*1 OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN

Iionorsbls c . H. c.aYnesa State Auditor

Auetln, !l'ex4m

Dear Sir:

e OS yow.ppohlem olved in ita aolu- the pragptPesa of eratlon of your re- Foundation for oorporatu?rl, a State, for the eaw.Pias end 1, aa proper* es of the X&d- ty, and other hospIt& builm or buildings La the City Oi ml- veston in oonneotlon nlth the John seely xospital and the endannenfthareof, fwtheuse ofthepeopls of the said City of Qal*eston, by prov~d.dlng; thein wfth *2 Hon. c. 3. cavness, Page 2

the naaessary mediaal mre atxI attention therein, the legatees u&der the will of the estate OS John S~ly,dea~sed,~eclohotthlrm,beandarahe~- by mlleved and ralsesed from payment of taxes pro- vided for ln Chapter 5, Title 122, Revlsad Statutes of Texna, generally known a5 Inheritanoe lkxer, and the state c0mptr0iiOr and the 'pax c0ut0t0r or (ki- VestonCountyantheMbO~~andd~u~not to oolleat or l ttaapt to oolleot auuh tax or tame, whloh ta%ea if not ao hereby relsaaed vould be par- able outofthepart; ofhis eatcstedetiaedaxx3ba- queatbed by said Scaly to said Foundatian, and pro- vided, however, that the City of Oalventon ahell not thembybs releasediropIanyobllgatloninorundar a oertaln lease of said Yoba Scaly Hospital, exe- outed by the Board of Regents of the Rnlvarsity of ~~,PithsaZdCity,datedthc9thdayoi~y, .

"ssotion 2i S8Qtio&1lmwof8b6il3 beeoslevoid unlsaa the "scaly end smith Rotrndsts.on ror the John ~~Hospital*hau.sithin.sir8onfha~~~rfhs palream. ~#. tU:A& enter rat;0 M Bap?e#osrrt with the 'Road a? Rego&ii af: the lJamm#ity of sxm)~ a orgy whereof mrt~ed aa a em otspyby fh8 P.yMeat.0~ the~U~&veraitj of Taxas&all be~fU.ed wltlt ~tbo t3awMry of St&e wbamby thk-sea1y and SndthFounb*tionfar~o Johealy Eosp~talrball : agreawithaai+3BoaMoilbgent~to8q$reg*toaad a~t,apartpmprmty;ort?wprWWl8thaPaof,ar aaah, orpewt~prqw$y~~lycruh, ts.k l grW .t@ w~~,duid be$v@ea’~Wd‘Fbmda~iqa &ad .$l.w t,a of 8 raltM aQAak.to m - " Mid Re i !l%oudy$~;00.c?3) Dolkr?r, thr eatmtsd amount of taxm w.bymd~'~:#l&xtlaq 1 hewcand bywhlah said PoundatLom.~eWLl;rgrWto~keop auah p r o pwty aqwato fr on it* eth er l wta o r p r qmty and to we thr 3x&o ome th eram lalaler th e dlrmtion and rith tha ajqmval al. ,s*Zd~Regwita fo r U;ra Yeha sea4 Htmpitnl, twaay a@dltluna thqroto .m .Bullw t0 be wed in OUIIUW**~~WWL~,~O~ r0p* 0f th0 purporer 8pecitied.b tkb lKll1 of a4d.d Yoha saalr. T& sum htWeby rerd.tt8d &Q.l ;pbrpsourl~ b Uadm' *3 Hon. C. R. Cmmess, Page 3

the joint oontrol of the Board of Regents of the -- Unlverslty of’ Texas, and the Sesly and Smith

Foundation to invest and reInvest the prooeeas. Approved, Ootober 1, 19Z6.n

we have aneertained that the 0ondlt10w oontalned in Sootion 2 ol= the Aot vere met by the Foundatlan and by the Boarrl cURegents oqJanwrp31,1927,endttuttthm fund thus orented haa alnoe been admlnlstered in aooordanoe v%tb the pro- of the Bat. vlslonn

Although the Aat speaks in temna or u *release* of lnherltanoe tuxtar, we are or the optnion that the Aot 88 a whole does not agotmpllnh a relaese OF rmn.laeIon of t&see, and henoe t.b&t the Aot doe8 not run afoul or those ~OVISIOM or oup con- atltutlon vbloh problbLt the rsmLaaion of taxes. ,%&ion 1, the Section whIoh purportedly "re3mwes" t&m tmcos, cm&.& an a gMatiqf$nat*,baps beocme affeatlve oq@vhsa $700,ooo,

the. 08tba&Od OBBwmt .W tUce# releaSea .bpSeetlcm la, ma ret aaldetwLsrthe.teras andeol@it~ ou30otian2. state&dir- rdiy, agy eh5m.t of l .,~release wueh d.gbt have be& bhorsat in the~operathn of sSoW?nlvas lmedZately~crfmntsr-balaaoed by the aeg2yga$am of a aa #@d@.od ag "the e5tinurtt$d ylox$or ~t*rsd. *,kr;r&j." bj,~:-.,;Ebof&&

we huve bee@aJlmmd by reprssentativeu of the

"thmthenmountof mmhliab$li~~. ,Comidmed asavboM, the Aot IS en appreps?Utioa a@6athar &lam a mleaae, an apprupr.lation fs the aaanner.and for the purpeses~nt.sted in sootlen 2'aereof. It remains to $0 seen ~wlmthes the Iagi.slature poilass8ed the power to mnke an appf@H.atton or ttrls kWd.

Hon. c. FL cavaeua, PQge 4

Hon. c. H. CaYne5s, Page 5

A8 stated in the Aot, the Joha~Sealy Ho~pltal is, amlwaaattketims o?thepssssge o?theAat,oumdbythe 8tate OS 2ema and wed ior olintoslpurpo5es tqths.vledioal lJehoo1 of the University of Tsxaa. Sindlarly, M have aaoer- talned tlu%ttkobdldiage inoormeotionpith tkeXorrplt&l are and ware wed HOP 8duoutiowl purpasea by pai8 sdmol. It is alem, wo fool, the lfospital aad its attemlant buudlnge thut 'govezmmsntslpurpose" o?the State,ati that nrewedfora tiQum8tionare au- ?Poathe lnrm?#e Ofthefwd eixpauttuw thmlmA 6aly in oonneotfon vith and in the ?urthmanos of such purcporre.

SeetIau 51 of Artl~le III of our C0nstitutks.n pmnr¶Aes inpartanfollwa~

*iOn vita fbe lneening of the l bov6-Quoted af.wtt~ tutioztalpwMslon.

HOL c. H. Cevwss. page 6

Thus, although the lZtem1 wm&g OS the constitution problblts all granta to a munLalpt31 OT other eorporatlon, our aourte have, with respsot to munloipal and political oarparetlone, intOPpl’8tOd this ~OV&SiWl 80, pl’Ohibiti.?i& Otis those gP&UtS vhicrh are not for 8 gfxern;wtntul purpose. That a similar lnterpsetetion is applicnble to private obarltable oorpoxations of the type under dlsousaioil is lll.~lat??ated by the eme or conleg v. naughtem of the Republio, 1% 3. W. 197, I57 S. I?. 937. muler th8 ?8miller sects of ws eajgse t&3 3it6~te ptlrobaeed the Alamo for the use and 0nJoyment of tbe people of lexa~, and, ardw le~elatlve dlreotion, the govwnor deliveeed .&.ob property to the eurtody and owe of the @wghtera of the Republlo o# 2exen, a

gam,“‘roP edtist1ow1 purposei, xa

le&elature, the Court, e?tsr ststlng 0r the ~Stiato over it8 pmpe~y, atstaluded~

Although not Uwol aprivate osrijor~tlon theokiraa Of Icing Y. shep?@i?d, 157 8. 682 (OrPor P4fuaeddf thP@w addltiOaalll.@t ap0nthiaprObl~i IntiUa ~&Seth0 fWIitent1~ wea nmde that the abws quoted oaoati~utlaaal pzwvbbn prohibited the stute froa over; the title, oqo and owtouy of stof6 lad to the Hat Servfqa of thb%dnval Oapsrnrpsnt ?or we en a Riltfonel PaPk, In is j~otlng thitr“‘aicIltentto tha court quoted ?rom8n&adopted the 0 iaieno? the cpeariea~ee 4qreme CotlPt in Halme 01 Peay, 159 !karh 3El, 17 8. W. ,(2d) 901, aa~ s0nm8

*Woreover, a traaefer of the title to landa S&m *7 HOII. C. H. CsameSS, Page 7

Maa United States. The paeel.ng of thle property From one government; to the otitar tivolwie no I.osa to the citizen or taxpayer. The o3ajeot of the uon- trt cl. invoked wa3 to prevent a loss t0 t&

its cP0dl.t. Bere not only can no loss result, but the sttits. OOX33%deFed 830 a pOliCloa1 Sllt;tty, i3 re- rights tmd privileges of tbfs gr be presoxvsd to the people 0,' Teriue3see.I "We tM’;I..‘.k this decision is souzd and shcxld be rOu0vtsa as the law of thi.3 aa3e.” @@233ie added) We feel that the cumulative ei%ct of these deoi&ms is to demonstsste that the lMb,bitlons of' ScctLon 51 of Artlole III or the Constitution are oper&Lve only Vrzan the grant hy the State ie, or oan be;a diversfan of State property ux Sunde to nonqwJPnmenta1 purposea. Conversely, so long as the it is itma gmrnmerital prpcse;sdl haa onlybe used $3~ auohpur- pow, we r3w that this SsctQJn is Lnopexative.

Iit the iIL3tSat 81tUZtfiOfL, the Se?il~.+nd iSslit& Fwnda- tion is but 3 joint 'oustedfan of the fund ,in *ehtlciti, posaas- ;Lz ast ort3y the povero of a jolnt trustee with qwspoot to

Xarsover, the Fo?andatlan aray expe& auoh faoa oalo for g& ental purpoeea a& nosy mke suoh srpe&l.tw?es only under the dirootlcn a~nd tith the appmrel OS the Btxzrd of Xsgenta cr Texea. In au& a sftuatly the eppzwpx$a- o? tha lJla-5rslty titan 2;~th.s Lsglblature connot be said to be a gratuitous do- n&ion to a corporation. Retither oan it be se&d that the spp&'o- pxistlozi dlvcst% tha ciblsfm and tazpqem 09 !k.as of the r@ht or use 0r th3 furd OF fv4pal.m tb3f.r bsneitoiel rights theveto.

Under ths teme oi the 8 propxiatfon, allo p3avl.l.ege8 of the State titb respsc to the iuad are e pruaerved.

Apart trOm Chh, mttera herotoiore d%smssed, we 48~ peroelve no smlous qusatfons vMah al&t be mLsed agaC%st the oonstitutionality of the Act urrder dlsoussion. Cvtly, PU are wspeotfullg advfaed that the At& Is Ln all wap v?Ciid and oonstltutional. !l!hLo oonalu8ion renduP unasaesaary an 811lR7yn to your iaquLry as to the titwe of the aotion whiah ehould be tabn lf the Aat were to be i%%Id u!momtltIltio~~.

Hon. C. If. Catmess, Pegs 8

lbu8tln.g thet the foregoing iully answers your lnquiky, ue era

Your0 very truly