Untitled Texas Attorney General Opinion

June 2, 1939 Hon. Tom L. Beauchamp secretary of state Austin, Texas Dear Sir: Opinion No. O-747 Fkl: Incorporationof American Legion Corporations. We are In r&klpt of your lettbr of May 3, 1939, in which you request an opinion from this departmentupon the followingquestions: "The typical purpose clause of applica- %ions for charter for the American Legion cor- porations reads as follows: "'It shall have all the rights powers and privilegesgranted to and conferred upon corporationsby provision of Subdiv- ision 2, Article 1302, Chapter 1, Title 32, of the Revised Civil Statutes of the State of Texas, which reads in haec verba: ""The support of any benevolent, .cheritable,educationalor missionary un- dertaking" and particularlyincluding the following: 'I'(e) To preserve and strengthen com- radeship among its members; to perpetu- ate the memory and history of our dead; to support and maintain education in the moral, intellectualatidphysical de- velopment of those who served in, or who mag.serve in, the Army, Navy, Marine .Corpsor Coast Guards of the United States of'dmerica,in any foreign war, insurrectionor expedition,which ser- vice shall be governed by the issuance of a campaign badge by the Government of the United States of America; and to maintain true allegiance to the Govern- Hon. Tom L. Beauchamp,June 2, 1939, Page 2, (O-747) ment of the Unlted States of America, and fidelity to Its Constitutionand Laws; to foster true patriotism;and to malnt&l'n a'ndextend the institutionof American freedom: "'l(b)To act as a charitableand benev- olent organizationfor the purpose of pro- moting the welfare, alleviatingthe suffering, and assisting and aiding those who have served, or may serve, with the military forces of the United States of America In foreign lands, their widows, orphans and dependantsand relations." "This department reqrieststha% you amwer the followingquestions: "1. In suoh corporatton,with purpose as outlined above, authorlaedto incorporateun- der subdivision2 of article 13029 “2 , Are our fees for filing a charter containingthe same or Lmllar purpose clauses $10.00 or $50.001 "3. Is such a corporationentitled to be exempt from the payment of franchise tax under the provisionsof article 70947" The purposes for which corporationsmay be formed in the state of Texas are enUner8teQ In Article 1302, Vernont8 Annotated Civil Statutes. Section 2 of said article readp as follows: "The support of any bdnevolent,charlta- ble, educationalor mlseilonary UndertakIng." The first question 1s whether or not reotlon 2 Is statutoryauthority for the lnoorporatlonof American Legion oorporatlonswhom typical purpose clause 18 set forth in your letter of request quoted at the outaet of thi8 opinion. , We donnot think there la any doubt that suoh objective an the following fall within the category of “educational”purposes: , .-- -- Hon. Tom L. Beauchamp, June 2, 1939, Page 3, (O-747) ' l ** to perpetuatethe memory and hls- tory of our dead; l l l It ' l * l to support and malntaln education in the moral, intellectualand physical develop- ment of those who served in, or who may serve in, the Army, Navy, Marine Corps or Coast Guards of the United States of America, in any foreign war, insurrectionor expedition,which service shall be governed by the issuance of a campaign badge by the.Go~ernmentof the United States of America; * l l " l * *and to maintain true allegiance to the Government of the United ftates of Amer- ica, and fidelity to its Constitutionand Laws; to foster true patriotism;and to maintain and extend the institutionof America freedom: l l l"fl Furthermore,the following aim of an American Legion Cor- poration is undoubtedly "charitable": " l * l To act as a charitableand benev- olent organizationfor the purpose of promoting the welfare, alleviatingthe suffering,and as- sisting and aiding those who have served, or may serve, with the military forces of the Unit- ed States of America in foreign lands. their wldowsn orphans and dependantsand reiatlons. +)o+ It la not placing a strained constructionupon the following purpose clauses to hold that they are "benev- olent' in their nature: Itl l l To preserve and stnrengthen comrade- ship among its members; l l l and, of course: Itl l l To act as a charitableand benev- olent organizationfor the purpose of promoting the welfare, alleviatingthe suffering,and as- sisting and aiding those who have served, or may serve, with the military forces of~the United States of Amerloa in foreign lands, their widows,,orphans and dependants and relations. *it* - *. .-. Ron. Tom L. Beauchamp, June 2, 1939, Page 4, (O-747) Thus, an analysis of the typical purpose clause of an American Legion Corporationreveal8 that the manl- fold objectivesare each and every one wlthlh the purview of Section 2 of Article 1302, Vernon's Annotated Civil Statutes. We wish to cite one Supreme Court-.ofTexas au- t$r;t; in this matter. We feel that the case of Conley, Daughters of the Republic (1913) 156 SW 197 (SU rem; Court of Texas, Brown, C.J., delivering the opln- ionP is very much in point in its elucidationof the phrase "educationalundertaking"used in Section 2 of ar- tlcle 1302, Vernon'8 Annotated Civil Statutes. In the cane of Conley v. Daughter8 of the Re- publlo, the Daughter8 of the Republic of Texas which was organleedas a corporationfor the declared purpose of perpetuatingthe memory and spirit of the men who achieved Texas' Independence,and to encourage historicalresearch into the early history of Texas, and promote the celebra- tion of IndependenceDay of the Texas Republic, and erect monument8 upon place8 made historic in the war for Texas Independence,was held a corporationorganleed for "educa- tional" purposes within the second subdlvl8lonof Article 1121, Revised Statutes, which wording is identicalwith that of Section 2 of Article 1302, Vernon'8 Annotated Clv- 11 Statutes. The court held that "education"in a etatu- tory sense meant not merely instructionreceived at school, but the whole oour8e of training, both moral,intellectual, and physical. The following explanationof the term "ed- ucational"by the Supreme Court is governing in the present instance. "ihe Attorney General asserts that the corporationwa8 not lawfully created under the statute of thin atate, because the law does not authorlte the creation of uuch corporationfor the purpose8 named In its charter. The eecond subdlvl8lonof article 1121, Revised Statutes, reada: 'The purposes for which private corpor- ations may be formed are: l l * (2) The support of any benevolent,charitable,educationalor missionary undertaking.' The purpose of this corporationis clearly 'educational.' Whatever educates &within the meanlnq of 'educational undertakl!U.' Education in thesense as used in the statute includes: "In its broadest sense, l * l not merely the instructionreceived at school or college, but the whole course of traln- lng, moral, intellectualand physical; is not Hon. Tom L. Beauchamp, June 2, 1939, Page 5, (O-747) limited to the ordinary instructionof the child in the pursuits of literature. It comprehends a proper attention to the moral and religious sentimentsof the child. And it Is sometimes used as synonymouswith 'learning'." 14 Cyc. p. 1230. The sentiment of regard -m-for the mem- m of tho=who Rave their lives for the bless- u of this nreat state stimulatespatriotism, and is in the h*hest sense educational. The facts to be preserved furnish the means of the best education for the young men and women of this state. The purRos6 is laudable in its in- fluence won the present Enoration; it is laudable, educational,g&benevolent for the future citizens. This qU08tion 18 asked: 'Shoulda state commit 138 interests to corpor- ations? I This court has naught to do with the policy of the state on that question. All lltl- ganta 'look alike' here. However, we will say that this is not 8UCh a SOU~~SsS Corporation as needs to have a watch upon its actions. The heart, the soul, and splrlt of patrlotl8mare the capital employed by those women which would not detract from the authority and power of the state. On the contrary, those ladies, wlth no hope of gain to themselves,undertook to sub- stitute for the state18 fund, which would have been created by taxation, the voluntary offer- ings of the people - a tribute of patrlotlsm, sanctifiedby love for the state, and reverence for the memory of her heroic dead. Can there be danger from such a car oration? We think not . ” (UnderscoringoursP . It is our opinion, in answer to your first question, that American Legion Corporations,with the typical purpose clause set forth in the letter of request, derive and possess the necessary authority to lnoorporateunder Subdivision2 of Article 1302, Vernon's Annotated Civil Statutes, whloh reads: "The support of any benevolent,cbarltable, educationalor mlsslonaryundertaking. Your second question asked whether the fees of the Secretary of State for filing a charter containing the same or elmllar purpose clauses to that quoted in your letter of request are $10.00 or $50.00, . Article 3914, Vernon's Annotated Civil Statutes, prescribing fees of the Secretary of State, provid68, in part as follows: Hon. Tom L. Beauchamp; June 2, 1979, Page 6, (O-747) 'Upon filing each-charter,amendment,or supplementthereto of a corporationfor the support of public worship, any benevolent,char- itable, educational,missionary,literary or sclentlflcundertaking,the maintenanceof a library, the promotloc of public cemetery not for profit and the encouragementof agriculture and horticulture,to aid its 'membersin produc- ing and marke~tlngagriculturalproducts, or for acquiring,raising, breeding, fatteningor mar- keting live stock, a filing fee of Ten ($10.00) I)OllarB,end for filing the seml~annualflnan- Cfal 8tat6m6nt Of such 6SgrfCUltUralprOdUCt or live Stock corporation,Ten ($10.00)Dollars, which shall include the annual license fee." Since we have held'thet an American Legion Corpo- ration with the purpose clause as set forth in your letter of request, may bs incorporatedunder Section 2"of Article 1302, as within the purview of "any benevolent;charltable,edu- cational or mlsslonary undertaking",it follows that in answer to your second question the fee of the Secretary of State for the flllngof the charter of such corporationswould be $10.00, as prescribed in the second 8 article 3914,‘abovequoted. See "opinionsof Attorney General, biennial report, 1914-1916, p. 471." In this opinion it was held that a corporation,the purpose of which is stated to be the accumulationend loan of money to young men to defray their expenseswhile studying for the christianmlnlstry and to young women to defray their expensea while studying to be christian missionarlee,where such corporation is organiced for charitable purposes and not for profit, may be incorporatedunder SubdiViSiOn2 of article 1121, Revised Civil Statutes; and that the fees for filing the charter of such corporation is $10.00; and finally that such corporation 18 nO$ subject t0 8 franchise tax. ArtfClSs 1121, 3838 and 7403, ROViSOd Statutes, 1911, were considered. The~thlrd'question asked in your letter of request Is whether or not such a corporationincorporatedwith a pur- pose clause, such es that quoted in the letter of request, is entltled'tobe exempt from the payment of a franchise tax under the provlslonsof artlole 7094, Revised Civil Statutes, 1925. Artlhle 7094, Revised Civil Statutes, 1925, read8 88 fOllOW8 I "CorDoration exempt.- The franchise tax lm- 8 posed by this chapter shall not apply to any insur- ance company, surety, guaranty or fidelity company, or any transportationcompany, or any sleeping, . . *m-. .‘i- . Hon. Tom L. Beauchamp, June 2, 1939, Page 7, (O-747) palace car and dining car company which is now required to pay an annual tax measured by their gross receipts, or to corporationshaving no capital stock and organized for the exclusive purpose of promoting the public interest of any city or town, or to corporationsorganized for the purpose of religious worship, or for pro- viding places of burial not for private profit, or corporationsorganized for the purpose of holding agrlcultural,falrsand encouragingagrl- cultural pursuits, or for strictly educational purposes, or for purely public charity." Under this statute corporationsorganized "for strictly educationalpurposes, orfor purely public charity" are exempt from the payment of a franchise tax. The corpo- rations under considerationare formed for educationaland charitablepurposes. It is our opinion that the American Legion corporationswith purpose clause set forth in your letter are brought within the exemption,and ere excused from payment of the franchise tax under the provisionsof article 7094. It wes within legislativecontemplationthat just such American Legion Corporationsbe exempted, since they are to a high degree of a benevolent,charitable,edu- cational and patriotic nature. See opinions of Attorney General, biennial report, 1914-1916, p. 471, supra. It is, of course, recognized that corporations organized under Section 2 of Article 1302 have no capital stock and are non-profit legal entitles. Trusting that the above fully answers your ln- qulries, we are Yours very truly ATTORNEY GENERAL OF TEXAS DS:omb:eac BY /s/ Dick Stout Dick Stout APPROVED: Assistant /s/ Gerald C. Mann APPROVED OPINION ATTORNEY GENERAL OF TEXAS. COMMITTEE BY /a/ H.Q.B. CHAIRMAN