May 14, 1956 

Hon. Robert S. Calvert 

Comptroller of Public Accounts 

Opinion No. S- 198 

Capitol Station 

Austin, Texas 

Re: fnherttance tax ltabiitty of 

bequests to certain foreign 

charitable corporations. 

Dear Mr. Calvert: 

We quote the following excerpts from your le;tter requesting our 

opinion on the above-captioned matter. 

‘C. Ii. Seabrook died January 30; 1953, a resident of Texas, 

Leaving a will which. after several specific bequests, provides that his estate shall go to The Mercantile National Bank, 

Dallas, Texas, as trustee. The income is to be paid to the 

wife for life. On her death the property in the hands of the 

trustee is to be transferred to the following named religious, 

educational and charitable organizations: 

-Principia College, Elsah, MO.; 

Christian Scientist Benevolent Association, 

San Francisco, Cal.; 

Christian Scientist Benevolent Association, 

Boston, Mass.; 

Pleasant View Home for the Aged, Concord, 

N.H.; 

First Church of Christian Scientist, Dallas, 

Texas; 

Scottish Rtte Hospital for Crippled Children, 

Dallas, Texas. 

‘Decedent’s wife died about 8 months after his death. The 

trustee has reduced the trust to cash and has delivered the 

shares to the respective beneficiaries. The trustee held a 

sufficient amount of each payment to pay the inheritance 

taxes proposed by the State Comptroller. 

‘The trnstee at the time of delivery to each beneficiary had 

each to sign a commitment or statement to the effect that 

the bequest would be used in Texas. 
88 

Hon. Robert S. Crlvert, page 2 (Opinion No. S-198) 

“In connection with the transfer by the trustee of the 

trust property to the beneficiaries, decedent’s will provides as follows: 

*‘It shall be the duty of the trustee in any such 

transfer to condition the same by a provision 

that tbe gift or gifts are to be used within the 

State of’.Texas. There shall be no duty or obligation on the trustee to see that the terms of 

the aforementioned conditions are fulfilled or 

to further concern ttseif with the trust properties and the use thereof after said transfer has 

been made.’ 

‘The Comptroller concedes that the last two names beneficlar ies above are exempt from lnherltancc tax as they 

are religious, educational or charitable organisatioas organised under the laws of the State of Texas and the bequests will be used in Texas, 

“The Comptroller contends that the first four named organizatlons are dus an inheritance on their bequests 

because: 

‘( 1 They are foreign corporations, 

*(2 1 That such bequests on account of the 

location of the organizations cannot 

be used in Texas. l 

We are in receipt of photostatic copies of the charters of the 

Christian Science Benevolent Association on Pacific Coast, Christian Science 

Benevolent Association and The Christian Science Pleasant View Home, Like-. 

wise, each of these corporations has furnished us with a certified copy of a 

resolatlon passed by the trsstees of the respective institutions. These resolutions in substance state that the bequest will be held in trust in a fund to be 

known as the ‘Cbar.les H. Seabrook Fund’ which shall be available only for 

use in the State of Texas for purposes COMiStent with the charitable purposes 

of the respective institutions, including specifically gifts to individuals wtthin the State of Texas for care by Christian Sclencc nurses and Christian 

Science practitioners, living expenses and other charitable purposes. 

We have received from the Principia Corporation a photos’tatic 

copy of its char&r and a certified copy of a resolution duly executed by said 

corporation, under tie terms of which the corporation accepted its legacy in 

accordance with the terms of the will requiring that the Legacy be used in 

this State and dedicated said legacy to a fund to be known as the *Seabrook 
59 

Hon. Robert S. Calvert. page 3 (Opinion No. S-198) 

Fund” to be used within this State for purposes consistent with the charitable purposes of the Principia Corporation, including specifically gifts to 

individuals within the State of Texas for educational expenses, scholarships 

and other charitable purposes. 

In McIntire’s Estate, 34 Pac. 2d 432 (Wash. Sup. 1934). the case 

cited in your request, the court was concerned wlth exemption under the following provision of tha Washington statute: 

‘All gifts, bequests, devises and transfers of property 

situated within or under the jurisdiction of the State of Washington shall be exempt from the payment of any Inheritance 

tax, when the same are for one of the following charitable 

purposes. , . Provided, That all such gifts, bequests, devises and transfers be limited for use within the State of 

Washington’ 

The bequest lnquestion was to the Congregational Board of 

Ministerial Relief, a Connecticut corporation, in trust for the benefit of 

needy ministers of the Congregational Church in the State of Washingtonand 

their widows. 

The majority opinion held that only domestic corporations could 

qualify for exemption, saying, at page 434, that ‘the bequest itself must go 

out of this state into the state of Connecticut to be used in that state by the 

foreign corporation to produce the income provided by the will.” 

Three judges dissented. We quote the following excerpt from 

the dissenting opinion: 

‘If the bequest in this case was to ‘the Congregational Board of Ministerial Relief, a corporation organized 

under the laws of the state of Connecticut in 1907,’ without 

limitation or qualification. the majority opinion would be 

correct, but the will provides that the bequest shall constitute a ‘trust for the uses and purposes and upon the terms 

herein set forth, to-wit: 

***********+***t+ 

-‘The said fund is to be invested and reinvested by 

the said Board, and its income only shall be used to assist in the support and maintenance of aged, needy and 

dependent ministers of the Congregational Church in the 

State of Washington and their widows; it being my intention that this bequest to the Congregational Board of 
Hon. Robert S. Calvert, page 4 (Opinion No. S-198) 

Ministerial Relief shall be limited for use within the State 

of Washington and shall be granted for the relief of only 

such aged, needy and dependent ministers and their widows as may be actually resident within said state.’ 

‘It cannot be said that the gift was for the benefit 

or maintenence of a foreign charity, or to be used even 

partly in its jarisdiction, but through such charity for use 

only in this state, This limitation distinguishes this case 

from the aathorlties cited in the majority opinion, as I 

understand them, and brings It wlthin the terms of our 

statute.* 

In re Thomas’ Estate, 53 P. 2d 305 (Wash. Sup. 1936) held that 

a bequest to ‘Salvation Army of Spokane’ for charitable uses was not exempt 

from inheritance tax where donee was a California corporation authorized to 

do business in the State of Washington, The court said that the state had no 

visitorial power enabling it to enforce compliance with will’s direction that 

the property be used in the State of Washington. 

The judge who wrote the majority opinion pointed out that he had 

concurred in the dissent in the McIntire case but that it mast now be regarded as the established rule. One judge concurred solely for the same reason 

and one judge dissented. 

Obviously all of the cases which have passed on whether charltable bequests to foreign corporations are exempt are bottomed on the 

particular statutory provision involved. See Annotations in 168 A.L.R. 1260n 

and 108 A.L.R. 300n. 

The first Texas Inheritance Tax Act1 exempt property passing 

to *any public corporation or charitable, educational or religious organisation within this State when such bequest, gift or devise 1s to be used for 

charitable, educational or religious purposes within this State . , .- (Emphasis supplied throughout.) 

In 1923 the exemption provision was amended and subjected 

charitable devises to tax if property passed to y . . . any religious, education. or ,charitable organization, located without the State of Texas, or to 

any religious, education or charitable organization located in the State of 

1 General Laws, 30th Leg., 1st C. S., 1907, ch. 21, p. 496. 
Hon. Robert S. Calvert, page 5 (Opinion No. S-198) 

Texas,. . . and the bequest is to be used without this State . . .r2 

In 1927 the above quoted section was again amended and an exemption-was provided for property valued at less than $25,000.00 tf the 

property was devised to a charitable organization ‘located within this state’ 

and to be used within the state. Property in excessof $25,000.00 in value 

was subject to tax.3 

In 1931 the Legislature passed House Bill 741,4 the pertinent 

portions of which are the following. 

‘If passing to . . . any religioas, educational or 

charitable organization or institution located without the 

State of Texas, or to any religious, educational or chariw organization or institution located in the State of 

Texas or to the United States, and the bequest, devise or 

gift is to-be used without this State, . . . the tax shall 

be . . . 

The above quoted provision was construed in San Jacinto Nat. 

Banlc v. Sheppard, et al, 125 S.W. 2d 715 (Tex. Civ. App. l-9). The court 

heldted’ as used in the statute was used by the Lexislature in the sense of domicile or residence of a corporation and not only 

to distingulsh generally a foreign from a domestic corporation but to require that even a domestic corporation, in order to claim a more favorable 

exemption, must use the devise or gift within the state. 

At the date of the death of the decedent in the instant case, 

Article 7122, Vernon’s Civil Statutes, had again been amended.5 The pertinent provision reads as follows: 

‘Provided, however, that this Article shall not 

apply on property passing to or for the use of . . . any 

religious, educational or charitable organization when 

such bequest, devise or gift is to be used within this 

State.’ 

2 Acts, 38th Leg., 2d Called Sess., 1923, ch. 29, PP. 63, 85. 

3 Acts, 40th Leg., R. S.. ch. 62, p. 87. 

4 Acts, 42nd Leg., ch. 72, p. 109. 

5 Acts, 43rd Leg., R. s., 1933, ch. 192, pp. 581, 592. 
Hon. Robert S. Calvcrt. page 6 (Opinioo No. S-198) 

The above quoted portion of the statute was construed in 

Presbyterian Church in the U. S. v, Sheppard, 198 S.W. 2d 282 (Tex. Civ. 

App. 1946, error ref., n.r.e.). In that case & bequest in question was to 

ths Presbyterian Church in the United States. No limitation as to use was 

expressed in the will. It was stipulated that the Presbyterian Church 

: through its proper officials had satisfied the State of Texas and its proper 

officials that said Church had Legally obligated itself by action taken subsequent to the death of the decedent to use the bequest in its entirety within 

the State of Texas. The court held that the bequest was subject to tax upon 

the date of the death of the decedent and that the subsequent agreement on 

the part of the Church could not effectuate exemption, At page 284 the court 

said: 

Y 

. . . The will contained no language limiting 

or directing that the devisee church use the property in 

Texas only, and under no rule of construction can the 

will be construed as showing the intention of testatrix 

to require that the property be used only in Texas. 

. , * Thus the property passed to appellant church upon the death of testatrix without limitation, restriction 

or reservation as to where or in what manner it was to 

be used. It is this character of succession or passing 

of property to a religious organization that the foregoing 

statute expressly seeks to tax.” 

Although the question was not before the court, the clear implication of the foregoing language is that had such limitation been expressed in 

the will, exemption would have been accorded even though the General Assembly, the governing body of the Church, was incorporated under the laws of 

North Carolina. 

The 54th Legislature again amended Article 71226 and it now 

contains the following provision: 

*Provided, however, that this Article shall not apply 

on property passing . , . to or for the use of any religious, 

educational or charitable organisation, incorporated, unincorporated or in the form of a trust, when such bequest, 

devise or gift is to be used within this State. The exemption 

from tax under the preceding provisions of this Article shall, 

without limiting its application under othe’r appropriate circumstances, apply to all or so much of any bequest, devise 

6 Acts, 54th Leg., R. S., 1955, ch. 389, p. 1032. 
Hon. Robert S. Calvert, page 7 (Opinion No. S-198) 

or gtft to or for the use of . . , a religious, educationalor 

charitable organization, which is, in writing and pr.ior to 

the payment~of the tax, irrevocably committed for use excluslvely within’ the State of Texas or transferred to a religious, educational or charitable organization for use.exclusively within this State.’ 

The foregoing history of the Texas exemption provision shows 

that since 1933 the statute has omitted any reference to the location of the 

charitable organization which receives a gift or bequest. The controlling 

statute in this case allows exemption for property passing to *an 

charitable organization when such bequest, devise or gift la to -8. e used í l 

within this State.. Exemptions to charitable organinations are bottomed 

upon the fact that they render service to the State for which reason they are 

relieved of certain burdens of taxation. The will in this case expressly requires that the charitable bequests be used in this State. The charitable 

donees have undertaken the before summarized guarantees that said bequests 

will be used in this State. You are therefore advised that the statutory requisites for exemption have been satisfied and that no inheritance taxes are 

due. 

SUMMARY 

Bequests to foreign charitable corporations are not 

subject to inheritance taKes where will conditioned bequests 

upon corporations’ acceptance of will’s requirement that the 

bequests be used within the State of Texas and where corporations complied with this requirement. 

APPROVED: 

W. V. Geppert 

Taxation Division 

Yours very truly, 

JOHN BEN SHEPPERD 

Attorney General of Texas 

J. C. Davis, Jr. 

Reviewer 

J. Arthur Sandlin 

Reviewer 

L. W. Gray 

Special Reviewer 

Davis Grant 

First Assistant 

i, John Ben Shepperd 

k. Attorney General ,~A.