* . 

THEATITORNEY GENERAL 

OFTEXAS 

Mr. Jack N. Fant 

County Attorney 

El Paso County 

El Paso, Texas 

Opinion No. WW-- 736 

Re: Whether County Tax Assessor 

and Collector may make a 

refund of alleged overpayment of occupation tax 

on certain amusement machines 

collected under Article 7047, 

Dear Mr. Fant: V.C.S. 

We quote from your opinion request as follows: 

"In the early part of February, 1958, Frontier 

Music Company, Inc., paid the County Tax Assessor 

and Collector a certain sum of money as occupation 

tax on fifty Class ID' amusement machines. This 

payment was made pursuant to Article 7047 which 

allows counties to levy such an occupation tax 

in an amount of one-half the amount paid to the 

State. 

"It seems that after this tax was paid a 

decision was rendered by a Justice of the Peace 

Court in Dallas and that pursuant to said decision 

the State Comptroller's Office agreed to a payment 

of a lesser tax to the State. Frontier Music Company, Inc. made application to the County Tax 

Assessor and County Judge for a refund of their 

alleged overpayment and this application was approved 

and said refund made. This Company made a similar 

application to the City for a refund of an alleged 

overpayment to them. Up to the present time the 

City has not made a refund of this money due to the 

fact that their Legal Department has a serious 

question as to the legality of such refund. The 

City Legal Department has informed me that they have 

received certain communications from your Comptroller's 

office which indicate that said office approved the 

refund of the overpayment made to them by this Compaw. 

"The City and County are both interested in this 

matter even though the County has already paid said 

refund and I should therefore like an opinion from 
Mr. Jack N. Fant, Page 2 Opinion No. WW 736 

your office on this matter because there are certain 

other companies that are in a similar position and that 

may make application for such refund. 

"My investigation as to the law applicable to this 

matter leads me to believe that a refund should not 

be made if the payment was voluntarily tendered. 

We believe that this payment was in fact made 

voluntarily but there is a doubt as to this feature 

because of the business compulsion doctrine as 

expressed by some of the cases. 

"I further believe that certain companies in 

this City and possibly in other cities in the State 

did not pay their occupation tax at the time the 

payment became due in order to purposely await the 

outcome of this Justice of the Peace decision in 

Dallas. After this case was decided and the Comptroller agreed to the reclassification of these 

machines these companies then paid their tax on 

the new reclassification and thus paid a lesser 

amount than the Companies who had been punctual 

in paying their tax when due. The effect of refusing a refund to these companies would be to 

penalize them for paying their taxes promptly. 

"Because of the possibility of other companies 

asking for a similar refund and in order to be 

able to properly handle this problem in the future 

I would appreciate your furnishing me with an opinion 

as hereinabove requested." 

In reference to the question of voluntary payment, vel 

non, it is stated in 64 A.L.R. 9 at page 14: 

- 

"The rule in Texas although said by the Court 

to be, perhaps, more liberal than is sanctioned 

by the current of authority elsewhere, recognizes 

that a payment of taxes may be compulsory, although 

not made to relieve the person or goods from 

seizure or detention, actual or threatened, where 

it is made under cir&mstances creating a moral 

pressure of 'equal influence preventing the free 

Will.' Galveston Gas Company v. Galveston County, 

ml) 54 Tex. 287 . .." (Emphasis added) 

Duress may be implied as well as express and the legal 

liabilitv to reoav or refund is the same in both instances. 

Austin National-Bank of Austin v. Sheppard, 71 S.W.2d 242 (Tex. 

Com.App. 1934, opinion adopted); National Biscuit Company v. 

State, 135 S.W.2d 687 (Tex.Sup.Ct. 1940). The case of Crow, 
Mr. Jack N. Fant, Page 3 Opinion No. WW-736 

et al. v. City of Corpus Christi, 209 S.W. 2d 922 (Tex.Sup. 

Ct. 1948) is closely analogous to the situation in question. 

This case involved an action to recover certain taxes paid 

to the City of Corpus Christ1 under an invalid ordinance. 

The Plaintiff admitted that the taxes and charges were paid 

without protest or notice of protest to the city, but asserted 

that he would not have paid them except for the penal provisions contained in the ordinance. The holding of the Court 

is embodied in the statement contained in the decision at 

page 925: 

The city received from the companies 

money'to which it now appears it was not entitled 

and, under the circumstances detailed, it would 

not be just for the city to continue to retain 

the money. It appears from the record as a whole, 

and is consonant with the trial court's judgment, 

that it was paid to the city under the pressure 

of the particular means employed for its collection, 

which were tantamount to compulsion of duress within 

the purview of the cited cases. It would be against 

good conscience for the city not to pay back to 

petitioners the money thus received . .." 

The Court recognized that the common law doctrine of duress has 

been expanded and that many courts have adopted the doctrine 

of "business compulsion" under which it is established that 

where a reasonably prudent man finds that in order to preserve 

his property or protect his business interest, it is necessary 

to make a payment of money which he does not owe, and which 

in equity of good conscience the receiver should not retain, 

the payment may be recovered. See 40 Am.Jur. 831. 

The case of State of Texas v. Akin Products Company, 

et al., 286 S.W.2d 110 (Tex.Sup.Ct. 1956) upon which the de- 

\cisions in the gas gathering tax refund c&es1 were based, 

established the proposition that taxes paid under the duress of 

an unconstitutional statute may be recovered on the ground that 

the p%ayment thereof is involuntary. At page 111, the Supreme 

Court, quoting the decision of the Court of Civil Appeals, 

stated: 

"In the event the Plaintiffs had refused to post 

the required bond and pay the required taxes, the 

State v. Tennessee Gas Transmission Co., 289 S.W.2d 309 (Tex. 

Civ. App. 1956,Transcontinental Gas 

Pipe Line Corporation, 292 S.W.mTex.Civ.App. 1956, ref'd.); 

State v. El Paso Natural Gas Company, 300 S.W.2d 170 (Tex.Civ. 

APP. 1957). 
Mr. Jack N. Fant, Page 4 Opinion NO. ~-736 

Act /?he Texas Citrus Commission Act, H.B. 29, 

Acts 51st Leg., R.S., 1944, Ch. 93, page 150, held 

unconstitutional by the Texas Supreme Court 

in H. Rouw Company-v. Texas Citrus Commission, 

151 Tex. 182, 247 S.W.2d 231/ did these things: 

(1) imposed a penalty at the rate of $50 each 

day for the violation; (2) declared that the taxes 

were the personal obligation of the taxpayer, and 

imposed interest at the rate of 10% on all unpaid 

taxes; (3) declared the failure to post the bond 

or pay the tax as illegal, and (4) expressly 

directed the courts, on request of the commission, 

to restrain or abate any violations and to grant 

injunctive relief which could be mandatory." 

It is submitted that insofar as the law applicable 

to the situation described in your opinion request is concerned, 

the foregoing cases are controlling. There is no distinction 

sufficient to justify different legal treatment between a 

situation where taxes are required to be paid under ordinances 

or statutes subsequently declared unconstitutional, and a 

situation where taxes required to be paid under a certain statute 

or ordinance are subsequently determined to have been erroneously demanded and collected. 

Article 7047a, V.A.C.S., under which the questioned 

tax payments were made, contains the following penalty and 

enforcement provisions: 

1. Every machine subject to payment of the tax upon 

which the tax has not been paid is declared to be a public 

nuisance and is subject to bein 

Comptroller of Public Accounts 

yA;;;~e," s.~;7sne;yroyed by the 

2. In the event of non-payment of the tax, the taxpayer 

is required to forfeit to the State as a penalty the sum of 

not less than $25 nor more than $500 for each day's violation 

(Article 7047a-12). 

3. Failure to comply with any provision of the Act constitutes a misdemeanor; upon conviction the taxpayer is subject 

to a fine of not less than $25 nor more than $200 (Article 7047a13). 

It is apparent, therefore that if a taxpayer made tax payments 

such as are described in the opinion request under duress of 

the penal and enforcement provisions of Article 7047a, such 

payments are not voluntary and may be recovered. However, 

determination of whether tax payments are actually made under 

duress of such provisions is a question of fact. Rainey v. 
Mr. Jack N. Fant, Page 5 Opininion No. ~-736 

City of Tyler, 213 S.W.2d 57 (Tex.Civ.App. 1948). The latter 

case involved facts directly analogous to the case of Crow 

v. City of Corpus Christi. In distinguishing the Crow case, 

the court stated at page 58: 

"It follows, therefore, that in cases w~here 

there is competent evidence of such a nature 

developed as might be a basis for causing reasonable minds to differ as to whether or not the 

payments in question were made under compulsion 

or duress, an issue of fact is presented to be 

determined by the jury, or by the court that 

tries the case. In the case under consideration 

herein, the trial judge presumptively found that 

the tax payments were voluntarily made by Rainey, 

who had the ordinance in question prepared and 

presented to the City Commission of Tyler, and 

accordingly rendered judgment that they could 

not be recovered. In the case of Crow v. City 

of Corpus Christi, as w~ell as in the Boone v. 

City of Tyler case, supra, it is to be noted 

that the holdings were predicated on the fact that 

the,,payments were made under duress or compulsion 

. . , 

Based on this reasoning the court held that under the facts 

there presented, the payments were voluntarily made and could 

not be recovered. 

In your opinion request letter you set forth no facts 

to which the foregoing principles can be applied. You state 

only that there &s2a "possibility of other companies asking for 

a similar refund . In view of this, you are advised that if 

and when such refund claims are made, your decision must be 

2 

The Attorney General cannot advise the various city attorneys 

of the State and cannot render opinions regarding questions 

involving a city's legal problems. See Article 4399, V.A.C.S. 

Consequently, this opinion cannot be construed as being rendered 

in reference to the portion of the opinion request which deals 

with the application to the City of El Paso for a tax refund. 

Even if the city's question could be answered, in view of the 

Rainey case, sufficient facts are not set forth on which to 

base a conclusion. 
Mr. Jack N. Fant, Page 6 Opinion No. w-736 

based upon the particular facts or circumstances surrounding 

each individual claim, and that If payment was actually made 

under duress or compulsion of the penal and enforcement provisions of Article 7047a refund should be made. 

SUMMARY 

Refunds of taxes erroneously paid under 

Article 7047a, V.A.C.S., should be made ifs 

such taxes were actually paid under compulsion or duress of the penal and enforcement 

provisions of said Article. This is a fact 

question to be,determined from the particular 

circumstances surrounding each claim for refund. 

Yours very truly, 

WILL WILSON 

Attorney General of Texas 

JNP:cm 

APPROVED: 

OPINION COMMITTEE: 

John Reeves, Chairman 

J. Arthur Sandlin 

Robert G. Scofield 

Robert T. Lewis 

REVIEWED FOR THE ATTORNEY GENERAL 

By: W. V. GEPPERT '