   WVILL  WILSON
AlTORNEYG~NERAL

                               October 10, 1961

    Honorable Robert S. Calvert           Opinion NO. ~~-1160
    Comptroller of Public Accounts
    Capitol Station                       Re:   Exemption from inheritance
    Austin, Texas                               tax of devise to Shriners
                                                Hospitals for Crippled
                                                Children under submitted
    Dear Mr. Calvert:                           facts.
         In connection with your request on the above-captioned
    matter, you have advised us of the following facts. L. Alberta
    Watkins and her husband, who predeceased her, had executed a
    joint and mutual will. Paragraphs 3 and 5 of this will read
    as follows:
                 “3. In case of a common disaster of
               the undersigned testators causing the
               death of each of us, then,,in that event,
               we jointly and severally devise and
               bequeath all of the property, whether
               real, personal or mixed of which we,may
               die seized and possessed to Shriners
               Hospital for Crippled Children, a
               Corporation, for the use and benefit of
               the hospitals owned, operated, and main-
               tained by said Corporation.
                     8,
                      . . .
                     “5. In case either testator survives
                   the other, but makes no other or later
                   will, then In such event, the estate of
                   such survivor shall pass under and accord-
                   ing to the program of distribution set
                   forth in numerical Paragraph Three above."
          Article 14.06, Title 122A, 20-A, Tax.-Gen., Vernon's
     Annotated Texas Statutes, provides an exemption from inheritance
     taxes for transfers to charitable organizations if such charitable
     organizations are to use the gift within this State. Article
     14.06 also contains the following further provisions for exemption
     which reads as follows:
                     "Provided, further, that If the property
                   so passing is to or for the use of a
Honorable Robert S. Calvert, Page 2     Opinion No. ~~-1160


         religious, educational, or charitable
         organization which conducts its operations
         on a regional basis, one such region of
         which includes the State of Texas, or any
         part thereof, then a bequest, devise or
         gift to be used within such region shall
         be'deemed to be'used within this state.
           "For purposes of this paragraph a region
         shall comprise not more than five contiguous
         states, either in whole or in part, one of
         which is the State of Texas."
     The Attorneys for Shriners Hospitals for Crippled Children
have supplied you with certain information which they deem
pertinent in the determination of the taxability of the devise
in question and which is offere~din support of their position
that said devise Is exempt from an inheritance tax. We quote
the following excerpt from the letter submitted to you in
connection with this matter.
           "Shriners Hospitals for Crippled Children
         is a wholly charitable corporation organized
         pursuant to the laws of the State of Colorado.
         This organization,owns and operates hospitals
         for crippled children located in different
         parts of the country; one such hospital being
         located in Shreveport, Louisiana, which
         services the region of Texas, Arkansas,
         Mississippi, and Alabama. In other words,
         crippled children of parents financially
         unable to supply needed orthopedic care,
         hospitalization and surgical treatment from
         the states mentioned are admitted for treat-
         ment at our Shreveport, Louisiana, hospital
         entirely without cost. Over the years since
         our hospitals have been in existence, many
         crippled children from the State of Texas
         have been admitted for treatment at a cost
         of many thousands of dollars which might
         otherwise have been spent in treating such
         children in public institutions within the
         State of Texas.
           "Shriners Hospitals for Crippled Children
         have always been affiliated with the Imperial
         Council of the Ancient Arabic Order of the
         Nobles of the Mystic Shrine of North America,
Honorable Robert S. Calvert, Page ~3     Opinion NO. ~~-1160


        a fraternal order. The 'charitable corpora-
        tion was organized tomoperate the hospitals
        which administer the charitable work of the
        Shrine fraternal order. The Shrine is
        operated under the so-called Lodge System
        form of government, which means~that Shrine
        Temples are chartered by the parent body
        and are~located throughout the country.
        Eleven such Shrine Temples are located in
        the State of Texas, one such temple being
        in Austinand another in Dallas, where the
        Watkins estate Is being administered. The
        other temples are at Amarillo; El Paso,
        Wichita Falls, Fort Worth, San Angelo, San
        Antonio, 'Waco, Houston and Galveston. The
        members of the Shrine fraternal order make
        annual payments toward the operation and
        maintenance of Shriners Hospitals for Crippled
        Children and the various Shrine Temples are
        responsible for locating and processing
        crippled children who are eligible for admis-
        sion to our hospitals. The Shrine Temples
        also provide transportation for the children
        to and from the hospitals and assist in many
        other ways ,in furthering the charitable
        endeavors of the organization.
           II
            . . .
           "As indicated above, -the funds to be received
         by Shriners Ho~spitalsfor Crippled Children
         from the estate of L. Alberta Watkins will be
         used at the Shreveport, Louisiana unit of
         Shriners Hospitals for Crippled Children for
         the care and treatment of crippled children
         from the State of Texas. An affidavlt to such
         effect over the signature,of one of our cor-
         porate officers was to have been attached to
         the inheritance tax report. . .'
     The submitted affidavit was signed by George M. Saunders,
Secretary of the Shriners Hospitals for Crippled Children.
The substance of the affidavit Is that George M. Saunders is
the Secretary of.the Shriners Hospitals for Crippled Children
and that, as such officer, he ~1s authorized to make the state-
ments contained In .the affidavit on behalf of the Shriners
Hospitals. These,,statcments:areto theeffect that the
Shriners Hospitals for Crippled Children is a charitable
Honorable Robert S. Calvert, Page 4     Opinion NO. ~~-11.60


Colorado corporation owning and operating hospitals for
Crippled Children throughout the country and providing care
for children of parents financially unable to provide such
care. He states that the Hospitals are administered and
operated on a regional basis and that one such hospital unit
is located at Shreveport, Louisiana, and is known as the
Shreveport unit of Shriners Hospitals for Crippled Children.
He states that children from,,theState of Texas are treated
there and that it is hereby . . .stipulated and agreed that
the funds and/or assets received by Shriners Hospitals for
Crippled Children from the estate of L. Alberta Watkins will
be expended exclusively for the care, surgery, hospitalization
and treatment of crippled children who are residents and
domiciliaries of the State of Texas at the Shreveport,
Louisiana, unit of said Shriners Hospitals for Crippled
Children wholly without charge;. . ,'
     Attached to the affidavit is a copy of a resolution
adopted by the Board of Directors of Shriners Hospitals for
Crippled Children at a regular meeting held in Miami, Florida,
on June 15, 1961. This resolution provides, in part, that,
among other officers, the Secretary J.sauthorized, directed
and empowered in the name and in behalfof Shriners Hospitals
for Crippled Children, a Colorado corporation, to take certain
enumerated legal steps. Paragraph 3 of the resolution reads
as follows:
           "To make and execute all necessary contracts
         and documents affecting the property of
         Shriners Hospitals for Crippled Children,
         and other properties of the corporation;"
Paragraph 9 reads as follows:
           "To make and execute any and all papers
         and documents as may be necessary from
         time to time to comply with the laws of the
         state in which any of the properties of
         the corporation may be located for the pur-
         pose of protecting and safeguarding the same;"
Paragraph 10 reads as follows:
           "To make and execute such agreements,
         papers and documents as may be necessary
         from time to time to settle any controversies
         over the properties of the corporation, or
         such suits as may be pending affecting the
         properties of the corporation, and as may
Honorable Robert S. Calvert, Page 5      Opinion No. ~~-1160


        be deemed necessary.‘for the’protection bf
        the proparties of the corporati,on;”
     Tha foregoing facts clearly satisfy the requirements of
the statute. The limitation as to the use and expenditure of
the devise is in no way lnconsistant with the terms of the
will. The Secretary of Shrlners Hospitals for Crippled Chll-
dren is plainly authorized to so bind the corporation. The
regional operation of the Shriners Hospitals for Crippled
Children within the states of Texas, Arkansas, Mississippi
and Alabama meets the statutory requirement that the region
shall comprise not more than five contiguous states, either
in whole or In part, one of which is the State of Texas.
     In Attorney Qeneralls,Opinion No. W-1141, the following
statament appears in connection with the proper construction
of the statutory provision hare under consideration:
           II   .The Legislature did not see fit
         to pr&ide any yardstick for measuring the
         amount of baneflts which this State should
         receive from the charitable organization
         operating on a regional basis; yet it Is
         avident that tha Legislature did not intend
         to accord an exemption for all charitable,
         bequests, devises or gifts since this regional
         axemptlon provision is limited to regions of
         not more than five contiguous states, either
         In whole or in part; one of which is the
         State of Texas. Therefore, necessarily the
         statute contamplates that this State receive
         some teneflt bafore exemption will be allowed
         . . .
     The “benefits tast” established by Opinion No. NW-1141
as determinative of exemption has been mat in this case by
Irrevocably committing the devise In question for the use
and benefit of the crippled children of this State. You are,
tharefora, advised that the devise Is exempt from an inheritance
tax.

                        SUMMARY
              A devisa to Shrlners Hospitals for
         Crippled Children, a Colorado charitable
         corporation, is exempt from an inherltanca
         tax undar Article 14.06, 20-A, Tax.-Gen.,
         V.A.T.S., by vlrtua of the corporation’s
Honorable Robert S. Calvert, Page 6       Opinion No. ~~-1160


          regional operation in the states of
          Texas, Arkansas, Mississippi, and Alabama
          and by its irrevocable commitment of the
          devise for the use and benefit of the
          crippled children of this State.
                              Very truly yours,
                              WILL WILSON
                              Attorney General of Texas




                                    Assistant
MMP:lmc
APPROVED:
OPINION COMMITTEE:
W. V. Geppert, Chairman
Henry Braswell
Tom Burrus
Linw~ardShivers
REVIEWED FOR THE ATTORNEY GENERAL
By: Houghton Brownlee, Jr.
