Court Opinion

ID: 9760320
Source: CourtListenerOpinion
Date Created: 2023-08-29 00:48:02.265865+00
Date Added: 2024-06-11T07:29:10.863455
License: Public Domain

HUGHES, Justice.
I respectfully dissent.
My concern is with the 1957 Amendment (Art. 7122-a, V.A.C.S.), copied in the majority opinion. This amendment, if valid, applies to this case under the stipulated or proved facts.
That this amendment is retrospective or retroactive in its present application is of itself of no consequence, since under Art. 1, Sec. 16, of the Texas Constitution prohibiting the making of a “retroactive law” a statute cannot be said to be a “retroactive law” unless vested rights are destroyed or impaired. McCain v. Yost, 155 Tex. 174, 284 S.W.2d 898. No one’s vested rights are involved here unless it be the State’s. It seems to be generally held that where a State enacts retroactive legislation impairing its own rights, it cannot be heard to complain on constitutional grounds. Greenway’s Case, 319 Mass. 121, 65 N.E. 2d 16. See also Sweeney v. State, 251 N.Y. 417, 167 N.E. 519, People v. Frisbie, 26 Cal. 135, Hervy v. McKay, 164 Wash. 526, 3 P. 2d 145, 77 A.L.R. 1025, Jackson v. State, 261 N.Y 134, 184 N.E. 735.
This subject will not be developed further because the State does not base its case on this provision of the Constitution (Texas) rather it relies upon Sections 51 and 55 of Art. Ill of that instrument.
Section 51 provides, in part, that:
“The Legislature shall have no power to make any grant or authorize the making of any grant of public moneys to any individual, association of individuals, municipal or other corporations whatsoever * * * ”
and Sec. 55 provides in part that:
“The Legislature shall have no power to release or extinguish, or to authorize the releasing or extinguishing, in whole or in part, the indebtedness, liability or obligation of any corporation or individual, to this State or to any county or defined subdivision thereof, or other municipal corporation therein, * * * ”
These constitutional provisions have been construed in Rhoads Drilling Co. v. Allred, 123 Tex. 229, 70 S.W.2d 576, 583, in an opinion by Judge Smedley in which, after reviewing many prior decisions, he stated:
“ * * * the decisions which have been discussed construe these sections of the Constitution as forbidding gifts, gratuities, or bounties, or the gratuitous releasing or extinguishing of obligations, * * * ”
The question here presented is whether or not the extinguishment of appellants’ tax liability to the State upon their compliance with the requirements of Art. 7122, supra, is gratuitous and a gift.
The State relies principally upon the following authorities: In re Bowen’s Estate, 1908, 153 Cal. xviii, 94 P. 1055, Riley v. Howard, 1924, 193 Cal. 522, 226 P. 393, In re Clark’s Estate, 1937, 105 Mont. 401, 74 P.2d 401, 114 A.L.R. 496 and In re Voorhees’ Estate, 1935, 123 N.J.Eq. 142, 196 A. 365 affirmed 121 N.J.L. 594, 3 A.2d 891; 124 N.J.L. 35, 10 A.2d 650, 651.
In re Bowen’s Estate need not be noticed in detail because it merely involved the effect of an Act repealing an inheritance tax statute upon taxes accrued to the State *124but not paid. The Court held that under the Constitution of California:
“ * * * it is not within the power of the Legislature, either by the repeal of the law in virtue of which the right vested, or by any other means, to grant or donate it to the successor in estate or to any other persons.”
Riley v. Howard followed the ruling in Bowen’s Estate and a review of it would not be helpful.
In re Clark’s Estate is fully explained in this summary taken from its report in 114 A.L.R. at page 496:
“Where title to a decedent’s property vests immediately at his death in his legatees or distributees, so that liability to inheritance tax attaches at that time, a statute enlarging permissible deductions in determining the state inheritance tax is, in so far as it permits such deductions in the case of estates of persons dying before its enactment which remain undistributed on its effective date, in conflict with the constitutional provision that no obligation held by the state shall ever be remitted, released, or in any way diminished by the legislature, nor shall such liability be extinguished except by the payment thereof into the proper treasury.”
It is obvious that these cases are not in point here because in none of them is there any consideration moving from the taxpayer to the State for the release of or reduction in the taxes already accrued.
In re Voorhees’ Estate, is a more important case. The principal opinion is found in 196 A. 365, 366, the other opinions cited being memorandum opinions.
In this case Elizabeth R. Voorhees died September 21, 1924, and a transfer inheritance tax was assessed against her estate in respect of a legacy in her will in favor of the New Jersey College for Women. Effective March 13, 1925, P.L.1925, c. 102, New Jersey passed an Act which exempted from inheritance taxes property passing by devise or bequest since July 1, 1924,
“ * * * to or for the use of any institution solely educational for whose benefit there may have been or may hereafter be appropriations made by the Legislature of this State.”
Concededly the requirements of this provision were met and the Court stated the problem presented in this language:
“The sole question on this appeal is as to whether or not this exempting statute, in so far as it is intended to, and does affect transfers which occurred prior to its enactment, is constitutional. More specifically the issue is narrowed by the briefs of the parties to a determination as to whether or not the statute, to the extent of such expressed retroactive operation is in violation of Article 1, paragraph 20, of the Constitution of this state in that it operates to donate moneys of the state to a private corporation. If the statute be unconstitutional in this respect, the tax must be affirmed; otherwise it must be set aside in toto.”
The constitutional provision referred to by the Court reads:
“No donation of land or appropriation of money shall be made by the State * * * to or for the use of any society, association or corporation whatever.” N.J.S.A.Const.1844, art. 1, par. 20, as added in 1875.
After holding that upon the death of Elizabeth Voorhees a vested right accrued to the State in the taxes due the Court proceeded, and we quote:
“In Rutgers College v. Morgan, 70 N.J.L. 460, 57 A. 250, 255, the Supreme Court declared it was competent for the Legislature to establish an agricultural college at Rutgers and to support it out of the state’s general fund. The court specifically held that *125legislation on that subject is not infirm by reason of the constitutional provision against private, special, or local legislation, or by reason of the further provisions of paragraph 20, art. 1.
“In the words of the court: ‘This provision, as well as that relating to special laws, does not bar instrumen-talities for public education provided by the state and under its control by general laws, where the appropriation is made for such schools. They were designed as an insurmountable barrier to giving free state aid, and to donations to private or sectarian schools, and should be rigidly enforced, but they were not intended to narrow or circumscribe the legislative power to furnish facilities by general laws for public education under its own supervision.”
The Court then stated:
“It is to be observed, however, that these determinations go no further than to hold that grants or appropriations made by the Legislature to corporations in consideration of services rendered or to be rendered to or for the state, or even in consideration of a moral obligation to reimburse corporations for services rendered or materials supplied to or for the benefit of the public, do not contravene the constitutional provision sub judice. They do not hold that a legislative grant or appropriation may be made, purely as a gift, to any corporation whatever (whether charitable, educational or of any other nature) without violating that provision.”
Emphasizing that the transaction must constitute a gift the Court said:
“A gift of public funds or property to a private corporation is unconstitutional whether made directly or indirectly ; and the annulling by the Legislature of a financial obligation due from such corporation to the state the right to which has theretofore already become fixed and vested in the state, is (unless supported by some legal, equitable, or moral consideration therefor) such a gift, and hence invalid.
“ * * * The constitutional provision is general and all-comprehensive. It rested upon the appellant to establish before the commissioner, and it rests upon it to establish here, that the legislative grant thus effectuated was made upon due legal, equitable, or moral consideration and therefore does not come within the scope of the constitutional prohibition. This has not been done, * * * ”
From the fact that the amount of taxes involved was not known to the New Jersey Legislature when the amendment was enacted the Court concluded:
“Consequently the Legislature did not form any judgment, because without that knowledge it could not form any judgment, as to whether a fair consideration, legal or moral, had been received for the grant which would be indirectly effectuated.
“ * * * It is evident, therefore, that the Legislature did not, because' it could not, include this retroactive provision in the statute with any idea, intent, or purpose that it was thereby making fair and reasonable compensation, to the beneficiaries who might thereby be affected, in consideration of and return for services performed or materials supplied under circumstances which imposed upon the state some legal or moral obligation.”
The import of this case is, to me, more to the advantage of the appellants than it is to the State. If the Court had found an adequate legal or moral consideration for the exemption its decision may well have been different although the constitutional. provision there under scrutiny had previously been judicially described as an “insurmountable barrier” to giving free State aid to private or sectarian schools.
*126Our Art. 7122 was before the courts in Halff Foundation v. Calvert, 281 S.W.2d 178, 181, San Antonio Court of Civil Appeals, writ ref., N.R.E. The question presented here was not in that case but Justice Norvell, now on the Supreme Court, in writing for the San Antonio Court in discussing this statute said:
“The Legislature has thus decided that the greater good may be served by exempting certain property from taxation, considering the use to which it is dedicated. A use of property which alleviates a burden which the state or its political subdivisions would otherwise necessarily bear at public expense, or a use thereof which fulfills or accomplishes the generally accepted charitable objectives of the people of the State, is recognized as a proper subject of tax exemption by specific legislative enactments.” 1
I believe that this language sustains the additional conclusion “and is a good consideration for the release of taxes due but unpaid.”
In City of Aransas Pass v. Keeling, 112 Tex. 339, 247 S.W. 818, 819, the validity of an Act granting State taxes to the City of Aransas Pass for a period of years for the purpose of building sea walls was sustained the Court saying:
“The act makes no grant of public money as forbidden by section 51 of article 3 of the Constitution. The state here bestows no gratuity.”
In Bexar County v. Linden, 110 Tex. 339, 220 S.W. 761, the Court, in sustaining an Act requiring district attorneys to pay excess fees into the County Treasury, said:
“The giving away of public money, its application to other than strictly governmental purposes, is what the provision is intended to guard against. The prohibition is a positive and absolute one except as to a distinctive class to whom the State is under a sacred obligation. * * *
“If, therefore, the effect of the statute is to bestow funds of the State upon counties of the State as a gratuity, or for uses not related to the State’s governmental duties, it would be invalid. On the other hand, if its effect is to but apply such funds to the uses of the State as a government, there can be no reason for holding it void.”
It seems to me that there is no practical distinction between the language of Justice Norvell when he speaks of this Act as alleviating “a burden which the State or its political subdivisions would otherwise necessarily bear at public expense” and a prior Supreme Court decision (Bexar County v. Linden) which says “if its (statute) effect is but to apply funds to the uses of the State as a government, there can be no reason for holding it void.”
All doubts should be resolved in favor of a statute’s constitutionality. The Legislature is the policy making arm of our Government. It has, in this instance, plainly and, in my opinion legally, exercised its prerogative in legislating for the public good. The beneficial results here are about eight to one. $800,000 will, if the legislative Act is sustained, be devoted to charitable use in Texas. The loss to the State’s general fund will be $100,000. The wisdom of the Legislature is exemplified by this humane and just enactment. The will of the Legislature as expressed in this statute should not only be respected, it should be applauded.

. There is little practical difference between a tax exemption and a tax remission; one looks to the future and the other to the past, but in dollars and cents they are identical.