                    September 22, 1964

Honorable T. W. Dullington      Opinion No. C-314
County Attorney
Knox CountY                     Ht?: Taxation of property which is
Munday, Texas                        under an option to purchase
                                     after January lst, and whether
                                     property should be taxed at
                                     its true and full value in
Dear Mr. Dullington:                 money.
         We have received your letter in which you submit the
following statement: .:
         "A taxpayer appeared on behalf of himself
    before the Knox County Commissioner'sCourt sitting
    as a Board of Equalization and complained that the
    evaluation assessed on his cattle was improper.
    The taxpayer stated to the Board that he raises
    his own mother cows, and they produce a calf crop
    each year; that when he renders these mother cows
    for tax purposes he depreciates.thevalues of the
    mother cows each year, not taking into consideration
    their actual cash value. Said depreciated value is
    less than the actual cash value of said mother cows.
    Said taxpayer further stated that '-hecontracts to
    deliver the calf crop each year after January lst,
    to a proposed purchaser. The proposed purchaser,
    enters into a contract with the taxpayer before the
    1st of January and tenders the sum of $10.00 on each
    calf contemplatedto be purchased. Said contract
    provides that if the purchaser does not desire to
    consummate this contract when the calves are ready
    for delivery after the 1st of January he may forfeit
    the $10.00 per calf and the contract shall become
    null and void."
         YOLIsubmit the following questions:
          "1. Are the calves contracted before January 1st
     of each year, to be delivered after January 1st of
     each year under the facts above set out, the property
     of,the taxpayer and subject to taxation, or the pro-
     perty of the purchaser?


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Honorable T. W. Bullington, Page 2 (C- 314)


          "2. Is the taxpayer entitled to depreciate his
     mother cows each year without consideringtheir actual
     cash value or is the taxpayer required to report the
     actual cash value of said mother cows?"

                       FIRST QUESTION
           In your f,lrstquestion, you desire to know who
 owns the calves on January lst, since the owner on such
 date is required under Article 7151, Vernon's Civil Statutes,
 to list the same for taxation for the ensuing year. The
 answer to this question depends upon the contract between~the
 optionor and optionee. You state what the optionor says per-
etaining to the,contract.  In your letter and brief which you
 have submitted to us, you assume that the optionee only had an,
 option to purchase the calves after January 1st under the option
 contract which was entered into before January 1st. Upon this
 assumption alone, we will answer yo:r question.
                Tex.Jur.2d 161, ~Sec. 37, it Is said:
          In 13 --
          "An option Is merely an offer that binds the
     optionee or holder of the ,optlonto do nothing;
     he may or may not accept the offer, as he chooses,
     within the time specified. Until it is accepted,
     anoption is not, in legal effect, a completed
     contract. . . ."
           In Corsioana.PetroleumCo.   V.   Owens, l10 Tex. 568,
'222 S.W. 154 *
           11
           .     A contract for the grant of an option
     is necessarily unilateral. An option is granted -,
     for the purpose of enabling the grantee to exercise
     the particular right or not, as he may elect. The
     value of it consists in that privilege. Owners of
     property have the unquestionedpower to grant such
     rights with respect to it. They are free to validly
     make such contracts. When so made, it is the duty of
     courts to uphold and enforce them. A contract for
     the grant of an option, limited to a definite time,
     is therefore valid and enforcible if,,supportedby
     an independent consideration . . . .
           In McWhlrter v. Morrow, 203 S.w.2d 317 (Tex.Civ.App,
 1947), the Court said:



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Honorable T. W. Bullington, Page 3 (C-314)


          "It is conceded by appellant that the option
     clause in the contract is a mere offer to sell and
     that appellee did not bind himself to buy but he
     may or may not,accept the offer. It is further
     conceded that if he failed to accept the offer
     to sell his only liability was the forfeiture
     or loss of the $1,000 consideration. Northside
     Lumber & Bldg. Co. v. Neal, Tex.ClviApp.,23
     S.W.2d 858.   Until the offer was accepted by,
     appellee there was not a legal binding contract
     of sale. Texarkana Pipe Works v. Caddo Oil &
     Refinin Co. of Louisiana, Tex.Civ.App.,228
     S.W. 58fi . . . ."
          As the contract above mentioned was only an option
to purchase the.calves, and since the option was not to be
exercised until after January lst, we answer yourfirst ques-
tion by saying thatthe optionor of the calves was the owner
for taxation on January 1st.

                       SECONB QUESTION
          Your second question Is fully answered by Attorney
General's Opinion'No. V-776, a copy of which is enclosed.

                       SUMMARY
          If the owner of property before January 1st
                   contract giving a person an option
     enters ~into,.a
     to purchase the property after January lst, the
     property should be listed for taxation for the
     ensuing year in the name of the optionor.
                                  Yours ve,rytruly,
                                  WAGGONER CARR
                                  Attorney General of Texas




HGC/fb
Enclosure

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    Honorable T. W. Bullington, Page 4 (C-314)


    APPROVED:
    OPINION COMMITTEE
    W. V. Geppert, Chairman
    J. H. Broadhurst
    John Allison
    Bob Flowers
    Harry   Gee
    APPROVED FOR THE ATTORNEY GENERAL
    By: Roger Tyler
