Untitled Texas Attorney General Opinion ( 1974 )

THE A-JTORNEY GENERAL
OFTEXAS
AUSTIN. T-s 78711
October 10, 1974
Major General Thomas S. Bishop Opinion No. H- 418
Adjutant General of Texas
P. 0. Box 5218 Re: Whether the Texas
Austin, Texas 78763 National Guard and
similar groups are
entitled to income
from a trust estab-
lished for the “White
Military Companies
Dear General Bishop: of Dallas County. ”
You have asked several questions relating to the income from a
trust and have described the factual background.
In December, 1888, a lot in the business section of Oak Cliff, City
of Dallas, was conveyed by deed to the Dallas Artillery Company on
condition that the Artillery Company would erect an armory on the
property within six months. This was accomplished and title vested.
The property was to be vested in the Dallas Artillery Company for its
sole use, enjoyment and control as long as the Company remained an
organization either military, civil or social, and after the dissol.ution
of the Company the land was to go to any military company or social
organization formed by as many as five of the members of the Company,
either by themselves or associated with others. After the dissolution
of the Company and any such organization or organizations, then the
property was to revert to the County Judge of Dallas County and his
successors in office to the use and benefit of such “White Military
Companies of Dallas County” as might be in a position to use and enjoy
it.
No military company has used or enjoyed the property since 1919
when the Dallas Artillery Company was mustered out after the First
World War. Two law suits tried to recapture the trust estate, but
failed. The County Judge of Dallas County sold the original property
and later bought another tract of land. This was sold in 1971 for
$120,000; $10,000 of which was paid then and the remainder was to be
paid over a 20 year period with interest. A private association called
p. 1947
Major General Thomas S. Bishop, page 2 (H-418)
Dallas County National Guard Association was formed and, the Trustee.
the County Judge of Dallas County, authorized the purchaser of the tract
to make payments under the note directly to the Dallas County National
Guard Association. The association spends the interest and gives the
County Judge an accounting each year. Principal payments are treated
as the corpus of the Trust and are not spent.
Your first question recites that it was held in Scott V. Sterrett, 234
S.W.2d 917. 920 (Tex. Civ. App. --Dallas 1950, writ ref’d. n. r. e. ) that
the trust beneficiaries, the white military companies of Dallas County,
are “constituents of the organized militia of this state” and asks “whether
or not is is legal to transfer interest payments received from this trust
to the Dallas County National Guard Association which is not a state
Militia entity but a private association? ”
Before the property was sold in 1971, a declaratory judgment action
was brought to determine, inter alia, whether the payments from the
sale of the property could be made to the Dallas County National Guard
Association. The parties to the actionwere the County Judge, the com-
manding officers of all National Guard units in Dallas County and the
Attorney General. See Article 4412a, V. T. C. S. An agreed judgment
was entered by the Court on December 3, 1970, and provided in part:
IT IS FURTHER ORDERED, ADJUDGED and DECREED
that the Promissory Note in the amount of $110,000 to
be executed by the purchaser of such property be made
payable to W. L. (Lew) Sterrett, County Judge of Dallas
County, Texas, as Trustee for the White Military Companies
of Dallas County, Texas, and/or his successors in office
and trust, and that the County Judge allow payments to be
made under said Note directly to the Dallas County National
Guard Association, which Association shall provide annual
accountings to said County Judge, showing that proceeds
received under such Note were used by such Association
in furtherance of the purposes for which the Trust herein
referred to was created. Sterrett,et al. V. Didear,
No. 70-12528. Dist Ct. of Dallas County, 116th Judicial
Dist. of Texas, December 3, 1970.
p. 1948
Major General Thomas S. Bishop, page 3 (H-418)
As the payments on the note are made to the Dallas County National
Guard Association pursuant to the judgment of the court, it is our opinion
that they are being made legally so long as the purposes and activities
of the Association do not change so that they no longer reflect the pur-
poses of the trust. Whether that is the case depends on a determination
of the facts and is outside the scope of this office’s opinion process.
Your second question is:
If the answer to the first question holds such
payments to be legal does the Adjutant General’s
Department have authority to supervise this fund
under joint regulation, TARNG Regulation 230-2,
TANG Regulation 176-2 and TSG Regulation 230-2?
The regulations about which you inquire outline detailed procedures
for the handling of National Guard funds. Although the Association is
closely related to the National Guard, it technically is not a part of the
Guard. Therefore, we have found no authority by which the Adjutant
General can extend the requirements of TARNG Reg. 230-2, TANG Reg.
176-2 and TSG Reg. 230-2 to the Association. However, the judgment
of the Court directs the Association to provide an annual accounting to
the County Judge in his role of trustee.
Your third and fourth questions ask whether the Texas State Guard is
entitled to participate in the trust and whether the Dallas County National
Guard Association violates the terms of the trust since some non-county
residents, some retired members of the Guard and some regular Army
and Air Force personnel assigned to the Guard are entitled to membership.
Again, we believe these questions were answered by the District Court
judgment which directed that the payments be made to the Association.
Absent review or modification of the judgment, we must answer these
questions in the negative.
Your fifth through eighth questions involve the federal tax status of
the Association and the steps necessary for the Association to realize
maximum federal tax benefits. We believe these questions are outside
our opinion giving authority as outlined in Article 4399, V. T. C. S., as
they are primarily private in nature.
p. 1949
Major General Thomas S. Bishop, page 4 (H-418)
Your final question is
Since Militia units now have Negro members what
effect does the provision of the trust have which set
it up for the benefit of the White Military Companies
of Dallas County? Is this an enforceable provision
of the trust and if so by what procedures?
Although the trust refers to “White Military Companies,” we do not
believe it must be interpreted to exclude benefits for non-whites. Coffee
v. William Marsh Rice University, 408 S.W.2d 269 (Tex. Civ. App. --Houston
1966, writ ref’d., n. r. e. ). If the trust were interpreted as being limited to
a racially segregated class, the restriction would be unenforceable. Shelley
v. Kraemer, 334 U.S. 1, 92 L. Ed. 1161 (1948). It is our conclusion, there-
fore, that the beneficiaries of the trust are not limited to members of any
racial group.
SUMMARY
The entitlement to income from a trust estab-
lished for the Dallas Artillery Company and upon
that group’s dissolution for the use and benefit
of the “White Military Companies of Dallas County’
is determined by a district court judgment directing
that payments be made to a private association of
National Guard personnel. Under Texas case law,
the trust is not to be interpreted to exclude bene-
fits for non-white persons, and an interpretation
limiting benefits to a racially segregated class
is unenforceable.
Very truly yours,
JOHN L. HILL
Attorney General of Texas
p. 1950
Major General Thomas S. Bishop, page 5
(H-418)
APPFj,OVGD:
v---l \\ VI-t-i.-
!?. YOR , First A Lista-
DAVID M. KENDALL, Chairman
Opinion Committee
p. 1951