                                          :re;mrteci
                                                  in 349 S. W. 26 640,
                                          error   ref.,   N.   R.   E.



Hon. George II.Sheppard    Opinion NO. O-4613
Comptroller of Public      Re: Questions relating to ad
  Accounts                 valorem tax liability as a re-
Austin, Texas              sult of the acquisitionof real
                           estate by the United States
Dear Sir:                  Government,and related questions.
          We have received and consideredyourrequest for
an opinion from this department. Since the letter, attached
to your request, contains the questions in detail, we quote
from the same as follows:
          “In connectionwith the acquisition of lands
     by the United States and its various agencies
     both by purchase and by condemnation,it has geen
     the practice in some cases for such lands to be
     acquired in the name of the United States and
     thereafter conveyed to some agency such’as the
     Defense Plant Corporation,a subsidiary of the
     ReconstructionFinance Corporation. In view of
     existing Federal Statutes (Sec. 610 of Title 15,
     U.S.C.A.) there would be no problem if the prop-
     erty is owned by one of these agencies on January
     1st of any given year since the property would be
     subject to taxation.
          “We are confronted,however, with several
     problems on which we would like to have an authori-
     tative comment from your office. Briefly these may
     be set up as coming under the following general
     questions:


          “A proper judgment of the District Court of
     the United States vests title in fee simple to a
     tract of land as of December 23, 1941, and under
     the terms of the decree all claimants and lien hold-
     ers, etc., have their claim for compensationas their
     respective interests appear. As of January 1 1942,
     the United States of America was the fee simpie owner.
     The tract in question was acquired for the purpose Of
     constructinga magnesium plant and at the time of the
Hon. George H. Sheppard,page 2


    acquisitionit was planned that the United States
    of America would in due course convey the property
    to the Defense Plant Corporation.
         "QUESTION:Is such property subject to taxa-
    tion for the year 1942 by the various taxing agen-
    cies?
                               2.
         "Assume the same facts as in (1) foregoing,
    except that title w'asvested in the United States
    after January 1, 1942 and prior to April 1, 1942.
         "QUESTION: Is such property subject to taxa-
    tion for the year 1942 by the various taxing agen-
    cies?

         ItAtract owned by an individual is delinquent
    to the State and County for a number of years prior
    to the year 1929, It is also delinquent for the
    years 1929, 1930 and 1931. Assuming complianceby
    the Tax Collector of the preliminaryrequirements,
    a suit is filed on August 1, 1932 against the rec-
    ord owner and all necessary and proper parties as
    defendants asking for judgment for the taxes for
    the years 1929, 1930 and 1931 only and for a fore-
    closure. This suit is brought to fruition in a
    final judgment and following a regular order of
    sale, legal levy and notice, the property is sold
    at public auction as required by law and bid in by
    an individualwho had had no previous connection
    with the land or the suit. & regular sheriff's deed
    is delivered to the purchaser following his payment
    of his bid.
          "QUESTION: (a) Assuming that the purchaser
     bid and paid the full amount of the judgment, inter-
     est and costs of court, are the taxes for the years
     previous to the year 1929 still a charge against the
     iana?
          “(b)  Assuming that the purchaser bid and paid
     an amount less than the amount of the judgment,in-
     terest, and costs, are the taxes for the years pre-
     vious to 1929 still a charge against the land?
-- .                    /?




       Hon. George H. Sheppard, page 3


                                         4.
                 “Assume the same~facts as are set out in
            (3) foregoing, except that included in the suit
            and final judgment are the taxes for all years
            that are delinquent and at the sale the purchas-
            er bids and pays only an amount equal to a por-
            tion of the amount sued for. A regular deed is
            delivered to him by the sheriff.,
                “QUESTION.:Are taxes for any of the years
           sued for a charge upon the property. If so, to
           what extent;?
                                         5.
                “An individual owner makes an offer to the
           United States in the form of an option to sell a
           ‘placeof property at a fixed price, agreeing that
           the United States may immediatelytake posses-
           sion of the property while the title is being ex-
           amined, and if condemnation,benecessary, agree-
           ing that the price shall remain as fixed. This
           offer is dated November 5, 1941 and is accepted
           by the duly authorized agent of the United States
           after January 1, 1942. However, the United States
           has taken exclusive possession of the property and
           begun improvementsthereon immediatelyfollowing
           the date of the offer, on November 6, 1941. The
           title is Sound acceptable and a~deed to the prop-
           erty is delivered to the United States on February
           15, 1942.
                 ‘lQUESTIOK:Is the property in question sub-
            ject to taxation for the year 1942 by reason of
            the fact that the legal owner thereof on January
            1, 1942 was an individual?
                                         6.
                 “Assume the facts as in (5) foregoing, except
            that after January 1, 1942 the title is found to be
            defective as a merchantabletitle, although it is in
            fact an indefeasibletitle by reason of long posses-
            sion, and the United States institutes a condemnation
            proceeding and procures a valid judgment vesting ti-
            tle in the United States.
Hon. George H. Sheppard, pege 4


          “QUESTION:Is the property in question sub-
     ject to taxation for the year 1942 by reason of
     the fact that the legal owner thereof on January
     1, 1942, was an individual?”
          Article 7151, Revised Civil Statutes of Texas, 1925,
provides as follows:
          “All property shall be listed for taxation
     between January 1st and April 30th of each year,
     when required by the assessor,with reference to
     the quantity held or owned on the first day of
     January in the year for which the property is re-
     quired to be listed or rendered. . . .‘I
          By virtue of the provisions of this statute the own-
ership of property on the 1st day of January of any year cre-
ates a liability on the part of the owner for taxes levied upon
such property for that year; Humble Oil & Refining Company v.
State (Civ.App.)3 S.W.(2d) 559, Winters v. IndependentSchool
District of Evant, (Civ.,App.)208 S.W. 574, and the sale of
such property shortly thereafter does not affect the rule. Chil-
dress County v. State, 127 Tex. 343, 92 S.W.(2d) 1011.
          Whether a particular piece of property is exempt from
taxation or not depends upon its ownership on the date as of
which the taxes are assessed, and if, after such date, but be-
fore the taxes are paid, the property is taken by eminent domain
or bought by body politic or corporate, the property of which is
exempt from taxation, the tax as originally assessed is valid
and specific, and the person who owns the property on the date
as of which the tax was assessed is legally bound to pay it.. 26
R.C.L. 299.
          In our opinion No. O-4749 we held that tax liability
for all state, county common school district and.independent
school district ad vaiorem taxes was determinedby property own-
ership as of January 1st of the year for which the taxes are as-
sessed. In the same opinion we held that property acquired dur-
ing the month of March of 1942 by the Federal Government for the
purpose of constructinga military flying school should be as-
sessed for school taxes as of January 1st of this year; that the
owner of the property on that date was personallyliable for the
payment of the taxes; and, that the statutory and constitutional
lien was not extinguishedbecause the Federal Government acquired
the property but rather became unenforceableby the taxing unit
so long as the Federal Government owned the property unless per-
mission was given by Congress to bring an action against the
Hon. George H. Sheppard, page 5


Federal Government to foreclose the tax lien. A copy of said
opinion No. O-4749 is enclosed for your information.
          Since the que,stionpf,liability or exemption from
ad valorem taxes under the laws of this State turns upon own-
ership as of January 1st of the year for which the tax, under
the law, is to be assessed, it follows, therefore,that if the
United States Governmentwas in fact the owner, in fee simple,
of the property as of January 1 1942, the government and the
propert would be exempt from ai1 ad valorem taxes for the
year 19c2, provided the United States held the title to the
property throughoutthe year 1942. We quote from 40 Texas Jur-
isprudence,page 24, as follows:
          “The state has no power to tax either the prop-
     erty of the United States situated in Texas, or the
     property here of the Federal agency or ir&rument-
     ality, or the conduct of any business insofar as it           I
     is used as an instrumentalityof the United States
     Government.I#
The fact that the Federal Government planned to convey, but did
not actually convey, the property to the Defense Plant Corpora-
tion at some date subsequentto January 1 1942, would not change
the rule announced in the foregoing quotation. However, if the
United States Government conveyed the property to the Defense
PlantCorporation at any time during the year 1942, then we call
your attention to that part of Article 7151, supra, which reads
as follows:
          II      If any property has, by reason of any
     speciai ia;, contract or fact, been exempt or has
     been claimed to be exempted from taxation for any
     period or limit of time, and such period of exemp-
     tion shall expire between January 1, and December
     31 of any year, said property shall be assessed and
     listed for taxes as other property; but the taxes
     assessed against said property shall be for only
     the pro rata of taxes for the portion of such year
     remaining.tl
In this connectionwe direct your attention to the pertinent part
of Section 610 of Title 15 U.S.C.A., as amended June 10, 1941,
Ch. 190, Sec. 3, 55 Stat. 348, which provides:
          n    . The corporation        shall be exempt
     from ak’taxation now or hereifie; imposed by the
     United States, by any Territory, dependency, or
    .possessionthereof, or by any State, county, muni-
     cipality, or local taxing authority; exceot that
                                                                  --.




Hon. George H. Sheppard, page 6


    any real property of the corporationshall be sub-
    ject to State, Territorial,county. munl IDaL or
    local taxation to the same extent accord& to
    its value as other o wertv 1 taxed The exemp-
    tions wrovided for ITthe wrezedinn lentence with
    respect to taxation . . . shall be-construedto
    be applicable not only with respect to Reconstruc-
    tion Finance Corporationbut also with respect to
    (1) the Defense Plant Corporation . . . Such ex-
    emptions shall also be construed to be applicable
    to the loans made, and personal property owned, by
    the ReconstructionFinance Corporation or by any
    corporationreferred to in Clause (11, (2) or (3)
    of the preceding sentence, but such exemptions
    shall not be construed to be applicable in any
    State to any buildingswhich are considered-bythe
    laws of such State to be personal property for taxa-
    tion purposes.n (Underscoringours)
          From the foregoing considerationwe answer your first
question by saying that such property is not subject to taxa-
tion for ad valorem taxes for the year 1942 by the various tax-
ing units of this State which determine tax liability based
upon ownership as of January 1, 1942. If, however, the United
States conveys the property to the Defense Plant Corporation
at any time between January 1 and December 31, 1942, then said
Defense Plant Corporationbecomes liable for and may be assess-
ed for the pro rata of taxes for the portion of the year 1942
remaining.
          In view of what we have said above in connectionwith
your first question,we think there can be no doubt that the
owner of the property would become personally liable and the
constitutionaland statutory lien become fixed, under the facts
submitted in your second question, for all ad valorem taxes for
the year 1942 to the various taxing units in this State which
determine tax liability based upon ownership as of January 1,
1942. It would be immaterial at what time during the year, af-
ter January lst, the title to the property passed to the United
States. Your second question is answered in the affirmative.
          We think our opinion No. O-4779 a copy'of which is
enclosed, answers all of the matters subm1tted in your third
question.
          After a careful considerationof your fourth question
we have decided that you have not given us sufficientfacts from
which we can accurately advise you. The question there presented
calls for a very thorough examinationof all the facts surround-
ing the sale.
Hon. George Ii.Sheppard, page 7


          In connectionwith your fifth question we call your
attention to the rule announced in 43 Texas Jurisprudence,
pages 98 and 99, which reads as follows:                #
            * . It is obvious that an option does not
            I,
                 0

    operate as
             . a conveyance
                  -   . . of any interest or title
    in property. In giving an option the optionor does
    not sell his property nor agree to do so; he merely
    sells a privilege or right to buy it. Mor does the
    option bind the optionee to purchase; it is binding
    upon the optionor alone, until such time as the
    optionee accepts and exercises it."
It is obvious, therefore, that the actual fee simple title
would remain in the optionor and be vested in him as of January
1, 1942. Applying the rules which we have heretofore discussed,
your fifth question is, therefore, specificallyanswered in the
affirmative.
          We think the same reasoning must be applied, in an-
swering your sixth question, that we used in answering your fifth
question. For the reasons expressed above your sixth question
is specificallyanswered in the affirmative.
         We trust that the foregoing satisfactorilyanswers the
questions submitted in your inquiry.
APPROVED OCT 20, 1942              Yours very truly
/s/ Gerald C. Mann
ATTORNEY GENERAL OF TEXAS          ATTORNEY GENERAL OF TEXAS
APPROVED: OPINION COMMITTEE        By /s/ Harold McCracken
BY:      BWB, Chairman             Harold McCracken, Assistant
HMC:db:wb
Enclosures
