Case Information
*1 Honorable Geo. H. Sheppard
Comptroller of.PublIc Accounts
Austin, Texas
Dear Sir: Opinion NO.
Re: Whether propertg'belonglng to ati Independent school which is not used for 'school mrposes Is exempt from taxation.
We adcnowleage receipt of your 1etter'df~Julg 1; 1940, wherein ga request the oplnlon of this Department as t6 whether property which IS 'owned by the,Wolfe City Inaependent3chool District and 1s~ rented cut for business and .resIdentIal purposes Is subject 'to taxation.
Your request is as follows:
"About' the year 1923 W. J. Turner died, leaving a ,wrltten will, In which he Willed to the Wolfe City Independent School District a brick business building and several residences in the forin of 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 Section 1 of the Constitution of Texas, pro- vides that . . . All property in this State, whether owned by natural persons corporations, other khan rmnlcipal, shall be taxed in proportion to its value, . . . In 'other words, 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'for the establishment and maintenance of a system of free WblIc schools. When Article 7, Section 1 of the ConstItution.was adopted; It'recognized that the education of the messes was a,governmental function for *2 Hon. Geo. H. Sheppard, page 2
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 Constltutlon above quoted, the Leglslature'made provision 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 is not an ordinary corporatlofi organized for purposes of gain to Its members, but 1s a public agency, using the motiej ralssd-'by taxation to educate the ch+ltien-within the district. It Is'~a political subdIvIsIon of the State, to which has b&en delegated'the power 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 nainiclpal corporation, because It Is an organization of a certain geographical district under atithorlty of law and invested with a governmental function. Hatcher vs'. State, 81 S.W. (26) 499; Bexar-Medlna-Atascosa Counties Water Improvement District vs. State, 21 S.W. (26) 747; Short vs. Gouger, 130 S.W. (26) 267.
The power to tax Is an attribute of sovereignty and-. 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 speclflcally enumerated In the Constitution, among the powers to be exercised by It, or not. The constitutional provisions In reference to It, therefore, are more usually Intended or understood restric- as llm&tatlons 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 *of the 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 Constitution granted to the Legislature the authority to exempt certain property from taxa-~~' $Ion by the adopti‘on of Article 8, Sbction 2, which provIdes.that
. . . the Legislature may, by general laws,.exempt from taxation
Hon. Geo. H. Sheljpard, page 3
.
public property for public purposes. used . .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 Constitution to ex'empt political subdivisions which were carrying out a governmental function from ,taxatIon, but that when such political subdlvl- .slons entered 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~'provIdes that 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 subalvlslon thereof . . ."
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,Artlcle 7150, apparent- ly overstepped'the bounds of Its power when It df;d not 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 comprehensive than the power which the Leglslittiire possessed. The purpose of the 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. 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
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