The opinion
Honorable Robert S. Calvert Opinion No. M-15
Comptroller of Public Accounts
Capitol Station Re: Constltutionalltyof
Austin, Texas Article 14.0’7(2),Ch. 14,
Title 122A, Taxatlon-
Dear Mr. Calvert: General, V.C.S.
Article 14.0'7'(2),Chapter 14, Title 122A, Taxatlon-
General, Vernonls Civil Statutes reads as follows:
“(2) Resident Decedent. In the event
a resident of this State dies, leaving any
estate subject to an Inheritance tax, situated
partly within and partly without this State,
the Inheritance tax Imposed upon the share of
any beneficiary of said estate situated in
Texas shall be a tax which shall bear the same
ratio to the amount such tax would be If his
entire share and Interest were situated In
Texas, before allowable beneficiary deductions,
bears to the total value of such beneficiary's
share In such decedent’s estate, wherever situ-
ated, before allowable beneficiary deductions
are made.”
We quote the following excerpt from your letter re-
questing the opinion of this office on the constitutionality
of the above quoted statute.
"Our Interpretationof the provlslonb of
said Article Is calculated as follows:
Gross Estate 'WhereverSituated $115,486.14
Less: Funeral and AdministrationFxpenses.
Debts of the Decedent, Mortgages
and Liens
Net Estate Wherever Situated
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Honorable Robert S, Calvert, page 2 (M-15)
Gross Estate Situated In the State of Texas $ 32,806.14
Less: P;;centagedas follows)
.
,'+Bb.14X $458531.57 - 12.935.52
Net Estate Situated In the State of
Texas $19,8?‘0.62
, a niece of the decedentJ Inherited
e total net estate.
Net Estate Wherever Situated
Total Texas InheritanceTax Due If Entire
Net Estate Was Situated In the State of
Texas $2,447.73
Percentage of Net Estate Situated In the
State of Texas
.2841
Total Texas Inherlta m
You state that the attorneys for the estate take the po-
sition that the provisions of Article 14.07(a) are unconstitutional
under Section 1 of Article VIII of the Texas Constitution. You
further state that the attorneys also refer to a regulation In the
Comptroller'spamphlet (entitled "InheritanceTax and Federal Es-
tate Credit") at page 20. This regulation states In substance
that the State of Texas does not impose an Inheritance tax on real
property of a Texas decedent If It is located outside the State.
With regard to this regulation, you state that It was correct under
the old law but "this regulation is now obsolete and was lnadvert-
ently left In the pamphlet when House Bill 1182, Acts of the 59th
Legislature,made the changes In our InheritanceTax Law. A new
printing of our pamphlet will omit this regulation."
The brief which has been filed by the attorneys for the
estate further challenges the efficacy of Article 14.07(2) on the
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Honorable Robert S. Calvert, page 3 (M-15)
ground that the caption of House Bill 1182 Is defective.
Another defect Is alleged as follows:
"Article 14.07(2) Is defective since
the application of such statute requires the
calculation of two unknown factors In a four-
factor equation. Such defect Is apparent when
Article 14.07(2) Is compared with Article 14.07
(l), the Immediate next preceding statute. It
Is obvious that the phrase 'as the total value
of the beneficiary's share of the decedent's es-
tate which Is situated In Texas' was left out of
Article 14.07(2), and that such phrase must be
Inserted Immediately next preceding the phrase
'beforeallowable beneflclarydeductions' before
the calculation of any tax Is possible."
Article 14.07(l) reads as follows:
"(1) Non-resident Decedent. The ln-
herltance tax Imposed upon every beneficiary's
share of the estate of a non-resident decedent
shall be a tax which, In amount, bears the same
ratio to the entire tax for which the beneflcl-
ary's Interest would be liable If the entire es-
tate were situated In Texas, as the total value
of the beneficiary's share of the decedent's es-
tate which Is situated In Texas, before allowable
beneficiary deductions are made, bears to the
total value of the beneficiary's entire share In
the estate of the non-resident decedent wherever
situated, before allowable beneficiary deductions
are made."
We shall first pass upon the constitutionalityof Artl-
cle 14.07(2). We think that the decision In
S.W.2d 593 (1934), a Commission of Appeals 0
the Supreme Court, disposes of the contention that the pro-
visions of Article 14.07(2) are in violation of the provlslons
of Section 1 of Article VIII of the Texas Constitution,requlr-
lng taxation to be equal and uniform. In s, the court held
that the provisions for different exemptions and percentages or
rates In the various classlflcatlonprovisions of the lnherlt-
ante tax statutes were constitutional. The basis of this hold-
ing was that Inheritance taxes are "privilege taxes"; and that
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Honorable Robert S. Calvert, page 4 (M-15)
since they are a tax on the right of succession and not on the
property passing, such classlflcatlonprovisions were valid.
Before reaching this conclusion, the court pointed out the
fundamental rule that where a statute Is susceptible of two
constructions,every possible presumption In favor of Its constl-
tutlonallty will be made; and such presumptionswill prevail un-
til the contrary Is shown beyond a reasonable doubt. The basic
principle of this case has been followed In subsequent lnherlt-
ante tax cases.
Under the reasoning of this declslon, we think It la
clear that the legislature may speclflcallyprovide two differ-
ent classificationsfor a resident decedent, making the classi-
fication depend on the location of the property of the decedent,
Even though such classlflcatlonresults In different amounts of
taxes, It Is no more discriminatorythat the classificationpro-
visions ba.sedon relationship to the decedent.
With regard to dlscrlmlnatlon,the attorneys for the es-
tate made the following statement at page 6 of their brief:
"Article 14.07(2) Is discriminatory
In character since a Texas decedent who
owns no real property outside of the State
of Texas is taxed at a lower rate than a
Texas decedent who owns real property out-
side of the State of Texas."
We think that the Supreme Court of the United States
disposed of this ar ument In Maxwell v. Bwbee, 250 U.S. 525
(1919). At pages 5t0, 541, the court said:
” , They finherltance taxesJ are
. . .
based upon two principles: 1. An lnherlt-
ante tax Is not one on property, but one on
the succession. 2. The right to take proper-
ty by devise or descent la the creature of
the law, and not a natural right -a privilege,
and therefore the authority which confers It may
Impose conditions upon It. From these principles
It 1s deduced that the States may tax the prlvl-
lege, discriminatebetween relatives, and between
these and strangers, and grant exemptions; and
are not precluded from this power by the provisions
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Honorable Robert S. Calvert, page 5 (M-15)
of the respective state constitutionsre-
qulrlng uniformity and equality of taxation.'"
The rule of Immunity from taxation by a state, upon the
transfer, on the death of the resident owner, of 'propertyhav-
ing an actual physical location or sltus In another state, does
not apply to such a statute as Article 14.07(2). This statute
merely uses the entire estate, wherever situated, In determining
the rate of tax to be applied to the transfer of property within
the state and does not purport to compute the tax with respect
to the part within the state on the value of the whole. Conse-
quently, such a statute IS not unconstitutional. 28 Am.Jur. 207,
Inheritance,Estate, and Gift Taxes, Sec. 270; Maxwell v. Busbee,
supra.
Maxwell also disposes of the due process problem. In
Maxwel1,thet.mt held that the fact that a state tax on suc-
cession to local property of a non-resident decedent la measured
by the ratio In value of such property to the entire estate, in-
cluding real and personal property in other states, does not make
It a tax on property beyond the jurisdlctlonof the state and Is
therefore not violative of the due process clause OS the Fourteenth
Amendment, At page 539, the court said:
"It Is not to be disputed that, con-
sistently with the Federal Constitution,
a State may not tax property beyond Its
terrltorlal jurlsdlctlon,but the subject-
matter here regulated is a privilege to
succeed to property which Is within the
jurisdictionof the State. When the State
levies taxes within Its authority, property
not in Itself taxable by the State may be
used as a measure of the tax Imposed. rnls
principle has been frequently declared by
decisions of this court. In the present
case the State imposes a pkklege tax,
clearly within Its authority, and It has
adopted as a measure of that tax the pro-
portion which the specified local property
bears to the entire estate of the decedent.
That It may do so within llmltatlons whSch
do not really make the tax one upon property
beyond Its jurisdiction,the decisions to
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f
Honorable Robert S. Calvcrt, page 6 (M-l5j
which we have referred clearly establish.
The transfer of certain property wlthln the
State la taxed by a rule which considers the
entire estate in arrivlni:at the amount of
the tax. It 13 In no .;c::.t
z:cnr,e
a tax upon
the foreign property. ~e;ilor personal. It
Is only In Instances :nerethe State exceeds
Its authority In Imposing a tax upon a subject
matter within I's jurisdictionIn such a way
as to really amount to tnxlng that which Is
beyond Its authority, ':hutsuch exercise of
power by the State is .leldvoid. To
say that to apply a different rule'rig;latlng
succession to .,sldentand nonresident de-
cedents la to levy a tax upon foreign estates,
Is to distort the statute from its purpose to
tax the privilege, which the statute has cre-
ated, Into a property tax, and is unwarranted
by any purpose or effect of the enactment, as
we view It."
In holding that the equal protection of the law clause of
the Fourteenth Amendment was not violated, the Maxwell case further
declares at pages 541 and 543:
"Equal protect&on of the laws requires
equal operation of the laws upon all persons
In like circumstances. Under the statute, In
the present case, the graduated taxes are
levied equally upon all interests passing from
non-resident testators or Intestates. The tax
Is not upon property, but upon the privilege of
succession, which the State may grant or withhold.
It may deny It to some and give It to others.
The State is dealing In this Instance not
with the transfer of the entire estate, but only
with certain classes of property that are subject
to the jurisdictionof the State. It must find
some rule which will adequately deal with this
situation. It has adopted that of the proportion
of the local estate In certain property to the
entire estate of the decedent. In making classl-
flcation, which has been uniformly held to be wlth-
In the power of the State, Inequalitiesnecessar-
ily arise, for some classes are reached, and others
omitted, but this has never been held to render
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s .
Honorable Robert S. Calve&, page TV (K-15)
such statutes unconstitutional. Beers v.
Glynn, 211 U.S. 477. This principle has been
recognized in a series of cases In this court
. . . It has been uniformly held that the
Fourteenth Amendment does not deprive the
States of the right to determine the llmlta-
tions and restrictions!lponthe right to ln-
herlt property, but 'at the most can only be
held to restrain such an exercise of power as
would exclude the conception of Judgment and
discretion, and which would be so obviously
arbitrary and unreasonable as to be beyond the
pale of governmental authority.' The
Fourteenth Amendment does not dlminl~h'thetax-
ing power of the State, but only requires that
In Its exercise the citizen must be afforded an
opportunity to be heard on all questions of lla-
blllty and value, and shall not, by arbitrary
and discriminatoryprovlslons, be denied equal
protection. It does not deprive the State of
the power to select the subjects of taxation.
But It does not follow that because it can
tax any transfer (hatch v. Reardon, 204 U.S.
152, Pjq), that it must tax all transfers, or
that all must be treated alike.
"The question of equal protection must
be decided as between resident and non-resident
decedents as classes, rather than by the lncl-
dence of the tax upon the pnrticular estates
whose representativesare here complalnlng.
Absolute equality is impracticableIn taxation,
and Is not required by the equal protection
clause. And lneo.ualltien that result not from
hostile discrimination,but occasionallyand
Incidentallyin the appllcatlon of a system
that Is not arbitrary In It:;clanslflcatlon.
are not sufficient to defeat the lava."
Maxwell was concerned with the validity of a statute
which dealt with non-resident decedent; differently from
resident decedents in determining the amount of the lnherlt-
ante tax. In 14.07(2), we are concerned with a distinction
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Honorable Robert S. Calvert, page 8 (M-15)
between resident decedents, said distinction being based on
whether the resident decedent:;owned property outside this State
a3 well as within this State. We deem thl:;difference In the
statute under considerationto m:kkeno difference in the appll-
cablllty of the principles enunciated In Maxwell. We therefore
hold that Article 14.07(2) In no way vlolatestkieFourteenth
iimendment.
Their contcntlon Is tliclt
the ::tateIs bound by its
error In falling to revoke OS cancel Ita prior regulation pro-
mulgated under the old :;tatuteand InadvertentlyIncluded In Its
publlshed booklet entitled "InheritanceTax and Federal Estate Tax
Credit State of Texa:;1965." However, It further appears that
there has been no administrativeor departmentalpractice, construc-
tion, or Interpretationapplying the statute in such a way as to
omit real property of decedents in other states In determining the
rate of tax to be applied. Under such circumstances,we cannot
hold that the state is bound to its prejudice by such an error.
In any event, it is well settled In Tcxaa, and elsewhere, that
the state does not lose Its right to taxes by reason of lathes,
estoppel, or acts of negligence or inadvertenceof Its officers;
for It cannot bc thereby cut off from the lawful exercise of Its
sovereign powers. State v. Federal Land Bank of Houston, 1.60Tex.
292, 329 S.W.2d 847 (1 )- city of san 'arc03 v. Zimmerman, 3Gl
S.W.2d 929 (Tc~.Cl~.Ap~?~1$62 , error ref., n.r.e.); Schriver v.
Board of Com'rs of Sedgwlck County, 189 Han. 548, 37b P 2d 124
(1 b9j* Inhabitantsof Town of Milo v. Ml10 Water Co., i3 Me. 372,
-16; i.'lb3 1932). Institute for Trend Research v, Grlffln, 139 A.
2d 268 (195 ); Lekn' State, 2 S.W.2d 199, 200 Tex.Clv.App.
1951, no writ hlst.); North American Co. v. Green, 129 So.2d 603
(1959); Con;ol;;ate;Co. of Ne;.York v. Ct;tz Tax Commission, 261
N.Y.S.2d 7b [l 65 W lk Hi 1 C0. v. t d States, lb2 >'.2d
259 (7th Clr. i947 , czrtr%n. 323 U.S. 771.
The next contention Is that the title of House Bill No.
1182 enacted in 1965 Is insufficientfor failure to contain a
statement that the Inheritancetax was to be computed by lnclud-
lng real property of Texas decedents located outside Texas. This
contention is further buttressed by a statement In the title, where-
in It Is recited that the act is "levying no new taxes." It Is
thus ultimately contended that the statute should not be construed
to change the prior laws and administrativeconstructionthereof.
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Honorable Robert S. Calvert, page 9 (M-15)
The caption of House Bill No. 1182, Acts 1965, 59th Leg.,
p. 830, reads as follows:
"An Act concerning payment and admlnlstra-
tlon of the InheritanceTax; amending Chapter 1,
Acts of the 56th Legislature,Third Called Ses-
sion, 1959, being Chapter 14, Title 122A, 'Taxation-
General' of the Revised Civil Statutes of Texas, as
amended; providing for a new Article 1.032 to Chap-
ter 1 of said Title 122A (DeficiencyDetermination
and Redetermination);repealing Chapter 15 of said
Title 122A; repealing that part of Chapter 192,
Acts of the 43rd Legislature, 1933, as amended,
being Article 107a and Article 107b, Vernon's Anno-
tated Penal Code of Texas (InheritanceTax Reports)
and Acts 1923, Second Called Session, page 67, being
Article 140 of said Penal Code (InheritanceTax
Reports); repealing certain Articles of said Chap-
ter 14; making no other changes In any other Chap-
ters of said Title 122A and levying no new taxes;
providing a savings clause; providing a severability
clause; providing for an effective date; and declar-
ing an emergency."
It Is apparent that the statute not only repealed Chapter
15, but also amended, revised and changed Cha ter 14, adding
some new provisions, lncludlni Article 14.07(27. The effect of
these changes was to create a new statute sub ect to a new construc-
tion. 53 Tex.Jur.2d 136, Statutes, Sec. 90, $2 C.J.S. 411, Stat-
utes, Sec. 243. Where the legislature has Incorporatednew matter
Into the statu'r;e,
or has changed the meaning or application of
previous laws, the addition and changes must be given effect.
American Indemnity Co. v. City of Austin, 112 Tex. 239, 246 S.W.
ty;g2ff922]; Gately v. Humphrey, 151 Tex. 588, 254 S.W.2d 98
An amended act is to be construed as If the original stat-
ute had been repealed, and It will be presumed that a change In
the law was Intended to which the courts will give effect. Amerl-
can Surety Co. of New York v. Axtell Co., 122 Tex. 166, 36 Sn
(1931).
While the matter of the computation or measure of the tax
was not expressly mentioned In the caption, It was not necessary
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Honorable Robert S. Calve&, page 10 (M-15)
to do so because the title sufficientlyIndicates the general
subject of the act and gives sufficient notice that a substan-
tial change as to Its provisions for application and computa-
tion may be expected.
A liberal constructionof the title as a whole must be
given, and every lntendment In favor of Its constltut.:o~;l;y
and every doubt must be resolved In favor thereof. . . .
3 7, Statutes, Sec. 220; Gulf. Ins. Co. v. James, 143 Tex. 424,
1i 5 S.W.2d 966 (1945). Such rules also apply to taxation, ln-
cludlng Inheritanceand estate taxes. 82 C..J.S.391, 393, Stat-
utes, Sec. 226.
The declaration In the title that no new tax Is being
levied simply means what It says. No new tax Is levied In that
the nature and character of the Inheritancetax as a privilege
tax has not been changed. Since the method of computation Is
held not to amount to a direct tax upon the decedent's property
outside I;hestate, we conclude that no new tax Is In law being
levied. Consequently,the title is not deficient In falling
to expressly mention that specific subject matter. 53 Tex.Jur.
2d 93-98, Statutes, Sec. 52.
Finally, they contend that Article 14.07(2) Is defec-
tive because Its application requires a constructionof reading
Into the statute the phrase "as the total value of the beneflc-
iary's share of the decedent's estate which Is situated In Texas"
Immediatelynext preceding the phrase "before allowable beneflc-
iary deductions." This becomes apoarent In comparing Article
14.07(2) with Article 14.07(l). However, such a constructionIs
reasonable and proper to give effect thereto and In rendering
the statutes harmonious.
In construing a statute, If a word or phrase must be
added to a particular part or section In order to carry out the
manifest Intention of the legislature,as disclosed by the entire
enactment, the missing wore?or phrase may be added. 53 Tex.Jur.
2d 201, Statutes, Sec. 138.
If two reasonable constructionsof a statute can be ob-
tained, then clearly In the public Interest, the construction
given the statute by the official charged with the admlnlstra-
tlon of the statute should be given effect. Yoakum County v.
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Honorable Robert S. Calvert, Page 11 (M-15)
221 S.W. 880 (1920).
SUMMARY
Article 14.07(2) of Title 122A, Taxatlon-
General, Is not unconstitutionalIn using the
resident decedent's entire estate wherever sltu-
ated as one factor In determining the rate of
tax to be applied to the succession of property
within the State.
Such amended statute does not levy a new
tax, and Its title Is sufficient to give notice
of Its substantive change In tax computation.
The State Is not bound by an erroneous or
Inadvertenterror In the promulgation of Its
regulations;and neither lathes, estoppel,
waiver, nor the negligent or Inadvertentacts
of Its officers will prevent the State from
properly construing or enforcing the tax stat-
ute.
Ve+q7truly yours,
Prepared by:
Marietta McGregor Payne
Kerns B. Taylor
Assistant Attorneys General
APPROVED:
OPINION COMMITTEE
Hawthorne Phllllps, Chairman
W. V. Geppert, Co-Chairman
Nell Williams
Gordon Cass
Pat Bailey
STAFF LEGAL ASSISTANT:
A. J. Carubbl, Jr.
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