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