Untitled Texas Attorney General Opinion ( 1959 )

‘%-HE ,6k-JlTORNEY GENERAL
OF TEXAS
March 13, 1959
Hon. V. L. Ramsey .~Opinion No. WW-571
Chairman, Revenue &
Taxation Committee Re: Constitutionality of sub-
House of Representatives section (2) (b) of Section
State of Texas 12.02 of House Bill Number
Austin, Texas 33.
Dear Mr. Ramsey:
We quote from your opinion request as follows:
“The committee requests to be advised on the question as '
to vðer the Legislature may constitutionally delegate
to the Scorctary of State the power to determine whether
a corporatlon'(r accounting system is acceptable for
allooatlon purposes an 1s~ provided in Subsection (2)(b)
of Section 12.02 of the Bill p. B. 331."
You arc advised that the delegation of power In question
is constitutional.
Article 1, Section 28, of the Texas Constitutionprohibits
the exercise of the power of suspension of any law except by
the Legislature; Article 2, Section 1, requires a separation of
powers between the three departments of government.
In construing these two provisions, the courts have formu-
lated the following q.S.86 for tcrting the constitutionality of
a delegation of power by the Legisls&ure:
1. The Dower delearated must be eubleot to exeroisc by the
exeoutive or bdmlnlstra~lve agency only i&thin limits pre--
eorlbed by the Legislature. Moody v. City of University Park,
278 S.W. 26 912 (Tex.Civ.App. 1953 R 2' ExP rt
.~Salolldo, 153 Tex. C.R. 160, 218 S.i. :d%$r[;&i4,; EX'P arts
'
'wason, 112 Tex. CrioR.v1T2,, 15 S.W. 26 650 (1929); see
,a160 Panama Refining Ryan, eb al Amazon Petroleum
t.al,v. she: 55 S. ct. 2h~u.s. -9 L.
2. Ilegislation wh& delegates power to an administrative
or executive offloer to be exerol&ed.zzthat officer, in his
tieoretlon, may arbitrarily ohooee, without setting forth a
."gulde or "suffiolent standard" to govern the exercise of such
,
~\~.a . ~8, .’ .I.>
Ron. v. L. Ramsey, page 2 (Ww-571)
power, Is unconstitutional and void. Moody v. Clty,of Univcr-
supra; Railroad, Commisslon~ v, Shell 011 C00, Y
%%-%%l S W 2d 1022 42) See also Margolin v,, State,
151’Tcx: C.R. i$, 205 S.W?d 7j5, (1947).
3. The standard prescribed by the Legislature to guide
the exercise of the delegated power may be general and still
be valid if it is susceptible of,rcasonablc application.
Moody v. City,of Unlversity,Park, supra; see also Gillaspic
v..Departmentof Publiosafety 152 T;;. 459, 259 S W 26 17
b j) ; and Reagan County Purchasing ,, Inc. .v, ~&ate, llp7
S.W. 2d~l194 (Tex.Clv.App. 1937, error ref.).
The portions-of Seotion 12.02 of House Bill .33 relevant
to this opinion .arc aa follow?:
"( 2) Any corporation engaged in finance, investment,
cohstruction or pub&lo utllltics aotlvltlcs may, in
lieu of the allocation formula In Seotlon (1) of this
Article, allooate.to 'Texas that portion of its entire
stated capital, surplus and undivided profltr, plus
the amount' of outstanding bondr,~ notes and debentures
as defined In this Article which reparate accounting
Indicates is properly attributable to business done
in Texas.
"Providcd,:.howcver, that to be eligible for allocation
under the premises of this section, each corporation
must:
“(a). . ,
'I(b) Secure from the Secretary of State advance written
‘approval certifying that the coz?poratlonl s acoo;;tlang
system Is acceptable for allooation purposes.
pre-requisite for granting such approval the Secretary
of State may require the oorporatlon to submit to him
any and all relevant Information regarding Its aocount-
ing rymtem In such form as the Seoretary of State may
direct ,I’
Purruant to the ‘foregoing provisions the Seoretary of
State Is oharged with the ministerial duty of oert~hI.``e~l~s
written approvil o,f separate acoounting systems.
oernarily calls for an administrative determination of faot.
Delegation of the power ‘to make a detennlnation, of foot Is
not unoonstitut
100 S.W. 26 754
58 fm. 45);
Safety .,rnd, Reag
I
Hon. V. L. Ramsey, Page 3 (WW-571)
supra . In the instant case the determination ‘must be made
according to a well defined standard, 1.8, whether or not
the accounting system ,ln question discloses the smount of
entire stated capital, surplus, undivided profits, outstand-
ing notes, bonds, and debentures attributable to business
done in Texas. No discretion Is given to the Seoretary of
State to refuse ocrtiflo.atlon of approval of any separate
accounting system which conforms to this standardi nor Is
he given any discretion to approve a separate aooountlng
system that does note conform to the standard. It Is appar-
ent, therefore, that the power of approval delegated to the
Secretary of State by the Legislature meets the tests of
constltutlonality’set forth above.
Anol-llary to the power of approval, and to facilitate
the making of the ‘fact. determination, the Seorctary of State
is given the power to require any and all relevant lnforma-
tlon concerning the separate accounting system in question.
This power is one ‘thkt Is necessary in order for the Secretary
to make a deolslon aa to whether a oorporatlon is entitled tb
pay Its ,franchlse tax aooording to its sepw’ate aooountlmg
syst.em . It. Is lapllolt 1~ the Bill that~ the Secretary of
State can n’ot use the power &rbltrarily or In such manner as
to cause dlsapprova;b of a separate aooouqrting syrtea whloh
conforms to the staridard set forth i‘n the Bill. WC therc-
fore hold that th6 delegation of this power doe? not violate
the tests of oonstittit~onbllty set forth~ above.
SUMMARY
The power of the Secretary of State to
approve separate accounting systems is a mln-
lsterlal Punctlon to be exercised aooording
to a well defined standard; the power to
require 8ubmlrrloPi of Information by a oorp-
oration ooncernlng Its separate, accounting
syetea ,I8 necessary to, the effective admInIs-
tration of the Bill and can not be arbitrarily
used by the Secretary of State. Therefore
Section 12.02 Subsection (2)(b) of Hour8 Bill
1
The power of the X?.ecrctary of State to determine the form
in which lnfomatlon from a corporation should be?iibiiiiiied
; In order to calculate much oorporatlonts franahlse tax was
apeclfioally upheld In Houston. Oil Company,of Texas. v.
Lawson, 175 S.W. 26 716 (Tex.Civ.App., 1943).
.
Hon. V. L. Ramsey, Page 4 (WW-571)
33 does not violate the constitutional pro-
hibition against delegation of power by the
Legislature.
Yours very truly,
WILL,,WILSON
Attorney General
J&k N, Price
Assistant
JNP:&t
APPROVED
OPINION COMMITTEE
George P. Blackburn, Chairman
Charles Cabiness
Leonard Paasmore
C. Dean Davis
Morgan Nesbitt
REVIEWED FOR THE ATTORNEY
GENERAL
By
W. V. Geppert
.