                         January    13,    1964


Mr. Frank M. Jackson                              Opinion   No. C-202
Executive Secretary
Teacher Retirement   System        of   Texas     Re:   Whether benefits    under
201 East 14th Street                                    the Teacher Retire-
Austin 14, Texas                                        ment System Act, as
                                                        amended in 1955, are
                                                        subject  to inheritance
Dear Mr. Jackson:                                       tax.

           We have received    your      letter   from which   we quote   as
follows:

                  "The Inheritance     Tax Division    of the Of-
              fice  of the State Comptroller        of Public AC-
              counts has asserted      a claim against    Gertrude
              A. Herm for State Inheritance         Tax on the value
              of an annuity payable to her by the Teacher
              Retirement   System of Texas.       She is receiving
              this annuity as the sister        and nominee of
              Hattie L. Herm, a deceased        member of the
              Teacher Retirement      System.    Miss Hattie L.
              Herm taught in the public       schools   of Texas
              for 43 years,    deposited    $4,986.25   to her
              account   in the Teacher Retirement       System and
              named Gertude A. Herm to receive         any payments
              which after   her death might be due under the
              terms of the Teacher Retirement         Law of the
              State of Texas.      The Comptroller     has set a
              value of $13,190.20      on this annuity.      Miss
              Hattie L. Herm died July 29, 1962.

                  "Since  the enactment of the first  Teacher
              Retirement   System act in 1937, the statute
              has carried    the following provision, in sub-
              stance:

                    "'The right    of,,a person to an annuity or a
              retirement     allowance,      to the return   of contri-
              butions,     annuity,     or retirement   allowance   it-
              self,     any optional     benefit   or any other right
              accrued     or accruing     to any person under the
              provisions     of this Act, and the moneys in the
              various     funds created     by this Act, are hereby
              exempt from any State or municipal            tax, and

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Mr. Frank M. Jackson,       Page 2 (Opinion                      No.       C-202    )



             exempt from levy and sale,  garnishment,  attach-
             ment, or any other process  whatsoever,  and shall
             be unassianable  exceot as in this act specifi-
             tally provided. I”    L

         You call   attention     to Opinion No. WW-92, dated October         17,
1957, by this office,      which held that the above quoted provision
of the 1937 Act Is of no effect         since the caption     of the Act did’
not carry a notice     of the above exemption from inheritance           taxes.
You also
      -   state   that   the  Board  of  Trustees    of the Teacher   Retire-
ment System requests      tnat we reconsider      said opinion,   especially
in the light    of two acts of 1955 and 1963.

        We believe      that said Opinion No. WW-92 has no effect                       on
such benefits    accruing    on or after November 6, 1956 for the
reasons  hereinafter     stated.

          Chapter 530, page 1638 of the Acts of the Regular Session
of the 54th Legislature,    1955 (V.C.S. Art. 2922-l)  amended the
Teacher Retirement    System Act of 1937 and had a caption  reading
as follows:

                  “An Act amending Cha ter 470, Acts of the
             Regular Session    of the z 5th Legislature  (as
             heretofore   amended) pertaining    to the Teacher
             Retirement   System of Texas; prescribing    the
             conditions   upon which this Act shall become
             effective   as a law: declaring   the Act to be
             severable;   and declaring   an emergency.”

            Section  9 of the original   Act of 1937 above quoted from
your   letter    was made Section   16 of the Act of 1955 in identical
language of the exemption set out in the Act of 1937.           Since the
Act of 1955 amends the Act of 1937, the caption        of the 1955 Act
above quoted is sufficient.         State v. McCracken   42 Tex. 383
!+8;5& ardoGuyt;;      v. Texas Land Mtg. Co. Ltd. , 82 Tex. 496,
      . .         (8  1.
          The case of English & Scottish     American Mortg. & Inv.
Co. v. Harde, 93 Tex. 289,,++      3 w lfo [lonnl
                                  /,    Y   .   . .   3s directly
                                                      .    A”,       in
                                                                  \A,““,       &I




point and is decisive     on thye ouestion  of the su fficiency    of the
caption    of the 1955 amendment:     In 1897 the Legislature     passed
an act entitled    “An act to amend Articles     641 and 642, Chapter 2,
title   21, of the Revised Civil Statutes      of Texas relating     to the
treat ion of corporations    ~” (Emphasis ours).      The body of the act                    >
in addition    to matters relating    to the creation   of cornorations.
in its last proviso,     read as follows:
                II          that foreign                  corporations  obtaining
             permits   io    do business                  in this state shall

                                       -977-
Mr. Frank M. Jackson,       Page 3 (Opinion        No. C-202       )



            show to the satisfaction     of the secretary
            of state   that fifty  per .cent of their   author-
            ized capital   stock has been subscribed,     and
            that at least    ten per cent of the authorized
            capital   has been paid in, before ~such permit
            is issued. ”

        The Court     stated:

                 “The contention        of plaintiff         is that the
            last proviso,        relating      to permits      to foreign
            corporations,        is not embraced within the sub-
            ject named in the title              to the act.       If we
            could disregard         the reference        in the title        to
            the number of the article               of the Revised
            Statutes     to be amended, and look alone to the
            words ‘relating         to the creation         of private
            corporations,’         as expressing       the whole subject
            of the act,       it may be true that such expression
            would not be broad enough to admit provisions
            concerning       the Issuance        of permits      to foreign
            corporations.         This it is unnecessary             to decide,
            since,    in view of the previous             decisions       in
            this and other courts,             and of the course of
            legislation       based upon their         authority,       it must
            be held that such a reference                to the number of
            an article       in a code, such as our Revised
            Statutes,      is sufficient,          in the title      of an
            act amendatory thereof,              to allow any amendment
            germane to the subject             treated     in the article
            referred     to.     Gunter v. Mortgage Co., 82 Tex.
            ;K);, 17 S.W. 840; State v. McCracken,                   42 Tex.
                     Many decisions         from other states          to the
            same effect       might -be cited.         The reason for
            the decisions        holding      this proposition        must be
            that the naming of the article                to be amended
            directs     attention      to all of the provisions
            there,in,    as the subject          of the amending act,
            and that such provisions               can be ascertained         by
            reading     the article       to be amended.          However
            questionable        may be the practice,           and the decl-
            sions by which it has been recognized                    as valid,
            it has been so long and so often followed                       that
            this court would not be justified                  in now holding
            it to be a violation            of the constitution.             The
            effect    of the reference           to the article        to be
            amended is not restricted               by other language
            of the title        to the act in question.              Such other
            language is, as far as it goes , properly                     descriptive
            of the subject         of the amended as well as of the

                                      -978-
Mr. Frank M. Jackson,      Page 4 (Opinion     No. C-202     )



             amendatory act.         It simply does not cover
             the whole of the subject;         but the reference
             to the number of the article          to be amended
             does Include,      as the subject     of the amendatory
             act,   the whole subject       embraced by the provi-
             sions of the former.          It Is that article    which
             the title     proposes    to amend, and not merely
             such parts of It as relate         to the creation    of
             corporations.      . .'

        The Texas Supreme Court cited  the above case with approv-
al In Board of Water hgineers   v. City of San Antonio,  155 Tex.
111, 283 S.W.2d 722 (1955).

         This 1955 amendment in unequivocal    language states    that
the teacher's  annuities, retirement  allowancesA    et cetera,   "are
hereby exempt from any state or municipal    tax.     The Inheritance
tax Is a state tax.

          You are therefore     advised   that since    the effective     date
of the 1955 amendment of the Teacher's           Retirement    System, that
the right   of a person to an annuity or a retirement            allowance,
to the return of contributions,         annuity,   or retirement     allowance
Itself,   any optional   benefit    or any other right      accrued   or ac-
cruing  to any person under the provisions           of this Act, and the
monies in the various     funds created     by this Act are exempt from
state and municipal    taxes,    Including    the State Inheritance       *ax.

         The Act of 1955 provides   that said amendment shall
become effective  on November 6, 1956, and for that reason we
say that Opinion No. WW-92 Is not effective       as applied   to bene-
fits  under said Retirement  Act accruing   since   said date.




                           SUMMARY


                 Since the effective      date of the 1955 amendment
          of the Teacher's    Retirement     System, the right      of a
          person to an annuity or a retirement          allowance,    to
          the return of contributions,        annuity,   or retire-
          ment allowance   itself,    any optional     benefit   or any
          other right accrued      or accruing    to any person
          under the provislon,s     of this Act, and the




                                   -979-
Mr. Frank M. Jackson,   Page 5 (Opinion    No. C-202         )



         monies in the various  funds created   by this
         Act are exempt from state and municipal    taxes,
         including the State Inheritance   Tax.

                                   Yours   very     truly,

                                   WAGGONER CARR
                                   Attorney General              of   Texas




                                        Assistant

HGC/jp
APPROVED:

OPINION COMMITTEE:
W. V. Geppert, Chairman

John Reeves
Albert P. Jones
Linward Shivers
Robert Smith

APPROVEDFOR THE ATTORNEYGENERAL
Byt  Stanton Stone




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