Case Information
*1 E ORNEP GENERAL OF
GNRALDC.WN AUSTlN 11. TEXAS
Hoaorable Arnold Smith
Cbunty~Attonsy
ldontgom~ry County
Conroe, Texas
Dear Sir: Opirioa mb. O-6302
Rer Validity of bontrrot for tha listiag and valutitiom of oil properties in Montgomery County.
In your letters of %y 13, 1943 ud June 9, 1943, you requesYed our opinion on the above stated question. The oontraot ia questicm provides:
"ICIXJWALL MNN BY THESE PRNSEHTS:
"TBAT, WBBXiAS, the Conunissioasrsl Court of Montgmery %uaty, Texas, has oontemplated the employment of skilled ex$ez?bd in the matter of appraisals aad valuation of oil and @8 and plblio utilities properties ia the said Montganery Coumty, for,the ooxve8ieaoe and iafonnation of the Board of Eqtialiaatior of said Coruty ia equalizing the vpluatiorar of such propertier a~ oompared tiith all other property valuations in said County for ariesament purposes; a8d
"WEEBUS, PRITCHARD AND ABBOTT, a Parbnership of Fort yorth, Texan, represent that they are skilled im au?h niattera and ham roieatifio and tsohaioal knowledge ud rnq year8 1 experien6e ia the matter o? apprai- sale ad valuations of ruoh propsrtiee.for assessment, and it is the pur; pane of the Cmmissiomer#' Court of Montgomery County to employ the *WV- ioea of the maid PETTCHABD AND ABBOTT for raid purpoaee, and
%3NRNM, PRITCHARD AUD AEOlT haF prupowd $0 said Commlrsionerr' Court of raid Moatgcrmery County that they willa8airt the Tu-Aaserror-Col- lsotor im the preperatioa of Cl1 and Gas and Public Wilily propertier ,I, l rsessmeats ud advim with the Court an to the value of all oil and gay md publio utility properties for the year 1944 For a fee of Elaan Thousqd ,', (#ll,OOO.OO) Dollars.
"IT IS, THEREFOBE, AGF?XXD BY AND ETlSZENMOMCOONBRY Colulty, Texar, actire; herail by ud tihrough its Ccmmisaiomers ' Court, prt of the First Part, ud PXITCBARD ABD ABBOTT of Tarrawt County, parties of the Seooad Pard, aa followsa
HUB. Arnold &nith - Page 2 (06302)
"PARTIES OF m SECOND PART agree to ocnnpile a ocmplete list of the record owners of all 011 ud Gas producing properties wherever situated ud located in Mooattganery County, Texas, and all undewloped leases and royalty interest adjrosti thereto, as of January 1, 1944, said compilation and record to show the partioular interest or interests therein owned.
"PARTIES OF THE SECOND PART also agree to seoure for Party of the First Part, all information available for the use of Parties of the First Part, sit- ting as a Board of Equalization, ia dstsnninimg the proper valuatioza to be fixed upon such properties for assassmnent rud taxation purposes and generally to campile such information as shall'be of aid and benefit tos aid Party of the First Part in equalizaticm of tha.value of suoh properties for taxation.
"Said parties of the Seoond Part agree to meet with the Commissioners' Court of Montgomery County, sitting as a Board of Equalization, and to furnish said Board with al.1 information scoured by them during their investigatims for the purposes of equalizing the asrressments on said properties. Parties of the Second prt also obligate themselves to make a survey of&l pipe lines, refin- eries, tank farms, tankage, and all other properties of value used in oonneo- tiola with said oil and gae dawlopment, including transportation facilities, etc.
"FOR AND IN CONSIDERATION of the skilled services, technical knowledge, and experience of Parties of the Seoond Part, ia the $erformanoe of the obliga- tions devolving upom them hereunder, Party of the First Part agrees and obli- gates itself to oompwsate Parties of the Saoond Part in the manor follotiagz
"Seoond Parties shall reoeiw RR amout to be paid out of the General Fwd of Montgomery County, Texas in the awn of Eleven Thousand (~ll,OOO.OO) Dollars covering oil and gao and publio utility properties, including leases and royalty interests.
"It is further agreed axed understood % both Parties that Montganery County, Texas, will issue, or oauae to be issued to PRITCRARD AND ABBOTT, warrants drawn agaimst the General Fund of said Montgamsry County, Texas, and payable out of the revenues of 1944, and/or the anticipated revenues of 1945, as follows:
"Seven Huedred and Fifty ($750.00) Dollars 08 the first day of December 1943, aad on the First days of January, February, broh, April, May, fmd Jume, 1944.
"AND upon campletiom of said mxk for the year 1944, aad PftUr final action has beer taken by the Board of Equalization, a Warraat or Irrants dram against the GENERAL FUND of MON'iWXERY COUNTY, TEXAS, shall be issued t to PRITCHARD AND ABBOTT, for oompeasation due, if any, making the total compensatic8 equal to Ela~en Thousand ($ll,OOO.OO) Dollars. I
Bon. Arnold Smith - Page 3 (o-5302)
"IT IS AGBEED AM) UNDEBSTOOD by both Parties that in no way will Montgomery County be obligated to PEITCBAED AND ABBOTT, or their assistants for salaries, erSenses, or material used in oonneotion with said work, ox- oept as above stated.
ITEE TOTAL AMOUEI OF OIL field and public utility properties shall bs oertified by the Rx Assensor, who shall in his Certifioate state the total valuation of all such properties assessed for the year 1944 and all said warrants issued to PRITCHARD ANDAPBO'IT shall be registered for payment and payable out of the reoeipts and anticipated receipts from the taxes levied for General County purposes and from other souroes ocming into the said Gener- al Fund for the year 1944, and to provide for the payment of said mrratts, such an amount of money as is neoessary for said purposes is hereby set aside and appropriated out of ths money in, or w ioh shall ooms into, the said General Fund.
"WITNESS ODE BANDS in duplicate thio the 16th day of April A.,D. 1943." This oontraot is virtually in haeo verba with a contract the validity of which was upheld in Roper v. Hall, 280 S.W. 289 (1925) (no applioation). In upholding ths oonraot the Waoo Court of Civil Appeals pointed out that no ex- press authority to emter into such oontraots is conferred upon the Commissicn- srs* Courts, bxt added:
"No provision is made by the statutes for aiding the asssssor in discovering unrendered property, nor for securing a proper descrip tion thereof, nor for ascertaining its actual ownershiP. No standard of value for us0 in making PSSeSwentS is presoribed SXOeDt the assessor*s oun opinion. %o special qualifioaticns are presoribed to make a man eligible to hold such offioe. Evideatly the law contem- plates such disohargs of the duties of that offioe as may be expected frcPn a man of ordinary experience and oapaoity. It has made no express provision for extraordinary oases. . . . Express authority, however, is given to the oormissioners' court over the subject of levying of taxes and requiring all property situated in the county to be proosrly assessed and to bear its proportion of the burden of taxation aooord- inr? to its value. . . . The general powers so given to the cowission- courts are of little praotioal value without the further authority em’ to uss adequate means to insure the urousr. intellieent and effeotive exeroise thereof. The Constitution requires and public policy demands that all taxable property shall oontribute its just proportion to the expenses of goverwent. The purpose of the oontraot under oonsideration 1~s to aid in seouring suohresult. The services oontraoted to be ren- dered oalled for information and experienoe not possessedbythe ordi- nary person. So far a8 they affected the disoovery, assessment, and unrendered oil properties. they could not have been performed by the county asssssor unless he possessed extraordinary information and ex- periemoe alonn the required lines0 He testified in the oass, and under oath disclaimed such sualifications. Neither oould the ccmrmis- sitting as an equalieation board, perform its funotions siomers' court, effeotivelywithout such expert aid, The oourt so dealaxed, in effect, when it entered the contract. . . *s (Bnphasis added) *4 -_ Hon. Arnold Smith - Page 4 (O-6302)
As oan be seen from this quotation, the 'Birco Court held that the con- tract related in part to the "discovery, asssessment, and valuation of unren- dered oil properties" and&hat such portion of the contract aot only was itself valid, , but also gave support to the general validity of the mntraot. This deoision was rendered in 1926 prior to the passage of Acts 1930, 4lst Legisla- ture, 4th C.S., p. 9, oh. 8 (Article 7335a, V.A.C.S.) which provides in partr .
"No oontraot shall be made or entered into by the Ccmmrissioners' Court in oormeotion with the oolleotion of delinquent taxes whre the compel- sation under such contraof is more than fifteen ueruent of the amzat oolleotede Said ooatraot must be approved by bo%h the Cauptroller and the Attorney Gsleral of the State of Texas, bothas to substance and form a . *" (Usphasis added)
Cur courts have since repeatedly held that oontraots relating to the colleotion of delinquent taxes are void unless approved as required by the above Article. Eastemood V. Henderson County, 54 S.W. (Zd) 897 (Comma App.); BMte V. McGill, 131 Tex. 231, 114 S W. (2d) 860: Xarquart V. Harris County, 117 S.VL, (2d) 494 (dismissed, judgment correct). Consequently, while we are bound bythe holding of Roper V. Hall, supra, to the effect that contraots of this kind relate in part to the collection of delinquent taxes, m ars forced by Article 7336a, V. A.C.S., and the abow cited oases to costalude'that such oorptraots are now void unless approved by the Comptroller and the Attornuy Generalo Moreover, the holding in Roper V. Hall that such contracts do relates in part to the colleo- tloa of delinquent taxes has since found support in the oollowing statement by our Ccwnission of Appeals:
"Uhea the purpose for whioh Article 7335a was passed is oonsidered, ~1) do not think the Legislature used the words 'delinquent tares' in a technical 8ense.s Rhite v. &Gill, supra.
Since the oomtraot in question nerer received the approval of the Comptroller and the Attorney Gaaeral, the portions of the.oontraot relating to the aolleo- tion of delinquent taxes neoessarily are void; however, it is settled that in contracts of this kind the portions of the oontraot are so interrelated that the invalidity of a part opuses the entire contract to falle Marquart V. Harris County, supraj Aldriah V. Dallas County, 167 S.Ti. '2d) 560 (dismissed). Consequently, we are constrained to hold that the entire contract in question is invalid by reason of the principles and authorities alove stated*
This conclusion makes unnecessary a consideration of the serious ques- tions of whether a oontraot of this kiad involves an attempt by the oceanission- em 1 court to oiroumvent the prohibitioi against aoting initially on assesmaenta other than those submitted by the tax assessor (hkxrquart V* Rarris County, supm, at p. 503; Aldrioh v. Dallas County supra, at p. 565) and whether the oontraot involves an attempt to aocomplishthe prohibited purpose of vesting in others the duties which the law confers upon the tax assessor (Terre11 v. Greene, 88 Tex. 539, 31 Sew. 651, 634: 34 Tax. Jur. p. 444)~ and loco cl& supra.
In your letter of June 8, 1943, you state:
Hon. Arnold Smith - Page 5 (o-5302)
". . . the Conmissioners' Court of BBontgQnery County did not make any provisions for levying and colleoting a suffioieat tan to pay any interest and to prwide at least 2% as a sinking fund, etc., at the time of the exeoutioa of the oontraot." This statement was made with referenoe to that portion of Seotion 7 of Artiole XI of our Constitution, providing:
"But no debt for an7 purpose shall ever be incurred in any manner by any city or county unless provision is made at the time of ore- sting the same, for levying and collecting a sufficient tax to pay the interest thereon and provide at least ta per cent as a sink- ing funds . . ."
In Stevenson v*‘Blake, 113 S.W. (2d) 625, the Commission o'f Appeals said:
"The term 'debt' as used insaid olause of the Comstitutioa 'mesas oqy peouaiary obligation imposed by contract, except suah as mre, n-pus Christ1 V. Woessner, 58 Tex. 462, 4671 Foard County V. Ssndifer, 105 Tsx. 420, 151 S.W. 523.; City of Rous- ton v. Glover, 40 Tex. Civ. App. 177, 89 S-W. 4253 T,okett v. Middle- ton, Tax. Corn. App. 280 S.W. 563, 44 A. L. R. 1143." (&phasis ours) R this case, oertaia attorneys employed w the ocamsissioners~ oourt under a oontraot dated July, 1935, were to be paid as follows: "One Thousand ~l,COO.OO) Dollars ia cash upon the signing of this oontx%&t tie Thousand ($l,OOOeOO) Dollars on February 16, 1936; and Cne Thousand (#l,OOO.C0) Dollars when judg- ment beoame final in said oases." With referenoe to these payments, the Court said*
aAt the time the ooxtraot here in question 91s made, statutes existed in keeping with this authority whereby ad valorem taxes generally, for the year 1935-- imoluding oounty tames for general oounty purpos- es-- bsosme payable October 1, 1935, but nb penaltg fo- non-payment attached prior to February 1, 1936. Perhaps these oor,siderations supply a firm foundation for the oontentioa of the plaintiffs im error totheeffeot that all saidtaxes for general oounty purposes which wers paid prior to the: last mentioned date constituted "ourrent revenues* of the oounty for the year 1936, and that the presumption arises that the parties to the contract contemplated, at the time ssars was made, that the sum of $1,000, whichwas to become due February 15, 1936, would be paidfrom these revenues. Be this as it may, the faot remains that this sum did not constitute the entire obligation of the county which the contra& purports. The olause of the Constitution whioh has been 8 et out regards as an entirety the pecuniary obliga- tion undertakem to bs imposed by the oontraot, and unless the parties *6 Hon. Arnold Smith - Page 6 (O-5302)
reasonably contemplated at ths time the contract ma8 made, that same would be wholly satisfied out of current rsveauss for the year 1935, or out of sume fund then within the control of the som- missioners' oourb, the entire obligation is void. (Citing oases) The peouniary obligatioa undertaken to bs imposed on the sounw by the oontraot inoludes the myscant of the sum of $1,000 *when judgment bsoom,s final in said oases.1 The contrast, fairly OOIL- strued in the light of the oiromustanoes, shows that the parties did not definitely contemplate that %i.s last-mentioned sum l~uld be paid, when it falls due, from ourrent rweaues for the year 1935. . . . Cnder the authorities as we interpret thsm, the test is, Did the parties, under the oiroumrstanoss, reasonably oontem- plate that the SUII mentioned would in fast become due at such a time?"
See also ths'opinion of the Court of Civil Appals in this case* 88 S.W* (2d) 773. The instant contrast was exeouted on April 16, 1943, and payments t-0 the oontraators =re to be made by warrant8 spayable out of &he revenuss of 1944, and/or the &ioipated revenues of 1945 as followsa Seven Rndred and ..--- --. - ~~ Fifty ($750.00) Dollars on the first day of Dee ember, 1943, and on the First days of January, February, March, April, May, and June, 1944. AED upoa cm- pletion of said work forths ysar1944, andafter final action has been taken by the Board of Equalization, a Earrant or Warraints drawn against the Gensra3 Fund of VMONTGOMERY CCUBTY, TEXAS, shall be~issued to FEITCMRDAED ABBOTT, for oompensation, due, if aw, making the total omnpsnsatior equal to Eleven Thousand (#ll,OO .OC) Dollars." Unlike the obligaticms ig the oases of Ccsmsissionsrs* ourt of %dissn County v. Wallace, 118 T X. 279, 15 S.W. (2d) II
535 and MoCliataak & Robertson v. Cottle County, 127 S.fni (2d) 319, (dismis- ~ sed 5 , the obligation ia the instmt oomtraot is not oontingemt upon the suo- oess of the contractors ia the undertaking whichthey assume, nor is such obligation SO unoerbain in amount as to make impossible the provision of a 8i.nkiag fund; unlike the obligation in Ward v. Ci of Big Spring, 161 S.W. (2d) 821, reversed oa other grounds, 169 6.K (2d 151, in the instant case 7
ths.oontingency rnhioh creates the obligation is not solely withia the control of the county; unlike ths obligation in Wderrood v. Howard, 1 Sell; (2d) 730 (dismissed) the obligation i8 this sass is not to be disoharged frcss taxes already assessed.
Since the iastant contract expressly provides that payments are to be made out of the srevenues of 1944, and/or the anticipated revenues of 1945,s it is impossible.to aaswer the test established ia Stevenson v. Blaok, supra, by saying that at the date of the corntract, the parties then oomtemplated that the obligation nmuld be satisfied out of the currant revenues for the year or out of some fund thea within the immediate control of ths corporation.
Consequently, if ms should bs mistaken in the oonolusion first stated above, you ars rsspeotfully advised that the oontraot is invalid by reason *7 h
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Hon. Arnold Smith - Page 7 (o-5302)
of its oraatioa of a debt in ooatravmtion of Seation 7 of Article XI o.f the Tsxas Constitutiono
Tmst~sg that the foregoing fully ummem your inquiries, wu are ve y t mly yours R. Dean Moorhead Assistant APPROVED JUNE 21, 1943 APPROVED /s/Gerald C. Mann OPINION CWb5TpEE AlTORl-iEYGENERALOF'TEXAS BYBWB
Chairmar