Court Opinion

ID: 4131478
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:16:13.285123+00
Date Added: 2024-06-11T14:32:28.193137
License: Public Domain

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                                              The Attorney                          General of Texas
                                                                         December     31,   1982

    MARK WHITE
    Attorney General

                                           Honorable Mark M. Humble                                     Opinion   No. ?lW-583
    Supreme      Court Building
                                           Milam County Attorney
    P. 0. BOX 12546
                                           County Courthouse                                           Re:    Constitutionality           of tax
    Austin.    TX. 76711. 2546
    51214752501                            Cameron, Texas    76520                                     exemption for nursery           products
    Telex    9101674~1367                                                                              in    section      11.16        of    the
    Telecopier     5121475.0266                                                                        Property    Tax Code

    1607 Main St., Suite 1400
                                           Dear Mr. Humble:
    Dallas, TX. 75201-4709
    2141742-6944                                You ask whether the ad valorem tax exemption for nursery products
                                           set forth in section  11.16 of the Property Tax Code is constitutional.
                                           We conclude that it is.
    4624 Alberta       Ave., Suite   160
    El Paso. TX.       79905-2793
    91.w533.3464                                  Section   11.16        of    the Property        Tax Code provides      the     following       in
                                           pertinent    part:

    1220 Dallas Ave.. Suite 202
                                                             (a)   A producer     is entitled     to an exemption
    Houston.     TX. 77002-6966
    713,650.0666
                                                         from    taxation     of  the   farm    Droducts    that   he
                                                         produces    and owns.    A nursery   pioduct.    as defined
                                                         by Section      71.041,  Agriculture    Code,    is a farm
    606 Broadway,        Suite 312                       product   for purposes of this section        if it is in a
    Lubbock,     TX.    79401.3479
                                                         growing state.       (Emphasis added).
    6061747-5236

                                           Section       71.041     of        the    Agriculture       Code    contains      the      following
    4309 N. Tenth. Suite 6                 definition:
    McAllen,     TX. 76501.1665
    5121682-4547
                                                         'Nursery    product'     includes     a tree,   shrub, vine,
                                                         cutting,   graft,    scion,   grass,   bulb,  or bud that is
    200 Main Plaza, Suite 400                            grown for,    kept for,     or is capable of, propagation
    San Antonio,  TX. 78205.2797                         and distribution      for sale.      (Emphasis added).
    512,225.4191

                                           Section 11.16 was adopted                in conformity       with   article    VIII,     section       19
    An Equal Opportunity/                  of the Texas Constitution                which provides:
    Affirmative Action Employer
                                                         Farm products...      in the hands of the producer,    and
                                                         family   supplies    for home and farm use, are exempt
                                                         from all    taxation     until otherwise directed    by a
                                                         two-thirds    vote of all the members elect       to both
                                                         houses of the Legislature.

                                                                                     p.   2162
                                                  .-

                                                                                                         .   .

Honorable     Mark M. Humble - Page 2                  (Mw-583)

       The legislature            may not authorize            that which the constitution
prohibits,           Maher       V.     Lasater,         354    S.W.Zd       923     (Tex.     1962).
Specifically,         the legis: lature         is without      power to add to the list            of
pioperties       - entitled    -to      exemption        under    the   constitution,         Leander
Independent         School    District       V. Cedar Park Water Supply Corporation,
479 S.W.Zd 908 (Tex.               1972);     City of Amarillo          V. Amarillo        Lodge No.
731, A.F. and A.M., 488 S.W.Zd 69 (Tex.                        1972),    and any attempt to do
so is void.          City of Amarillo          V. Love, 356 S.W.Zd 325 (Tex. Civ. App.
- Amarillo        1962, writ ref’d          n.r.e.);      Dickison    V. Woodmen of the World
Life Insurance          Society,       280 S.W.Zd 315 (Tex. Civ. App. - San Antonio
1955. writ ref’d).              In this       instance,      the issue      is whether “nursery
prod&ts,”        as defined        by section        71.041,   Agriculture       Code, constitute
“farm products”          within      the meaning of article           VIII,    section     19 of the
Texas Constitution.               If they do, the statute              is constitutional.           If
they do not,          the statute         attempts      to add to the list           of properties
entitled      to exemption          under the constitution            and is void.         While the
authority       is not clear          and unambiguous,         we conclude        that the courts
would be likely           to hold that “nursery              products”      are “farm products”
and that the statute             is constitutional.

       It has been suggested               that Kirby Lumber Corporation           v. Hardin
Independent        School   District,        351 S.W.Zd 310 (Tex.        Civ.   App. - Waco
1961. writ        ref’d   n.r.e.)       is controllina.          We disagree.      The court
therein      declared     that     timber     grown on --IItree     farms” does not fall
within      the    ambit    of     article      VIII,    section    19.    Relying    on the
principles       that constitutional            provisions     must be construed       in the
light    of conditions       existing       at the time of adoption       and that it does
not lie within the power of the legislature                    to change their meaning or
enact laws in conflict            therewith,      Jones V. Ross, 173 S.W.Zd 1022 (Tex.
1943);     Travelers’     Insurance        Company v. Marshall,       76 S.W.Zd 1007 (Tex.
1934),    the court declared:

                  In our opinion          appellant’s      timber here involved
              is not included          in the constitutional          exemption of
              ‘farm     products.’          We feel       certain     it   was not
              within     the contemplation            of the framers          of the
              provisions      and the people who adopted it.                 In 1879
              Texas was in the throes of an economic depression,
              and     apparen;t;tintended              the     exemption       to   be
              temporary                        otherwise       directed        by      a
              two-thirds         vote’        of    the      Legislature.          See
              Interpretive           Commentary,         Vernon’s       Ann.      Tex.
              Const.,     570.     Texas citizens         of that day, not far
              removed       from        frontier       and      pioneer      status,
              considered       timber       and forests         as areas        to be
              cleared     before      the pursuits       of husbandry could be
              engaged in.         It would have been incredible,                 then,
              to call     trees     ‘farm products.’          We think they are

                                                       p.   2163
Honorable      Mark M. Humble - Page 3               (MW-583)

               not    such       now,     within       the     meaning        of     the
               Constitution.

351 S.W.Zd      at 312.

       At most,       the Kirby        case        stands    for      the     proposition         that,
regardless       of    whether      "the       application         of     scientific         forestry
practices      to an established        stand of timber,"            i.e.     a lumber operation
commonly referred         to as "tree       farming,"       would properly           be considered
"farm products"        now, it clearly           was not so considered               in 1879.       But
the case offers       us no guidance        in determining          whether section          11.16 is
constitutional,        because    a lumber operation              as contemplated           by Kirby
does not meet the threshold                   requirement        of     section      11.16     of   the
Property     Tax Code.      A tree as part of a lumber operation                      is not "grown
for,   kept for,       or is capable           of,    propagation        and distribution           for
sale."      Aericulture      Code 571.041.            A nursery       is defined        as "a nlace
where trees,      shrubs,    vines,     etc.,       are propagated        for transplanting           or
as use for stalks        for grafting."            Hill V. Georgia Casualty Company, 45
S.W.Zd 566, 567 (Tex.          1932).      (Emphasis added).              Timber, on the other
hand, denotes       "trees    of a size         suitable     for manufacture            into lumber
for use of building         and allied      purposes       and does not include            saplings,
brush,    fruit   trees or trees suitable              only for firewood          or decoration."
M & I Timber Company V. Hope Silver-Lead                      Mines,       Inc.,    428 P.2d 955,
955 (Idaho 1967).

                  The word 'timber'      has been generally          defined    as
              meaning growing trees suitable             to be used for the
              construction        of    building,         tools,      utensils,
              furniture,     fences,    ships,     etc.      This concept       of
              timber     distinguishes        it     from      saplings,      and
              undergrowth,     fruit   trees,     and trees      suitable    only
              for firewood     or cordwood,      or for decoration.

Melder V. Phillips     Pipe Line Company, 539 S.W.Zd 208, 210 (Tex. Civ.
APP.  -  Austin    1976,   writ  ref'd    n.r.e.).        See also     Cummer-Graham
Company V. Maddox, 285 S.W.Zd 932 (Tex.            1956).    Because the court in
Kirby was not concerned     with nurseries,      it offers   us little    guidance.

      A more helpful        case is City of Amarillo           V. Love, a.             There
the court held that a taxpayer               who engaged in a general        retail      (and
some wholesale)       nursery business        for profit   was not entitled      to claim
an ad valor-em tax exemption               under article     VIII,   section     19.      The
taxpayer     received   his nursery       stock from large nursery plantations              or
farms and replanted         the stock in order         to preserve    and continue        the
life   of the plants.          Prior    to the time that the nursery           stock was
removed from the plantations                or farms,    they were in their          "first
growth     stage."     During      the    time   in which     the stock      was in the
possession      of the taxpayer,       they were in their "second        growth stage."
The court held that the taxpayer               was not entitled     to ad valorem         tax

                                               p.   2164
Honorable    Mark M. Humble - Page 4 (w-583)

exemption    because     he was       not   a   "producer"      within     the   meaning     of
article   VIII,  section    19.

                 In our opinion      the nursery         stock   in question
             does not come under the constitutional                 exemption
             of 'farm products      in the hands of the producer.'
             In order to come under the exemption,                 appellee's
             nursery    stock must meet two requirements:               first,
             it must be 'farm products'            and if so, it must be
             found that appellee       is the 'producer.'           Under the
             facts   and circumstances      before     us, we do not think
             the nursery      stock   meets       these    requirements....
             The trees and bushes were started              by grafting      and
             budding on large nursery          farms and transferred           to
             appellee     who conducted      its    retail     and wholesale
             business    on several    city     lots within      the City of

                         ordinarily      used among both business              men
             and the       general     public.        Appellee's       care    and
             treatment     of this nursery stock during its 'second
             growth stage'       was incidental          to its    selling     the
             stock    to the ultimate          consumer.        It would be a
             strained        construction          of      the       applicable
             constitutional       language      to say the nursery          stock
             in the hands          of   appellee      is    'farm    products.'
             (Emphasis added).

356 S.W.Zd at 328.       The court held that a person tending nursery stock
during    its   "second   growth     stage"      is not a "producer"      within   the
meaning of article      VIII,   section     19.    It did not directly    address the
issue   as to whether nursery         stock     in its   "first growth stage"    is a
"farm product."        However, we believe         that our courts,    if confronted
squarely    with the issue,    would so conclude.

       We find      it persuasive        that Texas courts        in other     contexts     have
concluded      that nursery       products        do constitute       farm or agricultural
products.       In Brewer V. Central Greenhouse Corporation,                 352 S.W.Zd 101
(Tex. 1961),       the Texas Supreme Court held that workers in greenhouses
were "agricultural         laborers"        within     the meaning of the Fair Labor
Standards       Act,    29 U.S.C.         section     201 et     seq.     The act       defined
"agriculture"        to mean "farming           in all    its branches     and among other
things      includes...       the       production...        of    any    agricultural        or
horticultural         commodities....          29 U.S.C.      9203(f).     Admittedly,       the
definition      of "agriculture"         in the federal       act is broad.        Yet, in an
ad valorem taxation        case,      the Ohio Supreme Court relied          in part on the
case in construing         a statute        which exempted equipment          and machinery

                                                 p.   2165
Honorable      Mark M. Humble - Page 5               (MW-583)

"used in agriculture"   and "agricultural  products                   on farms."  In Benken
v. Porterfield,   247 N.E.Zd 749, 753 (Ohio 1969),                    the court declared:

              [Tlh=       business     of     planting,     cultivating,
              harvesting,      and selling    flowers   and vegetables,
              indoors   in greenhouses,    or outdoors    in lath houses
              or planting      beds in the ground,      with substances
              being   added to the soil        to aid and protect        the
              growing process,     is agriculture.

       Again,     in another       context,     Texas    courts   have held       that,    for
purposes       of    workers'      compensation,      nursery       laborers     are    "farm
laborers"      within     the meaning of the statute.                In Hill    v.    Georgia
Casualty     Company, B.            the court stated:         "That one engaged in the
nursery     business     is engaged in an agricultural            pursuit    is not to be
doubted."       In Guerrero v. United States Fidelity              and Guaranty Company,
98 S.W.Zd 796 (Tex.            1936),   the court     affirmed     the proposition        that
horticulture       constitutes     one of the main divisions          of agriculture.        It
further     noted the distinction          discussed    in City of Amarillo         v. Love,
E,         between     raising     nursery    stock   and buying       nursery    stock    for
resale    and placing      it in the ground temporarily          for preservation.         The
former     horticultural       practice     is a part of agriculture            within     the
meaning of the statute;           the latter    is not.

       While      admittedly       both    of    those    cases     construed       a worker's
compensation       statute,     we think that it is significant              that the supreme
court     of another        jurisdiction       relied    on Hill      v.    Georgia      Casualty
Company, B.             in deciding      an ad valorem taxation          case.     In Boehm v.
Burleigh      County,     130 N.W.Zd 170 (N. D. 1964),            the court declared           that
a nursery       engaged in growing          trees,    shrubs,    flowers     and plants        fell
within      the    ambit     of    an ad valorem         tax    exemption      of     "all     farm
structures,       and improvements located           on agricultural       lands."     The court
found that the products            of a nursery are agricultural            products       because
"'agriculture'        is sufficiently        broad to include        'horticulture."'            Id.
at 176.       See also State v. Wertheimer Bag Company, 43 So.Zd 824 (Ala.
1949) (a sales         tax case which relies          in part on both Hill v. Georgia
Casualty      Company, supra,         and Guerrero      v. United States          Fidelity      and
Guaranty Company, a);                  Orendorf    v. H. Weber and Sons Company, 140
A.2d 641 (Md. 1958);             Township of Marple v. Lynam. 30 A.2d 208 (Pa.
Super.     Ct. 1943);       Hagenburger      v. City of Los Angeles,             124 P.2d 345
(Cal. Dist.      Ct. App. 1942); Dye v. McIntyre Floral                 Company, 144 S.W.Zd
752 (Ten*. 1940).

        We are persuaded     that Texas courts would construe   "farm products"
in article      VIII,   section    19 of the Texas Constitution      to include
nursery    products   as defined     in section 71.041 of the Agriculture   Code
and believe     that section     11.16 of the Property   Tax Code is constitu-
tional.

                                                   p.   2166
Honorable    Mark M. Humble - Page 6      (MW-583)

                                    SUMMARY

                 Section  11.16 of the Property     Tax Code which
             exempts from ad valorem      taxation   farm products,
             including   nursery products   as defined   by section
             71.041 of the Agriculture    Code, is constitutional.

                                                   MARK        WHITE
                                                   Attorney   General of   Texas

JOHN W. FAINTER, JR.
First Assistant Attorney        General

RICHARD E. GRAY III
Executive Assistant    Attorney     General

Prepared    by Jim Moellinger
Assistant    Attorney General

APPROVED:
OPINION COMMITTEE

Susan L. Garrison,    Chairman
Jon Bible
Rick Gilpin
Patricia  Hinojosa
Bob Lattimore
Jim Moellinger

                                              p.    2161