. 

-* . 

843. 

OFFICE OF THE ATTORNEY GENERAC OF TEXAS 

AUSTIN 

-a.yIIp( 

-9mua 

y./- LA - 

Honorable George H. shoppard 

Co?lptrollar of Publio dcoouats 

Austin, Tesms 

xb3ar sir: 

ioheritanco tams. 

3t for an opinion 

t:orraw for xite 

art 98 r0im6: 

. with r&&t or surcivorshlg, end not as tenants 

in COaxOn." 

~;e are further edviccd that Harry E. Xorrow and Certrtie Ii. 

vorrow :7aro husband end vita durin:: all ot the tina Involved, 

&d the", no cocsidsrntion was pald to 22. E!orrow or onyoce 

el.ne fm having the stmk re-lseuad to hi.% and his wire as 

Joi& t@;?ant~. 
I 844 

Honorable George E. Sheppnrd, Page 2, 

is subject 

Your question 16 what part ol' this stock, if any, 

to the State luherltame tax by virtue or xr. 

LorroWs death. I 

Khen this &oak wm lx&stilted by Xi. Harry E. EOTrow 

and 

fro=. his father'ln 1932 It becam his separate property, 

his wire had no interestin It at that tine. Artiole 

4613 of the Revised Civil Statutes ot Texas) Townsend '0. 

Challlett, (Civ. App.) 45 S. I?. 2nd 334. 

His aot of having the etook re-issued to him and 

his wife as joint tenants appears to have been purely voluhtarp on his part en& we uademtand that he received no consideration. Khatever interest I&s. Gertrude ?.I. tiorrow reoeivod in the stock was a &lPt frcn Ur. Korrow. One spouse 

hss the power and authority in Texas to &ive his or her separate property, or an interest therein, to the other spouse. 

23 TQX. Jur. 70; speercs Law ,of zarital Right5 in Texas, 3rd 

Ed., pp. 179-186. 

Let us now look at the nature of ejolnt tenanoies.* 

Tie find a definition of joint tenancy in 14 Amrican Jurlsprudence 79 as follows: 

*An estate ia joint tanenay is one hold by 

two' or gore persom jo,$ntly, with equal rights 

to sham in its enjoyxoont during their lives, 

aud having as its dlatlngulshihg reature the 

ri&t of sul'vlvorship or jus aocresoendl, by vlrtore, of nhlch the eat~lre estate, upon the death 

02 any of the joint tenants, goss to the survivors, and so oi? to the last SurvLvor, who takes 

an o&ate of ,inheritanoe free and exempt fro5 

all charges zade by his dcccased ootemnts. . .* 

i3y virtue of tho holdinlj of the Cotit of Civil IQUS?&? at aoammt in the case of chandler V. Kountze, (1939) 

130 3 . x . (2d) 327 (writ refused), it io now established that 

a joint t~mncy cm legally exist 1~ Taxas. Prior to the 

holding in that case thme was so1ce oonfusfon a5 to the meanLE<T o-e ~rtlolc~25~?0 of the j&Msod Civil Statutes of 'fwas, 

vihich rca6.s as follons: 

“Art. 2SO. (2471) (1698) (1655) Jus accresaandi abolished. 

"%zre two or xore persons hold an estate, 

real , iorsoml or mixed, jointly, aad one joint 

! 
845 

OWiaOl! die8 before 8e?eranso, hi8 Interest in 8ai8 

joint ertate rha11 not 8unlre to the remaini~ 

joint owner or joint owners, but whall desaend 

to, 8nd be Ye8t8d in, th8 heir8 Qr leg81 repre8entPtiVei3 Of auoh deO9a8Od joint owner ih the 8am8 

Mnner 88 if hi8 intarert had ken 8evered and 

8aOertaiMb. (Act Marob 18, 1646, p. 189; PI D. 

5489; 0. L.vol. 8, p* Leo.)- 

S88 tllo oas8r of rn88 1. ArOLltrcmg, 88 Tax. supp. 355, aad 

P8tmx8on v. Kirk, 73 Tex. 584, 11 8. 1. 5M. HovWer, the 

Chandler v. Kountze 0800 held that Artiolo 12500 put 8n 8ad 

to joint ten8nOy and rurvivorahi~ 88 a matter of 18~ or by 

OpsX-atiOn Of law, but th8t 8 jeint tenenag oould be OrWod 

in ‘RX88 by 8XQl'e88 OOntX8Qt. 

As we underrtanb the fao$a in thi8 088e, rll of 

thr parti oontnoted tbrt Yr. 8nd Xro. Morrow would own 

9hlr 8took a8 faint tenante. TEo faat th8t they wem hurban6 86 Wife would not pX8VOnt th8 Wrangemnt frOm b.ing: 

8 jObt tM8nOy. Ingelbrooht f. Bngelbnoht, 38s T11, LOB, 

I55 w. L. 667. ‘pb, n8tiUX’8 Of th8 ~l’O$M’ty i8 iE4JitOZi81 

.bW8tU8 “8% Od(ry10~ l8W dOi.Ilt t8MSlOfOd, With the iJlOidOl%t 

of 8ur~irOr85ip, obtained 86 to both l’U8l 8AB ~tfM?n~l QrOp8rty.w JoEnrton V. SOEnBton, 175 Me. 91, 75 8. w. 11109, 61 

L. B. A. 166, 96 A&L St. SasSb 486. 

It 68filZit8ly 8 

rhioh thllr #took ‘111s 01110 i 

poan the chia 8rxan@m8at at&r 

-8 8 joiat t8MllOY. AD t-0 whothwr 

or not it i8 aubjeot to the Stat0 inkerlt8nOe tax by virtue 

of Hr. WrxOw'8 688th d8pWdw upon the OOn8trUetiQn tS b8 

p18Od UQOZl th8 %X&U inhOl’it83%08 t8X ItatUt88. 2%8 l t8ttttO 

th8t dO8i@ltt38 th8 p%'o~M~rty ad tha OonditiofM ursder whlah 

it 18 rubjeot to th8 8sate lnEarlt8noe tar ir AStleL8 Trio 

of Vemon*s Annotated Tgvisod Oivil tlt8tutOa of 'PIx88, Whi8h 

ro8d8 a6 iQ11OW82 
Honorable'Ceorge Ii. Sheppard, Page 4 

u 

. 

or administrator as insuranoe umior policies 

takan out bg the decodent upon his o'#n life, and 

to tho extent of the oxcsss over Forty Thousand 

Dollars ($40,000) of the smount receivable bpall 

other bencfioiarles aa Insurance uder poliolea 

taken out by tha decedent upon his own life, 

whether belong-in3 to inhabitants of this State 

or to P?rsons who are not inhabitants, regardless 

of whether suoh property is located *&thin or with- 

; out this State, vMch shall pass aboolutoly or in 

trustby will or-oy the la-;rs o? descant or distribution or this or any other state, or 

m sale, or :qift made or intends to tnke ef- 

.+x deed, 

,fcct in posocssion or enjoyment aftar the death 

of the ~-rwtor or donor, shall upon passirq to or 

for tho usa of any parson, corporation, or aosociatiori, bo subdact to a tax for tho benefit of the 

Qtatcto Car?erx Revenue Fund, in aocor:!ance with 

the follov~ing classification. Any transfor naGe 

by a Grantor, vendor, or donor, VJhettier by dead, 

Grant, sale, or gift, shall, unless uhcwn to be 

contrary, be d~3md to have bcon made in oontomplation of death and subjeot to tho same tax as 

horcin provided, if such trsnsfer is made within 

t-&o (2) gcsrs prior to the death ol' the grantor, 

vrnckr~, or donor, of a.material part of his estate, 

or if the trsnoter made within such period is in 

tha nature of a final distribution of property and 

without adoquste valuable aonaideration.* (Underscoring our3) 

There has been no Texas appellste court dsclslon 

on this quostlnn; and Prom.our investigation v;s find that 

there is ercrat confusion among the decisions in the other 

states in which the question of liability for inheritance 

tc-xc3 on joint. tenanoles hasbeon passed on. It seems that 

u majority of the oourts in other states have held that under iahhcritxxa tax statutes that fix a tax on the transfer 

of property "by will? or "by tko laws or Cesoent or diotrib:tionn thoro io no tax llabllitg In respect OS property ecc,_uirdi by enrvivorship in case of a joint tenonoy. 61 corpus j.&wis. 1649; Attornay Cenoral v. Clark, 222 Uass. 291, 

110 N. E. 299, L. R. A. 1916 C 079; In re Leaches Rotsto, 

-32 El. 545, 128 Atl. 497. The reason for such holdings 

1 : bs orolaincd by quoting from the cane of RQ EaXelway 

2. -I il. Y.-15, 116 N. E. 343, L. R. A. 1917 E 1143, as foi1s .-. I.!. 
“. ---*i”‘- 

-l-,i,.W-l...i.a .,,._,_._ _..~I . . . ..* . . A.-r.- --- *- .._ _

. . . 

1347 

Honorable fX~0rc;O H. Sheppard, Page 3 

“. . . t.ho eUNlVOr takes, not under the - 

laws regulating intestate suooession, but under 

the oonvoyanco or lnstrumont by whioh the tenanoy is created.* 

This theory is zore fully explained ln ths case of Ellken 

V. young, 149 end. 1, 41 D. 2. 69, as r0liwtJ3: 

“. . . nmmts 0r tbls kind are sald to 

hold indlviCuo11y’aad jointly, haoina one ahd 

the 821;;s interest, accruing through oae aa& 

th3 smo conveynnoe, oomeccing at the sue 

tirm, ahd held by ooe and the saize possession. 

Upon tha Couth of one joint tchart, there boing no sevarahoe in the estate, his ontire interest is cast upon the survivor or survivors, 

to ths cxclusioc of the inhzrltanoc of the 

8an.e bj his heirs. The interest of the survivor in the rsolty is consaguently increased by 

the oxtingulshzent of the interest of the tenant 

d3cesssd. It ia settled in law that a joint 

tenant my alienate or oonvay to a strm;or his 

purt or interest in the realty, and thereby beSent the right of the survivor.. Tied. Real. 

Prop. 2 238; 1 Viashb. Deal Prop. 6S2, .cl. 22; 

4 Xent, COXL 460;.,1 prest. Est. 136; Bovins 

v. Clin8, 21 Ind. 40; 0 AL & z&3. BnO. Law, 

SG2; 11 ALL & 9~. En0. law, 1092;‘~ Duncan 0. 

.“_, 

Ferrer, 6 Bin. 193. In the ancient language of 

the law, joint tenants were said to hold per zy 

et rjcr tout, or, in plain wor&, ‘by the moiety 

or half and by all’ ; the true interpretation 

ol this phrase boihg that those tenants were 

seisea of the e;?tire realty for the purpose of 

tenure and survivorship, rhfle for the purpose 

of Laxxiiata alienation eaoh had- only a particular part or icterost.w 

If the 3mas’inhorita~oo tar statute ilred a tax 

o:.ly on the trunafar of property *by willm or “by the laws 

ol'-de;cant or distrlbutionn it nay be that uuder.the theory 

of the above cited cases there would be no tax. due In this 

csse; but, the Texas statute also fixes a tax on the transfar of property by “gift naee or intended to take eft’cct in 

po~msslon or onjoymmt aster the death ~1~ th 83 9 . . ~. 00.3or 1, 

and it is our opinion that by vLrtue.of that prOVi8iOXTEG 

half of ,the value of this stook in this particular ease is 

. ., 
848 

Honorable George il. Sheppard, pago 6 

subject to ail iZherit3nOe toX for the Teaso hereinafter 

explained. 

As ntated above, when this mtook xas first laherited by !iarry E. Xorrow froxz his father it becam his separate property, and his act whereby without any oonsideratioh 

ho o&used the oreation of a joint tennnoy.in which he and 

hLs v:ife vmze joint tenants wa3 a tzift aa far as the izterost obtained by his wife was oonoernod. In othar words, 

whatever istercst tho v:ife, Certrudc 2. Eon-o-e;, racoived 

was a gift. Khat interest did sha receive at the the of 

the creation of the joint tenanoy? Oh the question of what 

ihterost a joint tenant has 33 Corpus Jurls 909 says: 

The shares or intorcsts of joint tecnnts 

are prosu~~d to be equal, althsun,h the contrary 

oay be shown by proof. . .* 

In the case 

court said: 

of Grcehwood v. EIaunett, (Ala.) 93 So. 159, the 

*VIZ the langago of t-he old law, the nature 

Of joint tonmcy is whore tho oxnora hold *par my 

;t par tout.9 That lo to say, for tha purpose of 

tmura aml survivorship oaoh is tha holder of the 

?:holo; for the purpose of alienation, each has 

his ovm,shsreI whioh is presunred to bo equal. 3 x. 

A. L. p. 243 8 311; 2 13ii30k COCS~. p. 180; wiiiion~, 

Iical Property (Gth Ed.) p. 132." 

?:o ttiisk it is oloar that at the tinm of the orcation of the 

joint tsha.r.oy ?xior to zr. XorroWs doath Urs. Horrsw rocelvad 

by sift a cm-half interost in the stock, that is she shared 

equally :'lith her hosbsud. She havioe mm Into that half interust by Sift prior to his death, it was not subjaot to an 

icherftnncc toz . 

T.-hat about tho othor half intorest, that 13, the 

i$torost retained by the husband when he created the joint 

tenancy? Upon the death of the husband that lnt~erest desoeni.ed to the wife. In 33 Corpus Juris 903 it oays: 

~he di&tinct characteristic of a joint tenaxy In thct, upon tho death of one of the joint 

tenacts, thsm being no'severaoce, hin inter%St 

Gosc~nd~ to the survivor or survivors, and at 

length.to the last survivor. Thorcforc, whenever 
Eonorable George I-L Shepp3ard, P3ge 7 

a joint tenahoy exists, whether at. comon 13~ 

or W-&2 the statutes, OII the death of one of 

~~‘tho joint tenants and in the absence of stntute otheralso, the survivors take the whole estato, . . .*' 

It my ba Dreswecl that the huoband kl)es! thst t!.e law ~3s 

sueh that Won he cauced to be cxeated the joint tccaacy 

with hii1 3nG his wife m jaint tenants thtrt tho cm-hali 

intcrczt rotaice by bin would descend to his wife ticAlatoly USOR his death. Ye mst rmesber that he reccivod 

no consldorstion. clearly this one-half interest ~3s 3 

gist %35aEs or intonile to take efiect in possession or enjoymnt after ths Costh of the . . . donor.” ThereSam, 

it cozxs within the,words of Artlole 7117 and is subject 

to tho tax. 

The scae holding that we have mde hero was r;ade 

by tto Suprae Court of Xew York in 1914 in the 03s~ of In 

ro W.lliCi~~ B. iEn3 COzpany, 164 N. Y. App. Div. 44, 149 N. 

v Supn. 417 (aSSime&in 214 It. Y. 710, 108 F. 2. 1112). 

$ thai. cmo !Yil.lfa~ B. Dsna owed EOILB stool; in 3 corpsr3- 

tion, end he had the stock re-issued to bin ana saao~b seibert, 

Jr., as joint teu3nt.s. X0 cocslderetion was lielc? for this 

chahce ia o%aerohip. “. .~ . the InCuclng cnuse cf the BiSt 

~3s services which 2eibert h3d ren8ered to Villla~~B. Da&e. 

c o np my . l ,ì. Ore -of the prooichms of the l?ew York lnheritance law at t,hat tirie Drovirled:~ “-4 t.ax shall be and Is 

herebp ir~osed uron the trarsfer or any . . . property , . . 

or any lntsrant therein . . . .to persons . ,. , .4., Yhen the 

transfer -Is of ictangible property, or of ta@ble popcrty 

*t:ithic t,hs Stcto, . . .' . by dew?, gant, bargain, ,331e or iit 

ihtz;r+ed to take eSfect’,in 9oescssion or mjoyimnt SC a 

;r’aht?r scch dnet.h.” The Suprem Court of !WN York 33M: 

vo think that the rel3tlon of the 

porti:: -hi that of donor acd dcnoe and not a 

cmtractusl relntioc for a valuable *considerat.+ion. 

Ye ao not think’ it is rcoessary to fletertine exactly the character OS title or ownership 

3s b;t.v:eon thozelvos OS joint ovmro OS personal 

;;roprty, - nor whether this was 3 gift inter vivos 

ho? Khet~heZ it was nade in contemplation OS ae3t.h. 

It ‘eight have been the Sorm~r, and not the latter, 

arli! still the ultimte succession be taxable. 

C&tie on Inherltacce Taxation, 697. Certainly, 
,. 

. 

: 

. 

8350 

:onorable Georg;e B. Sheppard, page 2 

while D32.3 lived, the girt by him to Eeibcrt of 

this stock did not take eifect in conpletc posoossicn or acjoyzent , aor was It intended that 

it should. T!ia lrtactlon V.QXZ that such Gift 

should take ouch eSSeCt only after Danalo death 

ami by reaaoh thcraof. @en the stook mm transferrca , Sslbort cay have beooze 'benoficitilly 

entitled in ex:&ctanoy* to such property, provide& h:z survival Dsna, but not othuri;ioo, en& 

it 0~3s Dnna~s intent that he should thus becoma 

ec';itled, and only to thst extent. It v:aa nuah 

aist and such only, that Txinn mda to hia. 

&ib&tts 'right of successlon,~ theretore, beca&a effective when Dana died, and not t&ore. : 

A father fr. robust health rtly it;ake a Girt to 

hi3 six of proprty, reserving to himeli 3 life 

iz.:orest themin. Thle would be 3 gift to take 

&Sect in enjoyzcnt efter tha fetharts Oeath, 

and ViOUld ba 3 texabla t~zanster. In ro Green, . 

153, li. Y. 223, 47 l?. E. 202." 

It will be roticcd that ,tha Texas statuta (Artiole 7117) inthe sane. 

, 

A note In 28 Haxvarb Law Rsvlew 437 discusses the 

c3sa OS In re William B. Detoa Gonqany, supm, an3 approves 

t& holi1ing in the ease with this 8tntoxent: "The prinolpal' 

case (Dam case), therefore, 10 aloorly correct. . .* 

??e arc not passing. on whether or hot there wsuld 

be an ixhcr~tence tax du3 under the Tesos law ir respect of 

l;ro?arty acquire& by survivorshi? in case of a joint tenancy 

if oocsiaoretloc had been paid Sor its oreatiou, such as in 

3 case w;?,ei’e a third party ha convoyed prossty Sor ootslderct.iea to tzo or c!ore persons 38 joht tenants, or where one 

r,orson paid amther pxmn a WA... 9.-1dorstlon to create a joint 

temmy with said two parsons as joint tehaats. Vie are only, 

~:3::13G oh this cam in which the survivor, Gertrutia k, Xorrow, succeeciod to her interest by what we believe to be 3 

Gift from Earr~ I. Uorrow.. 
851 

Honorable Oeofge H. Sheppard, Pnge 9 

Tar ths reasons stated above, it ir our opinion 

that the ous-half interest whloh aasoendeb froln the husband 

to the wife upon the huabaad*e death wag subje.ot to a State 

lnhoritanoe tax. Tbt Intorest would be aeasurea by taking 

one-half of the value of all of the etook in question at ths 

time of Harry X. fi6orrow*a death. 

We am enslosing with this opinion your tike on 

thie quaetion. 

Pours Ywy truly 

ATTOIWXY CENJSRAL OF TXXAS /3