. 1 

TEEAITORNEY GENERAL 

OF-TEXAS 

GELRALDC. MANN 

Au~T~N~I.'~~xAR 

XIXXX 

ATTORNKY G*:SERAIHonorable George H. Sheppard 

Comptroller of Public Accounts 

Austin, Texas 

Dear Sir: 

i;i.nion No. O-3526 

: meaning of the term "book 

value" in Article 88la-53, 

V. A. C. S. 

This is in reply to your inquiry as to how the term %ook value" 

in Article 881a-53, Vernon's Annotated Revised Civil Statutes of 

Texas, should be construed in the rendering of property, and the 

fixing of tax values thereon, of building and loan associations. 

Said Article 88la-53 is a part of a comprehensive act dealing 

with building and loan associations, and said article reads as 

follows: 

"Every building and loan association doing business in this 

state shall, in the city or town in which it is located to 

the tax assossor at the time fixed by law and in the following manner: (a) The value or its office furniture and 

fixtures therein; (b) the value of all real estate in such 

city to which such association holds title; (c) the value 

of its assets therein in excess of an amount representing 

the total of (1) accounts payable and notes payable owing 

by such association; (2) the book value of the shares outstanding and (3) the assessed value of the furniture and 

fixtures and real estate held by such association and rendered by it for taxation." 

An examination of the dictionaries and the cases involving the 

term "book value" shows that it has a well understood meaning. 

Webster's New International Dictionary, 2nd Ed. Unabridged, 

gives a definition of "book value" as follows: 

"The value of anything as shown by the books of account of 

the business owning it; spedif., ofstock, the value as 

indicated by the excess of assets over liabilities." 
Hon. Geo. H. Sheppard, Page 2 O-3526 

In 11 Corpus Juris Secundum 521 it defines *book value" as 

follows: 

" . ..the value ascertained by deducting from the assets, 

carried on the books, the liabilities and other matters 

required to be deducted; the value as it appears from the 

books; the value as predicted on the market value of the 

assets of the company after deducting its liabilities, the 

value shown by the audit of the business of the company up 

to a date specified; and specifically in determining the 

value of a share of stock upon withdrawal from an association, it has been defined as meaning the proportionate 

amount of the net assets, 

the corporation, 

including profits or losses, of 

applied to a share of its stock...." 

In the case of Lane v. Barnard, (N. Y. Sup. CT.) 173 N. Y. S. 

714, the court said: 

" . ..The book value of stock ordinarily means the value 

thereof as shown by the assets and liabilities as carried 

on the books of the company,...n 

In the case of Gurley v. %oodbuty, 

the court said: 

177 N, 0. 70, 97 S.E. 754, 

"The meaning of "book value of stock" is well understood 

and its ascertained by deductingfrom the assets, carried 

on the books the liabilities and other matters required to 

be deducted fPeople v, 

Cabble v. 

Coleman, 107 N.Y. 541, 14 N.E. 431; 

Gabble, 111 App. Div. 426, 97 N.Y. Supp. 773...", 

In the case of Elhard v. Rott, 36 N.D. 221, 162 N.sf. 302, the 

court said: 

" . ..It means value as predicated on the face value of the 

assets of the corporation after deducting its liabilities. 

Steeg v. Leopold Bldg. & Imp. Co., 126 La. 101, 52 South, 

232-235; CabSle V. Cabble, 111 App. Div. 426, 97 N. Y. 

Supp. 773-775; 1 idords and Pharses (Second Series) 479. 

The assets, of course, must appear upon the books of the 

company, and must be able to be estimated therefore, but 

it does not follow that the computation must have been made 

on such books and appear on the ledger. The book value of 

stock is determined by the face value of the assets as 

they appear upon the books..." 

In the case of People v. Coleman, 107 N. Y. 541, 14 N. ii. 431, 

the court said: 

"One mode of arriving at the actual value of the capital 

stoc!c of a corporation is to take what is sometimes called 

the "book valuen , which is reached by estimating all the 
Hon. Geo. H. Sheppard, Page 3 O-3526 

assets as they appear upon the corporate books, and deducting all the liabilities and other matters required to be 

deducted by law, and taking the balance as ths measure of 

value for assessment. This seems to be a proper method for 

arriving at the value of the capitaL stock in the case of 

a corporation which is about to discontinue business, wind 

up its affairs, 

holders;...s 

and distributo its assets among its shareThe cases cited and quoted from above involved ordinary corporations, and not building and loan associations, but we see no 

reason why the same definitions of "book value" would not apply 

to building and loan associations. Said organizations are defined in Article 8dla-1, Vernon's Annotated Revised Civil Statutes 

of Texas, as follows: 

"A buildinS and loan association, as contemplated by this 

$7" iArts. 88la-1 to 8&a-68; P. CT Arts. 1136a-1 to 1136a1s any dssociation or corporation heretofore or hereafter formed created or organized which is chartered under 

any building'and loan lack, and/or is principally in the 

business of assistins its members to buy, improve or build 

homes , or to remove the inculmbrances therefrom, and .which 

accumulates the fund s thus loaned through t!le issuance or 

sale of its oven sh,res.ff 

tie have found one case construin;; the term "book value" with reference to building, and lo:n associationstock, and that ,isthe 

case of Thirteenth ?fard %ilding & Loan Association v. Ljeissberg, 

115 N. J. %qo 467, 170 Atl. 662, 98 A. L. R. 134, in which the 

court said: 

"The withdrasial value should not be confused irith the "book 

value", The 'Wthdr~~~al value" is the :imount ictu~~lly paid, 

in addition to such proportion of the profits, or such rate 

of interest, as may he Prescribed by statute or by the bylavfs. The f*book value" is the ;~roportionate amount of the 

net assets, including profits or losses, of the association, 

applied to a share of its stock, t&king into consideration 

the amount rictually paid in, and the length of time the 

association has had the use of the ;aoney...* 

There are no Texas a?pell:lte court cases, as far as :ie can find, 

approving a definition-1 of the term "book value." The term is 

mentioned in the cnse of iiineinzer v. Day, (Tex. Civ. App.) 

58 S. >i;. (2d) S76, but no definition is adopted by the a;?pellate 

court. Ye see no reason why the Texas courts should not be 

governed by the SLi;te weli ~;nt,, --stood meaning of the term "book 

value" th;:Lt the courts of other states have alnost unanimously 

adopted. 
. . - 

Hon. Geo. II. Sheppard, Page 4 O-3526 

Our ans;qer to your inquiry is that the term "book value* in 

Article Ma-53, V. A. C. S., means the value of the shares 

outstanding as shown by tho assets and liabilities as carried 

on the books of the building and loan association. 

APPROVEU JIJNi3 7, 1941 

Yours very truly 

ATTUWEY GENERAL OF TEXAS 

FIHST ASSISTANT BY 

ATTOWJiY GENERAL Cecil C. Xotsch 

Assistant