OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 
2n: 

Xonornble G%or&o Ii. Sheppard, Page 2 

cam under the gr07ialonrr of the new law end 

be taxable .I 

:.:.:.:l:.:::/:j >::::. 

You+ letter olaarly states the feats sna queatlon 

in We ease. under me faoto stntaa we amme thet the 

transrers psaaed ml1 1e.W title to .t!io tranafereea ea or 

the tlf;oo of suoh traWil6rs. 'Taa ~WGtibl the3 ia *ethar 

or not silch transfers are subieot to the Texes Xnhorltauoe 

Tax even though mde prior to t?re t%x!G;snt ta t5o Texcla 

Xnherltenoe Tar Statute in ~questlcu u~lc~ ello~.'s the tnxstlon 

of such trensfors. The deoeased died subseqxmt to the 

efrectlve date of ouch nc?eadize.?t. Article 7ll7 of the Serlaea clvll Seatut& (15 anded by ii~use Dill S33, seotion 1, 

Acts of the 46th Le&latuxe; 1%??8, reads as Pollomw 

*All ~rop2rty uithin the @risdictlon 

0r this StAto, rtml or ?cxs:nal, coryorate 

or lnoor;orate, and ezy in:erost tfizrein, inoluding property pnssieg under a ~enerel pawer 

0r appolntzmt ezercloaa by the decodout by 

will, in<rluain.~ the procseds 0fiif5 t?suranoe 

to the extent of tho szm.mt receivable by the 

exeoutor or adziolatrator es inaurartoe uuder 

poliolea t&on-out by the deooeent uym hiss 

own llfo, ani% to t?m extent nf the exoeaa over 

??Or?iy niOU8eAd rI0~l~s(~~~,o~) Or th5 5ZOUAt 

rowivable by all other benefiaiarics es insurance 

under policies taken out by the deoelient upm 

his owh lire, whet3er belon!$ng to ishabitsnts 

of tkls Stnte or to persons a& em %ot lahebltants,+~ei;zmdltws of rchother suoh poporty Is 

locatod~.within or withut thl6 Stata, w~11oh shall 

pass absoltitoly or in trust br will or bj the 

lswiof Cesoont or Uetribution of t:h.l.s or any 

other St&s, or by dead, :';rent, sale, or ..;ift 

nado or lntondad to t&e effect in possession 

or enjoptmt after the death ol~the crentor or 

donor, still, won pnssing to or ior the use of 

anf person, cor?orntlon; or acaociation, be 

mbjeot to e tex for the bemflt 0-r tkc Ststefs 

General ir.evenue WIG, in accordance 171th the 

follmiinz olaasiflcntiou. &jr trnnstcr mdo by 

R :rfmtor, wmdor, or timor, '%ilet;lzr by deed, 

Q-ant, G3lQ) or ,;lr't, s>ell, tzlla23 s;ioi7a to 

the contmry, be desr;cd to k;uve been mde in 
2 

Iioiorrorablo Coorgo 8. Bhoppard, Fa&e 3 

ocntoqlatlcn of death and subjoot to the 

6~ tax as her&n 

is made wlthln two f 

rovlded, if suoh transfer 

2) years grlor to tho 

death of the era&x, vendor, or donor, Of 

a aatorlal part of hfo l state, or if tho 

$ransfer zado within nuch period is in tho 

nature or a tlnal distribution OS gro?orty 

and without adequate vclunblo OonslderatlOu. 

,Auts m;,p; C. s ., p. 631 Aotr 1929 41st 

La. ‘ 

19.999, 46th ice., 

109 oh. 50 ( 11 ke 

l í ii: B. #ooo . I i.* 

Vader the facts submlttod tho transfer8 in quoatioa woro sade within two peers prior to the death of the 

grantor and were s&is without adequate valuable aoaalderatlon. 

Prlot to the mendzzent by tho Legislature .ln 1939, such 

transfers were not tazablo. 

-Xowhoro in tho wording of tho amsndzeht lo tiero 

any languarjo to evidenoe an intention of the Legislature 

that tho amendaent should ogerate retroaotlvoly so as to 

tax trausferr that were fully ccnsumatod prior to the effeatlvo dato of said mendkkt. Khlibe wo have no Texas dsolslcns on thla question, the great weight of authority throughout tho United States ie to the effsat that such an act 

irgoslni; a tax upon transfer8 whlck fully vest title in 

the transferees la not retroactlvo unless the sjmolrio 

laaguago of the etatute so z&err tho same* 

The Suiuproiso Court of ‘&ntAa in the.oase OS Stats 

~8. Diatrlct Court of 0th Sualolal 3lstrlot in and for 

Choutoau County, 96 ?ao. (Zd) 036, deolded Xoveabor 29, 

1939, was leoed with a similar situation. The facts In 

that~ ease 6loolooo that tho deceased mda uortzln trtmsrem by deed th 1934. In 1935 the Kmtmn statute was 

a-landed so that instead of.lt providing thet “every tramior bg deed, grant, barsaln, sale or gi:t mid0 within t%o 

f-. 

ears prior to tho death of $Santor . . . and wltnout 0. 

rti r ocnslderatlon in mney or m.ineya thall unless shown to 

tho contrary be deesed to heve boon inado in cante~~lation 

Of death,* it was cl4cuqsd to reed: *every transfor by 

Ceed . . . mdo within three ymro prior tz the death of the 

fmntor . . .n The Ceceasod died in 1936 which was subaeWent t3 the amen&ant of the statute in 1925. Tho oourt 

held thrrt the two year psrlod applied and thnt the law piOr 
Ecnorsblo George 8. Shopgard, Pago 4 

to tho aan&aont in 1935 was agpllaable to the trsnstor8 

in question. The court ototed aa followor 

*It is elszsntary that lt would have been 

oonpotant fez the L~glelaturo to have s&o tkio 

rtatuto retroeatlvo ii it saw fit ta do so.* 

Wkors is nothing in Chqtor 186 tc aur&ast 

that tha Legislature lntonded that it shc~uld ap 

ply to deeds theretofore 3848. It is a ci;onersl 

rule t&at statutes ars lnto.tiod to operate ?rospootlvoly only unless othemloo orprsesly ststod 

or oloarly end aoceeserllf Ijrplled an$ tho prommptlon la amlnst rotro3epop.t4vo operation.” 

The Su row Court ot Caliiornia in the oa4o of 

Hunt vse Vlaht, E 62 Pac. $39, wa8 eonfronted with a sitilar situation and in that case the transrors in question wore 

aade in 1905. The CalLfornla statute WRU anended ln 19ll 

SO as to tax auah transrors. Thea deooased died in 1913. 

The ocurt ooaoluded thfit the transrors,woro not taxablo and 

stntod a4 r0im8r 

.Z;t is tho vesting in intaralt that 4cnstitutos the sucoesslon, and the QU.eDtiOli 0r llability to ‘suah a tax zust be daterulnod by t&e law 

fn rote0 at that tiise. . . . 

*ft .is litwiatorlal so rar aa the question wo 

have disoussod is acrmerned, that it is alleged 

that the trsnsfor WRS infida ‘la con*t43zplatfon 0r 

his doath and without valuable cmsideratic&l 

The estate convoybd iully vasted at the tlcze of 

tho delivery of tho deed in escrcw, entirely 

regardless or the Ilotives. oft the pantor for tho 

oonvoyanco, and vAt::out rsgard to uhsthar the 

tranafar was Hithcut vaLuetAo ccnsldoratlan, 

and bbcre waathen no law lza?oslmj a tax on agy 

such tramfor.* 

The Eugraim Cmrt 0r cta.ir0mia rearrir236 thin 

hlo of law fn 0onstruZng a alzilar ra0t sltur3icn in the 

can0 or In FM i&ix’s S&ate, ,100 Pea. 135. The oourt Prtntod 

‘8 r0110wt38 
Eonorable George H. iSheppard, 

')Aa afrerdy atatcd, 

uhy Ed* 1913. The E48d agprra GO iuwe tieen 

fully delivered and effeatlre at the tirnc it 

beam data. The taxability of tke trtmefsr mat 

thorofore be detsrslneb by t!:a law in sfrect at 

t3at tiae. ihat 7. ZiOhL, 174 Cal. 239 l62 ?e0. 

639, L. R. A., 191e* %lt xotate of &oa, 178 

O&@. 609, 169 Pm%. 362. 738 lati in Zorce at 

that ti=;c W&S the act of 1911. stats. 1911, 

Q* 7x3. . . .* '. 

The SLue rub of mfl wes anMuncsd by ths supieme 

Court of Louislena i;r the ease of Gucosssion of #illiaSa, 

lE9 80. 601. The oourt state6 em follmtea 

Wtatutoe levylog taxea on doaatione or 

transfers ma&s ln contenplatl,on of death es@ 

never ao5strueG aa applytr?g to treneaotlolle that 

were ooapletad beiors the law was enaetbd. It 

we8 so clr?cidcd idShmb V. iioglo, 256 ‘j. S. 629, 

42 s. Ct. 391, 68 L. 233. 747, 26 A. L. El. 1454, 

with rtzifersnce to ths Act or Congmxi of Segtereher 8, 1918 (39 Stat. 7771, the Cirst ostato tax 

act. Ahd it has since bexa hold t!xxt. to s.ive 

~~03 a statute the retroecti-re effect of taxing 

tranafero 2mde prericua tc t&3 encotxunt of the 

law %ould ezmunt to oonfiaaetion Md be vloLative of ths '-‘aurtesEth kmd%zit of the Ccnetii&ton of the United St&&. Xiohols v. Coolidge, 

874 U. a. 531 47 

52 A. L. R, 143It 

a. ct. 710, 71 LL ix. 11&S, 

Blodzett v. Golden. 275 I?, 5. 

UC,-83 8. Ct. 35, 72-L. ZdC. 353; Uitor=leyir i. 

Anderson , 313 u. 3. 4.39, 43 8. ct. 253, 72 L. xd. 

64s . . . . 

* 

A skll&r qaeatio?z -#as decidad by ths Suu_?Etior 

Court of Dplmare in the cnne of Drown VD. ?er?sylvenia 

Co~::pany for Insurance on Liven 2nd ;'trantin; kmuitiea, 

126 Atl. 719. In thet cm0 an attaqt was zfzde tc tnz 

cortaiz tmnafore w:~iok had be9.z zdo ti i3ld bowwe 3uoh 

tnlItofers went mde t,:xcl?Ae b.v an amnckont tc t% S&mare 

law affactl.va Lhrc3 E4, 1917, oti ths deceased did not 

aa until Aoril f7, 1317. The oourt ccncltied t&at ths 

law 13 off&t at t!m the of t!m tramfer o.jctrollcd nnd 

that ouoh tramfere *ore r.ot taxabko. The court etrted a8 

rOuowe I 
&aorabls George il. .%e?gard, ?ege 6 

*The plelntltf arates thnt the statute In 

question was intended to bo retroactive bemuse 

it osntalna these wordeI ‘Auy tronafer . L . 

wltkln two year8 prior to his Ge+th wltkout full 

ooneiderntion in Eonby or :~oney*o worth aLcU, 

unlase ahma to the oontrary, 50 domed to bste 

been nade La cortezqlatloa or death wltliiz tke 

mt3aalnG of thla 0Snptor.f Inss:ach es th0 lew 

?r0~id08 th3t ~i:te 23=ice 12 c0a33:aiti02 0r 

death shall be subjeot to t>o tax, and :‘urt!mr 

provides ii-&t $.fta =ade r:ithin two yanre prior 

to the dent5 OS the dzior &-ml1 tc deeze6 to 

heve beon zmde in contaqlatloa of dmth, It is 

lnslstod t&s gi:t ln the grosont case is liable 

to the taxi It ia r&t clai.zed t!m-e Ir, ey 

.othor lan.gaaga in the stlitrute that indicates an 

lntemttioa t&t It si;ould .pe retroactlve.W 

” The transfers, therefore, could cot 

be tslrfbie’unless the taxfw aot ia retroaotlve, 

und we have held it ia not .* 

Ths a.838 rule of 18%~ XQS ennoumod by the 3upme 

Court of Pennaylv~ia in the cm3 cf In Z&i “Yeanl$ton’s 

Betate, ,192. Atl. 39. ‘i!hO OOtU?t 6t8t8d 88 tolloua: 

-The sot. of 191s iqosea a tax u-3 'the 

right of siiccemolon or the ;?rivlle;o of rsoelvIn3 st dmth the xroparty possessed by s decedent.' Dolar\‘s Sian te, 279 ie. m2, 5”&, 124 

Ac.178, 173,. 46 A. L. R. 653; ‘XlrQatrick~s 3state, 

275 Pa., 271, 273, 110 A. 269. It 5ca been repeatedly held t!mt tXio act oizly agpllcs to 

tramlore occurring eftor lta enactment awl not 

to those prior tfiareto. . . .- 

The Sii;i?arere Court of W~~7lvanIa also eomider 

eC 4 prohlei2 aiA.lfir ta t&it w:ic:; c.:nrrxta ~5 In tti6 cam. 

in the cese of In lit3 Oliver’s i’st*!te, 117 ktl. 31, Ia tati 

cas3 tho tmncfero in 1;motim ttbk $Eoe in 1913. On June 

20, 1919, the XA3msylvrinin lnri me czm.deG 80 2s to tnx 

such trcmfors. 

holC that tSe tmsfers were zot temblo aad ateto& UB 

The Goceo30d CleC Qly, 1019, Em cmrt 

Pc1l0w31 
,* ‘. 

..:+::l:i::i 

:: 

<ii::‘. 

: :, 

*The dooreo nut be atiixued. The sot 

provides t 

.Vhat e tax shall be, and is hereby, 

hposed u>on the traasfer 02' any grogerty, real 

or personal, or or any intorast tkwoin or income therafroa, in tru-lt or othawlcls . . . by 

doed, grant, btm~in, sale, or cirt, nnde in 

oantuzphtfoa of the bath of tha Srantor, 

vendor, or donor, or lnteaded to take erfeat in 

poseessfon~ of enJopent ot or etter 5mh death.* 

%3ither thcae words, nor any 0th~ -pats 

of the sot, ahow M intontfm to L-~OXI the 

tax on my *twnsfort wbich,:wea fully aeaoi5- 

plished prior to its pw35w3b; aad heaoe t5e deora io correot, for the rqoeon stnteC by t&a 

court belovr in ita oglnion, unless there 1s 

oamet..ing Irr. the atatute ahlch oor~~els a difParent ~onolualon.~ 

The Court of h peals 

City Bank Fnners Wuat E 

in I&M York in the oase of 

rmpmy 98. Kerr York Central railway 

~aoiigfuiy, 170 If. iL 4539, considerad Q 5ir;ilar problm pat 

oourt in a;1 opinion written by Chief Justlco cardozo held 

that au fnhoritanco tar statute ~45 sot retroaotlvs and 

stated ae foUowsl 

Whatever lorrunity etisted when the tmnefor becajlo iaMoctive, extitinuod to exist that+ 

artsr, untouckeU in its intizrfty by 03ythiq 

that the LeiJlelature could do.* 

The Sunrese Court of Iwa in the case ol ImA vs. 

!3rown 166 H. ii.' 99, aanaunoed the 9-e rule of law and 

stctoE 06 followsr 

. 

. In the atme before ue the ri$.~:a of 

phd.ntifh ant! the Litteors with remeet to thle 

Froroperty \iO‘iO rl.~td and 1~a6e lrrovoimble, orcept 

by iSmlA1 omrmit, on the iitto when tt?a pag"r5, 

wera oxocuted nnd ~lal~titf ncqdred po~sesslon 

thereundar, md if we r;qv a::suzo thnt It was cozigetent for the otnto to thereafter smot or mend 

a statAx to izs205e a ter upon such :rol?afers 0r 
Honorable door88 IL She?>ard, Page 3 

title, tbs retroopeotive obarnotcr dffeot 

of such en:~tzent zu3t oloarly a;qeor, and 

in the cbsonce of myth.&; siiowin.; auo!: intent the court5 will zlve it proopctlv4 e:Ssot 

oolp. There io nothing in tLls eztndze4t indicetAnG eny le.~olativo intent to dve it 

retrosp3otlvvs sgplioatfon, and It ,CKtlOVis that 

WM if xts wore. to ao;Latxua it ne bslq othtsrtiiee ap9llcable to such a trmeior as is here 

b4inz ccnsidered, it would zot Zovarn tho re5ult of thi.8 ap3al." 

The adclrd rule ol law w~8 smouaced by .the Sugrenre 

court or Errors or Connecticut ln tho ease of BlodFett vs* 

Fnion.end i%w &von muet Cozpaq?# 110 Ml. $05. %ie .aourt 

stated t&e iaeuo and conoluded 4s followst 

*Th4 quoootlon first to be ooneibwid in 

lo&xl 8equezse.U shsther the taxlhg statute 

appliczbls to the tnmt fund is the aot of 

1913, w!aiohw~e in Sores wheen the deed end the 

aeouritles wore dellvored to the trcstee or the 

statute of 1315, whloh ceze into effect after. 

the ostablisbkent ot .tiie trust, but before tSe 

settlor'a death. . . . 

*On the other bend, en irrevoaeble grant 

of a ra-&indsr Laterset i3 a preeent trauafer 

of it to th5 rez4lnd4rzan, and, eincs a succcaelon ton is a tax on the tmzsSer, aod ;lot 

on tie property, the question whether 4ny 

pa.rt1oula.r tramfor 13 or ie :iot texeble should 

1o;icelly depend on *the terzs of tha statute 

in force at the tine when the tram%-r ttiee 

place. 

Whether the Lel;islature f&kit. acnstltuti0dxg lay a rm~oassi~,-. c trrr u3oa 4 trm.3for 

of a rezalaCor intsreet whlcil had .alroady verjtod 

13 ri,-ft before t'\e statute wc5 pcssed, ia a 

suestioz ~;hicL NO noed not Llscuos my further 

than to observb t&t tha ln:.ent to lay 8 retroootira tnz o*u$it to be mhifanted by Very slain 

and exnlicit words, and fkt 30 find no ox?ressl2n of til2t !1125nt in t&o ?xt of 1915. Oiir 

ccnoluslo3 t221t ,@a a?3licahle tnxlri,: stntute 

la that whloS. was in forca vii03 the irrevocable 

trust dood ws CellvaroC e;recC with the Ceclalms in other jurisdictions. . . ,'* 
23 

??htle thare are awa casts wzSol1 tezd t3 indiaate 

~onzrarp to the r*ule of Ma ariounoed prevlouoly in thie 

opln.lon, &a previously stated, it la tho overw!iaki~ viei;ht 

of authority that aa to trsnsfere w!tic!4 take ;laco end vest 

title 13 the trmar’ereos @or t.3 the ezar,d::ont of t&i tax 

rtatuto wUch t&m&a such trfcdorb the S!IES are not tnxcble 

tdt3r such a2enaimnt aesgite the fc0t th-t th0 ae06s.9oa am 

eubsoquent to tke ammdmntr No 8rQ of the oplnim that 

tkio is the uorrect x-tile of law to be a??lied in t.U.8 case 

and t!!et the trannfere in quastlon are zot taxable *under 

the azon&:or;t to the Inheritsace Tar Stati%te by the 40th 

teg1*1aturo in 1939. 

FIRST ASSISTANT 

ATTORNEY GENERAL 

,