R-360 NET GI~NERAIL ,,..a EXAS . ’ Honorable G44r 4 H. Sheppard cosrkptroller ef p-ublic Accounts Austin, Texar *inion we. V-A82 E4,: The applicability of tha Taut Stock Treaefer ‘kc Law to transfer wf stock to the .rurvivor whan the ato& ~44 issued to twe permom as tenants in com- m6n with ihe r&h% of mar- vivorlllrip. X344? Sir: . ln your letter of April 14, 19d7, ysa rsqwwt the apixdam of this deyartmrat upen the question reorotcrd in a IetMr from Mr. R&art b. Hincka, of the firm of Bur ft rd, Rybwn, tunCkti & Foal. Mr. Hfncks’ letter is as feflewar “Am Att4rney fw a Te~me corporbtioa, 1 have frrqueat occreion tfa p8sa 0 various tr~anefers of dock, which transfers are made on the b4eks afthe Company’s transfer agent in Ekllrs. “Often we l-he a transfer requested to the aur- vivor where the rtock has been isswd in tore names, as tenants in common with right of eurvivership. While ,thim right of survivorship is not log*1 in Tex- aa unleis supported by a contract in the lffetime of the partia8, it is legal in IIYA~ states and we have mtlad ffirt kr such cases the 14w of the residence lp- pli4r and we make the tranmfer to the survivor on proof of t&e da&h of the ether WI@& in commor~. 3 have been unable to fidd 4 ruli4 os ta wheth- ‘,’‘er or not the Texas Stock Transfer Tax Law apples to the above transactions. The Federal L.aw exempts ,them from skdk transfer 64s as a transfer ariming ‘.. by operation of law. “Would you be kind en&&to render me a find- ing or regulation on the above? * 4 ., -. lion. Goorpt H. Sheppard - Page 2 Opinion No. V-W I Article 7047m, V.C.S., provides in part as followr: “There ia hereby imposed and levied a tax as hereinafter provided on all aales, agreements to oell, or memoranda of @alas, and all deliverfas or transfers of shares, or certificates of stock, or certificatea for rights to stock, or certificatir of deposit representing an interest fn or reprt#cntfng oertificbtor made taxable uader this Section in any domastic or foreign assocfrrtfon, company, or cor- poration, or certificates of tatera& in go bueinesc conducted by txustee or trueteec mule after the ef- factiva date hereof, whether made upo4 or Jowa by the books of the association, company, corparatiun, or trustee, or by any asrigament in blank or by u~)r delivery of any papers or agreement or mamoran- dum or other evidaace of rale or transfer or order for or agraament to buy, whothor intermediate or finrl, and whether investing tha holder wfth thebena- ficial fntarest in or legal title to such shck ar c&hat certificate Cuable harelurler, or with the pos``sior or use theraof for any purpeee, or to mecure the fu- ture p4yment of ma4ay or the future tra4rfar of Lnp ruch stock, ox certificate, on each hundred dollars of face value or fraction thereof, lbire4 (3) Centb, . . .* After providing for the levy of the tsx upon the 00&i- tiono net out in the above-quoted portfen of Article ‘IQ47m, them folIowe certain exceptions, to which the tu does not apply, The excaption nccarrary for us to ceader here is ae folbwr: * * . . if neither the sale, nor tie order for, nor agreement to buy, nor the agreement to sell, aor the memorandum c&frule, nor the delivery ip ,ynads tn tbia St&e 4nd when no act wcdaeary to &feCt the ralc or ixawfer ia done in this State. . . .” A constructitm of the foragoing exceptfen oU4 fer a da- tarmfnation of whether or not-the sale, the order far, the agree- ment to buy, the agreement to sell, the memorandum of aale, the delivery, or any act nacessary to effect the s4le or trmsfe,r, is done in this State. A careful research rcva4lr th4t our 4ourU h4va oat tbul far constrwd Article 7047~ ia conwction with the probhll pn4oated; hence this opiaion rest4 upon our oap oamatnrotfo4 d tha Act applfcabla to tha problem prceanted. If a certifioate of stack has been issued to two perlolu, ab tenants in common, with absolute right of ownership vestfng in t&3 survivor upan the death of one of the tenants in common, and at .: Hon. Gvorge H. Sheppard - Peg8 3 OpiQiQn Ye. v462 the time of du8th, under the 18w of the St&e in wMch the tesnn& in common reside, the ownership pasws unconditionally to the aurvi- ~1: by operation of law, then we are of the opinion that there dws net remain any further act necessary te effsct the srle or transfer tn this St&e. Indeed if the title passes to the survivor by e~eraW of law, we doubt if there he been s arle or transfer vithfr t&i pus- view of this et&de. But if 80, ad if ,*e necee~rrty tct to affect tb4 srle or twasfer ha8 occurred in another &ate, it $8 not subjbQt to tax in thio State. We confine oui answer so&Iy to the Qw*t&r 04 8 transfer that irmree to the benefit of the survitig temt in cm in l State in which such ownership may arise by operation oi ina, and not by virtue of a contrrct ,made in the lifetime of the parties a6 ! required in Tex&s before the surviving tenant in common may cl&fan t&e full +xnseriliip of the stock, Article2580, V.C.S.; Chandler v. ##urJw, 139 6. W. (26) 327 (tiurt of Civfl Appeals). SUMh4ARY A wvtWk@e al ntwk owned by two p vr r o ns l8 knmt@ ia vmnmvai $6 not subject to the stock trans- fer tan Provided in Article 7047m, V.&S., If under the 16~ of the St&e where such tenurta in cornmon reside, &s&ate ownarship vehs in the survivor upon the de@.& of ens of the owners by operation of law. This ruling insapplicable only to the States in which by operation ,of law the survivor acquires complete ownership of rtock which he owned with a tenant in cemmvn rt the time of the death of such tenant, Very truly youra, ATTQRNEYGENERALOP~ . : LPL:mmc APPROVED MAY 5. 1947 .,. --4 ATTORNEY GidiRJU OF %‘6L&&? .’ .; “. . .