The opinion
THEA~ORN~Y GENERAL
OFTEXAS
AUSTIN I,. Texas
January 13, 1960
Honorable Robert S. Calvert Opinion No. W-780
Comptroller of Public Accounts
Capitol Statlon Re: Whether the Comptroller
Austin, Texas Is authorized to Issue
warrants In payment of
claims filed under H.B.
22, Sec. 1A 56th Leg.
3rd C.S., ;.tlatingto
delinquent taxes and
sales under the Veterans'
Dear Mr. Calvert: Land Program
By recent letter you advise:
"I have two claims filed with this depart-
ment in accordance with the terms and provisions
of Section IA of House Bill 22, Third Special
Session of the Fifty-sixth Legislature of the
State of Texas, each claim certified to and
signed by the Chairman of the Veterans' Land
Board requesting: (a) that warrants be issued
to the two taxing agencies named; (b) that
warrants be Issued in the name of the veteran
who made payment on the delinquent taxes and
whose name appears in the next to the last
paragraph of the certificate attached. (The
certificate is enclosed.)
"I am attaching hereto a copy of these two
claims for your examination and, after you
have examined the same, I will thank you to
advise this department whether or not I am
authorized to issue warrant in payment of
same. If these are in fact and In law valid
claims against the State of Texas the appro-
priation is sufficient for warrants to issue
in payment of the two claims."
In 1955, the Veterans'Iand Board asked the Attorney General
for an opinion on several questions relating to forfeiture of
contracts for purchase of land under the Veterans'Land Act.
Hon. Robert S. Calvert, page 2 (~~-780)
In answer to these questions, Attorney General John Ben
Sheppard in Opinion No. s-183, rendered on December 12, 1955,
held in the pertinent part:
"10. In the event that delinquent taxes
have accrued against a tract of land being
purchased through the Veterans' Land Program
and the Veteran's contract Is forfeited and
the land is resold by the Board, as provided
In the Veterans' Land Act, the purchaser 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."
Relying upon enumerated holding No. 10, the Veterans'
Land Board, acting through Its agents and representatives,
advertised that land forfeited under the Act and held for
re-sale "will be sold free and clear of any tax encumber-
antes ."
In 1958. the San Antonio Court of Civil Anpeals, in the
case of State v. Bexar-Medina-Atascosa Counties‘W.1..Dlst.,
310 S.W. 2d 641, held that the liens for water district taxes,
flat rate assessments, and bond retirement assessments charged
against land in the hands of an original veteran purchaser
were not extinguished upon forfeiture of the purchase contract,
but were enforceable against.the land in tbr?hands of a sub-
sequent purchaser from the Veteranss Land Board. The Supreme
Court of Trxas refused an application for writ of error in
the case on May 21, 1958.
Prior to the decision in the Bexar-Medlna case, the
Veterans' Land Board made a number of re-sales of forfeited
land to purchasers who relied on the representation concern-
ing taxes. Since the decision, some purchasers have paid
outstanding taxes to prevent foreclosure; In other cases,
taxes accruing against property while in the hands of the
original purchaser remain unpaid, and constitute a lien
agalnst the land. In order to rectify the inequities in-
herent in the situation, the 56th Texas Legislature passed
House Bill 22, which provides:
‘ .
Hon. Robert S. Calve&, Page 3 (WW-780)
"For the payment of the claims listed
below, there is hereby directed to be paid
out of the sum appropriated and set aside
by the General Appropriation Bill for'the
Biennium September 1, 1959--August 31, 1961,
for the payment of Itemized claims and judg-
ments, an amount not to exceed the amounts set
forth opposite the names of the following
Military Veterans respectively, towit:
&ere follows list of claimsJ
"Said payments shall be received in full
satisfaction of all claims and demands of
said named veterans, respectively, against
the State of Texas arising out of the resale
by the Veterans Land Board, under the provisions
of Article 5421m, Revised Civil Statutes, as
amended, of various tracts of land and the
purchase thereof, respectively, by said named
veterans upon representation based on a legal
construction of the applicable law, which con-
struction was overruled by the Supreme Court
of Texas, that such tracts were sold free of
any lien for ad valorem taxes, bond taxes, flat
rate assessments, water charges, and special
assessments levied by any municipality or
political subdivision of the State. Said pay-
ments shall be made as and when the Chairman of
the Veterans Land Board certifies to the Comp-
troller: (a) the name of the veteran; (b) a
brief description of the property purchased;
(c) the date of the initial contract of sale
was forfeited by the Board; (d) the amount of
the taxes and other charges specified above,
together with penalty and interest thereon
and that such amounts accrued against the land
during or after the tax year in which such lands
Initially were sold by the Board but not subse-
quent to the tax year in which such initial
contracts were forfeited, all pursuant to the
provisions of Article 5241m, Revised Civil
Statutes, as amended; and, (e) whether in fact
said amounts have been paid by the veteran or
are still owing and unpaid to the agency or
official charged by law with the collection
thereof. If said amounts have been paid by
the veteran the Comptroller shall issue the
Hon. Robert S. Calvert, page 4 (~~-780)
State's warrant in the name of the veteran
making such payments and deliver said warrant
to the Veterans Land Board for transmittal
to the veteran; if, however, said amounts are
still due and owing to the agency or official
charged with the collection thereof, the
State's warrant shall be issued in the name
of such agency or official and delivered to
the Veterans Land Board for transmittal to
such agency or official. The Comptroller
shall Issue the warrants provided for by
this section in the amounts certified by
the Chairman of the Veterans Land Board
without the necessity of submission to or
approval by any other Official of this State,
the requirements of any other section of this
Act to the contrary notwithstanding. The
Veterans Land Board shall, in transmitting
said warrants as above provided, keep an
accurate record of each transmittal."
You have submitted with your opinion two types of claims under
H.B. 22, which calls for determination of a two-fold question:
(1) Does a taxing authority have a valid claim against
the State for taxes against land forfeited and resold under
the Veterans' Land Act which accrued while the land was in
the hands of the original purchaser.
(2) Does a subsequent purchaser from the Veterans' Land
Board have a valid claim for reimbursement for payment of
taxes which accrued while the property was in the hands of
the original purchaser?
Merger of Tax Liens
In order to clearly delineate the problem presented, it
Is necessary to briefly revisit the question of merger. The
Bexar-Medlna case, for the first time in Texas, appears to
forge a dominant line of authority.1 Under this case, and prior
1.
The prior decisions of Texas Courts on the question of merger
of tax liens of one taxing authority upon acquisition of title
by another taxing authority are anything but consistent.
Hon. Robert S. Calvert, page 5 (w-780)
consistent decisions, the following propositions may be deemed
established:
1. Tax liens of cities, schools, counties, the state, and
other taxing authoNritiesare of equal dignity.~ State v. Dexar-
Medlna-Atascos+ etc., su ra; Lubbock Independent School Dis-
trict SJ 217 S.+%d 166 (Tex. Clv. App. 1949, error
refused). (No,te: In view of the Bexar - Medina case, it ap-
pears that-in this regard there Is no dlstinccion between tax
liens and liens for special assessments,)
2. When one taxing authority acquires title to oroperty
against which it has a tax lien, the tax lien merges with the
superior title; tax liens of other authorities not sharing in
the legal title are unaffected. Ibid.
3. Tax liens which are not merged are outstanding, but
enforcement of them is suspended during the time the property
is owned2by the taxing authority and devoted to a public
purpose. Ibid.
l.(Conlt.
See: (Chlldress County v. State, et al., 92 S.W. 2d 1011 (Tex.
Sup. Ct. 193b). and compare the broad language used to fortify
the decisions in Childress County v. Schultz, 199 S.W. 2d 860
(Tex. Civ. App. 194b), and City of Marlin v. State, 205 S.W.
.-_ --_._
2d 809 (Tex. Civ. App. 1947) with the result in Gerlach
Mercantile Co. v. State, 10 &.W. 2d 1035 (Tex. Cl\r. App. 1928).
Note also that in St535 v. Stovall, 76 S.ti.2d 206 (Tex. Civ.
ARP. 1934, error refused) the court held that state land sold
to-a nri.vatepurchaser, and subsequently retaken by the state
upon forfeiture of the contract of sale, was not subject to
seizure and sale for taxes accruing in favor of a school
district while the land was in the hands of the private
purchaser. Though this much of the decision is consistent
with what is now the weight of authority, the court perpetually
enjoined the enforcement of the school district's lien, there-
by indicating that the Court considered such lien extinguished.
2.
As a corollary to this proposition, it should be noted that
under the authority of Art. XI, Sec. 9, Tex. Const., the
property is not subject to taxation during the time it is owned
bv the State or a aolitical subdivision thereof and held for
&blic purposes. See: City of Abilene v. State, 113 S.W. 2d
631 (Tex. Civ. App. 1937, error dism.).
Hon. Robert S. Calvert, Page 6, (W-780)
4. Liens such as are described In No. 3 above may be'en-
forced against the property when resold to a private individual.
In light of the foregoing propositions, it Is evident
that the State's liens for ad valorem taxes against the
properties In question merged with its superior legal title
upon reacquisition of the properties by the Veterans' Land
Board. The liens in favor of the counties,3 school districts,
water improvement districts, etc., for taxes or assessments,
were not extinguished, but merely suspended during the time
that the property was held for re-sale. Consequently, the
question of liability here posed concerns only liens for taxes
of assessments in favor of the latter authorities.
These appropriations are valid unless same are in viola-
tion of section 44 of Article 3 of our State Constitution. The
constitutional provision involved reads as follows:
"The Legislature shall provide by law for the
compensation of all officers, servants, agents
and public contractors, now provided for in this
Constitution, but shall not grant extra compen-
sation to any officer, agent, servant, or public
contractors, after such public service shall have
been performed or contract entered into for the
performance of the same; nor grant, by appropria-
tion or otherwise, any amount of money out of the
Treasury of the State, to any individual, on a
claim, real or Dretended, when the same shall not
have been provided for by pre-existing law; nor
employ any one in the name of the State, unless
authorized by pre-existing law."
So far as applicable to this opinion, the above constitu-
tional provision may be read as follows: "The Legislature---
shall not grant---by appropriation or otherwise, any amount
3.
In this connection, it makes no difference that the county is
the collecting agent of the State for state ad valorem taxes.
The counties obtained no interest in the State's superior legal
title upon reacquisition by the Veterans' Land Board; conse-
quently, the counties' tax liens, being of equal dignity with
the State's liens, are not extinguished. (For an example of
different treatment of State and county tax liens, see Childress
County v. State, cited in the body of the opinion.)
. ,
Hon. Robert S. Calvert, page 7, (w-780)
of money
- .out of the Treasury
. . .of the State, to any individual,
on a claim, real or pretenaea, when the same shall not have
been provided for by pre-existing law." Certain taxing
agencies of the State are "any individual" within Its mean-
See Austin Nat'1 Bank v: Sheppard, 71 S.W. 2d 242
App. optnion adopted by Supreme Court 1934) This
case also holdsthat the common law as well as statutory law
constitutes "pre-existing law" within the purview of said
constitutional provision, and cites State v. Elliott (Tex.
Civ. App.) 212 S.W. 695 (writ ref.)
Section 19 (A) of Article 5421m provides:
"The resale of land which has been forfeited
under the provisions of this Act may be made
to the highest bidder; provided, however, that
sales shall be made to qualified veterans only
and under the same terms and conditions as pro-
vided elsewhere in this Act for original sales.
Such sales shall be held at such times and in
such manner as the Board may prescribe, and the
Board shall have the right to reject any and
all bids. If the successful bidder refuses to
execute a contract of sale and purchasqall
moneys submitted with his bid shall be forfeited
and deposited in the State Treasury and credited
to the Veterans' Land Board Special Fund."
The Board in advertising such lands for re-sale stated
that the lands were free and clear of all liens for taxes and
assessments. Of course the Board was relying on opinion No.
s-183 (supra) by Attorney General John Ben Sheppard, and was
laboring under a mistake of law. However, the veteran pur-
chasers in relying on such representations, calculated and
submitted their bids under a mistake of fact. Under the
common law, equity requires that relief be granted when one
party is injured by a contract entered into through a mutual
mistake as to a material fact. The Board's mistake of law
gave rise to a mistake of a material fact by it, i.e., the amount
of noney to be expended by the purchaser to obtain clear
legal title, and thus the actual sales price was materially
different from what the Board believed it to be under their
mistaken conclusion of law. The Texas courts have always
recognized this principle of law.
Hon. Robert S. Calvert, page 8, (~~-780)
"That a contract may be entirely rescinded
upon the ground of mutual mistake, as well as
for fraud, is well settled. In such cases,
where the parties suppose they are bargaining
with reference to specific property which they
have in mind, when in fact it either does not
exist or is materially different from what they
believed it to be, it is very evident that
their minds have not met and concurred so as
to constitute a contract as to the real subject
matter, as it is afterwards ascertained to be
and that the conveyance of the property as it
really exists (though it may be identifed as
therein described) does not evidence the true
intention of the parties in making the contract.'
Pendarvis v. Gray, 41 Tex. 326 (1874).
Here the State, acting through the Veterans' Land Board
re-sold the lands, which it believed to be free and clear of
taxes and assessment liens, to the veterans who were the
highest bidders. These veterans calculated and submitted
their bids on the basis of the lands being unencumbered
by tax and assessment liens. There was not a meeting of
the minds and not a valid and subsisting contract, unless
the appropriations made by the Legislature to pay these out-
standing taxes and assessments are valid. The veterans would
have the right to rescind the contracts, recover the amount
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improving the lands. It seems however, that all the veteran
purchasers want is to be made whole and have the State to con-
vey to them what it purported to convey and what the veterans
in good faith believed they were purchasing.
The State has the right to exact strict obedience to its
laws and constitution, but it should also be the policy of
the State, and we believe it is, to deal fairly with veterans
who, in good faith, accept its offer to purchase lands be-
longing to the Veterans' Land Fund.
It is our opinion that the Legislature has the authority
to appropriate money to cure the title to any of its public
lands. This may be accomplished by authorizing the expenditure
of appropriated money by the Attorney General in bringing and
prosecuting trespass to try title suits, or locating adverse
claimants and securing quit claim deeds, or securing necessary
affidavits of heirship, etc. and placing same of record.
. .-
Hon. Robert S. Calvert, Page 9 (~~-780)
Likewise, the Legislature has the authority to appropriate
money to pay off and discharge valid liens or other encum-
brances against its public lands, so as to have a good and
marketable title thereto. The appropriations in question
should have been made by the Legislature to discharge these
liens prior to their resale to the veterans or they should
have been discharged at the time of closing the re-sale
transaction, or have been taken into consideration at the
time of advertising, calculating and submitting the bids.
In which case they could have been assumed by the Veterans
and the contracts of resale would have resulted in a meet-
ing of the minds and a valid and subsisting contract would
have resulted.
It is, therefore, our opinion that the Comptroller is
authorized to issue the warrants in que-,tionin accordance
with the provisions of H.B. 22, Sec. lA, 56th Leg. 3rd C.S.
in that the appropriations in question~are supported by the
common law, which constitutes pre-existing law. Austin
Nat'1 Bank v. Sheppard. (supra)
SUMMARY
The Comptroller has the authority to issue
the warrants in question in accordance with
the provisions of H.B. 22, Sec. lA, 56th
Leg., 3rd C.S.
Yours very truly,
WILL WILSON
Attorney General of Texas
By:
W. V. Geppert
Assistant
APPROVED:
OPINION COMMITTEE:
Morgan Nesbitt, Chairman
B. H. Timmins, Jr.
James R. Irion
C. K. Richards
REVIEWED FOR THE ATTORNEY GENERAL:
By: Leonard Passmore