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 re-
                                                                                                           ceiver          “free     and      clear       of all
                                                                                                           encumbrances                  and      claims        of
                                                                                                           any      person         nor party        of any na-
                                                                                                           ture      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 op-
          eration         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 re-
          ceiver)         for    state       and    county          taxes     in the sum           of $6464.65,               said     stim      represent-
          ing     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       ac-
          crued      during           the period           from       1930 to ,the present                 time       have      beeti      paid.
,   .




        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 re-
        ceiver      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,          certi-
        fyi.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 pre-
        viously      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 ac-
                    tion 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           David-
son     Co.     v. Hinnant,              93 S. W.           (2d)    532;      Texas         Steel     Co.      v. Huey         & Phiip         Hard-
ware      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                 pro-
ceeding         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 ap-
pointment            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 charac-
ter    held,        claimed         or    owned          by any        person         or    persons         whatsoever”                on the prop-
erty     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        judg-
ment      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             direct-
ing the receiver                 to sell         the property                here     involved,         free      and        clear      of all      encum-
brances,            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.
,   .




                                                                                                                                                               ‘.




        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 prop-
        erty.     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 extin-
                       guish,        or     to authorize            the releasing               or extinguishing,                   in whole
                       or     in part,          the     indebtedness,              liability      or    obligation              of any corpora-
                       tion     or    individual,               to this       State     or to any county                  or    defined      subdivi-
                       sion     thereof,           or     other     municipal            corporation               therein,        except         delin-
                       quent         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      per-
                             sonal,          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        prop-
                            erty        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          evi-
            dence       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            ques-
            tion 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              re-
                        ceivership             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             whe-
                        ther      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       proceed-
                        ings      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 de-
                        cree         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       confront-
            ing 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.            Con-
            sequently,        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




                                                                                                             F.owler       Roberts
                                                                                                                   Assistant
            FIRST      ASSISTANT
            .ATTORNEY            GENERAL



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