            THE’ ATJXWZNEP                 GENERAL
                         OF      TEXAS
                     AUBI?IN.    T-e      187ll
r,wo~ C.MAR-
,masTx o*w-As.                  May.19, 1971




  HonorableBen Atwell                     Opinion No. M-864
  Chaiiman,Committee on
  Revenue& Taxation                       Re:     Constltutlonallty of
  House of Representatives                        Sections 1 and 2, House
  CapitolBuilding                                 Bill 1674, 62nd Legis-
  Austin, Texas                                   lature, R.S., 1971.
  Dear Mr. Atwell:
        In your letter ,requestlng the opinion-of.this Office on
   the above captioned matter you have provi,dedus with a copy I
   of Section 1 of House Bill No. 1674,- 62nd
                                         --   Legislature, Reg-
   ularSession, 1971, which reads as rollows:
            "Section 1. Section (g), 'Article 7.08, Title 122A,
            Taxation-General, Revised Civil Statutes of Texas,
            1925, as amended, is further amended to.read as
            follows:
           "'(9) The State Treasurer shall require that pay
           ment In full for stamps or meter settings be made
           within fifteen (15) days from the date the stamps
           or the set meter are received by the distributor.
           In each fiscal year, payment for stamps and meters
           received In August of that year shall be paid in
           full on or before August 31 no matter when pur-
           chased or received by the distributor during that
           month. Upon receipt of an order for stamps or the
           setting of a meter, the State Treasurer shall ship
           such stamps or set such meter.ln compliance with
           the order and transmit with the stamps or the met-
           er a certified statement showing the amount due
           for said stamps or meter setting, and the distrlb- '
           utor shall forward a remittance as payment In
           full of the amount certified as due by the State
           Treasurer within fifteen (15) days after receipt
           of the stamps or the set meter and the certified
           statement, or for stamps and meters received in



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Honorable Ben Atwell, Page 2                  (M-864)




         August of each fiscal year in full on or before
         August 31 no matter when purchased or received
         by the distributor during that month. However,
         in order to secure the payments of the tax as
         provided In this Section, a distributor must
         file with the State Treasurer a surety bond,
         approved by the State Treasurer and the Attorney
         General, with a corporate surety authorized to
         do business In this State, conditioned upbn pay-
         ment in full for the stamps or meter settings
         within the time specified in this Section. a
         ment by a company check or by personal check of
         a bonded distributor shall be treated as cash
         payment when received by the State Treasurer
         for payment of stamps or meter settings rec-
         eived by the bonded distributor. The State
         Treasurer shall fix the amount of the bond, in
         an amount equal to one and one-half times the
         credit In stamps and/or meter settings reques-
         ted by the distributor and approved by the State
         Treasurer for the purchase of stamps and/or
         meter settings during the succeeding month. Any
         distributor who falls to forward the proper
         remittance by the due date shall.be notified
         by the State Treasurer within five 5 day'safter
         the due date to appear within five t5 1 days be-
         fore the Treasurer to show cause why he should
         not be denied the privilege of ordering stamps
         as herein provided, and if such distributor
         shall fail-to show good cause, the Treasurer
         is hereby authorized to discontinue the shlp-
         ment of stamps or the setting of meters as pro-
         vlded In th$s Sectlon.and to enforce payment of
         the bond.'
     You have also advised us as follows:
          "The underlined portion of Section 1 is new
          language providing for the State Treasurer
          to consider personal checks from bonded dlst-
          ributors as cash when received, thus provld-
          ing such distributors with the full 15 day
          payment period contained in the present law.
          At the present time, the Treasurer does not
          consider payment as received until personal


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Honorable Ben Atwell, Page 3               (M-864)


          checks have cleared the bank on which they are
          drawn."
     In McCarty v. James, 453 S.W.2d 220 (Tex.Clv.App. 197p
error ref. n.r.e.),the Oourt csnsidered the 1969 amendment
of Section (9) of Article 7.08 . This article allows the
distributor 15 days from the date the stamps or meter set-
tings are received to make payment therefor. The Court
held tha the amendment did not violate Section 50 of Art-
icle IIITiof the Texas Constltutf.onbecause it did not
amount to an extension of the State's credit to the dls-
trlbutor. The court pointed out that even though the dls-
trlbutorhas certain duties and liabilities In the collect,on
of the tax, the ultimate tax debt is owed by the user or
consumer of cigarettes.
     After so holding, the Court said at page 224:
          "The Treasurer suggests that the distributor
          before he pays for the tax stamps under H.B. 1158,
          may stamp and sell the cigarettes without paying
          the tax to the State, The State has guarded
          against this Improbability by requiring an ad-
          equate bond."




     Acts, 1969, 61st Leg., Reg. Session, ch. 17, p. 1405.
3:   Title 122A, 2OA, Taxation-General, V.C.S. '
3.   Section 50 of Article III reads as follows:
       "The Legislature~shall have no power to give or to lend,
       or to authorize the giving or lending, of the credit
       of the State in aid of, or to any person, association
       or corporation, whether municipal or other, Or t0
       pledge the credit of the State in any manner whatso-
       ever, for the payment of liabllltles, present or pro-
       spective, of any Individual, association oftindlxld-
       uals, municipal or other corporation whatsoever.




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Honorable Ben Atwell, Page 4               (M-864)



     The amendment we are now considering requiring the
State Treasurer to treat personal checks of bonded dlst-
rlbutors as the equivalent of cash payments when received
as cash payment f?r stamps or meter settings does not
purport to affect the safeguard of the adequate bond re-
oulrements of the statute. It does not say that the Treas-
urer shall,treat personal checks as "payment In full"
but rather as "cash payments". Under the proposed amend-
ment, %he distributor must still file the surety bond,
approved by the State Treasurer and the Attorney General,
with a corporate surety authorized to do business In this
State, conditioned upon payment In full for the stamps
or meter settings within the staGd=tutory      time. The
State Treasurer must fix the amount of this bond In an
amount equal to one and one-half times the amount In
stamps or meter settings to be sent. The statute speaks
of the tlme,of sending in terms of "the succeeding month".
But it is evident that any bonded distributor's order
in excess of the amount covered by an existing bond can-
not be filled at any time .untll an adequate bond has been
furnished to and approved by the State Treasurer and the
Attorney General of Texas.
     We therefore think that the provision of the proposed
amendment which requires the Treasurer to treat personal
checks of bonded distributors as the equivalent of cash
payment when received as payment for stamps or meter set-
tings Is consistent with the requirements of Section 50
of Article III of the Texas Constitution under the reason-
ing and the holding of the McCarty case, supra; and you
are therefore advised that it Is constitutional in that
respect.
     Even If the Treasurer's treatment of personal checks
as cash payment werg to be construed as changing the re-
quirement that bonds be'conditioned upon payment in full
for the stamps nor meter settings, as In a case when an
order or orders exhausts the amount of an existing bond,
there Is nothing in the Constitution which requires that
a payment such as is made by a distributor to the State
Treasurer, or even a payment of a tax, must be secured by
a bond conditioned upon payment in full of said payment.
The language in the McCarty case, quoted at page 4 ofIyi;
Opinion, is not a part of the holding of that case.
explanatory of the court's decision In that It states the


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Honorable Ben Atwell, Page 5               (M-864)


court's view of the statutory scheme rather than the grounds
of its decision on the constitutional question involved. How-
ever, as we have previously stated, we do not think the amend-
ment has any effect on the bond requirements of the statute.
First, because such a holding would be in the "teeth" of the
plain language of the bond provlsions,of the statute. Sec-
ond, because if the amendment be subject to interpretation,
under well-settled rules of construction, we reach the same
result. A few of such rules are those denying repeals or
amendments by Implication, requiring that parts of a statute
be harmonized whenever possible, that it be given a prac-
tical and workable effect, and that the Legislature will
never be assumed, much less presumed, to have intended to
accompllsh:an inequitable much less an absurd result.
     But regardless of one's vlew of a resulting dlstinc-
tion in bond requirements In cases where the taxpayer ten-
ders his personal check as payment for orders and cases where
orders are filled on the strength of a previously filed bond
alone, these matters are within the sole discretion of the
Legislature subject to constitutional inhibitions; and we
find none. Furthermore, should we be in error in this and
there be a possib3.equestion'of constitutionality on the
basis of unreasonable classification or unequal protection
of the law, we think that a taxpayer who tenders his per-
sonal check falls in an entirely different category from,
one who has filed only the requisite bond since he has
assumed an additional liability and subjected himself to
entirely different results, penal, or otherwise, as the
facts may be, which may ensue from any insufficiency of
funds to cover the tendered personal check.
     We pass now to a consideration of the constitutionality
of Section 240f House Bill No. 1674. Section 2 amends
Article 7.10 . The first paragraph of this Article requires




4. Title 122A, 20A Taxation-General,   V.C.S.




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Honorable Ben Atwell, Page 6                    (M-864)


every person, other than a distributing agent, bonded
distributor or common carrier,.to obtain stamps from the
State Treasurer and affix them to any unstamped'clgar-.
ettes In.their possession. This paragraph of Artlcle~ 7.10
remains unchanged by the proposed amendment.
     The final paragraph of Article   7.10~as   it Is pres-
ently enacted reads as follows:
         ."Every.dlstributorin this State shall cause all
          cigarettes received by him to have the requisite
         denominations and amount of stamps affixed to
         represent the tax as levied herein; provided,
         however, that any distributor who has obtained
          from the Treasurer and has in his possession the
         requisite amount and number of stamps necessary
          to stamp all cigarettesreceived by him may hold
         such cigarettes from [SIC] a period of not longer
         than ninety-six (96) h=s,    excluding Saturdays,
         Sundays, and legal holidays, before affixing the
         stamps as required herein."
     In the proposed amendment, thensecond paragraph reads
as folloius:
          "Every distributor In thls~State shall cause all
          cigarettes received by him to have the requisite
          denominations and amount of stamps affixed to
          represent the tax as levied herein, within ninety-
          SIX (96) hours, excluding Saturdays, Sundays, and
          legal holidays, wafter receiving delivery of them."
     The only change effectuated by this portion of the amend-
ment Is to require every distributor to have the renulslte
denominations and amount of stamps affixed to all cigarettes
received by him within the 96-hour period regardless of
whether the distributor had previously obtained from the
Treasurer and presently had wlthin'hls possession the re-
quisite amount of stamps. As we view It,,this is a measure
designed to facilitate and effectuate the overall purposes
of the Cigarette Tax Law, the primary purpose, PDF course,
being the collection of the State's revenues. Such measures
are within the special province of the Legislative branch of
the State government; and we find nothing on the face of this
change in the statute to indicate any abuse of Legislative
power. Section 2 is constltatlonal.

                            -4197-
Honorable Ben Atwell, Page 7                M-864)


                        SUMMARY
               The provision of Section 1 of H.B. 1674,
          62nd Legislature, Regular Session, 1971, allow-
          ing personal checks of bonded distributors to
          be treated as cash payments by the State Treas-
          urer when received for payment of cigarette
          stamps or meter settings does not violate Sec-
          tion 50 of Article III of the Texas Constitution.
               Section 2 of H.B. 1674, requiring all clg-
          arettes to be stamped by all distributors within
          a stated period is proper exercise of Legislative
          discretion in the manner of collecting t~heState's
          revenues.




Prepared by Marietta McGregor Payne
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
James Broadhurst
John Reeves
Arthur Sandlln
Robert Lemens
MEADE F. GRIFFIN
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
NOLA WHITE
First Assistant



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