# THE A-JTORNEY GENERAL OFTEXAS AUSTIN. T-s 78711

October 10, 1974 Major General Thomas S. Bishop Adjutant General ofTexas P. 0. Box 5218 Austin, Texas 78763

Dear General Bishop: Opinion No. H- 418 Re: Whether the Texas National Guard and similar groups are entitled to income from atrust established for the “White Military Companies ofDallas County. ” You have asked several questions relating to the income from a trust andhave described the factual background. InDecember, 1888, a lot in the business section ofOak Cliff, City of Dallas, was conveyed by deed to the Dallas Artillery Company on condition that theArtillery Company would erect anarmory on the property within six months. This was accomplished andtitle vested. The property was to be vested in the Dallas Artillery Company for its sole use, enjoyment and control as long as the Company remained an organization either military, civil or social, and after the dissol.ution ofthe Company the land was to go to any military company or social organization formed by as many as five ofthe members ofthe Company, either by themselves or associated with others. After the dissolution ofthe Company and any such organization or organizations, then the property was to revert to the County Judge ofDallas County and his successors in office to the use and benefit of such “White Military Companies ofDallas County” as might be in a position touse and enjoy it. No military company has used or enjoyed the property since 1919 when the Dallas Artillery Company was mustered out after the First World War. Two law suits tried to recapture the trust estate, but failed. The County Judge ofDallas County sold the original property and later bought another tract of land. This was sold in 1971 for $120,000; $10,000 ofwhich was paid then and the remainder was to be paid over a20 year period with interest. A private association called

p. 1947Major General Thomas S. Bishop, page 2 (H-418)

Dallas County National Guard Association was formed and, the Trustee. the County Judge ofDallas County, authorized the purchaser ofthe tract to make payments under the note directly to the Dallas County National Guard Association. The association spends the interest and gives the County Judge an accounting each year. Principal payments are treated as the corpus ofthe Trust and are not spent. Your first question recites that itwas held in Scott V. Sterrett, 234 S.W. 2d 917. 920 (Tex. Civ. App. --Dallas 1950, writ ref’d. n.r.e.)that the trust beneficiaries, the white military companies of Dallas County, are “constituents ofthe organized militia of this state” andasks “whether or notis is legal totransfer interest payments received from this trust to the Dallas County National Guard Association which is nota state Militia entity but aprivate association? ” Before the property was sold in 1971, a declaratory judgment action was brought to determine, inter alia, whether the payments from the sale ofthe property could be made tothe Dallas County National Guard Association. The parties to the actionwere the County Judge, the commanding officers ofall National Guard units in Dallas County andthe Attorney General. See Article 4412a, V. T.C. S. An agreed judgment was entered by the Court on December 3, 1970, and provided inpart:

IT ISFURTHER ORDERED, ADJUDGED and DECREED that the Promissory Note in the amount of $110,000 to be executed by the purchaser ofsuch property be made payable to W. L. (Lew) Sterrett, County Judge ofDallas County, Texas, as Trustee for the White Military Companies ofDallas County, Texas, and/or his successors in office and trust, and that the County Judge allow payments tobe made under said Note directly tothe Dallas County National Guard Association, which Association shall provide annual accountings to said County Judge, showing that proceeds received under such Note were used by such Association in furtherance ofthe purposes for which the Trust herein referred towas created. Sterrett,et al. V. Didear, No. 70-12528. Dist Ct. ofDallas County, 116th Judicial Dist. of Texas, December 3, 1970.

p. 1948Major General Thomas S. Bishop, page 3 (H-418)

As the payments onthe note are made to the Dallas County National Guard Association pursuant tothejudgment ofthe court, it is our opinion that they are being made legally so long as the purposes and activities ofthe Association do not change so that they no longer reflect the purposes ofthetrust. Whether that is the case depends ona determination ofthe facts and is outside the scope ofthis office’s opinion process. Your second question is:

Ifthe answer to the first question holds such payments to be legal does the Adjutant General’s Department have authority to supervise this fund under joint regulation, TARNG Regulation 230-2, TANG Regulation 176-2 and TSG Regulation 230-2? The regulations about which you inquire outline detailed procedures for the handling ofNational Guard funds. Although the Association is closely related to the National Guard, it technically is not apart ofthe Guard. Therefore, we have found noauthority bywhich theAdjutant General can extend the requirements of TARNG Reg. 230-2, TANG Reg. 176-2 and TSG Reg. 230-2 to the Association. However, thejudgment ofthe Court directs the Association to provide an annual accounting to the County Judge inhis role oftrustee. Your third and fourth questions ask whether the Texas State Guard is entitled toparticipate inthe trust andwhether the Dallas County National Guard Association violates the terms ofthe trust since some non-county residents, some retired members ofthe Guard and some regular Army andAir Force personnel assigned to the Guard are entitled tomembership. Again, we believe these questions were answered bythe District Court judgment which directed that the payments be made tothe Association. Absent review ormodification ofthejudgment, we must answer these questions in the negative. Your fifth through eighth questions involve the federal tax status of the Association and the steps necessary for the Association to realize maximum federal tax benefits. We believe these questions are outside our opinion giving authority as outlined in Article 4399, V. T.C.S., as they are primarily private in nature.

p. 1949Major General Thomas S.Bishop, page 4 (H-418)

Your final question is

Since Militia units now have Negro members what effect does the provision ofthe trust have which set it upfor the benefit ofthe White Military Companies ofDallas County? Is this an enforceable provision ofthe trust and if so by what procedures? Although the trust refers to “White Military Companies,” we do not believe it must be interpreted to exclude benefits for non-whites. Coffee v. William Marsh Rice University, 408 S.W. 2d 269 (Tex. Civ. App. --Houston 1966, writ ref’d., n.r.e. ). Ifthe trust were interpreted as being limited to a racially segregated class, the restriction would beunenforceable. Shelley v. Kraemer, 334 U.S. 1, 92 L. Ed. 1161 (1948). Itis our conclusion, therefore, that the beneficiaries ofthe trust are not limited tomembers ofany racial group. SUMMARY

The entitlement to income from atrust established for the Dallas Artillery Company andupon that group’s dissolution for the use and benefit ofthe “White Military Companies ofDallas County’ is determined by a district court judgment directing that payments be made to a private association of National Guard personnel. Under Texas case law, the trust is notto be interpreted to exclude benefits for non-white persons, and an interpretation limiting benefits to a racially segregated class is unenforceable. Very truly yours,

JOHN L. HILL Attorney General ofTexas

p. 1950Major General Thomas S. Bishop, page 5 (H-418)

APPFj,OVGD:

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### VI-t-i.- !?. YOR , First A ListaDAVID M. KENDALL, Chairman Opinion Committee

p. 1951