OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
Eonorablt:Claude Isbell
secretary of :?tate
kuetin, Taxes
Attention: J. L. Mc3arlty
Peer Sir:
Opinion MO. G-781E
:‘:e
hare reoeived pur
IS quoted a8 r0n0w8:
*%a00 Mile c:
tloned below.
this alab und
105 of Artlal
stetutss.
these attorneya that the
araileble, lnmmuoh
t
JIBrefloated that wa he6 al-
lub with the name *Kaea
s tiled on June 26, 1919,
and benefit of the State by this
ever, of the opinion that thle fee
I and that e flllnr;tee in thm mm
vc been colleated by this offloe ln
aonnsatlon with such fllln~. '20are of t?m opinion that
such a alub should be subJeat to 8 mlninwn annual ,frea-
chlss tax, at t>at time in the sum of S10.00 and qndbr
the prea8nt statutes, in the sum of $2G.~0. Te a6 ad-
uloed these attorneys on Farah 15th.
Hon. Claude Isbell - Page 2
"On March 18th, these attorneys further advised
us that they were of the opinion that suoh a olub oould
be organized under the provisions of Section 105 of
Artiale 1302 of Vernon's Annotated Texas Revised Civil
Statutes. .
We hand you herewith a photostatlo oopy of this
proposed incomplete, unexecutecland unacknowledged
charter and respeatfully ask you for your opinion as to
the following:
.~#es---l--
-..,
._..
~,
"First: Whether or not the proposed oharter
should be filed by this offloe under
any Seation of Artlole 1302 of the
Texas Revised Civil Statutes.
Yeoond: In the event that such propoaea
charter if aompleted and properly
exeoutea and aoknowleagea, should
be filed by this offloe, please ad-
vise what the proper filing fee
should be an8 if the aala dub would
be subjeot to an annual rranohlse
tax."
Before the proposed charter oan be properly oonsldered for
filing by the Secretary of State, it must first meet the statut.ory
requlraments pertaining to iorm. It 1s neoeseary that the charter
contain all apeoifla items as set out in Articles 1304 and 1312,
V.A.C.S., and it must be properly subscribed and aoknowleclgefl pur-.
suant to the provisions of Artiole 1305, V.A.C.S. Upon satisfying
the statutory provisions relating to form, the oharter may then,,be
viewed from the,standpolnt of compllanae with substantive laws.
A corporate name la essential to the exlstenoe of a cor-
poration as it 1s made so by statute. There is no general statute
in Texas preventing a corporation from taking any name that it may
seleot, although by Article 4700, V.A.C.S., insurance companies are
prohibit~eafrom selecting a name similar to that of another existing
insuranoe oompany so as to mislead the public. At common law, how-
ever, oorporations generally were prohibited from seleotlng 9 name
similar to that of an existing oorporation so as to deceive the
public and this rule of law now prevails in Texas. Suoh a slmilarlty
OT names ten& to create oonfuslon with Espect to suoh oorporate
aatlvlties as contraotual negotiations, mail alstrlbution, and many
others too nunemus to mention here. It 1s the duty of the Seoretary
of State to inquire into a similarity of corporate names and reject
the proposed charter of a new corporation when it offers the adoption
4;s
Ron. Claude Isbell - Page 3
of a name which so nearly resembles that of an already existing cor-
poration as to be misleading. Names for oorporatlone are of an un-
limited source and we believe it to be no hardship upon the incor-
porators here who propose the name Y~aco Rifle and Pistol Club" to
seleot a name substantially different from that of the already
existing corporation; namely, "Waco Rifle Club." For a further dls-
cussion of similarity of corporate names, see 14 C. J. 310 and
Rlldebrand on Texas Corporations, Vol. 1, iV29, p. 128.
The lnoorporators here have stated the purpose of their
proposed corporation in Article Two of the charter to be as follows:
"This association 1s formed for the purpose of edu-
cating citizens of the United States resident in our
oommunlty in the art of the safe handling and use of Sire-
arm6."
To authorize the foregoing purpose, the incorporators have
suggested either subdivisions 2 or 105 of Artiole 1302, V.A.C.S;,
whioh we quote as follows:
"2. The support of any benevolent, charitable, eau-
oatlonal or missionary undertaklng.
"105. Corporations may be created for one or more of
the following purposes, namely: Religious, Charitable,
Literary, Scientific or Educational. Acts 1945, 49th Leg.,
p. 119, oh. 81 B 1."
In 1945, the 49th Legislature added subdivision 105 to
Artiole 1302 and by doing so simply authorized any one or comblnatlon
of purposes already listed in subdivisions l-.anb2 of the Article
(See opinion of thls offioe addressed to you numbered O-0043 and dated
November 5, 1945). A selection of one of these two subdlvlslons 1s
immaterial here as the provisions of both overlap and our problem is
to determine generally whether the term educational as used in eaoh
can be reconciled with the purpose as stated in the charter.
The charter must speolfy the purpose for which the corpor-
ation 1s to be created with sufficient clearness to enable the Seore-
tary of State to see that the purpose listed is one providea for by
the statute. In determining this, the Secretary OS State is not
restricted to the literal wording of the purpose olause in the oharter
which adopts the very words of the statute, hut he may oonslderall
features of the charter and olroumstances surrounding the proposed
incorporation to aeclde whether the primary object of the corporation
1s within the statutory purposes suggested here, 1. e., eduoational.
*
r 49 ,..
eon. Claude Iabell - Page 4
In the case of Razen v. National Rifle Ass'n of Amerioa,
101 Fed. 26 432, the United States Court of Appeals (D.C.) had before
it a aorporate charter listing its purposes as (1) educating the
youth of the nation in marksmanship, (2) improving marksmanship of
members and (3) encouraging msrksmsnahip throughout the country. The
Court, in holding that the personally of such corporation was not ex-
'empt from the taxation statute, stated that although these activities
might be in some small measure eduaational, not one of the objects
was neoeasarilg or exclusively educational in character. In the case
of Vredenburg v. Behan, 33 La. Ann. 627, the Court held that a rifle
olub organized under a statute providing for the creation of corpor-
ations for "literary, scientific and charitable purposes" was not
properly organized within said statute. In the case of State v. Fuai-
neaa Men's Athletic Club, 163 S.W. 901, the Court of Appeals of Ma-
aourl held that a corporation organized to provide its members with
entertainment and exhibitions of agility and activity auoh as boxing,
basketball and other sports, was not organized for eduaatlonal pur;
poses. To the same effect, see Mohawk Mills Aaan. v. Miller, 22 N.Y.S.
2nd 993.
It appears that the aaaoolation here is to be formed for
the benefit and advantages of its members as a olub so that they may
enjoy, exhlbit.and beoome sdept in the art of rifle and platol'ahoot-
w3. In carrying on this objeative, eduoation is but an incidental
feature. It la not the exaluaive or prlnolpal objeot of the aaaoci-
ation. If rifle and pistol ahooting,were primarily educational, then
the term oould, with equal propriety, be extended to include nesrly
everything pertaining to the oaoupationa, endeavors, experienose and
pleasures of man, as theae~are to some extdnt educational in nature;
We believe the Legislature, by authorizing eduoational purposes for
corporations, intended those oorporatlona to be engaged in aomethlng
more than inoidental eduoatlon, 1. e., a corporation must have for its
primary purpose the giving of inatruotiona in some reoognlzed field
of knowledge. Consequently, it la our opinion that the purpose of the
asaooiation here does hot come within the meaning of the~term eduas-
tlonal as used in aubdTiiTaiona2 and 105 of,Article 1302, V.A.r
It is our further opinion that the purpose of this oorpor-
ation does oome within t.heprovisions of and is authorized by aub-
division-4 of Artiole 1302, which we quote as follows:
"To support and maintain bicycle clubs, and,other
innocent sports. Acts 1897, p. 189; G.L. vol. 10, p. 1243."
This department has frequently construed the above subdivi-
sion and the term "lnnooent sportsn has been defined at length in our
opinion numbered O-2866 ad$.ressedto the Seoretary of State and dated
EM. Claude Iebell - Fags 5
XovaPtb8r 15, 1940j to rhlah you my refer. A typioel exemple or
**part* cad one almost alweya lleted bf the authoritise 14 *hunting*.
We belleve bwfti afstol and rifle shootlag to be almaZy allied with
%untlng*, and wltr?ot..t further elsboratlon on tha matter it 1s our
opinion that the art and sport of TiSfle and rlstol shooting* exer-
~oired lawfully and an nasied in the ahemer oleerly oomes within the ,
term ninnooent aports” ab epeolflsU in eubdlvlslon 9 af Xrtlale 1302,
V.A.C.6.
Artiole 5914, Q.l..U .S., eatabllshee the feea to be oberged
by the seontary or State upan the filla or in oharter, the pertinent
parta of whioh we quote belowr
“Upon flllng esoh ahsrter, emendment or su pleaent
tbnto of a aorporetlon for the support of pubPio worehip,
any benevtolent, ahedteble, eauaatlonal, mis~lonury, IAt-
rrery or roientlfla underteklag, tke melntenanoe of a Ub-
rery, tha gromotlon of a publla oemterp not far profit and
tb enoouregement OS rgrlonlture and kortioulture, to aid
lte memben in produolq aad merketlag agrloulturel pro-
Euota, or for aaqulrlng, reislng, breeding fattening or
matrketingilve atoak, U filing See of Ten fWJ.00) ;nollors,
and for rung the esml-ennusl rinenaial rt8tement or euah
agriotitural pro&iota or live etook oorporstlon, Tea (!310.00)
Dollere, uhlah shall lnolude tha annual llaensa fee.
“Upon flli!~ eaoh eherter, smendment or eupllament there-
As we have hsld thet the propored aeaoolatlon here is not for
the support of an e&aostlouel undertaking, it follonr thst said aeso-
clatlon fall8 wlthfn the statutory langua&e reedinu *piveto oorpor-
atlon or&ted fcir any ather purpose isxtended for mutuel. .I benefltw
and that acnnequently the $50.00 flllug fee 1s spplioeble end due.
Artlale IO&%%, Q.~,.C.~., authorizes the fran~blea tax for
every domeetlo an4 forelffn aorporation ahartered or lmmrfrsd to do
buefnees in Texas. %a quote below only that part of the etatute wbleh
we believe applieeble to the fa8te here;
*.....provlded, that suoh tax shnll not be leatar fMan
Twenty rollare (.“aO) in the oaae of s oorporatlon,
f&t those without oaplt@$letoek, md provide8 further +w=,
%a tax ehell in no ca~se~iiiputed on a sum leea than the
aeeeesed velue, for State ad valorem tax purpoaee, of the
property owned by the oorgmtion in this State.” (Xmphssle
edaec) .
51
Hon. Claude Isbell - Page 0
Purs,uantto the wording of the foregoing statute, it is
our opinion that the minimum Twenty Dollar ($20) annual Sranchise tax
should be assessed against the corporation proposed here.
Article 7094, V.A.C.S., lists the types of aorporations ex-
empt from payment OS the Sranohise tax and is quoted as follows:
"The Sranohise tax imposed by this chapter shall not
apply to any insuranae company, surety, guaranty or Sidelity
company, or any transportation aompany, or any sleeping,
oalace car and dinins oar oom~sn~ whioh is now reauired to
for private proSit,--
or corporations organized Sor the purpose
of holding agricultural fairs and encouraging agrioultural
pursuits, or for striatly eduoational purposes, or Sor purely
publio oharity." (Emphasis added).
The aharter revealk that the association has no aapital
stook; but is it one organized Sor the exolusive purpose of promoting
the public interest? :Kathink not.1 She Suoreme Court of Oklahoma
In the oase of Jtate v. Crockett, 206 p. 81i, deiines "publio interest"
thus:
nPublic interest means more than a mere ouriousityr
it means something in whioh the public, the oommunity at
large, has some peouniary interest, or some interest by
which their legal rights or liabilities are aiieoted."
All statutory eSeItIpt$.onS SIYXntaxation are strictly oon-
strued and one olaiming an exemption must bring himself olearly within
the statutory exemption. MoCollum v. Assooiateg Retail Credit Men OS
Austin, 41 S.5:.26 45. The association here is purely a private oon-
oern, oreated for the advanoement OS a private end and whose objeot is
to promote private interests. It is to be formed for the beneSit and
advantages of its members and the Sranohise oonierred is 'tobe exer-
cised in their behalf. Consequently, it is our opinion that it is not
a oorporation organized to promote pub110 interest and theresore does
not come within the foregoing provisions OS the exemption statute.
To reoapitulate, and speciiically answering your two qnes-
tions in the order asked, it is o"r opin~ionthat the proposed,oharter
here under oonsideration may be properly filed under Section 9 OS
Artiale 1302, V.A.C.S., when it is validly subscribed, soknowledged
I,.,
52
Hon. Claude Isbell - Page 7
and oom leted; ttit the proper Siling S3e to be oharged is FiStty
($50.00P Collars and that the oorporation is subjaot to an annual
franchise tax as required by law.
Very truly yours
&g-L I$;;&-
JKA:djm