Court Opinion

ID: 4137886
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:30:04.747273+00
Date Added: 2024-06-11T14:21:31.154346
License: Public Domain

Affirmed    by
                                                        ~Brenham Production    Credit
                                                         Assn., v., Zeiss
                                                         Tex. Sup. Ct.
                                                        264 S.W.2d 95

     &ion. Robeit S. Calvert                 Opinfm No. V-886
     Gomptrsller of Public Accounts
     Austin. Texas                           Rc: The liability of pzoduction
                                                 credit corpbrotieas for t&e
                                                 payment of ad valorem tax,

     Dear Mr. C8lvert:

                 You rcquelit the opinion of this office upon the question
     prcranted in your letter of Augu6t 3, 1949. which is as foliows:

                    “This Department has received an inquiry from
            the Tax iisseasor-Collector  of Zavala County, Texas
            for in6tructions as to whether the ‘Ninter Garden I-ro-
            duction Credit Association’ Co-op Bnnk is subject to
            the ad valorem tax in that county. Before advising the
            tax collector, this Department desires your opinion on
            the following  question:

                   “16 a production credit cdrporation or association
             6ubjoet to ad valorcm tax?

                    “%%06e rs6ociations h6ve never rendered their
             rtsck Co? taxe6 a6 have other banks. Originally the
             goverpnwnt through the Intermediate Credit B.xnk of
             Heu6tdh furnished the entire capital structure for these
             production credit asaociation6, but at present most of
             there credit production associations have paid off all
             ~Cftunent    indebttdnesr for the original capital stock
             and art now owned 100% by their members.”

                   The an6ker to your question i6 found in Section 1138~.
     U.tj.C.&,   WhiCh i&3a6 fOl~OW6:

                    “Tie~Centrsl  Bnnk for Cooperatives. and the Pro-
             &aaiioa Credit Corporation6, Predixtion Credit Asso-
             cirtion6. and Banks for Cooperatives, organiced under
             thl6 chapter. and their obligations. shall be deemed to
,’           be in6trumentaWier of the United State6, and as such,
             any oM1 &&I twtaa, debenturer,  bonds, and other such
Hon. Robt. S. Calvert, page 2 (11-886)

      obligations issued by 6UCh banks, a6sociation.s. or cor-
      porations shall be exempt both a6 te principal and inter-
      est from all taxation (except surtaxes. estate, inherit-
      ance, and gift taxes) now or hereafter imposed by the
      United States or by any State, Territorial, or local tax-
      ing authority. Such banks. associations, and corpora-
      tions, their property, their franchises. capital, reserves,
      6urplus. and other funds, and their income shall be ex-
      empt from all taxation now or hereafter imposed by the
      United States or by any State, Territorial, or local taxing
      authority; except that any real property and any tangi-
      ble personal property of such banks, associations, and
      corporations shall be subject to Federal, State, Terri-
      torial, and local taxation to the same extent as other
      similar property is taxed. The exemption provided here-
      in shall not apply wfth respect to any Production Credit
      Association or its property or income after the stock
      held in it by the Production Credit Corporation has been
      retired, or with respect to the Central Bank for Coop-
      eratives, or any Production Credit Corporation 6r Bank
      for Cooperatives or its property or income after the
      stock held in it by the Uni)ed States has been retired,
      June 16, 1933, c. Sg, sec. 63. 46 Stat. 267.”

             You state, “but at present most of these credit produc-
tion associations have paid off all government indebtedness for the
original capital stock and are now owned 100% by their members.”
As to such corporations the limited exemption provided in the fore-
going F&era1    statute cda6es to~.treapplicable:under the expres~s
terms of the statute. However, where this conditibnnioes net obtain,
$#Ialimited exemption provided in the statute is applicable but applies
only to intangible personal property such as notes, debentures, bonds
and other such obligations issued by such banks, associatieu     or cer-
porations,  both as to principal aad Merest.

             It is further observed that the statute provide6 that “axy
real property and any tangible personal property of such basks, a6-
sociations, and corporations shall be &abject to ., . , St&e m. . and
local taxation to the same extent as other similar property i6 turd”;
thu6 subjecting real property and tangible personal property    to ad
valorom   tu6tien at all time6.

            In brief, after the stock held by the Production Credit
Corporation or the United States has been retired, the intangible’ pcr-
tonal property theretofore exempt, such as notes, debentures, bsndr,
     L     t

Hon. Rabt. 5. Calvert.   page 3 (V-886)

and other such obligationa iseued by such banks, associrtionr   or cor-
porations, both as to principal and interest, are subject to ad valorem
ta.res to the same extent as the property of any other corporation in
this State. But even before this has bccurred. the real estate and
tangible personal property of such corporations are subject to ad
valorem taxes aa other property of corporations is taxed under the
laws of this State, and only intangible personal property, such as
notes, debentures, bonds and other such obligations issued by such
banks, associations or, corporationa, both as to principal and inter-
est, is exdmpt.

                            SUMMARY

            The real estate and taqible personal property
     of Production Credit Corporations are subject to ad
     valorem   turtion, but intangible personal property,
     such a8 tiotep, debentures, bonds and other such oblir
     gatienr iarued by such banks, associations or corpos
     rations, both a8 to principal and interest, is exempt
     so long as there is ouCst&nding any of the stock of such
     corporations owned by the Production Credit Corpora-
     tion or the United States. When this stock is retired,
     however, such intangibla personal property as herein
     enumerated becomes subject to ad valorem taxation to
     the same extent as is applicable to other corporations
     azkdtheir property under the laws of this State.

                                             Very truly yours

                                      ATTORNEYGENERALOFTEXAS

                                                                          *

                                    ‘w    lgG&d
                                             L. P, Lollrr
                                               Assistant

                                      ATTORNEYGENEML