Untitled Texas Attorney General Opinion ( 1942 )

.. _ . ....
OFFICE OF THE AlTORNEY GENERAL OF TEXAS
AUSTIN
QrmhLaC.MU(I(
A-Old-
Honoxable T. la.Trlnblo
Tlrst Air8i8tant
St&q Superintendent of Publlo Inmtruotion
Allatin, Toar
Dear Slrr
wo have raoeivad
8n opinion from tale depar a your TeQuostr
". . . .
ntlgamlt f&i8
on8 as outlimed
d aiat statt88 ao-
Na aTrite at the
Total Cepltal Aooouats 574,340
Lees real ost*to
BaalcingRouse 160,000
Other Real &state 23,730
Total 183,730
fbnorable T. Y. 'I'rimbl6,
Pt+ 2
hseeosed to Share R6ldera 390,610
8ti 312,b9O
Asss66ed Value Per Shr6 OU.7.92
gOnlnSonnatlon furni~he4 b~Mr.AldmJ6nk6,
Bireotor of R666ar6h fir th6 klk6rdtr 6f T6x66
6n.36 6p6oialirtin tax 6utt6r6,Xhthe~Ai6ziliO Ha-
tlon61Bank oleima that th6 a68666rn6& 6horrlbbe
made up laeordfng.tothe tollori6g rtatomtl
aapital stook
Cla88 A Prpmd 'gp&fJ
Gemman
8WRlU6 5o:odo
Uudlvld6d Profit8 149,335
Benerve k Retlr6mnt Ao-
oount prelerrad rtook llO.OoQ
Tot6l Capital Aooount6 w3,‘3hO
i%Ook, 01866
te66 .CaRpittll
A Pr6ferred k70.000
Aotual Value 6.fStook (lOC$) f39,JbO
Le66 Real ic6tate
value or BANiSSTOGlC
Asaeesea or Tax Yelo,
2650 Shares; Va lueo f la o h6hare 866.978
*you will not. tlmt thr aiti0rm00 betw66n u6
18 that we did not list in our 6t6t6ment, tb 01686
A pwferrrd atooL $235 000 at 6l.l,uhila aooordi&
to &!X. Jet&6 illtO~&IddiiOLl,he h6 li6t.d th6
$235,000 a8 asset6 amkLag UP ths total 06&dt6& 60-
aour& and has deduotsd 06 it6l St66k cla66 A .prrC
ierred stook $l,-@,OOO, whPqh i8 figumd at the rata
of two for 066 rstirablo ?al66.
l#
. . . .(I
Honorabla T. Y. Trimbla, Page 3
At OUT T6qU86t iOr additional iniOlm4tiOnWd hata
reoelved from YOU the i&lo&z@ 6UpplePlsntel informtion:
wRaferrlngto lour advioe that you doalro oer-
taln lnfonaation in ardor that detexdmtlon ry be
padO 46 to the prOROT 466W6&WRt Of WM b6Itk #to&
of the Amarillo Hatlonal Bank, end partioularlyto
rour repu66t that w6 gits you lnforrrtloaaoneom-
i!ltJ the fOl&6ilrg IJW36tiNi6 -
‘1. Who 16 th. OWWf Ot the ~TCdOTl’d
6tOOk and 66 they h6V6 title t6 it?
Reoomtruotioo Blnanoa Corporation
.16 the OUIM~ and h01b.r Of title to
all outstandi~ ~ef0rx-d 6tOQk.
;2. &i66 the ow&er OS the preferred 6toUk
elm lnotelllthamortga&e agalll6tthe
preferred atOOk?
Reo~mtruotlon -06 %r~OHAtiOllo1n-
ec and holder of the preferred itook
however, no note with mortgage axeout-
ed or held.
“3. We undershnd that the Reoon6traation
PIM!XOO GOrpOT8tiOn own6 or bold6 th6
&WfalWd atook, 6x14it 60 did th6
R. F. a. loan the bank $23~,000 or
$470,000 In oatihand``othsr-``valtrablo
OOn6id6TatiOil?
R6oonst&aotionflnanoe Oorporatlon pm--
oharedpreierred atook inbankaad pai&
in OSSh.th6 6~61Of $500,000. B66k h66
mada payment to R. F. O., of $30,000 in
oaah, thi6 pamnt 16aring the oUt6t6nd-
ing retirable value of preferred OtWk
(amount dtieR.P.Q.,) the sum of $470,000.
“4. UpOn the 4bOYa a66UlfQttOIl,
What (LO66the
oontraot with the Rooonetfuotion?laaitoo
Corporation provide relative to the date
of retirement and/or the amount or Bprpltu
fIonorabl6 T. M. Trimble, We 4
and undivided jWOfit6 that should be 6et
46lde 6aoh year ?OT t&6 T6tir6IMMtOf
the68 preferred atooka?
phe retirement of prefwred etoak @hall
be sabup laoh mar on a baa16 of twa and
onrhal? (2$$) wry oent# aid amountto
be set over in a ?n6d ?or the retlrsnmt
or prererrad atook. This 2&$ atuat oom6
out of earn&a aooruad for that year.
* . . . .”
Attaohed t0 ,$OUrNQU66t 16 4 MW6Q4~T OuigRw
o? a pObli8bellreport o?-the oondition o? the Amrllla lm-
tlonal Bank at the oloae of bu6hioss Deoember 31, 19k.l. #6
QuOtO imm the pWtinent pert thexvo? a6 ?Z41lO66t
*aAF~TAL'~AaaCutiTS
"Oapltal Stook;
(a) Ulnas A preSsrred, total par
235,000&C, retlrable .talros
lb70,000.00:(Rat60r tuti-
dcmds on retlrable rdloe ia 3%)
(01 Uij&un &ok, tot&par (265,ooo.oo 500,00&00
*&U’~lU~ 50,000.00
Wnbiv5Aed ~Ofit6 X49,335.42
~666~vt6 Iana retlramnt aoootmt for
Rirfekred at&Ok)
"TOTAL LXABILITIESAI'JD
OAPITOL ACCOUHTS 14.160.304.74"
The applioable t6Xi6& 6tatut68 Of thi6 State an
Artlolee 7165and 7166,&r*i68d Old1 statute6 O? TILBI, 1925.
Seotlon 5ld a? Tltia 12 (Bank8 and Bapklng), of
the U. S. 0. A., prOVid66;
I. . . .
%Otwlthatandlng any other prooi6ion of law
or oonssnt to tax expwsa4 or
or any prlvllo::e
.
Honorable T. M. Trimble, kg6 5
implledly granted thereby, the shares of pxwfsrred
stook of national banking e6sooietloaa,and the
shares o? proserred atoak, oepltel not.66 and dr
bentW66 o? State banks end tru6t oompen186, ao-
qulred before or after %-a& 20, 1936 by Reoonstruo-
tlon Flnenoe Corporntlon,and the dfvidsnda or in-
terest derived therMram by the Reoonstruotion?I-
nenoa Corporation, shall not 60 long a6 Reoonstruo-
tlon Fineno Corporation 6hail continue to own the
llems,be subject t0 any taxation by the United Statea,
by any Territory, dspend6noy, or posssaaion thereof,
or the Distrlot o? Oolumbla, or by enp Stats, oounty,
munlolpelity or local taxi% aathorlty,whsthor IAU-
posed, levle4 , or assessed on, before or aft6r Earah
20, 19%, end whether for e past, prtreentor future
taxing psrlod. . , .*
T&e prinolpel dl??ioulty In dstennIn!ngyour p~po-
sit&on erlsae baoauss of the mennsr ln whioh the benk oarrlae
the Clese A Preferred St&ok upon it6 b00ks. J.t6hW6 that
olaes of stook to have a pr value of $235,ooO.OOend yet the
taots presented show that the Class A Preferred 3t0ok ha6 a
retireblevalue of $470,000.00whloh la the prinolpal remln-
lng unpaid anount of tho original lot% to tktibank by the Ro-
oonstruotlonFlnenoe Corporation. In afidJ.tion to the $235,000.00
per velue of the steak ths bank appear6 to have set up a re-
tlremsnt retaerveo? $llO,OOO.OOend an "undividedprofits"
fund of $149,335.42 out of whlab it may elsot to pey the addi-
tional mount 0r $125,000.00 to pay the total sum Or $470,000.00
repreeentlngthe value of ths stock ownat by the Reoonstructlon
Flnanoe Corp0retionand th6 amount remfilningunpeld of the
orlglnel abllgetion o? $500 000.00 borrow& by the be& ?SOJE
ths ReoonstruotlonPlnanoe Eorporetion.
The ?eota 6hOW that the'ReoonstruotionBlriuwo Cor-
poration owns the title to the ales61A Preferred Stook end
that it ha8 po.MeSsiOn Of 66Em. Under the axpreaa p1~016lOns
of said Seotlon 516 o? Tit16 12, U. s. 0. A., aupre, all stock
.purohasedand owned by the ReoonotruotlonPinan Corporetion,
pursuant to anid statute, is 6xsnpt irom *any temtlon by . . .
munlotpellty or 10061 taxing authority. ."
%z zE'ihi?%i%i of 6x Perte frrensford 19lO 60 S Ct. 94:
354 84 L. Ed. 1249; Steto Tex'Com. : Belilmore gel
%I$ &k i938 199 A. 119 117 Kb. 40 i Flrkt Netlonel Benk
V, stet’e lb:,ConmlLsloa, 1939: 92 Pea. (2 987, 43 N. IL 307,
Honorable T. M. Trlmbls, Page 6
oertiorarldenied, 1940, 60 23.Ct. 173, 308 0. S. 515, 8i,
L. Ed. 4391 and Herohante liationaiBank of LGobileQ. U. S.,
1941, 37 Fed. sup. 931, 93 ot. 01. 705.
The law Is, themfora, olear. The tmr ana rull.
ialue of the Prererred Stoak aannot be taxed by the Amarillo
Independent ClohoolDietriot.
Shares of bank stook aro to be assessed as other
personal property
at the *true and full val.wm. There is no
exaluslvemethod for determIningthat value. Any mthod may
be employad whlah In Its nature Is reasonably oaloulated to
lstablIsh slob value. It may be mhan by tha market ralm of
the stock; by payment or dlvldands ror suah period or tIms
and at euoh rate as to reasonably JustMy ralm or by an ao-
oounting of the banks net oapltal assets to arx4va at tha .valuo
baok or the shares. In short any method reasonably aalaulatad
to reaoh a aorreat oonoltmion as to value Is surrlal0d ror
the taxIdngauthor1ties. The laws of this state plaaa the duty
or determInIng the value or suoh stook within the diaorotloa
or the 10441 aseesalng .authorItIes.The Legislature ha8 reet-
ed in boards of equalIz&tlon,as oonstituted by etatute, the
601s dlsoretlon In the valuation and the equalizationof valuaa
of property subjeot to ad valorem taxation. Their aotion Is
olothed with the presumption that It has been rightfully made
on the basis of aotual raluo and the aourta will daaline to
disturb auah assessments uuleea shown to be arbitrary and
grossly exoeeslve or fraudulentor based upon a tundamentally
wrong prlnolple or method. 40 Tex. Jur. 158. Furthar than
this the oourts have not gone nor aan this dspartmant in stat-
ing the rule.
Eroept a4 to the appllaablelaw, we are unable to
advise you oonoernlw the aorreat formula or method, of the
two eubmltted by you, to be used In maklag the assessment of
the atook or thr A``lllo national Bank. You aan, however
rollow the law whloh wa have glren to you In this OPlnIOn in
making your aaseasmant.
Trusting that this opinion will be of soma bansilt
to you, we are
Yours very truly
ATTOlW3Y OENEF#L OF TEXAS
A& ,,+&Lk.Lq
Harold SdoOraaken
Izac :mp a*.mru