The Attorney General of Texas
December 15. 1978
JOHN L. HILL
Attorney General
Honorable Jim W. Weatherby, Chairman Opinion No. H- 1287
School Tax Assessment Practices Board
3301 Northland Drive, Suite 500 Re: Can article 8, section l-d
Austin, Texas 78731 “agricultural use” tax treatment
be applied to land owned by a
partnership?
Dear Mr. Weatherby:
You ask whether land “owned in partnership” can qualify for agricultural
use valuation when each of the partners can “meet the other qualification
requirements” of article 8, section l-d of the Texas Constitution. That
provision of the Constitution begins:
(a) All land owned by natural persons which is
designated for agricultural use in accordance
with the provisions of this Section shall be
assessed for all tax purposes on the consideration
of only those factors relative to such agricultural
use.
(Emphasis added).
If land “owned in partnership” is not land “owned by natural persons,” it
is apparent that the provision does not apply. “Persons are of two kinds:
artificial and natural. . . .” 70 C.J.S., Person at 688. “A natural person is a
human being. . . .‘I 65 C.J.S., Natural at The Texas Supreme Court has
made it clear that land owned by a partnership formed pursuant to the Texas
Uniform Partnership Act, V.T.C.S. article 6132b, is to be treated for ad
valorem tax purposes as property owned by a separate legal entity, an
artificial person, end not as property owned by the partners as individuals.
Nacogdoches lnd. Sch. Dist. v. McKinney, 504 S.W.2d 832 (Tex. 1974). It
follows that land owned by a Texas partnership cannot qualify for special tax
treatment under article 8, section l-d of the Constitution.
the Supreme Court
S.W.2d 161 (Tex. Civ.
APP. - Tyler 1973), but in doing so it expressly agreed with the holding of the
intermediate court that
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Honorable Jim W. Weatherby - Page 2 (H-1287)
[ulnder the existing statutory law of this state, . . . for ad
velorem tax purposes, a partnership constitutes a legal
entity.
489 S.W.2d 169. In that case, a taxpayer assessed personally for taxes against
property held by two partnerships argued that he, though a partner, was not
individually liable for the taxes because the property was owned by the partnership
as a separate entity, and not by the partners themselves. The Supreme Court
agreed.
Dicta of the Beaumont Court of Civil Appeals in Driscoll Foundation v.
Nueces County, 445 S.W.%d1 (Tex. Civ. App. - Beaumont 1969), writ ref’d n.r.e. per
curiam, 450 S.W.Zd 320 (Tex. 1970) concluded that “natural persons such as
partners, cotenants and trustees, etc.” were “owners” not excluded from the classes
benefited by the article 8, section l-d amendment, but the Texas Supreme Court
refused to concur, explaining that its action on the writ of error in the case should
not be interpreted es approving the “natural persons” conclusion of the lower court.
450 S.W.2d 320.
The lower court there apparently reasoned that property held by partnerships,
trust estates, and associations is owned by natural persons inasmuch as it is not
owned by corporations. The dichotomy is based on language in article 8, sectio;;-i
of the Constitution which specifies that all private property in the state “whether
owned’by natural persons or by corporations” shall be taxed. But in 1878 when that
language was placed in the Constitution, the term “corporation,” (particularly when
used in state constitutions) often embraced all artificial persons recognized in law
as legal entities. Andrews Bras. Co. v. Youngstown Coke Co., 86 F.585 (8th Cir.
1898). See Ala. Const. art. XIV, S 13 (1875); MO. Const. art XII, S 11 (18751; Pa.
Const. KXVI, S 13 (1874). Cf. Great Southern Fire Proof Hotel Co. v. Jones, 177
U.S. 449 (1900) (limited partnership “corporation” for some purposes, but not for
ourooses of federal court~iurisdictionl. A‘%atural oerson” then as now~was a human
being. Rapelje end Lawrence’s Law Dictionary (18881, vol. II at 954.
In City of Mesquite v. Melouf, 553 S.W.2d 639 (Tex. Civ. App. - Texarkana
1977, writ ref’d n.r.e.1, the Texarkana Court of Civil Appeals approached the matter
in a. manner similar to that used by the Beaumont Court, but concluded that the
beneficiaries of a trust, rather than the trustees, “owned” the trust assets within
the meaning of article 8, section l-d of the Constitution. That court’s discussion of
the matter must also be regarded as inconclusive because the only holding of the
court was that the trustees and particular beneficiaries involved there were not
entitled to the benefit of the provision. Cf. V.T.C.S. art. 7425&25(k) (trusteeto
pay taxes against trust estate). Whether= not the Texas Supreme Court would
agree that the individual beneficiaries of a trust are owners of the trust property
for ad valorem tax purposes, it has come to a different conclusion with respect to
partners and partnership property. Nacogdoches Ind. Sch. Dist. v. McKinney, supra.
-Cf. H. Rouw Co. v. Texas Citrus Commission, 247 S.W.2d 231 (Tex. 1952) (“natural
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Honorable Jim W. Weatherby - Page 3 (H-1287)
persons” statutorily contrasted with “firms, associations and corporations?; Miller
V. Davis, 159 S.W.2d 973 (Tex. 194U (“public charitable non-profit body corps=
with powers of unincorporated foundation was corporation within article 12, section
1 of the Constitution).
In our opinion, the Texas Supreme Court, if faced squarely with the issue,
would probably hold that land owned by a Texas partnership cannot quaIify for
“agricultural use” tax treatment under the present article 8, section l-d of the
Texas Constitution. For a discussion of the background and purpose of the
povish, e Grape! v. Cayuga Ind. Sch. Dist., 539 S.W.2d 861 (Tex. 19761,
particularly note 2 at 864.
SUMMARY
The Texas Supreme Court would probably hold that land
owned by a Texas partnership cannot qualify for “agricul-
tural use” tax treatment under the present article 8, section
l-d of the Texas Constitution.
DAVID M. KENDALL, First Assistant
C. ROBERT HEATH, Chairman
Opinion Committee
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