Untitled Texas Attorney General Opinion ( 1943 )

THEATTORNEYGENERAL
OFTEXAS
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Hon. F. B. Caudle Opinion No. O-5094
County Attorney Rex Can delinquent levee
Franklin County improvement district
Mount Vernon, Texas taxes be collected from
a person who has purchased
Dear Mr. Caudle: forfeited public school
land from the State? And
related questions.
We have received and carefully considered your letter in
which you request the opinion of this department on the
matters stated+
We think a fair statement of your request and the facts
set out therein is as follows: Levee Improvement District
No. 1 of Franklin County was created in 1917 and bonds, some
of which are still outstanding, were issued the following
-year. Within the district is a tract or tracts of public
sohool land, which land is to be forfeited by the Commissio~~~r
of the General Land Office for nonpayment of interest due the
State. You further state that the district has brought suit
against the present owner to enforce payment of the delinquent
levee improvement district taxes against the land.
On the basis of the above faots you make inquiries which
are substantially as follows:
First: If the land is forfeited to the State and the
present owner should repurchase the land, or have his claim
reinstated, what would be ,the status of the delinquent taxes
due the district?
Second: Could the delinquent taxes be enforaed against
a person not having any rights under either Article 5326 or
Article 5326a, V. A. C. S., who purohased from the State after
forfeiture?
Third: What would be the status of the outstanding bonds
in either of the above situations?
TO avoid the use of unnecessary language, we will use the
term "present owner" as meaning any person given a right to
repurchase forfeited land under Article 5326a, and as mean-
ing any person given a right to reinstate his claims under
Article 5326.
i- .-
Hon. F. B. Caudle, page 2, O-5094
Artiale 5326, V.A.C.S., as amended in 1941 by the
~_ ^
47th Legislature, provides for the forfeiture of Public
school land and the method and manner of reinstatement of
claims "provided that no rights of third Persons may have
intervened."
Artiole 5326a, V.A.C.S., applies to Situations where
public school land has been forfeited for nonpayment of
interest accruing prior to November 1, 1925. It provides
for the manner and method of revaluation and subsequent
repurchase of land forfeited. This statuta also preserves
"any lien, legal or equitable, in behalf of any person or
the State, . s .'I
The remedy of the present owner will be governed by
one of the above statutes. Article 5326a clearly preserves
the district's delinquent tax lien on repurchased land.
However, the pertinent portion of this article before its
amendment in 1926 read as follows:
"Sec. 4. Whenever any land affeoted by ,this Act
is repurchased under the rights of repurchase given
herein, any lien, legal or equitable, and any valid
contractual right in favor of any person or persons
existing against, in and to said land or any part
thereof at the time of forfeiture shallremain unimpaired
and in full force and effect as if no such forfeiture
had occurred."
As against the contention that the quoted portion was
not intended to and did not peserve liens in favor of the
Sta.i;e,the Court of Civil Appeals in Gerlaoh Meraantile
Co. v. State, 10 S.W. (ad) 10.35, writ of error refusud,
held as follows:
"In section 4 the Legislature was fixing the
status of liens and contract rights affecting
the land before the forfeiture.
*IIn the present case the taxes here sued for
were delinquent for years prior to the forfeiture,
and we are now aalled upon to decide whether the
lien of the state for suoh taxes was preserved by
section 4.
"It is not to 'be presumed that the Legisla-
ture intended to cancel the taxes due the state, in
fact, we think the presumption will be that it did
not so intend; and, there bein nothing in the act
whichexpressly shows an intent"ion to cancel, we are
of the opinion that such was not the intention and
that the tax lien was intended to be preserved, and
therefore must answer the question in the affirmative."
Hon. F. B. Caudle, pago 3, O-5094
We believe the holding in the Gerlach case to be of
value in construing Article 5326, whioh allows rainstate-
ment of claims "provided that no rights of third persons
may have intervsned." We do not believe that this statute
is intended to bar the tax liens of the State o,r any
instrumentality thereof. We agree w'Lth the prfnrjfple
announced in the Gerlaah case that since the statute does
not show an express intention to cancel taxes, certainly
such an intention will not be presumed, Further, we have
grave doubts as to the power of the Legislature effectively
to bar tax liens where the situation is one of reinstatement
in view of the provisions of Article 3, Se&ion 55, of our
State Constitution.
The most recent construction of Article 5326 is found
in Danciger v. State, 166 S. W. (2d) 914 (Sup. Ct.).
The facts show that the State, Hudspeth County, a road
district and two sohool districts were plaintfffs In a
delinquent tax suit. The validity of the judgment fore-
closing the various tax liens was questioned on appeal.
The State, among 0the.r contentions, claimed the question
was moot since the land had been forfeited to the State
subsequent to the entrance of the judgment. The Supreme
Court answered this contention as followsg
II
. 0 . Even if we assume that it (the land
upon which the delinquent tax liens were foreclosed)
hasbeen forfeited, ft does not follow that the ques-
tion is moot. If tha rights of +hird parties have
not intervened, Danelger and Farley still have a
right to reinstatement upon payment of the fnterest
due, as provided in Ar%Icle 5326 of our statutes.
Upon reinstatemeniY they would ,iake the property sub==
jeet to all obligations to the State that were extant
at the time the for.feiture occurred, Fnoludeng the
judgment for the taxes, with foreclosure of the lien,
and the land could then be sold in satisfaction of
the judgment. . *If (Parenthe,tical matter added)
In answer to yovar.fSrst q,uestion you are advised that
if the present owner has his claims reinstated, or if he
repurchases the land, he vsill ,take subject to the delinquent
taxes of Levee Improvemen,t Distriot No. 1. of Franklin County.
This Department has recwn~tZ$ ruled on your second
question in Opinion No. O-5O629 a oopy of which we are
enclosing. Your second qraestlon, in aoeordance with said
opinion, is therefore answered In the negat.ive. However,
we oall your attention to the remedies afforded the district
against the former owner or owners, whl.chare set out Ln the
opinion.
We next consider your third question, Where the land is
Hon. F. B. Caudle, page 4, O-5094
repurchased or the claims of the present owner are
reinstated, it is obvious that the bonds, and the rights
of the bondholders, are not impaired in any particular.
However, a different situation is presented when a
new purchaser acquires the land. A close study of the
applicable statutes, Articles 7972-8042, VI. A. C. S., shows
that the bonds themselves are not a lien upon a particular
traot of land but that the delinquent taxes do constitute
such a lien. The rights of the bondholders rise no higher
than those of the Levee Improvement District. The bond-
holder has no privity of contract with the taxpayer as his
contract is with the district alone. See City and County
of Dallas Levee Imp. Diet., ex rel Simond v. Allen, (D.C.N.D.
of Texas), 17 F. Supp. 777.
A bondholder is not a necessary party to a suit to
oollect taxes, Glenn v. Dallas County Bois D'Arc Island
Levee District, 268 S.W. 452 (Comm. App., opinion adopted
by the Supreme Court), unless the right of the district to
levy and collect any taxes at all is questioned. Preston V.
Anderson County Levee Imp. Dist. No. 2, 3, S. W. (2d) 888
(Civ. APP.). The bondholder has no legal cause of action
against the taxpayer to recover taxes due nor has the tax-
payer any legal obligation toward the bondholder in that
respect. Glenn v. Dallas County Bois D'Arc Island Levee
Imp. Dist., supra.
In view of the above authorities as to the status of
bonds and bondholders, it is our opinion the bondholders have
no rights with regard to land forfeited to the State and sold
to a new purchaser.
We trust that the above fully answers the questions asked.
Yours very truly
ATTORNEY GENEHAL OF TEXAS
s/ Woodrow Edwards
BY Woodrow Edwards
wE:AMM; ok3 Assistant
Enclosure
Approved Opinion comiittee, by GPB, Chairman
Approved May 7, 1943, by Attorney General of Texas
s/ Gerald C. Mann