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