         THEA~TORNEYGENERAL
                      OF      TEXAS
                     AUSTIN    1% ‘IYExAS



                      November   3, 1961

Honorable William A, Nobles        Opinion No.    ~-1184'
County Attorney
Wise County Courthcuse            Re:       Tax exemption status of
Decatur, Texas                              a royalty Interest belong-
                                            ing to ‘Decatur Baptist
                                            CcLege, arising from a
                                            pooled lease of lands
Dear Mr. Nobles:                            belonging to the college.
     Pour request for an opinion reads in part as follows:
           “Decatur Baptist College is a junior
         college operated by and under the auspices
         of the Baptist.General Ccnventlon of Texas,
         It owns approximst,elyfour blocks of land
         in South Decatur A~dditFonto the city of
         Decatur3 on which its buildings, athletic
         fields and other school facilities are
         located.
           “Adjoining ;aid chmp:.~s~
                                   it.c,wnsvarious
         numbered Lots and blcsks in said addition,
         aggregating 91,212.acres of land through
         and acrGss whleh th.eplatted streets and
         alleys have rever been laid out or used
         as such, “TheCollege acquired this prop-
         erty under.various deeds dated from the
         year 1899 to the year 1947.
            “In the year 1948, the College authorities
         issued an oil and ga,sleast covering the
         91.212 aores &der what is known ‘in the
         industry as a “pGoling” lease, thereafter
         under  the authority granted in the lease,
         the lessee pools,dsaid acreage with other
         landa tG create a production unit of 352
         acres fcr the production of gas; drilled
         and discovered a producing gas well on the
         acreage with which the College lands had
         been pocled,
           “So far as I sr ab’leto determine, none
         of the Ccllege c,wnedproperty has ever been
         cn the tax poll of any taxing agency in Wise
Honorable William A. Nobles, Page 2      Opinion No. ~~1184


        'Xounty, Texas, the county and state wherein
         said land is situated, until the year 1961,
         for which year the royalty ictertst in said
        UnitSed production has been assessed at
         a value of $1,220.03, the tax value on
        which state and'county assessed at $18.56,
         an issue is presented between the tax
         assessor-cdlector of Wise County, Texas,
         and the ad+nistrat:ve authorities of
        Decatur Baptist Csllege as to whether or
         not the property in queatior,is exempt
         from taxation."
     In response to further inquiry frotzthis
                                          .   office, you
stated in part as follokJs:
           "All the property belonging to Decatur
         Baptist College and inyolved iv my problem,
         ares and have bee:?at all tfmts since, owned
         by the College, situated within the city
         limits of the City of Decatur, all of which
         being platted in Lots, blocks';streets an3
         alleys; that part of the acreage in question
         Is not a part of the eollege campus and
         never has been. According to my informati0n
         the 0nPy use the college has ever made of it
         has been td;graze dafry cattle thereon, the
         numbers varying from time to time untfl in
         recelatyears the dafrying operation has been
         discoctinued. While maintaining the dairy
         cattle on the land, the dairy products
         derived from the operation were used 'for
         the student tables in the dormitory. The
         entire tract in question waa enclosed in
         sollda with fecces which have been extended
         from time to time as acreage has been asquired
         by tht'college until all of it is under one
         fence and entire acreage was used for ;dairy
         cattlt.grazing :jlatfl
                              that operation wag dis-
         continued. For the last several years no
        .ust has been made of this land by the cbllege,
       .~.laa
            to far as I am informed, and believe:
          "I do not find that the,Collegt authorities
        have ever filed with the Tax Assessor Collector        '
        of Wise County, TtWos, the-County and State
        wherein said,land fa situated, JA comp$ett
        itemized statement of all of said property,
        any and every kind whatsoever which Is claimed        .'
        to be exempt from taxes under the auspices,
       .




Honorable William Nobles, Page 3        Opinion No, ~~-1184


           of this present law, and all property not so
           listed should be assessed and it would be the
           duty of the tax assessor to make levy on the
           same, and the tax collaotor to collect said
           taxes.'
             "In so far as I am informed or believe,
           the entire income from said land, if any,
           has been used by the College authorities
           for operational expenses of the college."
     In response to a telephone,inquiry from this office, you
have further stated that while Decatur.Baptlst College has
given instruction in the subject of agriculture In the past,
It has not done so in the last five or six years. You further
stated that even when the College gave instruction In agriculture,
this particular tract of land, 91.212 acres, was not used for
instructional purposes.
     Section 2 of Article 8, Texas Constitution, reads In part
a6 follows:
           11B I D the legislature may, by general
         laws, exempt from taxation, m * all
         buildings used exclusively and reasonably
         necessary in conducting any association
         engaged in promoting the religious,
         educational and physical development of
         boys, girls, young men or young women
         operating under a State or National
         organization of like character; also the
         endowment funds of such institutions of
         learning and religion not used with a view
         to profit; and when the same are invested
         in bonds or mortgages, OP in land or other
         property which has been and,shall hereafter
         be bought in by such Institutions under
         foreclosure sales made to satisfy OP protect
         such bonds or mortgages, thatsuch exemption
         of such land and property shall continue
         for only two years after the purchase of
         the same at such sale by such Institutions
         and no longerpO D * and all laws exempting
         property from taxation other than the prop-
         erty above mentioned shall be null and void."
     In Dickison v. Woodmen of the World Life Insurance Society,
280 S.W.2d 315 (Civ.App., 1953, error ref.), the Court stated
at page 317:
                                                     .




Honorable William A. Nobles, Page 4       Opinion No. W-1184
                     ..;


           “There are other provisions of the Con-
         ,stitutlonrelating to exemption from the
         burden of taxation of property, but the only
         constitutional provision here involved is
         Sec. 2, Art. 8. Two things are apparent
         from,.areading of this constitutional pro-
         vision: First, that the section itself does
         not exempt any property from taxation, but
         only authorizes the Legislature to do so
         by general laws, and second, while the
         Legislature may r+estrlctthe exemption,
         it may not broaden it beyond the constitu-
         tional confines9 and any attempt to do so
         would be null and void.”
               .
     The Legislature, acting under the authority of the pro-
visions of Section 2 of Article 8, Texas Constitution, enacted
Article 7150, V.C.S. Section 1 of which reads in part as
follows:
           “The following property shall be exempt
         from taxation, to-wit:
            “1 o Schools and Churches.--Public
         school houses. s .A11 public colleges,
         public academies, and all endowment funds
         of institutions of learning. 9 .not used
         with a view of profit, and when the same
         are invested4n bonds or mortgages, and all
         vs              used exclusive1 and ownea
         u bersons or associ,ationsforYschool
         purposes; provided that when the land or
         other property has been> or shall hereafter
         be, bought In by such institutions under
         foreclosure sales made to satisfy or
         protect bonds or mortgages in which said
         endowment funds are invested, that such
         exemption of.,suchland and property shall
         continue fo@twos years ofter the purchase
         of the same at such sale by suoh institutions
         and no longer, This provision shall not
         extend to leasehold estate of real property
         held under authority of any college or
         university of learning.
            “Provided, however, that said schools0.6 .
        “‘:
         desiring t,heright of exemption of the prop-
         erties hereinabove mentioned, shall first
         prepare and file with the Tax Assessor of
          the County In which such property is situated,
          .   .




.   :
        Honorable William A. Nobles, Page 5       Opinion No. WW-1184


                  a complete,itemized statement of all of said
                  wow-W,    any and every kind whatsoever,
                  which Is claimed to Abe exempt from taxation
                  under the provisions of this particular law,
                  and all property not so listed shall be
                  assessed and it shall be the duty of the
                  Tax Assessor to make levy on the same, and
                  for the Tax Collector to collect the said
                  taxes.
                    "Said itemized list of exemptions when
                  made by said schools, 6 *shall be sworn
                  to by some officer of the said schools, D s
                  familiar with the facts, and when the same
                  haa been filed with the Tax Assessor same
                  shall be by him filed in his office, subject
                  to inspection at any time by any person
                  desiring to see the same." Bphasis    addeg
             'The above proviso to the effect that schools and churches
        desiring theright of exemption shall file with the tax assessor
        a complete itemized statement of all property claimed to be
        exempt was held ineffective because the caption of the amendatory
        act failed to mention such purpose in the caption. City of
        Fort Worth v. Harris 177 S,W.2d 308 (Civ.App. 1944) revd.
        on other grounds, l& Tex, 600, 180 S,W.2d 131 (1944).
             In the case of Cassiano v. Ursuline Acadetn 64 Tex. 673
        I1885~),the Court held that the term "buildlng"y~ncluded the
        land-used with it, The grounds.in..questionwere used for
        recreation of the pupils and to supply vegetables for the
        school table. The Court said, at page 676:
                    "All the buildings and all the land
                  sought to be aold by appellants were
                  necessary and used for the proper and
                  economical conduct of the school,"
        The Court held that the buildingsand   ground were exempt from
        taxation.
             In St. Edwards' Collene 'v. Morris, 82 Tex, 1, 17 S.W.
        512 (1891) the College,owned 499 acre8 of land, which the
        trial couri found to consist of 5 acres uaed exolueively for
        school purposes9 and 494 acres was used as a farm and pasture.
        The pasture was used to pasture the farm stock; the produce
        raised on the farm was used to feed the stook. No stock ~w~as
        sold; no produce was sold. The hogs slaughtered were used
        to supply the table In the school. The trial court held
     Honorable Yllliam A; Nobles, Page 6      OplnlonNo,     y-1184


     that.the 5 acres was exempt, and the 494 acres subject to,
     ad valorem taxes. The 'SupremeCourt of Texas said at page'
     512:
               "It cannot be claimed that the prop-
             erty of appellant is public property used
             for public purposes, for to give It such
             character lt is believed that the ownership
             should be In the.state or some of its
             municipal subdivisions,0 o ."
     At page 513, the Court said:

               "The .statutealso exempts from taxa-
             tion 'all public colleges; public academies,
             .a11 buildings-connected with the same,
             and all lands connected with public insti-
             tutions of learning.' Under this exemption
             which has reference to public colleges and
             academies, the connection of buildings and
             of lands referred to, may not be one of    ,.
             mere contiguity, but one of connected use,
             for a oommon purpose9 public In its nature,
             and not foreign to the leading purposes for
             which the public colleges and academies
             are established and maintained.. . + .The
             constitution, as well'as the statutes, make
             the dfstdnction between public property and
             nrfvate prooertv owned and used for school
 c
i“           purposes; and that the property in huestfon
             is not publld within the meaning of these
             laws as too clear, Itmay have been con-
             venient to have lands. in connection with
             those used for school-purposes, and thus
             supply much that went to aupply the table
             of a boarding school; but we~are of the
             opinion that the lands so used by appellan4
             Were not used exclusively for school pur-
             poses.? ,&phasfs    addedJ
     The Supreme'Court u&&d   the trial court, which had exempted
     as much of the land as the conetltutl~onwould permit the
     leglelature to exempt, and held the balance of the land
     subject to taxation..                                     .:
                                                              <'
          The foregoing cases~pertain to privately owned church
     schools. 'They are to be distlnauiahed from the case of
     State v. University of Houston ;t al.,264 .S.Y.2d 153 (Clv.
      PP*, 954, error ref., n.r.e.). In that casep the University
       Honorable William A. Nobles, Page 7      Opinion No. ~~-1184


       of Houston, which is located in Harrls.County, owned certain
       producing mineral Interests In Fort ~Bend County. The State,
       Fort Bend County and certain differenttypes of taxing
       districts loc'atedIn Fort Bend County, sought to subject the
       mineral interest to ad valorem taxes. In the beginning, the
       University of,Houston was a municipally owned publlc~junior
.,
 ,."   college, developing eventually Into a large endowed university.
       The appellants had sought to place this mineral,lnterest on the
       tax rolls on the grounds that the University had lost its
       status as a "publicly owned and operzted lnstltutl.onof leam-
       ing D" The Court held that the University still retained Its
       "publicly owned and operated" ,status,and that the mineral
       interest sought to be tax'ed.was exempt.'
            Attorney'General's Opinion No. v-1568 (3952), concerned
       Jarvis Christian College, which by its purpose clause was
       incorporated to "give to the colored youth of Texas practical
           .;lgriculturrl#         as well as high grade instruction
       in'the arts,and sciences;. o ~a *" ,@phasis addedJ    Some
       of the college lands were used for campus3 other land being
       used as demonstration tracts in agricultural pursuits, and
       other lands used'ln reforestation courses. The opinion held
       that the entire surface of the land was being used exclusively
       for school,purposes, and that such exemption extended to the
       one-eighth 011 royalty constituting a part of the whole of
       the real estate owned by the college.
            In Attorney General's Oplnlon No. 0-3083 (19&l) it was
       held that ~the land on which the xchool plant of the College
       of Marshall ls..loe&ed and tihlchis used'excluslvely for
       educational purposes, including the necessary yards and
       recreational grounds, was exemptfrom, taxation, but that a
       part of the land which was farmed was not exempt;
            Attorney General's Oplnlon No. O-6485:(1945) was concerned
       with two tracts~of land,acqulred for Trinity University in
       San Antonio. The Secretary of the Board of Trustees of the
       University In a letter to the Commlsslonerss Court requested
       that the,land be exempt from taxation, and stated that "This
       property has been                            the campus of
       the Tf;lnlty                                The opinionheld
       that Q e .if the flommlss                   convinced that
       such property lr..reasonablynecessary to the full exercise
       and enjoyment of the educational purposes of the University,
       it Is exempt from taxation, 'D0 011
            From the facts submitted, and the authorities cIteda It
       is our opfnlon, and we so hold, that the 91.212.acre tract
       la not exempt from taxation. If the aurface'of the land 1s
                                                     .




Honorable William A. Nobles, Page 8         Opinion No. W-1184   ’j


                     ‘,jr.1
not exempt, neither is the mineral Interest, It being a part“
                The tract in question is no part of the
of the realty.'.:-
campusj the land is not used as a demonstration tract in
agricultural pursuits;,,.the
                           land Is not ,ownedby a "publicly
owned and operated institution of learning," that is, it
ls':hotowned by the S'tate,county or any municipality.

   ”
                           SUMMARY
        e’.
   P.
   ..        .The royalty interest of a 91.212'
        .acre tract oeland owned by Decatur Baptist
      . Colkge, which has been pooled with other
         land under an'oil and gas lease, the'surface
  '1'
   ~'   of such tract;not being a part of.the campus,
        not used as a:demonstratlon tract in agri-
         cultural
               . pursuits,,and   not the property of
        a publ:lcly~ow,ned,and operated institution of
        learnihg, is ,not exempt from ad valorem taxes.
                                Yours very truly,
                                WILL WILSON.
                                Attorney General of Texas



                                 ”


                                     Riley Eugene Fletcher
REF:om                               Assistant
                     "7~.
APPROVED:
OPINION COMMITTEE:    :
W. V..Geppert, .ehairman
W. E. Allen
W, Ray Sc~uggs
Marvin Sentell
REVIEWED FOR THE ATTORNEY GENERAL
BY:.,Houghton Brownlee, Jr.
                      1
