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### THEATITORNEY GENERAL
OFTEXAS

Mr. Jack N. Fant County Attorney El Paso County El Paso, Texas OpinionNo. WW--

### 736

Re: Whether County Tax Assessor and Collectormay make a refund of alleged overpayment of occupation tax on certainamusementmachines collectedunder Article 7047, Dear Mr. Fant: V.C.S.

We quote from your opinion request as follows:

"In the earlypart 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'amusementmachines. This payment was made pursuant to Article 

### 7047which 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 decisionwas rendered by a Justice of the Peace Court in Dallas and that pursuant to said decision the State Comptroller'sOffice 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 overpaymentand this applicationwas approved and said refundmade. This Companymade 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 thismoney due to the fact that their Legal Department has a serious question as to the legality of such refund. The City Legal Department has informedme that they have received certain communicationsfrom your Comptroller's officewhich indicate that said office approved the refund of the overpaymentmade to them by this Compaw. "TheCity and County are both interested in this matter even though the County has alreadypaid said refund and I should therefore like an opinion fromMr. Jack N. Fant, Page 2 OpinionNo. WW 

### 736

your office on thismatter because there are certain other companies that are in a similarposition and that may make application for such refund.
"My investigationas to the law applicable to this matter leadsme to believe that a refund shouldnot be made if the paymentwas voluntarily tendered. We believe that thispayment was in factmade voluntarilybut there is a doubt as to this feature because of the business compulsiondoctrine 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 casewas decided and the Comptroller agreed to the reclassificationof these machines these companies then paid their tax on the new reclassificationand thus paid a lesser amount than the Companieswho had been punctual in paying their tax when due. The effect of refusing a refund to these companieswould be to penalize them for paying their taxespromptly.

"Becauseof the possibility of other companies asking for a similarrefund and in order to be able to properly handle this problem in the future I would appreciateyour furnishingme with an opinion as hereinabove requested."

In reference to the question of voluntarypayment, vel non, it is stated in 

### 64A.L.R. 9 at page 14: -

"Therule 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 taxesmay be compulsory,although not made to relieve the person or goods from seizure or detention, actual or threatened,where it ismade under cir&mstances creating a moral pressure of 'equalinfluencepreventing the free Will.' GalvestonGas Companyv. Galveston County, ml) 

### 54Tex. 287

..." (Emphasisadded)

Duress may be impliedas 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 Companyv. State, 135 S.W.2d 

### 687 (Tex.Sup.Ct.1940). The case of Crow,Mr. Jack N. Fant, Page 3 OpinionNo. WW-736

et al. v. City of Corpus Christi, 209 S.W. 2d 922 (Tex.Sup. Ct. 1948) is closelyanalogous to the situation in question. This case involvedan action to recover certain taxes paid to the City of Corpus Christ1 under an invalidordinance. The Plaintiff admitted that the taxes and chargeswere 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 circumstancesdetailed, it would not be just for the city to continue to retain themoney. It appears from the record as a whole, and is consonantwith the trial court's judgment, that it was paid to the city under the pressure of the particularmeans employed for its collection, which were tantamount to compulsionof duresswithin the purview of the cited cases. It would be against good consciencefor the city not to pay back to petitioners themoney thus received

..."
The Court recognized that the common law doctrine of duress has been expanded and thatmany courts have adopted the doctrine of "businesscompulsion"under which it is established that where a reasonablyprudentman finds that in order to preserve his property or protect his business interest, it is necessary tomake a payment of money which he does not owe, and which in equity of good conscience the receiver shouldnot retain, the paymentmay 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 taxespaid under the duress of an unconstitutional statutemay be recovered on the ground that the p%aymentthereof is involuntary. At page 111, the Supreme Court, quoting the decision of the Court of Civil Appeals, stated:

"In the event the Plaintiffshad refused to post the required bond and pay the required taxes, the

State v. TennesseeGas TransmissionCo., 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 OpinionNO. ~-736

Act /?he Texas Citrus CommissionAct, H.B. 29, Acts 51st Leg., R.S., 1944, Ch. 93, page 150, held unconstitutionalby 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 interestat 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 violationsand to grant injunctiverelief which couldbe mandatory."

It is submitted that insofar as the law applicable to the situationdescribed in your opinion request is concerned, the foregoing cases are controlling. There is no distinction sufficient to justifydifferent legal treatmentbetween a situationwhere taxes are required to be paid under ordinances or statutes subsequentlydeclaredunconstitutional,and a situationwhere taxes required to be paid under a certain statute or ordinanceare subsequentlydetermined to have been erroneously demanded and collected.

Article 7047a, V.A.C.S., under which the questioned tax paymentswere made, contains the followingpenalty and enforcementprovisions:
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 Comptrollerof Public AccountsyA;;;~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 (Article7047a-12).
3. Failure to complywith any provision of the Act constitutesa misdemeanor;upon conviction the taxpayer is subject to a fine of not less than $25 nor more than $200 (Article7047a13).
It is apparent, therefore that if a taxpayermade tax payments such as are described in the opinion request under duress of the penal and enforcementprovisions of Article 7047a, such payments are not voluntary and may be recovered. However, determinationof whether tax payments are actuallymade under duress of suchprovisions is a question of fact. Rainey v.Mr. Jack N. Fant, Page 5 OpininionNo. 

### ~-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 casesw~here there is competentevidence of such a nature developed as might be a basis for causingreasonableminds to differ as to whether or not the payments in questionwere made under compulsion or duress, an issue of fact is presented to be determinedby the jury, or by the court that tries the case. In the case under consideration herein, the trial judgepresumptively found that the tax paymentswere voluntarilymade by Rainey, who had the ordinance in questionprepared and presented to the City Commission of Tyler, and accordinglyrendered judgment that they could not be recovered. In the case of Crow v. City of Corpus Christi, as w~ellas in the Boone v. City of Tyler case, supra, it is to be noted that the holdingswere 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 voluntarilymade and could not be recovered.

In your opinion request letter you set forth no facts to which the foregoingprinciples can be applied. You state only that there &s2a "possibilityof other companiesasking for a similar refund

. In view of this, you are advised that if and when such refund claims are made, your decisionmust be

2 The Attorney General cannot advise the various city attorneys of the State and cannotrender opinions regarding questions involvinga city's legalproblems. See Article 4399,V.A.C.S. Consequently, this opinion cannotbe construedas being rendered in reference to the portion of the opinion requestwhich deals with the application to the City of El Paso for a tax refund. Even if the city's question couldbe 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 OpinionNo. 

### w-736

based upon the particular facts or circumstances surrounding each individual claim, and that If paymentwas actuallymade under duress or compulsionof the penal and enforcementprovisions of Article 7047a refund should be made.

SUMMARY
Refunds of taxes erroneouslypaid under Article 7047a,V.A.C.S., should be made ifs such taxes were actuallypaid 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 surroundingeach claim for refund.

Yours very truly,

WILL WILSON AttorneyGeneral 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 '