OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

GROVER SELLERS 

ATIORNEY GENm*l. 

Honorable George Ii. Sh8ppard 

Oouptrollsr of Fublio Aoocunts 

Auratin, Ts%as 

Dosr Sir: Opinion no. Q-7040 

. 

RI I (1) Whether a #INI paid oat 

ln oompromlro oi a will 

atmtart 18 te 

banrflolarler 

SWm your lrttrro oi ra 

il;stetr of i&a. 1'. A. @enlay, ti 

furnlshrb by you, M r8etc thr 

o? prrronal proport 

provision di6pomiug 

arrtsin bepasstr 

, and oontalnrd thle 

0r my property, 

d 

%lng 

and p.mramd or, 

paragraph, after 

, togethrr afth all of the 

ng or this will, shell 

I in equal ahareu In the 

Fnrbytrrlaa Churah in tba 

I the Southarm Prosbyteri~n 

uroh in thr Onltad Staten 

Churoh In the Unltrd 8tatee (aomaonly known as the southern 

Frasbgtarlan Churoh) ti aqua1 sharee, tha ramindar of all 

177 
%onarabla George H. Sheppard - Fag8 2 

tha property I may avn 01: ba interested in at tha time of 

my baath, in roe elapla, to mana$a, 8411 or diepose of aa 

they may 844 prOp6r.* 

A contest of the will ms made by seven nlaoaa end nephews. 

On June 7, 1945, tha Judge of th6 Caunty Court at Lew of lallaa 

County entered an order Ulraoting the tam urery e&dniatrator of the 

a&ate to pay tha oontaetante tha auin of B 7,000. This order reeds 

in pert a8 follower 

Wn this day. . . ooming on to be heard the 

application a? the Temporary Admlnlatrator of this %&eta 

for approv61 of a proporition to settle tha aontast brought 

against tha probata af this will by 6artuin oontaatantr 

.: and it appaarlng to the Cwrt that all the parties 

;t*intarast hara agraad to the prapof184 8attl6mantI ana 

that it is to the advuatagr or the banaflolarias of said 

will . . . rapraeantal herain elro by apaoial oounaal, and 

that aafd proposed settlement Ir a raaeoMbla, duet, and 

bualnaae lIka disposition ot what may be 8, dengarwa, long 

end 8~pansI~a lltlgstion, It IS th8w0r8 0ra8r8a that tha 

18 

ro orltlon to aattla aald oontont by tha paymant o? 

7, 00.00 to the aontaetantr, ba en4 haraby la approved; 

and tha Tamporary Adm5.niatrator la hereby ordered and 

eothorlaad to pay uid amount. , .* 

In pragarlng the lnharlteaaa tax rapurt 

Aitar this oo~rmI.68, the will we n4mltt.d to probate. 

, tha l x a o utor bat Beken tha 

porltion that the $7,000, king $1,000 to aaah of the crontartenta, 

rhoula be aat up ar thair distrlbutiva ehera of the aetata and 

tax86 to them. SIn6a sash a2 tha oontaatanta would have 6n exemption 

In axoasa of &l,OOO, thls wauld result In no tex fram then ior any 

part of the $7,000. 

For a atatamant oi the fiats regardin& thw 8aoond quaation, 

ua quote the ?olluwi~ frum Oha latter of 3, W. MoUIllln, your 

InharItanoa Tax Auditor: 

*The eaoond quaation arisen as to the taxability of tha 

portion of the Brteta whIoh was wlllad to the Praabgtarlan 

Uhuroh of the Unitad Stetaa. The l x a o utor in prapati.u#l the 

lnherltanoa t6x report, ahowad this baquas e (te taxable end 

wfth 62 axamptlon or only $500.90. The Repr6..nt,stiVes of 

the Qtats now oontant? that this w6a In arror an8 tha entire 

amount is non-texsbla a~ eoirg to e ral&ious orppnizetion and 

la ta be usad in 'Razes. 
173 

gonarabla George 13, Shapperd - Page f 

line: 

Yhs Fraabytarlan Ch&rah ID organised along tha following 

The looal ahurahae In e aar$eln aaotion era organbad 

Into Prasbytarlae. A number of Prarbytarlaa oonstItuta e 

synod. Tha gotaming body of the Churah ia oellad the 

General Assembly and la mada up of rapreeantativas from 

the various rreabyterias. The General ksaambly maata 

annually and at thsaa meetinglo paa~aa ordera, rasolutiona 

ato. and diraot how the buaInara of tha Churah Is to ba 

oonthota4. These 4lraotitas ara for tha guidance of 

various Boaras oraated by the @anareA Aaeambly en4 throu& 

which the bualnaaa of the ehnroh Pa oerriad on. 

“Thaw Gana?al A~aambly la en Inoorporatad bo4y undar 

the lewr ctf North Caroline, The Gaaazul Aesambly has 

oraetad a Soar4 or Troataaa whoa* offiaa ir looata4 et 

Cherlotta, Morth Car0liaa. When bepoasta or donations 0r 

f: 

ropsrty era raoairr6 by the Ghureh, thr, usual prooa4ura 

a for the Boar4 of Truatara to take ohar&a of hen4linmg 

this property. The looms or other Pro88868 from thaaa 

propartlra era dlrtributad by tha Truakaa in eooordenoa 

with diraatlns from the Gan8ral Asaa6bly. In oeea ot 

propartybaquratho4 or donated for a spaolfle purpoaa, it 

la handled in l ooordenoa with the terms of uuoh baquaat or 

Uanetlon. When proparty la raoslvad by baqaaat or 4onstIon 

end no ~paoiria pur$ose ia Indiaetad, the proparty Is uaad 

for any purpose wldah the G4narel ~Assambly my think proper. 

It oatz be apsolY10 diraotiva order funds whioh it has on 

hen4 wa d for e l psoiflo pu 088 or ln e 8poolfIo arae* In 

the instant owe, the Chnara T Assembly by resolution 

f.yse,” that l/2 or tha Mrs. F. A, Manley %&eta ba usaid 

Tha Traaaursr ,ot the Churoh edriser ma that the 

Churoh a~am4a approrimatal~ $13,000.00 par fear In Taxa~s 

and that l/Z of the fund8 darlwd fry thia estate will, 

under the Qiraotlva mmtloaad, ba used in l’waa. 

*The Ganarsl Haa4qusrtars of the Prasbytarlan Church 

of the Unltad States $s looated at I.120 Liberty Bank 

Dullding, Dallas, Tares an4 has bean looatad in Dallw~ 

sin08 1922. 

“1 daolinad to allow the l/2 ai the ssteta going to 

the frasbytarlan Churoh of tha ~nitad States a8 Owmpt~ 

It la apparant from the WI11 and from the manner at 

orgenieatlon of this Churah, that these funds oould be 

uasd for any purpose a114 et w pl.404 that the Qanaral 

lrsaemblg should dlraat. In other words, its uaa was in 
mnora bla Qsor&~ li. Sheppard - Fags 4 

no eenee limitad to Toxae. Iti appanrs to ma that tha 

rsal quastion prssantsd 12 whether the rseoLiAl.on paeaad 

by the General -ssss?bly nftar draedent’s death to the 

eiisct that l/2 OZ t!iis eatat@ was to br uaad in Taxsa 

would chare,,a the canerel rule end Ln4k4 this bequest rxanpt. 

II! this ooncaotlon, I cell your ettentlon to Attorney 

Se~mrel*e opinion +G-2816. Thla opinion oallr a ttsntion 

to the aa~e ol ran Jscinto Ketlonel Bank te. Sheppard, 

125 z, ::. (26) 715, in %lch tha Court statad a8 followa~ 

manor did the Xl1 of ‘Tilroy require the funds 

derived from hle davlso to be uard In Texas. 

Claaorly undrr the Chartar and said X11, the 

beneficiary oorporatlon aould hava uaad thr 

dariea anywhara the dlraotors, thanof, should 

detarmlne in their maatlngs in Qhlo. * 

It a?psars fxom tha Attornay Gsneral*s ruling that thslr 

porltlon la t&at the Kill lterlf met ll@t tha asa OS 

tha proparby Involved to tha State of Taxae. This yould 

aoam to ba ospaofally trur when ths property ie nillad 

to an organleatlon whioh by Its Tary nature expands its 

funds 0~42~ a larga area and of whloh thr state of Taxae 

Is only a part. As pointed out in the ;rttornag Ganaral*s 

Cplnlon if an agraamant after daath of tba deoedent was 

parmittad to ohan@ the taxable status of a baqurat than 

there would 444n .to~~ba no raaaon why othar taxahla b+naiiolarlse would not ba antitlad to so Oontreot. A baqueet 

to a non-relatlva m ht by thlo roeaodurcr baooma taxable 

to a parson with a h Y ghsr sx8mpt f cpn and ardapr tax 

sltogsthnr.” 

Your first question hea bsan pas&ad upon and ssttlad by 

Grana V. E.fo,nn, 162 S;W. (2) 117, (writ of 6rror refused). In that 

0444 thera vtaa a will oontsat, and the wllL was adofttrd to probate tiy fan a~raad jud~raent of the Frobata Oourb wh@h lncorporstsd 

in It the settlsmnt eereamant waohad batw4m the parttas. Appallant, 

who wae tha pereon nnmed In the will to rrosits all ot;dacrdsntva 

property, contended thet only the BUSI of $98,4%82 peeeed to her 

end that aha owed taxes to the State on this amount, and that eha 

DIpsd no taxae on tha balanaa of ths a&ate whioh wab given to the/’ 

Qontestant in comprcml44 of tt:e oontsat. Th4 oourt reviewed tba 

authorities and held that the entlra aatate wae taxable to appsllent. 

The rationala of the opinion Is as follows: 

“It Ie our si.4~ that ahe did reoolw all the property 

by th3 term of We will. The court oould not alter the 

will end the fsct that eke gave up a part ,oP the property 

to 3~)Es good her title to the balaw4 did not altar It.” 
Bonorable George R. Shappard - ra(lr 5 

Gf tha ooutentlon that the &mount rswlmd by the l o~, who 

wes tba contestant, was not received frool appellant but wan reaelve6 

troln the father’s estate by virtue of ths laws oi deeaont and dlstribution eince his rkht to maintai? ths aontest was dsrlvsd eolslg 

from his status ae sn hair oz the testetor, the aourt dar 

n Reg~rdlesa of the ae,rec;rwnt whloh browht it 

ebout,*t~a’fuat ramalos that ths will of the deosdent wss 

probated and by the terns of it appellant reael+ed all ot 

the estete. Mthout probstinp, of the will she would hatie 

got no part of the 6etats. By agrerlng ios the oonteetant 

to take a part of the eetste whloh the will gave to her, 

she purohasod her peaae and thereby scoured unqurationrd 

title to the bnlanoe. It In true that the eon wee able to 

maintain the .aontest bemuse of his heirship, a&d so in a 

aenae being an heir did enable hia to gat a portion of the 

estater 3nt appellant cli& not oonwnt for him to share 

the set-ate beoause ha was an heir but only beoauee he was 

a contestant ot the will whloh gave all or the e&ate to 

her. There is ‘nothing to foaioote thab the son would ha?8 

gotten anything If be hsd not oanteated the will, Or that 

othar ohildren oi the doordent; ii he had left aDy, would 

have shared In the eoapromise eettfsment he& they not bsen 

psrtiee to the aontest., Both the appellant and the probate 

aourt drslt with the aon, not as en heir rserelf, but an a 

oontestsnt OS t!n3 will.” 

A olosely analogous sltuetlon wae rwlrwr6 by thl8 ‘. 

department in Opinion So. 0-6035, a oopy of. whloh I6 enoloeed .herewith, and it ma he16 that the sttorn8f’a fe8s,.%n queatian rhould 

not be dmluated befors ooqmting ths tux. 

In answer to your rirst question, it is our opinion that 

the $7,000 paid out lr. compromise of the will oonteet ia taxable 

to the two benerloiarlea, unbar thr *Ill. 

t?e paw now to a oonaidrretlon oi focir second question, 

whloh arises untier that portion or nrtiole 7122 which reada 5s 

fOllowa t 

Y3-ovlded, however, tha,b thlo Artlale shall not apply 

on property. pansine to or ior the ~86 oi the United Stat88 

or any rel&ioue, eduostional or ahartfible organization 

when mob bonueat. devise or ai$‘t Ia to be used wlthla thla 

$&&a” I xq&aele e~pplleiIT 
mnorublr George H. Sheppard - Pags 6 

pie lnejority or deoleitma from other jurladlotlons, under 

similar atotutse, 40 not allow aremptiona from the payment of an 

1nherltenae tax to a roreign religious, oharltnble or edueatlonal 

sorporo tion, tlven ii” it oarrids on same of Its work sfthin the utete. 

me rensons ror euoh rule hsve boen stated verioualy ae follower 

*Tt~xae must be relaed ror the support a:%d conauct ot 

the ~ovrrmmnt. ?‘Jxamption to oherltable, eduoational, and 

religious orignlzatlona is bottomed upon t&e faot that they 

rennder ear-doe to tha &ate, for whloh reaaons they are 

relieved or oertaln burdena of taxation. Tha etf8ob of an 

sxamptlon Is equivalent to an appropriation. It oannct be 

aal4 to have been the intent of the legislature to m&e 

epproprlatlona for the benerit or Mlntanaao8 or forean 

oharitirs, whioh, at best, have a reaote ohanor only to 

benefit the oltizana of this atate.” Morgan v. A. T, & 9. 

F. Ry. Co., 116 Kan. 175, 225 1'. 1029, 3i, ii. L. R, 625, 

“:vhile we may assuae that th6 CallfOrnl.tk aorporatlon 

would raltmllJr rxwmi61 tha provfrlonr or the will in tha 

usa of the 

f 

ropwty, yet the rtate would have Tao vlsit+eL 

power riiabl XI& it to enforar ooaplianarr True, the 001 

poratlon is reglstrmd in the date and permlttad to 40 

businesr.thrrein, but it la not soizpelled to mmnln tn 

t&a stata.” In ra Thomas~a Sa$aba, 185 Sarh. 113, 53 I"(2) 

305. 

*It 1~ the pollc ~ai soaimy to enoouqga bonrvolrnoe 

and oharity. But it 9 a n 0 t the proper funotloa .of a ptate 

to go outside its own l.imibe, and divote Its ramararcl to ,-. 

suppo*t the 04uae of rqllghn, oduoatiotl, or laiaalons $or ~’ 

tha benerlt of mankind ~st large.@’ Iltuaphreya v1 9taM. 70 

Ohio St, Rep. 67, 70 X.3. 957, 65 L.R.A. 776. 

Theaa rules ham been oited with apprwal by the Court of 

Civil Appeals ln ?San Jaolnto Rational Rank v, Sheppard, I.25 S'G(2) 

719. AlthouiJh that easa’ was oontrokled by statutes as thrg existed. 

in 1931 (at whiah time Artiole 73.22 provf(lrd for an exemption “ii : 

prrssl~ to a rellgloas 

Estate an4 th6 twauesb i r’t: 

. organlzzio; looated rrLthln this 

be. u~rd hJ, bhis 3tew) and the 

statutes have been sisended sinae to reaovu th llmltation of location 

of the or enlzation, 

& 

tho obsemt$on Or the ok on t&a Phaitatlon 

Of use vii hln this jtate, aa quoted by you in your request, Is the 

only expresalox by the aourts of this Stete on the mattsr. 1-t ie 

frobebla that the oourts will follow this vials ln construing the 

present Artiale 7122, 
~onore#lr G4or&e E. Sh4pp4rd - P4ge 7 

In acoordano4 with this rxprcrasion, w4 feel that 4 baqu44t 

In aada 4x4mpt under Artlolr 7122 only when the baqu4ut Ie 4prcIfIoally 

roqulrad by the tarme or the will ta br uesd In this Stat4 or whan 

th4 powsra of the benaflclary er4 1Imltad In such e menner thot It 

mnnot lagally meka ~44 of ths bequoat outsida of this :itate. Thr 

4msndaanta oi brticla 7122 In 1931 and 1933, rrmovlrg CL4 rsquiramrant 

that tha aorDorets bsnsrlolary ba “looatad” In tlil.4 Liteta Indloata 

4 olaar l4glal4tlv4 intrnt to put ItreIgn end dom4etIo corporation8 

of this tgpa on ths tmm tooting If tha b4queiet Is requlrad to bs 

484~3 wlthln this Stats. 

Mrs. Xanla.y*e will b4qu44thad sod drvlerd to ths i:rsrbyfarIan 

Ohuroh of the United Statse on4 half of bar property “In raa elmplr, 

to menags, 8411 or dispoas of aa thhsy m4y e44 propaP, and without 

4ny 1ImItatIon a4 to plea4 of Its u44. Ae rtetad by your Inharltanor 

‘Ibx Auditor, tha afl'alrs oi’ tha Churoh ar4 oonduoted by and undar Zh4 

rup4rvIaIon and oontrol of tha tinare Ae44mbly, which Is Inoorporated 

undsr tha law4 oi Korth Carolina. The Caneral Aseambly Is thr aotual 

raolplrnt of tha proparty. 84~104, th4 propsrty he8 bsrn rao4Iv4d by 

th4 foreign oorporatlon, and tha 444antLal ooatrol of It4 diapoeItion 

I4 In that oorporatlon ovar which thle Btstr hae no oIrltorIa1 powar 

or 4uparoIsIon. The Oonarel harrsmbl~Llr, in ths edmInIstratIon of tha 

buaInae4 or tha Churoh whloh, by Ita~ rary nature, satand ovar a.’ 

large aroe o? whioh tha State of Tdaaa I4 only 4 part, wet axpand 

Its funde omr euah large ~44. Tha eraa Is not, by the terma of tb 

wIl1 mari, rsstriotrd In 4ny my. UnCmr all or thr rulee ntatad 

8bova, thI4 baqusst is without tha rxamptfon containad In hrtlola 7122 

and Is rabjrot to th4 lnharltanoa tax. 

We 4r4 raturn- hanwIth your ii14 on thlr ~4~4. 

, 

Vary tmlf youm, 

ATIWRM‘GY UEmRAL OF TEXAs 

Aeslstsnt 

AL~Mlll 

Knalosurae