to have issued and to sell for the account of the government of Puerto Rico bonds with a face value of $500,000, the proceeds from which are to be devoted to the purchase from the Puerto Rico Railway, Light & Power Co., of the hydroelectric plant constructed to utilize the waters of the Rio Blanco River of Naguabo and its tributaries. You further state that the bonds are to be dated January 1, 1940, and to mature in series as follows: Series A, $100,000, July 1, 1946. Series C, $100,000, July 1, 1948. I have examined the proposed form of bond and other documents submitted with your letter, including opinions in favor of the validity of the proposed issue by both the Attorney General of Puerto Rico and the Solicitor of your Department. The Solicitor's opinion deals at length with the legal phases of the matter and there appears to be no occasion for further detailed discussion here. I find that all the statutory requirements regarding the issue and sale of the said bonds have been complied with and that the form of bond submitted is in compliance with the law and the determinations of the Treasurer, approved by the Governor. The form of bond properly recites that "under the provisions of section 3 of the act of Congress, approved March 2, 1917, as amended by the act of March 4, 1927, this bond is exempt from taxation by the Government of the United States, or by the government of Puerto Rico or of any political or municipal subdivision thereof, or by any State, Territory, or possession, or by any county, municipality, or other municipal subdivision of any State, Territory, or possession of the United States, or by the District of Columbia." It is therefore my opinion that the bonds, when issued in the amount and form proposed, will constitute valid and binding obligations of the People of Puerto Rico. Respectfully, ROBERT H. JACKSON. TAXABILITY OF LAND UNDER BANKHEAD-JONES FARM TENANT ACT Land acquired by the Government through purchase at foreclosure sale or the acceptance of a deed in lieu of foreclosure under the Bankhead-Jones Farm Tenant Act is not subject to State and local taxation. The SECRETARY OF AGRICULTURE. JULY 25, 1940. MY DEAR MR. SECRETARY: Reference is made to your letter of April 25 requesting my opinion concerning the applicability of section 50 of the Bankhead-Jones Farm Tenant Act (c. 517, 50 Stat. 522, 531, approved July 22, 1937), in cases where lands purchased by borrowers with the proceeds of loans made under title I are subsequently acquired by the United States through purchase at foreclosure sales or, in some cases, the acceptance of deeds in lieu of foreclosure: The section reads as follows: "SEC. 50. (a) All property which is being utilized to carry out the purposes of title I or title II of this act (other than property used solely for administrative purposes) shall, notwithstanding that legal title to such property remains in the Secretary or the Corporation, be subject to taxation by the State, Territory, District, dependency, and political subdivision concerned, in the same manner and to the same extent as other similar property is taxed. "(b) All property to which subsection (a) of this section is inapplicable which is held by the Secretary or the Corporation pursuant to this act shall be exempt from all taxation now or hereafter imposed by the United States or any State, Territory, District, dependency, or political subdivision, but nothing in this subsection shall be construed as affecting the authority or duty of the Secretary under any other law to make payments in respect of any such property in lieu of taxes." Title I of the act authorizes loans to farm tenants, farm laborers, share croppers, etc., to enable them to acquire farms. (Title II deals with loans for the purchase of livestock, farm equipment, supplies, other farm needs, etc.) Loans made under title I are required to be secured by "a first mortgage or deed of trust on the farm." A mortgage conveys the legal title to the mortgagee. When a default occurs and the property is disposed of to a private bidder at a foreclosure sale it is no longer "utilized to carry out the purposes of title I" unless, perchance, the purchase is made by or in behalf of one who is entitled to benefit under the title and obtains a loan thereunder to finance the purchase. If the Government bids in the property or otherwise acquires it for the protection of its interests under the mortgage it is likewise literally true that the property has ceased to be "utilized to carry out the purposes of title I." It has been suggested by your Solicitor that such an interpretation gives little, if any, effect to the provisions of section 50 (a) since "the fact that the United States has such a security interest does not, even in the absence of statute, result in rendering the land exempt from State taxation," and that a broader interpretation would more nearly accord with the policy evidenced by recent enactments of the Congress. It appears, however, from the report of the committee of conference which drafted the provisions of section 50 as enacted, and from a "statement of the managers on the part of the House," thereto annexed (House Rept. 1198, p. 15, 75th Cong., 1st sess.), that it was the purpose to provide for taxation of "real and personal property in the hands of beneficiaries of titles I and II." I quote below from the report: "(4) Under the House bill, property held by the Secretary was tax-exempt but property which was in the hands of the beneficiaries of the tenant and rehabilitation provisions was subject to taxation. By reason of the inclusion of a corporation in the conference agreement, it is necessary to carry over some of the provisions of the Senate amendment relating to taxation and tax exemption of the corporate property. The conference agreement provides that even though title is in the Secretary or the Corporation, real and personal property in the hands of beneficiaries of titles I and II is subject to taxation. Property of the Corporation or the Secretary (used for administrative purposes) and property owned by them and not in the hands of such beneficiaries is tax-exempt. The Corporation's franchises, income, notes, etc., are tax-exempt. An express provision of the conference agreement preserves the power and duty of the Secretary to make such payments in lieu of taxes on property held by him as are now authorized by law." [Italics supplied.] It is my opinion that the statute is to be applied in accordance with the literal meaning of its terms, with the result that land acquired by the Government through purchase at foreclosure sale or the acceptance of a deed in lieu of foreclosure under section 51 is not subject to section 50 (a) but is subject to section 50 (b) and exempt from taxation as therein provided. Respectfully, ROBERT H. JACKSON. ESTABLISHMENT OF BRANCHES BY NATIONAL BANKS Under sec. 114, Michigan Financial Institutions Act, adopted and made applicable by sec. 5155 R. S., as amended, a national bank doing business in Michigan may establish and operate as branches, anywhere in the State, existing State or national banks legally acquired by purchase or consolidation, provided that statutory requirements of capital are met. 36 Op. 344 distinguished. The SECRETARY OF THE TREASURY. JULY 30, 1940. MY DEAR MR. SECRETARY: I have your letter of July 12 in which you state that "in the administration of the office of the Comptroller of the Currency, a question has arisen whether a national bank doing business in the State of Michigan may establish and operate as branches, anywhere in the State, existing State or national banks legally acquired by purchase or consolidation, provided that statutory requirements of capital are met." The pertinent Federal statute is section 5155 R. S., as amended (U. S. C., title 12, sec. 36 (a), (b); U. S. C., Supp. V, title 12, sec. 36 (c)). I quote below, in part, the section as it now appears in the Code. "The conditions upon which a national banking association may retain or establish and operate a branch or branches are the following: "(a) A national banking association may retain and operate such branch or branches as it may have had in lawful operation on February 25, 1927, and any national banking association which has continuously maintained and operated not more than one branch for a period of more than 25 years immediately preceding February 25, 1927, may continue to maintain and operate such branch. "(b) If a State bank is after February 25, 1927, converted into or consolidated with a national banking association, or if two or more national banking associations are consolidated, such converted or consolidated association may, with respect to any of such banks, retain and operate any of their branches which may have been in lawful operation by any bank on February 25, 1927. "(c) A national banking association may, with the approval of the Comptroller of the Currency, establish and operate new branches: (1) Within the limits of the city, town, or village in which said association is situated, if such establishment and operation are at the time expressly authorized to State banks by the law of the State in question; and (2) at any point within the State in which said association is situated, if such establishment and operation are at the time authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks. ***"" [Italics supplied.] The State law thus made controlling here by the Federal statute is found in sections 34 and 114 of the Michigan Financial Institutions Act (Mich. Stat. Ann., 1939 Supp., secs. 23.762 and 23.867), which read as follows: "SEC. 34. Any bank having a capital of at least fifty thousand ($50,000) dollars may establish and maintain branches within any village or city other than that in which it was |