               THE        A-JTORNEY                  GENERAL
                              OFTEXAS
                          AUSTIN.     T-s            78711




                            October    10,    1974


Major General   Thomas S.     Bishop                   Opinion No. H- 418
Adjutant General of Texas
P. 0. Box 5218                                         Re:   Whether the Texas
Austin,  Texas 78763                                         National Guard and
                                                             similar groups are
                                                             entitled to income
                                                             from a trust estab-
                                                             lished for the “White
                                                             Military Companies
Dear General    Bishop:                                      of Dallas County. ”

     You have asked several questions relating to the income           from   a
trust and have described the factual background.

     In December,     1888, a lot in the business section of Oak Cliff, City
of Dallas,   was conveyed by deed to the Dallas Artillery         Company on
condition that the Artillery     Company would erect an armory on the
property within six months.        This was accomplished      and title vested.
The property was to be vested in the Dallas Artillery          Company for its
 sole use, enjoyment and control as long as the Company remained an
organization    either military,   civil or social,  and after the dissol.ution
of the Company the land was to go to any military company or social
organization    formed by as many as five of the members         of the Company,
either by themselves     or associated    with others.   After the dissolution
of the Company and any such organization          or organizations,    then the
property was to revert to the County Judge of Dallas County and his
successors    in office to the use and benefit of such “White Military
Companies     of Dallas County” as might be in a position to use and enjoy
it.

     No military company has used or enjoyed the property since 1919
when the Dallas Artillery    Company was mustered     out after the First
World War.      Two law suits tried to recapture the trust estate,   but
failed.   The County Judge of Dallas County sold the original property
and later bought another tract of land.    This was sold in 1971 for
$120,000;   $10,000  of which was paid then and the remainder was to be
paid over a 20 year period with interest.     A private association   called


                                      p.     1947
Major   General   Thomas   S.   Bishop,   page 2      (H-418)




Dallas County National Guard Association   was formed and, the Trustee.
the County Judge of Dallas County, authorized the purchaser of the tract
to make payments under the note directly to the Dallas County National
Guard Association.   The association spends the interest and gives the
County Judge an accounting each year.    Principal payments are treated
as the corpus of the Trust and are not spent.

     Your first question recites   that it was held in Scott V. Sterrett,    234
S. W. 2d 917. 920 (Tex. Civ. App. --Dallas     1950, writ ref’d. n. r. e. ) that
the trust beneficiaries,   the white military companies    of Dallas County,
are “constituents   of the organized militia of this state” and asks “whether
or not is is legal to transfer  interest payments received from this trust
to the Dallas County National Guard Association      which is not a state
Militia entity but a private association?   ”

    Before the property was sold in 1971, a declaratory       judgment action
was brought to determine,      inter alia, whether the payments from the
sale of the property could be made to the Dallas County National Guard
Association.   The parties to the actionwere      the County Judge, the com-
manding officers   of all National Guard units in Dallas County and the
Attorney General.     See Article 4412a,    V. T. C. S. An agreed judgment
was entered by the Court on December       3, 1970, and provided in part:

             IT IS FURTHER     ORDERED,      ADJUDGED       and DECREED
        that the Promissory     Note in the amount of $110,000       to
        be executed by the purchaser      of such property be made
        payable to W. L. (Lew) Sterrett,       County Judge of Dallas
        County, Texas,     as Trustee for the White Military Companies
        of Dallas County,    Texas,  and/or his successors      in office
        and trust,   and that the County Judge allow payments to be
        made under said Note directly to the Dallas County National
        Guard Association,     which Association    shall provide annual
        accountings   to said County Judge, showing that proceeds
        received under such Note were used by such Association
        in furtherance   of the purposes for which the Trust herein
        referred   to was created.    Sterrett,et  al. V. Didear,
        No. 70-12528.    Dist Ct. of Dallas County,      116th Judicial
        Dist. of Texas,    December    3, 1970.




                                          p.   1948
Major   General     Thomas      S.    Bishop,        page 3   (H-418)




    As the payments on the note are made to the Dallas County National
Guard Association   pursuant to the judgment of the court, it is our opinion
that they are being made legally so long as the purposes and activities
of the Association  do not change so that they no longer reflect the pur-
poses of the trust.  Whether that is the case depends on a determination
of the facts and is outside the scope of this office’s opinion process.

    Your   second    question        is:

            If the answer to the first question holds such
        payments to be legal does the Adjutant General’s
        Department have authority to supervise     this fund
        under joint regulation,  TARNG Regulation 230-2,
        TANG Regulation 176-2 and TSG Regulation       230-2?

     The regulations about which you inquire outline detailed procedures
for the handling of National Guard funds.     Although the Association   is
closely related to the National Guard, it technically   is not a part of the
Guard.   Therefore,  we have found no authority by which the Adjutant
General can extend the requirements      of TARNG Reg. 230-2,     TANG Reg.
176-2 and TSG Reg. 230-2 to the Association.        However,  the judgment
of the Court directs the Association   to provide an annual accounting to
the County Judge in his role of trustee.

     Your third and fourth questions ask whether the Texas State Guard is
entitled to participate   in the trust and whether the Dallas County National
Guard Association     violates the terms of the trust since some non-county
residents,   some retired members       of the Guard and some regular Army
and Air Force personnel assigned to the Guard are entitled to membership.
Again, we believe these questions were answered by the District Court
judgment which directed that the payments be made to the Association.
Absent review or modification      of the judgment,  we must answer these
questions in the negative.

    Your fifth through eighth questions involve the federal tax status of
the Association  and the steps necessary   for the Association to realize
maximum federal tax benefits.     We believe these questions are outside
our opinion giving authority as outlined in Article 4399, V. T. C. S., as
they are primarily  private in nature.




                                                p.    1949
Major   General   Thomas    S. Bishop,     page 4       (H-418)




    Your   final question   is

             Since Militia units now have Negro members       what
        effect does the provision    of the trust have which set
        it up for the benefit of the White Military Companies
        of Dallas County?     Is this an enforceable  provision
        of the trust and if so by what procedures?

     Although the trust refers to “White Military Companies,”        we do not
believe it must be interpreted     to exclude benefits for non-whites.     Coffee
v. William Marsh Rice University,        408 S. W. 2d 269 (Tex. Civ. App. --Houston
1966, writ ref’d., n. r. e. ). If the trust were interpreted as being limited to
a racially segregated    class,  the restriction  would be unenforceable.      Shelley
v. Kraemer,    334 U.S. 1, 92 L. Ed. 1161 (1948).      It is our conclusion,    there-
fore, that the beneficiaries    of the trust are not limited to members      of any
racial group.

                                 SUMMARY

              The entitlement to income from a trust estab-
         lished for the Dallas Artillery    Company and upon
         that group’s dissolution   for the use and benefit
         of the “White Military Companies       of Dallas County’
         is determined by a district court judgment directing
         that payments be made to a private association        of
         National Guard personnel.      Under Texas case law,
         the trust is not to be interpreted    to exclude bene-
         fits for non-white persons,    and an interpretation
         limiting benefits to a racially    segregated   class
         is unenforceable.

                                                Very   truly yours,




                                                JOHN L. HILL
                                                Attorney General      of Texas




                                           p.   1950
Major   General        Thomas    S.   Bishop,     page   5
                                                             (H-418)




APPFj,OVGD:




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DAVID M. KENDALL,               Chairman
Opinion Committee




                                         p.     1951
