Honorable Robert S. Calvert Opinion No. M-15 

Comptroller of Public Accounts 

Capitol Station Re: Constltutionallty of 

Austin, Texas Article 14.0’7(2), Ch. 14, 

Title 122A, TaxatlonDear Mr. Calvert: General, V.C.S. 

Article 14.0'7'(2), Chapter 14, Title 122A, TaxatlonGeneral, Vernonls Civil Statutes reads as follows: 

“(2) Resident Decedent. In the event 

a resident of this State dies, leaving any 

estate subject to an Inheritance tax, situated 

partly within and partly without this State, 

the Inheritance tax Imposed upon the share of 

any beneficiary of said estate situated in 

Texas shall be a tax which shall bear the same 

ratio to the amount such tax would be If his 

entire share and Interest were situated In 

Texas, before allowable beneficiary deductions, 

bears to the total value of such beneficiary's 

share In such decedent’s estate, wherever situated, before allowable beneficiary deductions 

are made. ” 

We quote the following excerpt from your letter requesting the opinion of this office on the constitutionality 

of the above quoted statute. 

said 

"Our Interpretation of the provlslonb of 

Article Is calculated as follows: 

Gross Estate 'Wherever Situated $115,486.14 

Less: Funeral and Administration Fxpenses. 

Debts of the Decedent, Mortgages 

and Liens 

Net Estate Wherever Situated 

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Honorable Robert S, Calvert, page 2 (M-15) 

Gross Estate Situated In the State of Texas 

Less: P;;centaged as follows) 

. 

,'+Bb.14 X $458531.57 - 

$ 32,806.14 

12.935.52 

Net Estate Situated In the State of 

Texas $19,8?‘0.62 

, a niece of the decedentJ Inherited 

e total net estate. 

Net Estate Wherever Situated 

Total Texas Inheritance Tax Due If Entire 

Net Estate Was Situated In the State of 

Texas $2,447.73 

Percentage of Net Estate Situated In the 

State of Texas 

Total Texas Inherlta 

.2841 

m 

You state that the attorneys for the estate take the position that the provisions of Article 14.07(a) are unconstitutional 

under Section 1 of Article VIII of the Texas Constitution. You 

further state that the attorneys also refer to a regulation In the 

Comptroller's pamphlet (entitled "Inheritance Tax and Federal Estate Credit") at page 20. This regulation states In substance 

that the State of Texas does not impose an Inheritance tax on real 

property of a Texas decedent If It is located outside the State. 

With regard to this regulation, you state that It was correct under 

the old law but "this regulation is now obsolete and was lnadvertently left In the pamphlet when House Bill 1182, Acts of the 59th 

Legislature, made the changes In our Inheritance Tax Law. A new 

printing of our pamphlet will omit this regulation." 

The brief which has been filed by the attorneys for the 

estate further challenges the efficacy of Article 14.07(2) on the 

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Honorable Robert S. Calvert, page 3 (M-15) 

ground that the caption of House Bill 1182 Is defective. 

Another defect Is alleged as follows: 

"Article 14.07(2) Is defective since 

the application of such statute requires the 

calculation of two unknown factors In a fourfactor equation. Such defect Is apparent when 

Article 14.07(2) Is compared with Article 14.07 

(l), the Immediate next preceding statute. It 

Is obvious that the phrase 'as the total value 

of the beneficiary's share of the decedent's estate which Is situated In Texas' was left out of 

Article 14.07(2), and that such phrase must be 

Inserted Immediately next preceding the phrase 

'before allowable beneflclary deductions' before 

the calculation of any tax Is possible." 

Article 14.07(l) reads as follows: 

"(1) Non-resident Decedent. The lnherltance tax Imposed upon every beneficiary's 

share of the estate of a non-resident decedent 

shall be a tax which, In amount, bears the same 

ratio to the entire tax for which the beneflclary's Interest would be liable If the entire estate were situated In Texas, as the total value 

of the beneficiary's share of the decedent's estate which Is situated In Texas, before allowable 

beneficiary deductions are made, bears to the 

total value of the beneficiary's entire share In 

the estate of the non-resident decedent wherever 

situated, before allowable beneficiary deductions 

are made." 

We shall first pass upon the constitutionality of Artlcle 14.07(2). We think that the decision In 

S.W.2d 593 (1934), a Commission of Appeals 0 

the Supreme Court, disposes of the contention that the provisions of Article 14.07(2) are in violation of the provlslons 

of Section 1 of Article VIII of the Texas Constitution, requlrlng taxation to be equal and uniform. In s, the court held 

that the provisions for different exemptions and percentages or 

rates In the various classlflcatlon provisions of the lnherltante tax statutes were constitutional. The basis of this holding was that Inheritance taxes are "privilege taxes"; and that 

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Honorable Robert S. Calvert, page 4 (M-15) 

since they are a tax on the right of succession and not on the 

property passing, such classlflcatlon provisions were valid. 

Before reaching this conclusion, the court pointed out the 

fundamental rule that where a statute Is susceptible of two 

constructions, every possible presumption In favor of Its constltutlonallty will be made; and such presumptions will prevail until the contrary Is shown beyond a reasonable doubt. The basic 

principle of this case has been followed In subsequent lnherltante tax cases. 

Under the reasoning of this declslon, we think It la 

clear that the legislature may speclflcally provide two different classifications for a resident decedent, making the classification depend on the location of the property of the decedent, 

Even though such classlflcatlon results In different amounts of 

taxes, It Is no more discriminatory that the classification provisions ba.sed on relationship to the decedent. 

With regard to dlscrlmlnatlon, the attorneys for the estate made the following statement at page 6 of their brief: 

"Article 14.07(2) Is discriminatory 

In character since a Texas decedent who 

owns no real property outside of the State 

of Texas is taxed at a lower rate than a 

Texas decedent who owns real property outside of the State of Texas." 

We think that the Supreme Court of the United States 

disposed of this ar ument 

(1919). t 

In Maxwell v. Bwbee, 250 U.S. 525 

At pages 5 0, 541, the court said: 

” , 

. . . They finherltance taxesJ are 

based upon two principles: 1. An lnherltante tax Is not one on property, but one on 

the succession. 2. The right to take property by devise or descent la the creature of 

the law, and not a natural right -a privilege, 

and therefore the authority which confers It may 

Impose conditions upon It. From these principles 

It 1s deduced that the States may tax the prlvllege, discriminate between relatives, and between 

these and strangers, and grant exemptions; and 

are not precluded from this power by the provisions 

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Honorable Robert S. Calvert, page 5 (M-15) 

of the respective state constitutions requlrlng uniformity and equality of taxation.'" 

The rule of Immunity from taxation by a state, upon the 

transfer, on the death of the resident owner, of 'property having an actual physical location or sltus In another state, does 

not apply to such a statute as Article 14.07(2). This statute 

merely uses the entire estate, wherever situated, In determining 

the rate of tax to be applied to the transfer of property within 

the state and does not purport to compute the tax with respect 

to the part within the state on the value of the whole. Consequently, such a statute IS not unconstitutional. 28 Am.Jur. 207, 

Inheritance, Estate, and Gift Taxes, Sec. 270; Maxwell v. Busbee, 

supra. 

Maxwell also disposes of the due process problem. In 

Maxwel1,thet.mt held that the fact that a state tax on succession to local property of a non-resident decedent la measured 

by the ratio In value of such property to the entire estate, including real and personal property in other states, does not make 

It a tax on property beyond the jurisdlctlon of the state and Is 

therefore not violative of the due process clause OS the Fourteenth 

Amendment, At page 539, the court said: 

"It Is not to be disputed that, consistently with the Federal Constitution, 

a State may not tax property beyond Its 

terrltorlal jurlsdlctlon, but the subjectmatter here regulated is a privilege to 

succeed to property which Is within the 

jurisdiction of the State. When the State 

levies taxes within Its authority, property 

not in Itself taxable by the State may be 

used as a measure of the tax Imposed. rnls 

principle has been frequently declared by 

decisions of this court. In the present 

case the State imposes a pkklege tax, 

clearly within Its authority, and It has 

adopted as a measure of that tax the proportion which the specified local property 

bears to the entire estate of the decedent. 

That It may do so within llmltatlons whSch 

do not really make the tax one upon property 

beyond Its jurisdiction, the decisions to 

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f 

Honorable Robert S. Calvcrt, page 6 (M-l5j 

which we have referred clearly establish. 

The transfer of certain property wlthln the 

State la taxed by a rule which considers the 

entire estate in arrivlni: at the amount of 

the tax. It 13 In no .;c::.t z:cnr,e a tax upon 

the foreign property. ~e;il or personal. It 

Is only In Instances :nere the State exceeds 

Its authority In Imposing a tax upon a subject 

matter within I's jurisdiction In such a way 

as to really amount to tnxlng that which Is 

beyond Its authority, ':hut such exercise of 

power by the State is .leld void. To 

say that to apply a different rule'rig;latlng 

succession to .,sldent and nonresident decedents la to levy a tax upon foreign estates, 

Is to distort the statute from its purpose to 

tax the privilege, which the statute has created, Into a property tax, and is unwarranted 

by any purpose or effect of the enactment, as 

we view It." 

In holding that the equal protection of the law clause of 

the Fourteenth Amendment was not violated, the Maxwell case further 

declares at pages 541 and 543: 

"Equal protect&on of the laws requires 

equal operation of the laws upon all persons 

In like circumstances. Under the statute, In 

the present case, the graduated taxes are 

levied equally upon all interests passing from 

non-resident testators or Intestates. The tax 

Is not upon property, but upon the privilege of 

succession, which the State may grant or withhold. 

It may deny It to some and give It to others. 

The State is dealing In this Instance not 

with the transfer of the entire estate, but only 

with certain classes of property that are subject 

to the jurisdiction of the State. It must find 

some rule which will adequately deal with this 

situation. It has adopted that of the proportion 

of the local estate In certain property to the 

entire estate of the decedent. In making classlflcation, which has been uniformly held to be wlthIn the power of the State, Inequalities necessarily arise, for some classes are reached, and others 

omitted, but this has never been held to render 

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s . 

Honorable Robert S. Calve&, page TV (K-15) 

such statutes unconstitutional. Beers v. 

Glynn, 211 U.S. 477. This principle has been 

recognized in a series of cases In this court 

. . . It has been uniformly held that the 

Fourteenth Amendment does not deprive the 

States of the right to determine the llmltations and restrictions !lpon the right to lnherlt property, but 'at the most can only be 

held to restrain such an exercise of power as 

would exclude the conception of Judgment and 

discretion, and which would be so obviously 

arbitrary and unreasonable as to be beyond the 

pale of governmental authority.' The 

Fourteenth Amendment does not dlminl~h'the taxing power of the State, but only requires that 

In Its exercise the citizen must be afforded an 

opportunity to be heard on all questions of llablllty and value, and shall not, by arbitrary 

and discriminatory provlslons, be denied equal 

protection. It does not deprive the State of 

the power to select the subjects of taxation. 

But It does not follow that because it can 

tax any transfer (hatch v. Reardon, 204 U.S. 

152, Pjq), that it must tax all transfers, or 

that all must be treated alike. 

"The question of equal protection must 

be decided as between resident and non-resident 

decedents as classes, rather than by the lncldence of the tax upon the pnrticular estates 

whose representatives are here complalnlng. 

Absolute equality is impracticable In taxation, 

and Is not required by the equal protection 

clause. And lneo.ualltien that result not from 

hostile discrimination, but occasionally and 

Incidentally in the appllcatlon of a system 

that Is not arbitrary In It:; clanslflcatlon. 

are not sufficient to defeat the lava." 

Maxwell was concerned with the validity of a statute 

which dealt with non-resident decedent; differently from 

resident decedents in determining the amount of the lnherltante tax. In 14.07(2), we are concerned with a distinction 

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Honorable Robert S. Calvert, page 8 (M-15) 

between resident decedents, said distinction being based on 

whether the resident decedent:; owned property outside this State 

a3 well as within this State. We deem thl:; difference In the 

statute under consideration to m:kke no difference in the appllcablllty of the principles enunciated In Maxwell. We therefore 

hold that Article 14.07(2) In no way vlolatestkie Fourteenth 

iimendment. 

Their contcntlon Is tliclt the ::tate Is bound by its 

error In falling to revoke OS cancel Ita prior regulation promulgated under the old :;tatute and Inadvertently Included In Its 

publlshed booklet entitled "Inheritance Tax and Federal Estate Tax 

Credit State of Texa:; 1965." However, It further appears that 

there has been no administrative or departmental practice, construction, or Interpretation applying the statute in such a way as to 

omit real property of decedents in other states In determining the 

rate of tax to be applied. Under such circumstances, we cannot 

hold that the state is bound to its prejudice by such an error. 

In any event, it is well settled In Tcxaa, and elsewhere, that 

the state does not lose Its right to taxes by reason of lathes, 

estoppel, or acts of negligence or inadvertence of Its officers; 

for It cannot bc thereby cut off from the lawful exercise of Its 

sovereign powers. State v. Federal Land Bank of Houston, 1.60 Tex. 

292, 329 S.W.2d 847 (1 )- city of s an 'arc03 v. Zimmerman, 3Gl 

S.W.2d 929 (Tc~.Cl~.Ap~?~1$62 , error ref., n.r.e.); Schriver v. 

Board of Com'rs of Sedgwlck County, 189 Han. 548, 37b P 2d 124 

(1 b9j* Inhabitants of Town of Milo v. Ml10 Water Co., i3 Me. 372, 

-16; i.'lb3 1932). Institute for Trend Research v, G rlffln, 

2d 268 (195 ); Lekn' 

139 A. 

State, 2 S.W.2d 199, 200 Tex.Clv.App. 

1951, no writ hlst.); North American Co. v. Green, 129 So.2d 603 

(1959); Con;ol;;ate; Co. of Ne;.York v. Ct;tz Tax Commission, 261 

N.Y.S.2d 7b [l 65 W lk Hi 1 C 0. v. t d States, lb2 >'.2d 

259 (7th Clr. i947 , czrtr%n. 323 U.S. 771. 

The next contention Is that the title of House Bill No. 

1182 enacted in 1965 Is insufficient for failure to contain a 

statement that the Inheritance tax was to be computed by lncludlng real property of Texas decedents located outside Texas. This 

contention is further buttressed by a statement In the title, wherein It Is recited that the act is "levying no new taxes." It Is 

thus ultimately contended that the statute should not be construed 

to change the prior laws and administrative construction thereof. 

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Honorable Robert S. Calvert, 

The caption of House 

p. 830, reads as follows: 

page 9 (M-15) 

Bill No. 1182, Acts 1965, 59th Leg., 

"An Act concerning payment and admlnlstratlon of the Inheritance Tax; amending Chapter 1, 

Acts of the 56th Legislature, Third Called Session, 1959, being Chapter 14, Title 122A, 'TaxationGeneral' of the Revised Civil Statutes of Texas, as 

amended; providing for a new Article 1.032 to Chapter 1 of said Title 122A (Deficiency Determination 

and Redetermination); repealing Chapter 15 of said 

Title 122A; repealing that part of Chapter 192, 

Acts of the 43rd Legislature, 1933, as amended, 

being Article 107a and Article 107b, Vernon's Annotated Penal Code of Texas (Inheritance Tax Reports) 

and Acts 1923, Second Called Session, page 67, being 

Article 140 of said Penal Code (Inheritance Tax 

Reports); repealing certain Articles of said Chapter 14; making no other changes In any other Chapters of said Title 122A and levying no new taxes; 

providing a savings clause; providing a severability 

clause; providing for an effective date; and declaring an emergency." 

It Is apparent that the statute not only repealed Chapter 

15, but also amended, revised and changed Cha ter 14, adding 

some new provisions, lncludlni Article 14.07(27. The effect of 

these changes was to create a new statute sub 

$ 

ect to a new construction. 53 Tex.Jur.2d 136, Statutes, Sec. 90, 2 C.J.S. 411, Statutes, Sec. 243. Where the legislature has Incorporated new matter 

Into the statu'r;e, or has changed the meaning or application of 

previous laws, the addition and changes must be given effect. 

American Indemnity Co. v. City of Austin, 112 Tex. 239, 246 S.W. 

ty;g2ff922]; Gately v. Humphrey, 151 Tex. 588, 254 S.W.2d 98 

An amended act is to be construed as If the original statute had been repealed, and It will be presumed that a change In 

the law was Intended to which the courts will give effect. Amerlcan Surety Co. of New York v. Axtell Co., 122 Tex. 166, 36 Sn 

(1931) . 

While the matter of the computation or measure of the tax 

was not expressly mentioned In the caption, It was not necessary 

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Honorable Robert S. Calve&, page 10 (M-15) 

to do so because the title sufficiently Indicates the general 

subject of the act and gives sufficient notice that a substantial change as to Its provisions for application and computation may be expected. 

A liberal construction of the title as a whole must be 

given, and every lntendment In favor of Its constltut.:o~;l;y 

and every doubt must be resolved In favor thereof. . . . 

3 7, Statutes, Sec. 220; Gulf. Ins. Co. v. James, 143 Tex. 424, 

1 i 5 S.W.2d 966 (1945). Such rules also apply to taxation, lncludlng Inheritance and estate taxes. 

utes, Sec. 226. 

82 C..J.S. 391, 393, StatThe declaration In the title that no new tax Is being 

levied simply means what It says. No new tax Is levied In that 

the nature and character of the Inheritance tax as a privilege 

tax has not been changed. Since the method of computation Is 

held not to amount to a direct tax upon the decedent's property 

outside I;he state, we conclude that no new tax Is In law being 

levied. Consequently, the title is not deficient In falling 

to expressly mention that specific subject matter. 53 Tex.Jur. 

2d 93-98, Statutes, Sec. 52. 

Finally, they contend that Article 14.07(2) Is defective because Its application requires a construction of reading 

Into the statute the phrase "as the total value of the beneflciary's share of the decedent's estate which Is situated In Texas" 

Immediately next preceding the phrase "before allowable beneflciary deductions." This becomes apoarent In comparing Article 

14.07(2) with Article 14.07(l). However, such a construction Is 

reasonable and proper to give effect thereto and In rendering 

the statutes harmonious. 

In construing a statute, If a word or phrase must be 

added to a particular part or section In order to carry out the 

manifest Intention of the legislature, as disclosed by the entire 

enactment, the missing wore? or phrase may be added. 53 Tex.Jur. 

2d 201, Statutes, Sec. 138. 

If two reasonable constructions of a statute can be obtained, then clearly In the public Interest, the construction 

given the statute by the official charged with the admlnlstratlon of the statute should be given effect. Yoakum County v. 

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Honorable Robert S. Calvert, Page 11 (M-15) 

221 S.W. 880 (1920). 

SUMMARY 

Article 14.07(2) of Title 122A, TaxatlonGeneral, Is not unconstitutional In using the 

resident decedent's entire estate wherever sltuated as one factor In determining the rate of 

tax to be applied to the succession of property 

within the State. 

Such amended statute does not levy a new 

tax, and Its title Is sufficient to give notice 

of Its substantive change In tax computation. 

The State Is not bound by an erroneous or 

Inadvertent error In the promulgation of Its 

regulations; and neither lathes, estoppel, 

waiver, nor the negligent or Inadvertent acts 

of Its officers will prevent the State from 

properly construing or enforcing the tax statute. 

Ve+q7truly yours, 

Prepared by: 

Marietta McGregor Payne 

Kerns B. Taylor 

Assistant Attorneys General 

APPROVED: 

OPINION COMMITTEE 

Hawthorne Phllllps, Chairman 

W. V. Geppert, Co-Chairman 

Nell Williams 

Gordon Cass 

Pat Bailey 

STAFF LEGAL ASSISTANT: 

A. J. Carubbl, Jr. 

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