R-457




                    iaUSTIN.   TEXAS




                     May 21, 1947

Hon. Jean Day          Opinion No. V-214
County Attorney
Henderson County       Re: Compensationdue delik
Athens, Texas              quent tax attorn en
                           aollection of tax when
                           15% exoeeds the amount
                           of penalty and interest
                           collected.
Dear Mr. Day:
           'Your letter requesting our opinion relative
to the above-captionedmatter; reads, in part, as fOl-
lows:
           nHutohins & Weeden, a fira of tax
     colJ.eotingattorneys, have a contract
     with Henderson Ceunty to colleot delin-
     quent taxes. They have thi,regular tax
     collecting contract,which calls for 15$
     upon the delinquent taxes collected to
     be paid out of the penalty and interest.
           "In July, 1946, they filed suit
     against Texas Power & Light Co., to ool-
     leot their 1945 tax. The suit was a-
     mended after February 1, 1947, to ool-
     lect the Texas Power E Light Co's; 1948
     tax. The suit was settled Mar. 8, 1947,
     tilepenalty and interest on the T946 tax,
     when collected, amounted to 2.65% on the
     dollar of tax collected.
                       "Question:
           "Now, are the tax attorneys,Hutbhin-
     soh & Weeden, entitled to 15% on all the
     Texas Power k Light Co. taxes for the year
     1946 colleotableas exoess penalty and in-
     terest accrued on all the delinquent tax
     oollected until they receive an amount e-
     qua1 to the full 15s on the 1946 Texas Pow-
     er 8 Light Co. taxes."
                                                           . . ..




Hon. Jean Day - Page 2   (V-214)


            We have examined the delinquent tax contract
executed by Henderson County and attorneys Hutchins &
Weeden, which was duly approved by the Comptrollerof
Public Accounts and the Attorney General. Paragraph=
reads, in part, as f~ollows:
            "First Party agrees to pay to Sea-
     ond Party as compensationfor the services
     hereunder required 15 per cent (not to ex-
     ceed fifteen (15) per cent) of the amount
     oolleated of all delinquent taxes, penalty
     and interest of the years covered hereby,
     actually aollectedand paid to the colleat-
     or of taxes during the term of this aon-
     tract, of which Second Party is instrument-
     al in aolle~tingas evidence& by copies of
     communication,tax notioes er pbstraats
     filed with the tax oolleotorprior to the
     payment of suah tax, including collectlen
     of taxes on property not appearing on the
     assessmeht rolls nor shown delinquentbut
     whioh would have been so shown had it been
     properly assessed, dlsooveredby said Sea-
     ond Party, as and when colleated,~follopriag
     the en& of each month within the period of
     this contract;accordinglyas the colleot; 2.
     or makes up his monthly regerts; provided,
     cost of collectingdelinquent taxes shall
     not exceed the amount of penalty and inter-
     est, or an amount equal to such penalty and
     interest of all delinquent taxes collected
     under the terms of this contract. . ."
            The contract in question,both as to ferm
and substance,is according to a form prepared by the
Attorney General and adopted by the Comptrollerof Pub-
lic Acaounts approximatelyeight years ago. The Attop
ney General in its Opinion No. O-3579, approved June 4,
1941, construed the above quoted portion of the approved
delinquenttax contract, and stated in part:
           "To us the priviso in the contract
     'coat of collectingdelinquent taxes shall
     not exceed the amount of penalty and inter-
     est, or an amount equal to such penalty and
     interest of aI1 delinquent taxes collected.
     under the terms of this contract'was meant
     only to guard against the use of tax money
     itself to pay the costs of collection,but
Hon. Jean Day - Page 3   (V-214)


      to make the penalty and interest col-
      lected under the contract as an over-
      all proposition subjeat to such ex-
      penses. In other words, it was meant
      to provide that the attorney's compen-
      sation under the contract and any other
      costs or colleation incurred, if any,
      should not exceed the total amount of
      penalties and interest collectedby
      him during the time of and under the
      aontract, Applying this to the con-
      tract in question it is our opinionthat
      MrLr,
          Payne may be paid the full 7$ per
      oent commission stipulatedin the con-
      tract, so long as such per cent, plus
      any other costs of collectionincurred,
      if any, do not exceed an amount equal
      to the penalties and interest collected
      under the contract from its beginning,*
            In other words, it has been the department-
al eonstruc:tion,since the inception of such contact
form, that the contractingattorney shall reaeive as
compensationfor his services the contractedper cent
or all delinquenttaxes, penalties and interest eollact-
ed by him, provided that such per'cent together with
other costs of collection, if any, either equals or is
less than the total penalties and interest colleotedun-
der suoh contract, To illustrate:
            ~A, the contractingattorney, makes the fol-
lowing collectionsduring the life of his contract




           Total penalties and interest=   $25,000
           Less other collection costs =

           As the $20,000 exceeds the 15% commissionA
will receive 318,750.OO as his compensation.
Hon. Jean Day - Page 4   (V-214)




           sunderthe regular approved aelinquent
     tax contra&, the delinquenttax attorney
     receives the oontractedper cent of'delis-
     quent taxes, penalties and interest col-
     lected by him, provided that such per cent,
     together with other costs of collection,if
     any, equals or is a less amount than the
     total penalties and interest collected un-
     der such contract.
                               Yours very truly,
                            ATMRNEY GZNSlU OF ISAS



                               W. 7. Geppert
UVQ/lh/wb                      Assistants


                            APPROIID MAY 21, 1947