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
. .
-