Honorable ffeorgeH. Shep&d          Qpihion Ho, o-5376
Comptroller of Public Accbunts      Re: Application of Stock
Austin, Texas                            Transfer Law. Article
                                         ~t;fL~;uae Bill No.a,
                                                  ., B.S.,   P-269,
                                         to certain factual sltua-
Dear Sir:                                tlona.

         We received your letter of June 9, 1943, request-
ing our opinion as to the application of the Stock Transfer
Law to certain factual situations. We copy from said letter
aa followa:
         "In administeringthe Texas Stock Transfer
     Tax Law this departmenthas followed the practice
     of collecting 39i on each share where the value
     of the ehare was less than $10.00. The question
     has now arisen, in transferringstock, as to
     whether the tax Is levied against the shares or
     the aggregate value of shares, to wit:
         "1. A broker presents four stock certifi-
             cates aggregating100 shares. All the
             certificatesstand in the name of the
             same person and are to be transferred
             to one pereon. Is it permissibleto
             treat these four certificatesaa an ag-
             gregate for the purpose of computing
             the tax at 304 or must each certifi-
             cate be considered separately for the
             purpose of computing the tax? If they
             are consideredseparately, then the
             State tax would be 94 per certificate
             or a total of 364.
            “2.   Consider the same state of facts as
                  question 1, except that all four cer-
                  tificates stand ln the names of dif-
                  ferent persons and are to be trans-
                  ferred to one person.
Honorable Qeorge H. Sheppard, Page 2.    (O-5376)

         “3.   Consider the same state of facts as
               question 1, except that the certlfl-
               catea are presented by a broker with
               a memoranda of sale attached. Stamp
               taxes are affixed to the Memoranda of
               sale as though the four certificates
               should be taxed in the aggregate and
               not separately.
         n. . .

         R4.   Where stock Is transferredto a cus-
               todian by the owner or to the nominee
               of a custodian, 1s the Texas tranafer
               tax payable or ia the transactionnon-
               taxable? I am Informed that such trans-
               actions are specificallyexempted by
               the Federal and New York atock transfer
               statutes, but the Texae .statutecon-
               tains no specific exemption.
         "I will thank you to advise this departmentin
      anmwer to these questions."
         Section 1, Article XV of H.B. NO. 8, supra, provides
in part as followa:
          "Section 1. There 1s hereby imposed and le-
     vied a tax as hereinafter provided on all sales,
      agreements to sell, or memoranda of sales, and
      all deliveriesor transfers of aharee, or certlfi-
      cates of stock, or certificatesfor rights to
      stock, or certificatesof deposit representing
      an interest in or representingcertificatesmade
      taxable under this Section In any domestic or
      foreign association,company, ar corporation,
      or certificatesof interest in any buslneas
      conducted by trustee or trustees made after
      the effective date hereof, whether made upon
      or shown by the books of the association,com-
      pany, corporation,or trustee, or by any as-
      signment in blank or by any delivery of any
      papers or agreement or memorandum or other evl-
      dence of sale or transfer or order for or agree-
      ment to buy, whether intermediateor final, and
      whether Inventing the holder with the benefl-
   .’ clal inte?est: lh @-? legal:ttt,lettbsuch‘stock
      or ot-hercertificatetaxable hereunder,or with
      the posseasianor use thereof for any purpose,
Honorable George H. Sheppard, Page 3.   (O-5376)


     or to secure the future payment of money or the
     future transfer of any such stock, or certifl-
     cate, on each hundred dollars of face value or
     fraction thereof, three (3) cents, except in
     cases where the shares or certlflcaten~arels-
     sued without designated monetary value, In
     which case the tax shall be at the rate of
     three (3) cents for each and every ahare. It
     ahall be the duty of the person or persons mak-
     ing or effectuatingthe sale or transfer to
     procure, affix, and cancel the stamps and pay
     the tax provided by this Article. It 1s not
     intended by this Article to impose a tax upon
     an agreement evidencing the deposit of certlfl-
     cates as collateral security for money loaned
     thereon, which certificatesare not actually
     sold, nor upon such certificatesso deposited,
     nor upon transfers of such certificatesto the
     lender or to a tiomlneeof the lender or from
     one nominee of the lender ta another,provided
     the same continue to be held by such lender or
     nominee or nominee8 as collateralsecurity as
     aforesaid, nor upon the retransfer of such cer-
     tificates to the borrower, nor upon transfer8
     of certificates from a fiduciary to a nominee
     of such fiduciary, or from one nominee of such
     fiduciary to another, provided the same contln-
     ue to be held by such nominee or nominees for
     the same purpose for which they would be held
     if retained by such fiduciary, or from the nom-
     inee to such fiduciary, nor upon mere loans of
     stock or certificates,or the return thereof,
     nor upon deliverlea or transfera to a broker
     for sale, nor upon deliveriesor transfer by
     a broker to a customer for whom and upon whose
     order he has purchased the same . . . . .
     Where the transaction Is effected by the de-
     livery or t~ransferof a certificatethe stamp
     shall be p.lacedupon the surrenderedcertifi-
     cate and canceled; and In cases of an agreement
     to sell, or where the sale Is effectedby de-
     livery of the certificate asalgned In blank,
     there shall be made and deliveredby the sell-
     er to the buyer, a bill or memorandumof such
     sale, to which the stamp provided for by this
     Article shall be affixed and canceled, . . . .'
Honorable George H. Sheppard,   Page 4.   (O-5376)


         The Stock Transfer tax is an exoiae tax upon the’
privilege of transferringshares or certificatesof stock.
Our Opinion No. 3594. The tax It not levied against the
value of the stock. The value of the stock la only a fac-
tor In determining the amount of tax Imposed on the prlvi-
lege of transferringstock or certificatesof stock.
           Our Stock Transfer Act is not entirely clear with
respect to the computationof the amount of tax Imposed in
the factual situations contained In your letter. The Act
does provide that In those instanceswhere the transaction
la effected   by the delivery or transfer of a certificate,
the stamp shall be plaoed on the am-rendered oertlflcate
and canceled. This leads us to believe that the Legltla-
ture Intended that each certificatebe treated aeparately
when computing the amount of tax due.
         In those transaotlonawhere the certificatesare
assigned In blank, the Act requires that a memorandum of
sale must be delivered by the teller to the buyer to which
the tax stamps must be affixed and canceled. To our minda
this indicates that the aeveral oertlflcateashould be con-
sidered in the aggregate when computing the amount of tax
due.
         Hhlle we have been unable to find any cases on
thla question, we do find the following pertinent language
in “The Wansfer  of Stock", Christy and McLean (Second Edl-
tlon) pages 516-517:
         "In the case of shares having a par value,
    under all of the laws except Hew York, the tax
    it computed on the total par or face value of
    the certificate,and notion the par value of
    each share. For example, under the Masaachu-
    setts and Pennsylvanialaws the transfer of a
    certlflca e for one share of atockof the par
    value of i10 It subject to a tro cent tsx; and
    a tax of the aame amount is payable on the
    transfer of a certificaterepresenting10 Shares
    of such stock. The trans,ferof a certificate
    for such stock representing51 or 20 shares
    would be taxable In the anwunt of 4 cents. Slm-
Honorable George H. Sheppard, Page 5.   (o-5376)


    llarly, under the Federal statute the tax on
    the transfer of a certificatefor such stock
    representing11 shares or 20 shares would be
    8 cents, provided the transfer did not repre-
    sent a sale for $20 or more per share, in which
    case the tax would be 10 cents. Under the New
    York law the tax is computed on the basis of
    the number of shares represented by the certif-
    icate. The tax la 3 cents on each share sold
    for leas than 20.per Share and 4 cents on each
    share Bold at !20 or more. The tax Is 3 cents
    per share on transfers which do not involve a
    tale.
         "Under the Federal statute, where four
    certificates,registered in the names of four
    different persons, are presented for transfer
    to another person In the form of a single cer-
    tificate, the transaction representsfour aepa-
    rate transfers. Uhere four certificates,regla-
    tered in the name of the same peraon,~arepre-
    sented for tranafer to another person, In the
    form of a single certificate,the tax Is com-
    puted on each certificate,unless the certifl-
    catea are accompanied by a bill of sale with
    the stamps attached thereto. Where a broker
    presents several certificatesfor transfer, and
    such certificatesare registered in different
    names and the certificatesare accompaniedby
    a bill of sale, the tax It computed on the total
    number of Share0 covered by the memorandumof
    sale."
         While the above quote it not conclusiveand while
it la based on departmentalIYIliIIgB and regulations,we
neverthelessthink that same is persuasiveof the conatruc-
tion of our law.
         To summarize, we are of the opinion that as to
your first and second factual aituatlonathe certificates
in question should be ConSidered separatelywhen computing
the amount of tax due. As to your third factual situation,
we are of the opinion that the certificatesshould be con-
Honorable George H. Sheppard, Page 6. (O-5376)


tldered In the aggregate when accompaniedby a memorandum
of sale with stamps affixed thereto. He have assumed that
the certificatesmentioned in your thlrd factual tltuatlon
were assigned ln blank and this opinion la se llmlted.
         In answering your fourth factual situation,your
attention it called to the first part of Section I, tupra,
which provides in effect that all transferaof Stock or
certificatesof stock are subjz to the tax In question.
The Act does provide certain exceptionsor exemptions.
Strictly speaking, the transfer mentioned in your fourth
question does not appear to be exempted or excluded by
name. However, as we are not furnishedwith any particu-
lar facts, we are unable to give you a specific or con-
crete answer to your fourth question. We will say that
the transfer In question la taxable unless the facts aur-
rounding same bring it clearly within the exemptionsor
exceptionscontained in the Act.
           Trusting that the foregoing answers your Inquiry,
we are
                                 Yours very truly,
                             ATTORNEY   QNNERAL OF TEXAS

                                 By     /a/ Lee Shoptaw
                                            Lee Shoptan
                                              As010tant
Ls:rrrzt




                                                       APPROVED
                                                        Opinion
                                                       Committee
                                                      By B&El
                                                        Chairman
