Untitled Texas Attorney General Opinion ( 1955 )

AUR'IW~X;~
JOEN BEN s--
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'-December 12, 1955
Hon. J. Earl:Rudder /.
Cha$rman, Veterans' Land Board
Austin, Texas
Opinion NO. s-183
Re: Questions relating to exe-
Outlon sale of .the interest
of a purchaser under the.
.~ Veterans' Land Program.
BearSir:'
Your opinion request consists of sixteen
questions contiernlnglevy of execution and foreclosure
sale, before land after forfe~ltureof the contract of
sale and ~purchase;.pursuantto.~judgments for ~delin-
quent taxesand private debt, and the effect on a
veteran's contractual interest In land 'he Is purchas-
ing.through the Veterans'-Land Program.
Your questions may be resolved into two
basic ones, the answers to which will determine~the
answers ~to.your spcific questions. Summar~ized;the
basic questions are:
1.. Is a veteran's interest in the land
he Is-purchasing through the Veterans' Land Program
subject to foreclosure and sale pursuant to judg-
ment for delinquent taxes thereon and for private
debts incurred by him?
..,.'
2. May the purchaser at the foreclosure
or execution sale be~substituted for the veteran in
the contract of sale and purchase with the Veterans'
Land
i. Board?
The answer ~to question number one is in the
affirmative:,if either of the following sets.of facts
exist and, In the case of private debt, the land is
Hon. J. Earl Rudder- page 2 (NO.%183)
nbt otherwise exempt from forced sale:
1. The veteran has had possession
of the land for three years or more and
forfeiture of the contract of sale and
purchase has not occurred.
2. The veteran has had possession
of the land under.three years and has
died or become incapacitated by reason
of illness, and forfeiture of the coti-
tract of sale and purchase has not oc-
curred.
The answer to question number two is in the
affirmative if the facts exist as set
_- forth
_a in either
of the preceding paragraphs numbered 1 and 2 and~the
veteran and ,purchaserhave complied with the terms and
conditions of the Veterans' Land A&t,.and;‘!as:+gahds the
tax sale, the two-year‘redemption period 'hasexpired
and the veteran has failed to redeem.
The Veterans' Land Act, hereinafter referred
to as the Act, is codified as Arti’de 542lm, Vernonis
Civil Statutes. The Act was amended by Chapter 520,
Acts of the 54th Legislature, 1955, effective on
September 6, 1955, and discussion herein will be in
the light of the Act as amended. The ~Veterans'Land
Board will be referred to as the Board.
All lands purchased by the Board and all
lands previously sold by the Board and repossessed for
any cause on account of the acts of the purchasers or
any other lawful reasons oonstltute a part of the Vet-
erans' Land Fund. (Sets. 8 and 11.) Thus, suCh lands
are exempt from taxation -so long as they remain a part
of the Fund. (Art. 7150, V.C.S.) However, when a portion
of the lands is sold to a veteran under a contract of sale
and purchase (Sec.l7), it ceases to be a part of the Fund.
Although the legal title to the land so contracted to be
sold Is In the State, ltls to be considered for all
the purposes of taxation, as the property of the person
so holding the same. (Art.7173, V.C.S.)
A veteran, upon execution of a contract of
sale and purchase with the Board and entry into poss-:
ession, becomes Invested with the equitable title from
the date of the contract, or in any event, from the
date he 'takespossesSiOn. Ingram v. Central Bltulithic
. .
* -,,y
Hon. J. Earl Rudder - page 3 (No.S-183)
@., 51 S.W.2d 1067 (Tex.Clv.App.1932 error ref.), Lee-
son v. City of``Houston,243 S.W. 485 [Tex.Comm.App.;lm),
Walcott v. Kershner, 291 S.W. 195 (Tex;Comm.App;l927).
The equitable title Is the taxable title in this instance.
,Texas TurnDike Company v. Dallas County, 271 S.W.2d 400
(Tex.Sup.1954).
But why distinguish the number of years the
veteran has held.possession of the land and how does
the ~veteran's death or Incapacity because of illness af-
feot thenanswer? By referring to Section 17'of the Act
it will be seenthat "the Board .isempowered,in each in-
dividual case.to specify the termsof the contract
entered into with the purchaser, not contrary to the pro-
visions of this Act, but no property sold under the pro-
vlslons~of this Actshall be transferred, sold or con-
veyed, in'whole or in part, until the purchaser has
enjoyed possession for a period of three (3) years from
the date of purchase of said property and complied with
all the terms and conditions of this Act and the rules
and regulations of the Board; provided, however, that
should the veteran purchaser die or become incapacitated
by reason of Illness, the property may be conveyed be-
fore the expiration of said three (3) years by said pur-
chaser or his heirs, administrators or executors; . . .n
A veteran in possession for three years or
more, or in possess'ionunder three years and incapaci-
tated because of illness, has a vendible interest in the
land. A vendible interest vests in his heirs, devisees,
or personal representatives upon his death. (Sec. 20.)
Since the Interest is taxable, as well as vendible, the
tax lien can be foreclosed and the interest sold-at a tax
sale. A tax suit Is brought as an ordinary foreclosure
for debt, and sale of the Interest is had as under ordi-
nary execution. (Art. 7326,v.c.s.)
The purchase by a veteran under the Act Is
analogous to a purchase by an individual of county school
lands or of public lands owned by the State and sold un-
der a contract of sale and purchase with forfeiture pro-
visions.' In Taber v. State, 85 S.W. 835 (Tex.Clv.App.
1905, error ref.), the court said:
"That our tax laws should be construed
as they long have been, to require the vendee
Hon. J. Earl Rudder - page 4 (No.S-183)
holding lands under an executory contract
of sale to pay the taxes assessed against
such lands, we entertain no doubt. Lands
so held are subject to execution as the
property of the vendee, . . .~after the
school lands are sold by the county'they
become the property of the vendee for pur-
poses of taxation, as well as of execution,
even though the sale be on a credit, and
the contract executory . . . True, the county
is not entirely divested of title to the lands
until they are finally paid for, but until a
forfeiture or rescission takes places on ac-
count of the default of the purchaser the
purchaser Is to be regarded as the owner,and
the lands may be sold for taxes as his prop-
erty."
In.Martin v. Bryson, 71 S.W. 615 (Tex.Clv.App.
1902, error ref.), the court quoted Freeman on Executions
as follows:
"So one who purchases lands'from a
state under a contract which pro,videsfor
certain payments, upon the making of which
he will become entitled~to a patent, and
upon default in any of which he forfeits
all rights under his contract, has a vendi-
ble interest in such lands prior to their
forfeiture, and one which is subject to
execution. The estate acquired under the
levy of an execution is, of course, no
better or more certain estate than-\that
held by thenjudgment debtor, and rema1n.s
liable to be defeated by the same contin-
gency to which It was subject before the
execution sale."
In all cases in which lands have been sold,
or may be sold, for default In the payment of taxes,
the sheriff selling the same or any of his successors
in office, shall make a deed or deeds to the pur-
chaser or to any other person to whom the purchaser
may d,irectthe deed to be made. (Art. 7330,V.C.S.)
However, the purchaser takes the interest subject to
the veteran% right, or the right df anyone claiming
under him, to the two-year redemption period from the
filing for record of the purchaser's deed, during
which perlod the veteran is entitled to possession.
(Art. 7345b,V.C.S.)
r-- `` 5, “Y
Ron. J. Earl Rudders- page 5 (Wo.S-183)
If the veteran~l~s
interest is purchased at the
tax sale by any tajring~'un$t,
it may be held or sold by
the unityfor the use and benefit of Itself and all
other taxing units which are parties to the suit and
whioh,.havebeen.adjudged to 'havetax liens against the
lntarest., (Art. 73#5bi~) But such interest is held or
sold subject to the,veteran's right of redemption.
,...
:What is the interest of the veteran.to be
acquired by the purchaser ata tax or ordinary execution
sale? It'ls the veteran'.srlght under his contract of
sale'and purchase,to possess the land and have a deed
executed:to him when theentire indebtedness due the
State $6.paid;.~as-wellas to convey his interest upon
certain terms and conditions. (Sec.17.) It is compara-
ble to a'mortgagor's right of redemption.
InBuchanan v.'Monroe, 22 Tex. 537 (1858), in
speaking of the equity of redemption, the court said:
" . * . The doctrine of equity is that the
equity of redemption is the real and bene-
ficial estate, tantamount to the fee at law;
.and,it.ls.accordlnglyheld to be descendible
.by,'tiherltance, devisable by will,and alien-
able by'deed, precisely as if it were an ab-
solute estate of Inheritance at law; . .':
'The mortgagor has a right to lease, sell, and
,inevery respect to deal with the mortgaged
-.premisesas owner, so long as he is permitted
to remainin possession, and so long as it Is
understood and held, that every person taking
under~hlm,.takes subject to all the righta of
the ,mortgagee,unimpaired and unaffected!: . . .
The equityof redemption . . . is liable to sale
on execution. . . .It
'In Houston vi Shear, 210 S.W. 976 (Tex.Civ.ADD.
lglg;ePfor-dism.I;-.~b~ follow%ig was said concerning exe-
cution .and-'themortgagor's rlght'of redemption:
"Where,~as .here, lands subject to
contract liens are sold on execution
against the owner,,the purchaser at exe-
cution sale succeeds to his rights, and
equity confers upon him the privilege of
rede~mp,tion,
but only on condition that
the rights acquired at execution sale are
valid.
r.,,
.I.
Hon. J. Earl Rudder - page 6 (NO-S-183)
In Rosenthal v. Desberger, 1)C S.W. 192 (Tex.Civ.
App. 1910), the court said:
1,. . . All that Is seized and subjected
to aale by the levy of the execution is such
fight or tltle.as the defendant therein had
at the timej and all that passes at the sale
Is such right or title as the latter had or
owned at the date of the levy, or Fad ac-
quired between that time and the date of the
sale. : : At exebutlon sales the purchaser
can claim no greater rights than such as he
might acquire had the defendanthimself con-
veyed all his right, title and interest in
the propertylevied upon."
You have advlsed.that a resolution was passed
by the Board on January 6, i953, which reads In part as
follows:
All transfers by Assignment of
Contradt'oh Sale and Purchase shall be ap-
proved by the Chairman of the Veterans' Land
Board. Such approval shall be accomplished
by his signature and by affixing the Veterans'
Land Board seal thereto. . . ,'
A veteran may convey all his right, title and
interest in the land he Is under contract to purchase, upon
certaln~terms and conditions provided .in the Bet and in
conformity with the rules and regulations of'the Board.
Hence, there appears to be no reason why a purchaser at a
tax or execution sale may,not.be substituted for the
veteran in the contract and~be permitted to continue it
or liquidate the Indebtedness, provided the Board is
satisfied that the facts existas assumed herein.
A veteran in possession for less than three
years from the date of his purchase contract and not in-
capacitated by reason of illness is prohibited from
transferrin selling or conveying his interest in the
property. 7' Sec.17.) In this cir&mstance he has no
vendible interest in the property subject to sale under
execution or like recess. Moser v. Tucker, 87 Tex.94,
26 S.W. 1044‘(1894 P , Bourn v. Robinson, 107 S.W. 87'8
(Tex.Civ.App.1908). Therefore, a tax judgment against
the veteran must be satisfied otherwise than by subjecting
..,;_~
Hon. J. Earl Rudder "'page ?'(No. s-183)
his interest to a tax sale.~ 'Dancinerv. State, 140 Tex.
252, 166 S,w.2d ,914 (1942):
Forfeiture of the veteran's contract restores'
the land to the'veteranst Land Fund (Sec.lg), leaving no
interest of.the veteran therein subject to taxation or
execution. ,Danclger'v. State> s,upr&I.State v. Stovall,
76 S.w.2d~206``fTex.Civ.App.l934jerror ref.),. The for-
feiture would not extlngulsh'the personal liability of
the veteran and upon reinstatement of thecontract an
execution could be levied upon~the veteran's interest in
the eventthat his interest,,issubject to a forced sale.
Further, upon relnstatement 'of the contract the veteran
would take the property.subjeot to all tax liens which ex-
isted-at the ~timethe forfeiture occur~red,and his interest
could‘thereafter be subjected'to foreclosureand satis-
faction'of the.'taxliens. Danciger v. State, supra.
Forfeited land sold',to~another veteran would not be bur-
dened with taxes accrued against the original veteran
purchaser. Att'y,Cen. Op. No. o-5062. (i943).
Based upon the above discusuion, asasummary
we will answer each of your questions by numbering them
as listed by.you.
SUMMARY
1. If a veteran's contract has not been
.forfeited'and ~a delinquent tax suit is brought
and execution levied on the veteran's interest,
the Veteran's interest may be sold at a fore-
closure sale only In the.event that (a) the
veteran has had possession of the land for three
years or more, or (b)'the veteran has become
incapacitated by reason of illness, or (c) the
'veteranhas died.
2. If a veteran's contract has not been
forfeited and the veteran's contractual if-l-
terest-is sold..under'anexei?ution(see answer
to.questlon No. l), the purchaser at the fore-
closure sale may.be placed in possession of
the land and assume the payment of the con-
tract with the Veterans' Land Board in place
of the veteran, provided that the two-year ~,
period of redemption has expired and the veteran
Hon. J. Earl Rudder - page 8 (No.S-183)
has not exercised his right to redeem; Bur-
ing the two-year redemption period and prior
to redemption, the purchaser would be en-
titled to make the required payments to the
Board under the contract in order-to pre-
vent a forfeiture of the contract, but if the
veteran later exercised his right of re-
demptionthe purchaser's rights as a DLU-
ohaser would be cut off.
3. If a veteran's contract has not
been forfeited and the veteran's contractual
interest is sold by levy of execution (see
answer to question No. 1) and there are no
purchasers, the State or county may purchase
said ,interestand hold ,it In trust'for the
taxing agencies involved. However, the
right of the Veterans' Land Board to for-
feit the contract for nonpayment of prlnci-
pal or interest would continue.
4. If a veteran's contract has been
forfeited when a'dellnquent tax suit is'
brought, only a personal judgment against
the veteran could be obtained, as the veteran
has no interest that can be foreclosed.
5. Our answer to the above question
No. 4 fully answers your question No. 5.
6. If the veteran's contract has been
forfeited, the veteran's contractual interest
cannot be sold under execution; and the pur
chaser at such a sale, if held, would acquire
no interest in the land and should not be
allowed to assume the payment of the contract
with the Veterans' Land Board ,in the place
of the veteran.
7. If a veteran's contract has been
forfeited, the veteran's contractual interest
Is not subject to execution or foreclosure
and therefore the State or county would have
no authority to purchase said Interest at
such a sale, if held, and hold it In trust
for the taxing agencies Involved.
Ron. J. Earl Rudder-:'.page9. (S-183)'
8. If a veteran's contract has not
been forfeited, and~aadelinquenttax ~suit
is brought.by the county in the name of
th&%tate .ofTexas, and .judgmententered,
an &ecution.may be levled only on,the
.lnt,er$st
owned by the 've~teran,
and his
interest~only may be sold'at,a foreclosure
sale to s&tlsfy the judgment, and then
only tn:the following'lnstanoes~: '(a)the
veteran has had possession of the land for
thriaeyearsor more, or (b) .$he veteran
has becomeincapacitated by reason oft
illness,,OT (0) the veteran has died.
..9. Ifa veteran's contract has been
forfeited when a'delinquent tax suit is
brough~tby'thia'countgIn ~the'name of the
Stkte of Texas,.-apersonal judgment only
should be entered againstthe veteran, and
neither a foreclosure of a tax lien nor an
execution could-be Issued sgainst the land
orthe 'veteran's interest therein.
'10. In the event thatdelinquent taxes
have accrued against a tract of land being
purchased through the Veterans' Land Pro-
gram and the veteran's contract is forfeited
and the land .is resold by the Board, as pro-
vided in the 'Veterans'Land Act, the pur-
chaser of the land at the second sale takes
the land free from all past delinquent taxes.
In such case.there Is no lien upon the land
by reason of the prior delinquent taxes, and
a personal judgment for such taxes could be
secured only against the original veteran.
11. If a veteran's contract has not
been forfeited and a creditor of the veteran
obtains a judgmentagainst the veteran and
the'veteran's contract has not been in ef-
fect for three years, an execution cannot
be;levied on the veteran's contractualin+
terest and said contractual interest be
sold at foreclosure sale and the purchaser
be substituted in place of the veteran on
his contract of sale and purchase, except
in the event that (a) the veteran has be-
come incapacitated by reason of illness, or
Hon. J. Earl Rudder - page 10 (S-183)
(b) the veteran has died and the interest
of the veteran Is subject to a forced sale.
12. Our answer given to the above
question No. 11 makes it unnecessary to
answer your ~'questlon
No. 12.
13. If a veteran's codtract has not
been forfeited and a creditor of the veteran
obtains a judgment against the veteran for
a debt and the veteran's contract has.been
in effect'for more than three years, an
execution may be levled on the veteran's
contractual Interest and said contractual
Interest be sold under execution to a pur-
chaser and said purchaser bi substituted
on the contract in lieu of the veteran,
unless the veteran's interest is not sub-
ject to a forced'sale.
14. If a veteran's contract has been
forfeited and a-credltor of the veteran
obtains a judgment against the veteran for
debt, an executioncannot be levied on the
veteran's interest unless the veteran re-
deems the land from the Veterans' Land
Board and then only in the following in-
stances: (a) the veteran has had possession
of the land for three years or more, or (b) the
veteran-has become Incapacitated by reason of
illness,'or (c) the veteran has died3 and fur
ther provided that the veteran's Interest Is
subject to a forced sale.
15. Our answer to the above question
No. 14 fully answers your qUeStiOn No. ~12.
16. After a.veteran's contract has
been forfeited, no taxes accrue thereon as
loti&as It is held as a part of the Veterans' ~
Land Fund. In the event the veteran secures
a reinstatement of his c,ontract,he should be
Hon. J, Earl Rudder - page 1% (s-183)
required to pay the delinquent taxes
that acerued before the forfeiture.
Yours very truly,
JOHN EEN SHEPPERD
Attorney Qeneral of Texas
APPRQVED:
Ha* K.~Wall
Reviewer
will D. Devils
Special Reviewer
L. W. Gray
Special Reviewer
Da& @pant
First Assistant
John Ben Shepperd
Attorney General
JAA:bt