Untitled Texas Attorney General Opinion ( 1941 )

. .
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 Rawle 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