:re;mrteci in 349 S. W. 26 640,
error ref., N. R. E.

Hon. George II.

Sheppard Comptrollerof Public Accounts Austin,Texas
Dear Sir: OpinionNO. O-4613 Re: Questionsrelatingto ad valorem tax liabilityas a result of the acquisitionof real estate by the United States Government,and related questions.
We have received and consideredyourrequest for an opinion from this department. Since the letter, attached to your request, containsthe questions in detail,we quote from the same as follows:

“In connection

with the acquisitionof lands by the United States and its various agencies both by purchase and by condemnation,it has geen the practice in some cases for such lands to be acquired in the name of the United States and thereafterconveyed to some agency such’as the Defense Plant Corporation,a subsidiaryof the Reconstruction

Finance Corporation. In view of existingFederal Statutes (Sec. 610 of Title 15, U.S.C.A.) there would be no problem if the property is owned by one of these agencies on January 1st of any given year since the propertywould be subject to taxation.
“We are confronted, however,with several problems on which we would like to have an authoritative comment from your office. Briefly these may be set up as coming under the followinggeneral questions:

“A proper judgmentof the District Court of the United States vests title in fee simple to a tract of land as of December 23, 1941, and under the terms of the decree all claimantsand lien holders, etc., have their claim for compensationas their respectiveinterestsappear. As of January 1 the United States of Americawas the fee i 1942, simp e owner. The tract in questionwas acquired for the purpose Of constructing

a magnesiumplant and at the time of theHon. George H. Sheppard,page 2

acquisitionit was planned that the United States of Americawould in due course convey the property to the Defense Plant Corporation. "QUESTION:Is such property subject to taxation for the year 1942 by the various taxing agencies? 2.
"Assumethe same facts as in (1) foregoing, except that title w'as vested in the United States after January 1, 1942 and prior to April 1, 1942. "QUESTION: Is such property subject to taxation for the year 1942 by the various taxing agencies?

ItA tract owned by an individualis delinquent to the State and County for a number of years prior to the year 1929, It is also delinquentfor the years 1929, 1930 and 1931. Assumingcomplianceby the Tax Collectorof the preliminaryrequirements, a suit is filed on August 1, 1932 against the record owner and all necessaryand proper parties as defendantsasking for judgmentfor the taxes for the years 1929, 1930 and 1931 only and for a foreclosure. This suit is brought to fruition in a final judgmentand following a regular order of sale, legal levy and notice, the property is sold at public auction as requiredby law and bid in by an individual

who had had no previous connection with the land or the suit. & regular sheriff'sdeed is deliveredto the purchaserfollowinghis payment of his bid. "QUESTION: (a) Assumingthat the purchaser bid and paid the full amount of the judgment,interest and costs of court, are the taxes for the years previous to the year 1929 still a charge against the 

### iana?

“(b) Assuming that the purchaserbid and paid an amount less than the amount of the judgment,interest, and costs, are the taxes for the years previous to 1929 still a charge against the land?-- . /?

Hon. George H. Sheppard,page 3

4.

“Assume the same~factsas are set out in (3) foregoing,except that included in the suit and final judgmentare the taxes for all years that are delinquentand at the sale the purchaser bids and pays only an amount equal to a portion of the amount sued for. A regular deed is deliveredto him by the sheriff., “QUESTION.:

Are taxes for any of the years sued for a charge upon the property. what extent;? If so, to

5.
“An individualowner makes an offer to the United States in the form of an option to sell a ‘placeof property at a fixed price, agreeingthat the United States may immediatelytake possession of the propertywhile the title is being examined, and if condemnation,be necessary,agreeing that the price shall remain as fixed. This offer is dated November 5, 1941 and is accepted by the duly authorizedagent of the United States after January 1, 1942. However, the United States has taken exclusivepossessionof the property and begun improvements thereon immediatelyfollowing the date of the offer, on November 6, 1941. The title is Sound acceptableand a~ deed to the property is deliveredto the United States on February 15, 1942. ‘lQUESTIOK:Is the property in question subject to taxation for the year 1942 by reason of the fact that the legal owner thereof on January 1, 1942 was an individual?6.
“Assume the facts as in (5) foregoing,except that after January 1, 1942 the title is found to be defectiveas a merchantabletitle, although it is in fact an indefeasibletitle by reason of long possession, and the United States institutesa condemnation proceedingand procures a valid judgmentvesting title in the United States.Hon. George H. Sheppard,pege 4

“QUESTION:Is the property in question subject to taxation for the year 1942 by reason of the fact that the legal owner thereof on January 1, 1942, was an individual?” Article 7151, Revised Civil Statutes of Texas, 1925, provides as follows:

“All property shall be listed for taxation between January 1st and April 30th of each year, when requiredby the assessor,with referenceto the quantityheld or owned on the first day of January in the year for which the property is required to be listed or rendered.

. . .‘I By virtue of the provisionsof this statute the ownership of property on the 1st day of January of any year creates a liabilityon the part of the owner for taxes levied upon such property for that year; Humble Oil & RefiningCompany v. State (Civ.App.)3 S.W.(2d) 559, Winters v. IndependentSchool District of Evant, (Civ.,App.) 208 S.W. 574, and the sale of such property shortly thereafterdoes not affect the rule. Childress County v. State, 127 Tex. 343, 92 S.W.(2d) 1011.

Whether a particularpiece of property is exempt from taxation or not depends upon its ownership on the date as of which the taxes are assessed,and if, after such date, but before the taxes are paid, the property is taken by eminent domain or bought by body politic or corporate,the property of which is exempt from taxation,the tax as originallyassessed is valid and specific,and the personwho owns the property on the date as of which the tax was assessed is legally bound to pay it.. 26 R.C.L. 299.

In our opinionNo. O-4749 we held that tax liability for all state, county i common school district and. independent school district ad va orem taxes was determinedby property ownership as of January 1st of the year for which the taxes are assessed. In the same opinionwe held that property acquiredduring the month of March of 1942 by the Federal Governmentfor the purpose of constructinga military flying school shouldbe assessed for school taxes as of January 1st of this year; that the owner of the property on that date was personallyliable for the payment of the taxes; and, that the statutoryand constitutional lien was not extinguished because the Federal Governmentacquired the property but rather became unenforceable by the taxing unit so long as the Federal Governmentowned the propertyunless permissionwas given by Congress to bring an action against theHon. George H. Sheppard,page 5

Federal Governmentto foreclosethe tax lien. A copy of said opinionNo. O-4749 is enclosed for your information.

Since the que,stion pf,liabilityor exemptionfrom ad valorem taxes under the laws of this State turns upon ownership as of January 1st of the year for which the tax, under the law, is to be assessed,it follows, therefore,that if the United States Government was in fact the owner, in fee simple, of the propertyas of January 1 propert i 1942, the governmentand the

c would be exempt from a 1 ad valorem taxes for the year 19 2, provided the United States held the title to the property throughoutthe year 1942. We quote from 40 Texas Jurisprudence,

page 24, as follows: “The state has no power to tax either the property of the United States situated in Texas, or the propertyhere of the Federal agency or ir&rumentality, or the conduct of any business insofar as it is used as an instrumentality of the United States Government

.I# I

The fact that the Federal Governmentplanned to convey,but did not actuallyconvey, the property to the Defense Plant Corporation at some date subsequentto January 1 1942,would not change the rule announced in the foregoingquota ion. t However, if the United States Governmentconveyedthe property to the Defense PlantCorporation at any time during the year 1942, then we call your attentionto that part of Article 7151, supra,which reads as follows:

II speciai ia; If any propertyhas, by reason of any

, contract or fact, been exempt or has been claimed to be exemptedfrom taxation for any period or limit of time, and such period of exemption shall expire between January 1, and December 31 of any year, said property shall be assessed and listed for taxes as other property;but the taxes assessedagainst said property shall be for only the pro rata of taxes for the portion of such year remaining.

tl
In this connection we directyour attentionto the pertinentpart of Section 610 of Title 15 U.S.C.A., as amendedJune 10, 1941, Ch. 190, Sec. 3, 55 Stat. 348, which provides:

n

. The corporation shall be exempt from ak’taxation now or hereifie; imposedby the United States,by any Territory,dependency,or .possession

thereof, or by any State, county,municipality,or local taxing authority;exceot that--.

Hon. George H. Sheppard,page 6

any real property of the corporationshall be subject to State, Territorial,county.munl IDaL or local taxation to the same extent accord& to its value as other o wertv 1 taxed tions wrovided for ITthe wrezedinn The exemplentencewith respect to taxation

. . . shall be-construedto be applicablenot only with respect to Reconstruction Finance Corporationbut also with respect to (1) the Defense Plant Corporation

. . . Such exemptions shall also be construedto be applicable to the loans made, and personalproperty owned, by the Reconstruction Finance Corporationor by any corporationreferred to in Clause (11, (2) or (3) of the precedingsentence,but such exemptions shall not be construedto be applicablein any State to any buildingswhich are considered-by the laws of such State to be personalproperty for taxation purposes.n (Underscoring ours)
From the foregoing consideration we answer your first questionby saying that such property is not subject to taxation for 

### ad valorem taxes for the year 1942 by the various taxing units of this State which determinetax liabilitybased upon ownershipas of January 1, 1942. If, however, the United States conveys the property to the Defense Plant Corporation at any time between January 1 and December 31, 1942, then said Defense Plant Corporationbecomes liable for and may be assessed for the pro rata of taxes for the portion of the year 1942 remaining.

In view of what we have said above in connection with your first question,we think there can be no doubt that the owner of the propertywould become personallyliable and the constitutional

and statutorylien become fixed, under the facts submitted in your second question,for all 

### ad valorem taxes for the year 1942 to the various taxing units in this Statewhich determinetax liabilitybased upon ownershipas of January 1, 1942. It would be immaterialat what time during the year, after January lst, the title to the propertypassed to the United States. Your second question is answered in the affirmative.

We think our opinionNo. O-4779 a copy'ofwhich is enclosed,answers all of the matters subm tted in your third 1 question.After a careful consideration of your fourth question we have decided that you have not given us sufficientfacts from which we can accuratelyadviseyou. The question there presented calls for a very thorough examinationof all the facts surrounding the sale.Hon. George Ii. Sheppard,page 7

In attentionto pages 98 and

I, 0 operate connection with your fifth questionwe call your the rule announced in 43 Texas Jurisprudence, 99, which reads as follows: #
*

. It is obvious that an option does not as a conveyanceof any interest or title

. - . . in property. In giving an option the optionordoes not sell his propertynor agree to do so; he merely sells a privilege or right to buy it. Mor does the option bind the optioneeto purchase; it is binding upon the optionor alone, until such time as the optioneeaccepts and exercises it."
It is obvious, therefore,that the actual fee simple title would remain in the optionor and be vested in him as of January 1, 1942. Applyingthe ruleswhich we have heretoforediscussed, your fifth question is, therefore, affirmative. specifically answered in the

We think the same reasoningmust be applied, in answeringyour sixth question, question. that we used in answeringyour fifth

For the reasons expressedabove your sixth question is specifically

answered in the affirmative.
We trust that the foregoing satisfactorily questions submittedin your inquiry.
APPROVED OCT 20, 1942 /s/ Gerald C. Mann ATTORNEYGENERAL OF TEXAS Yours very truly
ATTORNEYGENERAL OF TEXAS

answers the

APPROVED:OPINION COMMITTEE BY: BWB, Chairman HMC:db:wb By /s/ Harold McCracken Harold McCracken,Assistant

Enclosures