. -*

. 

### 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:

ioheritancotams. 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-lseuadto hi.% and his wire as Joi& t@;?ant~.I 

### 844

Honorable GeorgeE. Sheppnrd,Page 2,

is subjectYour question 16 what part ol' this stock, if **any,** to the State luherltame tax by virtue 

### orxr. LorroWs death. I

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

his father'ln1932 It becam his separateproperty, his wire had no interestin It at that tine. Artiole 4613 of the RevisedCivil Statutesot Texas)Townsend '0. Challlett, (Civ.App.) 45 S. I?.2nd 334.

His aot of having the etook re-issuedto him and his wife as joint tenantsappears to have been purelyvoluhtarp on his part en& we uademtand that he receivedno consideration. Khatever interestI&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 interesttherein,to the other spouse. 23 TQX. Jur. 70; speercs Law ,ofzarital Right5 in Texas, 3rd Ed., pp. 179-186.

Let us now look at the nature of ejolnt tenanoies.* Tie find a definitionof 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 (writrefused),it io now established that a joint t~mncy cm legally exist 1~ Taxas. Prior to the holding in that case thme was so1ce oonfusfona5 to the meanLE<To-e~rtlolc~25~?0 of the j&Msod Civil Statutes of 'fwas, vihich rca6.s as follons:

“Art. 2SO. (2471) (1698) (1655) Jus accresaandiabolished. "%zre two or xore personshold 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 tllooas8r 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’U8l8AB ~tfM?n~l QrOp8rty.w JoEnrton V. SOEnBton, 175 Me. 91, 75 8. w. 11109, 61 L. B. A. 166, 96 A&LSt. SasSb486.

It 68filZit8ly

8 rhioh thllr

#took ‘111s

01110 i poan the chia 8rxan@m8at at&r -8 8 

## joiatt8MllOY. 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 insuranoeumior policies takan out bg the decodentupon his o'#n life, and to tho extent of the oxcsss over Forty Thousand Dollars ($40,000)of the smount receivablebpall other bencfioiarles aa Insuranceuder poliolea taken out by tha decedentupon his own life, whether belong-in3 to inhabitants

of this State or to P?rsonswho are not inhabitants, regardless of whether suoh property is located *&thin or with- ; out this State, vMch shall pass aboolutolyor 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 posocssionor enjoymentaftar 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 RevenueFund, 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.materialpart of his estate, or if the trsnotermade within such period is in tha nature of a final distribution of propertyand without adoquste valuable aonaideration.* (Underscoring our3) There has been no Texas appellstecourt dsclslon on this quostlnn;and Prom.our investigation v;s find that there is ercrat confusionamong the decisionsin the other states in which the questionof liabilityfor inheritance tc-xc3 on joint.

tenanoleshasbeon passed on. It seems that u majority of the oourts in other states have held that under iahhcritxxatax 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 llabllitgIn respectOS propertyecc,_uirdi by enrvivorship in case of a joint tenonoy. 61 corpus j.&wis.

1649; Attornay Cenoralv. Clark, 222 Uass. 291, 110 N. E. 299, L. R. A. 1916 C 079; In re Leaches Rotsto, -32El. 545, 128 Atl. 497. The reason for such holdings 1 : bs orolaincdby quoting from the cane of RQ EaXelway -I 2. 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;OH. Sheppard,Page 3

-

“.

. . t.ho

eUNlVOr takes, not under the laws regulatingintestatesuooession, but under the oonvoyancoor lnstrumontby whioh the tenanoy is created.* This theory is zore fully explainedln 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,accruingthrough 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 sevarahoein the estate,his ontire interest is cast upon the survivoror survivors, to ths cxclusioc of the inhzrltanocof the 8an.e bj his heirs. The interestof the survivor in the rsolty is consaguentlyincreasedby the oxtingulshzent of the interestof the tenant d3cesssd. It ia settled in law that a joint tenantmy 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, jointtenants were said to hold per zy et rjcr tout, or, in plainwor&, ‘by the moiety or half and by all’; the true interpretation ol this phrase boihg that those tenantswere seisea of the e;?tire realty for the purpose of tenure and survivorship, rhfle for the purpose of Laxxiiataalienationeaoh 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 distrlbutionnit nay be that uuder.thetheory of the above cited cases there would be no tax. due In this csse; but, the Texas statutealso fixes a tax on the transfar of property by “gift naee or intendedto 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 ,thevalue of this stook in this particularease 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 wherebywithout any oonsideratioh ho o&used the oreationof a joint tennnoy.in which he and hLs v:ife

vmze joint tenantswa3 a tzift aa far as the izterost obtainedby his wife was oonoernod. In otharwords, whatever istercst tho v:ife, Certrudc2. Eon-o-e;, racoived was a gift. Khat interestdid sha receiveat the the of the creationof the joint tenanoy? Oh the questionof what ihterost a joint tenanthas 33 Corpus Jurls 909 says:

The shares or intorcstsof joint tecnnts are prosu~~dto be equal, althsun,h the contrary oay be shown by proof.

. .*
In the case court said: of Grcehwoodv. EIaunett, (Ala.) 93 So. 159, the

*VIZ the langago of t-he old law, the nature Of joint tonmcy is whore tho oxnora hold *parmy ;t par tout.9 That lo to say, for tha purposeof 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 (GthEd.) p. 132."
?:o ttiiskit is oloar that at the tinm of the orcationof 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 interustby Sift prior to his death, it was not subjaotto an icherftnncctoz
.

T.-hat about tho othor half intorest,that 13, the i$torostretainedby the husbandwhen he created the joint tenancy? Upon the death of the husband that lnt~erestdesoeni.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 survivoror survivors,and at length.tothe last survivor. Thorcforc,wheneverEonorableGeorge I-L Shepp3ard,

P3ge 7

a joint tenahoy exists,whether at. comon 13~ or W-&2 the statutes, OIIthe death of one of ~~‘tho joint tenantsand in the absence of stntute otheralso,the survivorstake the whole estato,

. . .*'
It my ba Dreswecl that the huoband kl)es! thst t!.e

law ~3s sueh that Won he cauced to be cxeatedthe joint tccaacy with hii1

3nG his wife m jaint tenantsthtrt tho cm-hali intcrcztrotaice by bin would descend to his wife ticAlatoly USOR his death. Ye mst rmesber that he reccivod no consldorstion. clearly this one-halfinterest~3s 3 gist %35aEs

or intonile to take efiect in possessionor enjoymnt after ths Costh of the . . . donor.” ThereSam, it cozxswithin the,wordsof 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 EOILBstool;in 3 corpsr3- tion, end he had the stock re-issuedto bin ana saao~b seibert, Jr., as joint teu3nt.s.X0 cocslderetion was lielc?

for this chahce ia o%aerohip. “. .~. the InCuclngcnuse cf the BiSt ~3s serviceswhich 2eibert h3d ren8ered to Villla~~B.Da&e.
c onpmy . 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 lntsranttherein

. . . .to persons . ,., .4., Yhen the transfer

-Isof ictangibleproperty,or of ta@ble popcrty *t:ithic

t,hs Stcto,
.. .'
. by dew?, gant, bargain,,331e or iit SC ihtz;r+ed

to take eSfect’,in

9oescssionor mjoyimnt a ;r’aht?r scch dnet.h.” The Suprem Court of !WN York 33M:

vo think that the rel3tlonof 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 characterOS title or ownership 3s b;t.v:eon

thozelvos OS joint ovmro OS personal ;;roprty,-

nor whether this was 3 gift intervivos ho? Khet~heZ

it was nade in contemplation OS ae3t.h. It ‘eighthave been the Sorm~r, and not the latter, arli! still the ultimte successionbe taxable. C&tie on InherltacceTaxation, 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 conpletcposoossicn or acjoyzent , aor was It intendedthat it should. T!ia lrtactlon V.QXZ that such Gift should take ouch eSSeCt only after Danalo death ami by reaaoh thcraof. @en the stookmm transferrca, Sslbortcay have beooze 'benoficitilly entitled in ex:&ctanoy*to such property,provide& h:z

survivalDsna, 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 'rightof successlon,~theretore,beca&a effectivewhen Dana died, and not t&ore. : A father fr.

robusthealth 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**  fethartsOeath, 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 (Artiole7117) inthe sane.

,

A note In 28 Haxvarb Law Rsvlew 437 discussesthe 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 therewsuld be an ixhcr~tencetax du3 under the Tesos law ir respectof 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 convoyedprossty 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 interestby what we believeto 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-halfinterestwhloh aasoendebfroln the husband to the wife upon the huabaad*edeath **wag subje.ot**  **to a**  **State lnhoritanoe**  tax. Tbt Intorest would be aeasurea by taking one-halfof the value of all of the **etook** in questionat ths time of Harry X. fi6orrow*a death.
We am enslosingwith this opinion your tike on thie **quaetion.**

Pours **Ywy truly**  ATTOIWXY

CENJSRAL

OF TXXAS/3