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Exhibit 3.2
[LETTERHEAD OF PAUL, HASTINGS, JANOFSKY & WALKER LLP]
November 8, 2000
Salomon Smith Barney Inc.
7 World Trade Center
New York, New York 10048
Re: Tax Exempt Securities Trust, California Trust 179
Ladies and Gentlemen:
You have requested our opinion as to certain California personal income tax
issues relating to Californian Trust 179 (the "California Trust") of the Tax
Exempt Securities Trust (the "Trust") sponsored by Salomon Smith Barney Inc.
This opinion relates solely to the California tax matters described herein.
This Firm has also rendered a separate 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 August 30, 2000 and proposed form of Amendment No.
1 thereto which is expected to be filed on or about November 9, 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; and (3) a draft of the Reference Trust Agreement for
the Tax Exempt Securities Trust , California Trust 179, dated November 8,
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").
Except as otherwise
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defined herein, capitalized terms used herein shall have the same 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 distinct entity with separate
certificates, expenses, books and records, and the assets of one State Trust
many not be commingled with the assets of any other.
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 Internal Revenue Code of 1986, as
amended (the "Code"), certain provisions of which are incorporated by
reference under California law.
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/ Paul, Hastings, Janofsky & Walker LLP
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