. .
The Attorney General of Texas
December 31, 1982
MARK WHITE
Attorney General
Honorable Mark M. Humble Opinion No. ?lW-583
Supreme Court Building
Milam County Attorney
P. 0. BOX 12546
County Courthouse Re: Constitutionality of tax
Austin. TX. 76711. 2546
51214752501 Cameron, Texas 76520 exemption for nursery products
Telex 9101674~1367 in section 11.16 of the
Telecopier 5121475.0266 Property Tax Code
1607 Main St., Suite 1400
Dear Mr. Humble:
Dallas, TX. 75201-4709
2141742-6944 You ask whether the ad valorem tax exemption for nursery products
set forth in section 11.16 of the Property Tax Code is constitutional.
We conclude that it is.
4624 Alberta Ave., Suite 160
El Paso. TX. 79905-2793
91.w533.3464 Section 11.16 of the Property Tax Code provides the following in
pertinent part:
1220 Dallas Ave.. Suite 202
(a) A producer is entitled to an exemption
Houston. TX. 77002-6966
713,650.0666
from taxation of the farm Droducts that he
produces and owns. A nursery pioduct. as defined
by Section 71.041, Agriculture Code, is a farm
606 Broadway, Suite 312 product for purposes of this section if it is in a
Lubbock, TX. 79401.3479
growing state. (Emphasis added).
6061747-5236
Section 71.041 of the Agriculture Code contains the following
4309 N. Tenth. Suite 6 definition:
McAllen, TX. 76501.1665
5121682-4547
'Nursery product' includes a tree, shrub, vine,
cutting, graft, scion, grass, bulb, or bud that is
200 Main Plaza, Suite 400 grown for, kept for, or is capable of, propagation
San Antonio, TX. 78205.2797 and distribution for sale. (Emphasis added).
512,225.4191
Section 11.16 was adopted in conformity with article VIII, section 19
An Equal Opportunity/ of the Texas Constitution which provides:
Affirmative Action Employer
Farm products... in the hands of the producer, and
family supplies for home and farm use, are exempt
from all taxation until otherwise directed by a
two-thirds vote of all the members elect to both
houses of the Legislature.
p. 2162
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Honorable Mark M. Humble - Page 2 (Mw-583)
The legislature may not authorize that which the constitution
prohibits, Maher V. Lasater, 354 S.W.Zd 923 (Tex. 1962).
Specifically, the legis: lature is without power to add to the list of
pioperties - entitled -to exemption under the constitution, Leander
Independent School District V. Cedar Park Water Supply Corporation,
479 S.W.Zd 908 (Tex. 1972); City of Amarillo V. Amarillo Lodge No.
731, A.F. and A.M., 488 S.W.Zd 69 (Tex. 1972), and any attempt to do
so is void. City of Amarillo V. Love, 356 S.W.Zd 325 (Tex. Civ. App.
- Amarillo 1962, writ ref’d n.r.e.); Dickison V. Woodmen of the World
Life Insurance Society, 280 S.W.Zd 315 (Tex. Civ. App. - San Antonio
1955. writ ref’d). In this instance, the issue is whether “nursery
prod&ts,” as defined by section 71.041, Agriculture Code, constitute
“farm products” within the meaning of article VIII, section 19 of the
Texas Constitution. If they do, the statute is constitutional. If
they do not, the statute attempts to add to the list of properties
entitled to exemption under the constitution and is void. While the
authority is not clear and unambiguous, we conclude that the courts
would be likely to hold that “nursery products” are “farm products”
and that the statute is constitutional.
It has been suggested that Kirby Lumber Corporation v. Hardin
Independent School District, 351 S.W.Zd 310 (Tex. Civ. App. - Waco
1961. writ ref’d n.r.e.) is controllina. We disagree. The court
therein declared that timber grown on --IItree farms” does not fall
within the ambit of article VIII, section 19. Relying on the
principles that constitutional provisions must be construed in the
light of conditions existing at the time of adoption and that it does
not lie within the power of the legislature to change their meaning or
enact laws in conflict therewith, Jones V. Ross, 173 S.W.Zd 1022 (Tex.
1943); Travelers’ Insurance Company v. Marshall, 76 S.W.Zd 1007 (Tex.
1934), the court declared:
In our opinion appellant’s timber here involved
is not included in the constitutional exemption of
‘farm products.’ We feel certain it was not
within the contemplation of the framers of the
provisions and the people who adopted it. In 1879
Texas was in the throes of an economic depression,
and apparen;t;tintended the exemption to be
temporary otherwise directed by a
two-thirds vote’ of the Legislature. See
Interpretive Commentary, Vernon’s Ann. Tex.
Const., 570. Texas citizens of that day, not far
removed from frontier and pioneer status,
considered timber and forests as areas to be
cleared before the pursuits of husbandry could be
engaged in. It would have been incredible, then,
to call trees ‘farm products.’ We think they are
p. 2163
Honorable Mark M. Humble - Page 3 (MW-583)
not such now, within the meaning of the
Constitution.
351 S.W.Zd at 312.
At most, the Kirby case stands for the proposition that,
regardless of whether "the application of scientific forestry
practices to an established stand of timber," i.e. a lumber operation
commonly referred to as "tree farming," would properly be considered
"farm products" now, it clearly was not so considered in 1879. But
the case offers us no guidance in determining whether section 11.16 is
constitutional, because a lumber operation as contemplated by Kirby
does not meet the threshold requirement of section 11.16 of the
Property Tax Code. A tree as part of a lumber operation is not "grown
for, kept for, or is capable of, propagation and distribution for
sale." Aericulture Code 571.041. A nursery is defined as "a nlace
where trees, shrubs, vines, etc., are propagated for transplanting or
as use for stalks for grafting." Hill V. Georgia Casualty Company, 45
S.W.Zd 566, 567 (Tex. 1932). (Emphasis added). Timber, on the other
hand, denotes "trees of a size suitable for manufacture into lumber
for use of building and allied purposes and does not include saplings,
brush, fruit trees or trees suitable only for firewood or decoration."
M & I Timber Company V. Hope Silver-Lead Mines, Inc., 428 P.2d 955,
955 (Idaho 1967).
The word 'timber' has been generally defined as
meaning growing trees suitable to be used for the
construction of building, tools, utensils,
furniture, fences, ships, etc. This concept of
timber distinguishes it from saplings, and
undergrowth, fruit trees, and trees suitable only
for firewood or cordwood, or for decoration.
Melder V. Phillips Pipe Line Company, 539 S.W.Zd 208, 210 (Tex. Civ.
APP. - Austin 1976, writ ref'd n.r.e.). See also Cummer-Graham
Company V. Maddox, 285 S.W.Zd 932 (Tex. 1956). Because the court in
Kirby was not concerned with nurseries, it offers us little guidance.
A more helpful case is City of Amarillo V. Love, a. There
the court held that a taxpayer who engaged in a general retail (and
some wholesale) nursery business for profit was not entitled to claim
an ad valor-em tax exemption under article VIII, section 19. The
taxpayer received his nursery stock from large nursery plantations or
farms and replanted the stock in order to preserve and continue the
life of the plants. Prior to the time that the nursery stock was
removed from the plantations or farms, they were in their "first
growth stage." During the time in which the stock was in the
possession of the taxpayer, they were in their "second growth stage."
The court held that the taxpayer was not entitled to ad valorem tax
p. 2164
Honorable Mark M. Humble - Page 4 (w-583)
exemption because he was not a "producer" within the meaning of
article VIII, section 19.
In our opinion the nursery stock in question
does not come under the constitutional exemption
of 'farm products in the hands of the producer.'
In order to come under the exemption, appellee's
nursery stock must meet two requirements: first,
it must be 'farm products' and if so, it must be
found that appellee is the 'producer.' Under the
facts and circumstances before us, we do not think
the nursery stock meets these requirements....
The trees and bushes were started by grafting and
budding on large nursery farms and transferred to
appellee who conducted its retail and wholesale
business on several city lots within the City of
ordinarily used among both business men
and the general public. Appellee's care and
treatment of this nursery stock during its 'second
growth stage' was incidental to its selling the
stock to the ultimate consumer. It would be a
strained construction of the applicable
constitutional language to say the nursery stock
in the hands of appellee is 'farm products.'
(Emphasis added).
356 S.W.Zd at 328. The court held that a person tending nursery stock
during its "second growth stage" is not a "producer" within the
meaning of article VIII, section 19. It did not directly address the
issue as to whether nursery stock in its "first growth stage" is a
"farm product." However, we believe that our courts, if confronted
squarely with the issue, would so conclude.
We find it persuasive that Texas courts in other contexts have
concluded that nursery products do constitute farm or agricultural
products. In Brewer V. Central Greenhouse Corporation, 352 S.W.Zd 101
(Tex. 1961), the Texas Supreme Court held that workers in greenhouses
were "agricultural laborers" within the meaning of the Fair Labor
Standards Act, 29 U.S.C. section 201 et seq. The act defined
"agriculture" to mean "farming in all its branches and among other
things includes... the production... of any agricultural or
horticultural commodities.... 29 U.S.C. 9203(f). Admittedly, the
definition of "agriculture" in the federal act is broad. Yet, in an
ad valorem taxation case, the Ohio Supreme Court relied in part on the
case in construing a statute which exempted equipment and machinery
p. 2165
Honorable Mark M. Humble - Page 5 (MW-583)
"used in agriculture" and "agricultural products on farms." In Benken
v. Porterfield, 247 N.E.Zd 749, 753 (Ohio 1969), the court declared:
[Tlh= business of planting, cultivating,
harvesting, and selling flowers and vegetables,
indoors in greenhouses, or outdoors in lath houses
or planting beds in the ground, with substances
being added to the soil to aid and protect the
growing process, is agriculture.
Again, in another context, Texas courts have held that, for
purposes of workers' compensation, nursery laborers are "farm
laborers" within the meaning of the statute. In Hill v. Georgia
Casualty Company, B. the court stated: "That one engaged in the
nursery business is engaged in an agricultural pursuit is not to be
doubted." In Guerrero v. United States Fidelity and Guaranty Company,
98 S.W.Zd 796 (Tex. 1936), the court affirmed the proposition that
horticulture constitutes one of the main divisions of agriculture. It
further noted the distinction discussed in City of Amarillo v. Love,
E, between raising nursery stock and buying nursery stock for
resale and placing it in the ground temporarily for preservation. The
former horticultural practice is a part of agriculture within the
meaning of the statute; the latter is not.
While admittedly both of those cases construed a worker's
compensation statute, we think that it is significant that the supreme
court of another jurisdiction relied on Hill v. Georgia Casualty
Company, B. in deciding an ad valorem taxation case. In Boehm v.
Burleigh County, 130 N.W.Zd 170 (N. D. 1964), the court declared that
a nursery engaged in growing trees, shrubs, flowers and plants fell
within the ambit of an ad valorem tax exemption of "all farm
structures, and improvements located on agricultural lands." The court
found that the products of a nursery are agricultural products because
"'agriculture' is sufficiently broad to include 'horticulture."' Id.
at 176. See also State v. Wertheimer Bag Company, 43 So.Zd 824 (Ala.
1949) (a sales tax case which relies in part on both Hill v. Georgia
Casualty Company, supra, and Guerrero v. United States Fidelity and
Guaranty Company, a); Orendorf v. H. Weber and Sons Company, 140
A.2d 641 (Md. 1958); Township of Marple v. Lynam. 30 A.2d 208 (Pa.
Super. Ct. 1943); Hagenburger v. City of Los Angeles, 124 P.2d 345
(Cal. Dist. Ct. App. 1942); Dye v. McIntyre Floral Company, 144 S.W.Zd
752 (Ten*. 1940).
We are persuaded that Texas courts would construe "farm products"
in article VIII, section 19 of the Texas Constitution to include
nursery products as defined in section 71.041 of the Agriculture Code
and believe that section 11.16 of the Property Tax Code is constitu-
tional.
p. 2166
Honorable Mark M. Humble - Page 6 (MW-583)
SUMMARY
Section 11.16 of the Property Tax Code which
exempts from ad valorem taxation farm products,
including nursery products as defined by section
71.041 of the Agriculture Code, is constitutional.
MARK WHITE
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Jim Moellinger
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Rick Gilpin
Patricia Hinojosa
Bob Lattimore
Jim Moellinger
p. 2161