.          .




                                               OIRNEY           GENERAL

                                                   TEXAS




    Honorable  Truett Hubbard
    County Attorney.
    Van Zandt County
    Canton, Texas

    Dear       Sir:
                                                   Opinion No. ,O-3796
                                                   Re:   May the Grand Saline Independent
                                                         School District    require  a cor-
                                                         poration   owning a salt mine in
                                                         said District   to psy texes
                                                         upon the proven and developed
                                                          underground    salt deposits 7

                 We are in receipt  of your letter of July 17, 1941 in which
    you request the opinlon of this department    on the questions set out
    therein as follows:

                        *A corporation      in the business     of mining and selling
                salt has a large mine located within the limits             of the Grand
                Saline Independent       School District.     This salt is mined from
                a rock-salt     formation    several   hundred feet below        the
                sulfate    of said corporation‘s      property.     This corporation
                renders    all of its property     and equipment     for taxes to
                this school district      except its underground       salt deposit.
                It refuses    to render these proven and developed            underground
                salt deposits.

                il      “1. Does then.GrandSaline.     Indepe,ndent School Dfstrtctbave
                autho,rity to require    this corporation    which owns a salt mine         0
                in its district,   to pay taxes upon their proven and developed
                underground      salt deposits ?

                        “2. If said school district   has authority    to require
                said corporation    to pay taxes on its underground       salt
                deposits   and said corporation.only    renders    its machinery   and
                equipment    and real estate;   but does not include these proven
                and developed    underground    salt deposits   in its real estate
                                                                                  I   .




Honorable      Truett      Hubbard,   page   2, 0-3796




          rendition,   and fails and purposely    refuses    to render
          the same, does the Grand Saline.       Independent     School
          District   have the authority  to assess     said corpora-
          tion for its taxes upon its mineral      interests   therein?”

               In your first question   you inquire whether      or not the
school dist,rict has the authority    to require   the corporation    to pay
taxes upon the proven and developed        underground    salt deposits.

                 Article     2784 of the R. C. S. provides     in part as
follows    :

                   *The commissioners        court for the common       school
          districts    in its county, and the district     school trustees
          for the independent       school districts   incorporated    for
          school purposes       only,   shall have power to levy and
          cause to be collected       the ,annual taxes and to issue the
          bonds herein authorized,         subject to the following    pro-
          visions :

                 -1. * * * and in independent      districts  for the
          maintenance   of schools therein,     an ad valorem    tax, not
          to exceed one dollar    on the one hundred dollars       valuation:.
          of taxable property   of the district.”

                 Article     7146 of R. C. S. provides    as follows:

                  “Real property    for the purpose of taxation,       shall
          be construed    to include the land itself, whether       laid out
          in town lots or otherwise,      and all buildings,   structures
          and improvements,       or other fixtures     of whatsoever      kind
          thereon,   and all the rights and privileges       belonging     or
          in any wise appertaining      thereto,  and all mines, minerals,
          quarries    and fossils  in and under the same.       Id.”

                 Under the above legislative     definition    of real
          propqnty  all mines, minerals,     quarries     etc. inand under
          the land are real property.    It is a well settled rule of law
Honorable       Truett   Hubbard,       page   3, o-3796




        in this state that minerals  that have not been severed
        either by actual severance    or by conveyance      are assessed
        as part of the value of the land in and uader which the
        same is located.    The Supreme     Court  of Texas    in the case
        of Texas Company     vs. Daugherty,    17b S. W. 717 stated as fol-
        lows:

                “The rights and privileges      belonging  to land contri-
        bute in a very substantial      way to its value.    They largely     cause
        it to yield its income,   and it is the theory of our statute,
        therefore,   that their value shall be included in the valua-
        tion of the land for taxation     in the hands of the owner.      They
        do no!: escape taxation by this method; on the contrary,           they
        are subjected    to its burden through the inclusion      of their
        value in the assessment       of the land; and they are taxed against the
        owner of the land because       the Legislature   has deemed it
        proper for him to bear the charge         in view of their essential
        contribution   to its value,”

This   theory    is also    stated   again     by the Supreme    Court   of Texas    in
the case    of Hager       v. Stakes,    294 S. W. 835.    The   court   stated   as fol-
lows :

                “(9) Fifth,    Real estate is ordinarily     taxed as a
        unit; ,yet, where there have been severances           by conveyance,
        exception,     or reservation,    so that ene portion    of the renlty
        belon;gs to one person and other portions          to others,   each
        owner should pay taxes under proper            assessment     against
        him of the portion owned by him.          The fact that a portion
        may consist      of minerals   or of a fractional    interest
        therein    makes no difference,      as outlines   in State v. Downman
        (Tex.    C.iv. App.) 134 S. W. 795, and Downman v. Texas,             231 U.
        S. 356, 357, 34 S. Ct. 62, 58 L. Ed. 264.”

             Unquestionably   the Grand Saline Independent    School
District has the authority  to require   the corporation in question to
pay a tax on its real estate based on its full value which would in-
clude the value of the salt deposits   in and under the land.
                                                                             -   .




Honorable     Truett   Hubbard,    page   4, 0-3796




        In your second       question you state that the corporation
has failed and purposely        refused     to render the proven and
developed    underground      salt deposits.      You ask whether      the
school dist~rict has the authority         to assess the corporation
for taxes on its said mineral         interests    in the land.    Under
the decision    previously    quoted the owner of land is required
to make only one rendition         of the real property,      which
rendition   should include the full value, of the land including
the mineral    interests    therein.    The coiporation       in this case
is not required     to make a rendition        of the mineral    deposits
in the land separate      and apart from the’rendition          of the
value of the land itself.      You state fin yo& cjues’tion that the
corporation    has rendered      the land but that this rendition
does not include the value of the underground              mineral    de-~
posits in the land.

         We assume that in the District         in question   the taxes
are assessed       and collected     by an independent    tax assessor-
collector     of the District    under the authority    of Article
2791, R. C. S. Under the facts you submit we believe
the correct      procedure     would be for the tax assessor
to raise the valuation        and submit same to the board of
equalization.       See Articles    2791 and 1050 R. C. S. and
Blewett    v. Richardson       Independent   School District,     240
S.W. 529.

        Under     the authority     of the above quoted Articles
if the tax assessor       is not satisfied  with the rendition      of
the property     made by the corporation        in question,   it is
then the tax assessor’s        duty to proceed    to increase     the
valuation    of such property      and submit same to the board of
equalization.      Unless this is done the rendition       of the
land carries     with it the value of the entire estate,       including
the mineral     interests    therein.    The Waco Court of Civil
Appeals    so held in the case of Humble Oil and Refining
Company      v. State, 3 S. W . 2nd, 559, writ of error          refused
by the Supreme       Court.    The court stated as follows:
Honorable   Truett   Hubbard,   page   5,   o-3796



               “Appellants    contend that, since the mineral
       estate had not been severed          from eight of said tracts
       of land on January 1, 1923, and since the owners             of
       the land had rendered        said land in its entirety
       for taxes for 1923, and paid the taxes so assessed
       and levied,    that the attempted       levy made by the tax
       assessor     in July, 1924, was illegal       and void.  We
       sustain this contention.        It is now a well-recog-
       nized principal     of law that, after the mineral       estate
       has tIeen severed      by the owner from the land, same
       is subject to taxes, and the owner of the mineral
       estate is liable for taxes to the same extent that
       property     owners are liable for any other tax. State
       v. Downman (Tex. Civ. App.) 134 S. W. 787; Id., 231
       U. S. 353, 34 S. Ct. 62, 53 L. Ed. 264; Stephens
       County v. Mid-Kansas          Oil & Gas Co., 113 Tex. 160,
       254 S. W, 290, 29 A. L. F. 566; Texas Co. V. Daugherty,
       107 Tex. 226, 176 S. W. 717, L. R. A. 1917F, 989.
       Until, however,     the mineral      estate has been severed,
       therendition     of the land carries       with it the value of
       the entire estate.      Article    7!46 of the Rev&_I!.?.atutes
       read:;:

                    ‘Real property    fbr the purpose of
              taxation,    shall be construed    to include
              the land itself,   * * 8 and all the rights
              and privileges     belonging   * * * thereto,
              and all mines, minerals,       quarries    and
              fossils    in and under the same.’ * (Underlining       ours)

                It is our opinion that the procedure       outlined above
is the one that should be followed        by the tax assessor      to
require    the property    of the corporation   .in question to be
taxed    at its full value including the value of the mineral
interests    contained   therein.

               We call your attention  hotieGkr.to  tge case of
Victory   v. Xinson,  71 S. W. (2nd) 365. In that case the
rendition   sheet of the plaintiff was discussed   as follows:
Honorable Truett Hubbard, page 6, O-3796



           "The plaintiffs rendered said land for taxes to the
     county tax assessor, but indorsed on said rendition,the follow-
     ing notation: 'This does not include the l/8 royalty under
     oil lease. The royalty is not subject to taxation against
     these lessors, see: Ehlinger v. Clark, 117 Tex. 547, 8 S. W.
     (2nd) 666; Stephens County v. Mid-Kansas Oil & Gas Co., 113
     TAX. 160, 254 s. w. 30, 29 A. L. R. 566.1 11

            The Waco Court of Civil Appeals in an opinion written by
Justice Alexander held as follows:

           "(4) Plaintiffs' next contention is that the tax
     assessor had no right to assess their royalty interest in the
     em-=~y,   separately from their interest in the'surface, but
     should have assessed all of their interest, whatever it may
     have been, as a unit. Ordinarily one's entire interest in a
     particular tract of land should be assessed for tax purposes
     as a unit. The assessor should not divide said interest into
     various.portions and assess the same separately; but where the
     owner has himself separated his interest into various portions
     and thus invited a separate assessment thereof, we see no
     reason why the property cannot be so assessed. Slater v.
     Ellis County Levee Improvement Dist. (Tex. Civ. App.) 42 S. W.
     (2z~?)867, par. 2; Hager Y. Stakes, supra, par. 9. In the
     ease st~bar the owners rendered for tax purposes their sur-
     dce interest, but expressly reserved, and purposely refused
     to render, their royalty interest as reserved in the oil and
     gas mining leases theretofore executed by them. Under such
     circumstances, we think the assessor had a right to accept
     the rendition of the portion so rendered and to separately
     assess the portion or interest which the owners refused to
     include in the rendition so made by them. The owners having
     thus invited a separate assessment of their interest in the
     property should not now be heard to complain if the assessor
     accepted their in'litationand assessed the property in the
     manner suggested by them. State Mortgage Corp. Y. Ludwig, 121~-
     vex. 268, 48 S. W. (2nd.)950, par. 5."

In the above case the Waco Court of Civil Appeals declared that the
taxpayer.had.undertaken to specifically exclude the mineral interests
from the rendition sheet, and that he then could not complain of the
action of the tax assessor in placing the part so excluded on the
unrendered roll for taxation purposes. The case was affirmed by the Can-
mission of Appeals of Texas in 102 S. W. (2nd) 194 in an opinion writtm
by Commissioner Hickman. The Court concludes as follows:
Honorahle Truett Hubbard, page 7,    O-3796




              "Our holding is limited to this conclusion. If a taxpayer,
        who owes the duty of rendering his property for taxation, voluntarily
        undertakes to exclude a portion thereof, even though such portion
        be an integral part of the whole, from his rendition sheet, the tax
        assessor is authorized to treat that portion as unrendered pro-
        perty and proceed to list and assess same in accordance with the
        statutes."

            It is our opinion that the mineral interest belonging to th?
corporation in question is properly taxable as a part of the land in and
under which the same is located. Where the rendition fails to include
the value of this mineral interest in the land it is the duty of the tax
assessor to increase the valuation of the corporation's property to in-
clude the value of these mineral interests in the land and to submit
the same to the board of equalization. If the corporation's rendition
shows on its face that the value placed on the land does not include ths
value of the mineral interest in and under the land then the tax assess-
or may assess the same separately upon the unrendered roll for tax pur-
poses and same would be a proper assessment of which the tax payer would
be unable to complain.

                We trust that the foregoing fully answers your inquiry.

                                              Youes very truly

                                       ATl'OFCNEY
                                                GENERALOFTEXAS



                                       By:     /s/ Billy Goldberg
                                                   Billy Goldberg
BG:fs                                                    Assistant
APPROVED JLJL29, 1941

/s/   Grover   Gellers

FIRST ASSISYCANT
 GEXERAL ATTO=
                                                           APPmvm
                                                           OPINION
                                                         Cm=

                                                         By:    BWB
                                                               CHAIRMAN
