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Exhibit 3.2
Brown & Wood LLP
555 California Street
San Francisco, Ca. 94104-1715
Telephone: 415-772-1200
Facsimile: 415-397-4621
July 19, 2000
Salomon Smith Barney Inc.
7 World Trade Center
New York, New York 10048
Re: Tax Exempt Securities Trust, California Trust 176
Ladies and Gentlemen:
You have requested our opinion as to certain California personal income tax
issues relating to California Trust 176 (the "California Trust") of the Tax
Exempt Securities Trust (the "Trust") sponsored by Salomon Smith Barney Inc.
Our opinion relates solely to the California tax matters described herein. It
is our understanding that Battle Fowler LLP has rendered an opinion, effective
as of the date hereof, as to certain federal income tax matters pertaining to
the Trust.
In rendering our opinion, we have examined and relied upon, among other
things, (1) the Form S-6 Registration Statement, as filed with the Securities
and Exchange Commission on May 19, 2000 (the "Registration Statement"),
pursuant to which you will offer to a limited number of investors (the "Unit
Holders") the opportunity to purchase fractional undivided interests in the
Trust ("Units"); (2) a copy of the Trust Indenture and Agreement, dated July
16, 1987, among Smith Barney, Harris Upham & Co. Incorporated, Kidder, Peabody
& Co. Incorporated, Drexel Burnham Lambert Incorporated, and L.F. Rothschild &
Co. Incorporated, as Depositors, United States Trust Company of New York, as
Trustee, and Standard & Poor's Corporation as Evaluator; (3) a draft of the
Reference Trust Agreement for the Tax Exempt Securities Trust, California Trust
176, dated July 19, 2000, among Salomon Smith Barney Inc., as Depositor (the
"Depositor"), The Chase Manhattan Bank, as Trustee (the "Trustee"), and Kenny
S&P Evaluation Services, a business unit of J.J. Kenny Company, Inc., a
subsidiary of The McGraw-Hill Companies, Inc., as Evaluator (the "Evaluator"),
incorporating by reference the aforementioned Trust Indenture and Agreement and
amending and supplementing the same (said Trust Indenture and Agreement and
Reference Trust Agreement being herein referred to collectively as the "Trust
Agreement"); and (4) the opinion of Paul, Hastings, Janofsky & Walker LLP,
effective as of the date hereof, that (i) the California Trust is not an
association taxable as a corporation for federal income tax purposes, and
income received by the California Trust will be treated as the income of the
Unit Holders; and (ii) each Unit Holder of the California Trust will be
considered the owner of a pro rata portion of each Bond in the California Trust
under the grantor trust rules of Sections 671-679 of the Internal Revenue Code
of 1986, as amended (the "Code") such that each Unit Holder of the California
Trust will be considered to have received his or her pro rata share of interest
on each Bond (which in the opinion of bond counsel for each such Bond is
excludable from gross income for Federal income tax purposes) when received by
the California Trust. Except as otherwise defined herein, capitalized terms
used herein shall have the respective meanings ascribed to them in the
Registration Statement.
The Trust consists of separate unit investment trusts designated the
California Trust and other named state trusts (each trust individually referred
to as a "State Trust" and collectively referred to as the "State Trusts"). Each
State Trust was created under the laws of the State of New York pursuant to the
Trust Agreement. Each State Trust will be administered in accordance with the
Trust Agreement as a distinct entity with separate certificates, expenses,
books and records, and the assets of one State Trust may not be commingled with
the assets of any other.
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Salomon Smith Barney Inc.
July 19, 2000
Page 2
The Bonds deposited in the California Trust are certain interest-bearing
obligations of the State of California or of the cities, counties and other
political subdivisions thereof, or of the Territory of Guam or the Commonwealth
of Puerto Rico. The Bonds will be held by the Trustee upon the terms and
conditions set forth in the Trust Agreement. You have advised us, and we have
relied upon the fact that, in the opinion of bond counsel to each issuer of
Bonds delivered at the time of their respective issuance, the interest on the
Bonds held in the California Trust is excludable from gross income for federal
income tax purposes and exempt from State of California personal income taxes.
We have made no independent investigation to verify the accuracy of such
conclusions and we express no opinion with respect thereto.
Under the terms and conditions of the Trust Agreement, once the original
corpus of the California Trust is acquired, the California Trust will have a
fixed portfolio of Bonds. The Trustee will not have the power to vary the
investment of the California Trust nor the power to take advantage of market
variations to improve a Unit Holder's investment, and the Trustee will have no
discretion to retain and reinvest the income or principal of the California
Trust.
Based on the foregoing, under existing California law applicable to
individuals who are California residents, we are of the opinion that:
1. The California Trust will not be treated as an association taxable as
a corporation. Accordingly, interest on Bonds received by the California
Trust that is exempt from personal income taxes imposed by or under the
authority of the State of California will be treated for California income
tax purposes in the same manner as if received directly by the Unit
Holders.
2. Each Unit Holder of the California Trust will recognize gain or loss
when the California Trust disposes of a Bond (whether by sale, exchange,
redemption or payment at maturity) or upon the Unit Holder's sale or other
disposition of a Unit. The amount of gain or loss for California income tax
purposes will generally be calculated pursuant to the Code, certain
provisions of which are incorporated by reference under California law.
We have not addressed, nor are we opining on, any federal income tax aspects
relating to the California Trust and, other than as specifically set forth
herein, we have not addressed, nor are we opining on, any state or local tax
aspects relating to the California Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement under the Securities Act of 1933, as amended, covering
the issuance of Units in the California Trust, and to the reference to our firm
in the Registration Statement under the heading "California Trust -- California
Taxes."
This letter is furnished by us solely for your benefit, and the benefit of
The Chase Manhattan Bank, as Trustee for the California Trust, in connection
with the Registration Statement for the public offering of interests in the Tax
Exempt Securities Trust, and this letter may not be relied upon by any other
person without our prior written consent.
Very truly yours,
/s/ Brown & Wood LLP
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