               .      1




                    TEEAITORNEY                     GENERAL

                                  OF-TEXAS

                                  Au~T~N~I.'~~xAR
GELRALDC. MANN
XIXXX
ATTORNKY     G*:SERAI-




        Honorable George H. Sheppard
        Comptroller of Public Accounts
        Austin, Texas
        Dear Sir:
                                             i;i.nionNo. O-3526
                                               : meaning of the term "book
                                                  value" in Article 88la-53,
                                                  V. A. C. S.
        This is in reply to your inquiry as to how the term %ook value"
        in Article 881a-53, Vernon's Annotated Revised Civil Statutes of
        Texas, should be construed in the rendering of property, and the
        fixing of tax values thereon, of building and loan associations.
        Said Article 88la-53 is a part of a comprehensive act dealing
        with building and loan associations, and said article reads as
        follows:
             "Every building and loan association doing business in this
             state shall, in the city or town in which it is located to
             the tax assossor at the time fixed by law and in the fol-
             lowing manner: (a) The value or its office furniture and
             fixtures therein; (b) the value of all real estate in such
             city to which such association holds title; (c) the value
             of its assets therein in excess of an amount representing
             the total of (1) accounts payable and notes payable owing
             by such association; (2) the book value of the shares out-
             standing and (3) the assessed value of the furniture and
             fixtures and real estate held by such association and ren-
             dered by it for taxation."
        An examination of the dictionaries and the cases involving the
        term "book value" shows that it has a well understood meaning.
        Webster's New International Dictionary, 2nd Ed. Unabridged,
        gives a definition of "book value" as follows:
             "The value of anything as shown by the books of account of
             the business owning it; spedif., ofstock, the value as
             indicated by the excess of assets over liabilities."
Hon. Geo. H. Sheppard, Page 2     O-3526


In 11 Corpus Juris Secundum 521 it defines *book value" as
follows:
    ". ..the value ascertained by deducting from the assets,
    carried on the books, the liabilities and other matters
    required to be deducted; the value as it appears from the
    books; the value as predicted on the market value of the
    assets of the company after deducting its liabilities, the
    value shown by the audit of the business of the company up
    to a date specified; and specifically in determining the
    value of a share of stock upon withdrawal from an associa-
    tion, it has been defined as meaning the proportionate
    amount of the net assets, including profits or losses, of
    the corporation, applied to a share of its stock...."
In the case of Lane v. Barnard, (N. Y. Sup. CT.) 173 N. Y. S.
714, the court said:
     " ...The book value of stock ordinarily means the value
     thereof as shown by the assets and liabilities as carried
     on the books of the company,...n
In the case of Gurley v. %oodbuty, 177     N, 0. 70,   97 S.E. 754,
the court said:
    "The meaning of "book value of stock" is well understood
    and its ascertained by deductingfrom the assets, carried
    on the books the liabilities and other matters required to
    be deducted fPeople v, Coleman, 107 N.Y. 541, 14 N.E. 431;
    Cabble v. Gabble, 111 App. Div. 426, 97 N.Y. Supp. 773...",
In the case of Elhard v. Rott, 36 N.D. 221, 162 N.sf.302, the
court said:
     " ...It means value as predicated on the face value of the
     assets of the corporation after deducting its liabilities.
     Steeg v. Leopold Bldg. & Imp. Co., 126 La. 101, 52 South,
     232-235; CabSle V. Cabble, 111 App. Div. 426, 97 N. Y.
     Supp. 773-775; 1 idordsand Pharses (Second Series) 479.
     The assets, of course, must appear upon the books of the
     company, and must be able to be estimated therefore, but
     it does not follow that the computation must have been made
     on such books and appear on the ledger. The book value of
     stock is determined by the face value of the assets as
     they appear upon the books..."
In the case of People v. Coleman, 107 N. Y. 541, 14 N. ii.431,
the court said:
     "One mode of arriving at the actual value of the capital
     stoc!cof a corporation is to take what is sometimes called
     the "book valuen , which is reached by estimating all the
Hon. Geo. H. Sheppard, Page 3   O-3526

     assets as they appear upon the corporate books, and deduct-
     ing all the liabilities and other matters required to be
     deducted by law, and taking the balance as ths measure of
     value for assessment. This seems to be a proper method for
     arriving at the value of the capitaL stock in the case of
     a corporation which is about to discontinue business, wind
     up its affairs, and distributo its assets among its share-
     holders;...s
The cases cited and quoted from above involved ordinary corpora-
tions, and not building and loan associations, but we see no
reason why the same definitions of "book value" would not apply
to building and loan associations. Said organizations are de-
fined in Article 8dla-1, Vernon's Annotated Revised Civil Statutes
of Texas, as follows:
     "A buildinS and loan association, as contemplated by this
     $7" iArts. 88la-1 to 8&a-68; P. CT Arts. 1136a-1 to 1136a-
         1s any dssociation or corporation heretofore or here-
     after formed created or organized which is chartered under
     any building'and loan lack,and/or is principally in the
     business of assistins its members to buy, improve or build
     homes, or to remove the inculmbrancestherefrom, and .which
     accumulates the fund s thus loaned through t!leissuance or
     sale of its ovensh,res.ff
tiehave found one case construin;;the term "book value" with re-
ference to building,and lo:n associationstock, and that ,isthe
case of Thirteenth ?fard%ilding & Loan Association v. Ljeissberg,
115 N. J. %qo 467, 170 Atl. 662, 98 A. L. R. 134, in which the
court said:
     "The withdrasialvalue should not be confused irith the "book
     value", The 'Wthdr~~~al value" is the :imountictu~~llypaid,
     in addition to such proportion of the profits, or such rate
     of interest, as may he Prescribed by statute or by the by-
     lavfs. The f*bookvalue" is the ;~roportionateamount of the
     net assets, including profits or losses, of the association,
     applied to a share of its stock, t&king into consideration
     the amount rictuallypaid in, and the length of time the
     association has had the use of the ;aoney...*
There are no Texas a?pell:ltecourt cases, as far as :iecan find,
                       of the term "book value." The term is
approving a definition-1
mentioned in the cnse of iiineinzerv. Day, (Tex. Civ. App.)
         (2d) S76, but no definition is adopted by the a;?pellate
58 S. >i;.
court.  Ye see no reason why the Texas courts should not be
governed by the SLi;te
                     weli ~;nt,,
                             --stood meaning of the term "book
            the courts of other states have alnost unanimously
value" th;:Lt
adopted.
                                                  ..    -




Hon. Geo. II.Sheppard, Page 4        O-3526

Our ans;qerto your inquiry is that the term "book value* in
Article Ma-53,   V. A. C. S., means the value of the shares
outstanding as shown by tho assets and liabilities as carried
on the books of the building and loan association.
                                     Yours very truly
              7, 1941
APPROVEU JIJNi3
                                ATTUWEY   GENERAL OF TEXAS
FIHST ASSISTANT                 BY
ATTOWJiY GENERAL                      Cecil C. Xotsch
                                           Assistant
