Untitled Texas Attorney General Opinion

E ORNEP GENERAL
OF
GNRALDC.WN AUSTlN 11.TEXAS
HoaorableArnold Smith
Cbunty~Attonsy
ldontgom~ry
County
Conroe,Texas
Dear Sir: Opirioa mb. O-6302
Rer Validityof bontrrotfor tha
listiagand valutitiom
of oil
propertiesin MontgomeryCounty.
In your lettersof %y 13, 1943 ud June 9, 1943, you requesYedour
opinionon the above statedquestion. The oontraotia questicmprovides:
"ICIXJWALL
MNN BY THESE PRNSEHTS:
"TBAT,WBBXiAS,the Conunissioasrsl
Court of Montgmery %uaty,
Texas, has oontemplatedthe employmentof skilledex$ez?bdin the matter
of appraisalsaad valuationof oil and @8 and plblioutilitiesproperties
ia the said MontganeryCoumty,for,the ooxve8ieaoeand iafonnationof the
Boardof Eqtialiaatiorof said Corutyia equalizingthe vpluatiorarof such
propertiera~ oomparedtiithall other propertyvaluationsin said County
for ariesamentpurposes;a8d
"WEEBUS, PRITCHARDAND ABBOTT, a Parbnershipof Fort yorth,
Texan, representthat they are skilledim au?h niatteraand ham roieatifio
and tsohaioalknowledgeud rnq year81 experien6eia the matter o? apprai-
sale ad valuationsof ruoh propsrtiee.for assessment,and it is the pur;
pane of the Cmmissiomer#' Court of MontgomeryCountyto employthe *WV-
ioea of the maid PETTCHABDAND ABBOTT for raid purpoaee,and
%3NRNM, PRITCHARDAUD AEOlT haF prupowd $0 said Commlrsionerr'
Court of raid Moatgcrmery
Countythat they willa8airt the Tu-Aaserror-Col-
lsotor im the preperatioaof Cl1 and Gas and Public Wilily propertier ,I,
lrsessmeatsud advim with the Court an to the value of all oil and gay md
publioutilitypropertiesfor the year 1944 For a fee of Elaan Thousqd ,',
(#ll,OOO.OO) Dollars.
"IT IS, THEREFOBE,AGF?XXDBY AND ETlSZENMOMCOONBRYColulty, Texar,
actire;
herailby ud tihrough its Ccmmisaiomers' Court, prt of the First Part,
ud PXITCBARDABD ABBOTT of Tarrawt County,partiesof the SeooadPard, aa
followsa
HUB. Arnold &nith - Page 2 (06302)
"PARTIESOF m SECOND PART agree to ocnnpilea ocmpletelist of the
record ownersof all 011 ud Gas producingpropertieswhereversituated ud
locatedin Mooattganery
County,Texas, and all undewloped leasesand royalty
interestadjrostithereto,as of January1, 1944, said compilationand record
to show the partioularinterestor intereststherein owned.
"PARTIESOF THE SECONDPART also agree to seourefor Party of the First
Part, all informationavailablefor the use of Parties of the First Part, sit-
ting as a Board of Equalization,ia dstsnninimgthe propervaluatioza to be
fixed upon such propertiesfor assassmnent
rud taxationpurposesand generally
to campilesuch informationas shall'beof aid and benefittos aid Party of the
First Part in equalizaticmof tha.valueof suoh propertiesfor taxation.
"Said partiesof the Seoond Part agree to meet with the Commissioners'
Court of MontgomeryCounty,sittingas a Board of Equalization,and to furnish
said Board with al.1informationscouredby them duringtheir investigatimsfor
the purposesof equalizingthe asrressments on said properties. Parties of the
Second prt also obligatethemselvesto make a surveyof&l pipe lines, refin-
eries,tank farms, tankage,and all other propertiesof value used in oonneo-
tiolawith said oil and gae dawlopment, includingtransportation facilities,
etc.
"FOR AND IN CONSIDERATION
of the skilledservices,technicalknowledge,
and experienceof Partiesof the SeoondPart, ia the $erformanoeof the obliga-
tions devolvingupom them hereunder,Party of the First Part agrees and obli-
gates itselfto oompwsate Partiesof the Saoond Part in the manor follotiagz
"SeoondPartiesshall reoeiw RR amout to be paid out of the General
Fwd of MontgomeryCounty,Texas in the awn of Eleven Thousand(~ll,OOO.OO)
Dollars coveringoil and gao and publioutilityproperties,includingleases
and royaltyinterests.
"It is furtheragreedaxedunderstood% both Partiesthat Montganery
County,Texas,will issue,or oauae to be issuedto PRITCRARDAND ABBOTT,
warrantsdrawn agaimstthe GeneralFund of said MontgamsryCounty,Texas,and
payableout of the revenuesof 1944, and/orthe anticipatedrevenuesof 1945,
as follows:
"SevenHuedredand Fifty ($750.00)Dollars08 the first day of December
1943, aad on the First days of January,February,broh, April,May, fmd Jume,
1944.
"AND upon campletiomof said mxk for the year 1944, aad PftUr final
action has beer taken by the Board of Equalization,a Warraator Irrants
dram againstthe GENERALFUND of MON'iWXERYCOUNTY,TEXAS, shall be issued t
to PRITCHARDAND ABBOTT, for oompeasationdue, if any, making the total
I compensatic8equal to Ela~en Thousand($ll,OOO.OO) Dollars.
Bon. Arnold Smith - Page 3 (o-5302)
"IT IS AGBEED AM) UNDEBSTOODby both Partiesthat in no way will
MontgomeryCounty be obligatedto PEITCBAEDAND ABBOTT, or their assistants
for salaries,erSenses,or materialused in oonneotionwith said work, ox-
oept as above stated.
ITEE TOTALAMOUEI OF OIL field and publicutilitypropertiesshall bs
oertifiedby the Rx Assensor, who shall in his Certifioatestate the total
valuationof all such propertiesassessedfor the year 1944 and all said
warrantsissuedto PRITCHARDANDAPBO'IT shall be registeredfor paymentand
payableout of the reoeiptsand anticipatedreceiptsfrom the taxes levied
for General County purposesand from other souroesocming into the said Gener-
al Fund for the year 1944, and to providefor the paymentof said mrratts,
such an amount of money as is neoessaryfor said purposes is hereby set aside
and appropriatedout of ths money in, or w ioh shall ooms into, the said
GeneralFund.
"WITNESSODE BANDS in duplicatethio the 16th day of April A.,D. 1943."
This oontraotis virtuallyin haeo verba with a contractthe validityof
which was upheld in Roper v. Hall, 280 S.W. 289 (1925) (no applioation). In
upholdingths oonraot the Waoo Court of CivilAppeals pointedout that no ex-
press authorityto emter into such oontraotsis conferredupon the Commissicn-
srs* Courts,bxt added:
"No provisionis made by the statutesfor aidingthe asssssorin
discoveringunrenderedproperty,nor for securinga proper descrip
tion thereof,nor for ascertainingits actual ownershiP. No standard
of value for us0 in making PSSeSwentS is presoribedSXOeDt the
assessor*soun opinion. %o specialqualifioaticns are presoribedto
make a man eligibleto hold such offioe. Evideatlythe law contem-
plates such disohargsof the duties of that offioeas may be expected
frcPna man of ordinaryexperienceand oapaoity. It has made no express
provisionfor extraordinaryoases. . . . Expressauthority,however,
is given to the oormissioners' court over the subjectof levyingof
taxes and requiringall propertysituatedin the countyto be proosrly
assessedand to bear its proportionof the burden of taxationaooord-
inr?to its value. . . . The generalpowers so given to the cowission-
em’ courts are of little praotioalvalue without the furtherauthority
to uss adequatemeans to insure the urousr.intellieentand effeotive
exeroisethereof. The Constitutionrequiresand publicpolicy demands
that all taxablepropertyshall oontributeits just proportionto the
expensesof goverwent. The purpose of the oontraotunder oonsideration
1~s to aid in seouringsuohresult. The servicesoontraotedto be ren-
dered oalledfor informationand experienoenot possessedbythe ordi-
nary person. So far a8 they affectedthe disoovery,assessment,and
unrenderedoil properties.they could not have been performedby the
countyasssssorunless he possessedextraordinaryinformationand ex-
periemoealonn the requiredlines0 He testifiedin the oass, and
under oath disclaimedsuch sualifications.Neitheroouldthe ccmrmis-
siomers' court, sittingas an equalieationboard, performits funotions
effeotivelywithoutsuch expertaid, The oourt so dealaxed,in effect,
when it enteredthe contract. . . *s (Bnphasisadded)
-_
Hon. Arnold Smith - Page 4 (O-6302)
As oan be seen from this quotation,the 'Birco
Court held that the con-
tract relatedin part to the "discovery,asssessment,and valuationof unren-
dered oil properties"and&hat such portionof the contractaot only was itself
valid, , but also gave supportto the generalvalidityof the mntraot. This
deoisionwas renderedin 1926 prior to the passage of Acts 1930, 4lst Legisla-
ture, 4th C.S., p. 9, oh. 8 (Article7335a,V.A.C.S.)which providesin partr
.
"No oontraotshall be made or enteredinto by the Ccmmrissioners' Court
in oormeotionwith the oolleotionof delinquenttaxeswhre the compel-
sationunder such contraofis more than fifteenueruentof the amzat
oolleotede Said ooatraotmust be approvedby bo%h the Cauptrollerand
the AttorneyGsleralof the State of Texas, bothas to substanceand
form a . *" (Usphasisadded)
Cur courtshave since repeatedlyheld that oontraotsrelatingto the colleotion
of delinquenttaxes are void unless approvedas requiredby the aboveArticle.
Eastemood V. HendersonCounty,54 S.W. (Zd) 897 (CommaApp.);BMte V. McGill,
131 Tex. 231, 114 S W. (2d) 860: XarquartV. Harris County,117 S.VL,(2d) 494
(dismissed,judgmentcorrect). Consequently, while we are bound bythe holding
of Roper V. Hall, supra,to the effect that contraotsof this kind relate in
part to the collectionof delinquenttaxes, m ars forcedby Article 7336a,V.
A.C.S., and the abow cited oases to costalude'that
such oorptraots are now void
unless approvedby the Comptrollerand the AttornuyGeneralo Moreover,the
holdingin Roper V. Hall that such contractsdo relatesin part to the colleo-
tloa of delinquenttaxes has since found supportin the oollowingstatementby
our Ccwnissionof Appeals:
"Uhea the purposefor whioh Article7335a was passed is oonsidered,
~1)do not think the Legislatureused the words 'delinquenttares'
in a technical8ense.s Rhite v. &Gill, supra.
Since the oomtraotin questionnerer receivedthe approvalof the Comptroller
and the Attorney Gaaeral,the portionsof the.oontraotrelatingto the aolleo-
tion of delinquenttaxes neoessarilyare void; however,it is settledthat in
contractsof this kind the portionsof the oontraotare so interrelatedthat
the invalidityof a part opusesthe entire contractto falle MarquartV.
Harris County,suprajAldriahV. Dallas County,167 S.Ti.'2d) 560 (dismissed).
Consequently, we are constrainedto hold that the entire contractin question
is invalidby reason of the principlesand authoritiesalove stated*
This conclusionmakes unnecessarya considerationof the seriousques-
tions of whethera oontraotof this kiad involvesan attemptby the oceanission-
em 1 court to oiroumventthe prohibitioiagainstaoting initiallyon assesmaenta
other than those submittedby the tax assessor(hkxrquart V* Rarris County,
supm, at p. 503; Aldriohv. Dallas County supra,at p. 565) and whether the
oontraotinvolvesan attempt to aocomplishthe prohibitedpurposeof vesting in
othersthe dutieswhich the law confersupon the tax assessor(Terre11v.
Greene,88 Tex. 539, 31 Sew. 651, 634: 34 Tax. Jur. p. 444)~ and loco cl&
supra.
In your letterof June 8, 1943, you state:
Hon. Arnold Smith - Page 5 (o-5302)
". . . the Conmissioners'Court of BBontgQnery
County did not make
any provisionsfor levyingand colleotinga suffioieattan to pay
any interestand to prwide at least 2% as a sinkingfund,etc.,
at the time of the exeoutioaof the oontraot."
This statementwas made with referenoeto that portionof Seotion7 of Artiole
XI of our Constitution,providing:
"But no debt for an7 purposeshall ever be incurredin any manner
by any city or countyunless provisionis made at the time of ore-
sting the same, for levyingand collectinga sufficienttax to pay
the interestthereonand provideat least ta per cent as a sink-
ing funds . . ."
In Stevensonv*‘Blake,113 S.W. (2d) 625, the Commission o'fAppeals
said:
"The term 'debt'as used insaid olause of the Comstitutioa'mesas
oqy peouaiaryobligationimposedby contract,except suah as mre,
n-pusChrist1V. Woessner,58 Tex. 462, 4671
Foard CountyV. Ssndifer,105 Tsx. 420, 151 S.W. 523.;City of Rous-
ton v. Glover, 40 Tex. Civ. App. 177, 89 S-W. 4253 T,okettv. Middle-
ton, Tax. Corn.
App. 280 S.W. 563, 44 A. L. R. 1143." (&phasis ours)
R this case, oertaia attorneysemployedw the ocamsissioners~ oourt under a
oontraotdated July, 1935,were to be paid as follows:"One Thousand~l,COO.OO)
Dollarsia cash upon the signing of this oontx%&t tie Thousand ($l,OOOeOO)
Dollarson February16, 1936; and Cne Thousand (#l,OOO.C0)Dollarswhen judg-
ment beoame final in said oases." With referenoeto these payments,the
Court said*
aAt the time the ooxtraothere in question91s made, statutesexisted
in keepingwith this authoritywherebyad valoremtaxes generally,
for the year 1935-- imoludingoountytames for generaloountypurpos-
es-- bsosme payableOctober1, 1935, but nb penaltgfo- non-payment
attachedprior to February1, 1936. Perhapsthese oor,siderations
supplya firm foundationfor the oontentioaof the plaintiffsim
error totheeffeot that all saidtaxes for general oountypurposes
which wers paid prior to the:last mentioneddate constituted"ourrent
revenues*of the oountyfor the year 1936, and that the presumption
arises that the partiesto the contractcontemplated, at the time ssars
was made, that the sum of $1,000,whichwas to become due February15,
1936,would be paidfrom these revenues. Be this as it may, the faot
remainsthat this sum did not constitutethe entire obligationof the
countywhich the contra& purports. The olause of the Constitution
whioh has been 8 et out regardsas an entiretythe pecuniaryobliga-
tion undertakemto bs imposedby the oontraot,and unlessthe parties
Hon. Arnold Smith - Page 6 (O-5302)
reasonablycontemplatedat ths time the contractma8 made, that
samewould be wholly satisfiedout of currentrsveaussfor the
year 1935, or out of sumefund then within the control of the som-
missioners'oourb,the entire obligationis void. (Citing oases)
The peouniaryobligatioaundertakento bs imposedon the sounw
by the oontraotinoludesthe myscantof the sum of $1,000 *when
judgmentbsoom,sfinal in said oases.1 The contrast,fairly OOIL-
struedin the light of the oiromustanoes, shows that the parties
did not definitelycontemplatethat %i.s last-mentioned sum l~uld
be paid, when it falls due, from ourrentrweaues for the year
1935. . . . Cnder the authoritiesas we interpretthsm, the test
is, Did the parties,under the oiroumrstanoss,reasonablyoontem-
plate that the SUIImentionedwould in fast become due at such a
time?"
See also ths'opinionof the Court of Civil Appals in this case* 88 S.W* (2d)
773.
The instantcontrastwas exeoutedon April 16, 1943, and paymentst-0
the oontraators=re to be made by warrant8 spayableout of &he revenussof
1944, and/or the-&ioipated
..--- --. `` revenuesof 1945 as followsa Seven Rndred and
Fifty ($750.00)Dollarson the first day of Dee ember, 1943, and on the First
days of January,February,March,April, May, and June, 1944. AED upoa cm-
pletionof said work forths ysar1944, andafter final actionhas been taken
by the Board of Equalization,a Earrantor Warraints drawn againstthe Gensra3
Fund of VMONTGOMERYCCUBTY,TEXAS, shall be~issuedto FEITCMRDAED ABBOTT,
for oompensation, due, if aw, making the total omnpsnsatiorequal to Eleven
Thousand(#ll,OO.OC) Dollars." Unlike the obligaticmsig the oases of
Ccsmsissionsrs* ourt of %dissn Countyv. Wallace,118 T X. 279, 15 S.W. (2d)
II
535 and MoCliataak& Robertsonv. Cottle County,127 S.fni(2d) 319,(dismis-~
sed5, the obligationia the instmt oomtraotis not oontingemtupon the suo-
oess of the contractorsia the undertakingwhichthey assume,nor is such
obligationSO unoerbainin amount as to make impossiblethe provisionof a
8i.nkiag fund; unlikethe obligationin Ward v. Ci of Big Spring,161 S.W.
(2d) 821, reversedoa other grounds, 169 6.K (2d
7 151, in the instantcase
ths.oontingency rnhiohcreatesthe obligationis not solelywithia the control
of the county;unlikeths obligationin Wderrood v. Howard,1 Sell;(2d) 730
(dismissed)the obligationi8 this sass is not to be disohargedfrcsstaxes
alreadyassessed.
Since the iastantcontractexpresslyprovidesthat paymentsare to be
made out of the srevenuesof 1944, and/or the anticipatedrevenuesof 1945,s
it is impossible.to aaswer the test establishedia Stevensonv. Blaok, supra,
by sayingthat at the date of the corntract,the partiesthen oomtemplated
that the obligationnmuld be satisfiedout of the currantrevenuesfor the
year or out of some fund thea within the immediatecontrolof ths corporation.
Consequently,if ms should bs mistaken in the oonolusionfirst stated
above,you ars rsspeotfullyadvisedthat the oontraotis invalidby reason
- - h
Hon. Arnold Smith - Page 7 (o-5302)
of its oraatioaof a debt in ooatravmtion of Seation7 of ArticleXI o.f
the Tsxas Constitutiono
Tmst~sg that the foregoingfully ummem your inquiries,wu are
ve y t mly yours
R. Dean Moorhead
Assistant
APPROVEDJUNE 21, 1943 APPROVED
/s/Gerald C. Mann OPINIONCWb5TpEE
AlTORl-iEYGENERALOF'TEXAS BYBWB
Chairmar