:
THEATTORNEIYGENERAL
.
OFTEXAS
WVILL WILSON April 1, 1957
A-rroRNEY GENERAL
366JLOaa
J&I&$% b&o
Hon. Zollie Steakley Opinion No. WU-77
Secretary of State YF- 2%3ei7 A5u=*
CI4622)
Capitol Station R4: Authority of the ofiice of the
Austin, Texas Secretary of State to accept
and file the charter of a pro-
posed corporation containing
a stated purpose clause.
Dear Ur. Steakley:
Your request for the opinion of this oft!ce !s in part
l e So llo ws:
“The opinion of your office Is respectfully re-
quested concerning the authority of thj~sofflce to ac-
cept and file the charter of a proposed corporation
containing a purpose clause stated as follows:
“‘The purpose for which it is formed ia to accum-
late and loan money, to sell and deal In notes, bonds
and securlties ; to act as Trustee under any lawful ex-
press trust committed to it by contract and as agent
for the performance of any lawful act; to subacrlbe for,
purchase, invest in, hold, own, assign, pledge, and oth- ,
ervise deal in and dispose of shares of capital stock.
bondqmortgages, debentures, notes and other securities
(as) obligations, contracts and evidences of lndebted-
ness of foreign or domestic corporations not competing
with each other in the same line of business; to borrow
money or issue debenture8 for carrying out any or all
Furposes above enumerated; but without bur)ting or In-
surance privileges or as authoriati by Article 1303bo?
the Texas Revised Civil Act of 1925.’
“I find the departmental construction of this of-
fice to have been as follows:
“a. That the Texas Business Corporation Act,
‘I.A.T.S.,Articles 1.01, et seq, does not apply to Ar-
ticle 1303b. V.C.3. corporationa under the exclusion
therefrom of ‘trust compan!es’ in Article 2.018(4)(b)
and Article 9.14;
“b. That Articles 9.14, 9.15 and 9.16 of the
Hon. Zollle Steakley, page 2 w-77
Buslness Corporation Act do not repeal Article 1303b
and Ft is my understanding that this office in past
administrations has accepted and filed proposed char-
ters with a purpose clause stated In the terms of Ar-
ticle 1303b;
“C. That charters have also been presented to
the office and accepted for filing with a purpose
clause In the terms of Article 1303b except with the
following Article 1303b language omitted: 'to act as
Trustee under any lawful express trust committed to
It by contract or will, or under appointment of any
court having jurisdlctlon of the subject matter, and
as agent for the performance of any lawful act."'
It is noted that the proposed purpose clause Is identical
In language with the provisions of Article 1303b, Vernon’s Civil
Statutes, with the exception of the addl,tionof the phrase “or
as authorized by Article 1303b of the Texas Revised Civil Act of
1925."
You state that your departmental construction has been
that the Texas Business Corporation Act does not apply to Article
1303b, V.C.S., corporations under the exclusion therefrom of
“trust companies” by Article 2.01 B (4) (b) and Article 9.14.
It Is assumed that such departmental construction Is based In
part upon the opinion of the Austin Court of Civil Appeals In
Carney v. Sam Houston Underwriterg 272 S.W. 2d 942 (1954, error
ref. n.r.e.) which held that a coiporatlon having broad and
substantial {rust powers Is a “trust company.” The broad and
substantial powers referred to seem to be based upon the phrase-
ology of Article 1303b, V.C.S., “to act as Trustee under any
lawful express trust committed to It by contract or will, or
under appointment $f any court having jurisdiction of the sub-
ject matter, . . . , which Is one of the purpose clauses author-
ized therein, and which 1s contained In the proposed purpose
clause set forth In your letter of request.
The Secretary of State Is entirely correct in his depart-
mental construction that the Texas Business Corporation Act does
not apply to “trust companies” by reason of Article 2.01 B (4)
(b) and Article 9.14 of the Act, and as a matter of law under the
Act the Secretary of State Is prohibited from approving a charter
or amendment thereto which would create a corporation with trust
powers. Since the proposed purpose clause contains a purpose
clause authorizing the proposed corporation to exercise trust
the corporation would become a “trust company? within
~Ohwee~&hew of Article 2.10 B (4) (b) and Article 9.14, and fall
within thendefinition contained In the OpiniOn in CarnOr v. Sam
Houston Underwrlterg, supra.
Hon. Zollie Steakley, page 3 w-77
It Is the opinion of this office that the approval by
the Secretary of State of a charter containing the purpose clause
set forth in your letter of request would violate the provlalons
of the Texas Business Corporation Act, and that your office 1s
not authorized to approve such charter as a matter of low.
You have construed the provisions of the Texas Business
Corporation Act, and particularly Articles 9.14, 9.15 and 9.16
thereof as not repealing Article 1303b, V.C.S., and state that
charters with the purpose clause ,contalned in Article 1303b have
been approve by prior administrations. It is our opinion that
such construction 1s in error.
Article 9.14 D of the Act provides in part as follows:
“Bxcept for the exceptions and limitations of
Section A of this Article, this Act shall apply to
all domestic corporations organized after the date
on which this Act becomes effective. . . .”
Article 9.16 A of the Act provides as follows:
“A . Subject to the provisions of the two last
preceding Articles of this Act and of Section C of
Article 2.02 of this Act and Section B of this Ar-
ticle, and excluding any existing general act not
lnconilstent with any provision of thia Act, no law
of this State Dertaininn to vrivate corDoratlons,
domestic or forelun, shall hereafter aDDlr to CorDOr-
atlons OrRanlzed under this Act, or which obtain
euthorltv to transact business in this State under
this Act; or to existing corporations which adopt
this Act .“*
Therefore, If Article 1303b has.not been repealed by the provlslons
of Article 9.16 A, It must fall within the provisions of Article
9.15 B, which reads as follows:
“Except as provided in Section B of Article
,16 of this Act, any special limitations, obllga-
.ons, liabllltles, and powers, applicable to a
particular kind of corporation for which special
provision Is made by the laws of this State, ln-
eluding- (but not excluding other .corporatlons)
those corporations sublecc to suwrvislon under *
Article 1524a of the Revised Civil Statutes of
Texas, shall continue to be applicable to any
*Emphases throughout are supplied.
Hon. Zollle Steakley, page 4 w-77
such corporation, and this Act Is not intended tQ
reoeal and does not reoeal the statutory nrovlsions
providlnu for these soeclal limitations, obllnatlons,
llabllltles, and Dowers."
Section 1 of Article 152'4a,V.C.S., 1s in part as fol-
lows:
"This Act shall embrace corDoratIons hereto-
fore created and hereafter created having for their
mrpose or purposes any or all of the poiers now au-
thorized in Subdlvlslons 48. 49 or 50 of Article 1102.
Revised Civil Statutes of Texas, 1935, and heretofore'
or hereafter created havlnR In whole or in part anx
rvose or pu;rz;s2now authorized IanChapter 275,
enate Bill N b 32 of the General and SDecial Iaws
of the Renular Session of the 40th Lealslat&e. (Art.
1303b, V.E.S.)
This section specifically embraces all corporatjons which have,
in whole or in part, any purDose or wurooses authorized under
the provisions of Article 1303b. It may be noted that Article
1303b, V.C.S., embraces all of the purpose clauses authorized
by law under subdivisions 48, 49 and 50 of Article 1302, Revised
Civil Statutes, 1925.
Article 2.01A of the Texas Business Corporation Act pro-
vides Fn part as follows:
"Except as hereinafter in this Article excluded
herefrom, corporations for profit may be organized
under this Act for any lawful wrooeq or plrr)oses,
which purposes shall be fully stated In the articles
of incorporation."
All of the purposes contained in Article 1303b were law-
fil purposes as originally enacted by the Legislatures of Texas,
and still
. _ remain
. .lawful
. . . purposes
... .. for which
.. a corporation
^A. may be
organlzea unaer cne Act, wLT;nco4 excepclon or r;nepurpose clause
giving the corporation trust powers. As has been noted above,
the Secretary of State is prohibited by law from issuing a charter
to any "trust company."
Under the provisions of Article 1524a, V.C.S., any corpor-
ation whose charter contains any of the P\rpoae clauses set forth
In Article 1303b, Is subject to the supervision of the Banking
Commissioner, even though the principal purpose for i#hlchthe cor-
poration is formed may not be one of the purpose clauses named
therein. The provisions of Article 9.15 B of the Act evidence
the legislative intent to continue supervision by the Banking
Commissioner over all corporations created prior to the enactmnt
lion.Zollle Steakley, page 5 m-77
of the Texas Business Corporation Act, aa well as those subject
to the provisions of the Act after Ita enactment, WhOro 4uOh
corporations were organized for any of the oontalned in
Subdivisions 48, 49, and 50 of Article 1302
Statutes of Texas, or Article 1303b, V.C.3., lrreepeotlve of the
basic statutory law authorizing its organization for such par-
pose.
It is the opinion of this office that under the repeal-
ing clauses of the Texas Business Corporation Act ebove set forth,
Article 1303b, Vernon’s Civil Statutes, was repealed lnrofar as
: it permits the organization of a corporation thereunder, but that
a corporation may be organized under the Act whose charter can-
talns any or all of the purpose clausea nemed in Article 1303b,
Vernon’s Civil Statutes, except the purpore clause giving the
corporation trust powers. In this connection, that part of the
Eroposed purpose clause contained in your request whloh rwdr:
or as authorized by Article 1303b of the Texas Revised Clvll
Act of 1925”, Is surplusage, since we have held that Article
1303b, Vernon’s Civil Statutes, was repealed by the Texas E#.uI~-
ness Corporation Act.
SUWMARY
A corporation may be formed under the Texas
Business Corporation Act with a purpoae clause
authorizing the corporatl,onto engage in the
business of accumulating and loaning money;
selling and dealing in notes, bonds and securl-
ties; to subscribe for, mrchase, invest in,
hold, own, assign, pledge, and otherwise deal
In and dispose of shares of capital stock,
bonds, mortgages, debentures, notes, and other
securities otiobligations, contracts and evi-
dences of indebtedness of foreign and domestic
corporations not competing with each other in
the same line of business; to borrow money or
Issue debentures for carrying out any or all
of the purposes above enumerated; but without
banking or insurance prlvlleges.
A corporation may not be organized under the
Texas Business Corporation Act whose charter
contains a purpose clause authorizing it to
act as trustee under any laW?Ul exprese tNSt
permitted to it by contract or will, or under
appointment of any court having jurisdiction
of the subject matter
Ron. Zollle Steakley, page 6 w-77
Article 1303b, Vernon's Civil Statutea, wa8
repealed by the Texas Business Corporation
Act insofar as the organizationof a oorpor-
ation thereunder is now authOrie8d.
Very truly ymrs,
WILL WILSON
Attorney.General
By: s/C.K. Richards
C.K. nioharas
Assistant
CKR:lrn:wc
APPRWB):
OPINION COUMITTEB
H. Grady Chandler, Chairman