OFFICE OF THE ATTORNEY GENERAL OF TEXAS
                 AUSTIN
                                                                                               2n:



                     Xonornble   G%or&o Ii. Sheppard,    Page 2


                           cam under the gr07ialonrr of the new law end
                           be taxable .I
                                 You+ letter    olaarly states the feats sna queatlon
                     in We     ease.    under me faoto stntaa we amme thet the
                     transrers psaaed ml1 1e.W title to .t!io tranafereea ea or
                     the tlf;oo of suoh traWil6rs.      'Taa ~WGtibl the3 ia *ethar
                     or not silch transfers     are subieot to the Texes Xnhorltauoe
                     Tax even though mde prior to t?re t%x!G;snt ta t5o Texcla
                     Xnherltenoe     Tar Statute in ~questlcu u~lc~ ello~.'s the tnxstlon
                     of such trensfors.       The deoeased died subseqxmt to the
                     efrectlve   date of ouch nc?eadize.?t. Article     7ll7 of the Se-
                     rlaea clvll     Seatut&    (15 anded    by ii~use Dill S33, seotion  1,
                     Acts of the 46th Le&latuxe;          1%??8, reads as Pollomw
                                 *All    ~rop2rty uithin the @risdictlon
                           0r this    StAto, rtml or ?cxs:nal,     coryorate
                           or lnoor;orate,      and ezy in:erosttfizrein,     in-
                           oluding property pnssieg under a ~enerel pawer
                           0r appolntzmt       ezercloaa  by the decodout by
                           will,    in<rluain.~ the procseds 0fiif5     t?suranoe
:.:.:.:l:.:::/:j
          >::::::.         to the extent of tho szm.mt receivable         by the
                           exeoutor     or adziolatrator   es inaurartoe uuder
                           poliolea    t&on-out     by the deooeentuym hiss
                           own llfo,     ani% to t?m extent nf the exoeaa over
                           ??Or?iyniOU8eAd   rI0~l~s(~~~,o~)      Or th5 5ZOUAt
                           rowivable     by all other benefiaiarics        es insurance
                           under policies      taken out by the deoelient upm
                           his owh lire,     whet3er belon!$ng to ishabitsnts
                           of tkls Stnte or to persons a& em %ot lahebl-
                           tants,+~ei;zmdltws      of rchother suoh poporty       Is
                           locatod~.within     or withut    thl6 Stata, w~11oh shall
                           pass absoltitoly     or in trust br will or bj the
                           lswiof    Cesoont or Uetribution        of t:h.l.s or any
                           other St&s,      or by dead, :';rent, sale, or ..;ift
                           nado or lntondad to t&e effect          in possession
                           or enjoptmt after the death ol~the crentor or
                           donor, still,     won pnssing to or ior the use of
                           anf person, cor?orntlon;        or acaociation,     be
                           mbjeot    to e tex for the bemflt        0-r tkc Ststefs
                           General ir.evenue WIG, in accordance 171th the
                           follmiinz    olaasiflcntiou.      &jr trnnstcr     mdo by
                           R :rfmtor,    wmdor, or timor, '%ilet;lzr by deed,
                           Q-ant, G3lQ) or ,;lr't, s>ell, tzlla23 s;ioi7a to
                           the contmry,      be desr;cd to k;uve been mde in
                                                                       2


Iioiorrorablo Coorgo 8. Bhoppard,   Fa&e 3


      ocntoqlatlcn      of death and subjoot       to the
      6~     tax as her&n        rovlded,   if suoh transfer
      is made wlthln two f 2) years grlor to tho
      death of the era&x,          vendor, or donor, Of
      a aatorlal     part of hfo lstate, or if tho
      $ransfer    zado within     nuch period is in tho
      nature or a tlnal distribution           OS gro?orty
      and without adequate vclunblo OonslderatlOu.
     ,Auts m;,p;          C. s ., p. 631 Aotr 1929 41st
      La. ‘                      109 oh. 50 ( 11 ke
      19.999, 46th ice., l ’ ii: B. #o o o . I i.*

          Vader the facts submlttod tho transfer8  in quoa-
tioa woro sade within two peers prior to the death of the
grantor and were s&is without adequate valuable aoaalderatlon.
Prlot to the mendzzent by tho Legislature .ln 1939, such
transfers were not tazablo.
           -Xowhoro in tho wording of tho amsndzeht lo tiero
any languarjo to evidenoe an intention      of the Legislature
that tho amendaent should ogerate retroaotlvoly         so as to
tax trausferr   that were fully    ccnsumatod    prior to the effea-
tlvo dato of said mendkkt.         Khlibe wo have no Texas dsol-
slcns on thla question,    the great weight of authority through-
out tho United States ie to the effsat        that such an act
irgoslni; a tax upon transfer8     whlck fully   vest title  in
the transferees    la not retroactlvo    unless the sjmolrio
laaguago of the etatute so z&err tho same*
            The SuiuproisoCourt of ‘&ntAa in the.oase OS Stats
~8. Diatrlct    Court of 0th Sualolal    3lstrlot  in and for
Choutoau County, 96 ?ao. (Zd) 036, deolded Xoveabor 29,
1939, was leoed with a similar situation.         The facts In
that~ ease 6loolooo   that tho deceasedmda uortzln trtms-
rem by deed th 1934.       In 1935 the Kmtmn statute was
a-landed so that instead of.lt     providing thet “every tram-
ior bg deed, grant, barsaln, sale or gi:t mid0 within t%o
  ears prior to tho death of $Santor . . . and wltnout 0.
rti r ocnslderatlon
f-.                   in mney or m.ineya thall unless shown to
 tho contrary be deesed to heve boon inado in cante~~lation
 Of death,*    it was cl4cuqsd to reed:     *every transfor by
 Ceed . . . mdo within three ymro prior tz the death of the
 fmntor . . .n The Ceceasod died in 1936 which was subae-
 Went t3 the amen&ant of the statute in 1925.           Tho oourt
 held thrrt the two year psrlod applied and thnt the law piOr
Ecnorsblo     George8. Shopgard, Pago 4


to tho aan&aont     in 1935 was agpllaable    to the trsnstor8
in question. The court ototedaa followor
             *It is elszsntary     that lt would have been
       oonpotant fez the L~glelaturo       to have s&o tkio
       rtatuto retroeatlvo     ii it   saw fit ta do so.*

              Wkors is nothing in Chqtor     186 tc aur&ast
       that tha Legislature   lntonded that it shc~uld   ap
       ply to deeds theretofore    3848.   It is a ci;onersl
       rule t&at statutes   ars lnto.tiod to operate ?ro-
       spootlvolyonly unless othemloo orprseslyststod
       or oloarlyend aoceeserllf      Ijrplledan$ tho pro-
       mmptlon la amlnst     rotro3epop.t4vo operation.”
            The Su row Court ot Caliiornia    in the oa4o of
Hunt vse Vlaht,   E62 Pac. $39, wa8 eonfronted with a siti-
lar situation   and in that case the transrors in question wore
aade in 1905.    The CalLfornla statute WRUanended ln 19ll
SO as to tax auah transrors.    Theadeooased died in 1913.
The ocurt ooaoluded thfit the transrors,woro    not taxablo and
stntod a4 r0im8r
             .Z;t is tho vestingin intaralt   that 4cnsti-
       tutos the sucoesslon,    and the QU.eDtiOli0r llabil-
       ity  to ‘suah a tax zust be daterulnod by t&e law
       fn rote0 at that tiise. . . .
             *ft .is litwiatorlal so rar aa the question wo
       have disoussod is acrmerned, that it is alleged
       that the trsnsfor     WRSinfida ‘la con*t43zplatfon 0r
       his doath and without valuable      cmsideratic&l
       The estate convoybd iully vasted at the tlcze of
       tho delivery    of tho deed in escrcw, entirely
       regardless   or the Ilotives. oft the pantor    for tho
       oonvoyanco, and vAt::out rsgard to uhsthar the
       tranafar was Hithcut vaLuetAo ccnsldoratlan,
       and bbcre waathen no law lza?oslmj a tax on agy
       such tramfor.*
           The Eugraim Cmrt   0r cta.ir0mia   rearrir236   thin
 hlo  of law fn 0onstruZng a alzilar    ra0t sltur3icn   in the
 can0 or In FM i&ix’s  S&ate,  ,100 Pea. 135.    The oourt Prtntod
 ‘8 r0110wt38
Eonorable   George H. iSheppard,


            ')Aa afrerdy   atatcd,
      uhy Ed* 1913.      The E48d agprra       GO iuwe tieen
      fully delivered     and effeatlre     at the tirnc it
      beam data.      The taxability     of tke trtmefsr mat
      thorofore   be detsrslneb      by t!:a law in sfrect   at
      t3at tiae. ihat 7. ZiOhL, 174 Cal. 239 l62 ?e0.
      639, L. R. A., 191e*         %lt xotate of &oa,        178
      O&@. 609, 169 Pm%. 362. 738 latiin Zorce at
      that ti=;cW&S the act of 1911. stats. 1911,
      Q* 7x3. . . .*         '.
            The SLue rub of mfl wes anMuncsd by ths supieme
Court of Louislena   i;r the ease of Gucosssion       of #illiaSa,
lE9 80. 601.    The oourt state6  em follmtea
             Wtatutoe   levylog taxea on doaatione or
      transfers    ma&s ln contenplatl,on    of death es@
      never ao5strueG aa applytr?g to treneaotlolle          that
      wereooapletad beiors the law was enaetbd. It
      we8 so clr?cidcd idShmb      V. iioglo, 256 ‘j. S. 629,
      42 s. Ct. 391, 68 L. 233. 747, 26 A. L. El. 1454,
      with rtzifersnce to ths Act or Congmxi of Segtere-
      her 8, 1918 (39 Stat. 7771, the Cirst ostato tax
      act.    Ahd it has since bexa hold t!xxt. to s.ive
      ~~03 a statute the retroecti-re       effect  of taxing
      tranafero    2mde prericua    tc t&3 encotxunt of the
      law %ould ezmunt to oonfiaaetion         Md be vloLa-
      tive of ths '-‘aurtesEth kmd%zit         of the Ccneti-
      i&ton     of the United St&&.       Xiohols v. Coolidge,
      874 U. a. 531 47 a. ct. 710, 71 LL ix. 11&S,
      52 A. L. R, 143It Blodzett v. Golden. 275 I?, 5.
      UC,-83 8. Ct. 35,        72-L. ZdC. 353; Uitor=leyir i.
      Anderson , 313 u. 3. 4.39, 43 8. ct. 253, 72 L. xd.
      64s . . . . *
            A skll&r   qaeatio?z -#as decidad by ths Suu_?Etior
Court of Dplmare in the cnne of DrownVD. ?er?sylvenia
Co~::panyfor Insurance on Liven 2nd ;'trantin; kmuitiea,
126 Atl. 719.     In thet cm0 an attaqt      was zfzde tc tnz
cortaiz tmnafore     w:~iok had be9.z zdo ti i3ld bowwe        3uoh
tnlItofers went mde t,:xcl?Ae b.v an amnckont tc t% S&mare
law affactl.va  Lhrc3 E4, 1917, oti ths deceased did not
aa until Aoril f7, 1317.        The oourt ccncltied     t&at ths
law 13 off&t     at t!m the of t!m tramfer       o.jctrollcd  nnd
that ouoh tramfere     *ore r.ot taxabko.    The court etrted a8
rOuowe I
&aorabls   George il. .%e?gard,           ?ege 6


           *The plelntltf arates thnt the statute In
     question was intended to bo retroactive   bemuse
     it osntalna these wordeI  ‘Auy tronafer   . L .
     wltkln two year8 prior to his Ge+th wltkout full
     ooneiderntion      in   Eonby   or    :~oney*o   worth   aLcU,
     unlase ahma to the oontrary,   50 domed to bste
     been nade La cortezqlatloa or death wltliiz tke
     mt3aalnG of thla 0Snptor.f Inss:ach es th0 lew
     ?r0~id08    th3t   ~i:te   23=ice12 c0a33:aiti02           0r
     death shall be subjeot to t>o tax, and :‘urt!mr
      provides ii-&t $.fta =ade r:ithin two yanre prior
      to the dent5 OS the dzior &-ml1 tc deeze6 to
      heve beon zmde in contaqlatloa     of dmth, It is
      lnslstod  t&s gi:t ln the grosont case is liable
      to the taxi   It ia r&t clai.zed t!m-e Ir, ey
     .othor lan.gaaga in the stlitrute that indicates an
      lntemttioa t&t It si;ould .pe retroactlve.W
           ”        The transfers,   therefore,  could cot
     be tslrfbie’unless    the taxfw   aot ia retroaotlve,
     und we have held it ia not .*
           Ths a.838 rule of 18%~XQS ennoumod by the 3upme
Court of Pennaylv~ia     in the cm3 cf In Z&i “Yeanl$ton’s
Betate, ,192. Atl. 39.   ‘i!hO OOtU?t 6t8t8d 88 tolloua:
            -The sot.of 191s iqosea    a tax u-3    'the
     right of siiccemolon or the ;?rivlle;o    of rsoelv-
     In3 st dmth the xroparty possessed by s dece-
     dent.'    Dolar\‘s Siante, 279 ie. m2, 5”&, 124
     Ac.178,   173,. 46 A. L. R. 653; ‘XlrQatrick~s    3state,
     275 Pa., 271, 273, 110 A. 269.     It 5ca been re-
     peatedly held t!mt tXio act oizly agpllcs      to
      tramlore    occurring     eftor   lta  enactment        awl     not
      to those   prior   tfiareto.    . . .-

           The Sii;i?arereCourt of W~~7lvanIa       also eomider
eC 4 prohlei2 aiA.lfir   ta t&it w:ic:; c.:nrrxta    ~5 In tti6  cam.
in the cese of In lit3   Oliver’s  i’st*!te, 117 ktl. 31,   Ia tati
cas3 tho tmncfero      in 1;motim ttbk $Eoe in 1913.        On June
20, 1919, the XA3msylvrinin lnri me czm.deG 80 2s to tnx
such trcmfors.      The Goceo30d CleC Qly,      1019,    Em cmrt
holC that tSe tmsfers        were zot temblo    aad ateto& UB
Pc1l0w31
                                    *The dooreo   nut   be atiixued.     The sot
                              provides t
                                    .Vhat   e tax shall be, and is hereby,
                              hposed u>on the traasfer         02' any grogerty,  real
                              or personal,    or or any intorast       tkwoin or in-
                              come therafroa,    in tru-lt or othawlcls      . . . by
                              doed, grant, btm~in,       sale,    or cirt, nnde in
                              oantuzphtfoa     of the bath      of tha Srantor,
                              vendor, or donor, or lnteaded to take erfeat in
                              poseessfon~ of enJopent       ot or etter 5mh death.*
                                   %3ither     thcae words, nor any 0th~ -pats
                              of the sot, ahow M intontfm        to L-~OXI the
                              tax on my *twnsfort       wbich,:wea fully aeaoi5-
                              plishedprior to its pw35w3b; aad heaoe t5e de-
                              ora io correot,for the rqoeon stnteC by t&a
                              court belovr in ita oglnion,     unless there 1s
                              oamet..ing Irr. the atatute ahlch oor~~els a dif-
                              Parent ~onolualon.~
                                      The Court of h peals in I&M York in the oase of
 ,*       ‘.             City Bank Fnners Wuat Ermpmy 98. Kerr York Central railway
                         ~aoiigfuiy, 170 If. iL 4539, considerad Q 5ir;ilar problm    pat
                         oourt in a;1 opinion written by Chief Justlco cardozo held
..:+::l:i::i             that au fnhoritanco     tar statute ~45 sot retroaotlvs   and
                         stated ae foUowsl
                                    Whatever   lorrunity etisted when the tmne-
                              for becajlo iaMoctive,    extitinuod to exist that+
                              artsr, untouckeU in its intizrfty      by 03ythiq
                              that the LeiJlelature    could do.*
                                     The Sunrese Court of Iwa in the case ol ImA            vs.
                         !3rown 166 H. ii.' 99, aanaunoed the 9-e rule of law and
                         stctoE 06 followsr
                                     .      . In the atme before ue the ri$.~:a of
                               phd.ntifh   ant! the Litteors    with remeet to thle
                               Froroperty \iO‘iO rl.~td and 1~a6e lrrovoimble,   orcept
                               by iSmlA1 omrmit,       on the iitto when tt?a pag"r5,
                               wera oxocuted nnd ~lal~titf        ncqdred   po~sesslon
                               thereundar, md if we r;qv a::suzo thnt It was cozi-
                               getent for the otnto to thereafter         smot or mend
                               a statAx    to izs205e a ter upon such :rol?afers       0r

                ::
               <ii::‘.
                : :,
Honorable   door88 IL She?>ard,    Page 3


     title,  tbs retroopeotive     obarnotcr dffeot
     of such en:~tzent zu3t oloarly a;qeor,and
     in the cbsonce of myth.&;       siiowin.; auo!: in-
     tent the court5 will zlve it proopctlv4           e:Ssot
     oolp.   There io nothing in tLls eztndze4t in-
     dicetAnG eny le.~olativo      intent to dve it
     retrosp3otlvvs   sgplioatfon,   and It ,CKtlOVisthat
     WM if xts wore. to ao;Latxua it ne bslq othtsr-
     tiiee ap9llcable   to such a trmeior as is here
     b4inz ccnsidered,     it would zot Zovarn tho re-
     5ult of thi.8 ap3al."
          The adclrd rule ol law w~8 smouaced by .the Sugrenre
court or Errors or Connecticut   ln tho ease of BlodFett vs*
Fnion.end i%w &von muet Cozpaq?# 110 Ml. $05.       %ie .aourt
stated t&e iaeuo and conoluded 4s followst
            *Th4 quoootlon first    to be ooneibwid    in
     lo&xl      8equezse.U   shsther the taxlhg statute
     appliczbls    to the tnmt fund is the aot of
     1913, w!aiohw~e in Sores wheen the deed end the
     aeouritles    wore dellvoredto the trcstee or the
     statute of 1315, whloh ceze into effect        after.
     the ostablisbkent     ot .tiie trust, but before tSe
     settlor'a    death. . . .
            *On the other bend, en irrevoaeble     grant
     of a ra-&indsr Laterset i3 a preeent trauafer
     of it to th5 rez4lnd4rzan,      and, eincs a suc-
     ccaelon ton is a tax on the tmzsSer,        aod ;lot
     on tie property,     the question whether 4ny
     pa.rt1oula.r tramfor    13 or ie :iot texeble should
     1o;icelly   depend on *the terzs of tha statute
     in force at the tine when the tram%-r ttiee
     place.
           Whether the Lel;islature      f&kit. acnstltu-
     ti0dxg     lay a rm~oassi~,-.c trrr u3oa 4 trm.3for
     of a rezalaCorintsreet whlcil had .alroady verjtod
     13 ri,-ft before t'\e statute wc5 pcssed, ia a
     suestioz ~;hicL NO noed not Llscuos my further
     than to observb t&t tha ln:.ent to lay 8 retro-
     ootira tnz o*u$it to be mhifanted         by Very slain
     and exnlicit    words, and fkt 30 find no ox?res-
     sl2n of til2t !1125nt in t&o ?xt of 1915.          Oiir
     ccnoluslo3    t221t ,@a a?3licahle    tnxlri,: stntute
     la that whloS. was in forca vii03 the irrevocable
     trust dood ws CellvaroC e;recC with the Cecl-
     alms in other jurisdictions.         . . ,'*
                                                                        23




           ??htle thare   are awa casts     wzSol1 tezd t3 indiaate
~onzrarpto the r*uleof Ma ariounoedprevlouoly in thie
opln.lon, &a previously    stated,  it la tho overw!iaki~     viei;ht
of authority that aa to trsnsfere       w!tic!4 take ;laco end vest
title   13 the trmar’ereos    @or   t.3 the ezar,d::ont of t&i tax
rtatuto   wUch t&m&a such trfcdorb       the S!IES are not tnxcble
tdt3r such a2enaimnt aesgite the fc0t th-t th0 ae06s.9oa am
eubsoquent to tke ammdmntr         No 8rQ of the oplnim     that
tkio is the uorrect x-tile of law to be a??lied in t.U.8 case
and t!!et the trannfere    in quastlon are zot taxable *under
the azon&:or;t to the Inheritsace      Tar Stati%te by the 40th
teg1*1aturo   in 1939.




        FIRST ASSISTANT
        ATTORNEY GENERAL




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