Untitled Texas Attorney General Opinion

OFFICE OF THE AlTORNEY GENERAL OF TEXAS
AUSTIN
1940, bwbiah
on the queatlo
o r th elatata of
qurrtion now ariaor whether or not
the lxooutor is rornot la r ep o r ting
o nly
a a e-h 4o lff th eU16RRt*a
Sh ep o o eo dro f llte laaunaoe p o lio lo w
rer e
mrb brublr under the blur Inhoritaaoo Tsx Law br th
?Oorl~4~zth I*girl~tlu* &l lW9. Attlole 9ll9 OS the Ro-
riroa ClVll st4tRt.l. a0 a0 amuld, now roadl, Lo part
40 iOl.lOWS J
Eonoz=blo 0.0%. II. BhopprU, paa. 8
aAll propartr within the jurl8dlotloa o’?
thlr mato, real or glr8ona1,oorponto or
lnoorporrto, mad Oar latorert thoroln, laolud-
lzu ropartrparrlag wda r l aonl power of
lppo& taut lxrrolrsd br tha r *codoat br ~111,
laoludlag thr p0080a8 of llfo larurrao~ to
the rrtent br the
of the amouat noelnblo
waoutor or rdminlrtrrtor a8 lnrurum andot
polloier taken out br the drordoat upon hla
owa llfo, md to th8 lrtoat of the 0x0088 over
Party ‘Ihoumnd Dollan ($40,000) of the amount
rooriveblr by all other kneflohrlar aa larur-
a80 w&or polloirr taken out by the drordoat
open hi8 own lit., whothrr brloaglcy to lnhnbl-
taatr of thlr Stat0 or to prrow who are not
lnhabltaatr, regardlo of whather ruoh property
18 loo&O6 within or without tklr star, whioh
8hall pa88 lbrolutoly or in trurt by will or
by tho law8 of doroent or dl8trlbutlon of thlr
or a~ other 8kt0, or by a00d, grant, 8810,
or @rt DDE or tnt0lldrd to uk8 *mot in
pO88orrloa or la jo y m after
r nt th8 drath or th,
grantor or doaor, ahall, upon prrlm to or
for the u80 oi 8nj person, oorpormtlon, or l8-
roolatloa, be rubJ8ot to a tax for the benorlt
of the strte*e General Rennw mad, la aocord-
ano, with the iollowing ola8slfloOtlon . . . .a
ma rb o larllr 8a8n from th8 prooroding wti-
It
olb that tha tax 1s barma oa tbamountor propert that
pS88M. A p&rratlT the lxooutor 18 ouklag tin oontentlon
that only b ,661.a ot llfo inrurm.iooproorrda psrod at
the dorth of the dooedent. Itrldeatlythe executor 18 tak-
ing the porltloa that th@ 0th8r hali did not purr at th
bath of d80Oa8te beoaurr the 8~ ~08 tha rir0.8 halt or
the oommunltf property due to tha hot t&t the prualtana
oa tho poll0108 he& b8rn pal6 out of oomunlt~ iundr.
Oa the other haad, ii the rntlro 99,SSt.M of lnrurlnor
prooooti prrrardto tha banrilolart*Ila,bparato property
Of the horband mad aot ~8 Oomialt~ pro rty of both
8pou880, th8a th alx~outor8~ooatontloa E thlr rarpeot
murt b0 0v0rti8a rad the entin larountor insuraaor pm-
ored would bo 8ubjrot to th8 hxaa Inharltanoe RX.
8tatrd la another want,if the total proooeda of the poll-
oler 80 to thr bwwlolarler named therein netrubjeot to
mmnblr OOOr(@ lL Shapmrd, pqo 8
8ar lloa or olrla ot th8 wlto, thrn moh total pr0000b0
h8t. ~88.6 rt the death of Ueordont and we taxable under
our mu8 Iah8rltano* mx.
It a8 l -11 ratthd ?Uh Of 18w in thh Stat.
thbt wharo aa laaunaoo poll07
la taken out oa the life
or 001 ot tha 8~0~808,rt the drath o? tha perroa 80 la-
wn& tha proOaed8 of 8uOh polloy bolou to tha beaotlolrry
anamd therola, won though tho pronlum8 on th8 polioy w8ro
*id with ooamoaitf flllld8,ThiS Nh WI8 8anoUao86 by th#
Su?rM8 OoWtOf T,#S in thr 0880 Ot X@rtiA T* &!OAll18tSr,
et al, 6s 8. w. et4. Th8 oourt ia 8a opinion wrlttra br
fU8tiOO BrOm 8tat.d l# tOiiOW8~
-It 18 oont,ndod by the brt@ndMt@ in or-
ror the tin hUSb#lrd oould not appropr1at.ethe
OOmmUnit)r iUlld8 to hi8 Own U8. 1n th8 puraham
Of thir OOntrsOt without tho OOASOAt O? hi8
Wit@: but OUT Statuta S~Oiall~ prOtid88 t.hat
the hurbaad Shall hrv0 the 8018 rbht O? ooa-
trol or the ooaunualt~property, and it ha8 bean
unlroral~ hold that luah oontrol onmot be in-
t~ertrrrdwlth ~11.88 it 18 8X8~Oi8~d in fraud of
the ri@t8 Of the Wl?O. FM. St. Art. g9be~
Strmlar 1. Cm, 15 mx. glb. Wo 800 DO ground
tn the ?aOt8 O? thi8 dll88 to impraSh the action
of the hU8b-d a8 trrudulbat tOwar hi8 ti?Or
Th8 right to t& proaootla of the polloy, whether
upen thr li?. o? tho wit. la favor ot the hU@-
band, or upoa the llfa 0r the buSband la favor
Of th. WirO, ~##t# UQOa tha 8USl8 PrinOiple, whloh
18 t&t th# prOOwa8 Of the WllOy bOlO= t0 th
prroa naaed a9 payee, rad lt beOO&OS roxmrty
upoa thr 0ontlnSenoy o? the aaath or t1 0 insured
ill th8 ii?Otiar@Of rho &f4y,O. m#rOfOre, a8 it
oould not lmoonm tho property of tha husband or
the WiiS during the lltotlae of both of them, it
OMaOt be hold to be a0mawit.y QrOpertY, ud 18
thareror0 tha rrparatr propstir 0r thr one to
whoc it 18 mad. payable.'
Thl8 rule of law Laid dowa br tha 8UprOa8 Court
-8 rg8la lnno wo .4by th8 Baa Antonio CO-t O? CiTil Ap-
&Ml@ la the 0880 O? fOn88 1. JOAM, 146 9. W. 265. Tbr
COUrt Stat.6 88 fO11OW8;
aoaorable Ooorge g. Sheppard, page 4
-our Suprrmo court, la the 0880 0s Kar-
tin v. YoAlll8trr, ha8 held that when lanuranae
18 takrn upon the iire 0r tha wlfr, payablr to
the haband, and pmnluni8 pnld out of th8 oom-
#unity fUA68, thr jWOfJWd8 of the polloy beoome
the rrparato proportr of tha hwbrsd. Thr oourt
Stated that it 8RW Do @‘ound IA thr ?&OtS of the
oar0 to lapoaoh the lation 0i the hU#biUJda8
rnuaulsat toward8 hi8 tifr, and announord the
dootrlne that, 80 the prooasaa or a plloy upon
tho iire or thr hu#band or wire aould not booomo
thr Froperty of llth o rduring the llretime of
both of them, It oannot be hold to bo ooziaunlty
property, and 18 thorrtora the #``lWt# property
Of th8 On0 to whm it 18 pbyRbl8.”
Tha lulr oi law whloh prooludra the wlro from
SollOWlng the prOOar 0i the ln8uranoe polloy and recover-
ing rgainrt tha sarm baaaus8 oonitzunlty?unclswere expen@ad
la the payzaentr of the pronluma was announood by the Toxar-
kuia Court of Olrll Appeals in the oaso or l?orthwostorn
Utual Llf8 Ineuranoo Ooqany v. Whit88rllo, 18@ s. W. 22.
Thr court 8tataa a8 fOllOWOJ
"In Rowlett v. Xitohell, 52 Tox. Clr. App.
589, 114 S.W. 845, lt wad hold that, la the
abaono8, aa waa the aaa8 bore, or rrsud on the
prt Of the hurband, the w1t0 aannot SOllOw and
rooovor oommualty fIJIId@ 0xpnd0a by him la pre-
miuma on aa lnaur.;.nco polloy on hi8 iif8 for th8
bwmrit 0s other per8on8. It 18 plain, therorore,
t&t Carrlo 8. shook ~a8 not lntitloa to r eo o vo r
of lalntltf in error booaua8 oonolunltyrunds were
US. x by J. 0. Shook berm @hewas dlrorcad fro;;
him la paying pralumr due on the polloy.*
Thr cO1!~ib8iOa 0s Apmalr 0s Taxar a?:lrmed the
OaSO Of Whit880~1. 1. tiorthwrater'n
Yutual Llfr Insurance
caqany in 221 8. w. 595. ma CmMt ltatoa the S&X rule
of law t&t war rnnounord by the Ccat o? Civil Appeal8 la
the following laoguagrl
*The use of aomraunltyfund8 in plpmnt
0s pr8nAuau for lnrurnaor upoa tha iit0 or
on* 890u80 la rator 0s the othrr 4008 aot,
8onorablr oaorgr R. Shrppara, page 5
in th rlb8enoo 0s mud, oreatr la the oopcun-
',``dtharl2ht to rol&burrownt for th8 fUAd8 80
Yartln v. YaAlllrtrr, 94 'hx. 869, 63 6.
W. di4, 85 Lans. Ch. 8. A. 585. . ."
fha rule o flaw lnnounood in those other aasoa
+a# reaently StatOd by the Mrt Worth Court or Clvll Ap-
ala b thr oaao or Rln v. IMa, 98 8. 1. (24) 1226,
Twrit of error dl8rl8rrd by the Buyrtmir Oourt). Tho Court
rtakd 418fOilOW81
*Vo bellero it clear that thr liio in@Ur-
an00 p01101~8 that were made payablr to the
detradaat~8 ortat were Jilr reparato property,
ia whloh the ommunlty l8tet8 oould hare no
lntorert, llther legal or egultablm. Kartin
V. XOAll:St~r, 94 Tw. 569, 53 8. U. 524, 56
L. Rd A. 5851 Jonor V. Jones (Srx. Clr. App.)
146 8. W. 265.
*In whltor~llr f. Northwestern IiUtUalLl:o
Ina. Co. (nx. Corn. APR.) Ml 9. 1. 695, 575,
it WaS 8pOifiO8iay hid that ‘th@ U88 Of aO?fi-
nunlty fund8 la payment 0s prrmiuni8for insuranor
ugcm the iire 0s one rpousr in favor or the other
do.8 not, in the ab8onor 0s fraud, orente la tho
comunlty the right to relsburrementfor tho
fund8 80 U8ed.’ And furthorr *R@O0ver7 upon
th8 rertaiU:Ugground, aaml7, that th8 OaSh 8Ur-
maeor value or the pollay at the date of the
ailOrO8 vb8 OOmIaun~typOparty, a One-half in-
torrat in uhloh -8 doorood la the Wl?O, 18 p8-
oludrd uadrr thr deol8lon In Batoh v. Eatoh (35
Tax. Cit. App. 373, 80 5. W. 4111, in whla'.a
writ or arror war donird.**
27 w?17Of OOnOiU8iOA, it 18 a WOii S~ttitIdrti8
0s law 0s th18 Btatr that in a oasr auah a8 you pn8ent ln
your Inquiry th8 proare& 0s thr 1~8Ul%llO~ poll07 on th8
lit0 0s the iaOOa8.d rpouse are payable to tho bonoflola~
-a thonla in@ from any olalicthat tha runlr1ag apour
might hare agalnrt thr 8a1ra due to the faot that the pn-
&h&8 war. 9eld out Of OOmiunity fund@. ThiS bedI& tXW
the lntlr8 (99JS2.02 of ll?a in8UrtXlC6 ptoOoed8 p88& to
thr brnorlclazy on tho death or dooodent and the ontlre
301
gonorablr Oeorge H. Sbopprd, p&o 6
ai~ouat or lire lalruranoe proceed8 80ula tbereron b rub-
joot to tbo tax i~pored tbereoa by Art1010 7117, 8upra.
me rorult bore rnnouaord hoverer, rould or oourm be
rubjeot to tb8 $40,000 deiuotlon ot inrururoa proaeedr rl-
lowed wader the kmB or 8UOh Artiol**