Untitled Texas Attorney General Opinion

OFFICE OF THE ATTORNEY GENERAL OF TEXAS

MayV AUSTIN

gb*&,m c. Magi &- ..I- 19, 1939

Honorable 0. Kennedy County Attorney Bee County Deeville, Texas Dear Mr. Kennedy:

In seeking our op beve question by your letter of Xay 6, 1939, py of en opinion of Honorable R. L. W directed to Iiono F'ublioAccounts, You desire a ret il Statutes, provides that xea, except such as may be subject to taxation, and ed as herein prescribed." es, povides, in part, that rposes of taxation, shall be , chattels and ef.fects,end all r evidences of debt owned by whether the sanm be in or out of the th the enunmration of certain species There being no constitutionalor statu- bstract books as such, the only question or not such tOoks constitute "personal property" within the maning of the above cited articles. Your letter does not present a fact situation for our consideration,nor a0 w-e deem same rrtcesssry. It is to be assumed that the abstract books in question are those com- monly compiled and kept in the orderly and profitable pursuit of the business of furnishing abstracts of title, and contain certain written and printed information which such business may be called uporrto furnish respecting the title to real estate in the locality where they operate. These abstract

Honorable 0. Kennedy, i&y 19, 1939, Page 2

books are prepared at considerableexpense end are c# great value to the owners thereof in that they constitute the vark- ing plant of a profitable business. It is commonly known that these books possess a value by reason of the facts con- tained therein and the use to which they may be put, rather than the intrinsic value of the books, themselves, vrhlch from a tax standpoint Hould be inconsequential. There is a dearth of authorities upon this ques- tion in Texas, but as early as 1887 and before, ths courts of other jurisdictionshave concerned tlmmselves with this ques- tion because the novelty of abstract books as articles of ownership has given rise to some doubts as to their legal character as property. In resorting to the decisions of other states fnr persuasive authority to support this'opinion, we find in such states a contrariety of opinion, ani it shall be our purpose to determInewhich of these tm, lines of deoi- sions should be followed. The early case d Dart v. Woodhouse, 40 gich. 399, 29 Am. Rep. 44, while not involving a tax question, is impor- tant in determining the nature of abstract books as property, in that it held that *an execution levy made on a set of manu- script abstract books was of no validity, beoause the right of tlm proprietor of such manuscript to publish it IX to keep it back from publication is not a property right but one which is purely incorporated,ati attended with considerationsof a nature entirely different.-fromany involved in other rights.' The principle of law announced in this case is followed by the same court in Perry v. City of Big Rapids, 34 N. W. 530, and _.- Loomis v. City of Jaction, 90 N. VV.328 Both of these cases Involve a tax question, and the case of-Perry v. City of Big Raoids, which appears to be a leading case, holds that the -ion in the constitutionof Michigan vhich requires as- sessments to be made on property at its cash value, means not only wlmt may be put to valuable uses, but what has a recogniz- able pecuniary value inherent in itself, end not enhanced or diminished according to ths person who owns cr uses it, and hence manuscript books containing abstracts of land titles were not liable to taxation, as they had no intrinsic value but were valuable only for the informationthey contained and which is conveyed by consultation or abstracts made therefrom. This holding by the Supreme Court of Michigan has

Honorable 01 Kennedy, Ray 19, 1939, Page 3

been directly overturned by later decisions by the Supreme Courts of three different states, and has been severely criticized in two of t&se decisions, wherein it was-pointed 'out that the Michigan decision was by a divided court, and ms based upon reasoningwhich though ingenious was unsatis- fying, The case of Leon Loan and Abstract Company v. Equal- ization Board of Leon et al, 33 N. W. 94 by the Supreme Court of Iowa, was s,everestin its condemnatioiof the Xchigan cases hereinabove cited, and held that the abstract books, having an actual market value, and usable by anyone of ordinary in- telligence as a means of profit, axe personal property.and liable t;;ereforeto taxation, notwithstandingtheir manuscript character, and the fact that they are valuable only for the 'informationthey contain,which must be obtained by consulta- tion or extract therefrom. Similar disap?rowl of the Michigan cases is voiced by Freeman, in his wrk on Executions, Section 110. The comparativelyrecent case of State v. St. Paul Abstract Company, 196 N. W. 932 by the Supreme Court of Rinne- sota in 1924, reasons very convincinglyas follows: "The abstract plant consists;of abstracts of title to real property in Ramsey county, taken from the official public records and assembled in books with copious indexes, together with the articles of e uipment used in connectiontherewith; 3%e matter contained in such books is collected from the public records, and In no manner par- takes of scientific discoverdes, nor are they like the manuscripts of an author, or a copyright, as contended for. "The general work of compiling these books is a mere copying of extracts from public records and assemblingthem in abstract books far convenience in furnishing ab- stracts of title to land in Ramsey county, to such persons as are in needTre ",",,same and willing to pay therefor. fact that there was kept an index, Seth a secret ksy, thereto, changed the character of the property no more than would a Yale

Honorable 0. Kennedy, Kay 19, 1939, Pege 4

lock on the outer door of a dwelling, with a key in the pocket of the occupant, change the domicile. In other words the fact that informationcontained in the card index is in the form of a secret code or indicia t& key of which is known only to the me&)ers of the ap:>ellant, in no way changes the characterof the property, in our view of the situation. Nor does the fact that ths owners keep the abstracts of title prompted to date, by taking extracts from instruments re- corded in the office of the register of deeds and assembling them in the abstract books, change the situstion, other than to enhance the value of th? plant. Vie are of the opinion, and hold, that books containingabstracts of land titles v:hichhere a recognized tdalue,and which are kept and used as the basis of a busi- ness for profit, constitute taxable pro- 26 R. C. L. 138, and cases therein m- .n It is our conclusion:thatthe weight of authority, as well as sauna reasoning, supports the view that abstract books, especially as prepared and maintained under modern con- a.itions,constitute "personal property" within the meaning of titicles 7145 and 7147, &vised Civil Statutes of Texas, and are subiect to taxation. 61 C. J. 192. 26 R. C. L. 132. 1 R. C. L:~90. atate v. St. ?aul Abstract Compen , 196 N: 6i. 932, Leon Loan and Abstract Company v. .equalizaion Board of Leon et al, 53 N. ii. 94, Booth Ranford Abstract Company v. P. 489, 23 L. R. A. 864. Xashinston Bank of iialla Abstract and Security Company, 15 Nash. 487,

The opinion of this departinentaaverted to at the outset, is grounded upon the minority rule announced in Perry

fkmorable 0. Kennedy, h;ay19, 1939, pee 5 v. city of aig Sapids, supra, snd is accorhingly overruled.

Yours very truly ATTORNEY GXNZR4L OF TEXiS

AppROiiD: