OFFICEOFTHEATTORNEYGENERALOFTEXA!3
AUSTIN
iionombleOeorgeH. Shqpard
Comptrollerof Fubl:oAaaountr
Awtln, Texue
Dear Eiir:
ipts tax*a letvied
terms of Artio1e7000.
This is
or a Rural
not
under the -'S&be
for ad raloma
bBS reaelptal tex.
instanoesunder
ire CorporatloaAat* baarune
ptic 8S, 4Stb Legielatur*,
am ArtdalelS&Bb in Vernon*a
The Aot authorleesthe
oorpmatians by three or
purpoee of rwnhhhing sleatrlolty8nd
and, plumbingequipment in xuraZ areaa.
whioh 'IQdeem materialin this dieaus-
3.. Cooperative nOn-~r0rtt asrmberehlp
aorpcrationema? be orgon~sedunder t&i Aot
far th6 purposeor engqlng in rural elootri-
floationby a&y one or 1p0reof tbs iolloprlng
methods:
Hon.Geo.H.M.leppard,Page 2
(1) The Purnlshingor eleotrioener&yto
perSonSIn rurnl areaawho are not receiving
oentrnlstationservice;
(2) Assisting in the wiring OS the prs-
raisesoi'personsIn rural oreas or the aoqulsi-
tlon, supply,or installationof electrlsmlor
plunbIngequipmenttherelnn)
(3) The furnlshlngof sleotricenergy,
wiringfaoilltles,eleotrloolor plumbingequip-
ment, or sarvloesto any other oorporotlonsor-
ganizedunder this Aat or to the membersthoreor.
“sac. 4. E&oh oorporatlonshall hate power!
(1) To cnza an4 be &al, complainand defend,
In its oorporatename;
(8) TO ham perpetualsucraeesion
unlese a
UnIted periodof durationIs statedIn its arti-
ales of lnoorporetlon;
(9) To a&oBt a corporateseal whloh map be
alteredat pleasure,and to use it, or a iaoslmfle
there&, as requiredbylaws
(4) To generate,monuffioture, purohase,a*
qulre,and aooumulateeleotrloenergy and to
transmft,dlstrfbuts,sell, furnish,and dispose
oi such eledrlo energyto its memborsonly,and
to construct,ereot, purohase,lease as lessee
~aa4lnanymanneraoqulre,owa, hold,maIMaln-
operate,sell, dispose of, lease as lessor,ex-
ohange,and morQage plants,buildings,works,
maohinery,supplles,eqtipment,apparatus,and
tronsmlssionand distrlbutl~ l.ines$W systems
neoem3ary,oonvenIent,00 useful;
(Sl To asrrl8t its members only to wire
their pre&see.and Installthereineleotrloal
andplumbbg i~ures,,maohinery,supplfes,ap-
pa+at~, C+ZMI
equlpmentotanyand all ldnds and
charaoter,and in oonneotloatherewIthand iOr
' suoh purposes,to purohaf~e, aoqtie, lease,sell,
distribute Install,and repair eleotrioaland-
plamblngrixtures,maohinery,supplies,appara-
Bon. 050. B. Sheppard,Page 3
tw,, fu@ e&tlpment of any and all andkinda
oharaaterand to roaalva,acquire,endorse,
pledge,hypothacate, and disposeof notes, bands,
and other evldemoesof Indebtedness;
(6) To furnishto oth5r oorporatlons organ-
ized under this Aot, or to the member8threei,
eleotrIaenargy,wIrlng feollltles,eleotrlaal
and plumbingequip&, and servioes oonvenlent
or ueeful;
(7) To aoqulre,own, hold, use, exera189,
Bnd, to the extant,prmltted by law, to sail;
mrtgag5,915dge,hy9otheoate,and in anyramner
dltqxmeof FranalIl5eS,~rightS,prlVllCWH3,lb
oenses,rIghtaor way, and eas5mnta neoessary,
useful,or appraprlate;
. (8) To purahaae, reoelve, lease aa leases,
orla aayoth5rmwm5raoquir5,0wns hoXd,Plain-
tala,~e.ll,exahnage,and use any aad all real
and~soaal9rop5rty or cmy S.ntmestth5r5%n;
(9) To borrowl~ney and oth5rivi5eoontraot '
ladebtedues5, to lmie lte obligatUa5 thsmfors
and to 85ettr5th@ paymentthereofby rportgage,
plsdge,or 4486 of trust of all or any or lta
progmrty,aB(let(l,franahlms, revenuea, or la- '.
0oloe;
,i~,
(LO) Toselland oonv5~,mortg~,pl*e,
leaee a6 lessor,and otberrlsedisposeoi liu.or
any part of ifa propertyand assets$
(ll) Tohavc~tmdsreroisethepaprerOf
eminentdonainforthe purposeandintbeaanner
providedby the oondsrmanafiopr
laws af,thioStat5
for aaquirfngprlratepropertytm pub&h UO,
.suohright to be paraxaxaataxoept as to property
or the state, or et any polltlcalsubdlvl5Ion
thereofi
(12) To aoo5ptSlfts or grants of money,
servloes;or property,raalor personals
Hon. Gee. H. Sheppard,Page 4
(X3) To qake any and sll eontraotsneoessary
or ConYanlent im the ercrrolse of the powersgranted
in thl8 hot;
(14) ,To fix, regulate, and oollootrates,fees,
mats, or other ohargesfor electricenergyand any
other raollltles,supplies,equipmt, or servloes
furnishedbytheoarporatian;
(IS) To aonduotltqtbusfness, andhaveofflees
within or withoutthis Stats;
(16) To elect or appointofficers,agents,and
emplogeesof the obrpora%ian, and to define their
duties and fix their compensation;
(17) To make and alter bplaws, not imonsis-
teat with ths artiolesof immrporatlon or dth the
larrror this state for the a4mlal5fxutloa
and re-
gulatlonof the af?alrsof tbs oorporatloa;
(lf3) Todo andpewgorqeltherfor Itself or
Its memb5r5, or tar any oth5r oorporetlonorg5alZail
under this Aat, or for the numberstheq%of,any and
all aots mid thlag5,and ta ban, and exaroisemy
andallporersaslmyben~es~,o~nisnt,or
approprlatito effeatuatethe puzpow ror whleb the
oorporatloais orgnalzed.
"880. 6. (a) The artlales
of laaorporatl0n
slml.lstate:
(1) f&o name of the oorporatiion, tiloh name
shall lnaludothe wor4a, rXleotrloCooperative* and
de word *Corporation, * *fnoorporatsd, * *mo.~, *
Ua5oolatloa,* or Vempony~ aadthe nam6 shttll‘be
suah as to distlagul~hit from any other oorporatlon
orgsnizeaandexIstlngundsrtholaws of this State;
(2) The purposefor wblahtlm oorporatloaIs
folamd;
mn, Ceo. B. Sheppard,Page 5
'sac. 25, (a) Retchaorporatlonshnll b6
operatedwlthoutprofit toltsaecmbem but the
rates, fees, rents, or other chargesfor oleotrla
energy and any other faollltles,su99lles,equip-
ment, or servicesfurnishedby the oorporatloa
shall be suKIcl6nt at all tlms.
(1) To pay all operatlag and malntenauoe
expewes neoesasryor dealrablo for the prudent
conductof its businessand the prlnolpalof aad
intereston the obligationsissueddr asstmadby
the c~atloa la the 95rfon~no6 of the pur-
pose for whit* It was orgaalaed,and
(2) For the creationof reservw.
(b) The r6venuesof the oorpmatlm shall
be devotedilrst tothepaynmntofoperatingand
melntenancoexpen6os6ndth6 princlpalandinter-
est on outstandingobligations,and thsreafter
to 6uch reserv66ror lmproosrrvnt,n6w oonstru6tian,
.depreolatlon, and contlng6nelesa8 the Board Say
m.t.Gm to tlm prsacklbd.
(a) Revunuesnotmqu%red rorthepumoses
65t fOrth in 8UbsOOtiOSl (b) Of this -0tion. shall ‘. ‘.
bereturn6dfrmtimstot%6i6toth6m6mbersona
proratabebi6 aaoordlngtothodlDOunt0ttmS~s
done ulth aaah during the prlod, either la 0-b.
in abatemmt of aurr8ntOhtkrgeI!for 515ctrlc'5n5rf5YB
or othsxwlaoas th6 Eoard dete2mlnes~but such r6-
turamaybemsdobyxayofgsnsrali~~reduoklon
to 6&mbers,it the Board so eleots.
-soo* 30. Corporationsiormed.hereunder
shall pay annually,on or before May tirst,to
th5St3tmataryofState,alla0nse fesof Ten-l-
l6r6 ($10) and suoh corporate shall be eX6A6pt
fromallother excfee taxes ofwhat6o~w6rkSndor
nature.
"sea. 31. wleaeYer any Q0rporatlon arganleed
uDderthLs A&shall haa, borroasdmoneyfrcmany
Federalagency,the oblIgatlonsisswd to BacIpB
th6paymentoisuchmney8hallbeex6mptfromthe
p3mrlslo1~~of the Texas Seotarltl6s Aat. (CheptW
100, Acts of the Forty-fourth&g@ilature, R651h~
~0x1.0~0. B. Sheppard,Page 5
Session),or any Aots amendatorythereof,nor .
shallthe propislonsof.ealdAot apply to the
lfieuan~e of membershipOertlflOatesk
"SBO. 36. If any proVl610~0i~thl6hot, or
the applicationof euoh provisionto eny person
or olroumstanoeIs held InvalId,the remainder02
the Aot and the applloatlon0: suoh provlslom 'to
other personsor olroumstanoee shall not be af-
ieoted thereby.*
We wlll $lrstdlsoussyour lnqriiry ae to whether
or not a oorporatlonorganizedunder this law Is liable ior
ad valoiemtaxes on Its property. We 05lL your attentionto
the faot that We have already anenwredthle qU8lvtiOn in our
OpinionNumber O-587,dated.Ap~ll19, 1939, a@lreeeedto
HonorableJ0hn.C.Marburger,CountyAttorneyof %yette
Ctiunty,In whloh we held~thatoorporatlonsof thl8 kind,
organizedsuer thle law, are subjeotto ad valoremtaxes.
In our previousopl&n, on AprU 19, 193Q,we
dlsoussed'thi6 questionvery exhaus%ltiwly;
an&we f5k.l.y be-
lieve that the reason8and 6.onoluelonagiven in that opl.n%on
are oorreot. We will notigo into aa muoh.detailon this
questionin this opiniona8 we &id in our former~opXn.%on.
*The~.&er of the state to impose~kss ii:en In-
herentgovernmen tal pcmer' not d?pemSenton nor dezlwd fma
eitherthe +ederalor State Constitution.Thase Con0WtUtMn8~
imposerestr$otlons, but ,arenot the zouroeof the Statb*s,
taxing power,whloh is m attributeofmm~elgnty.~ 40 Tar.
hr. go. See~a?.so 3Dtparte Townsend,54 Tex. Crank. Rep. SM),
144 8. W. 0@., and StrattonT. Commi86fone1s~~Court Wgimep
County,(Tex. Civ. App.) 137 8. W. 1270 (v&t of error re-
fused)..There are no pro~l5bms In the Texts8Consfltutioo
that oould be oonstruedas exempting,or authorizln.6 the ex-
emptlodof, property ot the kind In questlonf'ron~ad ~alorem
taxationsbut,.onthe other hand the Constitution, in our
~oplnlon~prohIbltasuoh e&exemption. The pro~lelonsef then
Texas Constitution bearingon this partlatiarquestfonare
a8 follows:
ArtiOlLean, SeatiOXl 3;. "TaratiOn5ball
be equal and unliorm. ,AU propertyia thie State,
whetherowned by naturalpermansor oomorationar,
other than munlolgel,hall be taxed ln pmpor*blon
to.it,svalue, v&loh shall be asoerliaineda8 may be
km. Ceo. H. Sheppard,Pa56 7
providedby law. The Lo518laturemy kupose
a poll tax. It may also lmpoaeocoupatlon
taxes,bothuponnaturalperaons and up6n
corporations, other than nnmloipal,doing any
businessin this State. It may also tax &xi-
comes of both naturalpersonsand oorporatians
other than mnlolpal, exoept that personsen-
&a&xl lnmechaaloalandagrloulturalpuraulti
shall never be requiredto pay an ocoupatlon
tax;. Frovided,that two luaabed and fifty dol-
lars worth of household end kltohenfumlture,.
belon&&to oaohtamilylathlsState shall
be exemptfcom taxation,aad providedfmther
that the occupationtax leviedby any county,
city or tom r0r any year On persoas or 001~
poratlonspursulry; any.proieaelonor busl.neas,
shall not exoeedone half of the tax leviedby
the State ror the same periodon suoh profe88lon
or buainess.~
hrtlole VIII, SeetlexkZ, “AU Ommpation
taxes shall be equal end uniform upon the 8anm
alass of mbjsots wlthln the 13mlt.sor the auth-
orlty IevllnL:the tax; but the fa#tslatureIREV,.
by5emrallaw8, exempthrom taxationpublic
propertyu8Fd for publicpusposes;eatual plaoetf
0r ntl.fgfatls
rrorahlp;plaoesOf burial not he3.d
for privateor .oorgorate pmrlt; all buildZq@
wed exoluslvelya&downed by pereonsorarm+
Of
Oi~tfOliS PWEOIIS iOr SOhOOl pU3Xl6eS t3&d the
necessaryrurnltureor all sohools,aleo the en-
: Ucmzmntl'umls of suoh S.mtltul&ns of lee
aud rel.fgfonMt u~ad with a Vi6~tO PrMlt and
whentheaameare investedinbonds orippoFtga5es,
or in land oi other propertywhloh ha8 beea and
shallhereaftarbeboughtlnbysooh lnstl;tutions
amuer roreeloaureealesmade to satirrtg'or pro-
teat suoh bonds or mertgagesgthat such exempt&m
0r suohland and~ropertysbau. contln~eonly rer
two yeare artierthe g~urohase
ai the same at suoh
male by suoh institution8and no lower, and lx&-
stltutlonsof purely publio oha!rlty~and all lags
Clmmptltl5propertysroiE?taxatloaoth~than~*
property above mentfomd shall be 0013 and v$dd+*
iirtlole XX, Seotloa 9. *!Fheproperty of
oountiea,cities ami towns, owned and held only
6-w ntrhlla nurnb8e8. auoh aa aubllobulldinasand
HOG Gee. H. Sheppard,Page 8
turf? thereof,md all propertyused, or intended
for extinguiahia& fires,publiogroundatmd all
other propertydevotedexolualvelyto the UQB
und benerltOS the publio shall be exempt from
forced 6Gl.eand fromtaxetion,provldod,nothing
herein shall preventthe anroroezmntor the ven-
dors lien, the meohanlosor builderslien, or,
other llona now exiatl.ng.W
The propertyla queatlonla clearlynot within any of the
olesaeathat the legislatureis permittedto exeri@ from
taxation. We have found no statutethat attemptsto exeznpt
iron ad ralorem taxation;end we bellevethe
this pro.?erty
pas-e of such Q statuteis prohibitedby the last phrase
in mtlcle VIII, Seotlon2, .oithe Constitution, which aayn
that “&.I.
lms oxmptln(: poporty iron t&xatiOn other than
the propertyabove nentlonedahall be null and void.*
We will now diaouaayour aeoond queatlon,whloh
is, whetheror not a oorporatlonoqpnfzed underthis law
1s llzblefor the t;roaareceiptstax levlet¶sgalnatauoh
oono82asin cortafnfn6tanoesunder Alrtlole 7060, R.C.5,
The part or hrtlole7060 thet is materialto thti
dlaouaalonread6 es r0iiapwr
T&oh. Inbividuel, oompsny,corporationor
aaao0latlon,owning,operatingor alanag* or
controllingany gas, eleotrlo15.&t, eleotrlo
power or water worka, or water antiU.&t put,
locatedwlthin any lnoorporatedtom or olty
: in this St&a, agd utied for lootis&e and dlstri-
butlon in aald town or city, and oharginsior auah
gas, oleotriolights,eleotriopouez or water,
shallamka quarterly,on the O.rat days of Jeumry,
L\prll, July and Ootoberof’eaoh year a reportto
the Comptrollerunder oath of the iabifidupj.or
of the prealdent,treaswr or auperint~ndent of
suoh oompany,oorporatlonor aeamiationshawla&
the gross wunt reoebredfrom auoh bualneaadone
in eaoh such’Inoorporotedolty OY toun within thla
State in the paymentof char&3aior suoh gas,
eleotrlcllghta,eleatriopower or water ror the
quarternext preoeding. Sal4 indivlduel,oompeny,
corporationor enaoointion,at the time ‘ofmaking
aaid report for aog such incorporated town or
Ron. Gee. B. Shepgtwd,Page 9
olty of twenty-fivehundred (2500)inhabitants
and less than ten thousand(10,000)inhabitants,
aoeordfngto the last U&ted Statee Cmsus next
precedingthe film of sold report,shall pay
to the Treasurerof this State an oooupatlontax
ior the quarterbeglnnlngon said date equal to
seven-tenths of one per oent (0.7 of 16) of said
@otm reoolpts,ae shown by ra$d report;end ror
tinylnoorporated town or olfy OS ten thoumud
(10,GOO)inhabitantsor more, aooomllng to the
last Enlted.StatasConsuenest prooeaingthe
ill& of said report,the eald lntividualma-
pany, oorporatlonor aeaoelatlon,at the t&e of
inaklngeald report,~shall pay to the Treasurer
of thlei State an ocoupationtax for the quarter
be&nlng on said.datean amount equal t&one end
three-eight6per oent (1 3/e) of said e;roesme-
oelpte,a8 shown bg said report. Rothlngherein
shell applyto any such gas, eleetriell@t,
pomrorwaterworlo3orwateren4'llghtplent
nit?& t&l8 State owned end operatedby any olty
or town, nor to any Countyor waterlniprovwumt
or Coae8rvation Dfstriot."
Tipt art%610was paesed in its prowat forn~by the 44th Lt+gla-
lattme et ifs 3rd oalledgee&m in 1936.
We must now eonelderSeat&a ?#)of the VUotrle
CooperationCorporation Aot” (Art.1988b V,A.R&.S), quote&
above,*ohprovl&esthatwauah oorporatlons8hallbeexemp.
Srom all other exolaetax8s of whatsoeverkind or'nature.w
me."xleetrlo CQopBratlmlco ratloa Aat? perrolta
the organ-
18ing of oorporatloaE4 to f lxrzk h eleetrloltyto parsonsln
Vural area~P,and Art10187060 mqulres the payment of grow
reoelp$staxes by oorporatlonfi end pereonaoperatingeleetrle
plant8 in ineizporatedoitleaand towne. It may be thet eon-
oerna organbed under the Eleotrlo Cooperatlvo
CorpOratlOnhot
by virtue of being llkted to Wmtl areatPeouUl not operfite
lnlneorporate4touna,andthatthere eouldxiotbea oonee*
80 situatedthat both the EleotrleCooperativeCorpwatlon Aef
and Artlale7060 would a ply to it; but we do not hateail to 60
into that questionlnth%i opinion,beeause.weaseumabyrir-
Hon. ho. H. Sheppard,Fme lo
tue of you askin this partioulsrquestion t&t you have In
mind a Rurel Eleotrlc.;ssoolatlonthat comes wit&Inthe terms
or Article 7C60. 3[f Scotion36 of the *E.Ieotrlo Cooperative
Zorporatlon;rct"is valid it creates'anexheptionto mtlole
7060,and would controlin the situationyou ,a8k about.
iit3
we view it, aald Sect&n 20 is a valid law, and
it createsen exceptionto mticle 7060. under its terms all
RuralElectricxesoalationa organizedunder the wElootrloCo-
qmrative Corporation Aot? ere exempt from excisetaxes.
The gross reoeiptstax providedfn Article7060 is a
Corm of excisetax. In the c&se of Yoster E-.
CrefghtonCompany
7. Grnham,154 Ten& 412, 286 S, W. 570, 47 A. 1. R. 971, the
3oux-taaldr
*All taxes,otherthan polls, are either
direct or Indirect. k direct tax is one thot
is impo66d directlyon propertyaOCOrd~ to
its value. It is generallyspoken of as a
propertytax, or~nn ad raleremtax, .4nin-
dire& tax is a tax upon sou% right or prlvl-
legs, and it ls.alsocalled au exciseor oo-
oupatlontax."
Xt hais been suggestedthat acla S@lon 30 orentes
In exentptlon.that
is arbitraryaad uareaaonableand that it
violates the canetltutlonnlprovisloaaon untformtaxationand
squalprotectionof the laws; but we do not agree with that
contention.The *iQeutrlo CooperativeCorporationAuV is de-
3lgmd tqareate conoernsof a dlstinettype, and that are en-
pagedIn a businessdifferentfrom other aoneerns. Not only
~6 they differentfrom concernsselJ..lng oths~~uommotlltles,
Sat they are different.fromthe usual oonoern selling eleotri-
my. In the first plam thep are non-profitorganlzatlons,
md the othersare in businessfor a profit;end In the ssoond
?laoethey limit their aativitiesto wrural areatP,and the
,tbersdo businessin oltlesend towns; itswe understandit
'oaoupatlona say be classiiledfor the purposeof taxation,
' * * providedthe olaeslfloation is reasoniible.** * 30 per-
zonsof the same classmay be sub-blvitled apoordingto certain
llfferenoea, providedthe sub-olassifloation la reasonable,and
the tax graduatedaoooxWngly, or one or &ore sub-olaaaesmay
ae exempted.~ 1 Cooleyon Taxation,4th Ed., 940.
Eon. %o. 13. Sheppard, Pq:e ll
In view of what~the.appellate oou&s hare said
we are oonvlnoe4thnt said Seotlon 30 in qmetlon la vel.Id.
IQ the case of Citizens'3klephoue: Co. v, F~I.ler,
229 U. 5~.
322, 57 L. Ed. l.206,33 Sup. Ct. 833, the oanatltutlomllty
of the ?dichl@nlawtaxdn~ telephoneoonpanlt~was upheld,
and in that awe the SupremeCourt of the UnitedStatessaid:
*The act eontalnedthis pro*: VroviUe4,
That the propertyof telegraphand telephonehop-
panleawhom gross reoeiptswithin this State for
the pear ending June thirty do not exoeedfive
hundreddollarsshall be exeaptfrom taxation.:
'"Thacontantlonof appellantthat the aot
offendsthe equal proteotlonclauseof the Constl-
tutlon is baaed on that pi6vi~oi It is ,=6ed
thatthe-provisomakes an unjustdioorlxl.natl.on
betweeneompeniesdolngths same buelneesby the
681~8measm and imposesa tax * * * beoawe the
bu6lnessof one 16 large and the &her small.*+ *
The DiatrlctCourt,honever,tooke broader
claw and oonsidere%the laduoeuentof the leglela-
tlon and lto abmfnietratltre poselbllltle6 as glv-
lng aheraeterto its elaselfloatl0n~' The aourt
alsoooaai4eredth.eoheraaterofthe taxedend
non-texed.lines,their aurnber and gomparatlve
wlu6 en% tho mount-of tares which would bs as-
8essed a&.nst them. * * *
"The Lines may be divided into two oleeses,
: (1) lines own&l by appellantan% oonduoted for
profit,and (2) lines oonneotedwith those qt
fhe flrstolass and oalled sub4laen6ed oompealee,
rural and roadwny.+ * *
"The 9urel* usuallybelongsto en aseoQla-
tlon of farmerswho llva along the.lins~.It aom-
prlaea a switch-boar4ledsed & the main or profit-
n&lng oo~~~toar~~.~er,thelPain~o~any
own&g the telephonescm tha line end reee;lriPyi
the
entlre'ahargefos $011 messegee,less the manager's
comnlfJelans
fox aa.ieoti.o&%Q roadveya ooanooteQ
Hon. Oeo. H. Sheppard,Page l.2
with a *rural'are oonstructedand owned by
the Samera in the sum way as other roadways.
The largerportionof 'rurals'are oontraotfj
with Individuals.' * *
.:
Th? profitthat is afirlved from the rural
&nd roadwayllnee ie in the reducedrate for
the telep&m3e. The manager~ts.the dlfferenoe
betweenwhat he pays the main companysnd what.
he eets from tpoae to whom he re~te.
The %lfTorinOe,therefore, belzeenthe tax-
payingand non-tax-paying o&qenles, or lndlvi-
duale is thz& the foruer, aa said by the Di~striot
Court,belongto ommerolal oorporatlons or en-
terpzlses,0rg;onizea and oonduotedfor the pur-
pose of earnIrgand payingprofit8as or in the
nature of dividends;the latter,the uutexed,are
oooperatlveor fantars*mutuales8oclatlons,
usuallyunimorporated,oonduatedat estimated
coata and ortgmizedprlmrlly$o get farthi,
assooiatloncheap telephonese$vloe.
*Itilo mauISeat,therefore,that there em8
uarked dlffere~e8 betwen thetwed endnon-
fsrsa eotqxuths,and the dlfferenoesuight be
pronounoedarbitraryif the rule urged by appel-
lant shouldbe appUs4, that 18, that In the
taxationof propertyno cirownstancte should be
aonsldemd but its value, or, to u@o appellant*8
woras, 'es~ch~dollar's
sarth should be treated
alike.' But such ric;I%equelltyhas not been
eafrnued. IQ bf~oh.@mthe le&slaturo has the
power of prescrlbIrgthe subjeatsof taxation
end exemption,notwithsten4lng the oonstitutlon
of the State requIreathe leglslatuzeto provide
a unl.fornruleoftaxatlon,* * *'
*Wa think the statute&i4er r8vleiiiswithin
the rule. It Is not arbitrary. It ha6 a reason-
able baaie .restIngon a red. dlstlnetflon..Itis
not 6 d¬ion bueed on Wire size only, as ooxl-
tendedby appellant,nor upon'the"re anottnt of
Hon. 030. H. Sheppard,.
Page 15
businessdone. There I8 a differenceIn the
doing of the buslnescr
and Ite results;o dif-
femme In the relationto the publlo."
The 0onstItutIonallty 0r Article7060 as orI&-
ally passed,prior to Its amendmnt In 1956, was attaoked
on the &munC of dIsorlznInatIon In the oase of DallasGas
Co. T. State, (Ct. CiY. App.) 261 5. Vi.1089 (WritOf error
rerused),a& vm think the languageor JustIcre.Baugh In
upholdIngthe statuteIn that oam Is appllaableto the
questionin this opinion,that lengus being ae iollow6:
"AppellantInsiststhat beoause the act
in questionlevlea-anoooupatlontar at one
rate on those pursuingan occupntlonIn ofties
of over 25,000lnhabltants,~0.ocoupatlon-tax
et a lesserrate upon those pursuingthe same
oaoupatlonIn oltleeof 10,000 inhabitantaand
lees than 25,000 Inhabitants,and no ooal?petioti
tm at all on those puMluIngthat 8ame oooupa-
tlon In plaaesotherthan these two olassssof
alties,It Is void, and ln violationof section
5 of artiole1 and seotlona1 and 2 of art&la
0 of the Constitutionof Texas sad of the Four-
teenthhtnendmentto the ConetltutIonof the
UnitedStates.*l +
"In small towns suoh cost 3;s60 out ot
proportionto the returnn troa mmh oOOupation
a&to make It irspraotieable, if not eaonmnIoally
InpossIble,to pursue It there. The very ex%6t-
ace of swh ocoupatlonmuat needs depend upon
volume of business,whloh, generally,IS In pro-
. portionto the number 61 InhabItantsserved.
likwallythe largerthe volunw of businessdone
the more economiemlly suoh ooaupatlonaan be
'purmed end the mre profitableit.thu6beoome60
Jillthese considerations neoetwiarlly6ntez into
the matter of olasalflaatlon and oould have been,
and doubtles?.were, consideredby the Leglelature
~:arrIviug at the olassii;i~t%on of whl&appel-
l&t aontplains.9!h8,%gi8~iRZL3XOItyhW6iWlI-
dladed,and pePha B did, that due to ifs very -
I nature the operatPon of agas plant in any plaoe
Hon. Geo. IL Sheppard,Page 14
of loss than 10,000 inhebltants ras SO UCI-
profitableas to be eoona&a~lly Impraati-
oablo,or so nearlyso that an oooupationtax
upon it wuld render It 80. And as stated In
LIndsleyv. NaturalCarbonicGas Co., 820 IT.8.
61, 31 sup. ct. 537, 55 I..E4j.359, Ann. cas.
lOl.SC,160:
r*'When
the clas6IfleatIon In such a law Is
a&led In queetlon,If any state of facts xea-
sonablyaan be COnWlYt3d that would sustainIt,
the exlstenoeof thst state of faots at the time
the law WAS enaotedmust be assuced. *
*la view of the peoullarnature of the oo-
oupatlonIuvolvedand our duty to uphold the
aots of the Legislatureunless 8-e are olearly
In yiolatlonof the state or uatImaalCoastitu-
tlon, we aw not preparedtomy that the c&881-
floationof appellant~eooeupatlcmIs so arbIt-
rary, dIsor5mIwtory, gremmnable, or unroal,a6
to WArrEntus In holdinglt wl~nstItutlonalfo?y
that rewon.w
Thelfi~toaoewwlf~hto quoterroari6 theoaseof
Texas Conqxmy~d Step~M,l00~~.638,103S.F,4231,~ah
upheldthe confMttiIonalItyof a gxo1~8 reoeiptstax law that
plaoeda differentrate of taxes on differenttypes of busl-
nws, and in #at oaeie the SupremeCourt of Texas st#lr
The very 1-e of the Coustltutloaof
theState I@.Ies poW3rinthe Legislatureto
olassIfythe subj‘eotsof~oaoupetlontaxesand
only requiresthat the tax shall be ecual and
unifom upoqthe saraeclass. Person6:who,Iu
themostgeneral sense,mayberegarded as pur-
suing the imae ooaupatlon,as'ror Iustame am-
ehents,.maythus be dI?IdedIuto classesand the
classeszanybe,taxedIn differentamountsand
aceordingto dirierentst~alArd8. Merchants may
be dividedinto WhOleSAlera and retallerrr, and,
If there be reasonablegrounds,these may be
surtherdividedaooorditq to. the p6WtIOular alassw
o$ businessin wh.Iohthey,msyengage. The consi-
derationsupon whlah such olAsESfioAtfons 13hal.l be
Hon. Ceo. l?.Sheppard,Pnplel!3
based are primarilywithin the discretionof
the Legislature. lihecourts,undertheprovlslons
relied on, ofinonly interferewhen It Is made
clearlyto appear that an attempted olaseIfloatlon
has no reasonable basis Iu the nature of.the buel-
Il0ELleE ClaEEiiied,and that the w OpOZ’ateE UII-
equallyupon subjectsbetweenwhiah there I.6no
real differewe to justlfytheseparatetreatment
OS thsmundertakenbythe b&iEhltUre. =6 is
the rule In applyingboth the State and Federal
COnEtitUtiOnE, Andit has been SO Oft&It stated E@
to reuder uuneoessaryfurtbsrdisausslon0s It."
our answerto yourrIrstqus6tlonirtbatRural Eleo-
trioAssociationsoreanlsedunder $he ~ZZeotrIo
Cooperatiw
Corporationnot* (Art.l528blare liablefor ad valoremtaxw
on their property.
Our anmm.toyour 88002ld quWtlOtl16tbat by rirt\u
0s Seation
SO or the Wleotrk CooperativeCorporationbetw
(;,rt.
lciesb)
oonoern.8organbed under said aot am not l%able
for the grossreoelpta
tax levied,agaInst
6uoh ocwerns uX&Ur
Article7060.
CeOil CL ROtEOh
APPROVXII
JTL 17, 19.39 AEEiatfSlt
COMMItTEE
Untitled Texas Attorney General Opinion
Combined Opinion