Tarrant Appraisal Dist. v. Moore
| Decision Date | 27 January 1993 |
| Docket Number | No. D-2252,D-2252 |
| Citation | 845 S.W.2d 820 |
| Parties | TARRANT APPRAISAL DISTRICT and Tarrant Appraisal Review Board, Petitioners, v. Hans J. MOORE and George H. Moore, Respondents. |
| Court | Texas Supreme Court |
In this case, the jury was instructed that use of land "principally for recreational purposes, or as a hobby," does not qualify as an agricultural use. The jury's finding that the land failed to qualify as agricultural use prevented the land from qualifying as "open-space land" which would be entitled to favorable ad valorem tax treatment. We are asked to decide whether this instruction is erroneous. We hold that it is not erroneous. Accordingly, we reverse the judgment of the court of appeals, 823 S.W.2d 418, and remand this case to that court for further consideration.
Hans J. Moore and George H. Moore (the "Moores") own 78 acres of land located wholly within the city limits of Fort Worth. From 1983 to 1989, the Moores grazed from two to sixteen horses on the land. Although the Moores testified that they kept the horses as part of a horse breeding operation, evidence presented at trial showed that their mares were rarely, if ever, bred. In fact, only one filly was born on the property, in 1984. The Moores purchased two pregnant mares that bore foals in 1989. They also bred their stallions in that year.
There was testimony by the Moores that any horses kept on the property were used very frequently for pleasure riding by the Moores, their friends and relatives. The testimony revealed no other substantial use to which the horses or the property were put, although the Moores used the property to store cement blocks, bricks, old cars, and other miscellaneous equipment.
The property had not generated any income for the Moores since 1981. Andrea Moore, George's wife, testified that the Moores had not filed a Schedule F to report farm or ranch income to the Internal Revenue Service since at least 1983. Additionally, George Moore testified that he had listed the property with a realtor and hired an engineering firm to prepare a preliminary subdivision plan for the property.
The Tarrant Appraisal District and Tarrant Appraisal Review Board ("TAD") denied the "open-space land" designation for the Moores' land for the 1987, 1988, and 1989 tax years. The Moores filed this suit, asserting that the land had an "agricultural use" for those years and therefore was "qualified open-space land" subject to favorable tax treatment.
The jury charge contained the following definition of "agricultural use":
"AGRICULTURAL USE" shall mean the same and be synonymous with "farm or ranch purposes" and includes but is not limited to the following activities: cultivating the soil, producing crops for human food, animal feed or planting seed, or for the production of fibers; floriculture, viticulture, and horticulture; raising or keeping livestock; raising or keeping exotic animals for the production of human food or of fiber, leather, pelts, or other tangible products having a commercial value; and planting cover crops or leaving land idle for the purpose of participating in any governmental program or normal crop or livestock rotation. "Livestock" shall mean animals of any kind kept or raised such as but not limited to horses, beef cattle and dairy cattle. You are instructed that raising, breeding, and/or grazing horses are agricultural uses. You are further instructed that growing grass on land for the purpose of feeding animals, including horses, is an agricultural use. Where, however, the land is used primarily to show, train, stable, race, care for or otherwise divert livestock from a farm or ranch purpose, that land so diverted is not eligible as "qualified open-space land." You are further instructed that the law does not require that agriculture be the primary occupation and primary source of income of the landowner nor that the use of the land be an occupation or a business venture for profit. On the other hand, if the use of the land is principally recreational, or as a hobby, then the activity, although agricultural in nature, is not one that promotes a farm or ranch purpose but instead promotes a recreational purpose. To qualify for open-space land it is only necessary that the land have an agricultural use to the degree of intensity generally accepted in the area.
The jury found that the property did not qualify as open-space land for any of the three years in question. The trial court rendered judgment on the jury's verdict. Because the court of appeals concluded that property used as a hobby could still qualify as land devoted principally to agricultural use under the Tax Code, it reversed and remanded the case for a new trial on the grounds that the jury charge contained an erroneous definition of "agricultural use." We disagree. The submitted definition of "agricultural use" was not erroneous in light of the facts of this case.
The Texas Constitution promotes the preservation of open-space land by authorizing the legislature to tax open-space land devoted to farm or ranch purposes on the basis of its productive capacity. TEX. CONST. art. VIII, § 1-d-1(a) (Vernon Supp.1993). The Constitution further authorizes the legislature to provide eligibility limitations for the open-space designation. Id. Accordingly, section 23.51 of the Tax Code provides:
"Qualified open-space land" means land that is currently devoted principally to agricultural use to the degree of intensity generally accepted in the area and that has been devoted principally to agricultural use ... for five of the preceding seven years....
"Agricultural use" includes but is not limited to the following activities: cultivating the soil, producing crops for human food, animal feed, or planting seed or for the production of fibers; ... raising or keeping livestock; ... and planting cover crops or leaving land idle for the purpose of participating in any governmental program or normal crop or livestock rotation procedure.
TEX.TAX CODE ANN. § 23.51(1), (2) (Vernon 1992) (emphasis added).
Section 23.52(d) of the Tax Code, as in effect in 1987 through 1989, provided that "[t]he State Property Tax Board by rule shall develop and the appraisal office shall enforce procedures to verify that land meets the conditions contained in Subdivision (1) of Section 23.51 of this code." Id. § 23.52(d) (Vernon 1982 & Supp.1992). 1
Section 23.56 of the Tax Code states that land which is wholly within the corporate limits of an incorporated municipality, such as the Moores' land, would not be eligible for appraisal as open-space land unless:
(A) the city or town is not providing the land with governmental or proprietary services substantially equivalent in standard and scope to those services it provides in other parts of the city or town with similar topography, land utilization, and population density; or
(B) the land has been devoted principally to agricultural use continuously for the preceding five years.
Id., § 23.56(1).
Pursuant to the authority granted to it under Section 23.52(d) of the Tax Code, the State Property Tax Board promulgated rules that reiterate the original intent of Article VIII, Section 1-d-1 of the Texas Constitution. These rules indicate that land that is principally used for recreation does not qualify for the open-space designation under Article VIII, Section 1-d-1. The pertinent rules are as follows:
6. For the purpose of determining 1-d-1 qualification, the State Property Tax Board has adopted these definitions:
a. "Agricultural use" shall mean the same as and be synonymous with "farm or ranch purposes" as that phrase is found in Art. VIII, Sec. 1-d-1 of the Texas Constitution. The meaning of the phrase or term is that recognized by Texas courts in decisions arising out of interpretation of Art. VIII, Sec. 1-d of the Texas Constitution.
. . . . .
c. "Principally" or "Principal use" shall mean the more important use in comparison with other uses to which the land is put.
7. The State Property Tax Board by rule has adopted these eligibility standards:
a. Where the raising and keeping of livestock to the degree of intensity generally accepted in the area is the principal use to which land is currently devoted and to which it has been principally devoted for five of the preceding seven years, such land is eligible as qualified open-space land.
b. Where hunting and recreational use of the land occur so as to be secondary and incidental to an otherwise principal farm or ranch use, such land is eligible as qualified open-space land. Where hunting and recreational use of the land occur so as to be the principal use of the land, such land is not eligible as qualified open-space land.
STATE PROPERTY TAX BOARD, MANUAL FOR THE APPRAISAL OF AGRICULTURAL LAND 15 (1982) (the "1982 AG MANUAL") (emphasis added).
The "Guidelines for the Valuation of Agricultural Land" specifically provides guidance regarding the tax...
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