Case Information

*1 Honorable T. M. Trlmble

First Asaiatant

State Superintendent of Public Instruction

Auatln 11, Texaa

Opinion No. O-6235 Re: Under the facta stated, does the Amarillo Independ- ent School Dietrlct have grounds for legal action agalnet the shareholders of the American St&z Bank or of the American Rational Bank f’ar ta;ses aasesaed against the shareholders or the Amerlcen State Bank? Deer Sir:

We are In receipt of your recent request for en opinion upon the above captioned matter. You enclosed a letter from Mr. George M. Weddill, Secretary of the Amarillo Public Schools to Mr. L. A. Woode, State School Superintendent, pre- senting the queetion which i8 aa follows:

“WI11 you plreme submit the following Information to the Attorney General’8 Department and auk them for e rulings

Subject: Amarillo Independent School District Vereua Amerloen State Bank Question of Tax Asseeament January 1, 1936 The following information le taken from publlshed atetement of the condition of the American State Bank a8 of Deoember 31, 19358

Cegltal Stock @25,;;;.;: Capital Debentures 200,000.00 Surplus & Profits 35.3X3.29 Total $235,3,18.29 In arriving et the proper amount to eeaeae for *2 -

Honorable T. M. Trimble - page 2, (o-6235)

taxes, our Tax Assessor, Mr. M. H. Hardin, set up the following table:

Capital Stock $200,000.00 Less Debentures 75,ooo.oo 125,OOO.OO Add Surplus & Undivided Profits 35,320.00 160,320.OO Less Value of Real Estate as shown by Statement

05,280.00 Value of Personal Property

Assessment $2 75,040.oo The real estate was assessed separately at a valuation fixed by the Board of Squallzation and was paid on accordingly. The matter in question Is the assessment against the stockholders for the per- sonal property. As a matter of fact, on January 11, 1936, which was eleven days after the above state- ment was published by the American State Bank, this institution ceased to do business, and it is rep- resented by officers of the bank that the acceptable assets of the bank were transferred to the American National Bank in consideration of their assumption of liability to the depositors and creditors. It is further claimed that at the time of transfer, the stock of the bank had no value and, if it had no value on January 11, the day the actual transfer was made, there was no value on which to base these taxes on the year 1936 because there was no value of stock on January 1 of that year. It Is further claimed that stockholders of the new bank that was formed were not the same stockholders of the old bank, as there were more than thirty stockholders of the old bank that did not participate in the or- ganization and become stockholders of the new bank.

With the above information as a basis, the stockholders of the American State Bank claim there should be no liability for taxes assessed against them as of January 1, 1936 on the stock of the old bank which was liquidated or transferred to the American National Bank on January 11.

Up to this time, tax assessments by the Inde- pendent School District have not been paid, and members of the School Board wish advice as to whether there is ground for legal action against the stockholders

Honorable T. M. Trlmble - Page 3, (O-6235)

of the American State Bank or the stockholders of the American National Bank for the taxes assessed'against the American State Bank as of January 1, 1936."

In rendering our opinion we are doing so upon the assumption that a valid assessment was made against the share- holders of the American State Bank and that the Equalization Board passed upon the taxable value of the shares as rendered and as assessed by your tax assessor.

The following quoted statutes are relevant to the question under consideration, to wit:

Art. 7151 Vernon's Annotated Civil Statutes, 1925: "All property shall be listed for taxation between January 1 and April 30 of each year, when required by the assessor, with reference to the quantity held or owned on the first day of January in the year for which the property is required to be listed or rendered. Any property purchased or acquired on the first day of January shall be listed by or for the person purchasing or acquiring

If any property has, by reason of any special 2:; contract or fact been exempt or has been claimed to be exempted from taxation for any period limit of time, and such period of exemption shall or expire between January 1, and December 31 of any year, said property shall'be assessed and listed for taxes as other property; but the taxes assessed against said property shall be for only the pro rata of taxes for'the gortlon of such year remaining.

Acts 1909, p. 373 .

Art. 7145, V. A. C.-S.:

"All property, real, personal or mixed, except such as may be herinafter expressly ex- empted, is subject to taxation, and'the same shall be rendered and listed as'herein prescribed.

Acts 1876, p. 275; G. L. vol. 8, p. 1111."

Art. 7147, V. A. C; S.:

"Personal property, for the purposes of taxation, shall be construed to include all goods, chattels and effects, and all moneys, credits, bonds and other evidences of debt owned by citi- zens of this State, whether,the same be in or out of the State; all ships, boats and-vessels belonging to inhabitants of~this State, if registered in this State, whether at home or abroad, arjd a31 capital Invested therein; all moneys at interest, either within or without the State, due the person, *4 Honorable T. M. Trimble - page 3, (O-6235)

to be taxed over and above what he pays interest for, and all other debts due such person over and above his Indebt- edness: all public stock and securities; all stock ln turn-pikes, railroads, canals and other corporations (except national banks) out of the State, owned by Inhabitants of this State; all personal estate of moneyed corporations, whether the owners thereof reside In or out of this State, and the income of any annuity, unless the capital of such annuity be taxed within this State; all shares in any bank organized or that may be organized under the laws of the United States; all Improvements made by persons upon lands held by them, the title to which is still vested In the State of Texas, or in any railroad company, or which have been exempted from taxation for the benefit of any railroad company, or any other corporation whose property is not subject to-the same mode and rule of taxation as other property. Acts 1879, p. 39; G. L.

vol. 8, p. 1339.”

Art. 7166, v. A. C. S.

“Every banking corporation, State or national, doing business In this State shall, in the city or town in which it Is located, render Its real estate to the tax assessor at the time and in the manner required of individuals. At the time of making such rendition the president~~or some other officer of said bank shall file with said assessor a sworn statement showing the number and amount of the shares of said bank,. the name and residence of each share- holder, and the number and amount of shares owned by him. Every shareholder of said bank shall, In the city or town where said bank is located, render at their actual value to the tax assessor all shares owned by him In such bank; and in case of his failure so to do, the assessor shall assess.such unrendered shares as other unrendered property. Each share In such bnnk shall be taxed only for the difference be- tween its actual cash value and the proportionate amount per share at which its real estate is assessed. The taxes due upon the shares of banking corporations shall be a lien thereon, and no banking corporation. shall pay any dividend to any shareholder who Is In default In the payment of taxes due on his shares; nor shall any banking corporation permit the transfer upon Its books of any share, the owner of which Is in default In the payment of his taxes upon the same. Nothing herein shall be so construed as to tax national or State banks, or the shareholders thereof, at a greater rate than Is assessed against other moneyed capital *5 Honorable T. M. Trlmble - page 5, (o-6235)

in the hands of individuals. Acts 1885, p. 106; G. L. vol. g, p. 726.”

It will be noted that said Article 7166, provides that the shares in a bank shall be taxed on the basis of the amount of personal property owned by the bank and that the nersonal property Itself Is hot taxed.

The Supreme Court of Texas in t ,h, e case of Chlldress County vs. State et al, reported in 92 S. W. (2d 1011 in construing Art. 1 7151 (supra) used the following language:

“The foregoing article makes It clear that all property owned by persons on the first of and sale January must be listed for taxation, ^ .- ^. _ . _ _ tnereos Snortly aSterWard cloes not afr‘ect the

rule . ”

The ownership of property on the 1st day of January of any year creates a liability on the part of the owner for taxes levied upon such property for that year. Winters et al, vs. Independent School District of Evant, 208 S. W. 574. Hillstnan vs. Falson 57 S. W. 921; Rhomberg vs. McLaren 21 S. W. 571.

It has been held that the action of a Board of Equal- ization in fixing the value and assessing property is final, and not reviewable by courts; even for gross undervaluation. Chicago R. I. & G. N. Railway Co. vs. State, 241 S, W. 255; State vs.

Chicago R. I. & E. Railway Co., Comm. of App. 263 S. W. 249. It has been further held that the decisions of Boards of Equalization, in fixing taxable value of property Involve an issue of fact and such decisions are judicial in their nature and are final.

vs. City of Waco 3 S. W. (2d) 131. It has been further heIdE%% the determination by a Board of Equalization of the value of the property assessed for taxes cannot be disturbed by courts In absence of fraud , provided the board has performed its duties substantially in the manner prescribed by statute. Highland Park Independent School District of Dallas County, vs. Republic Insurance Company, 80 S. i>J. (2d) 1053.

It is stated in the quoted letter that the stockholders or shareholders claim’that the stocks or shares as of January 1, 1936 were without value. This raises a fact issue which cannot be passed upon by the school board, and under the decisions the only way that same could be adjudicated would be by the courts. Under the decisions we doubt very seriously if the courts under the facts stated would go behind the action of the Equalization Board, In the absence of fraud .

It is therefore the opinion of this department that the Amarillo Independent School District has sufficient grounds for brin&nq legal action against the shareholders of the American State *6 Honorable T. M. Trlmble - page 6, (O-6235)

Bank for the taxes assessed against said shareholders on the shares owned by them on January 1, 1936. It is also our opinion that the School District has no-legal claim against the shareholders of the American National Bank, except those who held shares in the American State Bank on January lst, 1936.

Trusting that the above and foregoing fully answers your inquiry, we are

Yours very truly ATTORNEY GENERAL OF TEXAS /S/ W, V. Geppert W. V. Geppert APPROVED OCT. 10, 1944

Assistant /s/ Carlo8 Ashley APPROVED

FIRST ASSISTANT ATTORNEY GENERAL OPINION

COMMITTEE By B.W.B.

Chairman WVG:iw:elb