McKinney v. Nacogdoches Independent School Dist.

• Decision Date: 16 November 1972
• Docket Number: No. 620,620
• Parties: R. W. McKINNEY, Appellant, v. NACOGDOCHES INDEPENDENT SCHOOL DISTRICT, Appellee.
• Court: Texas Court of Appeals

Page 161

489 S.W.2d 161

R. W. McKINNEY, Appellant, v. NACOGDOCHES INDEPENDENT SCHOOL DISTRICT, Appellee.

No. 620.

Court of Civil Appeals of Texas,

Tyler.

Nov. 16, 1972.

Rehearing Denied Jan. 4, 1973.

Pye & Dobbs, Tyler, for appellant; Barrow, Bland & Rehmet, Houston, of counsel.

Benchoff & Guidry, Edmund F. Benchoff, William D. Guidry, Nacogdoches, for appellee.

MOORE, Justice.

This case involves a determination of the taxable situs of tangible personal property.

Appellee, Nacogdoches Independent School District, brought suit against appellant, R. W. McKinney, in the District Court of Nacogdoches County on January 26, 1965, in Cause No. 1561, seeking to recover delinquent ad valorem taxes on certain personal property due for the year 1960. In 1969, while Cause No. 1561 was still pending, the tax assessor of the school district assessed personal property taxes against the appellant for the year 1969 and also back assessed personal property taxes against him for the years 1962 through 1968. On September 22, 1969, appellant filed suit against the school district in the same district court in Cause No. 14,602 for a declaratory judgment seeking to have the assessments made against him for personal property taxes for the years 1962 through 1969 set aside as null and void. By its fourth amended petition dated October 6, 1971, the school district sought recovery for delinquent ad valorem taxes on the personal property assessed for 1960 and for the years 1962 through 1969, together with penalty, interest and cost accruing as of October 1, 1971. After the two causes were consolidated, trial was had before the court sitting without a jury. At the conclusion thereof, judgment was granted in favor of Nacogdoches Independent School District for the sum of $68,586.27, representing the total of the taxes alleged to be due for the years 1960, 1965, 1966, 1967, 1968 and 1969, together with penalty, interest and cost as of October 1, 1971. The trial court sustained appellant's plea of limitations as to the taxes assessed for the years 1962, 1963 and 1964 and denied appellee a recovery thereon. From this judgment, both parties have prosecuted this appeal.

The record reveals that at all times material to this suit appellant, R. W. McKinney, maintained his residence and office in Nacogdoches, Texas, within the Nacogdoches Independent School District. Among other business enterprises, appellant was engaged in the business of constructing roads and highways at various places in the State of Texas. The highway construction business was conducted through three separate entities: R. W. McKinney, General Contractor; R. W. McKinnney and T. L. James & Company, Inc.; and McKinney-Deaton. The personal property assessed by the district and made the basis of this suit consisted of movable property, such as trucks, tractors, road graders, scrapers, rollers, doziers, rock crushers and other movable machinery and equipment used in the construction of highways by the aforesaid entities, none of which was ever situated within the Nacogdoches Independent School District. In 1960 the school district, not being satisfied with appellant's rendition, raised his valuation to $125,00.00 by assessing the roadbuilding equipment used by all three of the above mentioned enterprises. In 1961, the district accepted his $12,500.00 rendition and that year is not in dispute. After 1961 no additional assessments of appellant's property were made until 1969. In 1969 the tax assessor for the district addressed a letter to appellant stating:

'It is the opinion of the tax assessor that movable personal property is taxable at the residence of the owner. Therefore, all movable construction equipment owned by R. W. McKinney not having obtained a tax situs in another jurisdiction has been assessed at a value of $560,840.00 and placed upon the unrendered rolls for the year 1969.

'Additionally, back assessments have been made on unrendered movable personal property owned by R. W. McKinney for the years 1961 to 1968 inclusive. The assessed value as placed upon the 1969 supplemental roll follows: 1961--$512,860.00, 1962--$400,320.00, 1963--$401,330.00, 1964--$573,600.00, 1965--$760,160.00, 1966--$767,940.00, 1967--$866,410.00, 1968--$566,500.00.'

The assessed value was arrived at by taking the total depreciated value of all movable property of appellant used in the business of R. W. McKinney, General Contractor, plus one-half of the depreciated value of the movable property owned by R. W. McKinney and T. L. James & Company, Inc., and McKinney-Deaton.

The school district admitted in its pleadings that the property in question was at all times physically located outside the boundaries of the district, but alleged that it was nevertheless taxable by the school district because same never acquired a tax situs separate and apart from the domicile of the owners by way of a permanent location in another jurisdiction. The school district further alleged '(t)hat the taxes for which this action is brought insofar as it involves any properties of the defendant held in Partnership with others, are upon the defendant's one-half interest in such partnership properties * * *.' (Emphasis supplied).

In response appellant alleged that all property assessed by the district had acquired a permanent tax situs in other taxing jurisdictions and as a result the school district was not authorized to tax the property. Alternatively, appellant alleged that even though the property owned by R. W. McKinney, General Contractor, had no permanent tax situs elsewhere and was taxable at his domicile in Nacogdoches, the remainder of the property assessed was not owned by him, but was owned by the partnership of R. W. McKinney and T. L. James & Company, Inc. and by the partnership of R. W. McKinney and Herman Deaton, and was therefore taxable at the principal places of business of the partnerships located in Waco and Sanger, Texas, respectively.

By points one through thirteen appellant urges that the evidence, as a matter of law, establishes that the property in question was permanently situated outside the Nacogdoches Independent School District. Therefore he argues that the taxable situs being elsewhere, the assessment and levy of the taxes by the district is illegal and void. In reply appellee, while admitting that the property was never physically situated in the district, argues that in view of the evidence showing that the property was continuously moved from place to place, it never acquired a permanent situs anywhere and as a result of the rule of Mobilia sequuntur personam (movables follow the owner) is applicable. Appellee therefore argues that under the Mobilia rule the tax situs is in Nacogdoches where R. W. McKinney, the alleged owner, resides.

In this connection the trial court made the following findings of fact:

'During the vast majority of the time, the property is on construction sites located over large areas of the State of Texas and in counties away from the storage yards and repair shops maintained by the Defendant and his associates. The continuing location of this property is dependent upon the location of the actual construction sites more than any other factor, and not upon the location of the repair shops and storage yards. The construction sites are continuously changing from place to place and county to county. The great majority of the highway construction jobs are in counties and places other than those where the shops and yards are located. The property is not assigned for actual use to the respective field offices, repair shops or storage yards. The property and the individual items of it are at such locations only at irregular intervals and then only for temporary storage or repair. Relatively small amounts of the property are stored or are being repaired at any one time.

'Individually, the items of property are on jobs outside the counties where the shops and yards are located for the great majority of the time of their existence. Whenever an item of the property is in the yard or the repair shop, it is kept there only a relatively short period of time. When physically located in the shop or on the yard, it is not contemplated that the property will continue to be located there. To the contrary, the property is there transiently and temporarily rather than with any degree of permanency.

'The presence of the property, and the individual items of it, at the storage yards or the repair shops is customarily so temporary that it cannot be identified as a part of the mass of the property of the places where the shops and yards are located.'

A brief review of the evidence as to each enterprise will be necessary.

R. W. McKINNEY, GENERAL CONTRACTOR

This enterprise is a sole proprietorship owned by appellant, R. W. McKinney. Its principal business is the building of roads and highways within a radius of seventy-five miles of Leonard, Fannin County, Texas, where its office and storage yard has been maintained on land owned by appellant since 1947. The work is performed in various counties in northeast Texas. The firm owns approximately 150 pieces of movable roadbuilding equipment. When new equipment is bought it is usually sent to the shop in Leonard for servicing before being sent out into the territory. The record shows that highway construction is performed in phases. Each phase requires different equipment. When a phase is completed, the equipment is moved to another job wherever needed. Every effort is made to keep the equipment working. The only time the equipment is returned to the shop at Leonard is when it is in need of repairs or where there is no work available. It is without dispute that work was always available during the years in dispute and that the equipment was never stored in the yard for that reason. On the average each piece of the equipment was returned for repairs once every three months. When repairs were completed, the equipment was sent back...