**OFFICE OF**  **THE ATTORNEY**  **GENERAL OF**  **TEXAS AUSTIN** 

February 17, 1939 1

Sonorable Ceo. II.Sheppard Comptroller of Public Accounts Austin, Texas

Dear Sir:



### Under date of Jama Cfflcewhetheror not an att subjeiot

to the oooupationor 7061,RavisedCivil Statutes, of a collscting theirlegalpxao It appears froa
or commercial name and that xeoeipts tax b 

### r In connsetion with .trom suoh .prautiae. es8 0r a colleatiag conducted under a trade to pay said gross re attorneys.
1 Statutes, rsade as follows:

ny, oorporation or associanaglng or controlling any rclal agenap or oommercial re**tober** of each pear, a report to the r oath of the individual or oi the urer, or superintendent of such company, corporation or association, showing **from bwinesa**  **done** within this State the gross amount reasived in the payment of charges for collections made and buslueas done and reports IBad during the quarter n8X% preceding. Such individuals, companies, corporatio~n8 or amiociations at the time of making said report shall pay to the frea

### SUr8r of’this State en OoCUpatfOn tax for the QUart8S beginning on said date equal to one-half of on8 per Cent of said gross reoeipts as shown by said report."Bon. Gee. H. Sheppara, February 

### 1'7, 1959, Page 8

/- _---\

Your inquiry resolves it&elf into this: If 

### the busi- ,jL88 

### of operating, owning, managing or aontrolling a collecting ,,I agency or a commercial agency within this Stat8 is a mere incident of tte profession of law, this gross receipts tax will not lie against the !/ the attorneys involved in your letter. If, on the other hand operation in T8xaS of a collecting or commercial agenog is an.,

I independent business rather than a neoeasary incident to the practice of law, then we must hold that the attorneys in question are liable for this gross receipts or occupation tax despite their professional franchise to practioe law.

\ Viethink the line of demarcation between the profession of law and the business of oonducting a collecting or oOmmereia1 agency is claarly drawn by th8 aUti$loritiss, 

### at.113 we are constrained to hold that the attorneys involved in the instant ease must pay the gross receipts tax levied **by** 

### kW.ole 7061, Revised Civil Statutes. \--, _<.- ..-.-. A vcolleotian agenayv waclderided by the Court in EeCarthy v. Xughes. 22 A. 924, a8 

### followsr

*A *colleatlon agenap*, uhioh is **derined** as a concern which aolleots all kinds oi olaims for others and to whom it renders BCeotUitS,guarantee8 t0 UBB it8 b8St 8ndeavorS 

### to collectth8 claims and t0 seleot a oompetent and reliable attorney when Suit is DeaeSsary, for whose negligence, dishoneety, or unauthorized aote it will save the creditor haxmileSa.*

A *oormuetrclal

agsncy* was defined by the aourt in oaSe of Zugalla v. International Eeroanti1.e Agenoy, 14 Fed, 927, 950, as iollows~

*A 'oommercial agency' is a person, firm, or corporation engaged in the bu8ineas o? aollecting in- ' formation as to the financial etanding, ability, and credit oi persons engaged in business, and reporting the same to subsoribers or oustomere applying end paying therefor."
The term wcomeroip;L agency* is again defined a8 follows:
*Ccmmeruial agencies are agenaiea whose businees it is to collect information as to the Circumstan088, means, and pecuniary ebilfty of merohants and dealers throughout th8 oountry, and **k88p** aCoount.8theraofV SO**Floll.** Gee. H. Sheppard, February 17, 1939, %ge 3

that the subscriber to the agenoy, when applied to by a cuatoxer to sell goods to 

### hla on 

### credit,**by** referring to the a-;enayor to the lists which it publishes, zay aecetitain :he standing,and 

### responslbilsigi;:, :h;ac;toser to W~IO.Z it is pro,posedto **extend** Cole E;SurnhainCo. v. Avery, 8s 13.Y. 31, 34; 38 &'Rep. 329; "Jenesee**Liar. &nk**  **v. Xichlgan**  **Sarge Co.,**  **17 S.~..C.**  790, 793, 52 Kich. 164; 40 C. J. **036; State**  **vs. Xorgnn,**  **.48 :I.**  **k. 314.** 
The praatice of las,~as oo~nronlykuovm and understood, really needs no aerinltioa, but ln view of 

### the oonteatlon of t!?eattorneys., in the instant cam that praatloe of law oomprehehdti a 

### oomercial agency, we quote the following definition frov~the court in the case of State Bar 0r Caliiornla 

### v. SuperiorCourt **in and**  **Sor Los**  **Angeles, County,**  **278 P.**  **432, 437:** 

"The 'praotioe~ot 

### law* fki the doingor perloanlag semvioss~In

a oourtof justioe,in any 8aamer**depa&lgg** 

### therein,throu&.mutito veulous et-s, aad in oario+y to the adopted 

### role8 0r 

### pr000dur0. But in a sqpr sense it inoludsslegal advloe and oouuael,and Ma ~~ preparationof Ssgnl instrumenk and 

### oontraots**by** 

### whloh l&gal rights are seamed, althozah such matter may or, may 

### hot be depending 

### a oourLm ihea ease OS **Kendriokrrhitite,** 

### 1~020.14&$&he 8u~xama Court OS 

### aabama olearlydirferentiatesthe praotloeor lm rrop the operationof a oollsotingor oommerulalagcmoy. Thlr ease 

## turns upon a oonetruotion OS ah 

### aot prohibiting anyone 

### but a liaensedattoraep from undertaking for another the 

### ooSl.e&ionOS 

### olalmaout of court,rithrefsrenoeto the 

### oonstltutional pnnislon xq~uiriageach 

### law to oontsln but 

### one aubfeotwhloh shallbe olear4 expressedin its title. The oourt held 

### the act to be violative'of such oonatltutional 

### provisionin the, following slgaifioant language:

*TO practios law ia to sxeroise the aalllng or profession or the law, usually for the purpoee or gaining a livelihood, or at least toy gain. the buSin8SS of collectinfl claim bs
w OS oourt is not to uractice law. Thare ie no l&oreneoessary relation between the tvo thaa there la 'between the Draotioe of law and seoses of other 

### things whioh lawyers. in oomon wdth other folks. mst U I order to be able to 

### follrm theirdifferentvow&m~ ?he actunder consideration, seotlon (d) involvea a radical change of meaning in the oolloca&oa of m&M**,~Bon. Geo.**  

### H. Sheppard,Bebmary 17, 1939, Page 4

Apra4ticelaw." 

### To oolleotclaims out of court,that is, without recoume to legal remdies, and to practice In-v: connote very different things to ti:elay aind, and re have stated the steps neaeseary to the mking of a licensed lawyer, in 

### order to ehovc how broad is the teohnicel difference between the two. The 

### opinion in Xx parteCowert, supre,presentsa closeanalogy. The laaguageof that ease (page100 (9 So. 225) we 

### thinkslay

be fairlyparsphrasedas follows: 90 man to whoa is presenteda propositionto amenda statute declaringtnat regularlylicensedattorney8alonehave authorityto practicelaw,would for a moment cronaeive the propositionto involvean inhibitionagainstthe oolleotion

of olaims by 

### demand or negotiation out of courtby anyodsbut a lloeneedattorney.*

we have no ditfloultyin anmreriw your questloon in the 

### s&native, andyou n&y aocordlngly proceed to oolleotfms the sttorneysin questionthe gross rsaeiptetax leviedby hrtlole- :' j 1 ,~7061, 

### 6baeed Civil Statutes, 1925, 

### by virtue or the ownenahlp, 

### sperstlonor managemaatby tha of a soollecting agemy+ or ,. ~oomeroial 

### agency*within the lpeaning of aald statufs.
Yours very truly