The Honorable Tom Creighton Opinion No. H- 720

Chairman, Senate Committee onEconomic 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 ofarticle 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 ofthe State to any deposit or withhold payment ofany deposit to the depositor or to his order unless and until itis served by the Comptroller with notice of the State’s claim. 

### Inour view article 1.07 contemplates that upon proper notice abank will, withhold payment of deposits inthe sum ofthe lien. You ask whether such freezing ofaperson’s deoosits onthe basis ofan 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., 

### 395U.S. 337 (1969). Sniadach involved aWisconsin wage garnishment statute which allowed private creditors to garnish a defendant’s wages without aprior hearing. In ruling the statute unconstitutional 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 inFuentes, acase which involved the summary seizure, without prior notice or hearing, of household goods under awrit of replevin issued by the State on application ofaprivate creditor. Inholding the statute before itunconstitutional the Court stated:

. . .Only in afew 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 governmental or general public interest. Second, there has

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been a special need for very prompt action. Third, the State has kept strict control over its monopoly oflegitimate force: the person initiating the seizure has been agovernment official responsible for determining under the standards ofanarrowly drawn statute, that it was necessary and justified inthe particular instance. Thus, the Court has allowed summary seizure of property to collect the internal revenue ofthe United States, to meet the needs ofa national war effort, to protect against the economic disaster ofabank failure, and to protect the public from misbranded drugs and contaminated food. 407 

### U.**S.** at 90-92. Regarding the collection ofinternal revenue, the Court cited Phillips v. Commissioner, 283 U.S. 589 (1931), inwhich summary administrative proceedings were upheld. The Court stated: Where only property rights are involved, mere p~ostponement ofthe judicial inquiry is not adenial of due process ifthe 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 ofaboat upon which contraband had been discovered, 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 ofthe

. . 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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government official under specific statutory authority and the taxpayer has opportunity tobring 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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