              OFFICE   OF THE ATTORNEY     GENERAL   OF TEXA5
                                 ‘AUSTIN

                                                                ._




  Bonorable George H. 3heppord
  Comptroller of Publlo Aacouuts
  Austin, Texas.
  Dear Sir:


               its aoknowledge recc
.-. two letters addreeeed to you
    Judg3 of iC3nt County, rslatin




                                                 Oote Ad valorenl
                                                  And 22 In Blook
                                                 Hudsp,eth County,



                                        and receiving bids Or prb-
                                     ty depository of the fuads
                               Coimlesionsra’ Court of that
                              clnwmy Fern, 1931, soloct as
                               First IZatioml Bank of Sa-&on,

                                               Theae bondn
                                   T. E. Xurdoch and several
       .other individuals vero sureties on both of. these
        bonds, each furnishLag n financial    statement At the      ‘.
        tine of the preaontatlon of the b6ndc.      0ti’I.l~. MLIP-
       ‘doch’o fi.ncx&~l statment there was lletsd,         onon&
        other p;lopsl%p, 3200 acres of grcis8 land in IkIdsi>eth
        County, valued on the ototosaat at $24,000.00, aSninet
       ,vhich $hsro vae’listad  01i iadebtpclmos to. the State
        mud Of $48~~.00.

                 .
     ,
     ‘
    .t                                                                             .             .
    .’
      -.

Konorablc GeorEe II. Sheppard, page 2


                         “The Fir.st National Be& or Jayton, Tems, fail-.
                 :ed on or about the 8th day of June, 1932, defaulting
                   on the above wentioned bonds. Suit was filed by Kent                 :’
                   County on the bonds end depository contract, which, ‘.
                   upon trial in the Federal District      Court for the         ‘. ‘.. -.
                   Northern District   of Texae, at Lubbock, resulted in. i:. ;‘. .‘;
                   a’judgmnt in favor of ~KentCounty .against all of the                 .,
              ‘.i..defendant, bondmen, including T. E. Murdoch, for a. : .. ...’:
                :. total ~Drinoipsl amount of .$100,417.20.     This judg-     _,        ., ‘.
                :,ment also foreclosed    a dead of trust lion 02 the a-
                   bove desoribod land Given by Kr. Murdoch as an iq-         I:‘‘.. ’
                   demity security in oomection vith .thg.borrds.                 ::.’~.
                                                        . .,.
                                                            .”    :
                                                                        : :. .       :.i ~.
                         ‘The ju@nont just -ti%ntion& was rendered on -‘I.
                . ‘Sul$ 18, 1934. Tboreafter,     AM on’th% 25t.h day of. ‘.: ;,.:..:~““:._.
                   May, 1935, T. E. Murdoch coweyed the land to,Kent.              I.:: ~’.*
                   Oounty, Texas.: ‘a polltiaal   oubdlvlsion of the State;‘:..          ..
                   of T&m’,    r8citti   a oonsideration of Ten Dollarn. :,
                   Murdoch vas insolvent and by reason ‘of this judg-
              ,.

              .
                   mnt KentCounty held far raore than.fifty       per cent
               0:  OS the claims against him, At the ttie this deed
         ..
                   was sxecuted the CozmissiomraI. Court satisfied
                  .J
                  .                                                      it-.   ~’
                   self, that this vas the only .propertg ovnod by Isir,
                                                                                       ‘<, .



                   Murdoch that vas subject to execution;       The true con-:,
:


                   sideration for the deed vas an intention on the part .i
                   of all concernad to apply whatever the county ehould
                   evep receive for the.land on the judgment nontloned-
                   above, vhiah could never’ be collected~ in full;      These
                   proceeds w%r%aud are to go pro-rata to the separate
                   public funds on deposit in the depository bank at,          I
                   the time of its failure.                      ‘I
                              ‘Kent County has’continued to om th% .lend for
                        the reasons that there has never been a fair offer
                        for the land, notvithstanding   that the county has   .’
                        repeatedly tried to find a buyer for same, and has,:
                        therefore,  continued to hold the same in en attempt
                       .to preserve the public funds of the county.    It has
                        never been leased or rented end the county has re-
                        ceived nothinS for Its use.
                           * %a think the e uity ‘owned by Kc& County in the
                       land IS worth about $25OG.00, ma bolleve the COUI;;
                       will evoatually realize that amount from mm.
                       Is unpatented State School lend and the porcanncllt~
                       echo01 funds holds a lien for the unpaid pumhnao
                       price therefor,
                            .




Ronorable Gooree H. 8heppard! pai8 3

                                                                       ..
          *At the time of the failure of the depository                         1
     bank there vas on d%posit th%r8in the following a-
     mounts to the &edit of each reepectlve fund:
                                                                     , ... ..
     aComvio~School District        State & county                      :i ~
                                                         $1,387.2X :..      it
                                                                     .:
              tenanco
      :.  CommmdSchool    District    Schoolhouse
       ... CommonSchool District      Rural &I
           CommonSchool District      Building    : :.
           County AvaIlable School
           County Permanent School
           County Administration
           Court &US8  Bond
           Sail Bond              .’
           Road and Bridge Dond
  .‘.: ?SwialRoad        District    No, 1 Bond
           Special Road Distrtct     110. 2 Dond
           Special Road District     ho. 7 Bond
           Gonaral Bund;Herrant Sinking
           County PUghwayWarrant Sinking
    ‘. Road & Bridge Warrant Sinking
        : General Fund               .’
           Jury Fund’
           Rood & &,&Q8 Fr;nd
.          Permanent Improvement Fund
           Oounty Righway Fund ._
            “There has been reimbursed to’ each of the ‘above                       ; ‘~
      funds; from eOll8CtiOnS made from the receiver    of the
      defunct bank and from the bondsmen, thirty-four     per                              _.
      ceirt of the above amounts, not counting
                                           .   . the land
      abOQ%described.
            ‘At the.time of the failure of the depository’
     ‘bank Rent County was not operating on a cash basi.3,
      eome of the funds above appearing a3 tourrent fundst
      being several years behind,    There vas outstanding
      script, issued by the county clerk, again3t each of
      the laot five named funds vhlch had been r%Slatorcd
      by the treaouror, but on whhichthere had been no checks
      issued, for the reason that ecriy provlou3ly rcgietered
      by the treasurer va3 outstandinS in eufficlent    amounts
      to take up the mon%y then on deposit with the deposi-
      tory 3.3 .%houn above. ”
                                .-*                                           .
 Honprable George H. Sheppard, page 4
                            .

                      ‘Kent Countjr ovns Se&ions Nosi 21) and 25 in                    :
         * Blook 74 and Section 5 in Blook 75, Public School                          . ‘..
         ,’ Lands In Hudspeth County ln addltlon to the Irinds                   .
     ’ ’ desorlbed ln my letter to you of thls date and here-~                        ‘1.           ’
  .’ .. vith attached.             The county   acquired  title   to theao
           .
    . 1: three sections in a manner different              from that by                :.;:‘.
  .‘. .~.Ivhlch they ecqulred, title           to the land described in ..:~ _;:.                 .
     ~~~.Y”    the’ attached letter,      In addition to the Information                   ‘_
  “.’ .,; given in the other letter,            you are advised In eon- :.’ : ..::i’-.‘~
               sgeotlon with these three se&ions as follove:                    ,: :;I:::,
                                                                                     .A.
    . ~)..            %hen the First National ‘&k of Jayton, Tex&l. ~~~~~,,’              .“’
   .‘ ic::i.N
     :._       failed   the Comptroller    of  Currency  appointed   a  re-   ..:.;  .:.:    ‘:
       : ; celver therefor,          After a portion of the assets of               ,.: .;-.
         ‘,- the defunct bank had been liquidated,           the Coniptrollel*
     :~” of Currency and a court of competent juris’dlctlton au-                            ..
  ,:....
       .; :. tho&ieed and ordered the sale ,oS the rem-                 as-     _jl;.” j:;;
          .: sets to Kent County, it having been the highest                .,_. ,..._...;I:_..
  -‘.:l :{ bidder, for eaid assets and ovnlng practically              all’    : ,.‘_:_.!
      :::.’ of the claims agalnst the defunct bank4 A deed to : “‘!,; .;.
  .‘.,l.‘z:;theeo three seot+o!@ of land was executed by the re-. .’._,!::.
 : .: .? oelver and accepted by qhe oounty in whloh the con- :                           .‘.
 i ‘.:““: sideration bias reolted (Is $10 +d, other good and                       ~~:~.:
     ’ .% valuable oonslderat ion gald;                                        .e .:..
           i ::                     ..                                           ,j
    ,.....’
        : ;‘h.‘- aHi& & exceptiofi            & the fep,ta as hepeh si.iii”’ :, :‘i ’
   : ;i.:,+‘ed,. the situation as to this land Is the same aa’aet ~ -‘:‘:..k
*...y-_:’ out In the attached ,lettel?in             :          :                :~..‘;:.::.,;-;.
   _:. i _.                  .:..,                :                         : ‘~~~~~r.i.~.:~‘
                                                                                            :.y.   -.
 %&tiave been further advised that texes levied a&l asaegsod-‘aialnst
  thle land for State, county, and sohool purposes are delinquent for
  ohe ‘.or more years prior to the time Kent County acquired title
  thereto.            Also that taxes are delinquent for eoveral yeazw since
  the land vss acquired by sald county+ owe are not advised vhether
’ Kent ,~County has a since It acquired title to the land, legally and
  annually rendered the came for taxation;                  This fact may or may not
  become Important In detorminlng the questions to be hereinafter
  considered;            Those questions may be stated as follovsr                         ..~
           .   (1) Vae the ,land, after It vai acquired 6y kont
         County, subject to taxation-by either the State of
        .Texas, JWdspeth County or the school district?
       :
                        (2)   le Kent County, In order to protect Its Fn-
               terest      In the land, required to pay tho Stato’of Texas,
                .
                         : .’
                                                                                        , .:
                                                                           :         .:
Bonor?ble Georg6 Ii. Sheppard,, page 5


      Hudspeth County, or the school district   the dolin-
      went taxes vhich aoorued against the land before          ”
    - it, acqulrad same?                                         .:.
       .-
            The lquage    used by Judge Funderburk concerning the
question of the exsmptlon from taxatloL of the propert      Involved
in the case of City of.Abilene v. Stete, 113 8. Ii. (26 T 631 (Ap-
pllcation   diamlseod), is applloable to the factual aituatlon with
vbioh ve are hore concerned.     He said:
                   ‘The qiestion  of the“ exemption of said &ope$- :”
         .’’ty’ from taxation involves the iroper interpretu.tion       .~
            of’ constitutional   and statutory provieioaa,  the      ?’ ;j..‘I
        . inaterlal portions of vhlch, are aa followsr            .,~..
‘;: .,         %onst. a&t. 8, H-ir CM1 property in thfa                        .' :..';..-::.:
 .’ ‘, @ate, vhether o*vnedby natural persons or oorpor-                       :‘.:I:.:::..:,?
       ..atlons, other than mo-ricl~al., shall be ta&ed ln
        proportion to its value. * * + Provided, that tvo                            ‘.: ...
        hundred and fifty dollars-vorth    of household and                    ”
        Wtohen furnitwe.’ bolonr,in.p to each famllv In this                   ..:
         State shall be eiempt 6om-taxation,   I
               ‘%onst; i&t. 11, 0 9: ‘The grooerty of ooun-
          tiee,  olties tid tows,  omcd aad heid 2      for
   .’
          public p:wpos6s, * ii * and all other property de-.
          voted exclusively  to the use ad benefit of th?i-
          publia shaa be exempt from * Q * taxamon. (
                “conat.      art.   8,’ B 2:   -&hi &islnture    nay,

 ‘..




           funds of such l.nstitutio&‘of        loaning   and lands)
           and institutions        of purely public chori.yy; acd
           ell laws exeqAlng progcrty fkwz taxation other
           tha?l the pro crty above mentionad shall b5 null
           and void. ’ ,..,$ Italics   ours)
                  ~?Rc&eod Statutes       1925, art.   7150:                         ,


                'IThe followirq   property        shall   be,exempt from
           tax%tlon, to-l&t;   4 * *
                         .
                     .
Ronorable George H. Sheppard, page 6


           "'All property,  vbothcr real or personal, be-
     longS.ng exoluslvely  to this State, or any p oUtScal
     eubdivlsion thereof.1      (Underscoring oure}
            Artlole VIII, Section 2, of the Constitution,  authorizes
the Ieglalature    to pass general lave exempting from taxation &-
110 property used for $ubllc purposes.
           Article 7150, Revised Statutes, declares that ‘All pro-
perty, whether real or personal belonging exclusively    to this State
or az7 political   subdivision thereof shall be exempt from ta2Lstlon.l’
           The pertinent parts of Article 7150, vhgn read Fn oonnec-
tion wlih the linitatlon   on the authority of the Le&slature to
exe-t   from taxation ‘publlo property used for public purposes” by
Article 8, Section 2, supra, was held valid in the case of City of
Abllene v. State, aupra. The effect of said opinion is the same
as if eaid pertinent parts read:
           All property, whether real or personal belong-
     %ng exclualvoly     to this St&e, or any political eub-
     &ivleion thareof, used for public purposes, shall be
     exeztrpt ,frcap taxatlOn.
           There &8 oertaln oonstitutional  and statutory exceptidlls
to the above statute, as so cozzM,ruod, among others are Sections 6a
and 16a, Jxtiole 7 and Section’ la, Article 8, of t&e Cmatltutlon
and Sections 17, 18, Artiplo.7350,  Revised Statutes, v$th alch. ve
are nbt hsre gonoernod.
          We have found no de&s103 of the oourts of this State
based upon a like stat6 of facts.
            In the case of Statb v.‘ City of Rouston; 140 k. U. (2d)
277, (nit    of error refused),  it teas held that property purchased
vlth c=Iler from a special fund by a city, in excess of portion rc-
quired for a boulevard, for purpose of obtslnlng a--better bargain,
but. held kq oity for aals at a fair price, vas held for a “public
PWOPE, ” ti sense that It was bought and v&s belq held to peeervo.
the special    fund, and hence vas not subject to taxation by the
State of Texas and Harris County.The       court found that the city
purchased “,he entire tract, inoluding the part used for a boulevard
6s veil as the excess not so used, to preserve th-eclel        fund
from wZ&      the purchase prlco was paid.   Vi%i?%?crcnco  toFbis
-iIn
 -1
honorable George H. Sheppard, pa&e 7


             ‘Xl’ the property vas bought and Is being held
 -   to preserve such fund, hov can it be said that it
     uas not bou&t, and ie now being held for a publio
     pwpoee.      * * *  When  the’ city dooa sell such pro-.
     perty, it-must necesearily        apply the proceeds to
      Qoadvays to Turning Basis Funds and Bands. *”
The Court, titer quotSnS at great length from the case of the City
of Sheman v. WillLams, 84 Tex. 421, 19 9. W. 606, concludes its
opinion by saying:
           ‘The.trlaL  court’s ju&ment is clearly right
r:   if.the property constitutes   a’part of the special
     fund; and It seems clear to us that such property
     is so; if any case, the stipulated facts support a
     Msd%ng by the trial court to that effect,    aud we
     vi11 asswm the court eo found. Thls be%ng ao, it
     3.a neither taxable nor capable of being sold for
     taxes, and thus diverted.    Of course, if taxes could
     be levied on it, it could be seized and sold for
     taxes . ”
           An examination of the 1st of funds held on deposit to
the cred.Lt of Kent  County by the depository bsnk at the tim it
falled,ancl vent into Involuntary liquidation,  disclosoe that of
the total of more than $100,000 to the credit of said county only
$239.27 vas orodited to the county’s General Fund, the balance vas
to the creilit of nuueroua special funds, nono of vhich could be
diverted to any other fund or puvpose, but nust be used excluslve-
l$ for the purpose fur vhich they vere oath created, vhethsp de-
rived fvozn taxation, the sale of bonds, or donatlom by the Stete
of Texas,
           We can see-no distinction Ln principles between this case
and that of the City of Shornan v. Williams, supra, and St.ate v.
City of Houston, eusra.   In the Sheman case, the real pr*operty
involved was taken by the city in ssttlenent made with a dcfault-
ins tax col.Jector who ha4 collected taxes levied to pay the in-
terest and create a aink~n~ fund on a certain bonded obligation
of the city, but did not account to the city for sane? The court
held, a8 it did in the Ecustoll case, that the property when sold
ehould be credited to the special fund. That part of the opinion
of the court, sir consider pertinent here, reads es follows:
           ‘The texes collected   could not have bcon nppro-
     priatod to satisfaction    of appelloo’s claim had they,
Honorable George H. Shoppard, page 8
     .

         been paid over by the oolleotor;  and for the proteo-
         tion of the taxpayers as ~011 as creditors,  it seems'
         to us that the property In oontroversy should ba
         deemed a part of the fund, the mlsapplioation of
         vtich made it necessary for the oity to acquire
       . title to it..
               'If 8 taxpayer had failed to pay the tax on
   .    account of vhloh the money vas coU.ected, thon on
        enle of his property, if no bid vaa made, It would
        have been etruolc off to the city and a deed made to
        Ita under which the city would have had the power
        to oonvey the property to a purchaser from it. Rev.
      ~stst.,      Art. 449.   The money received on such a sale
      .vo~ld go to the fund on account of vhIch the tax
        VQP:Retied, and we see no reason vhy the proceeds
        of the sale of the property ia controversy should
        not belong to the fund on account of vhLch the
        taxes never paid over by the collector          vere col-
       _leoted.”                           .
                :
 The facte.be?ore       us disclose   that   when the depository bar& failed,
 it vaa not only Insolvent,         but that the sureties on Its bond &ivon
 to the oounty to aeoure the county~s~funda and it8 available and
 permanent school funds vere ale0 Insolvent, -so that .from the li-
 qtidation of the bank's asaots and its bondsmen only 3’1s dividend
 vas paid to the county vhlch sum vaa credited pro rato t.0 each of
 the aclcounts stand.I~ on the books of the depository to the credit
 of+tho county and Sts school Suede. The county foreclosed                  its
 deed of trust lien on part of the land here involved and at its
  sale by the trustee purchased the sama. The other-lands involved
 vere acquired by purchase from the depository b&c's receiver for
 a nouinal *onei.derat5.on. The lands have at all times since the%r
 purcham belo.xed to Ksnt CouUy, nubjeot to the indebtedness due
'the State as original purchase money: The aountg has never been
  able to find a purchaser for same a! afalr             an& rcaeonablo nrlce.
  These lands were aoquired by Kent County oololy for the pro%ection
  of the several funds above named; QrQ olearly a.part of each of
  said Sundaj and, as harstofore         et&cd, whatever amount is received
  from ths eale of ths lande by ths county will be credited proport-
  ionately to each of said funds.           Ilhile only g particular     spooial
  fund was involved in the Sherman case ard the lfoueton casa, YO
  have hero esveral special funds, e~rnebelonyiq             to the county,
  others to school and road distr9cts,            aleo a very lnslg~ific2~t
  ~UIQ beloqgng to the county's &cnaral fund, all of vhich are cer-
  tainly pUblFc funds.        With ll0 COUrt decision directly       iii PObt    t0
                  .~,
                                             :
a




    Honorable Oeorge B. Sheppard, page 9


  &tide UB, ve have reached the conolualo~ that the lands are pub-
 .llo lands of Kent County and as such arc being held only for pub-
  110 purposes, therefore am exenpt frm all taxstlou for the years
  eubsequent to the year in vhlch the county ecqulred title thereto.
  The Murdoch land was acquired by the county in Nag, 1935, thcre-
  fore it was not subject to taxatLon for the year 1936 or upon any
  subsequent yoar while it IA 80 held and owned. Ilo are not advised
..a8 to the date the title to the other lands here involved passed
  to the oouuty .
      ,
            The above stated conclus,lone constitute o&v amvep to
  questldn Ho, 1.
               liowevor, the quest102 of tQxos vhlch were delinquent at
    the tSm3 of and prior to the acquisition     of the land present a
    rath?r difficult   ~rogofiWlon.   This 1s 80 became, eo far ce lis
    have boen able to ascertain,    that preclso questioia, as here pre-
    eentod, has roper baen bsfore
                               .~    o-q courts.
              In the i&e bh 'khlldreas coutlty V, State, 92 S.N. (2d)
    1015, the Supreme Court in answering certified  questione, epeak-
    ing through Justice sharp, Raid:.
                '2he county ia merely an am of the State.  It
         ie a political   subdivision theroof. In view of the
         relation of a county to the State, the Stat3 my
         use, and frequexitly does ~3, a county as its agent
         %n the dlecharga of the State'a fmotione and dut-
     *   13s."
              The co&    further   eald:
               %hlle thlfi proolee queotlon, PO far ti8 ve knov,
         has never been determined by "tie court, we think the
         great weight of autborlty sustains the rulo that when
         the title to this Laad rovcrted to ChLldrese County,
         the tagi liea fo? Stat3 pUl?p0038 becnne cmyed with
         the ovnerehip of land by the county.    Thio property,
         dedicated to a county exClus$vdly for a public pur-
         pose, aud having been sold by the county to lndlvi-
         duals, who failed to cozq~ly wlth the contract of
         e.ale, whereupon tho titlo to the land reverted to
         the county, cannot bo burdened with taxes due the
         Stat3 duriq tho title it vae privately omed."
Eonorable George H. Sheppard, pe43 lo


            ft 18 true that In the above ~caze the court was oonslder-
ing oountg echo01 land, vhich under Article 7, Section 6a of 0~
Constitution,   1s taxable except fo? ~Stato purpoees,  But ln that
caee the land had becme private property and liable for State tax-
     It then roverted back to the county with tnxos for State pLLP-
z%ea belug delinquent.     In BO far an euch delinquent taxes are for
stato purposes, vo believe that the decision le applicable.
          You are, therefore, advised that the tax lien foi=.State
taxes became merged vlth the title of Kant County and that neithsr
the ooutg nor the land can be held for euch taxes.
          The quo&ion      of dolinque~t4axos    other than those for
State pu~posos present     a at111 more ool;lplexN problem.
          IIowever, at the outset, ve want to etate that the dell-
elan of the Supreme Court In the cm3 .or Childroes County v. state,
eupra, does not apBly to this case insofar as taxee Sor purposes
other than State are comorned.
          .Artio&e 11;93CtlO~     9   Of    ,thO CqSEtitUtiOU   Of   TOX&Qj   pro-
oldaa in part ea follovs ;                 %? ‘.

           “The property of oountlea.* ‘* Q owned and held
     only for public pUPpOsos * * + ahall be 3X3@ from
     force~eale~**.”           . -:    ‘.
          It lo th&efoi?o, agp&e& that the laid cannot be sold
for taxes beoauso we have heretofore held that the l@d is public
proparty held fdr publio purposee.    Our holding 1s euetalned by the
ease of State V. Stovall, 76 S. H. (2d) 206, (writ   refused) vherein
tho Court enjoined the eale of land under a tax jud&ment ln favor
of husk Iodop3Mei-A School District.,  where the land had been acqulr-
ed by the State for n pub110 purpoeo bsfore the tax judgment of the
echo01 diatrlct  became final. :   _.                    ‘~.

          However, in tho co83 of ‘Ciiy’if Dallas v. State 28 S.11.
(26) 937; the court hold that the city nuet pay the taxes’due the
State, county, road dletrlot and echo01 dltrtMct, vhlch were de-
Unquent befur tho purchase by the oltg.      In that CZMO the court
&id not discusa the merits of its holding ~ncl in ~10~ of the fact
that ~3 are bouud by that docielon,  we rhall not epoculate on the
court’s maeone.                 .~     I,

                                            ’   :
                      ‘_
                                                .

                                                          ‘.
            .




                                      i
Xonorable   OOOl?&8 H. Sheppard,   p8g3 u.

                         .
            We, therefore,  hold that Kent County la liable for
taxee due before    tho 8CqQbltlOa by tho county, OxOOpt taxee
state purpoeoP.




                              .




               4
