HL Farm Corp. v. Self

(Tex.1990). We pri- peals, 787 S.W.2d affect the 1992 proceedings These appeal as moot. The filing pe- therefore dismiss this mary general elections. tempo of the appeal is of this primary election dismissal for the riod for candidates only, and is without rary injunction order and closes Janu- opens December appeal, any, of the final prejudice 172.023. ary Tex.Elec.Code any perma granting judgment the district court have all parties injunction. nent the interest the issues expressed quickly resolved as in this case be raised disrupting the 1992 elec-

possible to avoid this concern and The Court shares

tions. litigation concluded that this will be

trusts dispatch.

in the district court with ap- jurisdiction of the direct retain

We this time express opinion no at

peal and concerning issues raised. Enforcement CORPORATION, Appellant, FARM injunction temporary of the district court’s stay vacating suspended. our. remains order, in the district proceedings we allow SELF, Appraiser Chief Jackie — Kaufman

court to continue. District, County Single Appraisal Bill Stark,

McFarland, Rex Man Ollie Individually ning, the Kaufman and as Board, Doris County Appraisal Review Dunn, Tax-Assessor-Collecto r —Kauf Collector, Betts, County, man Jean District, Independent Kemp Texas, Kaufman, County and the Texas, Appellees. RICHARDS, Ann Governor of Texas, al., Appellants, et 05-90-01390-CV. No. Appeals of Court of al., MENA, Guadalupe Appellees. et Dallas. D-1549.

No. 18, 1991. Oct. of Texas.

Supreme Court

Dec.

ORDER appeal tempo of a direct

This cause is a the district

rary issued because injunction redistricting for statutory

court held the Representative was Texas House Texas Consti

contrary provisions ren has now district court

tution. The permanent in the judgment

dered a final sought in this cause. Considera

injunction is there temporary injunction

tion Cities

fore moot. Coalition for Affor Ap Utility v. Third Court Rates dalbe McKeever, Cook, J. Dal-

Harold R. Kevin las, appellant. Kaufman, Jr., J. Alton Bill Kim-

Gil Austin, brough, appellees. C.J., ENOCH, and BAKER and Before LAGARDE, JJ. ON MOTION

OPINION FOR REHEARING LAGARDE, Justice. rehearing is de-

Appellant’s motion for motion, we withdraw nied. On our own The fol- opinion August our lowing opinion. now our judg- appeals summary from a Farm (collec- appellees in favor of ment rendered unit) in tively referred to as open- of its contesting suit the denial space application. points required In three Farm is error, HL argues acquisition Farm that section 23.- and of land with the United 56(3) of the Texas Secretary Agriculture. Tax Code unconstitu- States language, (West 1988). that it violates: tional U.S.C.A. § policy, of article HL County, Farm owns land in Kaufman Constitution; (2) 1-d-l of the Texas the Texas. County The Kaufman appraisal requirement equal and uniform taxation unit HL open-space denied Farm the land VIII, article under section 1 designation, which would the have reduced Constitution; the taxes on property. the The for only reason clauses and Texas States the 23.56(3) denial was section of the Tax Constitutions. We HL Farm’s overrule Code, which denies the qualifica- favorable and, points the accordingly, affirm trial tion to land by corporation owned a re- judgment. court’s quired by federal register law to owner- HL Both Farm and the ship of the land majority and a interest summary judgment. filed unit motions for corporation the by is owned granting HL Farm attacks both the 23.56(3)(Ver- alien.1 Tex.Tax Code Ann. § appraisal unit’s motion and the denial 1982). non motion. An order a motion own summary judgment appealable for is not CONSTITUTIONAL CHALLENGES except, here, parties as have when both motions summary judgment filed for VIII, Article Section 1-d-l of granted the trial court has motion and one the Texas Constitution City the v. overruled other. Garcia Article section 1-d-l of the Lubbock, 776, (Tex.App— 634 S.W.2d 780 provides: Texas Constitution 1982, n.r.e.). A Amarillo writ ref’d movant (a) promote preservation the To summary judgment has the burden of legislature open-space pro- the shall showing genuine that no issue of material general open- by vide law for taxation of exists and judg fact that it is entitled to space devoted to farm or ranch as a ment matter of law. Nixon v. Mr. poses productive on the basis of its ca- Property Co., Management 690 S.W.2d legislature pacity. by general The ... 546, (Tex.1985). 548-49 parties both When provide eligibility un- law limitations for summary judgment, move each must may impose der this sanc- carry its party own burden and can neither poli- in furtherance of tions the taxation prevail because of of the other the failure section. cy of this party discharge its burden. Villarreal 600, Bank, v. Laredo Nat’l 605 677 S.W.2d Const, l-d-l(a). art. Pursuant § Tex. (Tex.App. ref’d Antonio writ — San provision, to this constitutional n.r.e.). concerning ap- ture statutes enacted praisal of land that affords reg- Virginia corporation, HL Farm is a property qualifying taxation for favorable HL Farm istered to do in Texas. open-space land. Tex.Tax wholly subsidiary of Liebherr- is a owned Ann. Code (Vernon America, Supp.1991). 23.51-57 1982 & Inc., Virginia corporation. also a §§ imposed limi- Liebherr-America, wholly eligibility also by Inc. is International, AG, the entitlement Switzerland tations on Liebherr a corporation, qualification. neither citizen nor a Farm attacks which is a foreign person eligibility resident of the United Pursuant to limitation. Tex. States. Act, 1982). 23.56(3) (Vernon Foreign HL Investment Disclosure Ann. tary Agriculture, is Act re- a substantial control di- Investment Disclosure quires foreign persons acqui- indirectly by orga- all their rectly held a sition and in the United foreign government. the laws of a nized under person foreign to in- States. The Act defines 3508(3)(C) (West 1988). U.S.C.A. corporation organized under the laws of clude person as defined this Act. is a which, any state in the Secre- as determined Verdugo-Urquidez, v. United that section HL Farm contends 1056, 1064, 108 L.Ed.2d the above 110 S.Ct. behind U.S. purpose contravenes Doe, 457 (1990); which it defines as provision, Plyler v. constitutional How farm land. 2382, 2392, of Texas 72 L.Ed.2d 102 S.Ct. more ever, courts this state have HL Farm enti- (1982). We conclude that 1- narrowly defined equal of the laws two protection tled to family preserve and benefit d-1 to be First, Farm, party to this reasons. Indep. Gragg Cayuga farm. lawsuit, person meaning within (Tex.), Dist., appeal 539 S.W.2d equal protection clause. Bethlehem dism’d, 429 U.S. Corp. Flynt, Motors Ranch, (1976); Inc. L.Ed.2d 581 Alexander 571, 572, 65 L.Ed. 1029 41 S.Ct. Dist, 733 S.W.2d Appraisal v. Central in a (foreign corporation doing business (Tex.App. writ — Eastland meaning person a of the state is within the cert, n.r.e.), denied, 486 U.S. ref’d Amendment). Although HL Fourteenth (1988). L.Ed.2d foreign federal person Farm is a under the excluding non-resi limitation eligibility act, a alien. HL Farm not non-resident open- qualifying for the from dent aliens Second, ultimate look to the even we 1- furthers section designation space land its HL Farm to determine of benefiting the of and goal preserving d-l’s residency, Liebherr Inter- we conclude that family farm. national, AG, through ownership of HL its disagree Farm’s contention We with HL Farm, do Virginia corporation licensed to that section 1-d-l allows Texas, territory in is within regarding only eligibility limitations enact Texas, and the state of United not the the use of the and International, entitling AG to Liebherr thus placing eligibility of the land. Without equal pro- guarantee the constitutional in limi- ownership, on addition to limitations tection the laws. legisla- use of the tations on the fulfill 1-d-l’s ture could not section Having determined that benefiting pose preserving and the fami- guarantee to the constitutional entitled Accordingly, HL ly farm. we overrule laws, must protection of the we equal point. first Farm’s 23.56(3)de whether section determine now right. At constitutional HL Farm this nies Protection Clauses of outset, Court that the Eastland we note Texas Constitutions States and same has decided this Appeals In Farm contends that point, its third Ranch, 733 against HL Farm. Alexander equal protection of denies it have much discre at 307.2 States S.W.2d appraisal unit counters that the laws. The taxes, they may use laying in and tion alien, Farm, is not as long as assessing so in taxes classifications laws. protection of the equal entitled to supports the classification. rational con- appraisal unit’s disagree We with Bowers, Ohio, Inc. v. Stores Allied tention. 440-41, 526-27, 79 S.Ct. for tax (1959). A classification L.Ed.2d 480 Supreme Court The United States denial result in the purposes does not non-resident aliens who has held that some upon if it rests country are territory of this within having a and sub- fair ground of difference protection of thé laws. equal entitled to brief, lee, do its we in cited Ranch in brief. Alexander not cite this case 2. HL Farm did attorney Nevertheless, attorney argument Farm’s ad- of HL at oral condone the action knowledge directly authority contrary that is ignoring the case was knowingly mitted response contrary position. to HL Farm’s Supreme directly point. See on Court Court, simply responded questions he X, (Texas Disciplinary § art. Bar Rules bring Court’s did not the case he 3.03(a)(4) Conduct) Rule Rules Professional thought was case attention because he (1989). unit, appel- Although wrong. as VIII, 1(a) stantial Constitution, relation tion. Id. at 79 S.Ct. at 440. “[tjaxation which states that equal shall be Const, VIII, uniform.” 1(a). art. Tex. HL Farm contends that there is no However, by 1(b) looking at section of arti- rational basis for it the cle it becomes evident that the consti- designation because it is a require tution does not equality absolute person. legislative history Agri 1(b) taxation. Section provides: cultural Investment Disclosure Act (b) All property real tangible person- following of 1978 reveals the concerns that property State, al exempt this unless prompted its enactment: required permitted or by this Constitu- escalates, 1. Price of farmland tion, whether persons natural forces property up. taxes corporations, municipal, other than Prospective farmers are less able be shall taxed proportion to its val- farmland, existing farm- ue, which shall be may ascertained as ers are less expand able to or consol- provided by be law. holdings. idate their Const, 1(b) art. (emphasis add- ownership by 3. Land farmers be Tex. ed). HL Farm’s propor- land was taxed in supplanted by leasing foreign in- tion to its value as vestors, determined under the threatening the traditional Tax 23.56(3) Code. Tex.Tax Code Ann. owner-operator pattern family of our (Vernon 1982). In system. disposing of HL farm Farm’s points, first and third we concluded that a country. 4. Farm income leaves the rational assessing basis exists for the value Foreign 5. may owners have little incen- agricultural of land by owned non-resident participate tive to pro- conservation thus, differently; aliens upheld we the con- grams. stitutionality 23.56(3). of section 6. likely owners are more to supports sell Since a rational developers housing out to the of the stat- projects, centers, shopping differently ute that values HL Farm’s and indus- land parks. required, law, trial because it is under federal to of the land and it is capital Less will be available to local alien, we hold that banks to assist area farmers. 23.56(3) does not violate article H.R.Rep. Cong., No. 95th 2nd Sess. VIII, section 1 of the Texas Constitution. 7-21, reprinted in 1978 U.S. Code Cong. & Accordingly, we overrule HL Farm’s sec- 2916-30. These same AdminNews point. ond equally concerns agricultural threaten land family farmers in Texas. We hold that judgment The trial court’s is affirmed. policy provide these considerations a ration- 23.56(3), al support basis to ENOCH, Justice, dissenting. Chief fairly substantially related to the ob- “family Preservation of the farm” is not ject of legislation: purpose of article section 1-d-l of farm; therefore, family HL Farm has Contrary the Texas Constitution. equal protection not been denied majority, assertion of the states: Gragg Accordingly, laws.3 we overrule HL provision salutary also has the Farm’s point. third encouraging only that Article Section of the agricultural and ranch land be contin- Texas Constitution production ued in but that farmers and point, its second Farm con ranchers remain in the business such production.1 tends that section violates article (West 1990); altogether Stat.Ann. 500.221 Okla.Stat.Ann. 3. We note that some states forbid (West 1971). agricultural acquiring tit. 121-127 non-resident aliens from §§ See, e.g., land within their boundaries. Iowa Dist., Gragg Cayuga Indep. (West Supp.1991); Code Ann. §§ 567.1-11 Minn. dism’d, (Tex.), appeal S.W.2d

S77 to (3) are less able Moreover, prospective farmers Texas section 28.56 farmland; deny the tax benefits does not corpora- to agricultural use domestic to (4) existing farmers are less able ex- tions,2 production It holdings; their pand consolidate —the farming ranching, that is may (5) ownership by farmers be ownership. family encouraged, not in- supplanted leasing from distant majority recognize the true to failure of vestors, threatening the traditional produces VIII 1-d-l of article purposes pattern family owner-operator our forcing foreign-owned anomalous result system; farm prohibit- are corporations, who in fact not (6) increase absentee buying cease lower Texas ed to the concentration of contribute agricultural production in favor yield few; operations in the hands of a farm development. higher yield commercial (7) country; farm income leaves the agree majority I with the (8) bypassed local businesses the law. I is entitled supplies, machinery, and purchase of agree is entitled also equipment; making deference in classifica- substantial may have little incen- foreign owners does "The Protection Clause tions. pro- in conservation participate tive surveyor’s precision in fash- not demand grams; However, ioning I dis- classifications.”3 likely to foreign owners are more agree majority’s conclusion that with housing developers sell out to a rational basis for there is centers, shopping and indus- projects, designation. Farm parks; trial no find rational basis. (11) foreign ownership interferes with proceed upon “The must a rational State to parents of farms from the transfer and not resort a classification offspring; Indeed, arbitrary.”4 palpably it that (12) ownership separates in- upon ground must rest some of difference from that of the of landowners terests fair that has a and substantial relation to and operators; actual legislation.5 In determin- (13) capital to local less will be available ing whether the classification for HL Farm and busi- assist area farmers banks to permissible, questions an- two must be nessmen. (1) challenged legislation swered: Does Certainly, agricultural (2) legitimate purpose; have and was it farming and production and the business for the reasonable lawmakers believe legitimate purposes. The real ranching are challenged that use classification 6 it was reasonable is whether promote purpose? that would that use of legislature the Texas believe why thirteen reasons State advances promote these the classification would permitted: its classification is Here, legislature has crossed poses. up- (1) prices are forced of farmland cannot “point beyond which the state that ward; violating Protection go without up; Clause.”7 are forced property taxes 527, Stores, 973, at 79 at 441. (empha- U.S. S.Ct. 5. Allied 358 50 L.Ed.2d 581 97 S.Ct. added). sis Bd. S. Ins. Co. State 6. Western & Life (Vernon 1982). 2. Tex.Tax 23.56 Ann. S.Ct. Equalization, 101 (1981). Ward, 68 L.Ed.2d U.S. Metropolitan Ins. Co. v. 1676, 1692, Life 869, 898, 84 L.Ed.2d 751 (1985). 7.Id. Bowers, Ohio, Stores Inc. 4. Allied (1959). 79 S.Ct. L.Ed.2d authority

I am total at a loss understand how a certificate of under this Act foreign-owned corporations shall, the fact enjoy ... rights the same ... part buying public are a contributes privileges corporation_8 as a domestic any greater pressure upward for the move- Inv., Ltd., v. Hillcrest 630 P.2d prices. Regardless, of land I ment noted at (Okla.1981), Hillcrest, is instructive. foreigners prohibit- the outset that are not Supreme the Oklahoma Court determined Likewise, buying. dangers ed from Hillcrest, corporation, a Canadian was ownership absentee advanced a resident Oklahoma. An Oklahoma rationally State are not related to the clas- provided statute that non-resident aliens sification. There is no distinction between not own land could located within an incor- absentee of a New York However, porated city. town another registered which is to do busi- provided foreign corporation statute that a Farm, Virginia ness Texas and to do licensed business Oklahoma was a corporation registered to do statute, corporation. By domesticated dangers Texas. The of absentee corporations domesticated were entitled to apply equally corporate to all landowners. rights privileges same as domestic Finally, I say dare that unless circum- Therefore, corporations. the Court rea- unusual, quite stances are market factors soned that because Hillcrest was licensed drive the decision on whether to sell the Oklahoma, to do business in it could own country hap- not the where the owner incorporated within an city. town or sure, pens to live. To be I would hold section recognizes that a tax break Tax Code unconstitutional under both the use is a market factor. Fourteenth Amendment of supplies, As for local ma- Constitution and article etc., chinery, going anywhere. the land isn’t applied 1-d-l of the Texas Constitution as farmed, If going the land is to be it must Therefore, respectfully to HL Farm. dis- Consequently, be farmed here. most sent. operating capital all of the costs will be paid brings incurred here and here. Which my original point.

me back to open-space designation is to encour-

age agricultural production keep and to

farmers and ranchers the business.

Foreigners buy land. allowed to Texas

They, open like all other owners of commercially discouraged should be GUERRERO, Appellant, Lucilla encouraged developing open space agricultural production. to continue The Texas, Appellee. opposite statute in has the effect. STATE presented no rational basis State has No. 13-91-083-CR. open-space designation for the denial of the Appeals of Court of to HL Farm. Corpus Christi. point

There is another which think critical, not addressed but which was Nov. parties. The fair and substantial rela- tionship of the classification

tive undermined further registered

application to a to do Texas because the Texas Busi- Corporation provides

ness Act for- “[a]

eign corporation shall have received 1991) added). (Vernon Supp. (emphasis Tex.Bus.Corp.Act Ann. art. 8.02

Case Details

Case Name: HL Farm Corp. v. Self

Court Name: Court of Appeals of Texas

Date Published: Oct 18, 1991

Citation: 820 S.W.2d 372

Docket Number: 05-90-01390-CV

Court Abbreviation: Tex. App.