Court Opinion

ID: 4135482
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:02:46.463605+00
Date Added: 2024-06-11T14:35:04.331416
License: Public Domain

‘%USTXN   11.   TEXAS

   WILL     WILSON
A’PIORNEYOENERAL
                             December 13, 1962

         Honorable Robert S. Calvert                 Opinion No. WW-1497
         Comptroller of Public Accounts
         Capitol Station                             Re:   Exemption from inheri-
         Austin, Texas                                     tance tax of a devise
                                                           and bequest
                                                           __..   _-   to. the
                                                                            .
                                                           Natlonal r'ounaation
                                                           for Infantile Paraly-
         Dear Mr. Calvert:                                 sis, Inc.
                 In Attorney General's Opinion No. NW-1349 the exemption
         from Inheritance tax of this same devise and bequest was denied.
         The controlling provisions of the decedent's will are para-
         graphs IX, X and XI which read as follows:
                        "In the event I shall survive my
                     wife, then I hereby give, devise and
                     bequeath unto my Trustees hereinabove
                     named all my property, both real, per-
                     sonal or mixed, of which I may die
                     seized and possessed, IN TRUST NEYER-
                     THELESS to hold, manage, control, sell
                     and convey the asme In accordance with
                     the authority hereinafter conferred
                     upon them.
                        "The beneficiaries of this trust
                     shall be The American Cancer Society,
                     Texas Division, a non-profit corpora-
                     tion, incorporated under the laws of
                     the State of Texas and the National
                     Foundation for Infantile Paralysis,
                     Inc., a corporation organized under
                     the Membership Corporations Law of
                     the State of New York, having its
                     principal office at 120 Broadway,
                     New York, New York. My estate and
                     the income, rents and revenues there-
                     from, Including the proceeds of the
                     same, shall be used by said corpora-
                     tions for the purposes and uses hereln-
                     after set out.
                        "The term of,thls trust shall be
                     for a period not to exceed five years
                     from and after the date of my death. . .
                                                                    .i

Honorable Robert S. Calvert, Page 2          Opinion No. WW-1497
                                                                c

             "During the pendency of this trust,
          after the payment of all expenses
          thereof, there shall be paid by my
          Trustees one-half of the income, rents
          and revenues from the property of my
          estate to The American Cancer Society,
          Texas Division, with its office at
          Houston, Texas, and one-half of the
          income, rents and revenues from the
          property of my estate shall be paid
          to the National Foundation for In-
          fantile Paralysis, Inc., a New York
          corporation. Prior to the termination
          of this trust, I direct that my Trustees
          shall sell all of the property of my
          estate and shall deliver one-half of
          the proceeds of the same, together
          with one-half of the net income there-
          from after the payment of all expenses
          of administering this trust, to each
          of the beneficiaries, to be made at
          the discretion and in the amounts as
          may be determined by the Trustees.
             "The American Cancer Society, Texas
          Division, shall use all of the funds
          received by it from my Trustees for
          research in the methods of treatment,
          diagnosis and prevention of cancer,
          and to aid in the care of indlgent
          cancer patients in securing adequate
          diagnosis and treatment, and any
          other activities which may contribute
          to the control of cancer in such man-
          ner as may be directed by said cor-
          poration; provided however, that all
          of the funds which may be received
          by The American Cancer Society shall
          be used by it and expended for any
          and all of said purposes within the
          State of Texas.
             "The National Foundation for Infan-
          tile Paralysis, Inc., shall use such
          funds as may be received by it for the
          purposes for which it is incorporated."
        Article 14.06, Ch. 14, Tit. 122A, 20-A, Tax.-Gen.,
Vernon's Annotated Texas Statutes, contains the provisions
requisite to exemption from inheritance tax. The pertinent
portions of Article 14.06 are the following:
Honorable Robert S. Calvert, Page 3           Opinion No. WW-1497

             "If passing to or for the use
          of. . .rellglous, educational or
          charitable organization or insti-
          tution,. . .the tax shall be:
             11. . .

             "Provided, however, that this
          Article shall not apply on property
          passing to or for the use of. . .
          any religious, educational or charl-
          table organization Incorporated,
          unincorporated or in the form of a
          trust, when such bequest, devise or
          gift is to be used within this State.
             "The exemption from tax under the
          preceding provisions of this Article
          shall, without limiting Its appllca-
          tion under other appropriate clrcum-
          stances, apply to all or so much of
          any ,bequest,devise or gift to or
          for the use of. . .a religious, edu-
          cational or charitable organization,
          which is, In writing and prior to
          the payment of the tax, Irrevocably
          committed for use exclusively within
          the State of Texas or transferred to
          a religious, educational or charitable
          organization for use exclusively wlth-
          in this State,
             "Provided, further, that if the
          property so passing is to or for the
          use of a religious, educational, or
          charitable organization which conducts
          its operations on a regional basis,
          one such region of which includes the
          State of Texas, or any part thereof,
          then a bequest, devise or gift to be
          used within such region shall be deemed
          to be used within this state.
             "For purposes of this paragraph a
          region shall comprise not more than
          five contiguous states, either in
          whole or in part, one of which is
          the State of Texas."
             "For purposes of this paragraph,
          a religious, educational, or charitable
Honorable Robert S. Calvert, Page 4          Opinion No. WW-14%'

          organization shall include, but
          not be limited to, a youth program
          of physical fitness, character de-
          velopment, and citizenship training
          or like program."
        At the time Opinion No. WW-1349 was written, the attor-
neys representing the estate took the position that the fact
that the beneficiary was a charitable corporation was suffi-
cient to effectuate exemption, This office rejected this
view and denied exemption since the requisite geographical
limitations as to use had not been met.
        Subsequent to the rendition of Opinion No. WW-1349,
the National Foundation elected to commit the funds involved
for use in a region of five contiguous states composed of
Texas, Arkansas, Louisiana, Missouri and Oklahoma. As evi-
dence of this commitment, we have been furnished with a
letter addressed to the attorneys representing the estate
from John J. O'Connor stating that he is enclosing a letter
from Mr. Joseph F. Nee, Senior Vice-President of the National
Foundation "irrevocably committing all moneys passing to it
under the Last Will and~Testament of the. . .decedent for use
exclusively within Region 5 of its organizational structure,
which Region includes the five contiguous States of Texas,
Arkansas, Louisiana, Missouri and Oklahoma." Attached to
the letter is a duly certified copy of a resolution of the
Board of Trustees of the National Foundation authorizing the
officers thereof to make a commitment of this nature. The
National Foundation is a corporation duly organized and
existing under the laws of the State of New York. The resolu-
tion was unanimously adopted by the Board of Trustees of the
corporation at a meeting duly called and held on May 14, 1959.
The resolution is still in full force and effect. In sub-
stance it authorizes the President or Vice-President, together
with the Secretary or Treasurer or an Assistant Secretary or
an Assistant Treasurer of the National Foundation to accept,
assign, exchange, or consent to a reduction in, or modifica-
tion of, any share in, or payment, from any estate or other
fund if consistent with the purposes of the National Founda-
tion, and to agree in their discretion to performance of the
National Foundation, or any of its chapters, of any condition
or restriction lawfully imposed upon the use of any bequest
or devise, and to execute and deliver any consent which the
said officers may deem necessary or desirable for the accomp-
lishment of any of the powers described in the resolution,
and In addition to all powers specifically described in the
resolution to do any of the acts which the National Foundation
can do through its officers with respect to the estate of a
decedent in which the National Foundation or any of its chap-
ters has an interest.
Honorable Robert S. Calvert, Page 5          Opinion No. WW-1497

        We quote the following excerpt from a letter signed
by Joseph F. Nee, Senior Vice-President of the National Founda-
tion:
             "In order to avail itself of the
          exemption from the payment of these
          Inheritance taxes in the aforemen-
          tioned amount provided by Article
          14.06 of the Vernon's Texas Civil
          Statutes, The National Foundation
          hereby irrevocably commits all the
          monies received by It as a benefi-
          ciary named In the last Will and
          Testament of the subject decedent
          for use exclusively within Region
          V of its organizational structure,
          which Region includes the five con-
          tiguous States of Texas, Arkansas,
          Louisiana, Missouri and Oklahoma."
        We will first consider whether the proposed commitment
is consistent with the Intention of the decedent as expressed
In the provisions creating the testamentary trust. It is
true that the decedent saw fit to limit the expenditure of
the trust funds bequeathed to the American Cancer Society to
use within this State. However, no such limitation, in fact
no geographical limitation of any kind, was placed upon the
National Foundation except as such geographical limitations
might be Imposed by its charter. The law is settled that
a will may be construed only In cases in which there Is am-
biguity. In those cases in which Intention of the testator
is clearly and unequivocally expressed, there is no room for
construing a will. 44 Tex.Jur. 677, Wills, Sec. 131. The
National Foundation receives the Income from this trust free
of any restrlctlon save that previously referred to and could,
consistently with this provision of the will, commit the
expenditure of the funds as they have attempted to do in
this case. Further, In this connection, It Is noteworthy
that at the termination of the trust, which may exist for a
period of not to exceed five years, the National Poundation
will receive its share of the trust corpus and will have full
and absolute ownership thereof. We therefore conclude that
the attempted commitment is not contrary to the expressed
intention of the decedent, and therefore is not in contravention
of the terms of the testamentary trust.
        We pass now to a consideration of the question of
whether the commitment, as submitted, meets the requirement
of the statute, and is:sufficient to effectuate exemption.
Honorable Robert S. Calvert, Page 6          Opinion No. WW-1497

We first call your attention to a matter which could, of course,
be easily corrected. The letter committing the fund to use
within Region V of the organization of the National Foundation
is signed only by the Senior Vice-President.. Under the terms
of the resolution pursuant to which the Vice-President is
authorized to make such a commitment, he must be joined with
the Secretary or the Treasurer, or,an Assistant Secretary or
the Assistant Treasurer, of the National Foundation.
        No facts have been submitted to us as to the manner
in which the National Foundation conducts its regional opera-
tions in general nor its specific operations in Region V.
However, this office on two different occasions has construed
the meaning of "regional basis" as that term is used in the
statute. We quote the following excerpt from Opinion No.
ww-1146:
             (1
              . . .It is clear to us, that for
          a charitable organization to conduct
          its operations on a 'regional basls3,
          as that term is used in the ,statute,
          that the entire field of its opera-
          tions would have to be divided into
          separate and distinct regions and be
          of a permanent nature, with each re-
          gion being subject to local manage-
          ment and control, under proper dlrec-
          tlves from the officers or directors
          of the charitable organization."
        Opinion No. WW-1141 held that it was not essential
that a charitable organization be oper,atingon a regional
basis at the date of the decedent's death nor that there be
more than one reglon in order to be entitled to exemption
if such regional operation is effectuated prior to the pay-
ment of the tax. The opinion discusses the history of the
enlargement of the charitable exemption, but states that the
statute necessarily contemplates that the State of Texas
receive some benefit before exemption will be allowed.
        We quote the following excerpt from page 9 of the
opinion:
              1,
                   .Since we have no fixed legis-
           lative'standard to use as a guide, we
           are of the opinion that each particular
           case must rest upon its own facts, and
           that if the facts show that this State
           will receive substantial benefit as a
           result of the regional operations of
           the charitable organization, exemption
           should be accorded."
-   .

        Honorable Robert S. Calvert, Page 7           Opinion No. WW-1497

                If, therefore, facts are submitted to you which indi-
        cate (1) that there will be an operation on a "regional basis"
        in Region V and (2) that Texas will receive substantial bene-
        fit from such operatlon, exemption from inheritance tax should
        be accorded.

                              SUMMARY
                      The National Foundation for Infantile
                Paralysis, Inc. may, consistently with the
                provisions of a testamentary trust of which
                it Is a beneficiary, commit the funds it
                receives therefrom for use within,Region V
                of its organizational structure, which Re-
                gion Includes the five'contiguous States of
                Texas, Arkansas, Louisiana, Missouri and
                Oklahoma. If facts are submitted to you
                which indicate (1) that there will be an
                operation on a "regional basis" In Region
                V and (2) that Texas will receive sub-
                stantial benefit from such operation,
                exemption from Inheritance tax should be
                accorded.
                                        Yours very truly,
                                        WILL WILSON
                                        Attorney General of Texas

        APPROVED:
        OPINION COMMITTEE
        W. V. Geppert, Chairman
        Iola Wilcox
        John Reeves
        Robert Rowland
        Bob Shannon
        REVIEWED FOR THE ATTORNEY GENERAL
        By: Leonard Passmore