Untitled Texas Attorney General Opinion ( 1947 )

R-642
s;r
OXWICE OF ’-
THE ATTORNEY GENERAL
PRICE DANIEL
*mo*xFx GI:XERAI. July 26, 1947
Bon. Sam lee Opinion No. v-315
County Attorney
Braaoria County Re: Whether shares in a state
Angleton, Texas bank are taxable for the
year 1947, when bank com-
mences operations on Jan-
Dear Mr, L3e: uary 2, 1947.
Your letter request, relative to the above
captioned matter reads, in part, as follows:
"STATEME3TOF FACTS: The LAKEJACKSOIV
STATEBANKlocatz nke Jackson, Texas in
Brazorla County is a banking corporation.
This bank is g state bank rather than a na-
tional bank. The charter was granted this
corporation September 23, 1946. Permit #1765
from the Banking Commlasioa gives January 2,
1947 as the opening date for this bank. The
bank aid, in fact, open on January 2, 1947
and started doing business as a bank of that
date performing the usual functions as a bank.
'The capital stock was subscribed to by
the stook holders prior to January 1, 1947
and the capital of _the bank was set up as well
as a surplus was setcup ana an unaiviaea pro-
fit was also set up prior to January 1, 1947.
Money was used out of this undivided profit
for the purpose of buying furniture and fix-
tures for the bank. All of this was done
prior to January 1, 1947 and, as previously
stated, the capital, surplus and undivided
profits were likewise set up before January
1, 1947.
"LAKEJACKSONSTATR RANKis the agent
for the payment of all taxes that might be
due on shares of stock for the share htilclera.
The LAKEJACKSONSTATE RANKowns no real es-
tate. The corporation rents the building It
is in; however, it does own the furniture
Hon. Sam Leed, Page 2, V-315
84
ana fixtures which were bought out of the
undivided profits as set up on January 1,
1947..
“QUESTION: In view of ‘the fact that
the capital, surplus and undivided profits
were in being prior to January 1, 1947 and
some of the monies and the profits were
used prior to January 1, 1947, is this cap-
ital the surplus and undivided profits tsx-
able property for the year 1947 even though
the State BRnklng Commission’s permit gives
the opening date as January 2, 1947 ana the
bank In fact started operating as a bank as
of January 2, 19471”
The following quoted statutes are relevant to
the question under consideration, to wit:
Art. 7151, Vernon’s Civil Statutes:
‘All property shall be listed for taxa-
tion 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 gear for
which the propertynls required to be listed
or rendered . . .
Art. 7145, V. C. S.:
‘All property, real personal or mixed, ex-
cept such as may be hereinafter expressly ex-
empted, is subject to taxation, and the same
shall be rendered as listed as herein pres-
cribed. ”
Art. 7147, V. C. 3.:
“Personal property, for the purposes of
taxat ion, shall be construed to include all
goods, chattels and effe,cts, and all moneys,
credits, bonds and other evidences of debt
owned by citizens 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, wheth-
er at home or abroad, and all capital invested
Eon. Sam Lee, Page 3, V-315
therein; all moneys at interest, either with-
in or without the State, due the pBrsoa, to
be taxed over and above what he pays interest
for, and all other debts due such person over
and above his indebtedness; all public stock
and securities; all stock in turnpike rall-
roads, canals and other corporations I except
national banks) out of the State, owned by in-
habitants of this State; all personal estate
of moneyed corporations, whether the owners
thereof reside in or out o? this State, and
the income of any annuity, unless the capital
of such annuity be taxed within this State;
all shares la any bank organized or that may
be organized under the laws of the Unlted
States; all Improvements made by persons upon
lands held by them, the title to which 1s
still vested in the State of Texas, or in
any railroad company, or which have been ex-
empted 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."
Art. 7166, V. C. 9.
'Every banking corporation, State or ~na-
tioqel, doing business in this State shall, In
the city or town in which it is located, ren-
der 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 pres-
ident or some other officer of said bank shall
file with said assessor a sworn statement show-
ing the number and amount of the shares of sald
bank, the name and residence of each shareholder,
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 bank shall be
taxed only for the difference between its ac-
tual cash value and the proportionate amount
per share at which its real estate is assessed.
The taxes due upon the shares of banking corpor-
ations shall be a lien thereon, and no banking
86 Hon. Sam Lee, Page 4, V-315
corporation shall pay any dividend to any
shareholder who is In default ln the payment
of taxes due on his shares; nor shall any
banking corporation permit the transfer up-
on 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 oth-
er moneyed capital la the hands of lndlvld-
llals."
You will note that said Article 7166 provides
that the shares in a bank shall be taxed on the basis
of the value of the personal property owned by the bank
and that the personal property itself is not taxed. In
other words, the capital, surplus, and undivided pro-
fits are not taxed. But the shares in the bank are
taxed; and the value of the capital, surplus, and undlv-
lded profits (being personal property ) is used as a
basis for determining the value of the shares for taxa-
tion purposes. To illustrate:
Capital Stock $"OO*``~.``
Iess debentures 75.
$125,000:00
Plus Surplus and Undivided
profits 20,000.00
Other personal property 5.000.00
$150,000.00
Less value of real estate 10.000.00
Value of personal property 9140,OOO.OO
1000 shares divided into $140,000.00 equals
$140.00 value of each share for taxation purposes.
These bank shares under the express provi-
sions of Article 7145, V. C. S., above quoted are sub-
ject to taxation. They are 'property; real, personal
or mixed." They were in existence on January 1st and
the fact that the bank itself did not open its doors
for business until January 2 Is Immaterial.
The Supreme Court of Texas in the case of
Childress County vs. State, 127 Tex. 343, 92 3. W.
(28) 1011, in construing Art. 7151 used the following
language:
Hon. Sam Lee, Page 5, V-315
"The foregoing article makes It clear
that all property owned by persons on the
first of Januafy must be listed for taxa-
tion, . . . .
The ownership of property on the first day
of January of any year creates a llablllty on the part
of the owner for taxes levied upon such property for
that year. Winters, et al, vs. Independent School Dls-
trict of Bvant, 208 9. W. 574; Rillaman vs. Faison, 57
3. W. 921; Rhomberg vs. McIaren, 21 3. W. 571.
We appreciate your well prepared brief which
.accompanled your request.
SUMMARY
The capital, surplus, and undivided pro-
fits of a bank are not taxable. Rowever, the
shares of the bank are tsxea on the basis of
the personal property of the bank. The amount
of the capital, surplus, and undivided profits
of a bank, together with other personal pro-
perty less the value of the real estate and
debentures, determines the value of the shares.
Arts. 7151, 7145, 7146, and 7166, V. C. 3.
Chlldress County vs. State, 127 Tex. 343, 92
S. W. (26) 1011.
Yours very truly,
ATTORNEX
GENEXALOF TEXAS
W. V. Geppert
Assistant
WVG:mrj ATTORNEY
GFSERAL