OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
Honorable Claude ii.~illiema
Chairman an4 %soutire ~lreotor
Teuo Unmploymont Gonpmmation Oola~isdon
matin, Texae
equantly rtatea 3.21
thir opinion, has bea etaon or the
appellate aourts (388 truotion or
Mtlolo bmtlb 17(r)(4
read8 In part a8
r0ii0w8 t
ned ie the question of whether the
'owned or oontrolla4 (by leelly
enfomoabls meant or othemiro) dlroCaly or ia&ireotly
by the same intere88.'
"Query: Dsea Bubso&ien 19 (f)(r) ra4.r la&
employing unit li.abloai an employer under them tPOt#l
Ul. A owns anQ operates an individualbusiness.
?ielikewise owns iOQ$ or the voting steer or a eer-
poratlon.
Bon. Olaude k. Wlllar, pa60 I
*e. A 011110
end operatee an iz~Ilvi4~1buOlneee.
b likewIre own6 51s si the voting ebook of a cormpa-
tion.
"3. A and b are equal prtnare In a buainsse.
A and B likmlee own IO* Of the total rating etook
o? a mrporatlon, A owning 8g and n owaing SO$.
*a. A, B and 0 are equal pru'tnerein a bo~lnore.
A ON B raoh own8 one-third of th0 voting Btook af a
corporalha.
A B and C eaoh omr one-tklrd of the vot-
iag 022k oi a c0qwnliloa. Baoh llkOds0 ornO one-
th ir odi th TOCIA@Ob o a bffla&her eorpratlon.~
ArtFolo 538lb 1'1(f)(4), eupra, doiinee~aa raployor
a0 tol&we:
"(4) &y re@oyln& wilC whloh togrthr with one
or mare other mploy$&%@units, Se owned or oontmlle4
(by le$eUy lnfomubl,;li,mdene or oth~ruiee) direahly
or indtniotlyby the earn intanet, or which owae or
eontrol8 one OS more obh~~qlo~inb; uoik (by le@llr
onfero~able moo&e or WkorwfW), urb whisk, if tnrto&
ae a 01nglo UAIO with Owh Qabd O~lplo~ln($,u~iO, wouU
be an auployar ux&il*r paregraph {l) of this subeeeDion;*
In your flret hat rituatlorr,A OWIW a& eperatoe
an indlrl4u0lbwineee and aleo hmr l&0$ of t@ rotlag nt00k
of a oerpoxatlon. Wo aeeume that A ,OWAO011 of th 8Dsek
of the eorporatlonand thr8 tha p&Fame "voting atook" has LIB
obhar meming,
it may bs aaid that the etaokhoZPen
3trlotly apea'klaa;,
are not the 6wnore of tha oorpore?+epxopeS%~. $&3y do part&-
oipak to the dletributionot the WIPplue prorateiUw3anmet*.
Pmeml#Jouoa dl~.tPlbut~on,
their rigate are eaid to be mraly
,;yitial. 10 Lax. ;rw-,pp.,9803818and auth0riblee tbmelo
.
IC is eloo aaid that a partnet doe0 not own any patil-
oular interest in 0 perlmership Ontsrprtes but bfe intelvet
mtande only to a praposti,on8*o*hard of what rar remain after
&an. Blatabe A. William, pegs 8
pay&At o? the debts of the putnorehlp em4 8ho SJdtlWOAt of
its aooouate. Sherk v. Bank, SO6 6. Vi. WT.
The ~oau of Tua8 ~AOEBp~o~~At hnpmeatlon (bmi.eeioA,
et al la. &as, 151 J. ki.(ad) SW (Sup, Ct. of Texas) involved
three pwtnerehipe. A, B end 0 eomporsb cno partnerehip, A,B
C and D oomposed en&her and A, 8, C an6 E eompoeeQ the third
partnuehip. IA holbllrqthat thou thou p8rtneTehipewere
not owned by the leme Interdot within tti aeening o? Artlole
UEBlb 19 (f)(4), mupIa, kantice Grits ea54;
*It la erldont ~thattheao thrsa oen*drneare n&
owned by the same *lntereBt.* This 18 baoauee there
lo a partnar in No. 0 who has no lntueet iziNc. 1 or
No. $1 aniltheso lo a paHn4r In Ho. S who he8 no
Interest in 3Jo.1.or No. 2. I8 follows that,;? thus
6oaoeMe oonrtltut~ OBI *Ilrqplartr,@ tt met be be-
6auee thy (m un&er the ~oo~tL”ol~ of the *earn
intorut * wlthlo flu meenlqj ef the above quet&
0tatute .4
This lamgaage lndlretu to us that partners eaa own a
buBlAtO0 within
the menlAg of &t5010 liEB1b17(r)(r) gugra.
This being true, itwt3uid ?ellov ttlettha OWAUO o? rir tm
#took of LIrorpooatlon own the OerxWatlon withli the aeen-
ing of th8 same statute.
In anowor to pur uueetton based upon the fimi fast
altuetion,we ere;o? the opltien that the iadlvldaalbuMno
end the oorporatlonare ewe& by ths eamo interest rith5n the
aemnf~y of Artiole E&&lb 19(i)(4), supra. St ?oll@we that
eaah emplop5ng unit lr aA amp~oyef aa drflne6 by the Unemplof-
meritAot.
In your awmd fast eittr*tlon, A owns and ojwrat~e en
individualbualnese and also own* Sl$ of the Yatirigstock a? a
oorporatlon.
iyewish to point out bar* thet thraughout this opinioa
we hare assumed that the oorparetloaementioned bat** ~eeoeil
only one tpgo oi eteok and that tb0 phrase wvotlng etoe+kw bar
A0 Other BKWi~.
Hon. Olaude A. Willinns, page 5
situation based upon Q&mll;arstaDuts8 as i.nvo2v4 bare. It3
that eaw, one tie A. fiicaiadlv~duallyomrnd an& gperatad a
telephona ryatem saploying sir IfPLlvidu(Lla.Eisliketise
ownsd 449 of the bob outmtandlagshares of steak In a corpora-
tlon owning and operating a telephone sgrkpl which lmgle)rrd
sovan indiriduale, Bssides annisg 440 ahsres oi stock in ths
oorpcraOlon,cm&e being SO,&# ot all the stoat, Mea was alac
Proridmnt, dirsotor and general masa&rr of ths corporatloa.
The wire and father or Bioo owned the,othef 51 sham8 or steak
In the oorporation.
In holding that the above emu&orated taots bid aot
ooqwl the oonolusion that Bias aoatxolledthe aorpora~lonby
legally anfcrsaablsmans or othsmmise, the &proms Court ot
Yiesoux+ saidI
“DO the ooaaadsd Fasts in this sare soqpel ths eon-
elusion or fast that respondeat serpo~atlonwad *man-
trolled* by Dse A. Bioet AppQltaatr r&J on t5Q usas
ot the atatutsr *ConWoUUed by lagally eniorseable
mean8 or otha#uisQ,dlnstl~ w i&IireetLJ,b; the
oama intorwts.* JIlthougbtha awideneo may have beea
ruah that an 5aremumr of raot aouLd have basn drawn
to tha orfeet that ‘respondent oorporatlonwas OQQ-
trolled by Gee A. ,%ae the iairreaes was not (Lram
fmm the evidence by the trial o6urt, and ths Qvl(leneQ,
as eonsedod stidentiary fasts, was not woh as to w
th. O@EdiUiOtl Oi iaot that res emdMbwa8 a0 sontm r a&.
Then was no eridenee that he 1‘ Pie* vor;a& hi0 440
aharas or rtock in rr8pondsnteer ratton or that hs
aentmlled the eor~poration*s War r ot dfTeettc8. *ho
mara faat that he was rniplo~edas manager of the aQPp.Wa-
tion, and was its prasldeat snd was one 0r Its three
direotors,dose aot coaps~ tha aonohrlon that he ma-
trolLad ruponbent by legally Qziiorasebls maan of othet-
wise, direotlf or imlirwtly, or that he QzOSC?i8Ql ths
power to control that was hia by reason ai his otneX8hip
of a majortt~ or respon&erd*rrt~ek, and 8Wh fa8t Us
not oonaeded by the respendeA6.: Proor tha6 bhr
of tha two 'a~Qloyft&~1~8’ Wat$ u~+LLCilPatch]l Ted
the 'muse ~LiCeTeS68,' ?&A&hha6 b&h @otid~bO o~~~~ll~d,
did not coqml the oonolw~n tha6 bsth sai~ls~inl, ~~%tQ
were controlled by the ‘“ae iat8nstQ.'
"l'haholdsn c# a wsjox5ty ,@ithe stock Of Q OQE-
~CIX.E~IO~
ST* ,Qr oourso, QntftlQd to dieaclteits polisr
and sonduot it8 busiar88 In thslr OWB WW QB &Q&S a8 OhW
Hon. Claude A. ullllau, paga 6
not in good rafth and thalr nets 'areintra firas, but a
mere 8dsl8eSoa that the 0wni2vshlp0r a majority or
re8pOXldsnt's Gtook wad in &a A. Rioe ~186not 6n ad-
z;;ion that euoh individual 'oontrollsd*tha corpora-
k1thouCh a oorporation may conduot buainaar
throigh its pFe8idantand other ofrioere tha ultimate
sour:06 of all authority lies in t&s board ot dirsctors
Who Stand iKIths pia Or the individualstookholderr
in tha Qen8e of oontrol thqoxeroity over oorporata
affaIr8. ha adtEiQ8iOnthat u.8 A. hi00 11168PrWBidOnt
and manager of the oorporation -8 not an admi8Qion
that he oontrulledthe aorporation.'
In ths h88 0880, 8up~-a, .hItioe hits quotes f~ra
the Doniphab U.ephona Cospany onea, Qupxa, a8 rOuOW#t
that ths OOnt%d OS th8 tvm "sm-
"'+ * * Pl'oOl'
playing units* was ultisabalyrested in tha %amQ
ihtQ1YQt8,"and that both am&l be oatroiled, did
not ooapal the oonolu~ion bha8 both enployia~ unit8
were 00m0u3a by theYasia illtaralt8".*"
On the basis or t&e abare aitad OQ%Q8, wo oonslude that
the ownerstip 0r al% or tha Qtaok 0r a aorperation by an in-
divid~al does not of itself JlQOQ8QQril~ eo@psl the Qona1usion
that rush iaaivldual contxols aaid earporationwithin the man-
ing or &tlcle 866lb 17(f)(4). “P US, inlftwt, an8wws pour
qW#tiOfl ba8ed Upon the QeOOBd facltQit@atiO$&.
In pfiurthird raat Qltuahibn,A and B are lpual part-
nerr in a buelnese aad liksd80 owa,lOC$ of the atoak Of a
eorpuratlon,k owning bC$ and B crrningW$. 38 are or the
opinion that tha partnsrrbip and the aorporatlonare ownad by
;$ 8ame intereat within the mesain& of ArticZo WDlb 17 (i)
mpra, for the Qama rmQonQ as cwtained ih the amwer
ta $Our question based upon the first iaot situation.
Xn your fourth fast situation, A, B and 0 are aqua1
partners in a buelneas, and A and B qrs east the ownsrs of OR+
third or the atook or a oorpcraticn. For the raa8oaQ point04
out in the answer to pour quesaion based upon the ascend Paot
situation,we aoncluds that th,aownership of one-thirdof the
rtoak by eaoh, A and B, d-8 hat of itself nQoss8eri1yoonpol
the coaolurion that they cwu or aontaol the Qorporationwithin
ths m8asiag or ArMale 5aelb 17 (r)(r), supra, This answers
your question based upostha rourth raet situation.
Ban. Qlada A. Williams, puim b
Xn your fifth iaat sl8uafiion,A, B and C oaoh owna
oaa-third of the stook in two dlrfrrmt oarporatlona. kt aro
or tha opinion that both ~orpomtfonr are owned by tho aam
iAtOF.Et within thE rceanlng0r Article SZ2lb 17 (r)(4),
aupsa, ror the masons aatsd in the anner to the question
in your first ract situation.
Youra 7ery ttruly
bTTORlQ3YOZXERALOF T3W.S
FIRST ASSISTANT
ATTORNEY GEU~L