OFFICE OF THE ATTORNEY GENERAL _ OF TEXAS
gonorab1.e Gee. EL shepperd
coag3t2olltir of Publio looounts
m&R, Taxan
pIIsr sir:
at&of’ B des%h. The trullt
, amaw Ln Tami, rttaokti an6
atocico 8ria bond8 kr eorpor#iiona
E than Tmum, Unitad tstatqr Umvmrxaenf
‘bonds, nrunioQal bwiA# OS olti.8 ouQ-
ountr) bonda, an& a debt 6&e the s~tak
utsida OS I’(IZ(LIJ. Thi rwt:r2cster or
xoept acme of the Twarr reouritier) wwa
ofmseloa of R bmk in wt Pork ror oonuetl-
wh.3~ th8 bhet0nOe tax rOp0rt rap the chde8 a.
Jonss estate was filed recently, ths stocka wad bon&? of eor-
poratlons organl%e& in mteter other thm To%&4 United t3tatss
Uovermwnt BoMs, Fw3em1~ Land Bmlc bonda, a&oipal bon& of
cities outside of Texas, forsign oountry bar&a, on6 thhe debt
due the estate by 6.dubtar reaidfui; outetao of Texmi wafo
OrPitted fran the ~rpert.
555 i.
gomrable Qco. K. Sheppsrd - Pa&o 2
Your dqmrtunt haa taken the riolr that Chsrlm Hf.
Jonas* rntlrb 5 par cent intcirat ia the Korgsn Jone~ satats
is subj4ot to in.&wrItanoe tax, rqywdless of tha QomIoIle OS
tbtl corporation whlah Issued tba bonds and stooks, and co-
gsr6lers or tko physIoa1 Aoobtion of tha certllIoatsa or other
svidanous of ownership, UUQ you roqueet our 0&85on whsther
t&l8 poeition 1~ sorrtli9t.
The rd.mhg la witiportlmnl portion or Art1010
7117, v. a* c. 3.8
*all projmrty within th* jurIs6Iutioa or thin
st8to. real or personal. oocpornts of incorporats,
and any intsrrat thuxoln, . . . . whetbar balonIckrg
?a lRhRbltRnts Of thi8 f.itat*or Eo rsonr who axe
not inbsbitanto ra&ardlasL Of whe tr @r such proper
is l0o*ted ni do or without thIr state, whIoh ash3
~88 abrolutsly or in tru&t by will or by the lam
of do8oant or dlotributlon . . . l &m&l, upfm pa+
ofnc; to or ror the wo of any por80u, corpoxatlon,
or ar8ooIattoa, ba mbjeot to I tax. . . . u
The question of Jur5sbiotioR to tax pa%&rty, both
tangible anil intnn&blo, h8r been tha aubJa@t of #uoh &tm-
ous8iw by tho oouxts, md irm t5aa to tba tic prdros 00
wh%oh auoh Jurladlotiim mya baa.8 hate been ohmgod. WmUy,
la ourxy 1. MoCanlos8 (1939) 307 Lr. s* 357, 63 L. Bd. 1339,
59 3. Ot. 900, 123 A. L. il. i62, jurisdlotlon to tax lanfl,
tenglbla parumlty and lntaneibls rsonalty was pleoed
rpuerely on ths prataation or banaf r t throry of taxation es
oorrelated with the oontrol of the laws of the psrtioular
statu ovur th0 thine ox prr8on taxed.
In Curry T. &ooCrnlom, dooedunt, a rosidant of Ton-
nwmm,. tranrrerred oartain stoek8 anC bonde to ‘an Alabama
trust oorporation by truet Sndeatun, rssclrving the inoarrul
for Use, tnu powrrr to rimovo the tru#Eae and substltuts sn-
Other, the power to dirooc sale and investment of tha trwt
ropwty, crnd the powsr to dispose Of the truet Bststs by hmr
Past will. anC tcrstamant. tint51 d%%%dmt’%death the srldencnr
Or the intmeiblwa wwrelosetafi 51i iU.sbsnui sod thti trust oar-
poratfw edmb5aterud tkio trust tn that stat%. nt her death,
dsoctdent urrrrclaisd the reevrved power or +smt&wntorg dispo~+
tiOA, kad bequenthed the LnrPt &TQ&W?tY to thu Sami trustsct,
J
but ohangQ(LW&i original trust indmtura a8 to awunte end eatutaa.
Deodsnt S'urther aypolntcra T~a~888Qa and Alabaa@ trust c~mpanioa
&cutorU as to the propaftioawhioh ahe might own anb havetbe
right to Cuapoao of by will k ths rtrrpwatlva atate&. The exQw-
tore brou&t suit i&the ohanaery eowt of Tenneaau agalnati the
to% oftiolal8 or Rlabama tad Te.mes8eeDraglng for a Qaalaretorg
ju~nt to 4eteiaUs the portl(3ae of the artate taxabl+ by the
napaotfvo atat88.
m0 8th WU.Xk th88RUathat the dU8 p~008~ 0~8U88,
au t40wbrutta by pcerloua0asea in the aupw* Court (rarmr8
tazlng thu trumfer and that ON or t&e ethw ha& to be aaloatd
sr tha lltua of.th8 intan&blra. Tha &%pruae Court, tn u1
oplnlon by 36#u held Ohat botkA1abppI and Tonnaasor had
~urlaaioblQn, utlL5wl bg PUB pxQcrrr, to l8pQre a cloa6h 68x
OR traRarar or 6h4 tnt4la&1b198. airtrbi001Qn 60 68x W&8*@aa
M the p;poteotiMor budit theory. Hawmrar,tan(blblo an4 in-
tanglbla porsaralty uery 4iotlngulahad 0.0 the gxound that in
the oeae or the forrscrr oontrol oopld b8 8xwtad 0181: am3 pro-
to o tiQnlisorQra to the pbpalealalJag, uhm.8 * the oaae 0r
the latter the aourt aaid (307 U. 6. at 369)~:
“Vw?g U!ferbnL couddoratlona, both th~oretloal
.a& praotlomi,app4 to tblv tautlon or lntas&blerr,
that &a, rights whloh are not rrlabo4 to phyalraf
thinji. Swh rlghtr UF* but relatlctaaU~a batwean
pa~~ona, na6ural or uo+arat%,u&&oh the 1mu ,raooq-
nine8 by attaohix~g to t&a,nroortala maotiono canfotea-
lb & in owrta. Tha gowar of ~ovammant Qvlr thea
and rho proteotfon whioh lt slvaa thoa ouaad~~,bo
rxartml throw oQxitro1 of a phyalwl thing. They
ma ba made effrotivc only thxoggh oontrol QVW and
pxot@otlon affor4od to thoaa pereoaa whoa% relation-
f&i&t@ are tha origin of t&m ri@ha . . . .
* . l . .
*& ir e, fo r r esa o na o f her a wn the teatstrir,
althou@ &mleLleB ia Tonnsaaer en a l~joy&g bhe
benerita Qt it8 1~8~8, found it 84vantegcow to orsat
a trust of lutanglblua Ln ldd+ama by veaLlag legal
01th to the $ra$a&dblea end limiteb pOwern Ot oon-
trol over them In ~lsbsnra. But she alw provi&trd
t&it by resort to her powar ‘to dl~rpoau @f proprilrty
by nlll, conferred ;?DOU hur by the li:w of tha &ml.-
atle, tii~ truss% cou.l.8 br;bem.inated mih the proptrrty
pit88 uafir tka will. she thus oreated Lwo cuts of
lag81 rolatloP&hlpa reaultiry;tii dlatlnat. lnteqlble
.i&hto, the QDB oabodiad in tha lee1 ornwrrhip by
the Alabama trustee of the intangfblrs, the other
omboalbd iA the opuitabla right Of tha abObd8nt ta
oontrol the notion or the truatee alth rriepeot to
the trust property and to oompd it to pay over to
her the irlooes aura her iirc, and in her power
to Qlspoao of the property at Qoath.
" . . . .
“&he naoss*erlLy invoked the crld or the law Or'
both atates, ani¶ hor logateoe, before thay 0~1 aoIour8
Ona @55Qy thb benefit8 Of 8UOOb88iQR~ 0Wt bVOk6 ths
law Of bat&."
It la evldant that the L.cgal ownership of t&e AI.80
bai!ka truakt, we0 baffiolant to Jurtlry th8 impQrition of,a
train that atata.~ ~bven under the old ,idra Qf loealielng of
ixsta~&bl#lr, it met be oonosd~Q, an did Butlar in hi8 din&ant,
that Alabaa ha& thr $irisdiotlon to tar on the bsaia of
*buaineaa aitua.w
A si.mlhar rituatlok *au prsafmta~ in Qravbs vc islllott,
307 u. 6. 383, 83 L. &CL 1356, $9 ii. ct. 913, and the Jiirlsdio-
tiM Of the St6k *rhiQh W&8 talc slitUe Of thtt tl%Qt, tO,taZ
wan beyond gwatl~n. 50 ala0 la rr dam of prfaprty taxi 3928
Dttpoalc an& Tru8t Co. VI Ylrc;.icls, 280 LT. S. 83, 74 L+ &I. 76,
Y. ct. 59, 67 X. 3.. it. 386, &a al8.0: 18 Taxen Law Acavkw
$6.
The QsOtWtion, btnofit alid OORtTOl theory Of taXa-
tlou of htwglblea was reafrirawd by tiha Lupraew Court in
&t&o TQX Coliwisaion of Utah v. ~xldrlch, 316 U. j. 174, $6 l..
id. 1358, 62 3. dt. 1008.
$0 here, Chrrrlae 11. Jowe* lntc;rest in thy Wrgan
Jwirro truet is taxab1s under aithar theory. Thhe truut 0~s
its exiatanocr to th-i law3 of t&r:stat6 0P T~omm. T6x6a law
t