        OFFICE OF THE ATTORNEY GENERAL OF TEXAS
                            AUSTIN




         376 have for aon
Wth wherein you request
@in     aitsunmoc that we
quotr    at,, length
~onodh           Julian    Eontgoniery,       Fage 2


         by the  City of San Angelo in the transporting
         of paahengers for cozpensation    and hire is such
         use*aa would entitle   the City of San Acgelo to
         receive exen?t license    plates without tke pay-
         ment of registration   fees under the articles
         above referred   to.”

           Artiole  067Sa-3, Vernon’s Annotated Civil’stat-
utes, efter setting out the modus operandi of application
for required registration    of a notor vehicle ,under Artlole
6676a-2, provides es fOl.lOws:    b
                 0
                      owners of motor vehicles,   trailers
       and se&~tkilers,      which are the pro@erty of,
      anQ used exoluslvely     in the service of the
      United States Coverhxent, the state of Texas,
       or any County, City or School District       thereof
       shall apply annually to regfster,all      such ve-
      hicles,    but shall not be require,d to pap the
       registration    rees herein prescribea,   provided
   .~.~thet erridavit    Is made at the time of registra-
      .tlon by a person who has the proFer authority
       that such vehicles    are the property of and used
     .oxalusively     in the service of tho United St%t8S
       Governcant, the State of Texas, or County or
       City or School. District    thereor,  8% the case
      may be . . . .”
                 Artiole     6675a-Sas,       provides   that:
              *Before the Qellvery of license ‘plates to
         anyone engaged exclusively     in the service   of
         aad operating vehicles   whioh are the property
         of.the United States Gomrment,        or the State
         Or Texes~, or any cOu.ntp,’ or’ Cftie8 thereof,
         ouch application  shall have the approval of
         the State Highway Departn;ent. . . .”
           Further, we deem It advisable   at this polnt ~to
ret out the following   constitutional en4 statUtOI?y pro-
visions tisofar   as they deal with the subject of exenp-
tions and possibly appear applicable    to our problem.
              Article   8, Section            1, Constitution    of Texas,   pro-
rldes;     in part,   as follows:
                 .         All   property      In   this state. ‘. .
         other       ;h&*municipal,         shall   be taxed. . . .=
Eonombll~r   Julian    Eontgozery,    fage 3



           It ~111 be observed that Article    8, 5sction 1,
would aeelp to exeapt from taxation all t&e property held
by a nuniclpsl  corporation;  however, Artiole   11, Seation
9, providea:
             lTM property of c~uaties,   cities   and
      towns, owred and held oally for jmblio purpores,
       rash as publio bulldl~ga acd the altea there-
      ror.    Fire engines and the furniture    therecf,
      and all property used, or lntscded for ertin-
       guishing fires , Fubllc grounds and all other
       property devoted exolusively   to the use end
      ‘benefit or the publla shall be exempt . . .
      frcfa taxation.w

           The’enuzeration   oi these certain exempted articles
in the section of the Conatltutlon      quoted was designed to
indicate thl aharaater ct thinm,       and the wee to which they
euat be appropriated    a8 a condition   precedent to erezptptlon.
See Calveston %hart Co. va. CalvestOn,, 63 Ter. 14.       There-
tore, clearly   there my be property omed by a mnicipal         aor-
paration subjeat to taxation.     (Id)
             Betired     Statutes,   1025, Artlole   7150,   provides:
           .The rollowing    promrty       mhall be exenpt
      from tam.tion,   to-wit i
             *All     property,   whether real or personal,
      belonging       exoluelvely   to this State, or any
      political       eubdiviaicn   thereof  . . . .*
           Countlea, aities,     and t&as are ~unioipal      aorgor-
ations.   Constitution,    Article    11. They are political     sub-
dlrlaions  of the State. Id.       Alto see Corp. of Tan Fellse
de Austin va. state,    ill Tex. 102, 229 ~3. x. 845,. City of
Abilrne~va. State, ll3 3. i?. (2d) 632.
           Asaumlng that the Legislature      tas the authority
to enaot these statutory    provisions   greeting exeoptlona,
it is perforce of the coaatitutfonal      provision   contained
in Article  a, Seotlon 2, -Hheretmder "The Legislature       my,
by gdceral laws, exeqt    iron taxation public property used
r0r publia  purposes.*   3ereroro,     shy consideration    OS
these statutes   enaoted by the Legislature      pursuant to the
power granted it in Article    8, i”ection 8, should, if possible,
Eonorable Julbn     Xoatgonery,     Page 4



be viewed Ln the    light     of the aonatitutional      provisiona
ret out above.
           Xn the cases wherein the courts of this %ate
dealt with aituetiona   whloh imolved     or pertained to one
or more or ths statutory   and/or constitutional       pzoviaions
rsterred to above there has been corsiatent       dffficulty
snoouhtered la the proper eecertaimzert      of r&at conatl-
tutea *public property* aad further Mat ia, a’ *publio use.’
Id many oases it involves   the ‘laborious   problem o? border-
ltie c0hstruCttoKl.
            The leading      oese of corporation or sea 7elipe
de Austin   oa. State,      supra, advanoes the rollming  as a
helpful aid to possible  solution;           Fhillipa,   C. J.,   speak-
ing r0r the suprexs courts
              “The test is not whether the property        ir
      used ror governttntal       purpoaea.    That is riot
      the   langr;age of the Constitution.      This oourt
      has never aUoCtad that narrow lhitatlon           and
      the weight of authority is o?poaed to it. ruch
      public property or muuiaipalltles          exempt rrorn
      taxation has, and can have, no goverhzantal
      US@. The test 1s whether it is devoted ex-
      olusivs~ly to a pub110 use.* Citing Galoeation
      Wharf Co. ~5. Calvestion,        63 Tex. 14, wherein
      city owned stock in       a wharr corporation     waa.
      held exeqt      iron taratlon    under the,Constitu-
      tion.     Chier Justice Fhlllips      oozzeating on
      that oase said:
            *Xt would be dilfioult to rind anything
      vgovrrmental*   in the pub110 use or a wbari.”
          The San ?elipe  de Austin ~830 hold thet lend
granted the zumiaipallty  b? Xexlco and used by tkb lnhabi-
tants thereof ea a ;ubllo  R~~zx~nw is not taxable.   .:ae
Us0 the case or Daugherty vs. Thospaan, 71 Tar. 192.

              Rowever, it is our opinion ttat we woald aot be
jUStAiled      in looking to Article  11, Zeation 9, ot the Con-
 lititutlon   nor Artlole 7153, Revised Civil Statutes,     1925,
 ror a.solutizm      of the issue now aonrrontlng us. That aon-
 stitutlocal     proviso and that statute aFeal: of the word “tax”.
‘Our situation      involved not a *tax* but a Wrs&istra,tion* oT
 llioeme     isa**    in fhe case of atifns vs. State iiighvmp Ze-
Eonorable Julian     ~olltgoEery,   Page 5



PrUent,   201 S. T;. 226, in uphold&   the validity    of the
original act requlritig registration 0r riotor uehlcles,
the court said:

             %e . . . oonclude that the stm of money
      rhich appellant   is rewired   to pa,y under the.
      laws, Acts 35th Le(glelature,   oh. 190 and 270,
      as axe~dsd at Plrst Called:fEesslon,    35th Leg-
      islature,   ah. 31, here involved is not,o tax
      . . ., but a license ree r4r the privil0go     or
      operatlng his autombile     on the pub110 high-
      ways or the atate.*’
            In other words, the fee provided for in Artlale
 667ba-1 et se@ I;artakw tiot or the nature or sn exaction
.deslgned prlxarily   ror revenue raising purposes:       i.e.,  a
 tax, but Is a reasonable tipost levied and required to be
 *id as a oonditfon prsoedent to *the ~privilege oi using
 fhe highways of this Xtats..      Consequently, we reel that
 we axe not controlled    in tha rendition     or our opinion   by
 any aonetitut:onal    or statutory   provisions   ooaceming    or
 ~mtalnlng    to wtaxeam nor the oase8 eonstrulng them.
            In Louwin Y. .zoctdy by’ the Cozdssion or Appeals,
12s 9. Vi. (2d) 929, the court held that a person owning and
opexatlhg xotor vehicles     under oontractwith     ths fEedera
Oovernzent ror the pUrFOSfJ .0r transportlnr;    the mall was
rxexpt fror the payxect Of the ragiritrat~ion fess tax the
tald vehicles    under the term of the article,      supra.     Tha
court so held because it found that the *practical          eifesat-
oi the inpoeitlon    or such an exaotfon’ as a regfetration
fee would be to ?increasa the oost to the Enlted States
Or axocution    Or Lts poxer and duty (:eotion    8, oh. 7, Art.
1) to.eotabllsh    And operate post, offioes,   eta. . . .*
            The situation berore t,:ecourt in the iouwein
 sass may be distinguished    fro;;,our    ract  situation     in this
 IDBonert In the Louwein case the service or activity             in-
‘rolved, as the court 80 stated, was pursuant to a *duty or
 power* imposed upon the i?‘oderal Covernzent by exFresa pro-
 vision of the United states Constitution.           5?vhere in the
 laws of this State are we able to find any provision             or
 prorislona  wkinq It the "power or duty* or a sunicf:al               4or-
 poration to ostabllsh,    operate,     or wintaln     a. oystu   of
 inotor bussea -
            me caee or San Ant&f0         Independent    School   Distrlat




                                                           -.
  Bonorable Julian          Xontgomsrp.     Fage 6



  y, rater Works aoard or Trustees,                 123     9. X. (2d) 661,     annoume
  as r0110ws a well kmwh principal                  or    law:
                    *A rtunicipel  corporation  IS Invested with
           two klods      ot powera or'functlons,   ~overnzental
        and proprietary.   Coveruzental fuactioos    are ex-
        eroised in the ad&niotration     ct the arraira
        which affect   the publia generally,   and are per-
        famed by virtue of povms coaterred upon the
        city as an agency or the. state.     imprietary
        iuuctione  pertain to buoinese arralra adzinis-
        tered iOr the special benefit Of the urban co=-
        Sunity mbraced within tha corporate boundaries.”

             The first   potRer fa of a publia nature whereas the
’ ‘aeoond or proprietary,~tuhction   partakes or the nature or a
   private power.
                    Qt   the exercise     of its private          powera,
         generally  the eunicipal   oorporation    is treated
         8s a private corporation    or Individual    and is
        ~aubjsct to alL t’ne obligations    and is entitled
         to all the benefits   or the private law.”       gee
      ,. Ea~ufLlin tiunicipal corporation,     Vol. 1, Ssa.
         564,, at p. 905.
                   In the ann&ated, note in 3.8.             i.    R.~ 1439at   p.
  144l;:tt        la aptly said:

                   . zhsre tim state steps down troa her
                    0

           soterei&t~ and &&arks with individuals    in
        buslnesi e&rgrisas,     the saze considerations
        do not prevail.    The state does not enEage 13
        suoh enterprisee   ror the benefit or the state
        as a state, but ror the banerft    0r individuals
           . l    . .-


                   Burthot in the wim        note    it    ie observedr
              When an lncose or FrorltAe        derived iron
        malolpally     oxned property,    not as an incident
        to its use as a rublie ag~noy, but fro& its use
        prinarlly   and principally    ‘for the purpose or
        producing revenue, it casuot be said to be de-
        voted to public use, and is, thererore        subject
        to taxation’.*     (Citing xiwerous oases)
                 KS. are inclined       to think mat         Article 6673a-3,
  lupra,      exempting publicly        owned vehiolss        fros regletration
Eonorable   Julian   xontgosery,     iwigs 7



fees ahoulb ba visaed In the llG,ht of the faoiliar           prin-
cipl,    that a cmtutory      gsnt    or exacption is 20~0s pre-
~tmed, rzu8t be clearlp      conferred    ln.;lain  snd unnzblguous
term, and should bs strictly          ccnstrued.    The ;over of a
rtate   to levy fees or tar&s is an lnhererit attr:bGte of
Its sor3reigaty     esd “essetitial    to the perpetuity    of it8
llLst5.tutloa- ." This being true, the pertron v&o asserts
l right    to exer?tion    sDeulC be :re<ulred to *juatlfy     his
claim     by the ~clearest   grant,” or t..he nexpreaa provisions
of sol=0 law."     See C. S. 393, 334, and cited ~4848. 26
8. C. L. 3113, Eeo. ~274.
            Chici Zustiae Cureton, in the aase ot Jones Y.
W;lae,      45 1. E. (2d), X0, 121 ?ez. 94, 74 +. L. 8. 983,
     :
            a?%expt50m     fro=    taxation     are regarded
     not only as in EeroZatfon         of     sovereign   au-
     thority, but of COEEOI~right ea well.       They
     aust be strictly  comtruad,     and not ettonded
     beyond the eqrass   re;uirers.mta   of the laa-
     wage u8ed. . . .*
            The basis    upon %WCh th5a rule mot atrlct   eon-
8truotlcm rests  5s ably     ergmssed by a qaotatian    in 7 Tetas
Law !&view 3x25:

             aEsezaptlons imm the burdens of tasation
      which the groat mssea of the people are called
      apoxl to EuSt§ln, aa 4 requisite       of civil  gommi-
      amt., are only favored fn legislation         u-pm the
      theory that tho conceseion       is due 4s a mid pro
        uo for the p~rfoxance       0r a service eeZZEKrZG
   ‘~ ~puDl50      an? ‘which the state thereby is se-
      lleved    r: *s-to iroE the necessity      oi *rforEi-
      ing, BUST 03 +, vsrxs oi chxrity and education
      freelp ar.6 charitably     bestowed. . . .~ ‘<-itbout
      ,that ooncurrlcr,   preraqulsi te, an exemption bs-
      ,ooim~ es:~entlally   a &‘t of pub150 funds, at
      the axpense or the toxpyer,        and indefezsible
       both tmder our pab?io policy oi equal taxation
      and our conatltutional      ~xiafsguard a@inst   lb
      keg01 taxation.”
           Vie believe that the registrition     fse involved
Hera ir no aore tkaan 4 reasooable    oocpenoetion   for the use
Of the highwaya at t&is Srits;    that tha funds derived there-
riorp are expended ror ths purposn nf ooastTuotlon,       matiten-
~oaorable     Julian



mae, aod repair   Of our highway systez; that an excaptioa
fro? the payamt
             _ .  Of tt.Is
                      _._    fse
                              -  necessarily
                                       .. . .    Is aonducioe  or
procuotlve or lnequarlty     In acntrmution       co tre aomon
burden of vital highway construation         acd .mlntenance;  and
that the Levy. and   collection   of t.hIs fee would aot bye a
dIreat burden upon an Icstr~eatallty          of governxeutal  ad-
plinlatretion, but Is only a remote, If any, Influenae upon
the sxeroise qf the runations or ~overnsent~.
           It would appsar, turthar,      that then exsro~tions
prorlded i6r $.II hrtldle  6676a-3‘ aru aired at the proteotlon
of the ogeratlons    or the @marnzent and the Ixmnltp         there
presarlbsd doos not extend nor apply to asythi&g lying aut-
si~de or beyond govermehtal     functions   and their sxertlom;
and that the City or San knSe10 in, In the adsinietratlon
of the arfairs   of these notor busses, the owner Or Its
rysten in a proprietary    rather than lma publia capaaity,
aad therefore mst assum and bear the burdeas as well~aa
the benerits derivative    frorc 8uOh ownership.
            It ~I11 be urged, perhaps, that the motor bnsaee
are'operated~on   a non-profit     basis and therefore     cannot be
alaesed as' a Froprletary    aotirlty    writhln the strict   and
ordinary ~aanlsg or tha ter3.         To this, we tust inquire or
vhat assurance there-~rizht be that t&Is will re!naln 80 in
the future   and who Is to ordain ,the point at which the
buslnese ceases ~,to be non-prorttable       and become profit-
prodaoing.
          Further, It my be coAended that them buaaes
Ope&ite solely WithIn the ConfInes of the City and ooziae-
quently, do not travel upon the ~hfghways. artlala 6673a-l(a),
Ver~oB's hnmtated Civil StatuteU,   provides:
              *VubllaElghway' shall Include any road,
     Wreet,  mar, thoroughfare     or bridge in this,
     State not privately    oxvied or controlled    for the
     use or rehiolas    over which the State haa legis-
     lative jurisdiction    under its police     power.w
          The case of City of Taxarkana v. Southwestern
Telephone k Telegraph Co., 106 S. vi. 915, 48 Tel. Civ. App
6, well atatea the rollowing principle8
          'The publIa highways Of the state,     Includ-
     ing even the ekkeeete and alleys Mthin Incorpor-
     ated towns and cities  belong   to the State, and
gonoTable Sulian   h?ontgomery, Rage 9


     the eupreme power to regulate and control them
     Is lodged with the people through their repre-
     rentatlves -- the Legislature.”
             In oonalusion,   you are .advlsed that, In our opIn-
ion, munlci~lly      okqed and operated motor busses, whose
only alalm to exemption from the payment of the reglstra-
tlon feea provided ior in Artiale       6675a-2,   et seq. Is that
they are elyaged In lntra-aitg:transportatlon         or fares,
are not sufficiently      imbued with clvlc govemental       runa-
tlons as to oome within the meaning of the phrase, -. . .
ssed exclusively     In the service or the ; . . city . . .*,
and are therefore     not exempt.    To hold ,otherwiae would
seem, .to violate  the spirit   of the AW end defy the Inten-
tion of the Legislature.

              The Incidental   question of whether these partlc-
slarmotor      vehicles  are to be claseed,‘ror     the puqoaes or
raglstratlon,     as %Otor Bussee~ or WFasseager Cars” under
the provisions      of Art1018 6675a-l.(Deilnltion     Of Term) Is
to be determined by thb proper admlnlstrative          authorities
oharged tith that duty, after investigation          and ascertaln-
asnt or those tarts peculiar        to this situation.
           Trusting that the above eatlsractorlly       answers
your qaestlon,   we are
                                        Your* very truly
