The Honorable     Tom Creighton                             Opinion     No.   H-   720
Chairman,     Senate   Committee     on Economic
     Development                                            Re:   Constitutionality      of article
Senate Chambers,       Capitol   Building                   1. 07, Taxation-General.
Austin,   Texas    78711

Dear    Senator   Creighton:

        You have requested          our opinion   concerning   the constitutionality of article
1.07,    Taxation-General,           which establishes    a state tax lien and provides:

                       (l)(f)(ii)     No bank or savings     and loan institution
                                      shall be required   to recognize   the claim
                                      of the State to any deposit   or withhold     pay-
                                      ment of any deposit    to the depositor     or to
                                      his order   unless and until it is served     by
                                      the Comptroller    with notice of the State’s
                                      claim.

       In our view article       1. 07 contemplates     that upon proper       notice   a bank will,
withhold    payment      of deposits    in the sum of the lien.        You ask whether       such
freezing    of a person’s      deoosits    on the basis   of an administrative        decision    by the
Comptroller       is constitutional.       You have referred        us to Fuentes     v. Shevin,     407
U.S.    67 (1972)     and Sni>Jach    v. Family    Finance     Corp.,     395 U. S. 337 (1969).      Snia-
dach involved       a Wisconsin      wage garnishment       statute which allowed        private   creditors
to garnish     a defendant’s     wages    without a prior     hearing.     In ruling the statute      un-
constitutional      the Court indicated      that such summary         procedures     would meet the
requirements        of due process      only in “extraordinary        circumstances”        395 U. S. at
339.

      These   extraordinary       situations    were more    fully discussed     in Fuentes,    a case
which involved     the summary        seizure,    without  prior   notice or hearing,      of household
goods under a writ of replevin           issued  by the State on application       of a private  creditor.
In holding  the statute     before    it unconstitutional   the Court    stated:

                       . . . Only in a few limited       situations    has this Court
                       allowed   outright   seizure    without   opportunity    for a
                       prior hearing.      First,   in each case,      the seizure   has
                       been directly    necessary     to secure     an important    govern-
                       mental   or general    public interest.       Second,   there has




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The   Honorable   Tom      Creighton      - page       2    (H-720)




                        been a special      need for very prompt            action.      Third,
                        the State has kept strict        control      over its     monopoly
                        of legitimate     force:   the person       initiating    the seizure
                        has been a government           official    responsible       for deter-
                        mining    under the standards          of a narrowly        drawn
                        statute,   that it was necessary            and justified      in the
                        particular     instance.     Thus,    the Court has allowed
                        summary       seizure    of property       to collect     the internal
                        revenue    of the United States,         to meet the needs of a
                        national   war effort,      to protect     against     the economic
                        disaster    of a bank failure,        and to protect        the public
                        from misbranded           drugs and contaminated             food.    407
                        U. S. at 90-92.

Regarding   the collection        of internal   revenue,   the Court             cited Phillips     v.
Commissioner,     283 U.S.          589 (1931),   in which   summary               administrative        proceedings
were upheld.    The Court          stated:

                        Where    only property      rights    are involved,   mere   p~ost-
                        ponement     of the judicial    inquiry    is not a denial of due
                        process    if the opportunity       given for ultimate   judicial
                        determination     of liability     is adequate.     283 U.S.    at
                        596-597.

       This la.nguage    was quoted and Phillips               cited   without    criticism    in Mitchell      v.
W.    T. Grant Co.,      416 U.S.  600, a-73).

      In Calero-Toledo v.          Pearson          Yacht Leasing   Co.,  416 U.S.  663 (1973), the
Court upheld the summary             seizure         of a boat upon  which contraband   had been dis-
covered,    stating:

                        . . . unlike the situation      in Fuentes,      [the]    seizure
                        is not initiated   by self interested      private     parties;
                        rather   [government]     officials    determine       whether
                        seizure    is appropriate   under the provisions           of the
                           . . statutes.    416 U.S.     at 679

      We believe    our courts   probably    would hold that article    1.07 (l)(f)(ii)  satisfies
the criteria   presented    in Phillips   and Calero-Toledo.      The, State    has an important
governmental     interest  in securing    revenues,   the seizure    is initiated   by a responsible




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The    Honorable    Tom      Creighton     -    page    3   (H-720)




government      official   under   specific     statutory   authority  and the taxpayer     has
opportunity    to bring     any dispute     before     the courts.    Taxation-General,       articles
1. 032(c),  1. 05,    1. 07B.    Accordingly,        in our opinion article    1. 07 probably     would
be held constitutional        under the present        case law.

                                         SUMMARY

                             Article  1. 07, Taxation-General                  authorizing   a
                     state    tax lien is constitutional.

                                                i    Very   truly     yours,




                                         u           Attorney       General      of Texas




                                First    Assistant




C. ROBERT   HEATH,             Chairman
Opinion Committee

jad:




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