Texas Turnpike Co. v. Dallas County

• Court: Texas Supreme Court
• Writing for the Court: Henry Wade, Criminal Dist. Atty.; CALVERT
• Citation: Texas Turnpike Co. v. Dallas County, 153 Tex. 474, 271 S.W.2d 400 (Tex. 1954)
• Decision Date: 06 October 1954
• Docket Number: No. A-4749,A-4749
• Parties: TEXAS TURNPIKE COMPANY et al., Petitioners, v. DALLAS COUNTY et al., Respondents.

Page 400

271 S.W.2d 400

153 Tex. 474

TEXAS TURNPIKE COMPANY et al., Petitioners, v. DALLAS COUNTY et al., Respondents.

No. A-4749.

Supreme Court of Texas.

Oct. 6, 1954.

Claude Gilmer, Rock Springs, McCall, Parkhurst & Crowe, Millard Parkhurst, Roy G. Baker, Johnson & Abney and J. Edward Johnson, Dallas, for petitioners.

Henry Wade, Criminal Dist. Atty., J. J. Fagan and Julien C. Hyer, Asst. Dist. Attys., H. P. Kucera, City Atty., Charles P. Atkinson, Asst. City Atty., and A. J. Thuss, Jr., Dallas, Archie C. Price, Grand Prairie, John Ben Shepperd, Atty. Gen., and W. V. Geppert, L. P. Lollar and J. Milton Richardson, Asst. Attys. Gen., for respondents.

CALVERT, Justice.

Our principal question is whether property acquired by Texas Turnpike Company and Sam Houston Turnpike Corporation, private corporations, is exempt, under Article XI, Section 9, of the Constitution of Texas, Vernon's Ann.St., from the payment of property taxes to the State of Texas and its various political subdivisions.

Suit was by petitioners for a declaratory judgment. The trial court held the property to be exempt from taxes. The Court of Civil Appeals held that it was not exempt. 268 S.W.2d 767.

We agree with the conclusion of the Court of Civil Appeals.

The parties agree that to be exempt it must appear that the property is publicly owned and that it is used for a public purpose. Our conclusion is that the property involved in this case is not publicly owned and we need not inquire into the nature of its use. The opinion of the Court of Civil Appeals contains a rather full statement of the pertinent facts. Only those necessary to an understanding of our conclusion will be noticed here.

The petitioners were chartered as private corporations under Article 1302, subdivision 61, Vernon's Annotated Civil Statutes, for the purpose of building, acquiring, owning, operating and maintaining toll roads within the State of Texas. Property owned by such corporations was undoubtedly subject to taxation under the law as it existed at the time of their incorporation. Articles 7145 and 7159, Vernon's Annotated Civil Statutes. But petitioners contend that certain provisions of Article 6674v, Vernon's Annotated Civil Statutes, enacted by the 53rd Legislature, Acts 1953, Chapter 410, page 967, creating Texas Turnpike Authority, a state agency, when considered with their by-laws and certain escrow agreements, has had the effect of placing the taxable title to their property in the state.

Article 6674v authorizes Texas Turnpike Authority to construct and operate toll roads and turnpikes, but by Section 5(n) it is specifically prohibited from duplicating the facilities of any private toll road corporation chartered prior to March 1, 1953, which begins construction of a toll road within eighteen months of the effective date of the act, if such private corporation provides in its articles of incorporation, by-laws, or otherwise, that none of its net income or profits will be distributed to its shareholders or other private persons and that the title to all of its assets, after payment of indebtedness, will be conveyed to the State of Texas or to the county or counties in which the road is situated.

Section 18 of the Article provides the manner in which and the conditions under which the properties of private corporations complying with Section 5(n) will be transferred to Texas Turnpike Authority. It is provided that such corporations shall be obligated to make an irrevocable gift of all of their assets to the State of Texas and bind themselves to use all of their net income and profits to retire indebtedness; that upon the acquisition of real property they shall execute conveyances thereof to the State of Texas and place such conveyances in escrow with an agreement that the escrow agent shall deliver the instruments to the Authority upon compliance with the requirements and conditions set forth in the section. It then provides that 'the equitable, beneficial and superior title to the property' of such corporations 'shall be vested at all times in the State of Texas and shall constitute public property used for public purposes, subject only to any liens or encumbrances created against said property' by such corporations 'to finance the acquisition, construction, maintenance or operation' of such roads.

The conditions on which the Authority is directed to accept, as a part of the State Highway system, toll roads built by private corporations are: 1. That at the time of acceptance the roads be free of indebtedness. 2. That no compensation be paid therefor by the state. 3. That at the time of acceptance the roads be in good condition and repair to the satisfaction of the State Highway Commission. 4. That the roads shall have been constructed and maintained in a manner equal or superior to standards of the State Highway Commission. 5. That in the letting of contracts for construction and maintenance of the roads procedures of the State Highway Commission shall have been followed.

Petitioners have complied with the requirements of Section 5(n) and have executed escrow agreements with the Authority, contracting that the 'equitable, beneficial and superior title' to their real property is in the State of Texas, and have placed and will place in escrow deeds conveying such property to the State of Texas, to be delivered upon the conditions set out above. The agreements further provide that in the event petitioners should abandon construction of the roads the deeds will be returned to them upon releases being executed by the Authority.

Under the foregoing facts is the property in question 'publicly owned' so as to be exempt from taxes under Article XI, Section 9 of the constitution? Public ownership, for tax-exemption purposes, must grow out of the facts; it is a legal status, based on facts, that may not be created or conferred by mere legislative, or even contractual, declaration. If the state does not in fact own the taxable title to the property, neither the Legislature by statute, nor the petitioners and the Authority by contract, may make the state the owner thereof by simply saying that it is the owner.

The petitioners own and will own the legal title to the property acquired and to be acquired. They are, and will be, in possession and control of the property. They have placed, and will place, deeds conveying the legal title to the state in escrow, but the deeds are to be delivered and to take effect only upon certain conditions, some one or more of which may never occur or exist. Under these facts petitioners contend that the state is the owner of the equitable title to the property and that the equitable title is the taxable title. Undoubtedly the equitable title is the taxable title in those situations in which the grantee takes possession under a deed in which a vendor's lien is reserved or under a contract of sale by which the vendee is obligated to pay the purchase price. Taber v. State, 38 Tex.Civ.App. 235, 85 S.W. 835, writ refused; Harvey v. Provident Inv. Co., Tex.Civ.App., 156 S.W. 1127, writ refused; Leonard v. Kendall, Tex.Civ.App., 5 S.W.2d 197, writ dismissed. Undoubtedly, also, this court has said that the grantee in a conveyance held in escrow is the...