Court Opinion

ID: 9664746
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:28:03.751583+00
Date Added: 2024-06-11T12:57:46.938340
License: Public Domain

*129Mr. Justice Garwood,
joined by Justices Calvert, Walker and Culver, dissenting.
One naturally sympathizes with the desire to tax a federally owned plant, when used by a private lessee for purposes of profit, and especially when the federal government has consented to a tax being levied against “the lessee’s interest” and has stipulated in the lease that the lessee shall pay whatever taxes are assessed. On the other hand, the responsibility of providing for taxes being legislative rather than judicial, courts should not strain as much as we have here done to plug rather obvious tax loopholes, which the Legislature can easily plug at any time and could as easily have plugged long ago.
Art. 5248, before the 1950 amendment, was undoubtedly not a taxing statute at all, but an exemption statute, found, as it was and still is, in Title 85, “Lands-Acquisition for Public Use,” whereas our taxing statutes, with all of their hundreds of separate provisions, were and are found in Title 122 under the heading “Taxation.” The addition of the 1950 proviso, to the effect that federally owned property when used and occupied by private parties “shall be subject to taxation by this State and its political subdivisions,” did not convert what was theretofore a pure exemption statute into a taxing statute. It did not levy or provide for any tax, but simply qualified the express exemption theretofore existing, and the Attorney General of Texas has so ruled in his opinion S-124 as late as March 10, 1954.
It may be true that the amendment accomplished no great purpose, if it did not itself establish a tax. On the other hand, the article as it stood prior to the amendment likewise accomplished no great purpose, since it merely declared an exemption which undoubtedly already existed. The explanation of the amendment may well be that in 1950, following the 1947 Federal legislation permitting taxation of the lessee’s interest in Federal lands, the Legislature simply felt it proper to add a corresponding limitation to the exemption of Art. 5248, pending later enactment of appropriate taxing laws if found to be desirable.
Now, both before and since 1950, Art. 7173 of the taxing statutes provided that “Property held under a lease for a term of three years or more, * * * belonging to this State, or that is exempt by law from taxation in the hands of the owner thereof, shall be considered for all the purposes of taxation, as the property of the person so holding the same, * * This article deals *130expressly with the situation of exempt property leased to a private person — the same general situation we have here. Daugherty v. Thompson, 71 Texas 192, 9 S.W. 99, states that the article is what governs in situations of leases of exempt property to private persons but also confirms the obvious fact that it imposes no tax, if the lease in question is for a term under three years.
In Trammell v. Faught, 74 Texas 557, 12 S.W. 317, it was held with respect to state lands leased to private parties for a primary or basic term of more than three years, but subject to the right of the lessor-State to terminate within less than three years in the event it should sell the lands in question, that the lease was not “a lease for a term of three years or more” within the meaning of Art. 7173, supra. The Attorney General’s opinion S-124, supra, states that the taxability of Federal property leased to private parties is governed by Article 7173, notwithstanding the 1950 proviso to Art. 5248. It ruled that in the particular case, the tax upon the lessee provided by Art. 7173 was applicable, since the lease was for a term of 75 years, that is, “for a term of three years or more.” In the instant case, the lease, being terminable by the lessor, upon ninety days’ notice, in the event the property should be sold, is a lease for less than three years. If the lawmaking body did not like the result of Trammell v. Faught, supra, it could long ago have changed it without difficulty. Therefore no tax applies so far as Art. 7173 is concerned. What other article imposes a tax?
If we are to say that either the 1950 proviso in Art. 5248, or the general statement in Art. 7146 that all interests in land are taxable, imposes a tax on the short term lessee as if he were the land owner, we reach the strange result that both long and short term lessees of exempt property are so taxable, when Art. 7173 says that only long term lessees are so taxable. Certainly the normal course for the Legislature to pursue in 1950, if it intended to tax both short and long term lessees, would have been to amend Art. 7173 so as to strike out the word “for a term of three years or more.” That it failed to take this simple and obvious step certainly does not suggest that we should assume the responsibility to take it.
There is also the matter of Art. 7174, providing that leases shall be taxed only upon their market value; and Daugherty v. Thompson, supra, says that there can be no tax against a lessee except it be based on the market value of the lease.
*131If the mentioned rule of Daugherty v. Thompson is to stand, then the tax here involved cannot stand. In the first place, that tax is one based on the fee value of the premises and thus cannot be collected, if the only tax incident to leases is one based on the value of the lease itself. Moreover, we cannot say that the 1950 proviso to Art. 5248 levied a tax on lessees of federally owned property, measured by the fee value thereof, while as to lessees of other exempt property (to whom 5248 could not possibly apply) the tax is only one upon the market value of the lease itself. The result would be to discriminate against lessees of federally owned property, because their tax (based on the fee value) will obviously be much higher than one based on the sale value of a mere lease, which would b applicable to lessees of other exempt property.
If the mentioned rule of Daugherty v. Thompson is to be discarded (after all these years) on the theory that Art. 7173 effectively imposed on long term lessees of exempt property the same kind of tax sought to be levied here, and that Art. 7174 deals with a different subject, we still have the peculiar result of a short term lessee being taxed on the basis of the full value of the premises, when Art. 7173 says that only long term lessees shall be so taxed.
It therefore appears to me that the tax sought to be collected in this case has no basis in law. By so declaring, and thus putting the matter squarely up to the Legislature, which has the authority and duty to correct statutory confusion and deficiencies of this sort, I think that in the long run we will serve the public better than by ourselves attempting to do in roundabout fashion what we think the Legislature ought to have done. In this connection there can now be little doubt that a use tax on lessees (whether long term or short term) of exempt property-measured by the value of the premises would be as valid under our state constitution as it evidently is under the constitution of the United States. Article 7174 can readily be amended so as to make it clearly inapplicable to leases of exempt property.
Opinion delivered June 18, 1958.