                          December   13, 1948


Hon. Geo. H. Sheppard                  Opinion   No. V-732
Comptroller   of Public Accounts
Austin, Texas                          Re: The existence   of a tax
                                           lien against personal
                                           property which Recon-
                                           struction Finance Cor-
                                           poration has purchased
                                           upon foreclosure     of its
                                           deed of trust and chat-
Dear    Mr.   Sheppard:                    tei mortgage   liens.

           You submit for the opinion of this office the question
contained in your letter of November    0. 1948, which we quote
as follows:

            ‘I am attaching hereto a Statement of Facts
       concerning   the sale of property under judgment
       and foreclosure   in favor of the Reconstruction
       Finance Corporation     between the R.F.C.   and Hop-
       kins County.

             ‘You will notice that the State of Texas and
       Hopkins County are claiming a tax lien on the
       property sold under foreclosure.     The R.F.C.   has
       agreed to pay the taxes as claimed by Hopkins
       County and the State provided the Attorney Gen-
       era! of Texas rules that the tax is due. I shall,
       therefore,  thank you to advise this department    wheth-
       er or not the claim of the State and Hopkins Coupty
       is a legal lien agirinst the property sold under fore-
       closure as set out in the Statement of Facts attach-
       ed hereto.”

           The answer to your question depends upon whether or not
the St,ate and County had a lien for the taxes in question on the
30th day of Ottober,   1948, the date of the levy by the tax collec-
tor upon the personal property in question.       The admitted facts
show that prior to this date the Reconstruction      Finance Corpora-
tion had acquired title and possession    of t:he property by fore-
closure of its mortgage    lien and sale under execution by the
United States Marshal    on :uly 6, 1948, which sale was confirm-
ed by the Court on July 22, 1948.
     Hon. Geo.    H. Sheppard,     Page 2 (V-732)




               The general rule is that a lien on personal property for
     ad valorem taxes does not attach until seizure for saIt to satis-
     fy the taxes.  This is manifest from the following quoted from the
     case of Cassidy Southwestern    Commission   Company v. Duval
     County, et al, 3 S.W.(2d) (Sup.Ct.) 416:
              Y
               . . . For the levy upon and seizure of those cat-
         tle were not made by the tax collector      until subse-
         quent to the time when Cassidy Southwestern          Commis-
         sion Company became their owner.         The facts show a
         levy upon property belonging to oue person to satisfy
         taxes due by and assessed      against another, whereas
         the levies and seizures     authorized in those articles
         have relation to ‘personal     property bel.onging to such
         person as may be sufficient to pay his taxes.’ Nothing
         comparable    to a lien upon personal property,      except
         upon levy, seizure,    etc., in the manner prescribed,
         is provided to secure payment of state or county tax-
         es, save in the special case described      in article  7627.
         R.S. 1911. Storey’s    possible escapement     of the bur-
         dens assessed    against him does not justify holding
         another liable therefor.     . . .

           . . . It will be noticed that the Constitution  fixes a
         special lien upon landed property by the annual as-
         sessment     made thereon.    No such lien is fixed upon
         personal property in that manner, but the inference
         is clear that personal property belonging to any de-
         linquent taxpayer shall have a lien fixed thereon to
         secure the payment of taxes and penalties due by such
         delinquent taxpayer by seizure and sale in a manner
         provided by law.      . . .”

               While this case states the general rule, it recognizes
     an exception which we think clearly exists under the facts sub-
.>   mitted by you. It is thus expressed:      ‘Save in the special case
     described   in Article 7627, R.S., 1911.”    Article 7627, R.S. 1911,
     referred  to in the opinion is now Art. 7269, V.C.S.,     and is the
     statute upon which the State and County must rely, and not Ar-
     ticle 7268 set out in the Statement of Facts.

                 Article   7269   is as follows:

                “In all cases where a taxpayer makes an as-
          signment of his property for the payment of his
          debts, or where his property is levied upon by
          creditors,   by writs of attachments  or otherwise,   or
          where the estate of a decedent is or becomes      in-
          solvent,   and the taxes assessed  against such person
i   .




        Hon. Geo.   H. Sheppard,   Page 3 (V-732)




            or property, or against any of his estate remain un-
            paid in part or in whole, the amount of such unpaid
            taxes shall be a first lien upon all such property;
            provided,   that when taxes are due by an estate of a
            deceased   person, the lien herein provided for shall
            be subject to the allowances     to widows and minors,
            funeral expenses,     and expenses of last sickness.
            Such unpaid taxes shall be paid by the assignee,      when
            said property has been seized by the sheriff,      out of
            the proceeds    of sale in case such property has been
            seized under attachment      or other writ, and by the
            administrator    or &her legal representative    of dece-
            dents; and, if said taxes shall not be paid, all said
            property may be levied on by the tax collector       and
            sold for such taxes in whomsoever’s       hands it may
            be found . ”

                That this statute is an exception to the general rule that
    ’ a lien does not exist for the enforcement   of the collection of taxes
      against personal property until seized for sale by the taxing au-
      thority is also stated in 40 Texas Jurisprudence    206 in the fol-
      lowing language:

                  “On the other hand, a tax lien on personal prop-
            erty does exist in certain specified   cases, namely,
            ‘where a tax payer makes an assignment       of his
            property for the payment of his debts, or where
            his property is levied upon by creditors,    by writs
            of attachments   or otherwise,  or where the estate
            of a decedent is or becomes    insolvent.‘”

                   It seems quite clear to us that the case presented   by you
        in connection with the Statement of Facts falls squarely     within the
        terms of this statute.    Leaving out the portion of the statute not
        applicable   to the facts here, we have the following:

                  “In all cases . . . where his (the taxpayer)
            property is levied upon by creditors        by writs of
            attachment    or otherwise   . . . and the taxes against
            such person orproperty       . . . remains     unpaid in
            part or in whole, the amount of such unpaid taxes
            shall be a first lien upon all such property..        . .
            Such unoaid taxes shall be naid . . . when said
            property has been seizedby        the sheriff,   out of
            the proceeds    of sale in case such property has
            been seized under attachment        or other writ . . .
            and if said taxes shall not be paid, all such prop-
            erty may be levied on by the tax collector         and
            sold for such taxes in whomsoever’s          hands it
            may be found.” (Parentheses        and emphasis      sup-
            plied by writer.)
Hon. Geo.   H. Sheppard,   Pago 4 (V-732)




          That a writ of execution would come under the term
‘otherwise”   and “other writ” as used in the statute end that
seizure by the Marshal   is equivalent to seizure by the rher-
iff, we have no doubt.

           We should not confuse the question here consider-
ed with the’ immunity which the Reconstruction        Finance Cor-
poration enjoys under the terms of the R.F.C.       Act from taxes
upon its personal property, as that question is not here involv-
ed. The pers,onal property thus acquired by the Reconstruction
Finance Corporation     is exempt from ad valorcm taxes by the
State and governmental     and political subdivisions    thereof aris-
ing after such acquisition,   but, this immunity does not extend to
situations’ arising under the ‘terms of Art. 7269. V.C.S.       We
think the rule announced in the case of Reconstruction        Finance
Corporation    v. J. G. Monahan Corporation,     312 U.S. 81, 61 Sup.
Ct. 485, 85 L.Ed. 595, is pertinent here.     Mr. Chief Justice
Hughes, speaking for tbe Supreme Court with respect to the
R.F.C..   said that

         “While it acts as a governmental      agency in per-
    forming its functions (see Pittman v. Home Owners
    Loan Corp., 308 U.S. 21, 3233, 60 S.Ct. 15, 1718, 84
    L.Ed. 11, 124 A.L.R.   1253), still its transactions     are
    akin to those of private enterprises;     and the mere
    fact that it is an agency of the Government       does not
    extend to it the immunity of the sovereign.        . . .

          “It was with a similar       approach that we decided
    in Federal     Housing Administration       v. Burr, 309 US
    242, 84 L. ed. 724, 60 S.Ct. 488, that the’Federa1         Hous-
    ing Administration      was subject to be garnished under
    state law for moneys due to an tmployee.            There, the
    Administrator      under the National Housing Act was au-
    thorized ‘to sue and be sued in any court of competent
    jurisdiction,    State or Federal.’     /?August  23. 19357 49
    Stat. at L. 684. 722, chap. 614, 1Z USCA 8 1702. Sfkrt-
    ing from the premise        indicated in the Keifer Case that
    waivers    by Congress     of governmental      immunity from
    suit should be liberally       construed in the case of feder-
    al instrumentalities     -that     being in line with the cur -
    rent disfavor     of the doctrine of governmental      immun-
    ity-we     concluded that in the absence of, a contrary
    showing ‘it must be presumed that when Congress
    launched a governmental          agency into the commercial
    world and endowed it with authority to “sue and be
    sued”thnt     agency is not ltss amenable to judicial
    process    than a private enterprise       under like cir-
    cumstances      would be.’ Following that reasoning,        the
I   _,   .




             Hon. Geo.       H. Sheppard,   Page   5 (V-732)




                 precise point of the decision was that the words
                 ‘sue and be sued’ normally     embrace all civil pro-
                 cess incident to the. commencement     or continuance
                 of legal proceedings   and hence embraced    garnishment
                 as part of that process.   . . .

                         L
                         . . 1 We apply the farther principle that the words
                  ‘sue and be sued’ normally     include the natural and ap-
                  propriate incidents   of legal proceedings.    . . .”

                         In that case the R.F.C.    was held to be subject to costs
             and other impositions       in equity, like any private litigant, in a
             suit which it prosecutes.       We see no reason why the provisions
             of Article    7269 would not apply to R.F.C.     when it pursues its
             remedy in court to collect its debt and to enforce its security
             for the payment thereof, as it would against any private corpo-
             ration.    The scope of Article     7269 has been defined by our
             Courts in the case of State v. Mauritz-Wells         Co., 170 S.W.(2d)
             625 (Civ.App.)     in the following language:

                         *
                         . . . It merely operates to prevent property
                  vrhich already stands liable for the payment of spe-
                  cific taxes from ceasing to be liable, merely because
                  it is assigned,   attached or levied upon. . . .”

                        Associate      Justice Sharp of the Supreme Court in af-
             firming   this case,     141 Tex. 634, 175 S.W.(2d)  238, said:

                         I
                       . . . Article 7269 does not purport to provide
                 for a priority for taxes.  It merely creates  a lien
                 upon the happening of specified   events.”

                        The personal  property upon which the R.F.C.    caused
             its execution to be levied was subject to seizure for the pay-
             ment of the taxes here involved, and under Article     7269 and
             the authority of the cases last cited it, did not cease to be when
             levied upon by the creditor,   R.F.C.

                       We must, therefore,    conclude from the facts submitted
             by you, that the Reconstruction    Finance Corporation     holds the
             personal property subject to the taxes here involved and that the
             State and County have a lien against said property by virtue of
             the terms of Article   7269, supra.    The statute directs that the
             sheriff, in this case the Marshal,    should pay the taxes out of
             the proceeds      the sale; but since the creditor,
                                Of                                  Reconstruction
             Finance Corporation,     became the purchaser     at the foreclosure
             sale, it should have paid the taxes in order to relieve the prop-
             erty thus acquired of the lien arising under the foregoing       stat-
             ute. The statute clearly    provides,   “And, if said taxes shall not
Hon. Geo. H. Sheppard,    Page   6 (V-732)




be paid, all of said property may be levied      on by the tax collsc-
tor and sold for such taxes in whomsoever’s        hands it may be found.”

                            SUkQviARY

           A lien is fixed upon personal property sold un-
    der execution by a creditor       under Art. 7269, V.CS.,
    and such creditor takes such property so aold sub-
    ject to the lien for all taxes delinquent or owing at
    the time of such foreclosure       sale; and the sheriff is
    directed to pay the taxes from the proceeds         of the
     sale.   If the creditor becomes the purchaser       and
    credits his bid against the debt owing by the debtor,
     the creditor    should pay the taxes to relieve the prop-
     erty of the lien created by the levy of the writ of ex-
    tension as provided by statute.       Art. 7269, V.C.S.;
    Cassidy Southwestern       Commission     Co. v. Duval
     County, 3 S.W.(Zd) 416; Reconstruction       Finance Cor-
    poration v. J. G. Moaahan Corp., 312 U.S. 81, 61 Sup.
     Ct. 485, 85 L.Ed. 595; State v. Mauritz-Wells        Co.,
     170 S.W .(Zd) 625 (Ct.Civ.App.).


                                             Yours   very truly

APPROVED:                         ATTORNEYGENERALOFTEXAS




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