WI& WILSON 

*%-ro- CaENERAI. 

December 28, 1962 

Honorable Robert S. Calvert Opinion No. WW-1514 

Comptroller of Public Accounts 

Austln,'Texas Re: Whether, under the facts 

submitted, a corporation 

chartered by a Police 

Officers' Assoclat-ion is 

exemot from the franchisk~tax required by 

Chapter 12,,Title 122A, 

Dear Mr. Calvert: Taxation--General,V;A.TS. 

This is in reply to your request for an opinion on 

whether a certain corporation chartered by a Police Officers' 

Association is exempt from the payment of franchise taxes. 

Article 12.01, Chapter 12, Title 122A, V.A.T.S., imposes 

a franchise tax In words as follows: 

"(1.) Except as herein provided, every domestic 

and foreign corporation heretofore or hereafter 

chartered or authorized to do business in Texas 

or doing business In Texas, shall, on or before 

May 1st of each year, pay in advance to the Secretary of State t franchise tax for the year 

following . . . 

Article 12.03 of said Chapter 12 provides in part as follows: 

"The franchise tax Imposed by this Chapter shall 

not apply to . . . corporations organized ;.: for 

strictly educational purposes, or for purely 

public charity . .." 

You do not give any facts as to how the corporation in 

question is actually operated; but you state the purpose " 

clause of its charter, and we will answer on the assumption 

that it is operated strictly in accordance with the purpose 

clause. The purpose of the corporation is stated as follows: 

"The purpose or purposes for which the Association 

Is formed are as follows: The support of any benevolent, charitable, or educational undertaking and 

particularly to promote and develop friendly and 
Hon. Robert Calve& Page 2 Opinion No. WW-1514 

fraternal spirit among all of the employees of 

the Police Department, and to generally increase 

the efficiency of the Police Department by providing lectures, instructions, written material, 

and other educational aids In their duties." 

The answer to your question as to whether this corporation 

is liable for franchise taxes depends on whether, under the 

words of Its purpose clause, this corporation Is organized 

"for strictly educational purposes, or for purely public 

charity." 

We have been unable to find a court decision directly in 

point, but some cases construing other statutes are helpful 

in deciding this question. In the case of Conley v. Daughters 

of the Republic, 106 Tex. 80, 156 S.W. 197, the Supreme Court, 

‘in deciding whether a cornoration was lawfullv created under 

the statute authorizing a-private corporation"for "educational 

undertakings," said: 

"Whatever educates Is within the meaning of 

(educational undertaking'. Education in the 

sense as used In the statute Includes: 'In its 

broadest sense, . . . not merely the instruction 

received at school or college, but the whole 

course of training, moral, intellectual and physical; Is not limited to the ordinary instruction 

of the child in the pursuits of literature. It 

comprehends a proper attention to the moral and 

religious sentiments of the child. And it is 

sometimes used as synonymous with l"learnlng"l. 

14 Cyc. p. 1230." 

The general trend of the Legislature of Texas to be generous 

in its exemption from taxation of educational projects is 

stated in the case of Harris v. City of Fort Worth, 142 Tex. 

600, 180 S.W.2d 131, as follows: 

"The Constitution and the Statutes of this 

State evince a liberality in the exemption from 

taxation of property for educational or religious 

purposes." 

A case in another state that is helpful In deciding 

this question Is the case of Ancient and Accepted Scottish 

Rite of Freemasonry v. Board of Commissioners, 122 Neb. !~66, 

241 NW 93. v-. in which the Sunreme Court of Nebraska decided 

that a Scottish Rite Temple was exempt from ad valorem taxes 
Hon. Robert Calvert page 3 Opinion No. WW-1514 

under ‘the Nebraska statute exempting “property owned and 

used exclusively for educational, religious, charitable . . . 

purposes,” even though the building included a banquet hall 

and was also used for social activities for its members; and 

in its decision the Court said: 

” 

. . . lexicographers and the ,courts agree in 

defining ‘educational’ as pertaining to ‘education.’ 

The latter word taken in its full sense is a broad, 

comprehensive term and may be particularly directed 

to either mental, moral or physical faculties, but 

in its broadest and best sense it embraces them all, 

and includes not merely the instructions received 

at school, college, or university, but the whole 

course, of training-&moral, intellectual, and 

physical. 

“An educational purpose Is synonymous with an 

educational undertaking, and whatever educates is 

within the meaning of an ‘educational undertaking.‘” 

We are not unmindful of the recent case of Phlnne 

Dougherty 307 Fed.2d 357, in which the United Sta -T72& es of 

- or the 5th Circuit held that a gift to a student aid 

fund for the benefit of a university fraternity was not exempt 

from income taxes under the statute exempting income to corporat ions “organized and operated exclusively for educational 

purposes .‘I Thearemption was not allowed In that case because 

the court, apparently, approved the finding of the Treasury 

Department to the effect that the fraternity wa? “operated to 

provide most importantly social club facilities and that the’ 

‘fraternity house serves both the educational purposes of the 

University and the social purposes of the fraternity.” We do 

not think that the Phinney case would control this case, because in this case we must pres?lme that that the corporation 

in question does only those things stated in the purpose 

clause of its charter, which does not contemplate social purposes. 

An examination of the purpose clause shows that the 

purpose stated therein can be divided in two parts, the first 

art beginning with the words 

+i-- 

“the support of any benevolent, 

c aritable, or educational, un$ertaklng,” and the second art 

reading in full as follows: . . . to generally increase #iT 

efficiency of the Police Department by providing lectures, 

instructions, written material, and other educational aids in 

their duties .I’ 
Hon. Robert Calvert page 4 Opinion No. WW-1514 

We unhesitatingly are of the opinion that the second 

part of the purpose clause is “for strictly educational 

purposes” within the terms of the exemption statute; and the 

words are so plain that we do not believe that there could be 

any argument about them. 

We are also of the opinion that the first & of the 

purpose clause Is "for strictly educationamposes, or for 

purely public charity; ’ but we realize that there could be 

some argument in this regard, and for that reason we will 

discuss the words of the first art of the purpose clause 

which says: “The supportmany %- enevolent, charitable, or 

educational undertaking and particularly to promote and develop friendly and fraternal spirit among all of the employees 

of the Police Department . . . .‘I The words “benevolent, charltable, or educational undertaking" clearly come within the 

provision of Article 12.03, exempting a corporation organized 

for “educational purposes or for purely public charity.” The 

additional words of the purpose clause that follow, to-wit, 

"and particularly to promote and develop friendly and fraternal 

spirit among all of the employees of the Police Department," 

are not as clear in that regard; but we construe those words 

to be an explanation or amplification of the preceding words, 

that Is, they particularize a specific phase of the main subject, that of benevolence, charity and education. 

It is our opinion that the corporation in question, 

under the purpose clause set out above, is exempt from the 

franchise tax imposed by Article 12Dl Taxation--General, 

V.A.T.S. 

SUMMARY 

A corporation ,organized by a Police 

Officers' Association to support a "benevolent, charitable, or educational undertaking and particularly to promote and 

develop friendly and fraternal spirit 

among all of the employees of the Police 

Department" and ti incIB3m efficiency by 

providinglectures, Instructions, written 

material and other eucational aids, Is 

exempt under Article 12.01, Taxation-- 

General, V.A.T.S. from the payment of 
Hon. Robert Calvert page 5 Opinion No. WW-1514 

a corporation franchise tax. 

Yours very truly, 

WILL WILSON 

Attorney General of Texas 

Cecil C. Rotsch 

Assistant Attorney General 

CCR:bjh 

APPROVED: 

Opinion Committee: 

W. V. Geppert, Chairman 

Pat Bailey 

Dudley McCalla 

Norman Suarez 

Tom Peterson 

REVIEWED FOR THE ATTORNEY GENERAL 

BY: LEONARD PASSMORE