Untitled Texas Attorney General Opinion

December 13, 1948
Hon. Geo. H. Sheppard Opinion No. V-732
Comptroller of Public Accounts
Austin, Texas Re: The existence of a tax
lien against personal
property which Recon-
struction Finance Cor-
poration has purchased
upon foreclosure of its
deed of trust and chat-
Dear Mr. Sheppard: tei mortgage liens.
You submit for the opinion of this office the question
contained in your letter of November 0. 1948, which we quote
as follows:
‘I am attaching hereto a Statement of Facts
concerning the sale of property under judgment
and foreclosure in favor of the Reconstruction
Finance Corporation between the R.F.C. and Hop-
kins County.
‘You will notice that the State of Texas and
Hopkins County are claiming a tax lien on the
property sold under foreclosure. The R.F.C. has
agreed to pay the taxes as claimed by Hopkins
County and the State provided the Attorney Gen-
era! of Texas rules that the tax is due. I shall,
therefore, thank you to advise this department wheth-
er or not the claim of the State and Hopkins Coupty
is a legal lien agirinst the property sold under fore-
closure as set out in the Statement of Facts attach-
ed hereto.”
The answer to your question depends upon whether or not
the St,ate and County had a lien for the taxes in question on the
30th day of Ottober, 1948, the date of the levy by the tax collec-
tor upon the personal property in question. The admitted facts
show that prior to this date the Reconstruction Finance Corpora-
tion had acquired title and possession of t:he property by fore-
closure of its mortgage lien and sale under execution by the
United States Marshal on :uly 6, 1948, which sale was confirm-
ed by the Court on July 22, 1948.
Hon. Geo. H. Sheppard, Page 2 (V-732)
The general rule is that a lien on personal property for
ad valorem taxes does not attach until seizure for saIt to satis-
fy the taxes. This is manifest from the following quoted from the
case of Cassidy Southwestern Commission Company v. Duval
County, et al, 3 S.W.(2d) (Sup.Ct.) 416:
Y
. . . For the levy upon and seizure of those cat-
tle were not made by the tax collector until subse-
quent to the time when Cassidy Southwestern Commis-
sion Company became their owner. The facts show a
levy upon property belonging to oue person to satisfy
taxes due by and assessed against another, whereas
the levies and seizures authorized in those articles
have relation to ‘personal property bel.onging to such
person as may be sufficient to pay his taxes.’ Nothing
comparable to a lien upon personal property, except
upon levy, seizure, etc., in the manner prescribed,
is provided to secure payment of state or county tax-
es, save in the special case described in article 7627.
R.S. 1911. Storey’s possible escapement of the bur-
dens assessed against him does not justify holding
another liable therefor. . . .
. . . It will be noticed that the Constitution fixes a
special lien upon landed property by the annual as-
sessment made thereon. No such lien is fixed upon
personal property in that manner, but the inference
is clear that personal property belonging to any de-
linquent taxpayer shall have a lien fixed thereon to
secure the payment of taxes and penalties due by such
delinquent taxpayer by seizure and sale in a manner
provided by law. . . .”
While this case states the general rule, it recognizes
an exception which we think clearly exists under the facts sub-
.> mitted by you. It is thus expressed: ‘Save in the special case
described in Article 7627, R.S., 1911.” Article 7627, R.S. 1911,
referred to in the opinion is now Art. 7269, V.C.S., and is the
statute upon which the State and County must rely, and not Ar-
ticle 7268 set out in the Statement of Facts.
Article 7269 is as follows:
“In all cases where a taxpayer makes an as-
signment of his property for the payment of his
debts, or where his property is levied upon by
creditors, by writs of attachments or otherwise, or
where the estate of a decedent is or becomes in-
solvent, and the taxes assessed against such person
i .
Hon. Geo. H. Sheppard, Page 3 (V-732)
or property, or against any of his estate remain un-
paid in part or in whole, the amount of such unpaid
taxes shall be a first lien upon all such property;
provided, that when taxes are due by an estate of a
deceased person, the lien herein provided for shall
be subject to the allowances to widows and minors,
funeral expenses, and expenses of last sickness.
Such unpaid taxes shall be paid by the assignee, when
said property has been seized by the sheriff, out of
the proceeds of sale in case such property has been
seized under attachment or other writ, and by the
administrator or &her legal representative of dece-
dents; and, if said taxes shall not be paid, all said
property may be levied on by the tax collector and
sold for such taxes in whomsoever’s hands it may
be found . ”
That this statute is an exception to the general rule that
’ a lien does not exist for the enforcement of the collection of taxes
against personal property until seized for sale by the taxing au-
thority is also stated in 40 Texas Jurisprudence 206 in the fol-
lowing language:
“On the other hand, a tax lien on personal prop-
erty does exist in certain specified cases, namely,
‘where a tax payer makes an assignment of his
property for the payment of his debts, or where
his property is levied upon by creditors, by writs
of attachments or otherwise, or where the estate
of a decedent is or becomes insolvent.‘”
It seems quite clear to us that the case presented by you
in connection with the Statement of Facts falls squarely within the
terms of this statute. Leaving out the portion of the statute not
applicable to the facts here, we have the following:
“In all cases . . . where his (the taxpayer)
property is levied upon by creditors by writs of
attachment or otherwise . . . and the taxes against
such person orproperty . . . remains unpaid in
part or in whole, the amount of such unpaid taxes
shall be a first lien upon all such property.. . .
Such unoaid taxes shall be naid . . . when said
property has been seizedby the sheriff, out of
the proceeds of sale in case such property has
been seized under attachment or other writ . . .
and if said taxes shall not be paid, all such prop-
erty may be levied on by the tax collector and
sold for such taxes in whomsoever’s hands it
may be found.” (Parentheses and emphasis sup-
plied by writer.)
Hon. Geo. H. Sheppard, Pago 4 (V-732)
That a writ of execution would come under the term
‘otherwise” and “other writ” as used in the statute end that
seizure by the Marshal is equivalent to seizure by the rher-
iff, we have no doubt.
We should not confuse the question here consider-
ed with the’ immunity which the Reconstruction Finance Cor-
poration enjoys under the terms of the R.F.C. Act from taxes
upon its personal property, as that question is not here involv-
ed. The pers,onal property thus acquired by the Reconstruction
Finance Corporation is exempt from ad valorcm taxes by the
State and governmental and political subdivisions thereof aris-
ing after such acquisition, but, this immunity does not extend to
situations’ arising under the ‘terms of Art. 7269. V.C.S. We
think the rule announced in the case of Reconstruction Finance
Corporation v. J. G. Monahan Corporation, 312 U.S. 81, 61 Sup.
Ct. 485, 85 L. Ed. 595, is pertinent here. Mr. Chief Justice
Hughes, speaking for tbe Supreme Court with respect to the
R.F.C.. said that
“While it acts as a governmental agency in per-
forming its functions (see Pittman v. Home Owners
Loan Corp., 308 U.S. 21, 3233, 60 S. Ct. 15, 1718, 84
L. Ed. 11, 124 A.L.R. 1253), still its transactions are
akin to those of private enterprises; and the mere
fact that it is an agency of the Government does not
extend to it the immunity of the sovereign. . . .
“It was with a similar approach that we decided
in Federal Housing Administration v. Burr, 309 U.S.
242, 84 L. ed. 724, 60 S. Ct. 488, that the’Federa1 Hous-
ing Administration was subject to be garnished under
state law for moneys due to an tmployee. There, the
Administrator under the National Housing Act was au-
thorized ‘to sue and be sued in any court of competent
jurisdiction, State or Federal.’ /?August 23. 19357 49
Stat. at L. 684. 722, chap. 614, 1Z USCA 8 1702. Sfkrt-
ing from the premise indicated in the Keifer Case that
waivers by Congress of governmental immunity from
suit should be liberally construed in the case of feder-
al instrumentalities -that being in line with the cur -
rent disfavor of the doctrine of governmental immun-
ity-we concluded that in the absence of, a contrary
showing ‘it must be presumed that when Congress
launched a governmental agency into the commercial
world and endowed it with authority to “sue and be
sued”thnt agency is not ltss amenable to judicial
process than a private enterprise under like cir-
cumstances would be.’ Following that reasoning, the
I _, .
Hon. Geo. H. Sheppard, Page 5 (V-732)
precise point of the decision was that the words
‘sue and be sued’ normally embrace all civil pro-
cess incident to the. commencement or continuance
of legal proceedings and hence embraced garnishment
as part of that process. . . .
L
. . 1 We apply the farther principle that the words
‘sue and be sued’ normally include the natural and ap-
propriate incidents of legal proceedings. . . .”
In that case the R.F.C. was held to be subject to costs
and other impositions in equity, like any private litigant, in a
suit which it prosecutes. We see no reason why the provisions
of Article 7269 would not apply to R.F.C. when it pursues its
remedy in court to collect its debt and to enforce its security
for the payment thereof, as it would against any private corpo-
ration. The scope of Article 7269 has been defined by our
Courts in the case of State v. Mauritz-Wells Co., 170 S.W.(2d)
625 (Civ.App.) in the following language:
*
. . . It merely operates to prevent property
vrhich already stands liable for the payment of spe-
cific taxes from ceasing to be liable, merely because
it is assigned, attached or levied upon. . . .”
Associate Justice Sharp of the Supreme Court in af-
firming this case, 141 Tex. 634, 175 S.W.(2d) 238, said:
I
. . . Article 7269 does not purport to provide
for a priority for taxes. It merely creates a lien
upon the happening of specified events.”
The personal property upon which the R.F.C. caused
its execution to be levied was subject to seizure for the pay-
ment of the taxes here involved, and under Article 7269 and
the authority of the cases last cited it, did not cease to be when
levied upon by the creditor, R.F.C.
We must, therefore, conclude from the facts submitted
by you, that the Reconstruction Finance Corporation holds the
personal property subject to the taxes here involved and that the
State and County have a lien against said property by virtue of
the terms of Article 7269, supra. The statute directs that the
sheriff, in this case the Marshal, should pay the taxes out of
the proceeds the sale; but since the creditor,
Of Reconstruction
Finance Corporation, became the purchaser at the foreclosure
sale, it should have paid the taxes in order to relieve the prop-
erty thus acquired of the lien arising under the foregoing stat-
ute. The statute clearly provides, “And, if said taxes shall not
Hon. Geo. H. Sheppard, Page 6 (V-732)
be paid, all of said property may be levied on by the tax collsc-
tor and sold for such taxes in whomsoever’s hands it may be found.”
SUkQviARY
A lien is fixed upon personal property sold un-
der execution by a creditor under Art. 7269, V.CS.,
and such creditor takes such property so aold sub-
ject to the lien for all taxes delinquent or owing at
the time of such foreclosure sale; and the sheriff is
directed to pay the taxes from the proceeds of the
sale. If the creditor becomes the purchaser and
credits his bid against the debt owing by the debtor,
the creditor should pay the taxes to relieve the prop-
erty of the lien created by the levy of the writ of ex-
tension as provided by statute. Art. 7269, V.C.S.;
Cassidy Southwestern Commission Co. v. Duval
County, 3 S.W.(Zd) 416; Reconstruction Finance Cor-
poration v. J. G. Moaahan Corp., 312 U.S. 81, 61 Sup.
Ct. 485, 85 L. Ed. 595; State v. Mauritz-Wells Co.,
170 S.W .(Zd) 625 (Ct.Civ.App.).
Yours very truly
APPROVED: ATTORNEYGENERALOFTEXAS
LPL/JCP