                    December 21, 1962


Honorable Jesse James            Opinion No. WW-1507
State Treasurer
Capitol Station                  Re:    Payment of pro rata
Austin, Texas                           interest on refunded
                                        money paid under pro-
                                        teat under submitted
Dear Mr. James:                         facts.
        We quote the following excerpt from your letter
requesting our opinion on the above captioned matter:
              "We respectfully request your opinion
           regarding the payment of pro rata interest
           to companies refunded monies paid to the
           state under protest and refunded under
           conditions as listed below:
             "1. When companies pay under protest
          for taxes to the State, shall the State
          Treasurer pay pro rata interest along
          with the refund payment when refunds
          are made without suit being filed such
          as under conditions set out In Attorney
          General's Opinion w-1169?
              "2. When companies file suit for
           refund of monies paid under protest,
           and after suit la filed, other protest
           payments are made on a continuing basis
           for the same reason and judgment is
           awarded these companies on original
           suits and no amended petitions are
           filed, shall the State Treasurer pay
           pro rata interest on refund of pro-
           tested payments not included in the
           original suit?
              "3. Where suits are dismissed and
           refunds are made to companies because
           laws are declared unconstitutional,
           shall the State Treasurer make payment
           of pro rata Interest on these refunds?"
Honorable Jesse James, Page 2 (Opinion No. WW-1507)


        Opinion No. w-1169 held that refunds In the full amount
of the taxes in controversy were authorized under the provisions
of Article 4388, Vernon's Civil Statutes, in the following aitua-
tiona: (1) where suits were properly filed under the provisions
of the protest statute and were later dismissed by the taxpayer
and (2) where suits were properly filed under the protest ats-
tute and the judgments did not include all of the taxes paid
under protest.
       Article 4388 reads as follows:
             "The State Treasurer shall receive daily
          from the head of each Department, each of
          whom is specifically charged with the duty
          of making same daily, a detailed list of
          all persons remitting money the status of
          which Is undetermined or which is awaiting
          the time when it can finally be taken into
          the Treasury, together with the actual
          remittances which the Treasurer shall cash
          and place in his vaults or in legally
          authorieed depository banks, if the necea-
          aity arises. The report from the General
          Land Office shall include all money for
          interest, principal and leases of school,
          university, asylum and other lands. A
          deposit receipt shall be issued by the
          Comptroller for the daily total of such
          remittances from each apartment; and
          the cashier of the Treaaurer'a Eepart-
          ment shall keep a eaah book, to be called
          'suspense cash book,' in which to enter
          these deposit receipts, and any others
          issued for cash received for which no
          deposit warrants can be issued, or when
          their issuance 18 delayed. As soon as
          the status of money so placed with the
          Treasurer on a depoaft recel.ptis deter-
          mined, it shall be transferred from the
          suspense account by plactng the portion
          of l.tbelonging to the State in the Trea-
          sury by the Issuance of a deposit warrant,
          and the part found not to belong to .the
          State shall be refunded. When deposit
          warrants are issued, they shall be entered
          in this cash 'book,aa we.llas any refunds,
          and the balance shall represent the aggre-
          gate of the items at%11 in suspense. Refunds
          shall be made in a msnner simQlar to that in
          present use, except ,thatseparate series of
Honorable Jesse James, Page 3 (Opinion No. WW-1507)


          warrants shall be used for making such refunds,
          to be called 'refund warrants,' and such war-
          rants shall be written and signed by the Comp-
          troller and countersigned by the Treasurer and
          charged against the suspense funds to which
          they apply. Such warrants shall then be
          returned to the Comptroller and delivered
          by him to the veraon entitled to receive
          them. Acts 2nd C.S.1909, p. 438; Acts
          1930, blat Leg. 5th C.S. p. 230, ch. 73
          8 3; Acts 1931, 42nd Leg. p. 396, ch. 242
          $j1."

        Your first two questions are answered In the negative.
Refunds in such cases are made pursuant to the provisions of
Article 4388 which we have set out in full. You will note that
this article makes no provision at all for the payment of pro
rata interest.
        Section (5) of Article 1.05, Ch. 1, Title 122A, 20A
Tax-Gen, V.C.S., contains the following provision:
              !,     In the event, however, that suit
           is bro;ght by such taxpayer within the time
           and within the manner provided in this Arti-
           cle, and it be finally determined that such
           money so paid by such taxpayer, or any part
           thereof, was unlawfully demanded by such
           public official and that the same belongs
           to such taxpayer, then and in that event it
           shall be the duty of the State Treasurer to
           refund such amount, together with the pro
           rata interest earned thereon, to such tax-
           payer,,bythe issuance of a refund warrant,
           . . .
        Since under the facts outlined in your questions 1 and 2
the protest statute has not been complied with, the provision for
the payment of pro rata interest cannot be invoked by the tax-
payer. Pro rata interest may be paid only in those instances in
which the statutory procedure outlined in Article 1.05 has been
followed.
        We think that a different result must be reached under
the facts stated in your third question and advise you that in
such instances the Treasurer should make payment of pro rata
interest on refunds of this type. True, such suits are not con-
cluded by a final judgment in the taxpayer's favor as is usually
the case in those instances in which refunds are paid pursuant
to the provisions of the protest statute. However, there was
Honorable Jesse James, Page 4 (Opinion No. WW-1507)


in existence at the time of such dlamiasal a final judgment
declaring the particular law involved to be unconstitutional.
Article 1.05 does not provide that a final judgment in the
taxpayer's favor be entered, but only states if "it be finally
determined that such money so paid by such taxpayer . .   was
unlawfully demanded . . ." the Treasurer shall refund aulh
money together with the pro rata interest earned thereon to
such taxpayer. The test case "finally determined" that such
money was unlawfully demanded.


                           SUMMARY
                 No pro rata interest may be paid on
         refunded money in those instances in which
         refunds are made pursuant to Article 4388,
         Vernon's Civil Statutes, even though said
         monies were originally paid under the pro-
         teat statute, Article 1.05, 20A Tax-Gen,
         V.C.S., except in instances In which sub-
         sequent to the protested payment and prior
         to judgment in the suit for the tax refund,
         the law imposing the tax is declared uncon-
         stitutional.
                             Very truly yours,
                             WILL WILSON
                             Attorney General of Texas




MMP:pw
APPROVED:
OPINION COMMITTFE
W. V. Geppert, Chairman
Robert Rowland
Howard Maya
Marvin Sentell
Frank Booth
REVIEWED FOR THE ATTORNEY GENERAL
By: Leonard Paaamore
