THE’ ATJXWZNEP GENERAL 

OF TEXAS 

r,wo~ C. MARAUBI?IN. T-e 187ll 

,masTx o*w-As. May.19, 1971 

Honorable Ben Atwell 

Chaiiman, Committee on 

Revenue & Taxation 

House of Representatives 

Capitol Building 

Austin, Texas 

Dear Mr. Atwell: 

In your letter ,requestlng 

Opinion No. M-864 

Re: Constltutlonallty of 

Sections 1 and 2, House 

Bill 1674, 62nd Legislature, R.S., 1971. 

the above captioned matter you 

of Section 1 of House Bill No. 

ular Session, 1971, which reads as rollows: 

the opinion-of.this Office on 

have provi,ded us with a copy I 

1674, 62nd Legislature, Reg- - -- 

"Section 1. 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 settings be made 

within fifteen (15) days from the date the stamps 

or the set meter are received by the distributor. 

In each fiscal year, payment for stamps and meters 

received In August of that year shall be paid in 

full on or before August 31 no matter when purchased or received by the distributor during that 

month. Upon receipt of an order for stamps or the 

setting of a meter, the State Treasurer shall ship 

such stamps or set such meter.ln compliance with 

the order and transmit with the stamps or the meter 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 

Treasurer within fifteen (15) days after receipt 

of the stamps or the set meter and the certified 

statement, or for stamps and meters received in 

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Honorable Ben Atwell, Page 2 (M-864) 

August of each fiscal year in full on or before 

August 31 no matter when purchased or received 

by the distributor during that month. However, 

in order to secure the payments of the tax as 

provided In this Section, a distributor must 

file with the State Treasurer a surety bond, 

approved by the State Treasurer and the Attorney 

General, with a corporate surety authorized to 

do business In this State, conditioned upbn payment in full for the stamps or meter 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 settings received 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 approved by the State 

Treasurer for the purchase of stamps and/or 

meter settings during the succeeding month. Any 

distributor who falls to forward the proper 

remittance by the due date shall.be notified 

by the State Treasurer within five 5 day's after 

the due date to appear within five t 5 1 days before the Treasurer to show cause why 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 underlined portion of Section 1 is new 

language providing for the State Treasurer 

to consider personal checks from bonded dlstributors as cash when received, thus provlding such distributors with 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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Honorable Ben Atwell, Page 3 (M-864) 

checks have cleared the bank on which they are 

drawn." 

In McCarty v. James, 453 S.W.2d 220 (Tex.Clv.App. 197p 

error ref. n.r.e.),the Oourt csnsidered the 1969 amendment 

of Section (9) of Article 7.08 . This article allows the 

distributor 15 days from the date the stamps or meter settings are received to make payment therefor. The Court 

held tha 

icle III Ti 

the 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: 

"The Treasurer suggests that the distributor 

before he pays for the tax stamps under H.B. 1158, 

may stamp and sell the cigarettes without paying 

the tax to the State, The State has guarded 

against this Improbability by 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~shall have 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, whether municipal 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 oft indlxldmunicipal or other corporation whatsoever. 

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Honorable Ben Atwell, Page 4 (M-864) 

The amendment we are now considering requiring the 

State Treasurer to treat personal checks of bonded dlstrlbutors as the equivalent of cash payments when received 

as cash payment f?r stamps or meter settings does not 

purport to affect the safeguard of the adequate bond reoulrements of the statute. It does not say that the Treasurer shall,treat personal checks as "payment In full" 

but rather as "cash payments". Under the proposed amendment, %he distributor must 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, conditioned upon payment In full for the stamps 

or meter settings within the staGd=tutory time. The 

State Treasurer must fix the amount of this bond In an 

amount equal to one and one-half times the amount In 

stamps or meter settings to be sent. The statute speaks 

of the tlme,of sending in terms of "the succeeding month". 

But it is evident that any bonded distributor's order 

in excess of the amount covered by an existing bond cannot be filled at any time .untll an 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 the proposed 

amendment which requires the Treasurer to treat personal 

checks of bonded distributors as the equivalent of cash 

payment when received as payment for stamps or meter settings Is consistent with the requirements of Section 50 

of Article III of the Texas Constitution under the reasoning and the holding of the McCarty case, supra; and you 

are therefore advised that it Is constitutional in that 

respect. 

Even If the Treasurer's treatment of personal checks 

as cash payment werg to be construed as changing the requirement that bonds be'conditioned upon payment in full 

for the stamps nor meter settings, as In a case when an 

order or orders exhausts the amount of an existing bond, 

there Is nothing in the Constitution which requires that 

a payment such as is made by a distributor to the State 

Treasurer, or even a payment of a tax, must be secured by 

a bond conditioned upon payment in full of said payment. 

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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Honorable Ben Atwell, Page 5 (M-864) 

court's view of the statutory scheme rather than the grounds 

of its decision on the constitutional question 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 holding would be in the "teeth" of the 

plain language of the bond provlsions,of the statute. Second, because if the amendment be 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 harmonized whenever possible, that it be given a practical and workable effect, and that the Legislature will 

never be assumed, much less presumed, to have intended to 

accompllsh:an inequitable much 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 

find none. Furthermore, should we be in error in this and 

there be a possib3.e question'of constitutionality on the 

basis of unreasonable classification or 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 

facts may be, which may ensue from any insufficiency of 

funds to cover the tendered personal check. 

We pass now to a consideration of the constitutionality 

of Section 240f House Bill No. 1674. Section 2 amends 

Article 7.10 . The first paragraph of this Article requires 

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

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Honorable Ben Atwell, Page 6 (M-864) 

every person, other than a distributing agent, bonded 

distributor or common carrier,. to obtain stamps from the 

State Treasurer and affix them to any unstamped'clgar-. 

ettes In.their possession. This paragraph of Artlcle~ 7.10 

remains unchanged by the proposed amendment. 

The final paragraph of Article 7.10~as it Is presently enacted reads as follows: 

."Every.dlstributor in this State shall cause all 

cigarettes received by him to have the requisite 

denominations and amount of stamps affixed to 

represent the tax as levied herein; provided, 

however, that any distributor who has obtained 

from the Treasurer and has in his possession 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, then second paragraph reads 

as folloius: 

"Every distributor In thls~ State shall cause all 

cigarettes received by him to have the requisite 

denominations and amount of stamps affixed to 

represent the tax as levied herein, within ninetySIX (96) hours, excluding Saturdays, Sundays, and 

legal holidays, wafter receiving delivery of them." 

The only change effectuated by this portion of the amendment Is to require every distributor to have the renulslte 

denominations and amount of stamps affixed to all cigarettes 

received by him within the 96-hour period regardless of 

whether the distributor had previously obtained from the 

Treasurer and presently had wlthin'hls possession the requisite amount of stamps. As we view It,, this is a measure 

designed to facilitate and effectuate the overall purposes 

of the Cigarette Tax Law, the primary purpose, PDF course, 

being the collection of the State's revenues. Such measures 

are within the special province of the Legislative branch 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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Honorable Ben Atwell, Page 7 M-864) 

SUMMARY 

The provision of Section 1 of H.B. 1674, 

62nd Legislature, Regular Session, 1971, allowing personal checks of bonded distributors to 

be treated as cash payments by the State Treasurer when received for payment 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 distributors within 

a stated period is proper exercise of Legislative 

discretion in the manner of collecting t~he State's 

revenues. 

Prepared by 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 

Executive Assistant 

NOLA WHITE 

First Assistant 

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