December L:, lY70 

Honorable Martin Dies, Jr. Opinion No. M- 754 

Secretary of State 

Capitol Building Re: Should the Secretary of 

Austin, Texas State administratively reinstate, under Article 12.17, 

Title 122A, Tax-Gen.,,V.C.S., 

a trust company formed under 

Article 1302, subsection 49.. 

‘or’Article 1303(b), V.C.S., 

without proof that the 

corporation has complied 

with Article 1513a, V.C.S., 

and especially whether the 

corporation is authorized to 

have and doeshave a fully 

paid-in capital of not less 

Dear Mr. Dies: than $5OO,OOOiOO? 

Your recent request presents the following question for 

determination by this office: 

"Should the Secretary of State administratively reinstate, under Article 12.17, TaxationGeneral, Vernon's Annotated Texas Statutes, a 

trust company formed under Article 1302, subdivision 49, or Article 1303(b), Vernon's Annotated Texas Statutes, without proof that the 

corporation has complied with Article 1513a, 

Vernon's Annotated Texas Statutes, and especially 

whether the corporation is authorized to have and ', 

does have a fully paid-in oapital of not less 

than $500,000.00.~ 

This question of whether the Secretary of State should 

require proof of compliance with Article 1513a,l Title 32, 

Corporations, before reinstating the charter of a corporation 

1. All Articles cited are as codified in Vernon's Civil Statutes. 

-3676- 
. 

Hon. Martin Dies, Jr., page 2 (M-754) 

formed under either Article 1302(49) , or Article 1303(b), of 

this Title 32, (the latter two articles repealed by Acts 1961, 

57th Leg., p. 458, ch. 229, Sec. 1, Eff. Aug. 28,. 1961), 

actually presents two questions for determination in this opinion. 

The first question concerns the Secretary of State's wright or duty 

to require that a corporation seeking reinstatement under 

Article 12.17, Title 122A, Taxation-General, comply with all laws 

then pertaining to it before allowing reinstatemant~of its charter. 

Assuming that such a duty on the part of the Secretary of State 

exists, the second question is whether the provisions of Article 

1513a, apply to corporations chartered under either Article 1302(49) 

or Article 1303(b), and which corporations seek reinstatement of 

their charters granted under the authority of either of these 

Articles. 

Article 12.17 provides for administrative and judicial reinstatements of charters forfeited either administratively by the 

Secretary of State or judicially by court order. We are concerned 

here with only the right to administrative reinstatement provided 

for corporations with charters administratively forfeited by the 

Secretary of State. Article 12.17 provides in part: 

"(3) . . . (b). Any corporation, domestic 

or foreign, whose charter or certificate has been 

forfeited without judicial ascertainment by the 

Secretary of State may revive said charter.or certificate, by first filing all delinquent franchise 

tax reports as required by law and by filing all 

franchise taxes; penalties, and interest due by 

said corporation at the time of the request. . . . 

Upon such request, and upon the determination that 

all delinquent tfranchise tax,reports have been 

filed and all franchise taxes, penalties, and 

interest due by said corporation at the time of 

the request for reinstatement have been paid, the 

Secretary of State shall administratively set 

aside the forfeiture. . ." 

This statutory provision does not speak of any requirement 

that a corporation to be reinstated must comply with any other 

laws relating to its existence or operation. However, it can 

easily be seen that if such corporation is not required to comply 

with all laws pertaining to its existence and operation under its 

charter before it is reinstated, the Secretary of State would be 

put in the unreasonable and untenable position of reinstating 

corporations that cannot exist or operate under their char& as 

-3677- 
Hon. Martin Dies, J., page 3 IM-754) 

reins tated. For example, this problem would arise whenever a 

corporation did not have a registered agents as required by the 

Texas Business Corporation Act, or failed to meet some other 

provision of the corporation laws, but did meet the requirements 

of Article 12.17 by paying all delinquent franchise taxes, 

penalties, and interest due. It is implicit in any procedure to 

create or reinstate a corporate charter that the corporate laws 

dealing with suoh a corporation be complied~with prior to its 

creation or reinstatement on the records of the Secretary of State. 

In view of the above holding we must now determine the scope 

of Article 1513a, in so far as its prOViSiOnS may apply to corporations having charters originally granted under either Article 

1302(49), or Article 1303(b). If the provisions of Article 1513a 

apply to such corporations seeking reinstatement, then the Secretary of State must require compliance with them before allowing 

reinstatement of the forfeited charter. 

An understanding of the subject matter of these three 

statutes dealing with trust companies is necessary to this opinion 

these statutes read in their relevant parts: 

i 

Article 1302 

"The purpoaes for which private corporations 

may be formed are: 

,I . . . . 

"49. For any one or more of the following purposes: 

To accumulate and lend money, purchase, sell and deal 

in notes, b.onds and securities, but.without banking and 

discounting privileges; to act as trustee under any lawful express trust committed to them by contract and as 

agent for the performance of any lawful act.” 

Artiole 1303(b) 

"A private corporation may be formed for any one 

or more of the following purposes, without banking or 

insurance privileges: to accumulate and loan money; 

to sell and deal in notes, bonds and seourities; to act 

as Trustee under any lawful express trust committed to 

it by contract or will, or under appointment of any court 

having jurisdiction of the subject matter, and as agent 
Hon. Martin Dies, Jr., page 4 (M- 754) 

for the performance of any lawful acts;. . . .' 

Article 1513a 

"Section 1,. Trust companies may be created, and 

any corporation, however created,, may amend its,oharter 

in compliance herewith, or a foreign corporation may 

obtain a certificate. of authority to do business in 

Texas for the following purpose: to act as trustee, 

executor, administrator, or guardian when designated 

by any 'person, corporation , or court to do so, and as 

agent for the performance of any lawful act, including the righ:t to receive deposits. made by agencies of 

the United States of America,for the authorized account 

of any individual, and to act'as attorney-in-fact for 

reciprocal or inter-insurance exchange, and to lend and 

accumulate money without banking privileges, when 

licensed under the provisions of Subtitle II of Title 

79, Revised Civil Statutes of Texas, 1925, as amended. 

"Section 2. (a) Such corporations shall be subject 

to supervision by the Banking Commissioner of Texas and 

shall file . . . each year a statement of its condition 

showing under oath its assets and liabilities, 

;oge;her with a fee of $25 for filing;.. . . 

"(b) The Banking Commissioner of Texas shall . . . 

cause to be examined each such oorporation annually or 

more often if he deems it necessary. . . . If such 

corporation has not sold in Texas, and does not offer 

for sale or sell in Texas, any of its securities which 

have been registered or with respect to which a permit 

authorizing their sale has been issued under the Securities Act, . . . the Banking Commissioner . . . shall 

accept the financial statement filed by such corporation 

pursuant to the first paragraph of this Section. . . . 

"(c) If any such corporation shall fail to comply 

with the requirements of the first paragraph of this 

Section . . . such failure shall,subject such corporation 

to a penalty of not leas than $200 nor more than $1,000, 

which shall be collected at the suit of the Attorney 

General. . . . A second failure to file such statement, 

. . . shall be grounds for forfeiture of the charter of 

such corporation at the suit of the Attorney General . . . 
lion. Martin Dies, Jr., page 5 (M- 754) 

” (d) Refusal. . . of any such corporation 

to submit to an examination by the Banking 

Commissioner . . . or . . . withholding of information . . . shall constitute grounds for forfeiture of the charter of such corporation . . . 

"Section 3. Any securities issued.or sold by 

such companies shall be issued and sold in compliance 

with . . . Securities Act, . . . 

"Section 4. Any such company,must have a fully 

paid-in capital of not less than $500,000. 

"Section 5. Any such company shall not accept 

demand or time deposits, except as hereinabove provided. 

"Section 6. The provisions of this Act shall 

apply to foreign corporations which have heretofore 

been authorized and which may hereafter be authorized 

to transact business in this State under a certificate 

of authority which authorizes such corporation to, 

exercise in this State all or any of the purposes, 

powers or authorities referred to in Section 1 hereof. . . . 

"Section 7. The General Laws for incorporation 

and governing of corporationsand the provisions of 

Article 1513, Revised Civil Statutes of Texas, 1925, 

and the provisions of the Texas Business Corporation 

Act shall supplement the provisions of this Act and 

shall apply to such trust companies to the extent that 

they are not inconsistent herewith; provided, the provisions of Article 2.01A permitting a corporation to 

have more than one purpose shall not apply. The power 

and authority herein conferred shall in no way affect 

any of the provisions of the antitrust laws of this State." 

The above quoted statutes all,authoriae the oreation of 

corporations having trust powers, characterized as "trust companies

by the courts and in Section 7, of Article 1513a. Carney\v. Sam 

Houston Underwriters, 272 S.W.Zd 942 (Civ.App. 1954, error ref. 

n.r.e.); Stewart v. Ramsey, Secretary of State, 148 Tex. 249,' 

223 S.W.Zd 782 (1949). 
Hon. Martin Dies, Jr., page 6 IM- 754) 

Articles 1302(49), and 1303(b), were enacted in 1919 and 

1927, respectively, and were repealed as of August 20, 1961. 

Article 1513a, was enacted in 1957 and is still in effect. After 

the repeal of Articles 1302(49), and 1303(b), a trust company 

could be created only under the authority of Article 1513a. Although all three statutes authorized the creation of "trust 

companies", only Article 1513a sets out a comprehensive statutory 

scheme for the regulation of such corporations. 

Article 1513a, providing for the creation and the regulation 

of trust companies and requiring the compliance with specific 

conditions therein provided by such trust companies, effected a 

change in the conditions and requirements necessary for all trust 

companies, including those theretofore created under prior 

statutes authorizing corporations with trust powers. This statute 

is not the first enactment whereby prior corporations have been 

subjected to subsequent requirements necessary forits continued 

existence as a corporation having the same powersgranted to it' 

by the statute under which it was originally created. Jefferson 

County Title Guaranty Co. v. Tarver, 119 Tex. 410, 29 S.W.?d 316 

(Comm.App. adopted 1930). 

In that case a title guaranty company incorporated in 1927 

under Article 13021571, Title 32, Corporations, ,was subjected to 

a later act requiring an increase in the capital stock subscribed 

of $50,000.00. The court quoted the following statutes and provisions of our State Constitution: 

Article XII, Section 1, Texas Const.: 

"No private corporation shall be created 

except by general laws." 

Article XII, Section 2, Texas Const.: 

"General laws shall be enacted providing for 

the creation 'of private corporations, and ~shall 

therein provide fully for the adequate protection 

of the public and the individual stockholders." 

Article 1318: 

"All charters or amendments to charters under 

the provisions of this chapter, shall be subject to 

the power of the Legislature to alter, reform, or 

amend the same." 

-, 3f,R J ,., 
Bon. Martin Dies, Jr., page 7 (M-754) 

Under the above constitutional and statutory provisions, 2 

the court held that the company, having been incorporated under 

the Constitution and general laws of Texas expressly reserving 

in the Legislature the right~to alter, reform, or amend the 

corporation laws and charters, is subject to the Act of 1929 

requiring the capital stock of $100,000.00 as a condition precedent 

to doing business in this state , and that such statutory requirement does not impair any contract evidenced by the charter granted 

by the State to the company, The Court further held that a 

corporation such as the one in question had no vested right in the 

privilege of doing a title guaranty business as a corporation, and 

therefore suffered no loss of any vested right to property in a 

change in the statute law prescribing a larger capital stock as 

a condition precedent to continuing business in this State. 

This construction'of Article 1513a is not inconsistent with 

the prior Acts providing that corporations could be created having 

trust pwers because the subsequent Act, Article 1513a, does not 

invalidate the charters theretofore granted but merely provides I 

certain standards such as the amount of capital necessary, 

compliance with the Securities Act and compliance with the regulations providing for annual reports submitted to the Banking 

C&anissioner of Texas and his examination thereof. 

Further support is given to the above construction of 

Article 1513a because of the language of Section 6 of that statute. 

Section 6 provides that all foreign corporations' authorized to 

transact business in thexate of Texas under a certificate ~of 

,authority which authorizes such corporations to exercise in this 

State all or any of the powers or purposes referred to in Section 

1 of Article 1513a must comply with the provisions of that Act. 

If domestic corporations having trust powers set out in 

Section 1 of Article 1513a,did not have to comply with the provisions 

of that Act then a classification based on the nature of the corporation as domestic or foreign would result. It is the settled law of 

the land that a foreign corporation , once admitted to do business 

in a state, is untitled to equal treatment under the laws of that 

2. Article 1318 has been replaced by Article 9.12, Business 

Corporation Act, which contains similar provisions. 

-3682- 
Bon. Martin Dies, Jr., p.age 8 (H- 754) 

state. Whyy, Inc. v. Borough of Glaaboro, 393 U.S. 117 (1968), 

21 L.Ed. 242, 89 S.Ct. 286. 

The rule is stated in 17 Fletcher's Cyclopedia of The Law of 

Private Corporations, 58396, on page 292 : 

” 

. . . separate classification of foreign and 

domestic corporations,,for 'purpose of regulation, 

where the foreign corporation ha8 been admitted to 

the state, is unconstitutional as an unreasonable 

and arbitrary ola8sification \jhich conetitutee a 

-- 

. '. denial of the equal protection of the laws; . . .' 

(emphaeis added). 

Where a corporation has not been admitted to the state, 

special condition8 or standard8 may be imposed that do not apply 

to like domestic corporations. Also where ground8 for distinction 

between foreign and domestic corporations exist, the'above rule 

does not apply. 

Here, in view of the fact that domestic oorporations 

authorized to have trust power8 under Articles 1302(49) and 

1303(b) are not subject to any regulations if Article 1513a does 

not apply to them, the regulatory provisions of that Act, which 

clearly apply to fore+- corporation8 previously admitted to the 

state under a certifi'eate of'authority authorixing them to have 

like trust powers, would constitute a denial of equal protection 

of the ,lawa to such foreign corporatione. Ground8 for a distinction 

between foreign and domestic corporations are not evident under such 

oircumstanoes. 

It is a well-settled rule of law that a rtatute will be 

construed in a manner that will uphold the constitutionality of its 

provisions: 53 Tex.Jur.Zd 225, Statutes, 5158. By holding that 

Article 1513a applies alike to all domestic and foreign corporations 

authori8ed to have the trust powers defined in Section 1 of that 

Act-, the constitutionality of said statute is preserve'd. 

For the above reasons , it is our view that Article 1513a 

applies not only to corporations created under the authority of 

that Act, but also to all trust companies whether foreign or 

domestic, that may wish to employ the trust pwers defined in 

Section 1 of Article 1513a. 

The Secretary of State, therefore, is authorized to require 

proof of compliance with the laws governing trust companies, inciud- 

-3683- 
Hon. Martin Dies, Jr., page 9 (M-754) 

ing the provisions of Article 1513a, before allowing reinstatement 

of such corporations under Article 12.17 allowing reinstatement of 

charters forfeited for failure to pay franChiS& taxes. 

SUMMARY 

The Secretary of State is not require,d to 

reinstate a corporation whose charter, once reinstated, would not comply with the corporate laws 

governing said corporation. Article 1513a, V.C.S., 

applies not only to corporations created under the 

authority of that Act, but also to all trust 

companies whether foreign or domestic, that may 

wish to employ the trust pavers defined in Section 1 

of Article 1513a. The Secretary of State, therefore, 

is authorized to require proof of compliance with the 

laws governing trust companies, including the provisions of Article 1513a~ before allowing reinstatement 

of such corporations under Article 12.17, V.C.S., allowing reinstatement of charters forfeited for failure to 

pay franchise taxes. 
Hon. Martin Dies, Jr., page 10 (M- 754) 

Prepared by Wardlw Lane 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. Allen, Co-Chairman 

S. J. Aronson 

John Banks 

John Reeves 

Rogeq Tyler 

MEADE F. GRIFFIN 

Staff Legal Assistant 

ALFRED WALKER 

Executive Assistant 

NOLA WRITE 

?%rSt &38iStSl¶t 

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