Untitled Texas Attorney General Opinion

Honorable Geo. H. Sheppard Comptroller of.PublIc Accounts Austin, Texas . Dear Sir: Opinion NO. 0-2506 Re: Whether propertg'belonglngto ati Independent school district which is not used for 'schoolmrposes Is exempt from taxation. . We adcnowleage receipt of your 1etter'df~Julg1; 1940, wherein ga request the oplnlon of this Department as t6 whether property which IS 'ownedby the,Wolfe City Inaependent3chool District and 1s~rented cut for business and .resIdentIalpurposes Is subject 'totaxation. Your request is as follows: "About'the year 1923 W. J. Turner died, leaving a ,wrlttenwill, In which he Willed to the Wolfe City IndependentSchool District a brick business building and several residences in the forinof rent property. The title to this property passed to the school In due course. The rents and revenues received from such property since that time have'been used fojr schpol purposes only, except such as was necessary for PepaIrs t3 the buildings, etc. The school has not rendered this property far taxes and has not paid any taxes thereon. Demand has been tide by the city, State and county for the school to pay taxes. Is such demand authorized? A;tIcle 8, Section 1 of the Constitution of Texas, pro- vides that . . . All property in this State, whether owned by natural persons or corporations, other khan rmnlcipal, shall be taxed in proportion to its value, . . . In 'otherwords, the Constitution has said that all property owned by persons or cor- porations, except that belonging to municipal corporations, shall be subject to taxation. The Constitution proviaea'forthe establishmentand maintenance of a system of free WblIc schools. When Article 7, Section 1 of the ConstItution.wasadopted; It'recognizedthat the education of the messes was a,governmental function for Hon. Geo. H. Sheppard, page 2 0-2506 therein was used the following phrase: "A general diffusion of knowledge being essential to the preservation of the liberties and rights of the people, . . .' Within nine years after the adoption of the Constitution,the Supreme Court, in the case of Casslano vs. Ursullne Academy, 64 Tex. 573, recognized that education was a governmental function. Pursuant to the provlslon of the Constltutlonabove quoted, the Leglslature'madeprovision for the establishment of free public schools and provided, among other things; for independent school distrkts. These districts were established to carry out a portion of that function of the government. The district is not an ordinary corporatlofiorganized for purposes of gain to Its members, but 1s a public agency, using the motiej ralssd-'bytaxation to educate the ch+ltien-withinthe district. It Is'~apolitical subdIvIsIon of the State, to which has b&en delegated'thepower of carrying on the function of-education. ;;;Bs Estate vs.,School Trustees of Wlllacy County, 33 S.W. (26) . While the school district Is strictly a political sub- divlslon,~it Is design&ted a nainiclpalcorporation,because It Is an organization of a certain geographical district under atithorltyof law and invested with a governmentalfunction. Hatcher vs'.State, 81 S.W. (26) 499; Bexar-Medlna-Atascosa Counties Water ImprovementDistrict vs. State, 21 S.W. (26) 747; Short vs. Gouger, 130 S.W. (26) 267. The power to tax Is an attribute of sovereigntyand-. the extent to which this power may be exercised for governmanta purposes finds its only limitation in the Constltulon. Stratton vs. Commissioners'Court, 137 S.W. 1170 (Writ refused). TaXatIon is Inherent in sovereignty and without which a constltutlorsl government cannot exist. It Is vested In the Legislature by the general grant of legislative power whether speclflcallyenumerated In the Constitution,among the powers to be exercisedby It, or not. The constitutionalprovisions In reference to It, therefore, are more usually Intended or understood as llm&tatlons or restric- tions upon Its exercise than as a direct grant ?f the power to the Legislature. 40 Tex. Jur. p. 21. Therefore, under Article 8, Section 1 *ofthe Constltu- tion, the taxing power of the Legislature Is limited to the property of 'all persons and corporations, except mniclpal cor- porations. But the framers of the Constitutiongranted to the Legislature the authority to exempt certain property from taxa-~~' $Ion by the adopti‘onof Article 8, Sbction 2, which provIdes.that . . . the Legislature may, by general laws,.exempt from taxation Hon. Geo. H. Sheljpard,page 3 0-2506 . public property used for public purposes. . . . .I’ It is then apparent, in so far as this opinion is concerned, that the Legislature, for the purpose of taxation, is limited to all property owned by persons or corporations, except that property which Is owned by municipal corporations and used for a public purpose. In other words, we believe that It was~the purpose of the framers of the Constitutionto ex'empt political subdivisionswhich were carrying out a governmental function from ,taxatIon,but that when such political subdlvl- .slonsentered into proprietary enterprises that the property so uqed wwld be subject to taxation. ,. Pursuant thereto the Legislature passed Article 7150, Vernon's Annotated Civil Statutes, whlch~'provIdesthat the fol- lowing property shall be exempt from taxation, to-wit: "1. Fubllc school houses . . . . “4 . All property, whether real or personal, belong- ing exclusively to this State, or any political subalvlslonthereof . . ." The property concerned hereIn is not property on which Is located a public school house and, therefore, is not exempt under Section 1 of Article 7150. The Legislature,when it passed,Artlcle7150, apparent- ly overstepped'thebounds of Its power when It df;dnot limit the exemption to property "used for uubllc DurDoses, for Justice F'underburk,ln the case of City of Abllene vs. State, 113 S.W. (2a)b31 (Writ of Error Dismissed) said: _~ "It Is apparent that the exemption declared In said Article 7150 Is more comprehensivethan the power possessed. The purpose of the which the Leglslittiire Legislature Is broad enough to exempt public property regardless of Its use. This the Legislature wa&!ex- pressly denied the power to do. But it does not fol- low, we think, that the statute is for that reason wholly inoperative. We see no reason why It may not be operative, as an exercise of all of the power the Legislature has, to declare the exemption. The de- clared exemption includes public property used for public purposes, and to that extent, we think, the statute.is valid and operative. It IS elementary that the property concerned herein and owned by the Wolfe City Independent School District is pb- llc property. The property is not being "used for Dubllc Dur--' poses,I'but on the contrary, Is being u&by private IndIvidUals Hon. Geo. II.Sheppard, page 4 O-2506 for residential and business purposes. The property does not come within the purview of the cases of Sherman vs. Wllllams, 19 S.W. 606, or State vs. City . of Houston, 140 S.W. (2d) 277. In those cases the property was held to be a part of a special fund which fund was established to carry out a governmental fuhctlon. It ls;therefore, our opinion that,the property Is not exempt from taxation. ., Trusting that the foregoing fully answers your Inquiry, we are Yours very truly ATTORNEY GENERALOF TEXAS By s/Richard Ii.Cocke Richard R. Cocke Asalstant FiHC:N:wc APPROVEBJUL 22, 1940 s/Grover Sellers FIRST ASSISTANT ATTORNEYGENERAL Approved Opinion Committee By sbfB Chairman - -