                                                  r     -.

                                                  I..
                                                             186




OFFICE OF THE ATTORNEY      QENERALOF TRICAR
                   AUSTIN




                         rboro faotr,kindly

                r the polloiorbalag pay-
                 Jlamodb*B,tlrlarlesmd
                a a lng
                      lp lr r olr
                                f th eo r ta to
                 are taxable undrs thr ,Sbdr


   “W*    Y   i!u abigo quoetion Is anmom
.od yor, 18 lb the oonbntioa  o? the Dopart-
~qont that the atetute 10 retro-aotlrcrand
.a~~1108 ts tha ~oliolor q? fnruranae taken
one boioro tho pa8rago or tho Aa%?*
,Ronorable George R.               Bhoppar4,           pa@          8




          &Mel*   PllT of U8 Ilsvfredaivil 89etuto* w
rpaoad04 in l#bO roadl, in part, a8 iollowa;
             “All      proper&y   rlthla tho &rl.sdiotion oi
    this     Btato        PO81  ox ~orro~tal,* e L lnoludiq
    ,tbp r o w& o r 1 Ko lB 8u P a to
                                   a oIk
                                      * lilo
                                          x tM $o i
    W~wo unt noolirbh     bytk  mom&or   or ad&a-
    1JtrrSooaaa irmranoo uadm polieiw taken out
    by *ho   dqoodonC rpoa hi8 mm life and to chr-
         li$'Oi ChO lUO8B OVW %+rty dOU8Md    DOlbU'8
    7%     000) of t&u houat reanlvablo b{ all other
    k&..~.i?iO8              ,a#     inrwanoo              WltiOr       PO1     Ob8     takea
    out by        *      ioww*~
                              hirowll1lm,***
                         Y UtcIlJ OP h %PU8tby Wilt.
   '~Whirk $hrfi pa88 db80
     oi by th0 laW8.Of 4089Ont or dirtrllbutlon Of
     bhi8 OP My ether #t8tO, or br dood, aant, 8aJq,
     ox glit a + +   rh411, upon pa88iagto OP for
    tho     tM*       Of
                       l
                       ny’*a        r 8o Onl
                           oopporatloa,   T l88OOiW
    tion,         k   Subjedt        $0 8 $a% ltorth. bmnofit of
    tha Pltrtr*r           Gonoral         ROIOaw           ?udkj         in    aooordanor
    with     the folloufiy               olaarlfiortion.                       l e + .*

             Ia.awwor 64 your tlrrt                           qtiortloa           it 18 rpwront
that the k@irlature ban tazod i$8ur8noo whloh does not
bwoma a pati of tho l8tato of the daoedent bu$ whlob
 888oI tm aawd bOnOiiO%8riO#. Buoh taf, how8vor, $8 on
 ho wouat of oh, in8uPanoe 3a moo88 oi $40 OOtLOO of
t)
the amowN rroeivod by all Eanafioiarlor on {ho polioiar
kbn   out by tkwdoordont upon hl8 own liio.
              ah boliote          i8 oloar aad wamblgww
                                   tie     Imn&r$a
aad ~9 are of th@ opinion tlIat proorodrr 91 brurmoo    pol-
iolrr prsring to named knofislarlor u on tho death of l
domdont ara proppclr rabjootr oi l&or% ?an00 kutlon     ad
tho tax ha8 beea 80 lmporod  by tha above quoted lrbiole.

             Tha Lhrgrwno
                       Wart                      of Uiroqmria in tho oa8a o$
XX Rf AS&D* WILL 184 %W9, 981, rtrted                                          a8 fO11OW8l

             * e e + I The nature mad quality o? rueh
    bOMfief~1        fntOSO8t ti tb8.      pO1iO108 &IS-   8ho
    fimuo d’r lK@        OOB8titllk l g o edground fo r led-
    lrletlro     a&ion    to nrbjsot    the proooods zoallaod
    thoro&m       to iahorltanoo     tbaxrtion  upan tho ba8i8
    that     they '8hrll br,dpemoda paP$ of hi8 88%&O
Ronorablo            tiorg~      Be.   Sheppard,        pa@8   b



     ?OX th0           QtLVQOIO1        Of th0 tPX and Sbii        bb taxable
     $0 tb8 PerrOll OP pOr.Oll8 Ontitled thereto,’It
     18 no tlssontial that qmh prooeodr eh4ll broom,
     4 gprt of th0 dooomrod hu8b4ndv8 08t4tO upon his
     pt;g ln ardor to rub cot tbra to lnheritanoo tar-
          . lt is 8olf-oV idont that by aaans of thorn
     pOliOlO tho hurbrnd tPan8tomd    8 14PgO p4Pt O?
     hi8 08tate 00 hi8 widow, nhioh beoamol??00tlv0
     at his death. Thi8 >Ut8 tho tran84Otion within
     tw ?lOld 0r inhqrltanso taxation.*

            & JrOUP8000!ld
           ,'              qUO8tiOu r’ou in U&O   48 t0   thO
4pplioab~llItyo? tho aboro atstuto to po p:  16198 of in8tU’-
anoo takm out prior to th0 peseapo of the sbatuto by th0
LoAgirlatup4in 1939, In awwering this qUestIon HI will
as8unw   that the polioy of innUP4nW you lnqulro.obouO eon-
tainod thm ordinary olouso~@antIng      to the inrtcrodtho
d%;     to ohango bonotioiaPis8 ot any tiaa prior   to hlr
       , Upon 8UOh 4n assumption wo will an4w4P your quo+
tlon,
          The qOxa8 Inh~ritanoo Tax l.88 tax bared tapontho
right      to    propotiy, or, In othor ~0~48,
                    roooivo                       ugon tho
Pl@h$ or rucoo88ion.  The ~OdSS1OIl8   Of Appeal8   Of lb&l8
ln tho 0.80 of STATE vm HOGQ, ‘PS S.W. (2d)  696, 8tatod a8
f 0110~8        I

           "An 4X4minltiOn Of tho 4uthOpitfO8 OOnVinOO8
     U8 that tb .b!lO.t MiWi~fJal Pul8 18, the8 inhO?-
     itan    tar08 8uOh a8 a?0 lorlsd by PWT8tatUto8
     go$d       to b0 pr~vll4g0 taX48, ,and not property
               fn other WOlFtt8,
                               the tar'i8 upon the right
     Of 8Ug0fi88iOn  and DO8 UpOn tho prOpOPty~   * + 8 l*
          Wo 0.11 four attention to the Zaot that tho pol-
ioier o? inruranoo taken    out In the 0440 of ltnRo AllI8'
will, 8uppa, WOPO tskon out prior to tho anendaont bon-
rtmod in the4 0480 tsring.in8UrMaO paid to 4 Mmfid bOW-
tlolary. 'Ihthat 0.00 tho oourt held that tho tax applied
to 8!i4hpollelor t&on    out prior  to tho lnaot;nsnt of tho
rtetuto booauarethr tax wa8 based upon tho penrIn6 to th0
kno?loiarpwhieh   took plaoo at tho timr of dosbh of th@
insured 8ub8equOn* to the onaotmon8 of the 8t4tUtO      in qUO8-
t10lh
                     trh0     SUITS-      COUPE    0r    mm8800    in   th0 0680 0r
RowPablo       Oeorgo          Fkshoppnrd,                 pago 4


STATE v* WIN,  36 3.W. (Ed) 88,                                 paseed OA        s    similar          quss-
tloa and 8tatod aI r0iirmt
           mi8    4ppOOi    i8 ??a   S dOOPt    hOidiII&    8hO
     Qroo..d8, aboto #40,000,       of OOPtrin InBUPaaOe
     pOlIOiO8 on the Iif0       0s Miohaol J. OaSn       dsooam-
     od   186uOd p?i0?    to tho   pasrago Of oh&Or
     AOk8 Of TOMO.800, 198) ErtrS So88ion,
     to tho lnheritanoo tar bhsroby morodr
     dlod Mbruary 14, lOSO, loarln# by hi8 will              hi8
     lb iP @ l8thO     inOiUdin(l   ~DIUFUIOO,   t0 hi8 WsfO,
     A8 hi8 dO6bh b0 h6a $90,000        Of in8UPOnOO     in
     r0P00, all 0s whloh wa8 parable         to hi8 wit0     un-
     00n81010nall                                  $80,000 and
     tr0 r0r $6                                                              that        tho     in-
     %0X08$         on
     liio,      the
     botwson hi8 Ohhlldnll,
              aaoh          polloy      oontrlnod l               olauso’       giving          Orin
     tho rl#tt   00 ohan@ tho bonotiolary            whioh  right
     ho did not aarolre,     th0   doprtmn$          0s r*nm
     8nd taxabioa held 81% Thorprooood8 of Mr.. Gain’8
     liio   lnruranoo sbovo #40  000    liable      00 the *ax
      imposed by said ohaptor h       and      thi8  rulfna  hat-
     ing     beon        mutalnrd            by the h:.           board, %hO qw8tion
     m8      8ubmittod              to tha     ahanoellor 48 a nlgrood                           oaeo*

              *Wo era oowtrafmcrd to OO~PT with                                   tho
     loerned ohanoollor.                       Tho 'fOMO88.0                fnhOrit.lrOO
     tax     beIn&        lovlod~      upon        th8                 to loquIpo and
     not upon tho right to               48 undo?  tb
     fsdoral law (Hmmon vr              148 Tona, UB,
     88d 8.1. 104f&)and tb               in‘thi8~Oa8. be-
     lng 'all BaynbSo to 8h0 wlio   or the WKO ld      ohil-
     &on of tho IMUPOa, but with       the .mrO8. POlOcI
     vatlon 0s tho right. to ohange th0 bmotioIr
     an& thr wit0 OT ohirdrrn bsrln(lne rorto4 in     T or-
     b8t   iA 8uOh fOPA% Of POliOr UndOP OUP dOOl8iOW,
     thlr right ta naqulro did not booomo       liio o tir o
     until      attor        oh6ptor          80         A088    Prr    80s~~        1919,   h6a
     80nO      lat0       Orr00t,    ft iOuOW8 that 110                             ~OtZO.OtiVO
     lpplloation              18 glton to tho 8tatutO.*
              A rePy Peoont QaSo on ohi8 question i8 th0 OS80
of MaIssRxLvr llxwml,34a a,$ (Ed)1sa rr *ho ootu?+
                                                 of
hpppr0lr: OS xintu.LJ,                          fin thil oaael fully dir-
                                      ?he oao\lrc~
ou6r.d all tho       luBhoritio+           and l)ate& aa iollowaa
         r 9 e l          l     In the pnren$ odm, howover, ‘I,
    have no.dab%              that’a p3’op.roonrtnxobion 6t our
    Btatuto,      X4mtuaky             btatuter,          recrtion        4S8C)la-l~6,~tr
    that tho Lm&irlatPn Intonllr&  10 to apply to ‘all
    poliOie@ Uh+hOf 'bOkOa OUs bOfO]M 01 OnOr f$R
    lSieo tlv*do t.* ml@h                             p     o f*h a mltiou
    plain and tmmbiguoor r    Wb will no% imply an
    laPen$ on *hi pert ai the kgirlaturo *o rxoopf
    froa ftr oporatlon  0110%08 Mo*tofom    Ukn
    OUt b&t%Will QrO9891 (Is 69t8nnin4 d34thrr 61 lid
    i* is unoonati~utionel wbn 00 apglled~    It ir
    trw thed’atatpkr,‘an    not to b* iton a r9ItOI
    aotlro erreat, ema where 9ho tegf rl.stuN bar
      orwirto maa* alloha atitut*, anle8r ruoh aa
    s atantlon oltiarl a~pearm fmn:ph~9;4a~tu8%;-
    lolt (Bunlap v# z itOoll, ZOO
     880) but     a ~$roeotire                 eff691)“ii I obthnad           o&
    whan a rta&ute Is applied to r                                  a aequlr94
      rfar to it8 ennobient. I8 npp%! ld to t&O 010
    f oies in question no *sate4ryltr   are irpsM
                                                4 red
     or will M        later pointed                outr
          *   9   ,+ c     l


          “In     o o na i4 o r lng         th e          tllo
                                                   o o M tlwtio na ~ity
                                                      of
    ICentuolq     Stetutb             In    to the poll-
                                           its applioation
     0208 inrolre4 we nest,detozalne    whether or no8 any
     ve8tod PI    88 wora obtained  by t&e ~benoilafarler
     Of tha popb ioler by ,Win# daol#natad aI‘boueiioi-
     ario    with the right zbaened In tb irhure(L $0
     ohnmg thb b6aetiagnr        Wa find that the almoat
     oalreraal ru30 ia 8ha 1 whbn a rl(ihB to ahan@
     tb)  bonei 1010   hes been rtmrrveb to tha inrured
     Js tha polloy7 ha kne$ioiOxy                           nansd has a se*        1)x-
     p99tuio~ and a0 re8to& rQht                           Or interostidud&g
     the llfsbilprof tha ln~re4,     thfa rule king   maI+
     Jeo) W     the que3iiioalrlon,of oou?U    that Bhr .’
     benofioiary    may aoquira a voWI ri&
     0f 0~        by+     0r~0pb0i03               90ntrqot.          87 da
     14 R.&L.  l3fMB Laadrarrvm IandmWr
     Xy. 778, 818 9.1, a741 ULrgtri6n
                                    tr Xiller, 96 n$*
    ru?M  naenrd the right     to ohan@   the b@ne?iol-
    ary, mold (870 IL8 ttt, 49 8.011 lm, 78 In Ed,
    405 58 A*L.B* Jesjt 'Rutuntil aha mo!xontof
    dea&b tht (Loowlanl  ratmine a lagal intereat la
    tba polioie8 wbiab gme.bim the power of bi8pe81-
    *loa of them lnd that? rooeedm a0 o@nplotal~ or
    IS b wora hlemelf the & noflol6r~ of them,' Tha
    oourt in that @am, in Irpeakfng oi the powor of
    sentrsl over auoh pollolea retain& b an Snsured,
    raid the8 auoh power   *ia by no moan@ Iha leart
    aubrt8ntlalof tha lo al fnoident ot ammrahlp,
    Ond lb0 te?mloatloa at hi8 death 80 a0 Bo tree
    tha bmmilolarl6r of the polioy from the poem&
    blllby of its oxeroler would aeom to b no le8r
    a tranrfsrwithin the riaah of the Caxinng pawor
    *ban a tramfer  offeoteclin oth8r way8 through
    drath,* sinoe the bensSlaiery kr the poll0148
    in quratlon him aoquira no teatied right but only
    a aero 9xp9otansrbr being dealgnatad a# beoeti-
    olary wa fell to mea wherein the otatute   in qurr-
    tlon whn appllcsdto the pOliOi      in oontrorerrrj,
    inpair   the Obll&8tlOn of a OOntra9t or reOult8
    in a violation of the duo p?ooraa olauso of tha
    14th amonduumt to tha Federal Oonstltutfon o? any
    prorlalon bi ou? atate oonatltutlon.*

            Xxtb&li.th@ Tennaisoe and Xentuoky oa8eB the
oourt held that the *$.nherltanoe tax war 8 tax upon tho ?l&ht
of auooeaalon and that a tar imposed upon the prooeedr or
inrurrnor polfoie#   br a 8batuta   whioh wa8 pQ88ed prior ta
the doahh of the lnsu?ad l   ubjeoted   the prooeeda of ins-
anoe polloiea   takaa out  rior   to thq pssarge of the tax mot
to the 8ax impoee6 then s II* We a011 pour attention, how-
ever, to th trot that in bo$h of those oa8ea the lnrured
had a ridht uuber the terma of the lnruranoe       oontaot to
ohenga bb no&d beneflolar at any timr pPfO? to hi8 death,
2hla beihg lo the oourta haxd that the right0 in the pro-.
                                                                               - -.
.      .
                                                                               - .,,       192   j




&onoreblo         (HorgoX1 Shappord,Page       7




oeeda ai&  no4 aoortm TV the b8n8flOiadO8 uutil the hatb
of the luawed a& therefore tha proper$v pesaad al oi
8Ueb tins,  wbloh woo auba~quent to thi tirm of tb pesa-
age    ai   the    tar   sot,

                   We are of the opLaion that under the authnrf-
4106       the probeebr oi lnsu?anae polloloa           payable to named
baneilalarlsr           are’aubjrot  to the Tex.aa Inherlbanoo Tax
doeplU          tbo ho4     $ba$ 4ba pollolea  of    lmu?eaoe   wera   taken
ou4 prior40 the ammdaont of lVS@ taxing ln8uraaoe                    pro-
owla,         wbon    thr   pol~oieain queablon~?eaerted to $h& ln-
awed         the r3@      to’ ohange the nanad   bextMlela~     in tho
polloy at any ttma prior to hi0 beathi
                                           Tour0 very truly
                                           A!mOltxaT
                                                al?mAL
                                                     OfTxA8

                                           By‘t+i$wi
Bt?cab                                                           A08104an4             ,
