Untitled Texas Attorney General Opinion ( 1946 )

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
AL~Mlll
Knalosurae