OFFICE OF THE Al-fORNEY GENERAL OF TEXAS
AUSTIN
mnombls % @. hrme
srsr8tiwyor mata
Awtln, Texas
naar Sir: Attnt Mr. Qaodr A. Qlllanr
b am in maaipt 0
mant and sa
* (d) %I apltnl rtlll ea&Mbla $6 -
6371,039.00,wllhirh 6aourit~ tar debanturer
'3&6,656.%
irsrmd aaountbq tois
132
“The oomgany contanda thettha eubaerlb.6
6apltalstook 1s $974,000,00and that the aapltal
emountbg to ~~,QO.OO, subjaat to aall, ir, not
aub$mt to filing fws or fmnchlsr tama, their
oonhntlon being that $ll&,961.00
adveneod ova?
end abars $20.00 pr ahen ia la th8 natuu of
an ebmno~wnt upon whtah intanst ia pold aal
that tba eepltel aft11 eallael~ la not Qa b We
atookhcildorrr aa atodr aubsarlkd until the aI me-
tom 0al.l for luoh payrqnt. The aanpany*8arm-
mont la that nndar thr +~liah bn tba uorrat
aabrarlbrd ahoald be ddmmlned 81) tha ammat
called by the Ulrwto~. end tbrrt uattl e sell
ir maa for the unpaid portioa,then w Iy)lk-
b%llty oSthepart of'tba8tookEoldara for ttn
’ lmlanos or the otoak subeoriptloa, heme. M ill-
',rps tea ahaIM ba 8tmO8smd$grlmt thlo portion
,oithe &O&c. &I etlpport of thair oonteutiorl
ueorpts-fraaa rasolutionparwd by tha Board
:of @ra6tcim on Gbrtmry 1, I.867a#~#from the
*FM also aall your atkntlou tQ the paialon8
00nkfnsa'on IS9, 11, 15 16 and 35 of the kl?-
tialaa or +a800
T tion filed in thle offi la 1929
oonaem~'tho neton or this stooli
*%tt Will that in ti.&X4Wl6ll816 Of
ObEm'Vu
'pa&c&tdated Ootober25,.1929 October let, 1919.9
~Srptambar18, 1909, and uaow b r 8, l899, state-
matawara mad0 thetallof tha c8gitalsto0km5
mb-mxrlbedand lppmx$zStoly 755 $hclnoi #Sd In,
and rilsng reas paid on tin ant%ra oapltelstimk.
theMrin% roquallt you? oplalane8 to
*'iJa,
whloh or t&e roll& 5alomtaoar tlllssfwe
shellbe besedr
~22. u.0. Flowsra,I~af30
3
Wa also raquaatyour~opinion
aa to whlah
oftha followingEUW oar Smnahlw tarwIllba
euaeaed :
pert of ~l%laIa39u; %Tlead txvil BtelM85,
&et
1 9 25,
a sl~~~ndsd, Aata 1931, p* 204, a. 120, providbg irrr
the flllrrgto* of a fora&n 4orporatlonto rea3sw its right
to a6 boelaaeafjl%.a., rsads aa fonowst
"Upon obtainin&a pa!mltM(Xw ArtloU
1529 and upon,~~ng a arrtl.fiad ogy of any
lmmdmnt 8 au lamat uqd4r Art1 0 1537, *aoh
pey the roll.o~ing
rue
atblttad to d0 an
the ~eod wpN.l etosk w tazabb shell k thet
propozt~oBrr ttia~rholr tbalmr, l8 tha -8
lS.Stb Sa ip inwhole orlnprt in ln%mxata~
bualMu in T MS* plus tha groaa rawi to rrol8In-
tzaetatk‘prxae baefnose,baar to tea ameirr ssaatu
and reoelptaof tho aorpom&tIqn.3,nth4 ~56111s ot
e ba@nuar~arporatIoaobtainingapotit tcido
btmiarae In True for tha first tlm, mhara It
hre tlmrs$OfOr. .5@0~4 BO Upi++ &oak in -w,
thy beeta fllirg rro or rfitg $sa.OOl Dollars
shell bs p&d 66 harsinebove pmlaod end wlthln
ninety (90) day6 aft4r th4 axplratlon of the first
per tandar Ita pamit, tb oorp0mthOn efulll fil*
an affidavitwith t&s 8eomtWy Of Stata SXSOUtSd
b? OM ct its exeeutits ofriwrrr,ahaPiz@the ewurAt
of gross am&o omploya4in nilo1aal-sn part in Ln-
treatetabuaineaaiB Taua and the WOW% of ita
wtlrq grow maoto at the and o? auoh iint mar With
uS&otbar data mquire4 to oalaalda thafa* ltlrd
rf~eiiuh tirps shell ,pay to the s.OMtrrp or bets
tbabaia~rtbaril~~ronthapr~wa
etoak as banlnb&ore dobr-
of ifs leeuadotkpltal
&tad, +I exeau ol Tan ~o!seand
lsn at,tha mto of rcln
edditioanl %B %OUrWnd
fm4tlOaal part of euoh
y6ar of th4 llfa of any
1.34
non. 40. %warat %gr 4
oapltilatook 18 laauadandrr an ammdmant
vldodb~in forth .paymntonthr mm&e
e tha wee of a ,bsginnsr earpomtlon; We&
tbet~thsrinlqmflllng fi*toPr-:uyman~tor
eapplaarnt'abalXbr yifty ~4WO.00)iJoilen. .&an
th elaaato lmplayadin Tume.am used jointlyin.
oalmlating &mhfaar ar.tha lntreatak~~Prp8 ra-
mlpte bmrtotha lutaretete Tazee neipta fror
t&n onfirs opsmtio~ in Tsxae,a
ArtLI& w&,, R@r ld Giw Stat&as, 1925~ as
emandsd,Aota X931, ~~~Ul; 265*'Osoridmj1~ mrt, le
followe:
"(a) .%Ospt as ha&la prorldod,wry
domeetloend rarnignoorponts0nhrntoio~
or hsroei%erahabred ox mathorlmd to do.
buehsea ~in.‘foxoe, ‘tmor bsfors %ay
.shell,
lstbfwahyaer~ py ias(ltanootothe Baoy-
tery of stat4 a fnmohieo tau for the.yser
~llawing, baa.4 npanth.t pmpmblonoftha
outstending oapltallb&; marflacand m-
dirldd proflta,plna ths amount .otcwtatand-
ing bonds, notae end dabentume, other tbsn
thornamtaringlnloaa than a y8ar from data
0r leaua,as the grvae nulpte m its bus&
MU don6 InTexes bsareto the tctmlgroee
raoslptaof the sorporatlon?roa lta 4ntlrs
bualnsea,yh+oh~taCehellk wmpatrdattha
fomwdng mtaa fok 4e4h~&asa0ttuha’ JJeQmru.
nortraotlqnai?plqt
(#l,000.00) thamof&g~. ~.a,'
'Wddo not aederatandyour raqr;r~at
as lntwd& ti
m& w y o ur
ur p a r timntel
wnatmmtiask o ftha l~tietutee,
dnss
.thrXrlna&mant, wlsioh18 bees& Upon&i AttWay~&mr&*r
MT zt;: "Ly$nEh";t";w'-&=i ratiLc
&t:*At %rB4
am6 Court of lkxae, &etsa’A~lI l2*lg7~y&~9~~‘*~*
Oplnlonaand hp. 19l6-1918,PI t2l
thet-uplhl atwk of uld oorp4wt~on i5euaa, anu ou$&eiul-
lBgJ'm6eBtt<partOftha alhorlsad'oaltal rsook:~oh
be& boon aubaarlbadalthwgh not fully #8% ,+n ax4 qtibjyst
to 0311. ml- the ;w:Fasea cf thlit;
opinionvfaroaept you*
lo@! aatsblinhadtlapartPPsnta1construotiono?these stat-
otas ar& conoldsr tba umtantiona cf tka taXp9yartnatba-
aaasa of ths %&Uh leaveappllaabiato aa& oy-t-b
the full amount of ltc atook ahonldnot be OOIU damd for
tnxatlonor ~iower fu purpouai
~pparantlgunbar thr ?pn4ieblmf mombars-ofthe
-&lmltad.Caapnyare laausbcwrtlZlaeko m tha total pax
v6xu0 0r the. shams eub8aribadupon peymantof a-put or all
of the par olrlna,in this lnebn~.arOur poandr on 8ls pmnb
prvalua *took,laavln6two poanU5 par alnraaapald ?or
,wblah the nubsetiber ia subjrot to Gall. TJM rtooktmldar
wy notpayup thaunpalt¶ partlono~hls uteok.%nthe eb-
e4nw of .a0al.lor wlthatt the wne8nt of the.#lrwto~ ~4
-It 15 ala0 pr4tv$hdthat'adv4nwelay In rada by the etocDk-
:holdarea6.a pnpaymnt~a&aimS fNmra.oallr on thaw ap-
~paldatouk;ahanautho~aad bytha‘dlrabtam. Tbaa pra-
,pajwant8 ~alfkst~eall5 am notwmlUu8d u paynnte ap0.a
the ntocdcin its strictuan&o.bat ara aotxeldandmra in tha
DBturwof a loan up00 whloh-~&tanat 1U~galdend ln tha
wont 6.~aall is Pada, or tlm oasporr, tlon la diuo2wtl ‘and
1 t, bewmw luoMury 60 '8nfQrM.ulle ior um ~benaat or
oeditimt;~th6'~rpDont shaact*d is 0raua64 me 8n o??a*t'
~O&BinBt;
UCh Oti to the 4X@JBtHO? th@ pm$Bwt. tbldU
the lmv@ o$ Tsua-e eorpontio@may not lam&m &40kapanB:
9vetiy such sabaerlbrr baoumm a’ numbs
lpw faato on the inoozporatl8f1
OS tim umpad~,
and ltmblias WB hoxdsr O?+Lrtavar mmbar 6?
#~IWO~ ha has.at~baorlba.?w.'l'ha
23rllSeOtiw~
LO? Wr A5t Of 1862 &OP Wbhh IW@% asd & the
.~aum of awoalation in n airrum 'ay 00 .th4
poaltiono? other parwna uht'agxa~'~ km'
~JOR&MS. *l[tI5 pAin?. ea%d Lord blue ti
i!van'c4.a (lHi7);L.R. 2'Ch. hpp. 430, 't&H
the orS&kaiaubaorlba~eara, ,bythe &t Of Pi*
llhR4ant,de&maQ to mars trrlcen
tb* rharcl0mt.O;r
poelta thalr1181~~1'; the Ob et ba@ that tha
publla&&tralylrlthc~~~ Mt3"aanoamthaaab-
sor~lbepabr the ~~cswa~Atun btmml+ mwWn of
use ooRip3ny. r\nd a44~wgottl'5 oaw, 4 zq. 238,
In thhr88~ of the eub64rib4ra aeaorandum,
of t&a
tbsn3rmr, no auotmnt ir nrorsoary tna London
and ~?rorlnoial,& c;O.j Q. Ah 525)J'noaIrtry on
fh9 M#@~T Of 6@6b0rS 18 n4046rrlllf. ~f0hOl'S
oeme, eupra ~luandsr v. ktomstla Tel* honr
%. 63. The subseribarir ihand
co., .(19OC,1
to take tha.ah8qusfraa f&e 8omgs4, and to pay
fortheron oalls dulyasda1Ura any otharnhan-
holder."
Vhe ta3aa vi the Pat of 1929 'and.%a**
tSdnlirthe pr0v1810im0r O40t8. 28 and 157,
lra*s no doubt, ln'tiha oaae oi a'ooaplq,Mt.
Ml by Ilhera~, about tha obll&atlonor shn-
hel&er'a to pey'to the Ocmpa4 the fkll amotint
of thar tlhama. 2% worda of .Mm dotie xbit-
%06 tha foregoIng it appmrm. that th4 *to& mm-
or the,fullamountottho #took Qsitrdbrth5.aoor&wzatioa
will only pi404 it upon'th ma4 foot- and b4als with
othor oorporattoxm
84 th4 at8tuM S.aapplladQr tha Se*
Mtary Of 8tata*aofrima.
Path relF4Mnorto prrpeynleat5 in Nmpsot of futura
04ll.8,Palaiar'sGoap~nyLaw, A5tb ~Rdtioh, &at-esat pnga
14G es followBr
l.38
"Ey Lords, I ogrea, hatlon 7 of !l!abla A
authorizes the direc:ors of 4 coqmny limited
by shares to agrsa with any member for an ad-
vnnce of uonay on tha terms that the money so
advanced is to b6 sppllec!la discharge of the
member'8 llablllty on his aheres~when end aa
thet liability .rlpenu Into a debt preeently
payabls, en4 that in tha meantime the mmibnber
is tc be t3e+itha tc lntaroat en th4 4dVt6xa
aa if he ware an ordinary aredltor of the oom-
.vaw. 'zheinterest la to bs due to him in tha
character o$ orlditor, not In hls oheraatsr aa
tmn@tsr. .... 2
The member's advanoement against future oalls on
hia stock liability doea not iriany wiaymduae the amount or
although uutll a eall Is 6ade
capital stock of the aoflpfjny,
tba prepctywnt hears Interest, lnatead of sharing lo the dlvl-
awls. The soncy~thus edVenced by the &o&holders against $lnlr
liabUl.t,pon their atoak& oout~lbutep jwt ,aamuoh to the baai-
11888potenoy of the company and represents a part of the aatwil
available wing capital of %h~ aoupany attrlhiableto aapital
stock, whqther aharatierlzsd aa~a pre~ymant on future calla
or a present paprmnt on ths etaak ti con lets disaharga of lia-
blllty ror the unpaid stoak,or subscti~~,on.
P
An addltloual'.conal4en!~~onarlsea, however, wl%h
refarencltto the raura 'IlaxSatute, be~suea or the feat thet
Article 7064, as emended, Includes uutstenalr@ bonds, notes
and debentures maturing onegear~@;mora fran date of issue,
ae a part or the taxable Uapital of the OorpOWiloi%. zs this
oese the members* tuqald llablllty on thelr etoak baa bean
pledge4 by the cowany as aecwlty for Its debentures lseue4
amou&ug to $3.k0,656.00 and It ia au&w&ad by the ~aompany
that if e call should be mad4 upon the unpaid portion of tha
stock, a corres::onding,smq.&ntof the dabenturas for+Itlch they
ara security must also.be mid up and far that reStsonthe
inclusion of both oallabla ctipltaland the Uebentures w&h
in a aupm4tr aapitall~tlo~.~
If the ncceooltp ror ~rafltingtha dsbentures upon
calling in ths underlyiug cslleble capital, which irreecLu%Y
therefor, arose out of the fact that the aabenturs holder@
would prcbably demand addlLt@tal seaurltp to raplaae this
pledged stock, thfs 9fiaianot'ba naa6ssariJ.ytrus. Kowver,
we flna the follwlng provisloa in the comp~ny*s Artlalea of
Aost3cletlont
"The total lnsue of suah bonds and deben-
turee shall hot at any tins excobd the amount of
unpaid ~oapltal. . . .*
139
*n. ii.0.plOw6r6, rslrcl 9
zmaucraof thlb pro*lslon,the U6C688ityfor l-6-
&talagthe dabantarae whsn a ~11 1:;aPad@upon uapai6 aaplt8l
is b8Mtt Upda th6 limitationUpOn the Wit~ny'a 6UtibOC~ty to
isetia bonda en4 dabenturaa an4 fltoe a mrlmum mpltallsatlon
~@fbath &Oak an4 debmturra in tileawunt or th6 par valu6
ai @to mbsotikd &o&. Uo48r tb68a uira~tena68, th6fW.l
mwwto5th6 enderlyirgi4alZablo
oapltmil,
end the autatm4-
,ta(l
da~knturornoal rmalt in sattiag~
ap o texebla. mpltal
tn.rzoaes of tfu muW& llsit mbieh tin eorpontlon maid
k math~66 to mch ooder It8 ahe@nr an4 tha lam oi its
dtU10~6, 8nb St is OUr Op~Olt that to #18 8Xt6ZttSt W0ltl.d
in iBOt l’68illt in 8 &I liGld.Oll Of Qapital tlOt00lltU4&&!4
by fl'ttBahi@W
th6 bX IIis tUt8.
It la oar a Foion that th6 tez8bl6 capital of th8
?atiador
Lea4 snd C&t P 6 kquny, Ltd., for t&m purpo8r ch'
OLtbt16tiXQ th8 WrpOMtion'8~ &W'Btt fizLn& f@O - b6
aoeeptrd on#l b6~,000.00, klngtbr fullaafmat ofth
'&a&88 rabrarli8dand in th6 h8nd8 of atookbold6r8.
!i?ia6@ t&O @6BClhi58 tit2 %U b88Sd UpOB -piti dOOk,
srplua and Pnlirid@d&WOfit8, ati Wt68, bonde mPd 4OknWrOr
otlmr then thoea 8utturhg lataa than ozi6 par i 6ak of
tMu0,~ an4 W@ 40 lWt &lY6 011 Of thM6 f&W68 k+on tU W
&tad St6st6 tba:m MUint at taaabl.6 aEpita1 tl&Wt abhi4h
tb# -88.tE% 8hofild.k bead, hOW6'(*r,- t.TUUttbatth
abcna tlbwaeionrlll smblo you to aaqate the tax.
Yoaln Yary truly