Honorable T. M. Trlmble
First Asaiatant
State Superintendent of Public Instruction
Auatln 11, Texaa
                                    Opinion No. O-6235
                                     Re:   Under the facta stated,
                                           does the Amarillo Independ-
                                           ent School Dietrlct have
                                           grounds for legal action
                                           agalnet the shareholders of
                                           the American St&z Bank or
                                           of the American Rational
                                           Bank f’arta;sesaasesaed
                                           against the shareholders
Deer Sir:                                  or the Amerlcen State Bank?
          We are In receipt of your recent request for en
opinion upon the above captioned matter. You enclosed a letter
from Mr. George M. Weddill, Secretary of the Amarillo Public
Schools to Mr. L. A. Woode, State School Superintendent, pre-
senting the queetion which i8 aa follows:
          “WI11 you plreme submit the following Information
      to the Attorney General’8 Department and auk them for
      e rulings
            Subject:  Amarillo Independent School District
                      Vereua Amerloen State Bank
            Question of Tax Asseeament January 1, 1936

         The following information le taken from publlshed
     atetement of the condition of the American State
     Bank a8 of Deoember 31, 19358
            Cegltal Stock                  @25,;;;.;:
            Capital Debentures
                                            200,000.00
            Surplus & Profits                35.3X3.29
            Total                          $235,3,18.29
            In arriving et the proper amount to eeaeae for
                                                                 -   .




Honorable T. M. Trimble - page 2, (o-6235)

     taxes, our Tax Assessor, Mr. M. H. Hardin, set up the
     following table:
         Capital Stock                       $200,000.00
         Less Debentures                       75,ooo.oo
                                              125,OOO.OO
         Add Surplus & Undivided Profits      35,320.00

                                              160,320.OO
         Less Value of Real Estate
         as shown by Statement                05,280.00

         Value of Personal Property
                  Assessment                 $275,040.oo
         The real estate was assessed separately at a
    valuation fixed by the Board of Squallzation and
    was paid on accordingly. The matter in question Is
    the assessment against the stockholders for the per-
    sonal property. As a matter of fact, on January 11,
    1936, which was eleven days after the above state-
    ment was published by the American State Bank, this
    institution ceased to do business, and it is rep-
    resented by officers of the bank that the acceptable
    assets of the bank were transferred to the American
    National Bank in consideration of their assumption
    of liability to the depositors and creditors. It
    is further claimed that at the time of transfer, the
    stock of the bank had no value and, if it had no
    value on January 11, the day the actual transfer was
    made, there was no value on which to base these
    taxes on the year 1936 because there was no value
    of stock on January 1 of that year. It Is further
    claimed that stockholders of the new bank that was
    formed were not the same stockholders of the old
    bank, as there were more than thirty stockholders
    of the old bank that did not participate in the or-
    ganization and become stockholders of the new bank.
          With the above information as a basis, the
     stockholders of the American State Bank claim there
     should be no liability for taxes assessed against
     them as of January 1, 1936 on the stock of the old
     bank which was liquidated or transferred to the
     American National Bank on January 11.
          Up to this time, tax assessments by the Inde-
     pendent School District have not been paid, and
     members of the School Board wish advice as to whether
     there is ground for legal action against the stockholders
     Honorable T. M. Trlmble - Page 3, (O-6235)

     of the American State Bank or the stockholders of the
     American National Bank for the taxes assessed'against
     the American State Bank as of January 1, 1936."
          In rendering our opinion we are doing so upon the
assumption that a valid assessment was made against the share-
holders of the American State Bank and that the Equalization
Board passed upon the taxable value of the shares as rendered
and as assessed by your tax assessor.
          The following quoted statutes   are relevant to the question
under consideration, to wit:
           Art. 7151 Vernon's Annotated Civil Statutes, 1925:
           "All property shall be listed for taxation
     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 year for which the property is required
     to be listed or rendered. Any property purchased
     or acquired on the first day of January shall be
     listed by or for the person purchasing or acquiring
           If any property has, by reason of any special
     2:; contract or fact been exempt or has been
     claimed to be exempted from taxation for any period
     or limit  of time, and such period of exemption shall
     expire between January 1, and December 31 of any
     year, said property shall'be assessed and listed
     for taxes as other property; but the taxes assessed
     against said property shall be for only the pro rata
     of taxes for'the gortlon of such year remaining.
     Acts 1909, p. 373    .
          Art. 7145, V. A. C.-S.:
          "All property, real, personal or mixed,
     except such as may be herinafter expressly ex-
     empted, is subject to taxation, and'the same shall
     be rendered and listed as'herein prescribed.
     Acts 1876, p. 275; G. L. vol. 8, p. 1111."
          Art. 7147, V. A. C; S.:
          "Personal property, for the purposes of
     taxation, shall be construed to include all goods,
     chattels and effects, and all moneys, credits,
     bonds and other evidences of debt owned by citi-
     zens 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, whether at home or abroad, arjda31
     capital Invested therein; all moneys at interest,
     either within or without the State, due the person,
                                                             .




Honorable T. M. Trimble - page 3, (O-6235)

to be taxed over and above what he pays interest for, and
all other debts due such person over and above his Indebt-
edness: all public stock and securities; all stock ln
turn-pikes, railroads, canals and other corporations
(except national banks) out of the State, owned by
Inhabitants of this State; all personal estate of
moneyed corporations, whether the owners thereof reside
In or out of this State, and the income of any annuity,
unless the capital of such annuity be taxed within
this State; all shares in any bank organized or that
may be organized under the laws of the United States;
all Improvements made by persons upon lands held by
them, the title to which is still vested In the State
of Texas, or in any railroad company, or which have
been exempted 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. Acts 1879, p. 39; G. L.
vol. 8, p. 1339.”
     Art. 7166, v. A. C. S.
     “Every banking corporation, State or national,
doing business In this State shall, in the city or
town in which it Is located, render 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 president~~orsome other officer of
said bank shall file with said assessor a sworn
statement showing the number and amount of the shares
of said bank,.the name and residence of each share-
holder, 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 bnnk shall be taxed only for the difference be-
tween its actual cash value and the proportionate
amount per share at which its real estate is
assessed. The taxes due upon the shares of banking
corporations shall be a lien thereon, and no
banking corporation.shall pay any dividend to any
shareholder who Is In default In the payment of
taxes due on his shares; nor shall any banking
corporation permit the transfer upon 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 other moneyed capital
Honorable T. M. Trlmble - page 5,        (o-6235)

     in the hands of individuals. Acts 1885,               p. 106;   G. L. vol. g,
     p. 726.”
          It will be noted that said Article 7166, provides that the
shares in a bank shall be taxed on the basis of the amount of personal
property owned by the bank and that the nersonal property Itself Is
hot taxed.
          The Supreme Court of Texas in t,h,
                                          e case of Chlldress County
vs. State et al, reported in 92 S. W. (2d1 1011 in construing Art.
7151 (supra) used the following language:
          “The foregoing article makes It clear that
     all property owned by persons on the first of
     January
      .            be listed
           ^ must .-   ^.    for
                              _ .taxation,_and
                                           _   sale
     tnereos   Snortly   aSterWard   cloes not   afr‘ect    the
     rule .”
          The ownership of property on the 1st day of January
of any year creates a liability on the part of the owner for taxes
levied upon such property for that year. Winters et al, vs.
Independent School District of Evant, 208 S. W. 574. Hillstnanvs.
Falson 57 S. W. 921; Rhomberg vs. McLaren 21 S. W. 571.
            It has been held that the action of a Board of Equal-
ization in fixing the value and assessing property is final, and
not reviewable by courts; even for gross undervaluation. Chicago
R. I. & G. N. Railway Co. vs. State, 241 S, W. 255; State vs.
Chicago R. I. & E. Railway Co., Comm. of App. 263 S. W. 249. It
has been further held that the decisions of Boards of Equalization,
in fixing taxable value of property Involve   an issue of fact and
such decisions are judicial in their nature and are final.
vs. City of Waco 3 S. W. (2d) 131.    It has been further heIdE%%
the determination by a Board of Equalization of the value of the
property assessed for taxes cannot be disturbed by courts In absence
of fraud, provided the board has performed its duties substantially
in the manner prescribed by statute.    Highland Park Independent
School District of Dallas County, vs. Republic Insurance Company,
80 S. i>J. (2d) 1053.
     It is stated in the quoted letter that the stockholders or
shareholders claim’that the stocks or shares as of January 1, 1936
were without value. This raises a fact issue which cannot be passed
upon by the school board, and under the decisions the only way that
same could be adjudicated would be by the courts. Under the decisions
we doubt very seriously if the courts under the facts stated would
go behind the action of the Equalization Board, In the absence of
fraud .
     It is therefore the opinion of this department that the
Amarillo Independent School District has sufficient grounds for
brin&nq legal action against the shareholders of the American State
Honorable T. M. Trlmble - page 6, (O-6235)

Bank for the taxes assessed against said shareholders on the shares
owned by them on January 1, 1936. It is also our opinion that the
School District has no-legal claim against the shareholders of the
American National Bank, except those who held shares in the American
State Bank on January lst, 1936.
          Trusting that the above and foregoing fully answers
your inquiry, we are
                                              Yours very truly

                                        ATTORNEY GENERAL OF TEXAS

                                              /S/    W, V. Geppert

APPROVED OCT. 10, 1944                               W. V. Geppert
                                                         Assistant
/s/ Carlo8   Ashley
FIRST ASSISTANT                               APPROVED
ATTORNEY GENERAL                               OPINION
                                             COMMITTEE
                                          By B.W.B.
                                            Chairman
WVG:iw:elb
