## THE’ ATJXWZNEP GENERAL
OF TEXAS

r,wo~ C.**MAR** AUBI?IN. 

### T-e 187ll 

### ,masTxo*w-As. May.19,1971

Honorable

Ben Atwell Chaiiman,

Committee on Revenue

& Taxation HouseofRepresentatives Capitol

Building Austin, Texas
DearMr.Atwell:
Inyour letter ,requestlng OpinionNo. M-864
Re: Constltutlonalltyof Sections 1 and 2, House Bill 1674, 62nd Legislature,R.S., 1971.

theabovecaptionedmatter you ofSection1 of House Bill No. ularSession,1971, which reads as rollows: the opinion-of.thisOffice on have provi,ded

us with a copy I 1674, 62nd Legislature,Reg- - --
"Section1. 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 settingsbe made within fifteen 

### (15)days from the date the stamps or the set meter are received by the distributor. In each fiscalyear, payment for stamps and meters received In August of that year shall be paid in full on or before August 

### 31no matter when purchasedor received by the distributorduring that month. Upon receipt of an order for stamps or the settingof a meter, the State Treasurer shall ship such stamps or set suchmeter.ln compliancewith the order and transmit with the stamps or themeter 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 Treasurerwithin fifteen (15) days after receipt of the stamps or the setmeter and the certified statement,or for stamps and meters received in

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August of each fiscalyear in full on or before August 

### 31no matter when purchased or received by the distributorduring thatmonth. However, in order to secure the payments of the tax as provided In this Section, a distributormust file with the State Treasurer a surety bond, approvedby the State Treasurer and the Attorney General,with a corporate surety authorized to do business In this State, conditionedupbn payment in full for the stamps ormeter 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 settingsreceived 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 requested by the distributor and approvedby the State Treasurer for thepurchase of stamps and/or meter settings during the succeedingmonth. Any distributorwho falls to forward the proper remittanceby the due date shall.benotified by the State Treasurer within five 

### 5 day's after t 1 the due date to appear within five 

### 5 days before the Treasurer to show causewhy 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 shlpment of stamps or the setting of meters as provlded In th$s Sectlon.and to enforce payment of the bond.'
You have also advised us as follows:
"The underlinedportion of Section 1 is new languageproviding for the State Treasurer to considerpersonal checks from bonded dlstributors as cash when received, thus provlding such distributorswith 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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checks have cleared the bank on which they are drawn."
In McCarty v. James, 

### 453S.W.2d 220 (Tex.Clv.App.

### 197p error ref. n.r.e.),theOourt csnsidered the 

### 1969amendment of Section (9) of Article 

### 7.08

. This article allows the distributor 

### 15 days from the date the stamps ormeter settings are received to make payment therefor. The Court held tha icle III

Tithe amendment did not violate Section 50 of Artof the Texas Constltutf.on because it did not amount to an extension of the State's credit to the dlstrlbutor. The court pointed out that even though the dlstrlbutorhas 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:
"TheTreasurer suggests that the distributor before he pays for the tax stamps under H.B. 

### 1158, may stamp and sell the cigaretteswithoutpaying the tax to the State, The State has guarded against this Improbabilityby requiring an adequate bond."

3: Acts, 

### 1969,61st Leg., Reg. Session, ch. 17, p. 1405. Title 122A, 2OA, Taxation-General,V.C.S. ' 3. Section 50 of Article III reads as follows:
"The Legislature~shallhave 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,whethermunicipal or other, Or t0 pledge the credit of the State in any manner whatsoever, for the payment of liabllltles,present or prospective, uals, of any Individual,association oftindlxldmunicipal or other corporationwhatsoever.

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The amendmentwe are now consideringrequiring the State Treasurer to treat personal checks of bondeddlstrlbutors as the equivalent of cashpayments when received as cashpayment f?r stamps ormeter settings does not purport to affect the safeguard of the adequatebond reoulrements of the statute. It does not say that the Treasurer shall,treatpersonal checks as "payment In full" but rather as "cashpayments". Under the proposed amendment,%he distributormust 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, conditionedupon payment In full for the stamps ormeter settingswithin the staGd=tutory time. The State Treasurermust fix the amount of this bond In an amount equal to one and one-half times the amount In stamps ormeter settings to be sent. The statute speaks of the tlme,of sending in terms of "the succeedingmonth". But it is evident that any bonded distributor'sorder in excess of the amount covered by an existing bond cannot be filled at any time .untllan 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 theproposed amendmentwhich requires the Treasurer to treatpersonal checks of bonded distributorsas the equivalent of cash payment when received as payment for stamps or meter settings Is consistentwith the requirements of Section 50 of Article III of the Texas Constitutionunder the reasoning and the holding of the McCarty case, supra; and you are thereforeadvised that it Is constitutionalin that respect.
Even If the Treasurer's treatment of personal checks as cashpayment werg to be construed as changing the requirement that bonds be'conditionedupon payment in full for the stampsnormeter settings, as In a case when an order or orders exhausts the amount of an existingbond, there Is nothing in the Constitutionwhich requires that a payment such as is made by a distributor to the State Treasurer, or even a payment of a tax, must be securedby a bond conditionedupon payment in full of saidpayment. 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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### 5 (M-864)

court'sview of the statutory scheme rather than the grounds of its decision on the constitutionalquestion involved. However, as we have previously stated, we do not think the amendment has any effect on the bond requirements of the statute. First, because such a holdingwould be in the "teeth" of the plain language of the bond provlsions,of the statute. Second, because if the amendmentbe 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 harmonizedwheneverpossible, that it be given a practical and workable effect, and that the Legislaturewill never be assumed,much lesspresumed, to have intended to accompllsh:an inequitablemuch less an absurd result.
But regardless of one's vlew of a resulting dlstinction in bond requirements In cases where the taxpayer tenders 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 findnone. Furthermore, shouldwe be in error in this and there be a possib3.e question'of constitutionalityon the basis of unreasonable classificationor unequal protection of the law, we think that a taxpayer who tenders his personal 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 factsmay be, which may ensue from any insufficiencyof funds to cover the tenderedpersonal check.
We pass now to a considerationof the constitutionality of Section 240f House Bill No. 

### 1674. Section 2 amends Article 7.10

. The firstparagraph of this Article requires



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

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### 6 (M-864)

every person, other than a distributingagent, bonded distributor or common carrier,. to obtain stamps from the State Treasurer and affix them to any unstamped'clgar-. ettes In.theirpossession. Thisparagraph of Artlcle~ 7.10 remains unchangedby the proposed amendment.
The finalparagraph of Article 7.10~as it Is presently enacted reads as follows:

."Every.dlstributorin this State shall cause all cigarettesreceived by him to have the requisite denominationsand amount of stamps affixed to represent the tax as levied herein;provided, however, that any distributorwho has obtained from the Treasurer and has in hispossession 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, thensecondparagraph reads as folloius:

"Every distributor In thls~State shall cause all cigarettesreceived by him to have the requisite denominationsand amount of stamps affixed to represent the tax as levied herein,within ninetySIX (96)hours, excluding Saturdays, Sundays, and legal holidays,wafterreceiving delivery of them."
The only change effectuatedby this portion of the amendment Is to require every distributor to have the renulslte denominationsand amount of stamps affixed to all cigarettes received by him within the 96-hour period regardless of whether the distributorhad previously obtained from the Treasurer and presentlyhad wlthin'hls possession the requisite amount of stamps. As we view It,,this is a measure designed to facilitate and effectuate the overallpurposes of the Cigarette Tax Law, the primary purpose,PDFcourse, being the collectionof the State's revenues. Such measures are within the specialprovince of the Legislativebranch 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.

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SUMMARY
The provision of Section 1 of H.B. 1674, 62nd Legislature,Regular Session, 1971, allowingpersonal checks of bonded distributorsto be treated as cashpayments by the State Treasurer when received forpayment of cigarette stamps or meter settings does not violate Section 50 of Article III of the Texas Constitution. Section 2 of H.B. 1674, requiring all clgarettes to be stamped by all distributorswithin a stated period is proper exercise of Legislative discretion in themanner of collecting t~heState's revenues.

Preparedby 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 ExecutiveAssistant
NOLA WHITE First Assistant

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