I. . . 

Honorable George H. Sheppard 

Comptroller of Public Accounts 

Austin, Texas 

Dear Sir: Opinion No. O-501 3 

Re: Authority of Tax Collector 

to issue certificate showing 

all taxes paid on’property 

which is in receivership and 

taxes are delinquent after 

sale of such property by receiver “free and clear of all 

encumbrances and claims of 

any person nor party of any nature whatever,” under order of 

court. 

The facts reflected by your letter of December 8, 1942, supplemented by 

your letter of January 26, 1943, and the enclosures therkwith, may be stated as 

follows: 

In 1925, a receiver was appointed to take charge of, and operate certain 

oil leases. The appointmentwas made at the instance of plaintiffs who owned 

certain interests in the oil lease. The receivership is still pending and the operation of the property has shown a loss during each year of the receivership. 

At the time of the appointment of the receiver State and county ad valorem 

t.axes against this property were delinquent for the years 1923 and 1924, and 

same was assessable for such taxes for the year 1925. The State intervened 

in the receivership proceeding, and in 1931, the court rendered Judgment in 

favor of the State against all other parties to the proceeding (including the receiver) for state and county taxes in the sum of $6464.65, said stim representing state an.d county taxes, penalties and interest for the years 1923 to 1929, 

inclusive, and foreclosed the tax lien on the property in the hands of the receiver. 

No further action appears to have been taken by the State. No part of such 

judgment has been paid, and none of the state and county taxes which have accrued during the period from 1930 to ,the present time have beeti paid. 
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Honorable George H. Sheppard, Page 2, O-5013 

On July 25, 1940 the Court ordered the receiver to sell all of the 

property on which the State’s lien for taxes had been foreclosed, and on 

which taxes had accrued each year during the receivership, “free and 

clear of all encumbrances and claims of any person or party of any nature 

whatever”. Under this order of the court the property was sold, the receiver undertaking to convey same free of such encumbrances, and s’uch 

sale was by the Court confirmed. The proceeds of the sale of the property 

were later disbursed in payment of receiver’s fees and operating costs 

under order of the Court. 

The purchaser at receiver’s sale now desires a tax certificate, certifyi.ng that all state and county taxes have been paid through the year 1940. 

You request the opinion of this department advising whether the county 

tax collector is authorized to issue cancellation certificates and thereafter 

certify that all state and county taxes on said property for such years have 

been paid. 

The precise question here involved has never been passed upon by 

the courts of this state. Upon the general question of subordination of previously existing liens to the costs of receivership, the courts have passed 

many times. The leading case is that of Craver v. Greer, 107 Tex. 356, 

179 S. W. 862, in which.the Supreme Court said: 

“Where a lienholder procures the appointment of a receiver 

with the power to operate the property, which is subject to his 

lien, in a continuance of the business to which it is devoted, it is 

only just that~ the consequent expenses should take precedence 

over his lien, since it must be anticipated that such operation 

will be attended with cost, and possibly in excess of income. 

Heisen v. Bins, 147 Ind. 284, 45 N. E. 104. The same rule 

should be applied to a party who, while not directly the applicant 

upon whose petition the received is appointed is privy to the action which results in the appointment. But the indebtedness of the 

receiver has no right of priority over the vested lien of a creditor 

who neither applied for the receivership nor was a party to its 

procurement, merely because he is a party to the suit.” (Emphasis 

ours) 

The rule announced by the Supreme Court in Craver V. Greer has been 

consistently followed by the courts of this State. Mayotown Lumber Co. v. 

Nacogdoches Grocery Co., (C om. App.) 236 S. W. 704; Wagner Supply Go. v. 
Honorable George H. Sheppard, Page 3, O-5013 

Bateman, 260 S.W. 672; Hayes v. Gardner, 40 S.W. (2d) 917; Lynch Davidson Co. v. Hinnant, 93 S. W. (2d) 532; Texas Steel Co. v. Huey & Phiip Hardware Co., 110 S. W. (2d) 9674. It is true that the general rule is qualified to 

the extent that the court has the power, in the exercise of a sound judicial 

discretion, to charge the liabilities of the receiver against the corpus of the 

receivership estate where such.estate is “affected with a public interest” 

and the public has an interest in the continued operation of the property and 

such expenses‘are necessary in such continued operation. Craver v. Greer, 

supra; Ellis v. Water Co., 86 Tex. 109, 23 S. W. 858; Clint v. Houston Ice & 

,Brewing Co., 106 Tex. 508; 169 S. W. 411. 

The property here involved is private property. The receivership proceeding was instituted by its owners. It is neither public nor quasi-public in 

its nature and could not be said to be “affected with a public interest.” The 

State had no part in procuring the appointment of the receiver. 

The fact remains, however, that in 1928, some three years after the appointment of the receiver, the State intervened in the proceeding, bringing suit 

for some taxes which had accrued and constituted a lien on the property at the 

time of the appointment and for some taxes which had accrued subsequent to 

the appointment of the receiver. The court thereafter rendered judgment for 

the State as against all other parties to the suit which judgment is regular on 

its face establishing the State’s claim as a lien “superior and prior” to “all 

other claims, interests; rights, titles and liens of whatsoever kind ore character held, claimed or owned by any person or persons whatsoever” on the property here involved, and foreclosed the lien as against the receiver and a11 other 

parties to the suit. No objection has been raised to the judgment. This judgment of the court did not create the right of precedence of the State’s lien for 

taxes, but simply established the existence of the right. Mayotown Lumber Co. 

v. Nacogdoches Grocery Co., supra. The legality of the taxes and the existence 

of the lien have thus been adjudicated by the court. Likewise the priority of 

that lien has been adjudicated. 

No claim appears to have been made by the State for taxes which have 

accrued on the property since the year 1930. As to such taxes it cannot be 

said that the State has sought to invoke the aid of the receivership proceeding 

in their collection, and as to these taxes the State has not become a party to 

the receivership proceeding. 

The question to be answered here is whether the order of the court directing the receiver to sell the property here involved, free and clear of all encumbrances, is sufficient .to free the property so sold from the State’s lien for taxes 

previously adjudicated and established by the same court as well as to free it 

from the State’s lien for taxes which accrued subsequent to such judgment. 
, . 

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Honorable George H. Sheppard, Page 4, O-5013 

Many Jurisdictions hold that the court is authorized to subordinate 

the lien for taxes to the receiver’s costs and the cost of operation of the property. We find no such case decided by any court of a state having constitutional 

and statutory provisions with reference to tax liens similar to our own. Both 

our constitution and our statutes are explicit in defining the character of the tax 

lien and the dura,tion of its existence. 

Pertinent constitutional and statutory provisions are the following: 

Section 55 of Article 3 of our constitution reads: 

“The Legislature shall have no power to release or extinguish, or to authorize the releasing or extinguishing, in whole 

or in part, the indebtedness, liability or obligation of any corporation or individual, to this State or to any county or defined subdivision thereof, or other municipal corporation therein, except delinquent taxes which have been due for a period of at least ten years.” 

(Emphasis ours). 

Section 1 of Article 8 of the constitution provides, in part that: 

“Taxat,ion shall be equal and uniform. All property in this 

State, whether owned by natural persons or corporations, other 

than municipal, shall be taxed in proportion to its value, which 

shall be ascertained as provided by law. . . . .” (Emphasis ours) 

Section 10 of Article 8 of the Constitution provides that: 

“The Legislature shall have no power to release the inhabitants 

of, or property in, any county, city or town from the payment of 

taxes levied for State or county purposes. . . .” 

Section 11 of the same Article provides that: 

“All property, whether owned by persons or corporations 

shall be assessed for taxation, . . . . And all lands and other 

property not rendered for taxati,on by the owner thereof shall 

be assessed at its ‘fair value by the proper officer.” 
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Honorable George H. Sheppard, Page 5, O&5013 

By Section 15 of Article 8, the Constitution provides that: 

“The annual assessment made upon landed property shall 

be a special lien thereon; and all property, both real and personal, belonging to any delinquent taxpayer shall be liable to 

seizure and sale for the payment of all the taxes and penalties 

due by such delinquent; and such property may be sold for the 

payment of the taxes and penalties due by such delinquent, 

under such regulations as the Legislature may provide.” 

(Emphasis ours) 

Arficle 7145, R. C. S., provides that all property, not expressly 

exempted bv the statutes shall be subject to taxation. Article 7146 defines 

“real property” asrthe land itself and all improvements and fixtures thereon, 

including all mines, minerals’, etc., in and under the same. Article 7172, 

R. C. S., provides that: 

“All taxes upon real property shall be a lien upon such property until the same shall have been paid. And should the assessor 

fail to assess any~real estate for any one or more years, the lien 

shall be goody for every year that he should fail to assess for; . ...” 

(Emphasis ours) 

,’ 

Article 7336f, V.A.C.S., bars the collection of ad valorem taxes 

which became due before December 31, 1919. The Legislature has not seen 

fit to bar the collection of any such taxes which have accrued since that date. 

The~quoted constitutional and statutory provisions clearly evidence the jealous care’with which the framers of the constitution and the makers 

of our laws have sought to safeguard the revenues of the State. They speak, 

most emphatically, not only the intent that taxes should, constitute a lien upon 

the land against which they were assessed (Const., Art.‘3, Sec. 55; Art. 8, Sets. 

1, 10 and 15), but that such a Iien should continue in force and effect until the 

taxes secured thereby have been paid, or by act of the Legislature have been 

released, after they have been due for more than ten years. (Const., Art. 8, 

Sec. 15; Art. 7172, R. C.‘S.) 

The State of Oklahoma ha’s constitutional and statutory provisions 

with respect to tax liens, very similar to ours. In the case of Edwards v. Pratt, 

42 Pac. (2d) 506, the Supreme Court .of that State had before it the identical question here presented to us. The court stated the question thus: 
. . 

Honorable George H.~Sheppard, Page 6, O-5013 

“Does a court of equity in Oklahoma in a general receivership proceedings have jurisdiction to order and sell 

property in its custody free and clear of all delinquent 

taxes,” 

The Oklahoma constitutional provision was’ identical with our 

Constitution, Art. 8, Sec. 10, insofar as the latter is applicable to this fact 

situation. The Oklahoma statute provided~that taxes upon real property 

should be a “perpetual lien.” Our statute (Art. 7145, R.C.S.) provides 

that taxes upon real property “shall be a lien upon such property until the 

same shall have been paid.” The Oklahoma Constitution provided that the 

Legislature should pass no law “exempting any property from taxation,” 

except as provided in the Constitution. Our Constitution provides (Art. 8,, 

Sec. 1) that “all property in this State . . . . shall be taxed.” 

In holding that the court order authorizing the receiver to sell 

property free and clear of “all taxes” was void the Oklahoma Supreme Court 

in Edwards v. Pratt, said: 

“Taxes are a perpetual lien, and having attached to the land, 

this lien cannot be directed by a sale under judicial process whether upon execution, decree of court, or foreclosure of mortgage. 

“The third syllabus in the case of Board of Commissioners 

of Woods County et al v. State ex rel. Commissions of Land 

Office, 125 Okl. 287, 257 Pac. 778, 53 A.L.R. 1128. says: ‘A 

perpetual tax lien having attached to land is. not divested by a 

sale of the land under judicial process, whether upon execution, 

decree of court, foreclosure of mortgage, or any other proceedings in view of section 9724, compiled Oklahoma Statutes 1921, 

and art~icle 10, 5 5, of the Constitution.’ 

‘“In the body of the opinion, the case of Bloxham v. Consumers’ 

Electric Light & Street Railroad Company, 36 Fla. 519, 18 So. 444, 

29 L.R.A. 507, 51 Am. St. Rep. 44 is quoted: ‘The state’s lien for 

taxes, having attached by the assessment of the property, could 

not be divested by a subsequent judicial sale, even though the decree under which the sale was made should have directed that the 

property should be sold free from all incumbrances. . . . Mesker 

v. Koch, 76 Ind. 68.’ 

“. . . . 

“The judgment of the receivership court is void. This appears 

upon the face of the record, and it is subject to attack any time and 
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Honorable George H. Sheppard, Page 7. O-5013 

any way, and the unpaid taxes were a valid outstanding lien 

at the time Edwards conveyed to Pratt and the covenant of 

warranty in the deed was breached.” 

The fact situation, the statutes and the constitutional provisions 

before the Oklahoma Supreme Court are almost identical with those confronting us here. We think that case correctly disposed of the question and that the 

same reasoning applies and controls here. We are, therefore, of the opinion 

that in so far as the order of the court undertakes to free the land here involved 

from the state and county tax liens it is void upon the face of the record. Consequently, we advise you that the tax collector is without authority to issue tax 

cancellation certificates cancelling such taxes, and further advise that he is 

without authority to issue tax certificates showing that such taxes have been 

paid until such time as they have, in fact, been paid. 

Trusting that the foregoing fully answers your inquiry, we are 

Very truly yours 

FIRST ASSISTANT 

.ATTORNEY GENERAL 

FR :ff 

F.owler Roberts 

Assistant 

APPROVED 

OPINION