Court Opinion

ID: 4135601
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:04:08.564685+00
Date Added: 2024-06-11T14:45:27.649996
License: Public Domain

THEA          ORNEY        GENERAL

                                 AUSTIN   ~~.TEXAR

   FVILL    WILSON
A-l-x-O-GENERAL
                                     July 12, 1962

      Honorable Robert S. Calvert                    Opinion No. W-1378
      Comptroller of Public Accounts
      Capitol Station                                Re:   Exemption from inheri-
      Austin, Texas                                        tance taxes of devise
                                                           and bequest to the Leo
                                                           N. Levi Memorial Hospi-
                                                           tal in Hot Springs,
      Dear Mr. Calvert:                                    Arkansas.
             From your letter requesting the opinion of this office on
       the above captioned matter, and from a file which you submitted
       in connection with your request, we have been apprised of the fol-
       lowing facts.
            Leon Levine died testate on September 28, 1961. By the
      fourth clause of his will, he devised and bequeathed all of the
      residue of his estate to B'nai B'rith Home and Hospital of Mem-
      phis, Tennessee, and the Leo N. Levi Memorial Hospital in Hot
      Springs, Arkansas in equal portions. Admittedly, a tax is due
      as a result of the bequest to the B'nai B'rith Home and Hospi-
      tal; but the attorney for the estate is claiming a charitable
      exemption for the bequest to the Leo N. Levi Memorial Hospital.
            The following excerpt from the attorney's letter to the
      Comptroller of Public Accounts sets forth the facts and reasons
      he advances as effectuating exemption.
                        "In referring to this Hospital in our
                     Inheritance Tax Report we simply stated
                     that it was in a State contiguous to
                     Texas, but we did not mean by this to
                     rule out the fact that it was operating
                     on a regional basis. We thought our
                     reference would indicate the fact that
                     the exemption was claimed on this basis.
                        “We wrote the Hospital to find out
                     from whence they drew their support and
                     the territory to which they ministered,
                     Also we asked them to Indicate where
                     their officers and trustees were from.
                     They replied as follows:
                        “‘We treat people from all over the
                     United States and Canada. We have officers
                                                            -9   ..

Honorable Robert S. Calvert, Page 2          Opinion No. ~~-1378

         and trustees all over the United States
         and Canada. We have fewer officers and
         directors In Arkansas than in any other
         state and our Wills and Bequests are
         usually from other states.
           "'If you wish a run down of the states
        from where we have received our money, I
        can give you some at this time: Illinois,
        New York, Ohio, Texas, Alabama, Tennessee,
        Mississippi, Pennsylvania, and many more.'
            "I have been unable to find where 'opera-
         ting on a regional basis' has been judicially
         defined, but it certainly seems to me that
         a hospital such as this that draws support
         from adjacent states and whose governing
         body comes from all over the United States,
         and which likewise treats people on a re-
         gional basis as well as nationally, should
         certainly qualify under the head of this
         term."
      Article 14.06, Title 122A, 20-A, Tax.-Gen., Vernon's Annotated
Civil Statutes, provides an exemption from inneritance taxes for
transfers to charitable organizations if such charitable organiza-
tions are to use the gift within this State. Article 14.06 also
contains the following further provisions for exemption which
reads as follows:
            "Provided, further, that if the pro-
         perty 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."
      It is true that there has been no judicial determination of
the meaning of the statutory requirement of conducting charitable
operations on a regional basis. However, this office has had oc-
casion to pass upon the meaning of this phrase In several opinions.
We quote the following excerpt from Attorney General's Opinion No.
.   -

        Honorable Robert S. Calvert, Page 3            Opinion No. ~-1378

        ~~-1146:
                      II.* . It is clear to us, that for a
                   charitable organization to conduct its
                   operations on a 'regional basis', as that
                   term is used in the statute, that the
                   entire field of its operations would have
                   to be divided into separate and distinct
                   regions and be of a permanent nature, with
                   each region being subject to local manage-
                   ment and control, under proper directives
                   from the officers or directors of the
                   charitable organization."
        The above quoted statement was made in connection with the usual
        concept of regional operations. It did not, therefore, overrule
        the prior holding of the Attorney General in Opinion No. WW-1141
        to the effect that although the statute referred to the charita-
        ble organization "which conducts its operations on a regional
        basis, one such region of which includes the State of Texas or
        any part thereof. . .", and that, therefore, national organiza-
        tions operating on a regional basis were clearly within the pro-
        vision, the quoted portion of the statute did not require the
        existence of more than one region as a requisite to exemption.
              Attorney General's Opinion No. WW-1349 denied exemption
        to The National Foundation for Infantile Paralysis, Inc., a New
        York corporation, with an unlimited geographical field of opera-
        tion, in a case in which the funds it received were to be used
        for the purposes for which it was incorporated. We quote the
        following excerpt from that opinion.
                      "The attorneys representing the es-
                   tate take the position that the fact
                   that the beneficiary is a charitable
                   organization under the law is sufficient
                   to effectuate exemption.
                       "While it is true that under the Fed-
                   eral Estate Tax laws there are no geo-
                   graphical limitations Imposed as a re-
                   quisite to exemption for charitable insti-
                   tutions, this has never been true in this
                   State for inheritance tax purposes. Prior
                   to its amendment In 1955, Article 7122,
                   Vernon's'Clvi.1Statutes, presently carried
                   as Article 14.06, 20A, Tax.-Gen., V.C.S.,
                   had provided an exemption for property
                   passing I. . . to or for the use of any
                   religious,  educational or charitable
                                                           .    .

Honorable Robert S. Calvert, Page 4          Opinion No. ~~-1378

         organization when such bequest, de-
         vise or gift is to be used within this
         State.' This provision had been con-
         strued by our courts as requiring the
         limitation to use within this State to
         be expressed in the will, even though
         the charitable beneficiary irrevocably
         committed the devise and bequest to
         use within this State subsequent to the
         death of the decedent and prior to the
         payment of the tax. Presbyterian Church
         in the U. S. v. Sheppard, 198 S.W.2d 282,
         (Civ.App. 1946, error ref. n.r.e.).
            "In 1955, Article 7122 was amended
         by providing, in effect, that property
         passing to religious, education or chari-
         table organizations could gain exemption
         from inheritance taxes, even though the
         instrument effectuating transfer did not
         require that the charitable gift be used
         within,this State, by irrevocably commit-
         ting such gift to use within this State
         prior to the payment of inheritance taxes.
         Senate Bill 266, Acts 1955, 54th Leg.,
         Chapter 389, p. 1032.
            "In 1959, the 56th Legislature further
         enlarged charitable exemptions by extend-
         ing the geographical limitations on use
         and thereby departed from the former con-
         cept that the exemption would be accorded
         charitable devises, bequests and gifts
         only if their use was limited to this
         State.      However, it is noteworthy
         that even'under this most recent amend-
         ment of the statute, which accords exemp-
         tion to property passing to or for the
         use of charitable organizations conducting
         their operations on a regional basis, it
         is still necessary that the State of
         Texas or a part thereof must be included
         within the region of operations."
      Consistently with the holding of these opinions, we can
only conclude that exemption cannot be accorded the Leo N. Levi
Memorial Hospital, since the fact that its patients come from
all over the United States and Canada, and the further fact that
it has been the beneficiary of devises and bequests from numer-
ous decedents of various states, are not such facts as constitute
Honorable Robert S. Calvert, Page 5               Opinion No. WW-1378

conducting charitable operations on a regional basis within the
meaning of the statute.

                          SUMMARY

            The Leo N. Levi Memorial Hospital and Home,
      a charitable institution, in Hot Springs, Arkansas,
      cannot obtain an exemption from inheritance taxes
      since the fact that it receives patients from all
      over the United States and from Canada, and the
      further fact that it has been the beneficiary of
      devises and bequests from decedents of various
      states are not such facts as constitute conducting
      charitable operations on a regional basis within
      the meaning of Article 14.06, 20A, Tax.-Gen., V.C.S.
                               Yours very truly,
                               WILL WILSON
                               Attorney General of Texas

                               By :                          /&

                                      Assistant

MMcGP/P/jp
APPROVED:
OPINION COMMITTEE:
W. V. Geppert, Chairman
Gordon Zuber
Frank Booth
Bob Patterson
Pat Bailey
REVIEWED FOR THE ATTORNEY GENERAL
By: Leonard Passmore