Court Opinion

ID: 4139274
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:45:45.926918+00
Date Added: 2024-06-11T14:34:41.707214
License: Public Domain

177

                     OFFICE   OF THE ATTORNEY GENERAL     OF TEXAS
                                        AUSTIN
   GROVERSELLERS
   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

                                                             arrtsin   bepasstr
o? prrronal      proport                                , and oontalnrd     thle
provision     di6pomiug
                                                         0r my property,
                                                        d and p.mramd      or,
                                              %lng        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
%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 B7,000. 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
          ro orltlon      to aattla     aald oontont by tha paymant o?
        187,  00.00    to  the   aontaetantr,     ba en4 haraby la approved;
        and tha Tamporary Adm5.niatrator            la hereby ordered and
        eothorlaad      to pay uid amount. , .*
           Aitar this oo~rmI.68, the will we n4mltt.d            to probate.
In   pragarlng the lnharlteaaa     tax rapurt , tha lx a o uto bat
                                                               r    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 lx a o uto r 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      orppnizetionand
        la ta be usad in 'Razes.
                                                                                    173

gonarabla   George 13, Shapperd - Page f

            Yhs Fraabytarlan    Ch&rah ID organised   along tha following
     line:    The looal ahurahae In e aar$eln aaotion era organbad
     Into Prasbytarlae.      A number of Prarbytarlaa    oonstItuta   e
     synod.     Tha gotaming   body of the Churah ia oellad      the
     General Assembly and la mada up of rapreeantativas          from
     the various rreabyterias.      The General ksaambly maata
     annually    and at thsaa meetinglo paa~aa ordera,    rasolutiona
     ato. and diraot how the buaInara of tha Churah Is to ba
     oonthota4.     These 4lraotitas ara for tha guidance of
     various    Boaras oraated by the @anareA Aaeambly en4 throu&
     which the bualnaaa of the ehnroh Pa oerriad       on.
             “ThawGana?al A~aambly la en Inoorporatad           bo4y undar
     the lewr    ctf North Caroline,     The Gaaazul Aesambly has
     oraetad a Soar4 or Troataaa whoa* offiaa             ir looata4    et
     Cherlotta,     Morth Car0liaa.     When bepoasta or donations          0r
       ropsrty era raoairr6      by the Ghureh, thr, usual prooa4ura
     f:a for the Boar4 of Truatara       to take ohar&a of hen4linmg
     this property. The looms          or other Pro88868 from thaaa
     propartlra era dlrtributad        by tha Truakaa       in eooordenoa
     with diraatlns       from the Gan8ral Asaa6bly.          In oeea ot
     propartybaquratho4       or donated for a spaolfle         purpoaa,    it
     la handled in looordenoa with the terms of uuoh baquaat or
     Uanetlon.      When proparty la raoslvad       by baqaaat or 4onstIon
     end no ~paoiria      pur$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 fo re lpsoiflo        pu 088 or ln e 8poolfIo         arae*     In
     the instant     owe, the ChnaraT 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
     lrsaemblgshould 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    lterlfmet 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+na-
     iiolarlse     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 hY 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 pro-
bate 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 BUSIof $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 lo~, 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 dls-
tribution  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 .here-
with, 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 $7,000paid 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”      Ixq&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:%dconauctot
        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 rxwmi61tha provfrlonr            or the will   in tha
        usa of the      ropwty,    yet the rtate would have Taovlsit+eL
        power riiablf 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~aSa$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 ramararclto                         ,-.
        suppo*t the 04uae of rqllghn,       oduoatiotl, or laiaalons $or              ~’
        tha benerlt   of mankind ~st large.@’ Iltuaphreya v1 9taM.     70
        Ohio St, Rep. 67, 70 X.3. 957, 65 L.R.A. 776.
             Theaa rules ham been oited with apprwal          by the Court of
Civil    Appeals ln ?San Jaolnto   Rational  Rank v, Sheppard, I.25S'G(2)
719. AlthouiJh that easa’ was oontrokled        by statutes   as thrg existed.
in 1931 (at whiah time Artiole        73.22provf(lrd  for an exemption “ii       :
prrssl~    to a rellgloas         . organlzzio; looated rrLthln this
Estate an4 th6 twauesb ir’t: be. u~rd          hJ, bhis 3tew)     and the
statutes    have been sisended sinae to reaovu     th llmltation     of location
of the or enlzation,       tho obsemt$on    Or the ok       on t&a Phaitatlon
Of use vii &hln this jtate,     aa quoted by you in your request,      Is the
only expresaloxby 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 AseamblyIs 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‘GYUEmRAL OF TEXAs

                                                 Aeslstsnt

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