WI& WILSON

*%-ro- CaENERAI. December 

### 28, 1962

Honorable Robert S. Calvert Opinion No. 

### WW-1514 Comptroller of PublicAccounts Austln,'Texas Re: Whether, under the facts submitted,a corporation charteredby a Police Officers' Assoclat-ion is exemot from the franchisk~tax required by Chapter 12,,Title 122A, Taxation--General,V;A.TS. Dear Mr. Calvert: This is in reply to your request for an opinion on whether a certain corporation charteredby 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 Inwords as follows:

"(1.) Except as herein provided, every domestic and foreign corporationheretofore 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 Imposedby this Chapter shall not apply to
... corporationsorganized ;.: for strictly educationalpurposes, 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 accordancewith 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 educationalundertakingand particularly to promote and develop friendly andHon. 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 Departmentby providing lectures, instructions,writtenmaterial, and other educationalaids 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 educationalpurposes, 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, 

### 106Tex. 

### 80, 156 S.W. 197, the Supreme Court, ‘indecidingwhether a cornorationwas lawfullv created under the statute authorizing a-private corporation"for "educational undertakings," said:

"Whatever educates Is within themeaning of (educationalundertaking'. Education in the sense as used In the statute Includes: 'In its broadest sense, ... notmerely the instruction received at school or college,but the whole course of training,moral, intellectualand physical; Is not limited to the ordinary instruction of the child in the pursuits of literature. It comprehendsa proper attention to themoral and religious sentimentsof the child. And it is sometimesused as synonymouswith l"learnlng"l. 

### 14 Cyc. p. 1230." The general trend of the Legislature of Texas to be generous in its exemption from taxation of educationalprojects is stated in the case of Harris v. City of Fort Worth, 142 Tex. 600, 180 S.W.2d 131, as follows:

"The Constitutionand 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 Freemasonryv. Board of Commissioners,122 Neb. 

### !~66, 241 NW 93. in which the Sunreme Court of Nebraska decided

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

under ‘the

Nebraska statute exempting “propertyowned and used exclusively for educational, religious, charitable

... purposes,” even though the building included a banquet hall and was also used for social activities for itsmembers; and in its decision the Court said:

”

... lexicographersand the ,courtsagree in defining ‘educational’as pertaining to ‘education.’ The latterword taken in its full sense is a broad, comprehensiveterm and may be particularly directed to eithermental, moral or physical faculties,but in its broadest and best sense it embraces them all, and includes notmerely the instructionsreceived at school, college, or university,but the whole course, of training-&moral, intellectual,and physical.
“An educationalpurpose Is synonymouswith an educational undertaking,and whatever educates is within themeaning of an ‘educationalundertaking.‘”
We are not unmindful of the recent case of Phlnne -T72& of Dougherty 307 Fed.2d 357, in which the United Sta es

- or the 5th Circuit held that a gift to a student aid fund for the benefit of a university fraternitywas not exempt from income taxes under the statute exempting income to corporations “organizedand operated exclusively for educational purposes.‘IThearemptionwas not allowed In that case because the court, apparently, approved the finding of the Treasury Department to the effect that the fraternitywa? “operated to providemost importantly social club facilities and that the’ ‘fraternityhouse serves both the educationalpurposes 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?lmethat 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 beginningwith 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 Departmentby providing lectures, instructions,writtenmaterial, and other educationalaids in their duties.I’Hon. Robert Calvert page 4 Opinion No. WW-1514

We unhesitatinglyare 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 %- educationalundertakingand particularly to promote and develop friendly and fraternal spirit among all of the employees of the Police Department
... .‘IThe words “benevolent, charltable, or educationalundertaking" clearly come within the provision of Article 12.03, exempting a corporationorganized for “educationalpurposes or for purely public charity.” The additionalwords 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 precedingwords, that Is, they particularizea specificphase of themain 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 imposedby Article 12Dl Taxation--General, V.A.T.S. SUMMARY

A corporation ,organizedby a Police Officers'Association to support a "benevolent, charitable,or educationalundertaking and particularly to promote and develop friendly and fraternal spirit among all of the employees of the Police Department"and tiincIB3mefficiencyby providinglectures, Instructions,written material and other eucationalaids, Is exempt under Article 12.01, Taxation-- General, V.A.T.S. from the payment ofHon. Robert Calvert page 

### 5 Opinion No. WW-1514

a corporation franchise tax.
Yours very truly,
WILL WILSON Attorney General of Texas

Cecil C. Rotsch AssistantAttorney 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