.   ,




    Hon. D. D. Williams             Opinion No. V-166
    County Attorney
    Throckmorton County            Re:   (1)   Can penalty and interest
    Throckmorton, Texas                        be collected on the taxes
                                               on land which has not
                                               been assessed or rendered
                                               for taxation when placed
                                               on the tax rolls in
                                               accordance with Article
                                               7207 of V.C.S. of Texas
                                         (2) Taxability of corporate
                                             stock in the hands of
                                             residents of th;.sState.
    Dear Mr. Williams:
             You submit for the opinion of this Department two ques--
    tions stated in your letter, which we answer in the order stated.
    Your letter follows:
             "1 . Can penalty and interest be collected
        on the taxes on land which has not been assessed
        or rendered for taxation when placed on the tax
        rolls in accordance with Article 7207 of the
        R.C.S. of Texas, 1925?
             "PARTICULAR FACT SITUATION: There are
        several tracts of land located in Throckmorton
        County, Texas, which have been carried on the
        rolls for many years. If, for example, the
        assessor assesses a tract of such land for the
        year 1940, should penalty and Interest be collected
        on the taxes as though the tract of land had been
        placed on the rolls in the year 1940 and carried
        as being delinquent since that time?
             "2 . Should the stock in the West Texas
        Utilities Co. and other corporations owned by the
        citizens of this county be rendered and assessed
        for taxation in this county for State and.Countg
        and School purposes?"
                                                                   .




Hon. D. D. Williams,   Page 2,     V-166


         Before answering specifically your first question we
should determine to what extent, if any, Articles 7207, 7346 and
7347 are modified by S.B. 407, Ch. 128, Acts of the 44th Lcgls-
lature, page 355, and codified as Article 7336f, V.C.S. In
answering your questions we must consider not only Article 7207
but also Articles 7346, 7347 and 7348 as we shall explain later.
Article 7336f reads in part as follows:
         "Section 1. The collection of all delinquent,
    ad valorem taxes due the State, County, Municipality
    or other defined Subdivision that were delinquent
    prior to December jlst, 1919, is forever barred."
          We thlnk the Legislature in the enactment of said S. B.
No. 407 (Article 7336f, V.C.S.) meant to accomplish more than
merely the passage of a limitation statute against the collection
of delinquent taxes, but declared the public policy of the State
to be that no taxes were to be assessed and collected by the
State, county, municipality, or other defined subdivisions of the
State, if such taxes were delinquent prior to December 31, 1919.
This Is manifest by a careful reading of the entire act, including
the caption and emergency clause, for the caption merely says,
"An Act limiting the time within which ad valorem taxes may be
collected by the State, any county, Irslnlclpallty,or other defined
subdivision of the State"; in the emergency clause we find, "the
fact that the people have already passed a constitutional amendment
giving the Legislature the right to remit taxes that were
delinquent for a period of ten years or more; and the fact that to
remit taxes prior to December 31, 1919, would clarify the record
and remove a cloud from the title of property in this State creates
an emergency", etc.
         In other words, we think the manifest intention of the
Legislature in the passage of thfs act, and we so hold, was to
"wipe the slate clean" of all back taxes, whether upon the assess-
ment rolls or not, that were delinquent prior to December 31,
1919. To the extent that this opinion conflicts with the prior
opinions of this department, numbered O-2083 and O-7278, they are
expressly overruled. With this collateral matter out of the way,
we proceed to answer your first question.
         We quote below the parts of Articles 7207, 7346, 7347 and
7348, necessary to be considered in answering your question. These
Articles provide:
         "Article 7207, V. C. S.
        "If the assessor of taxes shall discover In
   his county any real property which has not been
   assessed or rendered for taxation for any year
.




Hon. D. D. Williams,   Page 3,   V-166


    since 1870, he shall list and assess the same for
    each year for which it has not been assessed, In
    the manner prescribed in the preceding article;
    and such assessment shall be as valid and binding
    ai though,,ithad been rendered by the owner thereof;
    . . . . .
         'Article 7346, V.C.S.
         "Whenever any commissioners court shall
    discover through notice from the tax collector or
    otherwise that any real property has been omitted
    from the tax rolls for any year or years since
    1884, . . . . they may, at any meeting of the
    court, order a list of such properties to be made
    In triplicate and fix a compensation therefor; the
    said list to show a complete description of such
    properties and for what years such properties were
    omltted from the tax rolls, . . ."
         "Article 7347, V.C.S.
         "When said list has been so made up the com-
    missioners court may, at any meeting, order a
    cancellation of such properties in said list that
    are shown to have been previously assessed, but
    which assessments are found to be Invalid and have
    not been canceled by any former order ofthe com-
    missioners court, or by decree of any district court;
    and shall then refer such list of properties to be
    assessed or re-assessed to the tax assessor who shall
    proceed at once to make an assessment of all said
    properties, from the data given by said list ( the
    certificate of the Comptroller as to assessments or
    re-assessments made by the tax assessor shall not be
    necessary as required under Article 7207, but ,he
    shall furnish all blank forms needed, that uniformity
    may be had In all counties), and when completed
    shall submit the same to the commissioners court,
    who shall pass upon the valuations flxed by him; and,
    when approved as to the values, shall cause the taxes
    to be computed and extended at the tax rate in effect
    for each separate year mentioned in said list; and,
    In addition thereto, shall cause to be added a
    penalty equal In amount to what would be six per cent
    interest to the date of making said list from the
    date such properties would have been delinquent had
    same been properly rendered by the owner thereof
    at the time and for the years stated in said list;
    . . . . .II
                                                                     .   .




Hon. D. D. Williams,   Page 4,   v-166


         "Article 7348, V.C.S.
         "The said list, when complete ln all respects,
    and filed with the tax collector, shall constitute
    a valid lien against all the properties mentioned
    in said list for the full amount of taxes, penalties,
    officers costs, advertising and six per cent interest
    from the date of said list to the date of the pay-
    ment of the full sum due on each separate piece of
    property. A copy of said list and all cancellation
    orders shall be furnished to the Comptroller, and a
    copy filed with the county clerk.'

         We shall consider these articles in the order stated
above. Article 7207 was enacted in 1888, (Acts 1888, page 4;
G.L. Vol. 9, p. 1002) and at this time and several years there-
after penaltles and interest upon delinquent taxes were not
imposed. It Is observed that no provision is made in said article
for penalties and Interest upon the taxes assessed by virtue
thereof. It does nothing more than to impose a duty upon the
assessor, if he discovers in his county any real property which
has not been assessed or rendered for taxation for any year since
1870, to "list and assess the same for each year for which It
has not been assessed". As modified by what we have said above
said article should now in effect read since 1918 instead of 1870.
         In 1905 the Legislature enacted Articles 7346, 7347 and
7348 (Acts 1905, page 318) at which time penalties and interest
had theretofore been imposed by the Legislature upon delinquent
taxes for several years. Article 7346, provides substantially as
does Article 7207 for the assessment of property omitted from the
tax rolls for any year or years since 1884, (should now be since
1918) but goes further and provides a comprehensive method of
assessing and collecting such taxes upon such omitted property.
Article 7347 and 7348, a part of the same act, speclfles the
penalty or interest that should be collected upon such taxes.
This is the first time the Legislature in deflnite terms gives
the penalty and interest applicable to taxes assessed and collected
upon property theretofore omitted from the tax rolls. We are
governed by these statutes as to the penalty and interest that
should be collected, regardless of whether the assessment of such
omitted property arises under Article 7207 or 7346. These two
articles are in &    materla and should be construed together.
The Legislature did not expressly, or by implication, repeal
Artlclo 7207 in the enactment of Articles 7346 and 7347. Indeed, a
reading of Article 7347 dlsclosos that the Legislature intended
for Article 7207 to continue In effect for the purposes for which
it was originally enacted and to continue In effect the duties
imposed upon the Tax Assessor to put omitted property upon the tax
rolls and assess it when he discovers It has been omitted. We look
Hon. D. D. Williams,   Page 5,   V-166


to Artfcles 7346, 7347 and 7348, the later act, to find the pen-
alty and interest that should be Imposed in such Instance.
         In our opinion it is not material from what source comes
the information that property has been omitted from the tax rolls
and has been escaping taxation; the important thing is that It
get on the rolls, be assessed, and begin to bear Its just portion
of the tax burden. Whether the omission Is discovered by the Tax
Assessor as provided In Article 7207, or the tax collector as pro-
vided in 7346, ,theduty remains the same, to proceed in the
statutory manner to subject such omitted property to taxation. It
1s observed that Article 7346 provides that the Commissioners1 Court
shall "Order a llat of such property to be made ln triplicate and
fix a compensation therefor; the said llrt to show a complete list
of such property and for what year such property was omitted from
the tax rolls". Article 7347 provides 'When the said list has
been so made up the Commissionera' Court may, at any meeting, . . .
and shall then refer such list of property to be asaessed or
reassessed to the Tax Assessor who shall proceed at once to make an
assessment of all said propertyand when completed shall submit the
same to the Commissioners1 Court who shall pass upon the valuation
fixed by him; and when approved as to the value shall cause the
taxes to be computed and extended at the rate In effect each sepa-
rate year mentioned in said llat .” Article 7348 provides that
said list, when completed In all respects and filed with the tax
collector, shall constitute a valid lien against all of the
property mentioned In said list for the full amount of the taxes,
penalties, officers costs, and advertising.
         Article 7347 and 7348 state specifically and separately
the penalty and interest to be imposed upon taxes that are found
owing upon such omitted property. After the taxes have been
computed for theNrespectIve years aa shown upon the list there is
added thereto a penalty equal in the amount to what would be six
per cent interest at the date of making said list from the date
such prooerties would have been dellnauent had same been properlr
rendered by the owner thereof at the time and for the years stated
in said list." (gmphasls added) Said Article 7348 provides 6%
interest from the date of said list to the date of payment for the
full amount due on each separate piece of property. It is observed
that the 6% is called a penalty when first calculated from the date
such properties would have been delinquent to the date of making
said list and in Article 7348 It calls the 6% interest. It makes
no difference whether we call this 6% a penalty or interest, It
is the same, and in effect is calculated from the date the property
would have become delinquent had It been rendered by the owner to
the date of payment. This calculation in either event Is on an
annual basis. We have no doubt that Articles 7347 and 7348 are the
governing statutes in determining the penalty and interest that
should be collected by the Tax Collector upon taxes assessed upon
Hon. D. D. Williams,   Page 6,   V-166


omitted property. We think the case of Electra Independent School
District vs. W.T. Waggoner Estate, Supreme Court of Texas, 168 S.W.
(2d) 645, confirms our view, and from this case we quote:
         II. . . The legislature has provided a procedure
    for the reassessment of property for taxation where
    property has been for any reason omitted from the
    tax rolls, or where assessments have beenfound to
    be invalid. Chapter 11, Title 122 of the Revised
    Civil Statutes of Texas, Article 7346 et seq. . . ."
         It would serve no useful purpose for us to enter upon an
academic discussion of why the penalties and interest imposed by
Articles 7347 and 7348 might In sane Instances impose a lesser
burden upon the taxpayer where his property had been omitted from
the rolls and assessed by vlrtue of Article 7207 or 7346 than
would be imposed upon a delinquent taxpayer who might have regularly
rendered his property for taxation but had refused or neglected to
pay his taxes within the time prescribed by statute, whereby his
taxes had become delinquent, as this is a matter vested solely In
the Legislature. Conceivably the Legislature may have thought that
the omission of property from the tax rolls may have resulted from
negligence upon the part of the taxing officials as well as neglect
upon the part of the property owner, and imposed penalties and
interest it thought commensurate to meet the problem dealt with.
         All that we have said above, applicable to State and
County taxes, applies with 'equalforce to common school districts'
taxes which, by virtue of Article 2795, V.C.S., are required to
be llsted, assessed, and collected by the County officials. A ten
year statute of limitations applies to school taxes.
         You are, therefore, advised that it is our opinion that
taxes assessed upon omitted property, such as comprehended under
Articles 7207 and 7346, bear 6s penalty or interest, calculated
upon an annual basis, from the date such property would have become
delinquent if rendered by the owner, to the date of payment, togeth-
er with such officer's cost and cost of advertising, if such costs
have been Incurred.
         We pass to your second question, which for convenience we
restate as follows:
         "2 . Should the stock in the West Texas
    Utilities Co. and other corporations owned by the
    Citizens of this county be rendered and assessed
    for taxation in this county for State and County and
    School purposes?"
         In answering this question, we should note certain
Hon. D. D. Willlams,   Pa8e 7,   v-166


statutory provlslons, which, for clarity, we state as follows:
         “Article 7147, V. C. S.
         “Personal property, for the purposes of
    taxation, shall be construed to include . . . . .
    all stock in . . . other corporations (except
    national banks) out of the State, owned bx lnhabi-
    tants of this State; . . . .”
         “Article 7161, V. C. S.
        “Each person required by law to list prop-
   erty shall make and sign a statement, verified
   by his oath, as required by law, of all property,
   both real and personal, in his possesslon, or
   under his control and which he Is required to
   list for taxation, either as owner or holder there-
   of, or as guardian, parent, husband, trustee,
   executor, administrator, receiver, ,,aocounting
   officer, partner, agent or faotor.
         “Article 7162, v. C. S.
         11     Such statement shall truly and dls-
    tlnctli iei forth: . . . . .
               Amount and value of shares of capital
    stock”3a’
           companies and associations not incorporated
    by th& laws of this State.

         “39. Value of property of companies and cor-
    porations other than property hereinbefore enumerated.”
         “Article 7163, V. C. S.
         “No person shall be required to list or render
    or to include In his statement as a part of his
    personal property, which is required to be listed any
    share or portion of the capital stock or property Of
    any company or corporation which is required to iist
    or return its capital and property for taxation.
         We answer this question with a statement from 11 Texas
Jurisprudence, page 219.
         “Under the Texas scheme of taxation, .the property
    of a corporation is taxed only to the corporation; the
    stockholders are not separately assessed upon their
    stock. Indeed, there la express provision that, in
Hon. D. D. Williams,   Page 8,   V-166      .


    rendering a return of hla personal property for
    taxation, no person is required to include In his
    statement any share or portion of the capital stock
    or property of an@ corporation which Is required to
    return its capital and property for taxation; and
    under this article stoek 1s not taxable to the stock-
    holder even where the oompany has not returned its
    property for taxation in accordance with law.
                Under the statute law of Texas stock in
    foreigi dorporations owned by inhabitants Af Texas
    Is expressly included in the deflnltlon of 'personal
    property,' The validity of such taxes has been up-
    held as against constitutional objeotlons,"
         Conceivably the provisions of Article 7163 may rest upon
the well-recognized principle of law that a stockholder Is not the
owner of the property owned by a oorporatlon in which he owns
shares of stock. Instead, a stoakholder merely possesses, in
common with all other stockholders, an interest evidenced by shares
of stock which authorlzea him, through selected officers and
directors, to participate in corporate management, an8 receive
dividends when declared, and to demand his pro rata share of cor-
porate assets upon dissolution of the corporation.
         Stock of State and National banks are partially excepted
from the provisions of Article 7163, for by special provisions,
banks pay upon the real estate owned by them, but not upon their
personal property. This, in effect, results Ln taxes against the
stockholders upon the stock owned by them, the value of which i.s
reduced by the factor of the real estate which the banks themselves
render and pay upon.
         We hold that stook in domestic corporations, owned by
residents of this State, is not subject to advalorem taxes, but
stock in foreign corporations, owned by residents of this State, is
subject to ad valorem taxes,
         We believe we have answered your question without the
necessity of stating categorically whether or not the capital stock
of any particular corporation would be subject to ad valorem taxes
as personal property in the hands of the owner.


            Property omitted irom the tax poll and
   asses:& by the virtue of Artioles 7207 and 7346
   V.C.S., for all years since 1918 is subject to 64
   penalty or interest, caloulatad annually, from the
   date such property would have beoome delinquent if
Hon. D. D. Williams,   Page 9,   v-166


     rendered by the owner to the date of payment.
     Electra Independent School District (Supreme Court)
     168 S.W. (2) 645.
         2. Stock of domestic corporations owned by
     residents of this State is not subjectsto ad
     valorem taxes in the hands of the owner, but stock
     of foreign corporations owned by residen;s of this
     State Is subject to ad valorem taxes In the hands
     of the owner.
                                  Yours very truly
                             ATTORNEY GENERAL OF TEXAS

                                  By SL L. P. Lollar
                                        L. P. Lollar
                                        Assistant

APPFiOVIP>
         APR. 28, 1947
s/ Price Daniel
ATTORNEY GENERAL
LPL:mmc:jrb:wc
