HE .s~-JITORNEY GENERAL 

OF TEXAS 

April 2, 1959 

Honorable Truett Latimer O-oinion No. W-584 

Chairman 

Agriculture Committee 

House of Representatives 

Re: Constitutionality of H.B. 

174, 56th Leg., relating 

Austin, Texas to producers of peanutsacting jointly with the 

Commissioner of Agrlculture In promoting the 

production and use of 

Dear Sir: peanuts, 

In your recent letter you have advised us that 

the House Agriculture Committee, 56th Legislature, has 

referred House Bill 174 to thls.office for an opinion regarding its constitutionality. 

House Bill 174 authorizes the Commissioner of 

Agriculture to certify an association recommended by the 

Southwestern Peanut Growers Association to conduct a Statewide referendum among commercial 

% 

reducers of peanuts. An 

annual assessment of One Dollar ( 1) per net ton of peanuts 

marketed by such producers is to be levied against such producer8, if as many as two-thirds (2/X) of those voting in 

such referendum favor the levy. 

The annual assessment Is to be continued until at 

least ten per cent (10%) of the members of the association 

call for another referendum, and at such subsequent referendum a certain percentage vote to discontinue the assessment. 

We note here that the bill is not @ear on the 

matter of ,what circumstances are required In order to discontinue the assessments, the last sentence of Section 12 

in the proposed legislation providing as follows: 

If such a partition 1 sic 

‘i--z 

1 

presented'& the said board, 

is 

then he oard 

shall conduct a subsequent referendum in the 

same manner as outlined above and future assessments will be made only two-thirds or 
Honorable Truett Latimer, page 2 (~~334) 

more of the producers eligible to participate 

in such referendum and voting therein shall 

vote in the affirmative." (Emphasis ours.) 

We assume that the error is typographical and 

will be corrected before final enactment of the legislation. 

House Bill 174 provides that the Commissioner of 

Agriculture shall upon request of the certified association 

following a vote in the referendum favoring the assessment 

notify all purchasers of the product that on and after a certain date the assessments shall be deducted by the purchaser 

or his agent from the purchase price of such product. The 

assessment SO deducted is to be remitted by the purchaser to 

the Commissioner on or before the 20th day of the month following such deduction. The ComjaXssioner of Agriculture is 

to pay ninety-five per cent (95%)' of the assessments to the 

certified association or organization by the end of the month. 

Inspection of the purchaser's books and records 

by the Commissioner is authorized by the bill. On all sums 

so remitted to the Commissioner he is entitled to deduct 

five per cent (5%) for administration of the act. These 

amounts deducted by the Commissioner are to be paid into the 

State Treasury and are by the act appropriated for the use 

of the Commissioner In carrying out the provisions of the 

act. 

With the exception of the five per cent (5s) noted 

above, the bill does not authorize the deposit of the asaessments in the State Treasury, but providesonly that they 

shall be received by the Commissioner of Agriculture and 

by him remitted to the certified association or organization. 

Under the bill any producer who is dissatisfied 

with the assessment may demand and receive from the treasurer of said assooiation a refund If the demand is made in 

writing within thirty (30) days from the date on which the 

assessment is collected from the producer. 

The proposed statute indicates that the portjon 

of the assessments in excess of the fjve per cent (5%) to 

be deducted by the Commissioner is to be used for the purpose of financing or contributing toward the financing of 
Honorable Truett Latimer, page 3 (WWz584) 

a program of research, education and promotion designed to 

increase the production, consumption and quality of Texas 

grown peanuts. 

Does the exaction authorized by House Bill 174 

constitute a tax? 

A tax is not a voluntar 

but an enforced contribution. 5 4 

payment or donation, 

C.J.S. 32, Taxation,~ 

Sec. 1. Although the peanut producer who is dissatisfied 

with an annual assessment is authorized by House Bill 174 

demand the return of his money, the fact remains that he 

has been made by law to part with it involuntarily In the 

first Instance. Under this bill money may be taken, for 

a time at least, without the consent of as many as onethird (l/3) of the class subject to the exaction. The 

farmer is deprived of the use of his money, but no provision is made to pay him interest. Further, he is put 

to the trouble of having to make written demand for the 

return of his money, and no provision is made as to when 

the money must be returned to him following demand. The 

fact that the farmer's money has been taken without his 

consent and diverted to other uses for a time is not ex- . . . . _. 

to 

plalnea away Dy saying tne conustlon may only be temporary. 

The revenue derived from the exation authorized 

by House Bill 174 does not enter the State Treasury. But 

the case of Friedman v. American Surety Co. of New:=, 

137 Tex. 149, 151 S.W.2d 570 (1941) indicates that circulation through the State Treasury is not a prerequisite of a 

tax. In that case ituas held that the "contributions" required by the Unemployment Act to be made by employers to provide compensation ?or certain employees during involuntary 

unemployment are taxes, and that the statute is a tax statute, 

even though the fund Into which such contributions are made 

never becomes a "State fund," that is, paid into the State 

Treasury, but only a fund in the custody or trust of the 

State Treasurer. In the words of the Court: 

I! The taxes are levied and collected ho; such fund, and not for the State 

in its sovereign capacity. . . .' 

Under House Bill 174 money Is to be collected 

from a certainclass for a particular fund. It is not 
Honorable Truett Latimer, page 4 (W-584) 

colleated for the general use of the State and does not 

come into the State Treasury. It comes within the custody 

of a State officer to be expended for the primary benefit 

of a certain class. In these respects the "assessments" 

provided for in House Bill 174 are like the "contributions" 

held to be a tax in the Friedman case, supra. 

The question of whether a particular charge or 

burden .is a tax depends on its real nature, and if in 1~s natureit is a tax, it makes no difference that it be otherwise labeled in-the statute imposing such burden. 

of Harris v. 

84 C J S 

Shepperd, 156 Tex. 18, 291 S.W.2d 721 

. . . 34 , Taxation, Sec. 1. 

In Texas Jurisprudence a tax is described in the 

following t&ma:: 

"Broadly speaking, 'tax' embraces every 

levy made by the government (or any subdivision thereof) for public uses. But in a narrower sense, the term connotes a charge 

imposed in aid of revenue, . . ." 40 Tex.Jvr. 

11, Taxation, Sec. 2. 

That the exaction of money authorized by House 

Bill 174 from producers of peanuts is a levy made by the 

government for what are ostensibly public uses is selfevident. The exaction is plainly a charge imposed in aid 

of revenue, as is seen from the case of R. Rouw Co. v. 

Texas Citrus Commission, 151 Tex. 182, 237 S.W 2d 231 

n9‘52), which is hereinafter considered in detail. 

If the revenue derived from the charge is not 

for a public,,or governmental'purpose then the Legislature 

has no authority to authorize'the levy, the bill thereby 

becoming unconstitutional on that ground alone. Fourteenth 

Amendment, U.S. Con&.; Tex. Const. Art. VIII, Sec. 3. 

For present purposes only we assume that the exaction is 

for'a "public purpose" within the meaning of the foregoing 

constitutional provisions, 

Under the instant bill producers of peanuts supposedly benefit from the money deducted from the sale of 

their crop, but the public In general is also benefited and, 

hence the benefits are merged. Any payment exacted at the 

instance of the State as a contribution toward maintaining 
Honorable Truett Latimer, page 5 (~~-584) 

governmental functions is a tax rather than an assessment, 

if the special benefits derived by those who pay the charge 

are merged in general benefit. Dickson v. Jefferson Count 

Board of Education, 311 Ky. 781, 225 s.w.26 b’/2* 

State ex rel Fargo v. Wetz, 40 N.D. 299, 168 N.W. 835 

(1918); 5 A.L.R. 731; 51 Am, Jur. 38, Taxation, Set, 4. 

True assessments are levied with reference to 

special benefit which the property is supposed to receive 

from the charge. City of Wichita Falls v. Williams, 119 

Tex. 163, 26 S.W.2d 910 (1930) . But if the exaction is 

levied upon all within the class in proportion to the value 

of the thing taxed, such charge is ordinarily held to be a 

tax and not-an assessment. Wharton County Drainage District 

No. 1 v. Holmes, 149 S.W. 381 (Tex.Civ.App. 1912, error ref.) 

Here the levy is against all within the class, the 

producers of peanuts for commercial purposes. The value derived by the various producers from research, education and 

promotion is practically incapable of estimation. The levy 

is not in proportion to the,benefits to be derived from the 

charge as in the aase of assessments. 

A charge or a fee, if for the purpose of raising 

revenue, is a tax and levied under the taxing power. Harris 

County v. Shepperd, supra. The monies secured by the exaction 

made under House Bill are to be used for research, education and promotion Instead of regulation of the peanut 

industry. As is hereafter shown by the case of H. Rouw Co. 

v. Texas Citrus Commission, supra, an exaction for such purnose is regarded as a revenue measure. Being a revenue 

measure rather than a regulatory measure, it-is B tax. 

Present here are the essential characteristics of 

a tax. Money may be taken without the consent of the person 

paying the exaction. It is taken under the authority of 

legislative act. It is taken for revenue purposes. A State 

official receives and handles the revenue derived from the 

"assessment," using his State office and powers in an 

integral phase of the collection and disbursement of the 

revenue, This official is called upon to certify the agency 

that will conduct the referendum and expend the funds collected from peanut producers. He is empowered to inspect 

the books of those who collect the charge against producers. 

The funds collected are to be spent for the purposes designated In the bill. Clearly, the State lends its authority 
Honorable Truett Latimer, page 6 (WbJ-584) 

and the aura of governmental power to the imposition of this 

burden and the expenditure of the revenue derived from the 

exaction. 

What kind of tax is authorized by House Bill 174? 

In H. Rouw Co. v. Texas Citrus Commission, supra, the 

Texas Supreme Court held that a tax authorized by the Texas 

Citrus Law (Art. 118d, V.T.C.9.) to be imposed bv the Texas 

Citrus Commission on persons, firms, associations and corporations of not exceeding Three Cents (3#) per standard box or 

bag on all aitrus fruit grown in the State and packed or 

placed In containers and marketed or processed and sold during a certain time was an occupation tax. The charge was 

not designated as an oocupation tax in the statute. 

The Texas Citrus Law provided that the tax money 

was ' . . . to be used . . . in eduaation and research for 

the purpose of increasing knowledge with respect to Texas 

citrus fruits and by-products, and ~protecting Texas citrus 

fruits from pests and diseases and of finding new uses for 

Texas.citrus fruits and by-products and of improving the 

quality and y&&l&of~ such fruit and by-products." The test 

laid down by the Court and its application to the facts of 

that ease were as follows: 

There has been much written upon the 

dlffere&& between a license tax, and an occupation tax. This court, in very clear and compelling la&age, laid down the rule for determining 

the distinction in the case of Hurt v. Cooper, 130 

Tex. 433, 110 S.W.2d 899, (1) as follows: 'It is 

sometfmee difficult to determine whether a given 

atatute should be classed a8 a regulatory measure 

6r ‘a tax measure. The principle of distinction 

generally reoognized is that when; from"a'donsideration of the statute as a.whole, the primary purpose 

of the fees ~provided therein ~is~the'ralsing'of revenue, 

then aii&'feeKare In fadt ocduijation taxes, and 

;;;zdregardless of the name by which they are deslg- 

. On the other hand, if its primary purpose 

appears to be that of regulation, then the fees 

levlddc~ are license fees and not taxes. Hoefling 

v. Clt~ of San Antonio, 85 Tex. 228, 20 S.W. 85, 

16 '&.L..Ri.' 608;. Brown v. City of Qalveston, 97 Tex. 1, 

75 S.W. 488; Cit,;r-yof. .Fort Worth v. Gulf Refining Co., 
Honorable Truett Latimer, page '7 (~~-584) 

125 Tex. 512, a3 S.W.2d 610; Royal1 v. Virginia, 

116 U.S. 572, 577; 6 S.Ct. 510. 29 L. Rd. 735: 

Dayton-Goose Creek Ry. Co. v. United States, D. C., 

287 F. 728; Te~xas co, v. Brown, D, c., 266 r. 

577, 37 C.J. p. 169, & 6.' 

"Applying the above rule tc the Act under 

consideration we find the taz levied to oe an 

occupation tax, A reading of the Act clearly 

demonstrates that its primary purpose is to 

raise revenue, and not a regulation of the 

citrus fruit industry.under the police power. 

Laudable as the purpose of the Act may be; 

viz.: to advertise and enlarge the markets 

for Texas citrus fruit and its by-products, 

and for research beneficial to the citrus fruit 

Industry, the primary purpose being the ralsing of revenues In excess of the amount needed 

for regulation of the industry to carry out 

the above provisions, under the well established 

rules of law, the tax levied must of necessity 

be classed as an occupation tax. . . ." 

From the Rouw case, au ra it is seen that House 

Bill 174 is an occupation tax -5 ra her than a license tax 

because it authorizes the levy of a tax on growers for the 

primary purpose of raising revenue to stimulate the sale 

of peanuts instead of regulating the industry. 

There can be no doubt that the tax provided by the 

bill is an occupation tax by reason of being a tax on the 

grower or aotivity of commercially producing peanuts rather 

than a property or sales tax. Like the tax in the Rouw case, 

supra, it is levied on persons based on certain occupational 

activity ensaged in by them. The bill purports in its title 

to provide . . ,., that producers may levy upon themselves 

assessments . . (Rnphasis ours.) 

again in Sections 4, 7 and 21 

This language appears 

Nowhere in the bill Is it 

provided that the “assessmenth is on peanuts; that is, the 

property. Nowhere in the bill is the "assessment" called 

a sales tax. 

The tax is not an ad valorem tax in that It Is not 

based on the value of the crop, but on the quantity sold. 

The bill provides that the "assessment" shall be 

levied on the commercial producer and fixes the rate at 

One Dollar ($1) per net ton of farmer's stock peanuts 
Honorable Truett Latimer, page 8 (Ww-584) 

marketed. The effect of the bill is to place a tax on the 

commercial production of peanuts, *the sale of the crop 

being a necessary incident to.duch commercial production. 

Louisiana State Department of Agriculture v. Sibille, 207 

La. 877, 22 So. 2d 202 (1945). Consequently, the levy of 

an occupation tax is authorized by the bill. 

Section, 3 of Article VIII of the Constitution of 

Texas provides in part as follows: 

"Sec. 3. One-fourth of the revenue 

derived from the State occupation taxes . . . 

shall be set apart annually for the benefit 

of the public free schools; . . ." 

House Bill 174 is, in our opinion, repugnant to 

Section 3 of Article VII of the Texas Constitution by reason of not setting apart annually one-fourth (+) of the 

revenue derived from the occupation tax for the benefit of 

the public free schools of Texas. All of the revenue derived from this occupation tax, except five per cent (5%) 

which goes to the Commissioner of Agriculture, is by House 

Bill 174 diverted to the certified association in violation 

of the Texas Constitution. 

Section 1 of Article VIII of the Constitution ,or’ 

Texas provides In part as follows: 

” 

. . . persons engaged in mechanical and 

agricultural pursuits shall never be required 

to pay an occupation tax; . . .' 

The Constitution of the State of Louisiana similarly forbids the levying of license taxes on persons 

engaged in agricultural pursuits. La. Const. Art. X, Sec. 

8. The Supreme Court of that State in Louisiana State Department of Agriculture v. Sibille, supra, struck down the 

Louisiana statute imposing a tax on all sweet potatoes 

shipped in Louisiana in so far as the tax violated the 

aforesaid constitutional provision by imposing a tax on 

the farmer shipping or carrying his crop to market. The 

Court stated: 

"In the case of State v. Hayes, 143 La. 

39, 78 So. 143, 144, which Involved a provision of the 1913 Constitution identical with 

that above quoted, it was stated: 
Honorable Truett Latimer, page 9 (WW-584) 

'It has been dgcided~by'this court that 

a farmer who goes from place to place selling 

at retail the products of his farm is only 

pursuing his farming business and is not a 

peddler or hawker. He is engaged in an agricultural pursuit, which is, by the terms of 

article 229 of the Constitution, exempt from 

any license tax. 

86, 24 So. 788.1 

Roy v. Schuff, 51 La. Ann. 

"The cited case of Roy v. &huff concerned 

Article 206 of the Constitution of.1879 which 

exempted all persons engaged in agricultural 

pursuits from the payment of a license tax. In 

refusing to compel defendant to pay a municipal 

license Imposed on peddlers the court said 

L5 1 La. Ann. 86, 24 So., 78$: 

I* * * He was only carrying out the purpose 

he had In view in making the crop,--to sell it 

at retail or wholesale, as deemed most advantageous to him as a farmer. The selling was an 

incident of farming, it may be said. It was a 

part of his pursuit as a farmer, and he thereby 

in no way became a peddler or a merchant. 'The 

exemption covers both the farmer and the sale 

by the farmer of that which his industry ~produces. . . .I" 

The rationale of the above-cited Louisiana case is 

persuasive on the issue now before us. 

It is the farmer that Is required to pay the tax 

although it is not due until he sells his crop. How else 

than by sale does the farmer utilize his agricultural pursuits? He cannot live on peanuts. The sale of the crop 

is a vital and necessary element of and incident to the 

occupation of farming. To hold that the producer of peanuts is not engaged in agricultural pursuits when he harvests 

the fruits of his labors from the sale of his crop would be 

wholly unrealistic. 

Inasmuch as the charge authorized by House Bill 174 

is plainly an occupation tax and one which is to be levied 

on persons engaged in agricultural pursuits; namely, the producer of peanuts at the time he sells his crop, the proposed 

legislation violates Section 1 of Article VIII of the Texas 

Constitution. 
. 

Honorable Truett Latimer, page 10 (W-584) 

In H. Rouw Co. v. Texas Citrus Commission, supra, 

it was held t,hat Section 1 of Article VIII of the Texas 

Constitution was not contravened by a statute requiring 

the vavment or ?. tax on citrus fruft by all whn q%c:lr or wlace 

in containers and market or process and :ell citrus fruits, 

the opirlion of the Coui*L; on reheariog I'~~cL~II~, in part, a0 

follows: 

"In Its motion for rehearing appellee, for 

the first time, contends that even if the tax 

be held to be an occupation tax, it is valid 

within that part of Sec. 1 of Art. VIII of the 

State Constitution, which reads as follows: 

I* * * except that persons engaged in mechanical and agricultural pursuits shall never be 

required to pay an occupation tax; * * *.I 

The present tax is not a tax levied upon persons engaged in 'agricultural pursuits' within 

the meaning of the above quoted phrase from the 

Constitution. As Is said in the amicus curiae 

brief supporting appellee's position 'the tax 

is levied upon the activity of packing or placing in containers and marketing or processing 

and selling citrus fruit grown in Texas. 

. . . The tax is exacted of any person, engaged 

in any vocation whatever, who performs these 

acts, whether he be commercial packer, gift 

fruit shipper, canner of citrus or bottler of 

lemon juice, processor of frozen orange juices, 

marmalade manufacturer, or whatever."' 

In contradistinction to the Texas Citrus Law under 

consideration in the Rouw case, supra, the instant bill 

taxes only "persons engaged in the production of peanuts 

in the State of Texas". It does not tax all who engage 

in the activity of selling peanuts, but only the producer 

who sells his own peanuts. The tax is not paid until the 

time of sale, but it is paid by the producer then and by 

no other person. It does not tax "any person engaged in 

any vocation whatever who performs the acts", but only the 

farmer, and thereby, In our opinion, places an occupation 

tax on persons engaged in "agricultural pursuits" within 

the purview of the constitutional provision prohibiting 

such taxes. 

We examine now the effect which the invalidity of 

the tax provided by House Bill 174 will have on the remainder of the bill. Consideration will be given by the 
: - 

<. 

Honorable Truett Latlmer, page 11 (~~-584) 

courts to a legislative declaration to the effect that an 

adjudication of the invalidity of a portion of the act should 

not affect any other portion. 39 Tex.Jur, 24, Statutes,Sec. 

9. House Bill 174 contains such a declaration in its 

"severability clause". 

Nevertheless, when the invalid portions of an act 

are an integral and necessary part of the act, so as to 

preclude a separation leaving a complete, workable and otherwise valid law capable of being executed in accordance with 

legislative Intent the entire act must fall. 

and Fuel Co. v. State, 121 Tex. 138, 47 S.W. 2d -=P 2 5 1932); 

Taylor v. Taylor Bedding Mfg. Co., 245 S.W. 2d 215 (Tex.Civ. 

APP. 1948 error ref g v. State, 267 S.W. 

2d 423 (T~xr%%%~~. 1954); 39 &e:?&. 22, Statutes, Sec. 

9. 

Without the portion of the act authorizing the levy 

of an "assessment" on producers of peanuts, the main purpose 

of House Bill 174 is defeated, it being apparent that the 

design of the bill is to raise revenue to finance promotion 

of the sale of Texas peanuts. The provisions for "assessment" 

are so intimately connected with the remainder of the bill 

that they are inseparable. The portion of the bill left 

after taking away the invalid part is plainly incomplete and 

unworkable. Here the invalidity of a part permeates the 

whole, and we must advise you that the entire bill would follow the fate of the unconstitutional provisions authorizing 

the levy of a tax. 

As the question of constitutionality posed by your 

letter is resolved on the above grounds, we deem it unnecessary to consider others. Accordingly, we base our opinion 

solely on the grounds stated and do not pass on any constitutional issues other than those expressly considered 

herein. 

SUMMARY 

House Bill 174 is unconstitutional 

by reason of (1) authorizing the 

levying of an occupation tax 

without setting apart annually onefourth (t) of the revenue derived 
. . 

* . 

Honorable Truett Latimer, page 12 (ww-584) 

from such tax for the benefit of 

the public free schools of Texas 

in violation of Section 3 of Article 

VII of the Texas Constitution and 

(2) authorizing the levying of an 

occupation tax on persons engaged in 

agricultural pursuits, in violation 

of Section 1 of Article VII of the 

Texas Constitution. 

Very truly yours, 

WILL WILSON 

Attorney General of Texas 

BY 

J49vybu 

Henry . Braswell 

Assistant 

HGB:mg 

APPROVED: 

OPINION COMMITTEE 

Geo. P. Blackburn, Chairman 

Riley Eugene Fletcher 

Charles D. Cabaniss 

William R. Hemphill 

Tom I. McFarling 

REVIEWED FOR THE ATTORNEY GENERAL 

By: W. V. Geppert