Court Opinion

ID: 4143295
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:31:58.524859+00
Date Added: 2024-06-11T14:34:39.612064
License: Public Domain

OFFICE OF    THE   ATTORNEY GENERAL OF TEXAS
                              AUSTIN

Honorable Cleorge ?I. She?,perd
Comptroller of Yubllc &mounts
Austin, Texas
Dear Sir:

                                             n meawning or
                                             a pipe 1iM oprr-
                                           tmeotlon rlth the
                                             produatlon 0r
                                            (01 Whether ln-
                                           aloe attaob.8 or

                       doolelon   ln de oaae of Ool-Fox
                        Bruoe Hart et al, 144 S. V. 2nd
                      to intangible   values, nearositates
     @y requerting    en opinion on the paints set forth
     below x
            *Company f3 dpsratea a private pipe line in
     oonnarotlon with 1tB oil praduaiap; buslaeer.     In
     addition   it gathers for other produoers In the
     ma8 field,    on whioh a gatherfnp: ohargo is made,
     agalnet the other producers of ilve oenta Per
     barrel,.or   they am &owed     ta iriake a ilve oent j
Honorable George H. Sheppard,     Page   Q

     proilt  when the oil is delivered to a aommon
     acrrier pipe llne.   Without th@ gathering spetem
     the Dommonoarrler pips llno would have aharged
     Site oentr per barrel ior thi6 serviae.
            yCompany D operates a gathering eyetern,
     in oonmotlon    with lta refinery,  but it 8011~1
     part of the oil to a aoaaon aarrler pipe llnr.
     Thlr servlae would have oort fltr aentr per
     barrel, &oald the o0nmo.n oarrler gathered the
     011, as in the oase of Goapmy C.
            %ompany E operates a pipe line under leaa8
     rgreement.    The proprrtle~~ are owned by a retin-
     817, but the operating ooapany is lnoorporatstl
     as an 011 pipe line Ooapakly. Or they may bur
     011 in the field    and eel1 it to the rsflnery      and/
     or other reilnerirr    and oom8on oam%ors, with no
     oontraat to roll,    but the reloo are made without
     any pro-determlnrd    profit.     The pipa line and/
     or markotlng aompany nar make more or lrrr than
     the gathering oharge.       The loaclr egr**ment mY
     rtlpulate,   (a) that all ad valorem      taxer are to
     br paid by the owner (reflaery)       or (b) that all
     ad valorem taxer ara to ba borae by thr lrra~
     oompuly . Alro it may rtfpulate,       (s) that the
     rental   be paid on a qlat rate pe=wnth         or annum,
     or (d) that the rental be bared on a per barrel
     rate, for Wumple the rats would be three osntr
     par barrel on all oil gathered.
            *The main quertlonr   involved   may be ataamar-
     Ised   as followr:
           “1.  What Ir gross inaom0, a6 appliOd to
     a pipe fine with no publlshod trrlfS@t   I8 ail
     trading profits  an 5.naoae In the oeao of Com-
     panlee C end Dt Ape aavlnga on their own 011
     to be oonsiderod in arriving at their total
     grow lnoomet
          *2.  11 them any yard-at&ok to be ~sr6
     In m0aeurIng or alas~ifyi~  a pipe line oper-
     ated In oonneotlon wxth the reilnlng  or prb’-
RonorabU Worge B.         Sheppard,   PM-   3

    duot Ion of arude ail0
          “3.     Doee an lntanglble   veluo, as found,
    lttaoh   itself    to the pQalaa1 prepert~ea,     or
    to the buaineaa of transporting        oil br plpe
    lIne7    It aa7 be presumed that QompanrE will
    hsve offioe     furniture  and other propmrtr that
    wI11 be used in their narketlng and pipe 1Ine
    buelneas      however the 1ntaagIble valur would
    ordinarl~y be apportloned to the counties through
    whlah the plpa llnem are altuatad.
           *Arttale     6019 rOa48, In part a8 iollowar
          “‘Xt la declare4 that the operatloa of
    common oarrlcr pipe lines la a bualneaa in
    whloh the publlo 16 intsreetrd     and Is aubJeot
    to regulation   by law.   The buaineaa or
    a,    or of mrahaslna ml relllnp; orude=I
              M in 06 aestion   with e-oh bualneae q
                ef the’alaaa  eubJect to thle law to
    transport the wudo petroleum SO bought or sold,
    sat11 not be oondwted,     unleso such pipe llnr
    80 urea la a oommon oarrler wlthln the purvlrw
    of thla law. . . .8 (Underaomlag ours)
            “On the pnrumptloa    that Co-lea        D md E
    arm ‘Omlng,     operating or nanaging’ a pip* lIn0
    that oomee within the above statute,        or that
    they are ‘Doing buaIneas a? the same oharaoter
    ln this Btate’l    la their ravanue to be predlQete6
    on a tariff,    where one la ratabliahad      and pub-
    lished    by a oammon oarrler   pipe llnet     Or Is
    thalr lnoama to be oonaldi8red the eame as that
    011 trading profit      iron buying, tranaportlng      and
    aelllng ollt     Prom a praotlaal    standpoint,    It w
    ara conflne4 to oil trading profltia thara wIl1
    be no lntanglble     value.   On the other hand, ii
    tarlftr    lro eet up on all 011 tramported,        a hp
    pothetloal,    or earning aapaalt~ o? the prop8rty
    as dlatlngulahe4     from the actual errninga,      la
    the baa1 e of an intangible     value.
             *ilntll   tha Qol-Tax eare was beoibed the pip@
    line     industry    had taken the praottoal  oonatx%otIon
%aorablo    Qeorge 8. Sheppard, Pago 4

      of that   part of Art1010 0018 reading aa follrluer
       'The pr0tl6lon6   Of thir law 6hall not apply to
      those pips lines whloh am llmlted in their u6e
      t0 the W8116, 6t6tiOnE, plant6 6n4 lVfin6l’i86
      Of the Owner. . . . * to mean the pipe line6 of
      the produoere of ail from the wella to the lea68,
      or rettlbag tank6; 6nd the lines from the lea68
      tank6 to the trunk liner 66 being a part o? a
      gathering 6JIt6pL.     AS60 Chore linca   running from
      refinery   t6nk farm6 to 6tlll6,    and/or loading
      radk6 Or WhRI’V66, 6trtlOns bto.,     withln the 26-
     'finery grOI.ind6 m6 being p. p6rt of the refinery
      lqulpment~ rhile those pips lines that brought
    ,oil to th6 tank     farm6 were a part of tranrpor-
      tatlon equipment.      The Judge, in the above oa68,
      widently    did not oonsider the oonrtruotion      br
      th6 industry,    In arriving  at hi6 dsoialen.

             *Seotlon 4 of Arttole 6019 read8 a6 follw6~
      *Owning, operating or 6un6glng or partlolpatlng
      In Wnerahip,     operation or WUgWWnt, m
             , oontraot of pufohare, mrment           to bw
                  or ether agreement or arrangement of
     *any inh what6oever,      ally pipe   line or plpe liner,
      or part of engr pipe IlaO, for tranrportatloa
      fr0m 6ny o$.XflsZd or pla06 of prodtaatlon with-
      la thir 8tate~ f&'any di6trlbItiAg,        rqflnlng     or
      aarketlag oentrr or reehipplng point thWeDf,
      within   thlr State, or 0-e        petmleua    bought
      of other68 A160 in this      0oanrotloa Artlele       '7lO6
      6ho&itd b6 Haa, srpeoitil~        that part reading a6
     fO11OW6 t

           “‘EaOh bpaoroarsteU.     . . . 011 pipe line
     oompany, and 6ll oommon oarrler pipe line eoc
     panlee.   . ; . 6nfc6p: 8 Ln th6~mrD~f
     &.      . . ln a&ditrZn to the ad raGrem tuer
     on tangible propertler     whlah are or lag be IS-
     pooed upon them rerpeotlvely,      by la+: ahall 'By
     an annual tax ta the State. . . 011thric it%-
     tangible 6669t6 and prO@Ortf, and lOOa t&X86
     thereon to the eowties      la whloh it6 bo6iR866
     la carried an.f     The undersoored uor46 a6y bcr
     applied to Gompanr E.
             *It   rholauld    Be pointed out her6 that non6
     of    the68   oompaaie6      i!mvr deeland th8#681+66 t0
     Iionorable   George 8. ahrppard,       Page 6

           be   Qommoaoarrler pipe llne6,     nor have thej af-
           tempted to exerolae the prIvllege6      und6r Arti-
           cles 6020,    6022 0r 6043.    However, they do ill8
           all report6 with the Comptroller of Pub110 Ao-
           count6 and with th6 Hallroad aoui66ion        Of mXa6,
           that   are require& of aouon puroharerr and trane-
           porter6 of ortad8 petroleum.      They are elthar
           Delaw6re oorperations,      or they 6~6 inOOrpOrct&d
           under Artlol86     1496, 1496, 1497 end 1833.
                 nShoul4 thL6 not be enough information aeo-
           errary for you to deoid6 the68 quertiens 1 rhall
           be glad to go into more detail,  persoaall~.*
                 You have verbally   amplified the foregoing   rtate-
     ment la ommeotlon    rlth *Cemgany D* by PdvIsiag ue that,
     a6 la th6 oa6Q of l  OempanP C', part of the oil handled wa6
     either purcbaeed from or transported for ether produoer6
     :a tha fleld   red-6   not confined to the produst~+    of raid
     lo o mp 6
             D..
              ny
                   In anowering your fIr6t       quertlon we point out
     that under prlnelpltr        hereafter   disoaseed,      we hold t&t
     Oomprales *Cd, 'IV and *g*, above tle6orIbeQ,              are engagrd,
     La pub      in bU6lne6686     of euoh ilature a6 to bring Qaoh of
     them'ti&n       the apppllostlen of Article        7106,   ~vl,tml   Civil
     Btatutes,    provldlag    for the 666e*ament, for taxation             of
     the lntanglble      values of eaah *oil pipe line Qompanyi
     “common earrler      pipe line aompanyw or *other LndlviduL
     oompany, oorporotIon       or 66sociatlan     doing buhinera of the
     66me charaat6r In thi6 State.*           tiewater,    It dare not follow
     from this oonalu6ion that cl1 ero6e lncoae reaelved by each
     of theet oomp6nIe6, iron every 6ource, o6n be properly oon-
     sidered by the 8tate Pax %Arb In asmpatlng the lntanglble
     v61UQS e? th6 bnef?AQ6ses 8nmeratea in the 6t&Ute,                  under
     the establl6hed      prlnoiple    of *oapltaliratIon       of net eamlngr*,
     b6CaU6e 6uoh oompanIe6, pcrrtioukrly            companies nC* and l        D*,
     are also engaged in the groduofng ml refining                 bu6lne68,     re-
     6peotIvely,     and such bu6inerse6 are not within raid Aot. It
     i.6 our 6n6wer to your flret quertlon thct              the Board m6y oon-
     alder at3 groe6 Income for these pku730666, only such Inoome
     as AOOPub6, 4Ireotly        or lndireatly,    from the buriness of
     transporting      orude ell for others for hire or for profit.
     '&IN, If oruda 011 is tranoported by the aempanIe6 in que6-
     tion for other produoer6, from the point of produetlon to

c
1.
Honorable   George H. Sheppard, Page 6

reflnerl8e    owned by others, or to oonneoting pipe line oar-
rime,    for a oharge or consideration        of iire. oents per
barrel,    tautahgrooa   lnoome, along  with   other Inoome traoeable
to the buslnerr a? transporting        oil for hire, would be prop-
erly oonrldered by the Board In determining Intangible            Value
under lstabli8hed      formulae, whether rush Inoome is deelnatsd
am aarrylng,     gathering or rerrloe oharge or tarI?f.
formal publloation      o? a tari??    under regulation8    o? the
Railroad CommIseIon (Artlole        6649,   Xevleed 01~11 Statutea)
la no oondltlon     prerequlslte    to bringing    the oompanIe6 here
within the Intendment o? the Aot taxing Intanglblec
            But I? (Iaeh o? the deeorlbed oompanler purohaee
euoh orude oil outright iron produoerr and traneport laem
through their gathering rpetem or pipe 1Ine ryetern to an-
other refinery   or to a oonnoo8ing pipe line, where it ke
cold ?or a profit,    then, under the oaae of Reagan County
Purohaelng Company v. State, ll0 8. W. (2d) 794, tha Board
may oonrlder    In aeseeelng   intangible    valuea, only auoh por-
tion of the total oonrideration      or greee Inoome reoelved        by
euoh aoqmlee     as repreaent6.a    IaIr, Just and reaaonabla
oharge for the oarrlaga or traaeportattioa        o? euah oil.    ‘Ihe
balanaa, I? any, over and above ruoh traaeportatlon            ohargO6,
would be ooneldered a8 trading pro?Ite or Inoome iror the
purohare and sale o? orudr 011, and would not be lnoome
derived  from the bualneee off traneportlng       oil?or    hire. Gor-
poratione ahartered under Chapter 15, Title 32, XevIeed
Civil Statutea, suoh ar these are lndloated to be, are au-
thorired to pursue bath burlneeser;       I.e.,   tranrport    orude
011 by pips llne for hire and buy and rell orude oil.
          Upon thle point of oxoludIag trading profltr    In
aeeesring Intangible  value6 o? luoh aompanlee, the trial
oourt, in the oaee a? Reagan County PurahaaLng Company v.
State, aupra, found I
            I,      Said value wan aeseseod and fixed
      by the &&     Tax Board by a prooeas o? *capital+
      icing* what it underetood od belleved to be
      the entire net revenue OS the dmietiant for the
      year 1934, taking into ooneideration  earnIng6
      o? said defendant from all o? its a~tlvitlee,
      that  is to say, earnings from the purohdlse and
      sale of oil,  am well as eerninga that might b*
Honorable    Qsorge 8. Sh@ppard, Page 7

      properly attributed   to the traneportatlon o? oIl$
      the oo@Mistlons    o? said Board being baaed upon
      a groes earning of 20 oents per barrel from eeoh
      and every barrel a? 011 bought, transported   aM
      mold by the said purohaelng oompany during the
      oelendar year 1934.@.
             The trial  Judge oonoluded that the leeeeament
was lxaseslve    beoauee the State   Tax Board toof Into ooa-
eldsratlon  the proiltr    earned by the oorpazby ?rom the buel-
Bass of buying and selling 011, mad uRd8rtook to drtermlnr
what part o? the net earnlnge o? said Oompeay warn attrlbu-
table to traneportation     of oil,  eo am to SIX thsrefrom  the
total taxable value of Its ollgbpe line bueIneee b> the
approved method known as *oapItalitation      o? net inoow*.
             Upon this   point   the flndlngs   of the oourt are as
rollo3re i
             (I*(7) I find that only one-fourth        (l/4)
      of the gross earnings of ths defendant           on 011
      bought, transportad and mold by it during the
      ysar 1954, Is properly lttrlbutsble          to end sbeuld
      ba allooatod      to~grors eernInge 66 from pipe line
      transportation       Instead of t& entire 20 oante
      per barrel     used by the raid Tnx Boa&.         While,
      66 round above, no trnneportatlon          or tarltr    ohargoe
      era made or published by the defendant,            f find am
      a faot that 5 oents par barrel would be and oon-
      ltitutss     a fair and reaeoAable aharge for,the
      transportation       of euoh 011 if it had been trane-
      ported for others for hire, and that 5 ornts warn
      the traneportatlon        rate detormIned nnd ueed by
      the deiendant em the basis !?or ooewatat~lon of
      the Federal Exolee Tax on the traneportatlon             o?
      011 by plpa line under Federal etatutes            exietlng
      at the tlms said Intangible         aeseeement wee made.
      On the basis of a gross earning of I) omts psr
      barral ?or all 011 transportsd         durl     the year
      1954, and applying thereto         the iormu“p a adopted
      and ueed by the Sate Tax Board for determInIng
      the intangible       value of the de?endant for the
      taxable year 1955 I find that 60 par oant o?
      ths intangible       vahae of the defsndant,     ettrlbu-
      table to its pips line eystam and operations
                                                                      - --
                                                                             288

Honorable tiorge    H. Sheppard,    Page   Q

      ae of the year 1936, is $769,408.00.         . . .*
            Although, in the absence of a aroma-aeslgnment
of error by ths State, the Court of Civil Appeal6 pointed
out that It was unneoeessry to determine the queetlon,     nevsr-
thelees,   said oourt r~fueed to dletorb the aIsaretIon  of the
t&Al oourt In revlewlng and adjudging the oorreot aeseee-
ment whloh ehould have been msds by the State Tu Board In
thle asee.
               Under the esme reasoning,     we do not believe that
the Board oan properly consider,          In oomputlng lntanglbls
vnluee of the companies involved here, the worth or value
at their pipe lines In the earinga effeoted          by them (1) In
traneportlng      oil produced by them or purchaesd from other6
to the refinery       owned by them    (Company D) or, (2) trane-
porting     oil produoad by thsa co a oonneotiig      ooamon oarrlrr
truak    line (Ooapany C).      Under the holding oi Col-Tar Fte-
?InIng Co. v. Hut,        3.44 6. Y. (26) QOQ, euoh ,u60 of a plpa
line to traneport crude oil would be as a *private            pipe line’,
Inoldental      to the refining   buelnees   or to the 011 produalng
bueIneee, and the value of euol? pipe lInse, when aerd In the
refining     or produolng bualneee,     to dIepenee with the hiring
of oommon o*rrIer pips lines,         cannot be ooneldsred am Inoome
Uerlved froa the buelness        of tranebortlnu   011 for hire    wlth-
In the meaning a? Artiole 7105, Revlsod Clvll Btatutes:            as
Interpreted      by said oase.
            In thle oonnsotlon,    however, we point out that the
State Tax Board, in lseesslng these desorlbed ooapanlee for
intangible   valuee, may consider the eamlng oapsolty of the
property as d~stlngulshed     from the actual aarnlnge.    Under
the ~oapItallsatlon     of net lnoomsm method of valuatIoa,   de-
olared by the court to be partloularly      ldeptabla to pipe
line oompanlee and vsrlous other pub110 utility       oompanlet?,
the earnings are merely treated am a guide to the aapltal
value, beoause the tax 10 not levied upon the earning6 a6
euoh.    Therefore,   in any partloular  oase, the go158 reoeipts
to be ooneldered for suoh purposr are not neosssarIly       the
aotual rsoeipte     but auah as would be reoelved   Andor a reaeon-
ably loonomloal and prudent management; and the rxpanroe to
be deducted, In order to determIne the net inoome, are not
nsoeeearlly    the sxpenees which were in fact inourred,    but
honorable   Oeorgs H. Sheppard, Page 9

suoh expenses as would be Incurred under a reasonably eo-
onomlo and prudent management. 26 R. C. L. 367; State v.
Nevada Cent. R. Oo., et al, 61 Pao. 99.
              By your eeoond question you ark I? there Is any
*yard-•tlok      to be ueed In meaeurlng or olaealfylng        a pipe
line operate4 in oonneotlon with the reflnlng            or produotloa
or orude Oil.”       This l yardstick*     ham been de?InItely   laid
down by the dcoleion of the Court of Clvll Appeals in the
case of Col-Tex Refining Co. v. Bruos Hart, et al, supra,
and the pertinent      statutes.     Art1010 5018, RevIeed CIvIl
Statutes,     aitcr giving iour broad de?lnItIons        o? a uoumon
oarrlsr pipe line Eospany, provides that%he provleIone                of
thle law ehall not apply to thoce pipe llnee vhloh are llslted
In their use to the wells,        stat lone, plant6 and rsflneriee
of the owner and which are not a part of the pip0 line trane-
portatlon     eysten of an7 common oarrler        as above de?lned.*
In Chapter 15, Title 38, Revised Clvll Statutes,             governing
the oi-aatlon and operation of oorporstlone           ror the storing,
traneportlng,      buying and selling      of 011, gas, malt brine
and other mineral eolutIons,         etc.,   we find Artlole   1505,
pr4vldIngi
            ‘Hothing in thIe chapter ehall preolude
      the ownership or operation by any oorporetlon,
      of private pipe lines In end about its r4?In-
      wlee,    fleldm or etatlons, even though much
      corporation6   say be engaged In the producing
      buslnees. a
           It waB held in the oase s? Col-Tax Reflnlng     C0mp.w
v. Hart, et al   supra, that a refining    ooapany, oting    and
uelng a pipe line exoluelvely    for the purpose a? tramporting
011 bought by the oospany from other produasrs to the re-
?Iner~r owned by It, was not an *Inoorporated    oI,l pipe line
oompany*, a *common carrier pil pipe line oompanyR or ‘doing
bueinese a? the same oharaoter*     within the tOr4s of Artl-
ole 7105, Revised Civil Statutes,    and henoe was not subJeot
to the tax on Intangibles   thereby assseead.    hip h0lain.g
warnupon the theory ana oonetruotlon     that the IntangIble tax .
etatute was Intended to embraoe only such property or faoll-
lties am produoed for the owner within ana a? It64lf       And
apart from any other busInsss of the owner, a tanglbie       revenue
Bonorable   Qeorge H. Sheppard, Paoe 10

or lnoome, and henoe oarryln;y rystem OS pipe lines owned
by reflnlng  company for use in transporting 011 Iron pro-
duetlon to such rerlnery,  did not hnve a tangible value to
uhioh the lntanglble  tax measure attached.
           But we are not willing   to extend thlr decision     to
cover and exennt pertsom, rlrms or oorporatlons      uelng pipe
liner for the tranoportatlon    oi ormde 011 IOr hire, even
though euoh pipe line ryetem ia called a gathering ayrtem
and la also used in oonneotion wlth the rtrflnlnc     or produo-
lng buelneer or suoh person, firm or oorporation.        In other
worde, to trlng the owner, leseea or operator of such gathe.r-
lng or pipe llne system within the prlnolple     announoed by
the Col-Tex oare, it must be used exolueiveu      (1) to tranr-
port oil produaed. by luch owner or operator,    and not bought
of others, to a connecting oommon oarrler
to it or further traneporation    by It, or, PE.~"t~'~ili~;O~;~:ll
produood or purohaeea by such owner, operator,     or leaeee to a
refinery  owned and operated by the same person, rirm or oor-
poratlon ror prooeselng.
            11, on the other     hand, such pipe line or gathering
    I8 urea, Jn addition
ly#tem                            to the vuroores ret out above
(1) for the purpore or traneporting,        for hire,   oharge, tailif,
or other consideration,     arude oil for other produoere from
the plaoe of produotlon to a oonneotlng ?lpe line for sale
or further tranaportatlon,       or to a rerlnery   owned and oper-
ated by another person, rlrm or corporation         for prooeaalng,
or (2) for the purpose of transporting         011 purchased by the
owner, operator or lessee of euoh pipe line or gathering
syotem, from others, to a oonneotlng pipe line oompanf ior
sale or further transportation        or to the rrflnery    of an-
other pereon    ilrm or oorporation     for sale    then in eaoh of
these situations,    exemplified    by the oompa&es deaorlbed
in your letter,    it is our opinion that you may lawrully a8sess
an lntawible    vnlue, for taxation purposes, by oapltalizlng
the profit or lnoome whloh aocrues from suoh trrznsoortatfon,
subJeot to the above dlsoussed.llmitations.
          By your third questton you ask if ‘an intangible
value, as found, attaohee Itself    to the physIoa1 properties,
or to the birelnese of transporting   011 by pipe line”,  pointing
Bonorable   Qeorge Ii. Sheppard, Page 11

out that *Company En would have offioe       furniture   and other
property use6 in thrlr marketing and pipe line bu8lne8s but
lntanglble   value would ordlnarlly     be apportioned to the
counties through whloh the pipe line8 were eltuatea.           AL
though an intangible   tmlur could not exi8t in any given care
without the pre8enoe o? tangible or phyaloal properties
noed in or devoted to the buslnere out of whloh the lntm-
glble value lrlme8, lnoludlng ofrloe       furniture   and equip-
ment in the instant oa8e, if neoerrarlly        inoldent to the
proper oonduot or the business of engaging in the tran8por-
tatLon by pipe line of orude 011 for hire, neverthelers,
it 18 our opinion that 8uoh intangible       value need not by
the Baaed bp apportioned and oertlrled       to the oounty or
oountler uhere suoh offioe    furniture,    and equipment or other
tangible property ir rltuatea,      but the praotloe,    long fol-
lowed by the %oerd, of apportioning       luoh intangible   falue8,
on a allaage   value, to laoh of the oountieo through uhloh
the plpe line run8, Is proper, and may be oontinue&
            In the ease of Reagan County Puroharlng     Company
v. St&e,    ll0 S. W. tza) 1196, the court ralai
           *Intangible raluea ordlnerlly   rertalt from
     the profit  of a business a8 aotuallj    oonduoted.
     They Inhere to it a8 a 'going oonoern,'      in nany
     oa8e8 tar exceeding the tangible valuem to whleh
     they adhere.*
           Thu8, although intangible     value oannot exlet,
for purpore8 or taxation,    wlthout the exlatenoe or tan@-
ble or phyclloal propertleo   to whlah euoh intangible     value8
adhere and out~oi which they grow, it i8 not teehnloally
accurate to nay that intangible     value attaohes ltrelf    to
euoh phyetoal or tangible properties,       80 as to hate a situ8
ror taxation   in the oountlea where ruch pro-3ertles are lo-
oated, beoause the intangible     value aought to be assearea
for ad valorem taxer under Artlole 7108, Rerl8sa Civil Stat-
utes, 1s the over-all   value of the buslner8 oonduoted a8 a
*going concerng, which buslnera ha8 a valuation        in exoe86
of the valuation of the physloal or tsnglble       property urrad
in such buclneee.
Honorable George H. LUleppard,Page 12

          Artlole 7111, Revised Civil Statutes, provide8 that
the Board *shall apportion the sum Or the said total taxable
valuee within this State to the oountlee in whioh auoh ln-
dlvldti oompany, oorporatlon or arsoolatlon doe8 business,
In proportion to the amount of business done ln and the re-
oelptr derived fro* eaoh 8Uoh oompany, exoept, that In ease
oi a railroad oompany, the apportionment to eaoh oount~ shall
be In proportion to the line or llnsr 0r rush lndlrldual,
ooma4 * corporation or association therein."
           Said artlole further provides that the Board may
oonrlder lrldenoe upon the question oi apportionment, and
may oertlfy an4 apportion 8Uoh lntanglble values aooordlng
80 any method of oaloulation whioh It bellevee to be best
oaloulated "to bring about a Jurt, fair, equitable and law-
ful lp P o r tlo nment*.
                      Adverting to bhir rtatutorr authorltf
Oonferred upon the Board, the Court of 01~11 Appeale In the
oaee of Texas Pipe Line Oouip~ V. AndarsOn, 100 9. W. tea)
764,  upheld the nlleage barie Of apportloment of the kn-
tangtble valuer of a ooamon aarrler pipe llne company aa a
method lpwored by the oourts and calculated to reach a Just
ma fair result.
          Trustlag the foregoing ruiif answers Your InquirJr,
we are
                                    Your8 very truly

   ATTORNEY
          GENERAL

                                                ASSi.&nt