    _ .,.

   .-        ..




                                The Attorney              General         of Texas
                                                   February 25. 1982

MARK WHITE
Attorney General

                              Honorable John F. Perry                        Opinion No. MI+451
SupremCowl Building           Hopkins County Attorney
P. 0. Box 12546
                              Courthouse                                      Re:  Section    11.161,    Property
Austin. TX. ?6711- 2546
5124475-2501
                              Sulphur Springs, Texas        75482             Tax Code
Tddl 910m74.1367
Tel*COpier 5121475a66         Dear Mr. Perry:

                                     In 1981. the legislature        amended the Property Tax Code by adding
1607 Main SC..Suite1400
Dallas. TX. 752Q1.4709
                              section 11.161, which provides that “[a111 individual          is entitled    to an
214l742.6944                  exemption from taxation of implements of farming or ranching that he
                              owns and uaes in the production            of farm or ranch products.”         Acts
                              1981, 67th Leg.,       1st C.S.,     ch. 13. section    32. at 127.     YOU ask a
4624 AIbmS Ave.. SUlh 160
                              series    of    twelve     questions,     which   fall   into   three    principal
El Paso. TX. 799052793
SlyuJ-3464                    categories,    concerning what items are entitled          to exemption, vho is
                              eligible    to receive    the exemption, and what limftations        apply to the
                              granting of it.      We limit our discussion       to the specific   questions    of
12M DallasAve..suite 202      statutory construction       that you raise.
Houslon.TX. 770024966
713/65M)8w
                                     Section     11.161 was adopted pursuant to authority         granted by
                              article    VIII, section 1 of the Texas Constitution,       which provides,    in
606 Broadway. Suile312        pertinent     part:     “[T]he Legislature  by general lav may exempt all or
cubbocc. TX. 794014479        part of the personal property homestead of a family or single adult,
-747.5236
                              ‘personal property homestead’ meaning that personal property exempt by
                              law from forced sale for debt, from ad valorem taxation.”             (Emphasis
4309 N. Tenth. Suite S        added).     Article    XVI, section   49 of the Texas Constitution   authorizes
McAllen. TX. 76501-1665       the legislature,       by general law , to protect from forced sale a portion
512m624547                    of the personal property of heaas of families and of unmarried adults.
                              male and female.         Article 3836. V.T.C.S..  specifies the property which
200 MaIn Plaza. sure 400      the legislature      has determined is exempt from forced sale:
San Anlonio. TX. 76205.2797
5w225-4191                                        (a)     Personal    property    (not to exceed an
                                         .aggregate      fair market value of $15.000 for each
                                          single,      adult    person.     not a. constituent    of a
                                          family,     or $30,000 for a family)          is exempt from
                                          attachment,       execution    and every type of seizure
                                          for   the satisfaction        of liabilities.     except for
                                          encumbrances properly          fixed thereon,    If included
                                          among the following:




                                                               D. 1555
Honorable John F. Perry - Page 2           (kw-451)




                  (2)      all   of the   following    which  are
            reasonably    necessary for the family or single,
            adult    person,   not a constituent    of a family:
            implements of farming or ranching....

      Your first         six  questions    are concerned  with what items            of
personal property        are entitled   to exemption, and are as follows:

                  1.  Should the tens implements be construed
            so as to include’any and all types of equlpnt   or
            machinery that could be used in an agricultural
            environment?

                  2. Would a dairy operation be entitled    to an
            exemption from taxation for all types of equipment
            and machinery used in such operation,     including,
            but not limited   to. milking,   storage,   feed and
            sanitation equipment?

                 3.   Would vehicles       utilized   in    agricultural
            products, such as trucks       and trailers.     be included
            in this exemption?

                    4. Would equipment used to obtain         water from
            wells    or for i.rrigation be exempt?

                  5.  Would permanent structures   such as silos
            or feed bins and tanks utilized   for the prc-rluction
            of forage and feed for livestock     and poultry and
            used exclusively  by the producer to feed his ovn
            stock be exsmpt?

                    6.Could other structures  such ss barns             or
            sheds used for    storage  of forage  and feed              be
            considered implements?

       Neither article    XVI, section       49 of the Texas Constitution           nor
article    3836, V.T.C.S..      define     what constitutes      an “implement of
farming or ranching.”         The predecessor      to article       3836, V.T.C.S.,
now-repealed    article   3832. V.T.C.S..      employed the phrase “implements
of husbandry.”      “Husbandry” is ordinarily      applied t: mstters involving
agriculture.      Stuart v.     State,     563 S.W.Zd 398,       399 (Ark.       1978).
“Husbandry” has been defined             to be “the     business      of s farmer.
comprehending agriculture        or tillage      of the grczzd.         the raising.
managing, and fattening        of cattle      and other ?znestic        animals,    the
msnagement of the dairy and whatever the land ; reduces ,‘I and is
equivalent    to agriculture    in its general sense.        Itions     v..Lovell.     7
Heisk. 510, 516 (Term. 1872).          See also State ex rel. Boynton v. Wheat
Fanning Company. 22 P..2d 1093 (Kan. 1933).            Therefore.     an item which
~..-

       .,   .

                Honorable John F. Perry - Page 3                (MW-451)




                was an  “implement of husbandry” under article                    3832 would now be an
                implement of farming or ranching under article                  3836.

                       III construing article        3832, courts declared that determination                as
                to what constitutes        an implement of husbandry is a question of fact to
                be resolved on a case-by-case              basis.     Henry V. McLean. 1 White 6 w.
                609 (Tex. Ct. App. 1881).             Courts focused on the use to which an item
                is put, Hickman V. Hickman, 234 S.W.Zd 410 (Tex. 1950).                             declaring
                “implements of husbandry” to include                    “all    implements used by the
                farmer in conducting his farming operations,                     not only those that he
                might use directly,          but those used by his tenants and employees.”
                Smith v. McBryde. 173 S.W. 234, 235 (Tex. Civ. App. - San Antonio
                1915, no writ).            In construing         article      6675a-1,    V.T.C.S.,     .which
                governs      vehicle      registration         and    provides        an exemption         from
                registration       for “implements of husbandry,” this office                 declared     that
                the test wss one of primary design and primary use or purpose:                          “It IS
                fundamental        then,    that    whether      a vehicle        IS an ‘implement            of
                husbandry’ must be determined by the primary design and primary use or
                purpose to which the vehicle              is put and turns on the ‘facts               of any
                particular        case. “’       Attorney       General       Opinions      U-1254      (1972)
                 (four-wheel     riding lawn mower not an “implement of husbandry” within
                article     6675a-1, V.T.C.S;~. because not used primarily for agricultural
                purposes),      citing   Allred w. J.C. Engelman. Inc.,                61 S.W.2d 75 (Tex.
                1933) (water truck designed for aole purpose of carrying water for
                 irrigation     and gasoline        carrier     truck designed and used for sole
                purpose of providing gasoline             to tractors       in orchards and fields         were
                “implements of husbandry” within article                     6675a-I.    V.T.C.S.);     M-1288
                 (1972) (piece of equipment designed and used primarily for applicaton
                of fertilizer         and herbicides        an “implement of husbandry” within
                article     66758-1, V.T.C.S.).          In Reaves V. State, 50 S.W.2d 286, 287
                 (Tex. Grim. App. 1931). the Texas Court of Criminal Appeals construed
                 the phrase in the context of article                827(a).     section 3(a).      V.T.C.S..
                which exempted from length limitations                     placed upon motor vehicles
                 implements of husbandry temporarily propelled or moved upon the public
                highways.        The court stated         that    “[aIn      implement of husbandry is
                 something necessary         to the carrying on of the business                 of farming,
                 etc.,   without which the work cannot be done.”

                        Employing such tests,           courts    variously    held   that  planting
                machines. Smith V. McBryde. supra, cultivators,               plows. stalk cutters.
                riding    planters.   Seiler v. Buckholdt, 293 S.W. 210 (Tex. Civ. App. -
                San Antonio 1927. no writ).            tractors,    Wollner V. Darnell. .94 S.W.2d
                1225 (Tex. Civ. App. - Amarillo              1936, no writ),     combines, beehives,
                and trailer      chassis,      Hickman v. Hickman. 220 S.W.Zd 565 (Tex. Civ.
                APP. - Eastland).       aff’d.     234 S.W.2d 410 (Tex. 1950), were “implements
                of husbandry.”        On the other hand, courts also held that a pickup
                truck used,~primarily        for purposes of trensporcation        was not exempt as
                an “Implement of husbandry,”              although.    under the statute     then In
                effect,     It was exempt as a “carriage.”              Hickman V. Hickman. supra.
..

     honorable   John F. Perry - Page 4       (MW-451)




     Courts also held that a mill and gin, Cullers      v. James, 1 S.W. 314
     (Tex. 1886). and a windmill and three gates, all unused and unerected.
     Hickman V. Hickman, s\rpra. were not exempt; such items would be exempt
     only if they were attached as fixtures    to realty which occupied the
     status oft a homestead.

           From the cases,   we can abstract      two propositions.    First,   that
     which is intended to be attached to realty,           such as a windmill,      a
     gate, a mill, or a gin, is not an “implement.”          Courts would probably
     hold, for example, that structures        such as barns. sheds, silos,      and
     tanks are not implements under this statute.              However, tools    and
     machines such as combines,        tractors,     and milling    machines would
     probably fall    within the statute.       Second, the determination     as to
     which implements are “implements of husbandry” is a fact question to
     be determined on a case-by-case      basis by employing a test of primary
     design and primaryr’use.     We are not empowered to make determinations
     of fact;   hence, we must decline     to answer your questions      concerning
     specific  items of property.

             Your next four questions center on who is eligible           to receive the
     exemption.       Section    11.161,    Property    Tax Code, employs the term
     “individual,”     while article     XVI, section    49 of the Texas Constitution
     uses the phrase I’... all         heads of families,      and ,also of unmarried
     adults,     male   and   female.”    Article    3836.  V.T.C.S.,    makes eligible
     (1. ..each  single,    adult person, not a constituent       of a family,    or...   a
     family.”      Clearly    the class    of persons embraced by section         11.161,
     Property Tax Code, could not be greater than the class                  embraced by
     article    XVI, section     49 of the Texas Constitution         and article    3836,
     V.T.C.S.     We must therefore      turn to these provisions      to determine just
     who may qualify under section          11.161.

                 first   question   under this   topic   is:

                 Would the term individual      as used in the [code
                 provision]   be limited or defined to include only
                 persons    in the agricultural    business    that have
                 sole or complete ownership of all          the property
                 necessary for pursuit of said business?

           We construe      your first    question    to consist    of   two related
     questions:     Whether sole or complete ownership of property upon which
     a claimant seeks exempt status         is required,   and whether a claimant
     must possess     al.1 of the property      necessary  to the pursuit        of the
     agricultural    business   in order to qualify.      We conclude that sole or
     complete ownership of the implements of husbandry is unnecessary.
     Article    3836(b)    and (c).     V.T.C.S..    both  refer   to    “. ..property
     described    in [s]ubsection    (a) of this article    [which lists     the kinds
     of property     exempt from forced       sale],    or any interest      therein.”
     (Emphasis added).       We believe   that the legislature     clearly     intended
Honorable John F. Perry - Page 5            (MW-451)




that any recognizable     legal interest    would be sufficient  to impress
upon personal property the character of a personal’property      homestead.
We further   conclude    that the legislature       did oot intend that a
claimant must possess all of the implements of husbandry necessary for
the pursuit of an agricultural        business   before he may qualify  any
implements.   See, e.g.,   Wollner v. Darnell. suprs (where teoant farmer
who had rental contract upon 320 acres of land and possessed only one
tractor and no horses,     court held that, since claimant was unable to
farm without the tractor,      that tractor   was exempt as an implement of
husbandry).

       We note again that the determination      of whether any item of
personal property is an “implement of husbandry,, is a question of fact
and that the term includes       “all implements used by the farmer In
conducting his farming operations,     not only those that he might use
directly,   but those used by his tenants and employees.,,       Smith v.
McBryde. supra, at 235.       Since someone not engaged in farming or
ranching may not avail himself of the statute,        Tucker v. Napier,  1
White h W. 365 (Tex. Ct. App. 1878); Attorney General Opinion U-1254
(1972). a determination must first be made as to whether a claimant is
ectually   engaged in farming or ranching.    If he is, then any items of
personal property whose “primary design and primary use or purpose”
are .as an implement for farming or ranching for purposes of article
3836. V.T.C.S..   and. concomitantly,  section 11.161, Property Tax Code,
would qualify.

     Your second question      under this    topic   is:

            Would an individual     or singular  person        who has
            incorporated be entitled   to an exemption?

       We conclude that a corporation,          regardless   of the type, Is not
entitled    to an exemption.       While the term “Individual”           in section
11.161 of the Property Tax Code is not expressly               limited to “natural
persons ,” the reach of          article     XVI.    section     49 of    the Texas
Constitution     and article   3836, V.T.C.S..      clearly  is.    Exemptions from
forced sale were unknown to the common law and are purely statutory
creations.     Pickens v. Pickens, 83 S.W.2d 951 (Tex. 1935).              Under the
common law. a debtor was deprived of all of his property and then,
frequently,     imprisoned.     Smith v. McBryde, supra.            The purpose of
exemption laws is to afford protection           to a person in the pursuit of a
lawful occupation       and to assure       to the family of the debtor           the
shelter    of a home,      the  means    of   securing     a livelihood.     and the
earnings of the head of the household.              Rodgers v. Ferguson, 32 Tex.
533 (1870).      Exemption lavs were passed not merely for the purpose of
protecting    the poor from creditors        who would deprive the debtor and
his family of their means of subsistence,            but also to protect persons
in the pursuit of legitimate       occupations     in order that they not become
charges on the public.         Gaddy v. First National Bank, 283 S.W. 277.
Eonorable    John F. Perry - Page 6           (MI-451 1




280 (Tex. Civ. App. - Beaumont 1923. no writ).  Even a cursory reading
of article  XVI, section 49 of the Texas Constitution,   article 3836,
V.T.C.S.,  and the cases decided thereunder,   make it clear that the
exemption reaches only natural persons.

      Your third     question    under this    topic   is:

             Would a partnership   of any nature,  including   a
             family partnership, be excluded from the benefits
             of this exemption?

       We conclude that partnerships,           regardless        of the type, are not
entitled    to claim this exemption.           With the adoption of the Uniform
Partnership      Act,   article     6132b.     V.T.C.S..       the Texas Legislature
adopted the so-called        “entity”     theory. as opposed to the “aggregate”
theory    of    partnerships.        In other       words.     for     most purposes,       a
partnership     is an entity      legally    distinct      from Its partners,        rather
than the assresate of its Partners acting as individuals                     pursuant to a
contract.    --Se;    V.T.C.S. -art.       6132b. -91.        Comment; see   .   generally
Bromberg, TheProposed         Texas Uniform Partnershi-,                  14 Southwestern
Law Journal 437 (1960); Bromberg. Texas Uniform Partnership Act -- The
Enacted Version,       15 Southwestern Law Journal 386 (1961).                    Thus the
creditors    of an individual       partner cannot seize partnership             property,
nor can a partner claim a homestead or exemption from forced sale in
partnership     property against partnership             creditors.        V.T.C.S..   art.
6132b, section 25(2)(c).         See    Kelley   v.   Shields,      448 S.W.2d 135 (Tex.
Civ. App. - San Antonio-69.                 writ ref’d         n.r.e.)     (under Uniform
Partnership Act. widow not allowed to claim as exempt property tools
of trade of a partnership              of which her late            husband had ~been a
partner).      Therefore,   no partnership is entitled             to claim an exemption
under section 11.161 for “implements of husbandry.”

      Your fourth     and final    question    under this     topic   is:

             Would an Individual        who is a citizen   of a foreign
             country be eligible        for the exemption?

       Citizens   of a foreign country are clearly       liable   for ad valorem
taxation     on real and personal      property which has acquired         taxable
status in a taxing jurisdiction        In Texas.    The question is whether a
citizen    of a foreign country is also entitled         to an exemption under
section     11.161.    We conclude    that he is so entitled.          The Texss
Supreme Court has declared that aliens are entitled            to the benefit of
state exemption laws, Cobbs v. Coleman, 14 Tex. 594 (1855).                 as are
nonresidents.       Hell v. Indian Live-Stock     Company, 11 S.W. 344 (Tex.
18891.     See also Carroll v. First State Bank of Den&on. 148 S.W. 818
(Tex. Clv. App. - Dallas         1912. no writ).     We conclude     that,    since
article    XVI, section 49 and article     3836, V.T.C.S..    reach the property
of aliens and nonresidents,      section 11.161 does as well.




                                       p. 1560
Honorable John F. Perry - Page ?          (nW-451)




      Your     final topic is concerned with what limitations  apply to the
granting     of the exemption.   Your first question under this topic is:

             Do the limits    [set  forth]          in [article    3836,
             V.T.C.S.,] apply to [section          11.161. Property Tax
             Code] ?

      Article’ 3836 places       8 limitation   of “$15,000     for  each single,
adult person, not a constituent         of a family. or $30,000 for a family”
on the amount of personal property exempt from forced sale.                 It has
been suggested that these limitations            somehow do not apply to the
personal property exemption set forth in section            11.161.   It has been
suggested that section        11,161 exempts from ad valorem taxation,          not
the specific      items which may be exempt from forced sale by operation
of article      3836, but Instead the clsss       of items   upon which article
3836 can operate.       In other words, section 11.161 is thought to exempt
simply the class of ‘properties        reached by the phrase in article        3836
“implements of, farming or ranching.”           without   regard to any dollar
limitation.       In support of this interpretation,       it is suggested that
this view reflects      the latent of the legislature       when the section was
passed,     that, by use of the term “exempt” in both article                 VIII,
section 1 of the Texas Constitution         and section 11.161 of the Property
Tax Code, the legislature         chose to provide a total,       as opposed to a
partial.     exemption.   We disagree.

      It is clearly      the rule that, when a law is attacked as being
unconstitutional,      there is a presumption that the law Is valid and
doubts as to its constitutionsllty          should be resolved in favor of its
constitutionality.       Smith v. Davis, 426 S.W.Zd 827 (Tex. 1968).             If an
act admits of two constructions,         it must not be interpreted         in a way
which will     render it unconstitutional         and void.    State v. Shoppers
World, Inc.,       380 S.W.2d 107 (Tex.        1964).    Section    11.161 of the
Property Tax Code does not on its face contain the dollar limitations
contained in article       3836, V.T.C.S.      If we were to interpret        section
11.161 as not including        the limitations.      we would be constrained         to
declare    the section    unconstitutional.       We therefore    interpret     it to
include    by implication     the limitations       set forth    In article      3836.
V.T.C.S.,    and hold It constitutional.

      Article    VIII,    section  1 of the’ Texas Constitution     provides  in
pertinent    part:     “[T]he Legislature    by general  law may exempt all or
part of the personal property homestead ot a family or single adult,
‘personal property homestead’ meaning that personal property exempt by
law from forced sale for debt, from ad valorem taxation.”              (Emphasis
added).     In other words. the legislature        may exempt from ad valorem
taxation    all or part (i.e..       grant either    a “partial”  or a “total”
exemption) of the personal property exempt by law from forced sale for
debt.     On the other hand, it        clearly   cannot enlarge  the class of
properties    which it is empowered to exempt as set forth in article




                                            ____
‘_‘,


       Honorable John F. Perry - Page 8            (MW-451)




       VIII.    section  1. Dickison v. Woodmen of the World Life             Insurance
       Society.     280 S.W.2d 315 (Tex. Civ.    App.   -  San   Antonio   1955.    writ
       ref ‘d).    hv attemot to do so is void.    Tex.   Const.  art.  VIII.   section
       2(a).     Se&;ion 111161 of the Property Tax Code does not purport to
       expand the class of properties   presently exempt from forced sale under
       article    3836.

              If the legislature   had wished to exempt implements bf farming and
       ranching without regard to dollar limitations,       it could have proposed
       appropriate     language for inclusion    in article VIII, section      1.   For
       example. it could have proposed language exempting all or part of the
       class    of  properties    upon which the personal        property   homestead
       provisions    operate.    Or, in the alternative,     the legislature      could
       have amended article      3836. V.T.C.S.,    by removing the dollar       amount
       limitations.       Compare now-repealed      article   3832,   V.T.C.S.     (the
       predecessor    to article  3836. which placed no dollar amount limitations
       on the personal property homestead exempt from forced sale).            But the
       legislature    did not do either.

             The law does not favor          tax exemntions.       since    they are the
       antithesis     of equality    and uniformity.-      Hilltop     Village;    Inc. v.
       Kerrville   Independent School District,         426 S.W.2d 943 (Tex. 1968).
       Constitutional     and statutory     provisions     creating     them are to be
       construed    narrowly with all      doubts resolved       against     granting   the
       exemption.     City of Longvisw v. Marl&am - McRee Memorial Hospital,            152
       S.W.Zd 1112 (Tex. 1941).        Therefore,   we Interpret     the statute in the
       more restrictive    way and conclude that the dollar           amount limitations
       set forth in article      3836, V.T.C.S..    also apply to section        11.161 of
       the Property Tax Code.

               Your last   question   under this   last   topic   is:

                    Would    an   individual   holding     equipment    and
                    machinery in an ~agricultural    area in which he is
                    “OK currently     engaged,  evan    though he still
                    pursues nnother type of agricultural        useage.  be
                    entitled  to an exemption?

              We undrrstnnd you to ask whether an individual       is entitled  to an
       exemption    on implements of husbandry that he owns even though he is
       not then actually      using such Implements in farming or ranching.        We
       turn again       to  the cases    decided     under article    3836 and its
       predecessor,    now-repealed article    3832.    It is clear that a claimant
       for    exemption may be engaged in other work besides              farming or
       ranching.     Seller v. Buckholdt. ~upr3; Smith v. Hcgryde. supra.        With
       respect to the exemption for tools of the trade, apparatus, and books,
       it was held that there is no requirement that the claimant be engaged
       in the particular     trade or profession   at the time of the levy; it was
       sufficient    that the claimant belonged to the trade or profession        and
Honorable John P. Perry - Page 9         (klw-451)




intended to use the nrticles therein.   HcBrayer v. Cravens, Dargan and
Roberts,  265 S.W. 694 (Tex.   1924).   By analogy ue conclude that a
claimant who is not engaged In farming or ranching for a temporary
period,  but retains   the requisite   intent,  haa not abandoned hia
personal property homestead and may claim an exemption under section
11.161.  See Seiler v. Buckholdt. suprcl; Attoway v. Still, 2 Poaey 697
(Tex. Comm’n App. 1879).

                                 SUMMARY

                 1.    The phrase “implements          of farming or
          ranching” under section 11.161 of the Property Tax
          Code Includes        those     items    of     equipment     or
          machinery whose primary design and primary use or
          purpose is that of an implement used by a farmer
          or rancher in conducting his farming or ranching
          operations;     such a determination           turns on the
          facts     of any particular       case.      “Implements of
          husbandry” cannot as a matter of law include
          improvement to real property or fixtures;               hence,
          barns, silos     and sheds would not qualify.            Items
          which are neither        fixtures    nor improvements to
          real property,     such as tractors,       cultivators.     and
          trailers,    could qualify,      depending upon the fact
          situation    in each case.

                2.    Section 11.161 of the Property Tax Code
          reaches;    vith    the term “individual,”    the same
          persons reached by the exemption from forced sale
          provisions,    article   XVI, section  49 of the Texas
          Constitution     and article   3836, V.T.C.S.   Neither
          partnerships      nor  corporations   can qualify;     a
          claimant must be a natural person.

                3.  The dollar    limitation   restricting     the
          amount of    personal    property   subject     to   the
          exemption provisions  as set forth in article      3836,
          V.T.C.S..  apply also    to section    11.161 of the
          Property Tax Code.




                                          -   MARK         WHITE
                                              Attorney    General of Texas

JOHNW. FAINTER, JR.
First Assistant Attorney    General
Honorable John F. Perry - Page 10          (nw-451)




RICHARDE. GRAY III
Executive Assistant   Attorney   General

Prepared by Jim Hoeflinger
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Susan L. Garrison,    Chairman
Jon Bible
Rick Gilpln
Patricia  Hinojosa
Robert Lattimore
Jim Moellinger
Bruce Youngblood
