OFFICE OF THE A'ITORNEY GENERAL OF'TEXAS
AUSTIN
~OnoxablQusi.J. Lawson
secretaryof stQte
Aumtin,TooaS
Dear Mrr Attention; Ihank D. Keex,
8eourlSiesCaumissioner
0plnienBO. 0-3097
Rea Does the *GoopercltiveMvanoe-
meat XmorporateP have authority
to isruemeieb~rrhlg aad fnvert
it8 funflsin the manner eet out
in its Gonatitution, and related
queetions4
Your ltiti3rof August al, 194l, requeetingan opln-
ion of tbia departsat upon the quertlonsrtatodbereinbar
beon reoeitad.
il6quote from four htter ae folltmsr
Ym Jtme 50 194l the CooperativeA&QMS-
aent Innaorpoxate~
ffled a charterdth the ofiioe
of the Secretaryof State which containedthe
rollowinqpurposeClQUSW
w’The gurpoaefor whioh SQfd aapwation is
fommdis to organloelaborers,worklnmea wage
earners,and farners,cdl busineespeople co
protectncd edvencetheaselvemin theirrerioue
glrault
8.*
*You will note that the capitalatock of
this aorporationoanaist8of bSOO.00divided
into 100 rrbaraoof $5.00 eaah,
“1 am enolosi~ for your ez.amineSlonand Oon-
ai&erationof the c&ecrtion8hsxsinafter asked a
copr of the ohwter of 8ueh Eerporatioil.
"The osrpnation has tidoptada ocmrtitu-
.a: tion and a plan r0r eelline:memberships as
distinotfirm the oapltalrtoek, the aost of
suoh me~lborrbipsb&x$ $la&O per par, Of
the W&O0 aollseted,$6.00 shall be depollted
in a trtxstfuud for the purposeof puroha&iag
owmon stoak in differantindustries.
mlaing $6.00 of the first year’s duer sre to
be oaredfor expenses, praaotionsand mainten-
aaoe o? the or&an.nisntionr
The swond year Pa&G of the #l&O0 Qus
shall be usad for expsnrrer, and the other
&10&O depositedIn mash fun&
"$1.00sf the tblrd tsar shsll Ea us.4 isr
expu~sss and OU.00 shall be depod.~e~ ia sash
wAttaohed hem80 is & 80 of a propwe
pzespeotus and ooastltutlba whPT eh the oerpow-
tiolr PkIS t0 iB8Uh The oorpontion has ap-
pUedtottialMpak~e~tfor krulingaa b
wmthsr or not suoh mambershlpmeonst,ltuts
a saourity within the pro~irlsnsof tks !lWas
securitiesAot and beforeidYfsl4 them aa to
the podtloa ef this B artmeat with rs8proO
therstows vmld kppreos ate heving'thebene-
;;t$: your opi.nloa
a# to the folltning y-
~1.) tr swh oorpmtion ruthorissats
i8sw mambemhips on the plaa 8Uggestid”l
"8.) Are sush ammb6nhipr sesuritiu
within the meanla~ of ths Ten8 Eeewitlss Aot?
V5.) May stmh aorporatisnlegallybarest
its fund8 in the IoBfUNr 6et Out ilI 8U@h Ph&?’
Vader the CosstitutianSt the abws nntiomd ODE-
pemtion, the run48 OS u&id o~2wrstiss ara to bs~iave+d
as aet out in your let8rr md the swmberrbip'fe8s arcal*b
to bs used as msntionedtheFeln. Bsr ths third y6ar sf the
SQEUIsmnberehip @l&O shall be plaoed in t&S ti8arv6 aa-
I oouat,Qnd 61,Oii in ths Operatingaoaowt, as Stated by youa
year thersaftsp.
an4 i,nthe em14 ratio a8 ths t.hlrd
Artisle~l90E, Vernon~8 JinnotatedCivil Statute8,
reta forth the
4uxv0888 for whfoh private ooiQ?Mations may
ba Somad., and aeotlcn83 thsrsoS,.aB anendsdby House Bill
No. 16, kStS~Of ths 47th &?&83.@tUCe, 1941, lWld8 118 fOl-
:~.. 1-r
., i
'To orgaaia~~$ .laboriwanorkingmen wage
tKMleT8,aad fRd&S 'tto p&'O#tWti
th4lWSlY;,in
1, theirvariow purruit8; pmia04, however,no aharc
ter shall OS issuedhereafterto labswrr, work-
ing men, or 'wagesarnars~, or Qiendmsntgraatsd
to a cbarter of a sorpomtioa prutiouslyors-
ats4 to or(panitslaborers,~uorkisg msn
oarnars, or that ‘iusy be hm&!6gftarc&~h~t!
under to ~~g~ite~laborers, work1 ma, or
-8s eammrs, by the %ao~~ttwy of "fs
tat, to say
pernon, askwdutlon or 60 oratitm,for ooeh
pnrpos~s rithout aa Iaver38 ation filw haYl?q
boon mde by tbr Cdsrlonrr oi Iabw Stat;Lr
tie8 ao~smlc~ meh appllaa*tioai and a Taror-
lbls rsamumemlstion made thereor)by sa$,dC&a-
mlmsioasrto tha0eoretarjr of &ate. 3t 3.8
apreeely. prwldsd that'aoimert&*cion @r
reoomnndatfonby th6 Oolpmicrrioaar of,Laboe
Sta~ti8tiesshall be.rsqulm4 or made o? appl%-
:- oatfonmfrom faxmin ior a abar8errR
In OOMiaering your fix8t questiona8 8tatsd above,
we axa f,irst aonoernsdwith the prspasitfonrhsth& or not
the aboos ntmtiimedoorporationhe8 ths~powsrmvler it8
chsrt6ron4 the law8 Of thi8 mat. to iSWM me&ershlps en
the plan hurotofore9asntionsd~&umWall~ apss]rSx&& tbs
powers or the corporation are thooe osppnssl Oonfsrrsdupon
it by its ehartsror the atntutssaSd thoes LpUed imm
the %Xpxae8 powiars or inoideatsl.to the eqtStesOsOf thS
corporQtion.The oo~pomtion ha8 no powsr to 40 an aot
where it la not uithln the express,is&31104 ST issi4Snta1
~snorsresultingrroz the charter,or where it ir pfohiblt-
ed by the ohaster ar 8oiue sp+miel8tStute, or WbmJ it $S
prohibitedby a Banera 8tatateapplioable $s bcbthmtttpal,
an4 artifioialper6ozus.Thiweioxo, In detedaiag *rtretbW
a oopporaticnha8 the power to 40 an a~$, it,%8 Bstissarg
first tc irefer to ?iheoharterto m.61)
whatbarthe power~ls
.acnrsrredexpressly or by lzplioo~lon,thm ta sxa~iimthe
ohwter aAa the statutestblaclng to acrpomtlons twsee
it the a& ie pro+ibitrd,and then in some oared to~~ooaeult
the r;enerurl
lrtatutsr to eeb ii the aNi is illegaleven in
QC:X3 Of AAt- ~0~001111~
$; f Xtwillbs noted thr'bthe langwi~soonbaSne6in
the tamose elatme ret forth 2A fha ohac~-erof iha above
Pi men?,oAed oor,noration ir rabskntially the 8ame a~,the
!
j( lmguagb In the firat alatuieaf Bsotion83 of Artiole1302,
uurra. It was statedin. tha oas6 of Ehnith7; Worth,
.;:-’ 157 fJ* w* 740:
;....
&’
The crtatutory rapuisaaeatt&fitthe pur-
&: para ai the so~psnbton shall ba statad in the
ohartsr ww Lntindodtcr the pretebtionof
k; the Looorpxatoru and etoakh~labn, awl the
publ.10, in ordar that they,‘w b* adTl,eed a#
il to tha obaraot0rof Itr o@#p#r~~:aot~vitler,
and to enablethe f&ate;t.qM~@~%ta propor
!~. orfll?ers, to ooubot ri1iAfj:t*m and frarjblr8
% tare&,and to lupervlm zu#Ieontrol~theAm
I an& punlehthe adn-areof it8~tm~obioe~"
;~.,
I: It Is atat* in *q JhrZaprudonoo,,
-Vol. lo, Q.
8848
"Xn oonrmotion dth'the 8tatrmamli
of tha
purposes of the oqrgoratlen,t&a prinois&l
proporltion is #at t&u3MOQO of thb purpoaar
enumeratedfn the statute taunt bo'eweti-
to
nbt
atI. it Ia oonsldsrwl bs the poliop
of th; hia8 law to lhdt the rf@i6 of inooc-
pporationto tha spaolflaptuporaaauthorize?
by atatuta. Obneml ruler of rtatutcryoon~
atructionare followadIn asterarinlng
the
~oc;peof the variouspurpomrrem&mated in
the atatuta."
Ho doctrina of the lar of corpooratioA8tramsoend8
in iZI~O~tPId.thatwhlah ~A~OUAOO~that the kiAQof tr:8M-
aUtionain which the cOTi.OZWtiOA arayema56 ard 14B5all.yltiit-
et%)nor is any policymore flrm.Ijsstabllilhed by the Conati-
tution,eratutesand judiolaldeo;taions of the State. The
conceptthat,:aoorpc?mtianWM lnvaatbd with only llmltad
legal powers 1s not a doatrho of the 064180~ law. (Moosr'r.
453
BpnorablsWm. J. Unman, Fegb 6
a, w. 179; Texas ;hlrlmrudbnco,
With to the 00~8tr~uofion of obartrr power8
rdsrenoa
it Ia atataetn !&x&s JuFiuprUtlbnoe,
Volt LO, p. 8781
"The pri~9ipQl rt+b that has bebn to~w-
latea for the lntorpretetloa oi oharterpowers
is ,thatonly uueh powan are glre~ as am
clearly eabraoad la the word6 of tbo sot or
oberteror derived therefromby neoeoaarylm-
plioatlbniA ~ibW oi the ,objeet,oithe ptrnt.
Anoah% cardleelrule apgLying
chartersunder rhioh speetrlprIlsst-rly
rilb$erera to
clb.lmed$8 tOst any 8mblguity oc doubt must
be resolved in,iiwor oi ths pub110as agdnut
the!grantees ef tho chart&r.'
with retbna?r to inalU6Wl powerr, it is dated In
'Abram
&rl8prudenos,Vol. 10, p* 879;
"In e+ary gnat of corgonte pasts, there
Is impllod a powor to do wbatrrer ir neabssary
or maaelurbly a?proppriato to the exwol~s of
tho authorlt$ lxp~w8lp oonferrbd. This state-
ment of thu prin*lQltJasstamo8that tha pwer
6xbruised~l8irio%dentaf.~to an ezprmsed pwbr;
tnasaotionr dlfrer~ la kiad from those whioh
the oorp?ratlon Is binpowrsdto sntnr into
oannotbe regardedas iAO%dSAt&
“A 6btbPmlningfootOPin dsoldindwhat&W
thu asser6idparer 1s pewees@d by the 8aQpora-
tioa a8 inoldqntal to Its srpr*SS@kdputpoSb8I@
wbatherthe trandaotlon18 tU\tpLin the 8 era-
tion of a bueinese of that kind, grmat we Peht
being given to the dominantptrrpO80 of thb
aorporation.,rA the laLgUag5 Of 5 hadit% at+
thority,
-'If ths mmmu be such 88 am u8ually
resortedto and a din-sotlesthodofacooa-
puehlng the puqo8b of the incarparation,
they are within it8 panore~if they be Un-
umal an6 tea6 in an indiraot axmnur 0el.y
to promotofta iAtbreB%8,they are held
to hb ultraTlrbs.'*
It 1s well establishetl
that a oorporation may
*it or restriotthe aaope of it6 parersanilautheslty
ocnferred by ths statutesas a generallaw,,b~I;p~gog.le
j~'
,, n~nrlalcnrIn the artlolesat laoomoration. e
It lm further stated in the abweimentionedVol. 8,
&
hi,' ad&her Cyolopm%a Uorgbratlona on pq 1968:
*A power 18 'impliedwhen *reasormbly
neo~ersasy!to enable the aorporatian to ao-
ooqllsh the objietrOS ft. oxsatlon.*
It is rwther stated
,., ticno rolums by tlatfhsr in the abbots~men-
,A.’
: on 0. 1990:
:’
“A ROWBS WhitOh the hW till. SttgaF6 *S
crxietlng by l~:gUcmtion met be ona in a
nenae nboerrasy, - thet is, aoedful, rultmble,
and propsrto acoonplishthe objeat oi the
gent, - kanti
oae that is direotlyand ime-
amroprirte
diatrlx7 to the areoution of the
npaolfiopower@ and not ene that ham but a
8Ught indin& or smote relatfoa to th8
rpeoido purpose of the oolrperetion.
V,n Term the rule is r ta ta dls tollowa:
'Y& 8host if tha maann be such a? 8z% umnlly
rii#brtad do, and a 4lrwt mthod oi aoeompliah-
ina;. the gumone of the ihefarporatloa, they are
Qithin itO PC!WO?lBe If they ae ummaml, an4
tend in an indiraat maanw only to promoto ita
.,’
!
intemmt8, they ass helA to be ultra r%rw.'
*A lmdla~ tsxtbooltwritsr lay8 down
the rule:eafollcmm: Wmteter bo a oomg+$r
lsgitisataibusfnss8,the ampan my tostsr
it by all t&s usual means; but f t nmy not go
b.goriQthi8; It may not UpdsZ'th6 prOtens
cf fostering,oHm@e Itsallin proewdlng8
Mth whioh it has ne lsra;it$.aato~oon,Omm. In
the next place, the emalltrhaoo h-et,
deGesmlnod that &ah mnann n&d be dlrwt,
Bo!.wnbleTQa.JI I+Llbon,Page 7
With r.-terema to the above nantloned rules ard
set out by Fletcher In his work on acrporationa,It
ot.parcs
1s etated on p. 1776, Vol. 2:
*The rules laid down abov4 84 to inrplled
powers are qell osttlad end are, st the prs-
sent Qay, not c~en ~usstlcnedby oourts or
wdters. The dlificulty oomea in apglylng
the ruleah It le efasyto say that a powor
is lmplled if it 1s ‘reasonably n60essarjc
to the exercise of express pfzwer8,but there
is no teat to 4aeiar whether a pertiaular
aat, done by a ~rtfoular corboration umisr
particularalroumetanow, la kaot&y
1140ollaary.'OS couma, many aota are olearly,
on ona side OS tfimline OP the other. But
there are lllan~
01054 to thu dlylding lfne,
which oaea8loalr
mar0 ox 1088 aontuaion in
thm dmalaiona. The result la the mls that
*futhsr 4.naot ovmea with&a the bapliod
pvwpa or.4 oorporatlon Qmst be deter-
nine4 in eaoh earn frcm all ita faotm 6nd
4lrotlDM)tnn048.'*
ft ia clear tbitttha pumoae o&m44 aa stated la
the obartar of the aboy leentionsdeorporatlon and the ,atrt-
utb tmlar whloh it ma lnuorpratad do40 not vxprerrly eon-
far upon the oorporati#+the power to ierur mezubarahi~aaa
aboy mmticned. ~tYado cot thl& that'thr iaa~ing of tha
mmbsrrhipa herrtofom mentioned.fs a dimat mst;llaa ol
aooomplfahingthr purpose of the inoorpcrationof aeld OOQI
py or eq +eam ~subh a8 .are urwlly resorted to, but
that aua%msthod8 and reet?m~
are -~~a1 and tend in ~1 fir-
dirmt man&r only to prC!nOte the intrrWta Of th4 001pOm-
tion. 'fherefora, It la our opinion $hat thr Coo am:::
Adwmo4zsent fnooraorated ha8 no loss1 4uthorltY PO
the abora mentlc&h mkbarships on-the plan he%sinrbovo
stated.
As we have answered your first yueetic@in tha
negative,pour seoond snd third puostlona raqulrr no dis-
aus.d.onr
Trusting that
Inquiry, we are
Untitled Texas Attorney General Opinion
Combined Opinion