Untitled Texas Attorney General Opinion

Hon. C I J. Wilde Opinion No. o-3672
County .Auditor Re: Taxable situs of oil and oil
Nuece s County products stored in Nueces County
Corpus Christi, Texas awaiting transportation or proces-
sing.
This is in answer to your inquiry concerning the
right of the state of Texas and Nueces County to assess and
levy ad valorem taxes against certain crude oil and oil prod-
ucts, which inquiry reads as follows:
“There are vast quantities of oil, or oil
products, stored in Nueces County. This oil and
oil product’s may be classified as follows:
“1. Oil produced in Nueces County and stored
in lease storage awaiting transportation to concen-
tration points.
“2, Oil produced in Nueces County and stored
at concentration points in Nueces County awaiting
el.ther:
a. Transportation
b, Facilities for refining.
“3. Oil produced in the state of Texas and
transported to concentration storage in Nueces
County, and awaiting either:
a. Transportation
b.. Facilities for refining.
‘!4. Oil produced outside the state of Texas
and transported to concentration storage in Maces
County awaiting either:
a. Transportation
b. Facilities for refining.
llse Refined products stored in Nueces County
processed from each classification above Itemized.
Han, Co J. Wilde, Caunty Auditor, page 2 (0-3672)

“The owners of such oil are failing and
refusing to render the same for taxation, as-
serting as a basis for such failure or refusal
tha.t the oil is in Interstate Commerce, and as
such is not subject to taxation in either
Nueces County or the state of Texas.”
Your inquiry involves first, the right of the state
of Texas to tax said property, and second, whether said property
is taxable in Nueces County or some other Texas County in the
event it is taxabla in Texas.
It will be impossible for us to answer your questions
categorically because they each involve a question of fact as
to whether the property has come to rest within this state or is
in transit, and we do not have all of the facts surrounding the
transactions on which your questions are asked. A final deci-
sion of your questions, by lawsuit or otherwise calls for an ex-
amination of all of the facts, incl,uding the nat ure and composi-
tion of the products, their origin, the route they followed, the
reasons for thelr stay in Nueces County, their length of stay,
the method of their processing and manufacture, their destina-
tion, and their various changes of ownership. If the final de-
cision of your questions should be by lawsuit it is possible that
some parts of the questions would be decided by a jury; and no
human can anticipate with any degree of certainty what a jury will
do. Therefore, we can only answer your questions by stating the
general rules that control in the situations about which you ask,
In determining the right of the State of Texas to tax
said property, we are confronted with two related problems:
?i..rst, whether or not the oil and refined products are in transit
in interstate commerce, and second, whether or not the cril and
refined products have acquired a taxable situs in Texas, but this
latter problem only arises when the owner is domiciled outside
of the state.
On this first problem, which concerns interstate com-
merce we find statements in 1 COOLEYON TAXATION, Fourth ,Edition,
as fo i lows:
“A tax on property in transit from one state
to another is invalid because an illegal burden on
interstate commerce; and this is so although the
articles taxed belong to citizens of the taxing
state. This includes oil in transit through pipe
lines, and sheep being driven through a state to
another state.” (1 COOLEYON TA;CATION,Fourth Edi-.
tion, 816.1
. .

Bon. C. J. Wilde, page 3 (0-3672)

"What is the rule where the property is tem-
porarily at rest? May the state where it then is
tax it although it is the intention of the owner to
remove the property to another state in the near
future? The gener,al rule is that property tempor-
arily at rest is taxable, as where the transit has
been interrupted and the property is held in storage
or at distributing points to be delivered to buyers
or reshipped to other places. Merchandise may cease
to be interstate commerce at an intermediate point
between the place of shipment and ultimate destina-
tion, and if kept at such point for the use and
profit of the owners and under the protection of the
laws of the state, it becomes subject to the taxing
power of the state. ***.N (1 COLLEYON TAKATION,
Fourth,Edition, 821).
!?Lere have been several tax cases involving the'move-
ment of oilfrom one 'state to another, but it is difficult to
arrive at a rule that can be applied to every fact situation.
"Whether commerae is interstate or intrastate is a practical
question to be determined by the facts of the particular case."
35 RARV,ARD LAWREVIEW620. In the case of PRAIRIE OIL & GAS
COMPANY v. ERRARDT,244 Ill. 634 91 N&. 680, it was held,that
the interstate commerce clause o h the Federal Constitution pro-
hibited a state from levying ad valorem taxes against oil that
was being moved from the state of Kansas to the state of Indi-
ana through a pipe line, even though some of the oil accumu-
lated and stayed for several days in working tanks at the pump-
ing stations along the line by virtue of the oil not moving
fast enough through sections of the line. In the case of STATE
v. EMPIREOIL & REFININGCOMPANY,171 Okla, 138, 4 Pac. (2d)
127, it was also held that oil moving continuously through a
pipe line from one state to another was not subject to state
ad valorem taxes., One of the leading cases on the question is
the case of CARSONPETROLEUM COMPANY v. VIAL 279 U.S. 95, 73
L.Ed. 626, 49 S.Ct., 292, in which it was heid that oil in
tanks in, a seaport in Louisiana that had been brought from oth-
er states to that port for the sole purpose of export by ships
to foreign countries and which was being held in said tanks for
the purpose of allowing enough to accumulate to make a shipload
or until a ship arrived to load the same was not subject to
state ad valorem taxes because the storage of the oil in said
tanks was part of a continuous interstate and foreign shipment.
A different conclusion was reached in some other tax cases ln-
volving the movement of oil between states, one of those being
the case of PRAIRIE OIL & GAS COMPANY V. JEFFERSON COUNTY,76
Fed. (2d) !&5, in which it was held that oil in tanks at a sea-
port in Texas was subject to state ad valorem taxes by virtue
Hon. C. J. Wilde, page 4 (o-3672),

of the fact that it was stored there for the purpose of export-
ing part of it, but not all 5y ship, and a large amount of it
remained in storage in the tanks 'a long time during which the
owner endeavored to sell it locally without exporting it by
ship. In the case of MAGNOLIA PEL'ROLEUM~COMPANY v. BOARDOF
COUNTYCOMMISSIONERS, 178 Okla. 484 .63 Pac. (,2d) 6, it was held
that oil was subject to state ad v ai orem taxes in a case in
which it was stored in tanks from four months to a year by an
interstate pipe line operating company for the purpose of having
a supply available in the event the pipe line's regular source
of supply was cut off because of breaks in the line or other
reasons. In the case of GULFREFININGCO. v. PHILLIPS 11 Fed.
(2d) 967, it was held that oil in storage tanks in LouIslana
was subject to state ad valorem taxes when it was shown that the
oil had been brought from Arkansas by a pipe line carrying 16,-
000 barrels a day and that a part of it was diverted and sent to
a refinery in Texas by a pipe line carrying 8,000 barrels a day
and that the remainder stayed in storage in said tanks or was
sold locally. The facts in each of the above cited cases are
different, and it is clear that in each case the court has sought
to determine whether or not there was "a continuity of transit"
of the oil at the time the attempt to assess the tax was made.
The best statement of the rule that we have found in a case in-
volving this question was made by Chief Justice Hughes in the
case of STATEOF MINNES0T.A v. BLASIUS, 290 U.S. 1, 78 L.Ed. 131,
54 S.Ct. 34, as follows:

'I*** the states may not tax property in transit
in interstate commerce., But, by reason of a break in
the transit, the property may come to rest within a
state and become subject to the power of the state to
im;,;se a nondiscriminatory prop;;;y tax ***. The 'Cru-
Cl auestion.l in determinina the the state's tq-
ieg power mav-thus be exerted. is tha: of transj&.'
CARSONPETROLEUM COMPANY v. VIAL, 279 U.S. 95, 101, 49
S.Ct. 292, 293, 73 L.Ed. 626.
'I***. The question is always one of substance,
and in each case it is necessary to consider'the par-
ticular occasion or purpose of the interruption during
which the tax is sought to be levied***.
"Where property has come to rest within a state,
being held there at the pleasure of the owner, for
disposal or use, so that he may disnose of it either,
within the state. or for shiumggt lsewhere. as h;tg
inte rest dictates, it is deemed toebe a part of the
general mass of property within the state and is thus
subject to its taxing power ***.I' (Underscoring ours).
Hon. C, J. Wilde, page 5 (O-3672)

The preceding paragraph has been an attempt to arrive
at a rule by which it can be determined whether or not the oil
and refined products in question are exempt from state ad valo-
rem taxes by virtue of being in transit in interstate commerce.
We will now take up the second problem in connection with the
question ‘of whether personal property in Texas is subject to
state ad valorem taxes, and that is this: Even though the prop-
erty is not in transit in interstate commercg,if the owner is
domiciled outside of the state it must be determined whether or
not the property has acquired a taxable situs in Texas. It is
a well established rule of law that personal property is only
taxable at the domicile of the owner, regardless of its location
at the taxing date, if it has not acquired a taxable situs else-
where. PULLMAN’SPALACECAR COMPANY v. PENNSYLVANIA, 141 U.S.
18, 35 L.Ed 613, 11 S.Ct. 876. GREATSOUl’HEFUi LIFE INSURANCE
COMPANY v. CITY OF AUSTIN, 113 Tex. 1, 243 S.W. 778. A state-
ment of the rule concerning personal property acquiring a taxa-
ble situs in a state other than the owner’s domicile is stated
in 2 COOLEYON TAXATION, Fourth Edition, 982, as follows:
“In order to acquire a situs in a state or
taxing district so as to be taxable in the State or
district regardless of the domicile of the owner
and not taxable in another state or district at the
domicile of the owner, tangible personal property
must be more or less permanently located in the state
or district. In other words the situs of tangible
personal property is where it is more or less perma-
nently located rather than wbrre it is merely in
transit or temporarily and for no considerable length
of time. If tangible personal property is more or
less permanently located in a state other than the
one where the owner is domiciled, it is not taxable
in the latter state but is taxable in the state where
it is located* If tangible personal property belong-
ing to one domiciled in one state is in another state
merely in transitu or for a short time, it is taxable
in the former state, and is not taxable in the state
where it is for the time being. Often,. if not usuallv,
a tax imoosed bv the state where orooertv is in tran&-
%Fc$ves interstate commerce, in which case the
a i n is not one of taxable situs but the broader
-one whether such a tax constitutes an unlawful inter-
ference with interstate or foreign commerce. ***‘I
The foregoing has been a discussion of rules concern-
ing the right of the state of Texas to tax personal property when
there is a question of interstate commerce and when there is a
question of the owners s domicile being outside of the state. If
it is determined that the oil and refined products about which you
Hon. C. J. Wilde, page 6 (0-3672)

ask are subject to ad valorem taxes under the laws of Texas
it must be decided whether or not Nueces C,ounty is the county
in which such taxes should be levied. That is a,question of
whether or not the oil and products have acquired a taxable
situs in Nueces County. If the owner’s domicile is in Nueces
County and the property is also located in that county (and
there is no question of interstate commerce), the property is
clearly taxable in that county+ But, it is a fact question
that may not be easy to decide if the owner 1s domicile is out-
side of Nueces County. We do not have the detailed facts on
your questions and therefore we will only endeavor to state
the general rules applicable in such cases.
The test of whether or not personal property has
acquired a taxable situs in a county other than the county of
the owner’s domicile is the same as the test of whether or not
such property has acquired a taxable situs in a state other
than the state of the owner’s domicile. The question of oil
in a pipe line end working tanks being taxable in a county oth-
er than the owner’s domicile was considered in Attorney Gener-
al’s Opinion No. O-885, dated June 22, 1939, and addressed to
Hon. E. P. Jennings, County Auditor of Herdin County. In that
case the facts showed no oil was stored, but that all of the
oil, including the oil in the working tanks, was actually in
transit; and, it was held in said opinion that the county in
which said oil was located on the taxing date (January 1st)
could no~t collect ad valorem taxes on the same, if it was owned
by a person or corporation whose domicile was in another county.
That opinion was based on the case of CUMBERLAND PIPE LINE COM-
PANy V. I:OMMONWEALTH, 258 Hy. 90, 79 s.w.(2d) 366, which in-
volved o,il moving from one county to another in a pipe line.
The constitutional provisions and statutes that should be con-
sidered :in dealing with this question are Article VIII, Section
2, of the Constitution of Texas, and Articles 7151 and 7153, of
the Revised Civil Statutes of Texas. Article VIII, Section 2,
of the Constitution reads in part as follows:
“All property, whether owned by persons or
corporations shall be assessed for taxation and the
taxes paid in the county where situated, but the Leg-
islature may, by a two-thirds vote, authorize the
payment of taxes of non-residents of counties to be
made at the office of the Comptroller of Public Ac-
counts ***. ”
Article ‘715’1, Revised Civil Statutes, reads in part as follows:
“Al.1 property shall be listed for taxation be-
tween January 1 and April 30 of each year, when re-
quired by the assessor, with reference to the quantity
i
. .

Hon. C. J. Wilde, page 7 (O-3672)

held or owned on the first day of January in
the year for which the property is required
to be listed or rendered ***”
Article 7153, Revised Civil Statutes, reads as follows:

“Al.1 property, real and personal, except
such as is required to be listed and assessed
otherwise, shall be listed and assessed in the
county where it is situated; and all personal
property subject to tax#ion and tempor
removed hrom the state oh county, shall ,‘ly
listed and assessed in the county of the re -
dence of the owner thereof, or in the count
where the principal office of such owner is
situated.”

In the case of GREATSGIJTHERN LIFE INSURANCE COMPANY
v. CITY OF
AUSTIN, supra, the Supreme Court of Texas said:
“OUT Constitution, therefore, in declaring
that property shall be taxed where situated,
h,ss done no more thm declare the common-law
rule. The purpose of the Constitution in declar-
ing that property should be taxed in the county
where situated, was merely to define the general
j~urisdictional un3.t for the exercise of the tax-
ing power and to confine the exercise of that
power to ihe subjects of taxation within that
unit. It did not define what was meant by the
w,ords ‘where situated. I Since St had reference
to the t power it evidently meant property
where si I-=uated for the purposes of taxation un-
der the general principl&@ of law as then under-
stood. County Treasufer ‘v. Webb & Garrison, 11
Minn. 500 (Gil. 378); San Francisco v. Lux, 64
Cal. 481 2 Pac. 254. San Francisco v. Mackay
(,::.C.) 23 Fed. 602. i507.
“Under the common law ‘mobilia sequuutur
personam’ was a well establIshed maxim, and per-
sonal property of every description was taxable
only at the domicile of its owner regardless of
its actual location. This is stifl the basic
principle upon which the taxation of pemonal
property rests. 26 R.C.L. 3 241, pp. 273, 274.
But even prior to the Revolution the principle
had been abrogated to the extent that, as between
different towns and taxing districts, certain
classes of tangible personal property had a taxable
 . ,

Hon. C. J. Wilde, page 8 (Q-3672)

situs where employed in business regardless
of the domicile of its owner* 2b R.C.L 3 244,
pp- 276, 277; Pullmatirs Palace Car Co. ;.
sylvania, 141 U.S. 388, 24 Sup.ct. 109, 48'?&.
232.1'
&n the case of CITY OF GALVESTON v. HADEN,214 S.W. 766, the
ourt of Civil Apl~als at Galveston, said:,
,I***.
The law seems to be well settled,in
Texas that the proper place to tax personal prop-
erty is the residence of 'the .owner, provided it
has not acquired a situs for purposes of taxation
elsewhere, in which instance it is to be taxed
where situated. Constitutiouof Texas Art. 8
3 11; R.S. Arts. 7510 and 7514; City oh Austin'v.
Insurance Co., 211 S.W. 482. Indeed, the cases
cited in the foregoing conclusions so hold par-
ticularly the Guffey Case, with reference c o such
physical property as is 'here involved, and both
litigants appear to proceed upon the assumption
that such is the rule, differing only as to whether
this property was shown to have a situs where lo-
cated. The question, then, upon this feature of
the case turns in this court,, on whether or not the
evidence was sufficient to support the trial court's
finding that the property as to which any recovery
for taxes was denied had in fact acquired's situs
outside of the city of Galveston, where its owner
resided.11
The question of whether cattle owned by a'person living in Okla-
homa had acquired a taxable situs in Texas is discussed in the
case of HARDESIYBROTHERS v. FLEMING, 57 Tex. 395. O,ther cases
dealing with similar questions are COURTv. O'CONNOR,65 Tex.
;3$ a$ CITY OF GALVESTON V. J. M. GUFFEYPETROLEUM CO.
We find a statement on this question in 2 COOl!E%N
T,tiIOi;; Fourth Edition, 975 as follows:
I'*** Its taxable situs is where it is more
or less permanently located, regardless of the domi-
cile of the owner. It is well settled that the state
where it is more or less permanently located has the
power to tax it although the owner resides out of the
state, ***.
11***

'IAs to the place in ;theestate where tangible
personal property is taxable, the same rules as to
Hon. C. J. Wilde, page 9 (O-3672)

situs apply as where the question is whether
the situs is inside or outside the state pro-
vided it is not otherwise regulated by statute.
*:**. If

We regret that we cannot answer each of your ques-
tions Icyest’ or %o” but in view of the fact that they are
fact questions and t hat we do not have all of the facts before
us we have given you the foregoing rules and suggest that you
apply said rules to each fact situation.
Yours very truiy

ATTORNEY
GENERALOF TEXAS
By /s/ Cecil C. Rotsch
Cecil C. Rotsch, Assistant
APPROVED JOL 22, 1941
/s/ Grover Sellers
FIRST ASSISTANTATTORNEY
GENERAL
APPROVED: OPINIONCOMMITTEE
BY: BWB, CHAIRMAN
CCR:ob:wb