Court Opinion

ID: 4139255
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:45:32.575452+00
Date Added: 2024-06-11T14:21:49.016876
License: Public Domain

OFFICE 0F THE A-ITORNE;Y GENERAL OF TEXAS
                  ‘_
                            AUSTIN
=ROVER
     SELLERS
~,,ommGn~ElllL

   Eonoreblc Gecrga II, .%oFpaerd
   Cunptroller or Zublic &cowts
   ?slstln, T0xw!
   mar Fir:      ’         Gplnion X0. C-7Cg5
                 .   .

                                                      ,
                                                                       ..   &_

Honoroblo Goorga 8. Sheppard, ‘Faga 2
          7          i-             ._     .     ’

2pchaEga Cozm%&on ordersd the iolloning:                       I

   . 1. That Anarican affect a gonplata aamranco or
aontrdl OS Texas ~t,ilitlas    and its subaldLmlas, -“in-
aladLn& the tarr&iatlon of all -intsrlockinp. otrfcorhslps
end direatOr5hiFa bst\?oen Tax38 %lliti6s       (and ‘its SQ~-
sIdfariss)    end .tiarfcnn and other ooia.m.?iao in the Xeo-
trio Bolt4 and Share eyetwii an4 any othar relationships,              ,
contracts or other arnn&azasnta which wg aid in tha
retention bf controPling .inflaanca. n
           ‘.   .
      2, ,Th&t knarloan I+I Elootrio be diesoloed?             ’
        Thii trmsrw       of the otooki of Toxm Power and ~axao
Bleatrio to Tame ~tllltiae            tcok pleas outside cf the
State of Texas, aad uaa effected            by an(iorasaa?lt and de-
livery of tha oartifiostae,           in aocordnnoo with the ~pro-
tieion     of the Unlfom Btocl: TrmtsPer Act (aticlos
1358-l to 13+26,           V.,A.O.S. ).   The ~~urchaoe by Texne
Utilitlae      o,c ,the stook of iM1l.a~ J’oww R LQht also took
plaoe o&t&la of. the-.‘$tste of Terge.             ”
                   ::.‘.i             ..:    :*:      “~,.
   ,$‘.IYourdok, the” follo$ng       quaa~tioue;
     1; Are allp of theaa traa&atio&            eubjeat   to the
Toxaa Stock Tr:mefer Tax?
     2. ?If +ihoan&r ‘to‘:the .ab& ~$&.&I      ii ~nhoir,’”
than w$ll the :tax~‘~badome.
                          duo when tho trmofcr    ii; mda
upon ths books of the ~orpuratiions in Tasz?sT
     seot1lxl 1 oi the Stock &3nsfsr           %xX Act ~rcvlbos
in part as follow’:
            V?hare is hereby i~q?osod owi lauisd a tax
      a8 heraimftsr     proPi     on 611 sales, egreawnts
     .tu sell, or mmoran%a of 00188, and 011 Bolivari6s
      or trmsfsrs     of shams, or cer.ti:lcateo   of tttmk,
      or c6rtiflcatos    for r&hta to stoc!:, or cartifi-
       oatea of BeposIt re~renaotir~ nn lntorsst In or,
      .rsDrsssntj.ns cart~fic3tos   Fide tW.ablG liUd8r ti1i.G
       Eaotlon, idmy Ocmatia or f&aiC,a nssociation,
       oorqa ny, or oorpora ti on, 02' OlWtifiC2tQD Of
       Int0ract in any busLnsss cwluoted by P truotao
                                                 .

                       .
                                   . -
      : or trustees ni3ae oftor the effective  4&e
        hereof, wh%ther =d% UFolI.or shown by the
        hike of the aPBooiRtlon, company, oorpora-
        tton, or trustoo,   or by an ass&m%nt in blank                       .

       ‘or’.by any delivery of any papsra or ograarssnt
        or umor8ndurj or other avid%nca of mle or
        tra@n~    or ordar for or wr%a:m,oontto bcy.. i.:;
                                                        .y
        One’sxs3ptfon irom the t&r is itnte,a   in this    ianguay:

              *Iij is not Intended by this Artiole to in,?oae
       8 tBx . . , ln fes3ect to shbras or CertittaWas
       oi stock, or t!e%lT'l06toe~ of rights to stocks, or
       arrtifioat%%’
     . of tha absrsctezof daponit reprasontinr, certifiootss
                            taxed by this Artials,     Zn any
       doadstic essoaiation,      oo;lps*,. or oorporeticn,    it
      -oalther ths sels, nor tho order for, nor agrae-
       uent to buy, nor the agraanant to sell, mr the
       mmoraiua or aele, nor the dalivary is mad%in
     . thiis State aird uhan no act necessary to effect                ..:
       the sale dr transfm lo done we this Stats,     ,I
                                                            , .I   ‘..
       Under J&&a. 13j4.,'8, 8. l&i,’ the etcik of any
oorporation craatad unCcr ths &anaml law ,of thle Ststa
cot&l ba transferred oaly OI\tha books of tha cw?~ora-
t&on. Under such .otste or the law, tkls 8egartmnt held
,in Gpioioo Bo. Oi3713 that tbo tax lavlod by Article
7&$%x is m excise tm upon the privllsgo            ,of traaefarr.lng
ahoras or certifiaiitjs       of otcck by sale or: glft,.l’%nd that
thou@ the tax aaasure oagnot hava -bny oxtre-tarrltorlal
oparation, ;.tha tsx willi wcrua and .b%cou%-.payabls. if any
one of the ,tollov;@       tmnsactiom      ox ov%nts OCCWEElth-
 In tht Stat0 of Texaor
      (1) An axooutory conimict or egxaeritent to sell
chores or fksrtii”iO~~tee Oi dxdL,‘ vhother oral or avidencad
$ogW:l    or mnoranduz ot %+n raquirad by Section 1 of
        .
          (2)   An   axo&,itcd codxsct'or   scle of ahsron or
oartificotoe of otock, 14:hat5.0roral or evidaacrad by
the “bill or iwaor:~;?du~ of ~31%” roquuLraP by Section           f
of’ the Act.
eto       (3)   A delivery   oi share% or csrfiflOstos     Of stock,
      .
    ,i (4) 4 transfer of nix&     or oertifio?\tes of stick
.apn the.ofticiol   books and records of thg corporation,
     .Th%s opinion    stats8    furth3rr
           I, , , Ir each wd all of the texabiii trans-
     aatioos anuasmted in the .stntuto e:?d obovo,
     transpire beyond tto tsrrltoriaL     Units oi Tsxss,
     rxcapt the tramfar of suoh sbnras or certificates            '
     upm ‘th% oartificeta   books, trjnsi'or IeQars or
     other. propar official  racords of tha ‘ibxns Oulr
     Bulphur Coqmy ; . . . and this latter set or
     traanaltion is aaussd and raipired,     under tha
     rimltatory corlstltutional and statutory proviokms
     tibovs discuooad, to brr dona and mcGrEed in Texas,
     then such tranefar fill. be subjaat; to the excioa
     stanp ta% i% Quwtioa. , . ."
       Then, fn 1943, the tagisl~tura    or'Taxae arvsqtad,the
Uclrora 9took~.'Z~anarar Aat and axpremly repsaled @iid..: ,,,:
iitilcla 1334. Esc,t;lo~ ,l a) then Fnifora Trcmfa+- Aot ,, .xr”k’:I’
                                                                   3~
 provldoe:                       .m :              ,
             .”
         .' *Tit10 bti a cirtifiwto and to ths 6haras
      repraeeatod thereby iah be trmaferrad onlyr                             .

      doraed elthar, i-9 blgnk.or to a~opeoifiod persbn~ ;~'.?'z:'::
      bp the person appaarfng,,by tho 6ertificate:to    bo I         ,~
      -the owner of .tho .ohsr:o reprrerimtod thereby; or
            Y(b) 3i Bolivory of t&x osrtificdo and a
       separate documnt cmtrtir.irz n wittsn    ansign-
       acnt of the ocrtificsto  cr a pmor or attornoy   -~.
       to sell, actd$o, or trmsfsr   tho 5er.m or the
      'eharea rsprasoniod thtiraby, t&w? by the parsor!
       appom3.w by the certl0,cot.c  to bo the o-mar of
       the shams mpraocntod thomby. a . .
              *The proviolons  of thin odction shell be
      applicnblo, althourJ     th!, chertor or orticlas   oi'
      lncorporstion or coda OS rozulations       or by-laws
      of the cornorotlon Icam&, the certificnt3         and               .

      the cartificsto   itoelf provide that tho ohm25
      reprooented t!mraby ahull b3 tzmaicrzblo only
      En the book of the cor;omtion        or shall 50 roEif+
      torad by o ro~lr;trm or tmmfezrod         by a troncSor
      @ant."
                             ,
                  l
     Emorabla ho?@        E!. Shappard, I%z,e 5

           The peoaaee of this ect tias had no.affeot   upon ths                F
     operation md wplication    PI, the taxing sot.    This $8
     to my, nlrere tha endoroment and deliviry      or the oertl-
     ficatos takea pleas ln another jurisdlotion,     ouch trans-
     rotions atill ara not taxable undar Article 7047~~.
          1% pans now to a aonsidoratlon          of your. asomd.
     Qaeetion.                                               i .
                                                               ‘_
            liars.York has adoptad the Unffom stock Tracnrar
     Aat, AAd .has a, lXOOk ‘   ~?rausr^er‘ihX Act upon orllich that
     of %exoe ~6 mdolod.,         In reopeota material here, the           :
     ti,xlng act is Ide.?tlcal with artiola 704751. Tha
     rmpertmant of Taxation and .Mnanco of Kaw York on
     Suly 1, 1942, lssuad a bulletin         called nInforuation
     Iislatlng to tha 3t.xk Transfer Tax Law” which oq&ii.ne
     the r0ii0the:           : .;~
              :.” wA’Artiole
                      :_‘.. l,?,.
                             .:     Exauplat3 of taxable   tranoaotions,
‘.

                 %, * Th6' tmnsfor or stock on the booka of
          .tho. oorporation within the St3t9 ro.qwdlaeo of                 .:
          ~%hare tha othdr aots in comectlon with tho ,sola                j
           or traosrar or. the atoo% r:era dam,*

            4 oomplathd trsncrar of sto’c:: may lnvolva -oavaral .’
      raparata trnncoctio:;s.     It is not nscossary that ell ouch
      transaotiono tske place within tha tc%inS jurladiotion,
      but tha tax attaches ii any oaa OF nora takes plscal.therc-
      in. .It .has bean mid that if wart          id II transfer    oft I~
      etock which is nscasnary to vast in?&         tronaferae : cc;)-, ~.J
      t\leta omers&      or the stock takas place cilthir? ;&!I$
       urisdiction,    a stock trazrfer tax is PZIyCbla. !
      a trmsfer     on tha booko of the corporatim       tnkcn ~laoi
      iA tha taxi% jurisdiotion       a stG& tramPer tOx Is pay-
      able (C.hz1ot.y and ilOLeAA,sFnha l!reasfsr-Of Stock, 2ocond
      sdition, pace $46, sac. 362.)       for such tramfor on tha
     ‘books does invest th0 tramfarce w:th rfl;hts, pov:ero and
      privllagao dr o-marshi~     of tha stock which ha Qoos ?1ot
      hava by virtue of ~endoreatont and dolivsry Gf tha Certi-
      ticate Al6Af3.                              *    _

          To answer   your qu~stidns'   c~togorlcally,  none of tha
     tlYmsectiona set forth in tha rttstcmnt of l%Ctu Is sub-
     jaot to the trxifXar tox for all of thm occurrod with-
     Gut the tarrltorlol   jurls3iotion    of Tdxics, but nhen tha
     trmsrar is c&de or ghoxh upon thl books of Dhe ccr?ora-
     tions in this fX.:cto, such 1s a tur.abl.o avent aad tho t?x                   1’
     ant bo paid.            ,
                                             .
 iitnoreble George If. Sheppard, Pa&e 6             _-

        ft is contandedby oounsel iOr i\&?lc~n end Elsotric
  &hat 'irO3 a tex StSAdFOInt, &BriOSA &%nier& Li&t CO+
  BOA. by mrely     exch2ngl~ the aoc~ities       of Tsxea Izower.
  k J zht Corwmy an4 'Sgxaa ~lootrlc      :cervlca CoupmAy, which
  It prevloualy aimed, for the eacurltlos        of the Texea
  UtIlitlaa Coz~ang, has not CRuead a ahea&a in thatiequI;;t'
  mAer8hip 0r the two coupAlas Involved. . . l
  the transfer of~the stock certIfIcetss.frc~~       &mrlCh~
  iEower&ii&t      CoApSnyto ‘20~~5 Utllitlee     Go:lpany resulted
  &ply 'IA chaA&lw the'ov;AershIp from ona hcnd to the
  other slnoe &wirlcsa Power tc LIr&t Coapany owe all of                        ,.

  the sseurItIao of Texas Utllltke       Coz~pA.Ay~"
        . :.
         f? such be true, Auericsn is falling &d rofueing
  to coz~plywith the orprese orrlaro of the fBmarItIea
  an4 Zxcha~ge ComIesIon to rid ltsalf        or all control ot
. the T&xas utllltla8:   coqanlao   involved, and it cannot be
  ymasuzmQ   at,thIe t&m that American aI         80 fail and       *
  rarlwe to coelply.
       pUrther&re, it cannotbe addin              'ti~:that::AnorioaA,
 d ?~aIna.CorpomtioA, ie .,ona’endithee-:aam388 T0a~s:Utllltleo,
 e Texas Corporation. .A~corporatIoA'Io a ~lagel.~entity,
 mated by law, h?Adis treated as an 63tity oaparnte aAd
 dletinct In ldontlty rxon t& otuera of Its aharos OS
 atook.' ~Tholronnarehip of such eharoa or stock &Ivec
 thm AO right to ~:norshIp of the essets of th3 ,corpora-
 tlon and they havs no',authorIty,to        die ose~of theai tbs. :d
.etockholdors orenot .liable i'or the deii ts of:;tha :covpora~~               i’ ;
 tIOnI 'the contx'actual ‘Ziti]ltS~aAd obli.CatloAs >of',the           ..;E.
 CorporatloA:e~!! it& etwkhc2daro are eO:erate and'dintinct;
 tha 6t~ol:holder.e am Aot lieblo ior tha tcrts of'tho car-1
 pcretioA; the reaifiance acd citizeAshIp of,t!!o coxp6rctim
 ere seperate and dlstiAot rrm th3t of the otookholdero.
 Thle corpornto rictlon ie raepeoted et lm aAd.iA aqulty,
 aAdnil1 ba dImeCarded only v&ere there arc cGApcllln&
 rcui30.~ -- as Vhe,-e the cloak Ie beihC I,tilixaC ae a
 eubter?uCo to dsmt public lntersst and aonvenlcAca,,tc
 juntify WFOAg, 'or to perpetrete ireud, . The cor?orote 'en-
 tity will A6t ba dlsrogardod where to do so rocld proiaOt3
 aA itljustioa     OIF OOAttOVOi:S  public pOli.Cy.      u C.J.E. 376,
 et bag.       To dlariqcra   the  eaparatenoso     of  Aaerio3n  OAd
 %xee Utilltiee        v:ould ba to oontxmno        tho ptrlioy amounosd
  by the Fubllo Utility U6ldiAC COupaAyr\Ct Of 1935,
             -        *.: .-' .,
    ,'                       _.  6~                                          1.:
                                                                               1   WG
    . Honorable Georse & Sheppard, Fag437               .

         .                                                               7                    7
                 ;.
                                                    .       .
.
           &uuwel. foi #said ct&aniss. OOntdAd further that
    dn any mrent,. the tmmmr ~m3 r0a              to be in socord-
    aA&    aith the POiiOY a~mO8d        by tha WOtMAt        Or the
    Fabllo Utility       Holding coqany Aot Ot 1935 and wae to all.
    intents dmd arpooes lnooluntnry and pursuant to the ordek                                 ’
    of tha &OUT P tise and 3tOha~e       Cordsslon    hSre&ftbOve
    ratem      to.‘?     Thle is not suoh a trapsrer by operaticn
    ot *law as has bQeA held to bo eiwapt       tract the tax.    It  is
    diiiieult    to so8 tha mpuity in counsel~s       oeitlon,    Thee0
    ooapeaire shave, by t@eii! owg sots,, brti& e thiwelves          ln-
    to a sltuatlon..whloh      Congra.srhas declared to be oontrory
    to publio pollc$ and the boat. intorests        or tha. peop$e oi                   .i.
    tha UnWil St?rtee.        When orderad to absolve thoaeolves or
    such aotlh,        ther oannot bo hserd to cwglain that. the
    sytartyka        -to exaot a tax f”” them beoauae of the.
                      l       .:
                               ..,

                  .       .    __”
                                       ’ Yo u r 8   .ver y       truly

                                                             .       .

                                                    -