Lower Colorado River Authority v. Chemical Bank & Trust Co.

I respectfully disagree with that part of the majority opinion wherein it is held that Section 4a, which was added to Revised Statutes, Article 7150, by Acts 1943, 48 Legislature, page 472, chapter 316, is unconstitutional.

The statute in question in effect provides that if conservation and reclamation districts, such as the Lower Colorado River Authority, acquire property which, at the time of its acquisition, was subject to taxation, and the property is being used by the District for generating, transmitting, and distributing electric energy and power, such District shall pay to the county, city, or other taxing unit where the property is situated, in lieu of taxes, an amount equal to what the taxes would have been on such property had it not been acquired by the District.

I shall assume that the payment required to be made to the county, city, or other taxing unit, in lieu of taxes, is in fact a tax, as held in the majority opinion. I do not agree with the holding that the Legislature is without power to authorize the District to pay taxes to the local school district or other taxing units on such property.

There are two provisions in our State Constitution relating *Page 335 to the exemption from taxation of public property used for public purposes. They are as follows:

"Article XI, Sec. 9. The property of counties, cities and towns, owned and held only for public purposes, such as public buildings and the sites therefor. Fire engines and the furniture thereof, and all property used, or intended for extinguishing fires, public grounds and all other property devoted exclusively to the use and benefit of the public shall be exempt from forced sale and from taxation, * * *."

"Article VIII, Sec. 2. All occupation taxes shall be equal and uniform upon the same class of subjects within the limits of the authority levying the tax; but the Legislature may, by generallaws, exempt from taxation public property used for publicpurposes; * * *." (Emphasis mine.)

The above provisions were incorporated in the Constitution for the first time in 1876. It will be noted that one of the provisions automatically exempts from taxation the property of counties, cities and towns "owned and held only for public purposes" and "all other property devoted exclusively to the use and benefit of the public"; whereas the other authorizes the Legislature to exempt from taxation "public property used for purposes." Since Article VIII, Section 2, authorizes the Legislature to exempt public property used for public purposes from taxation, it necessarily follows that if such property is not so exempted, it may be taxed by the Legislature. Now, if Article XI, Section 9, automatically exempts all public property used for public purposes from taxation, there was no necessity for inserting in Article VIII, Section 2, the provision authorizing the Legislature to exempt such property from taxation. Obviously, the people in adopting these two constitutional provisions must have intended that some public property used for public purposes should be exempt from taxation automatically, while other public property used for public purposes might be exempted or taxed according to the will of the Legislature. Otherwise there was no earthly reason for inserting in the Constitution the provision that the Legislature could exempt from taxation public property used for public purposes. Any other construction would render one of the provisions meaningless. In other words, if the property was automatically exempted from taxation by other provisions, why should the framers of the Constitution provide that the Legislature may exempt it from taxation? A. and M. Consolidated Independent School District v. City of Bryan, 143, Texas 348,184 S.W.2d 914, par. 1. *Page 336

It is the duty of the Court to construe the Constitution as a whole and to harmonize its provisions, and, if possible, give effect to each and every provision thereof. Texas National Guard Armory Board v. McCraw, 132 Tex. 613, 126 S.W.2d 627, 634. We should avoid, if possible, any construction that would render any provision thereof meaningless, for we should not assume that the people inserted in the Constitution an entirely meaningless provision. State v. Gillette's Estate, 10 S.W.2d 984, 986, reversing judgment (Civ. App. 1926) Gillette's Estate v. State,286 S.W. 261; Eucaline Medicine Co. v. Standard Investment Co.,25 S.W.2d 259, 262 (writ refused); Brown v. Fidelity Investment Co., 280 S.W. 567, 568, reversing judgment Fidelity Investment Co. v. Brown (Civ. App. 1925), 274 S.W. 265; Jones v. Williams, 121 Tex. 94, 45 S.W.2d 130, 137, 79 A.L.R. 983; Texas Bank Trust Co. v. Austin, 115 Tex. 201, 280 S.W. 161.

Moreover, any reasonable doubt as to the constitutionality of a statute should be resolved in favor of the validity of the statute. This Court in the case of Texas National Guard Armory Board v. McCraw, 132 Tex. 613, 624, 126 S.W.2d 627, 634, said:

"If doubt should be raised as to the validity of a statute, such statute should be held valid unless it clearly violates some provision of the Constitution. This Court speaking through Mr. Justice Brown, in the case of Brown v. City of Galveston, 97 Tex. 1,75 S.W. 488, said: `If there be doubt as to the validity of the law it is due to the co-ordinate branch of the government that its action should be upheld and its decision accepted by the judicial department. In his work on Constitutional Limitations, page 218, Mr. Cooley says: "The question whether a law be void for its repugnancy to the Constitution is at all times a question of much delicacy, which ought seldom, if ever, to be decided in the affirmative in a doubtful case. The court, when impelled by duty to render such a judgment, would be unworthy of its station could it be unmindful of the solemn obligation which that station imposes; but it is not on slight implication and vague conjecture that the Legislature is to be pronounced to have transcended its powers, and its acts to be considered void. The opposition between the Constitution and the law should be such that the judge feels a clear and strong conviction of their incompatibility with each other."'"

I think it is possible to harmonize and give effect to both of the above-quoted provisions of the Constitution without doing violence to either of them. It will be noted from the provisions *Page 337 of Article XI, Section 9, that the framers of the Constitution in providing that the property of counties, cities and towns "owned and held only for public purposes" should be exempt from taxation, undertook to illustrate by example what was meant by property "owned and held only for public purposes." The example given were "such as public buildings and the sites therefor fireengines and the furniture thereof, and all property used, orintended for extinguishing fires, public grounds, etc. (Emphasis mine.) Each example was of property which, by its nature, is available for use by the general public. Not a single example was given in which the property was used for commercial purposes. The examples given comprehend such property as courthouses, jails, fire fighting apparatus, school buildings, playgrounds, libraries, public parks, and the like. They do not embrace property used for commercial purposes, such as generators and distributing lines used in manufacturing and distributing a commodity for sale to the public.

It is true that after giving the examples of property which should be automatically exempt from taxation, the further provision was added "and all other property devoted exclusively to the use and benefit of the public." But in my opinion this did not materially enlarge the scope of this section of the Constitution. There is no material difference between the language "owned and held only for public purposes," as used in the first part of this section, and the language "and all other property devoted exclusively to the use and benefit of the public," as used in the latter part thereof. This latter provision meant nothing more than "all other property owned and held only for public purposes." The added provision enlarged the scope only so as to include other property of the same general classification as that previously dealt with and illustrated by examples given, and nothing more. This is so because under the doctrine of ejusdem generis, which is followed in this State, it is a well-established principle of construction that where words particularly designating specific things or classes of things are followed by general words, such as "and others" or "any other," or "all others," the general words are to be construed as meaning and comprehending only others of the same class or character. This Court recognized the rule of ejusdem generis as a prime rule of construction in this State in the case of Farmers' Mechanics' National Bank v. Hanks, 104 Tex. 320, 326,137 S.W. 1120, 1123, Ann. Cas. 1914B, 368. It was there said:

"It is a prime rule of construction that where, in a statute, general words follow a designation of particular subjects or classes of persons the meaning of the general words will be *Page 338 restricted by the particular designation in such statute. This is known as the rule of ejusdem generis and is a rule of almost universal application. Among other statements of this doctrine the following from Lewis' Sutherland on Statutory Construction has been approved by the courts of this State:

"`When General Words Follow Particular — Doctrine of Ejusdem Generis. — When there are general words following particular and specific words, the former must be confined to things of the same kind. This is known as the rule or doctrine of ejusdem generis. Some judicial statements of this doctrine are here given. "When general words follow an enumeration of particular things, such words must be held to include only such things or objects as are of the same kind as those specifically enumerated." "The rule is, that where words of a particular description in a statute are followed by general words that are not so specific and limited, unless there be a clear manifestation of a contrary purpose, the general words are to be construed as applicable to persons or things or cases of like kind to those designated by the particular words." "It is a principle of statutory construction everywhere recognized and acted upon, not only with respect to penal statutes but to those affecting only civil rights and duties, that where words particularly designating specific acts or things are followed by and associated with words of general import, comprehensively designating acts or things, the latter are generally to be regarded as comprehending only matters of the same kind or class as those particularly stated. They are to be deemed to have been used, not in the broad sense which they might bear if standing alone, but as related to the words of more definite and particular meaning with which they are associated." The general rule is supported by numerous cases.' (Lewis' Sutherland on Statutory Construction, section 422.) The same general doctrine, perhaps more particularly applicable to the case in hand, is thus stated in Endlich on Interpretation of Statutes, page 568: `But the general word which follows particular and specific words of the same nature as itself takes its meaning from them, and is presumed to be restricted to the same genus as those words; or, in other words, as comprehending only things of the same kind as those designated by them; unless, of course, there be something to show that a wider sense was included.'"

The doctrine of ejusdem generis, above referred to, is applicable in the construction of the Constitution. 12 C.J. 707.

If we apply such doctrine in this instance it will be seen that by the provisions of Article XI, Section 9, "and all other property devoted exclusively to the use and benefit of the public," *Page 339 the framers of the Constitution meant all other property of the classes previously mentioned, such as public buildings, public grounds, fire engines, and the like. If Article XI, Section 9, is given the construction above indicated there will be no conflict between its provisions and the provisions of Article VIII, Section 2. On the other hand, if it is given the construction applied in the majority opinion it will be in direct conflict with the provision of Article VIII, Section 2, above set out. The construction applied in the majority opinion has the effect of reading out of the Constitution and rendering entirely meaningless the provision which authorizes the Legislature to exempt from taxation public property used for public purposes.

This statute imposes a tax only on property of the District used for generating, transmitting, and distributing electric energy and power. The property here involved is revenue producing property. It is used for commercial purposes. It is owned, held, and used only by LCRA. While LCRA is a governmental agency, it is, nevertheless, in fact an industrial enterprise. It operates large generating plants by means of hydraulic power for manufacturing electric power. It transmits and distributes this power over thousands of miles of power lines throughout a large portion of the State. The electric energy generated and transmitted by it is sold to the public. As said by the Court of Civil Appeals in this case: "While designated and classified as a governmental agency and body politic and corporate, the Authority's functions and activities partake in large measure the nature and characteristics, within legislative restrictions, of a large industrial enterprise, rather than of a strictly governmental function. 185 S.W.2d 461, 467. There is a vast difference between public buildings and grounds and fire fighting apparatus, which are customarily available for free use by the public, and generators and other appliances that are used in manufacturing a commodity for sale to such of the public as can buy it. The property here attempted to be taxed does not come within the classification of either public buildings, fire fighting apparatus, public grounds, or the like, such as are customarily "devoted exclusively to the use and benefit of the public" in the sense indicated by the example given in Article XI, Section 9, of the Constitution. The framers of the Constitution had no intention of exempting industrial enterprises, such as LCRA, at the time they framed the language of Article XI, Section 9, of the Constitution.

The majority opinion cites only two cases in support of its holding. In one of these, San Felipe de Austin v. State,111 Tex. 108, 229 S.W. 845, the property there involved and sought to *Page 340 be taxed was "public grounds" granted to the City of San Felipe de Austin by the Mexican Government for the free use by its inhabitants as timber and grazing lands. Article XI, Section 9, of the Constitution expressly provides that "public grounds" shall be exempt from taxation. "Public grounds" is used as one of the examples of the class of property that is exempt. Consequently the question here involved was not before the Court in that case. The statute here involved does not undertake to impose any tax on any public grounds belonging to the District. In fact, it expressly provides that such property shall not be subject to the obligations imposed by the statute.

The other case cited in the majority opinion is the case of Galveston Wharf Co. v. City of Galveston, 63 Tex. 14. The property there involved was revenue producing property, and, admittedly, the Court used language indicating that the exemption was allowed by virtue of Article XI, Section 9, of the Constitution. However, the Court did not have before it the question now before this Court. The Court did not have before it the validity of a statute imposing a tax on such property. In fact, there was at that time a statute which expressly exempted all public property from taxation. The property was therefore exempt from taxation under the statute, regardless of the use of which it was put. The Court did not have before it the question of the right of the Legislature to enact a statute authorizing school districts and other taxing units to collect such a tax on revenue producing property, such as is here under consideration. Moreover, in that case the City was attempting to foreclose a tax lien on its own property. It had acquired the property under conditions which compelled it to hold the property "in- under conditions which compelled it to hold the property "in trust forthe present and future inhabitants of the city of Galveston, andall and every part thereof shall be inalienable, and not subjectto conveyance, assignment, transfer, pledge, mortgage, or anyliability for debt whatever, in any other manner than by the voteof four-fifths of all the qualified voters of said city in favorof some clear and specific proposition therefor." Galveston Wharf Co. v. City of Galveston, 63 Tex. 14, 18. Yet the City was attempting to sell the property through the circuitous route of a tax foreclosure in violation of the express terms of the trust agreement under which it had acquired the property. These circumstances were all pointed out by the Court in that case as reasons for denying the right to foreclose the lien. Such circumstances were alone sufficient to justify the Court in holding that the foreclosure proceedings in that case were invalid. *Page 341

There are good reasons why the Legislature should be permitted to tax the properties of all concerns such as we have under consideration in this case. In recent years many such large conservation districts have, by purchase or otherwise, acquired millions of dollars worth of property heretofore owned by privately owned concerns and subject to taxation by school districts and other taxing units. The acquisition of such property by these conservation districts has withdrawn it from taxation. This has left many school districts and other taxing units without sufficient funds to meet their local needs. The Legislature recognized the necessity of adjusting these inequalities and enacted the law here under consideration to effectuate that purpose. These reasons which prompted the Legislature to enact this legislation are clearly set forth in the emergency clause to the Act in question, which reads in part as follows:

"* * * the fact that there are large conservation districts which have been created by the State of Texas with the right to operate the business of generating, manufacturing, selling, and distributing electricity, and that such districts have acquired millions of dollars worth of heretofore privately owned property from individuals and utility companies, and that by such acquisition all of such properties have been withdrawn from the tax rolls of the cities, school districts, and counties, and that the State has lost all of its tax revenues from such properties, and is allowing these districts to be operated at a great loss to the State and its political subdivisions; and the fact that such loss in revenue is handicapping school districts, cities, counties, and the General Fund of the State of Texas, creates a great emergency * * *."

In this connection it should be noted that LCRA is not contesting the validity of the law in question. It is here contending that the law is valid and that it should be permitted to pay the tax. It is the American National Bank of Austin, as Co-Trustee for the bondholders, that is here contending that the Legislature is without power to authorize the District to use funds that would otherwise be available for the payment of the bonds for the purpose of paying the taxes to the local taxing units. It is sufficient to say that the constitutional authority to levy the tax was in existence at the time the bonds were sold. At that time Article VIII, Section 17, of the Constitution provided as follows:

"Sec. 17. The specification of the objects and subjects of taxation shall not deprive the Legislature of the power to require other subjects or objects to be taxed in such manner as may *Page 342 be, consistent with the principles of taxation fixed in this Constitution."

Those who bought the bonds were charged with notice that the State had the right to tax the property in question, and that it might exercise that right at any time. It is a generally accepted rule in this State that all property rights acquired and held, and all contracts made, are subject to the right of the State to levy its taxes and collect its revenues for the support of the government. State for Use of Delta County Levee Imp. Dist. No. 1 v. Bank of Mineral Wells (Tex. Civ. App.), 251 S.W. 1107 (writ refused); Preston v. Anderson County Levee Imp. Dist. No. 2 (Tex. Civ. App.), 261 S.W. 1077 (writ refused); 9 Tex. Jur., pp. 549, 550, Sec. 114; 61 C.J., pp. 368-9; City of Dallas v. State (Tex. Civ. App.), 28 S.W.2d 937 (writ refused).

For the above reasons I am of the opinion that the statute in question was fully authorized by the Constitution of this State.

Opinion delivered October 31, 1945.

Associate Justices Sharp and Simpson concured in this dissenting opinion.