Honorable Geo.H. Sheppard

Comptroller of Public Accounts Austin, Texas
Dear Sir: OpinionNo. O-5342
Re: Whether a bequest to the Masonic Temple Associationof Fort Worth Is exempt from the payment of inheritance taxes.
In your letter oft May 28, 1943, you inquiredwhether a bequest to.the Masonic Temple Association of Fort Worth is exempt from inheritancetaxes by virtue of its being a bequest to a charitable organizstion.

The inheritance taxes normally applicable to bequests and devises to associationsand corporationsare contained in Article 7122,v. A. c. s., but the rate schedule therein established is s.ubject to the followingproviso: "Provided,however, that this Article shall not apply on property passing to or for the use of the United States or any religious, educational or charitable organizationwhen such beq.uest, devise or gift is to be used within this State."
It is apparent that this exemption obtains onlywhen (a)~ the bequest is to one of the named types of organization, and (b) the property bequeathed is to be used by such organization within this State.

Pertinent portions of the charter of the Masonic Temple Association of Fort Worth are as follows:

"First. The name of this corporation is "MABONIC TEMPLE ASSOCIATION OF FORT WORTH." "Second. The purpose forwhich this corporation is formed is to support charitable and benevolentHonorable Geo. H. Sheppard, Page 2

undertakings through the erection and maintenance of a building for the benefit of the various contributing lodges. "Third. The corporation shall have its place of business in the City of Fort Worth, Tarrant County, Texas. "Fourth......... "Fifth.......... "Sixth. No money coming into the possession of this association,nor property of any kind, now or hereafter owned or to be owned by it, nor any assets arising therefrom, shall ever go or enure to the benefit of any certificate of donationholder in this association. All moneys realized by this association by the conveyance of properties from the respective contributing lodges' or orders, and all moneys received by contiribution,

gifts and otherwise, shall be used for the liquidationof the indebtednesson the buildings and improvementsof the associationand for the carrying ,outof the purposes for which this association is organized. "Seventh. This association shall not have any capital stock, but for the purpose of raising and supplying part of the funds with nhich to erect and,maintain a building,and to retire and pay off the bonds and other evidences of indebtednesswhich will be required in the building and completion of said building, the various lodges and orders contributingproperty, both real and personal, for such purposes shall be,issued certificates of donationpro rata upon the basis of such assets received from such contributing lodges or orders as the same bears to the total value of the buildings and propertywhen said building and improvements have been fully completed. "Eighth. Each contributing lodge or order shall entitled to be representedupon the board of trustees of said corporationby the election or appointmentof three of itsmembers respectivelyand each such be

contributing lodge or order shall be entitled to one vote at any meeting of said board of trustees, irrespectiveof the amount of certificatesof donation owned by any one of said contributing lodges or orders.Honorable Geo. H. Sheppard, Page 3

"Ninth........." Although the charter describes the Association in q'uestion

as o;e formed to "supportcharitableand benevolent undzrtakings, we feel that the Association is not the type of charitable organization", comprehendedby the proviso to Article 7122.

In the case of Masonic ,Temple Association et al v. Amarillo IndependentSchool District., 14 S.W. (2d) 128 (errorrefused), a corporation identical to the one here in question in all material respects ex$ept that membership thereinwas specifically limited to various Masonic bodies and lodges of Amarillo,Texas," claimed an exemption from ad valoretn

taxationunder Section 2 of ArticleVIII of our Constitutionpermitting the legislatureto exempt "buildings used exclusivelyand owned by

...institutionsof purely public charity" and under Article 7150 (7),V.A.C.S., exempting "allbuildingsbelonging to institutionsof purely public charity. ~ :.I"

~. Tndenying the,exemptionJudge Jackson ,~' pointed o.ut

that since the various Masonic orderswhich were stockholders in the Association and who used the building were not "orderswhich do nothing but dispense charity, b,ut which do dispense charity," the building in questionwas not owned and used exclusivelyby an institutionof purely public charity. Admittedly, the constitutionaland statutory provisions involved in the Amarillo case differ from those here under consideration,yet we feel that the principles enunciated in that case are applicablehere. If the Fort Worth Association is a "charitableorganization"within the language of Article 7122, it obtains that status only because of the use which is to be made of its building. Under the charter the users of the building are denominated only as the "variouscontributing lodges or orders," and the lodges or orderswhich may be,acceptedas holders of certificatesof donationmay be Masonic or non-Masonic,domestic or foreign, charitable or non-charitable. Moreover, although the building is to be erected and tnalr$ained'for the benefit of the vario,us

contributing lodges, the charter affords no other indicationof the nature of the building or the 'useto which it shall be put. Even ifwe could assume that all of the contributing lodgeswill be, to a certain extent, charitable organizations,the charter affords no guarantee that theHonorable Geo. H. Sheppard,.Page 4

buildingwill be used wholly or In part to further the charitable functions of such organizations.

Furthermore, to claim the exemptionprovided by Article 7122 it Is necessary that the bequest be one which is to be used within,this State. Under the sixth clause of the charter the bequest in questionmust be used for the liquidationof the indebtednesson the buildings and improvements of the Association and for the carrying out of the purposes for which the Associationwas organized. The charter providesno indicationor guarantee that the buildings or Improvementsof the Associationwill byelocated within this State, and the testator'swill in no way restricts the Association to using the bequest for buildings or improvementswithin this State or to retiring the indebtednesson such buildings or improvements. While the Association is a domestic corporation~andwhile its place of business is establishedat Fort Worth, still these facts are not incompatiblewith out-of-state operation,nor, we feel,j do they give rise to a presumption that the Associationnil1 confine its activities to this State. In the case of San JacintoNational Bank v. Sheppard, 125 S.W. (26) 715, in construing a statute (Article 7119,V.A.C.S., prior to its amendment in 1933)which taxed sharitablebequestswhioh uere "tobe used without this State," JusticeBaugh said at p. 716: I

"Roxhere in its charterwas anythingrequired to be done in Texas. 

### Bar, @d the will of Milroy require the funds derived from his devise to it to be us& in Texas. Clearly under the charter and said will the beneficiary corporationcould have used the devise anywhere the directors thEreof should determine in their me,etinga in Ohio+ Although the facts in that case involved a corporation located In Ohio and operating in Texas but which was not required by its charter to do ,so, while the facts immediatelyat hand involve a c.orp,oration locatea inTexas nhi& may operat,e el,sewhere

and which is not-forbiddenby Its,charter to do so, yet we feel that t,he,language af JusticeBaugh ishere p.e,rtinent

. In accsrdanoewi,ththis language,we feel that a bequest is made exempt under Artible 7122 anly .whenthe bequest is specificallyrequired by the t,epms,ofthe will to be used in t,Ns S,tate or **when** the pawexs of .the, beneficiary are limited in ,sucha manner that it ,canno,t legallyma$e use of the bequest out,s,ide, of this State. C.onsequent,ly, you areHonorable Geo. H. Sheppard, Page 5

respectfullyadvised that the bequest in question falls without the exemption contained in Article 7lZ! and that said beq,uest

is subject to the inheritancetax. Trusting that the foregoing fully answers yo'ur inquiry,we are Very truly yours ATTORNEY GENERAL OF TEXAS

By /s/R. Dean Moorhead

Assis.tant Approved July 15,,1943

Grover Sellers First AssistantAttorney General

RDM/JP/c,s

APPROVED OPINION COMMITTEE

BY BWB Chairman