Untitled Texas Attorney General Opinion ( 1964 )

September 22, 1964
Honorable T. W. Dullington Opinion No. C-314
County Attorney
Knox CountY Ht?: Taxation of property which is
Munday, Texas under an option to purchase
after January lst, and whether
property should be taxed at
its true and full value in
Dear Mr. Dullington: money.
We have received your letter in which you submit the
following statement: .:
"A taxpayer appeared on behalf of himself
before the Knox County Commissioner'sCourt sitting
as a Board of Equalization and complained that the
evaluation assessed on his cattle was improper.
The taxpayer stated to the Board that he raises
his own mother cows, and they produce a calf crop
each year; that when he renders these mother cows
for tax purposes he depreciates.thevalues of the
mother cows each year, not taking into consideration
their actual cash value. Said depreciated value is
less than the actual cash value of said mother cows.
Said taxpayer further stated that '-hecontracts to
deliver the calf crop each year after January lst,
to a proposed purchaser. The proposed purchaser,
enters into a contract with the taxpayer before the
1st of January and tenders the sum of $10.00 on each
calf contemplatedto be purchased. Said contract
provides that if the purchaser does not desire to
consummate this contract when the calves are ready
for delivery after the 1st of January he may forfeit
the $10.00 per calf and the contract shall become
null and void."
YOLIsubmit the following questions:
"1. Are the calves contracted before January 1st
of each year, to be delivered after January 1st of
each year under the facts above set out, the property
of,the taxpayer and subject to taxation, or the pro-
perty of the purchaser?
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Honorable T. W. Bullington, Page 2 (C- 314)
"2. Is the taxpayer entitled to depreciate his
mother cows each year without consideringtheir actual
cash value or is the taxpayer required to report the
actual cash value of said mother cows?"
FIRST QUESTION
In your f,lrstquestion, you desire to know who
owns the calves on January lst, since the owner on such
date is required under Article 7151, Vernon's Civil Statutes,
to list the same for taxation for the ensuing year. The
answer to this question depends upon the contract between~the
optionor and optionee. You state what the optionor says per-
etaining to the,contract. In your letter and brief which you
have submitted to us, you assume that the optionee only had an,
option to purchase the calves after January 1st under the option
contract which was entered into before January 1st. Upon this
assumption alone, we will answer yo:r question.
Tex.Jur.2d 161, ~Sec. 37, it Is said:
In 13 --
"An option Is merely an offer that binds the
optionee or holder of the ,optlonto do nothing;
he may or may not accept the offer, as he chooses,
within the time specified. Until it is accepted,
anoption is not, in legal effect, a completed
contract. . . ."
In Corsioana.PetroleumCo. V. Owens, l10 Tex. 568,
'222 S.W. 154 *
11
. A contract for the grant of an option
is necessarily unilateral. An option is granted -,
for the purpose of enabling the grantee to exercise
the particular right or not, as he may elect. The
value of it consists in that privilege. Owners of
property have the unquestionedpower to grant such
rights with respect to it. They are free to validly
make such contracts. When so made, it is the duty of
courts to uphold and enforce them. A contract for
the grant of an option, limited to a definite time,
is therefore valid and enforcible if,,supportedby
an independent consideration . . . .
In McWhlrter v. Morrow, 203 S.w.2d 317 (Tex.Civ.App,
1947), the Court said:
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Honorable T. W. Bullington, Page 3 (C-314)
"It is conceded by appellant that the option
clause in the contract is a mere offer to sell and
that appellee did not bind himself to buy but he
may or may not,accept the offer. It is further
conceded that if he failed to accept the offer
to sell his only liability was the forfeiture
or loss of the $1,000 consideration. Northside
Lumber & Bldg. Co. v. Neal, Tex.ClviApp.,23
S.W.2d 858. Until the offer was accepted by,
appellee there was not a legal binding contract
of sale. Texarkana Pipe Works v. Caddo Oil &
Refinin Co. of Louisiana, Tex.Civ.App.,228
S.W. 58fi . . . ."
As the contract above mentioned was only an option
to purchase the.calves, and since the option was not to be
exercised until after January lst, we answer yourfirst ques-
tion by saying thatthe optionor of the calves was the owner
for taxation on January 1st.
SECONB QUESTION
Your second question Is fully answered by Attorney
General's Opinion'No. V-776, a copy of which is enclosed.
SUMMARY
If the owner of property before January 1st
contract giving a person an option
enters ~into,.a
to purchase the property after January lst, the
property should be listed for taxation for the
ensuing year in the name of the optionor.
Yours ve,rytruly,
WAGGONER CARR
Attorney General of Texas
HGC/fb
Enclosure
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.
Honorable T. W. Bullington, Page 4 (C-314)
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
J. H. Broadhurst
John Allison
Bob Flowers
Harry Gee
APPROVED FOR THE ATTORNEY GENERAL
By: Roger Tyler