x 

.;\; / 

\y OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

. 

AUSTIN 

hnorablo Osville k. Csrpenkr 

chufrnn aa Xmoutfre DlroOtor 

Tex6r Un*mploymePt Compen8atioo Co6ani8rlon 

P,uetin, Texan 

Dear Slir 

#8~h8re rour req 

l pplloablq to the variou8 q 

tlona outlined in mur lette 

OlW4488.3 

l rpretation ot the law 

under tour tsot dtua0uZ letter read81 

8 not be8n 4.- 

81 4nten into 

lu4ln the tiale ot 

th. k&e 8graement nake8 

tal ot the bMiner8 18 

upon the ball18 ot h8r 

eOrf note, *lab18 in 

t 8qUd t0 One-h6ti Ot 

A ona raerota their 

part ia the %ntel.or dooorating bariZ4OO@liM8 Et8 #M’Xlitl@8 ,Or plT4tit8 

er repar8to propert*. W i4prerent8 to 

partntr8hfp Or4&i?&x8 thet 8h4 &nb. her 84p6r6t4 QmQ4XtJ 

are 2lable tor bubinaS8 dobtr ot th,e partnership.. A 

and # h8VO 6iwB$W.h&4 8et4B &?4F4948 ifi their W@iO~OILt, 

while Y-, who I8 engaged La another bosine88 which b4 

owaa a8 his 8Ogar6ti4 plWpf%f, iii%8 dWay8 4mpbr4d 

tire inditldualr'i 
lhn. r;rvills -.. Cerpenter, page SS 

me ~111 etste esch quecltlon and 8mm4r it a8 thsy 8pps6r 

ir. your letter in numerlcai order. 

kueetlon (a): "Is 'M legally e partner with h in the 

interior deooretiq bU8ln688?* 

*Teohnleallyy, CL xmrrle6 womn may be a wsrehant or 

treder 8t will, 60 far as the Immediate tmfl86OtiOtl of the bulline88 Is concemea.* S66 23 Tax. Sur. p. 304. The authorltler 

in Terss are generaiiy agreed tlst ths ltry naturo OS 4 msrtmntl~e 

businesr i6 such that a cjarrl4d wma QaPDOt be 0811b a p6rtner. 

She, obviously, cannot do ths thing8 ersmtla~ to a oomerolal 

BUOBB86. Gn the b6816 of the taot8 atat64, ~6 40 not think ti 

16 iegdiy n p&&NW at the the the bU6ln668 i8 fOlllcld, aLthaugh 

at th6t time ehe h68 borrow& moa6y at the bank to b8 paid bask 

out of the prOfit frOP her bU8in488. Profit8 Of th4 bUine88 

are community property. b64 +eer’s “hW of Unite1 Et&@&t& in 

‘i6V36a. p. 967. C~U1668 them i8 8 CielU i.tlteIAtiOIl tQ r4&tily 

borrowed money out of reparato property the new MqUi8iti.Oa boOOMP community. See also Ypeer, 6Uplq Seotlon 430 bn4 ~the aa6e8 

there cited. :Zc euoh lntantlon appear8 here. 

kUC8tiOIl (b): *It not, 18 k3 6 partner with A in 

that bU6ln488?” 

We think not. E hr in no way recognized or taken part 

in 8tartlng the p4rtnersbip bwine88. 6 be8 r4pre64Bt6d t4 her 

'are4ltora tbet 6h4 6214 her rapante property 4re liable tot the 

partnership debt. She borrow66 th4 money upcn the b86lr.ot her 

own oredit. Certainly @4 ha6 not bo~n4 H by her groai8e to r4pay 

the bank the,aroney borrowed. The iaW i8 ~42.2 Bettba in thi8 

state that. the Wite. aan Only bla4 the hu8b8nd ror neO886ari48. 

The money borrowed wa8 tor 8p4auiation in busln688. B m8y not be 

6de a Q6rlX6r in tbir bu6ine88 8g4in8t hi8 de6lr8 an4 6on84nt 

evea though be may hare a community lntere8t In the pwtnerrhlp 

beoaust of the natum ot tha capital lnve8teU. & 6048 basso an 

intem8t ia the Qartnar6hip in tb6 8M8e that,~he rOtid 8hare in 

tha comsmlty profit6 but bs oan not be -de,& partner is tha 

6triDt legal 64n6e against hi8 own will 4n4, OOZi8ent. 818 lntere8t 

16 a legal lwident ma not aontraotual. 

,UO6tiOn (a) I *If I3 I6 a partnnr with A, 16 P In the 

sgploym6nt or the partne6hlp 0r fI 6nd A9" 

L~lnae se have answered the nart preotilng que8tion In 

the negative, thl8 inquiry need not bs answar44, Bowever, the 
Eiou. Crvilie L. Capenter, ptige 3 

6tatu6 Of 0, a married woman fe likened tc thet of a creditor 

of the partnership by the suthorltlas of this M,ste. See 23 

Tax. Jur. p. 307 and the authorities there cited. 

Luesticn (a) : “If b-i is in the employffient of the 

partnerehlp of E and k, wtat la the mealiure of 

oontrlbutlon with respect to x.6 empIoymont?w 

An 6nswer to thle question 16 obviated by our reply thst 

E 16 not employed In the partnergbip. 

;;u86tiOU (6): "If i; 16 Iegelly 8 partner, are bar 

earnings or profita from the interior decorating 

buainesa community property subject to the oontrol 

of 81' 

w'e think, under the fact6 given, the earning6 or prorlt6, 

if you have used these word6 synonymou6ly, are oommunlty property 

and are Bubject to the control of if. Thi6 is true whether ii 16 a 

partner or not in the absence or a 

Schwethsln ~6. Schwethelrt, 1s. 'k. (i: 

irt oi t&e prOriL8 by H. 

24) 911; A. E. Fslcbard4 Yea. 

Co. vs. Jennings, E83 S. A. 296; i6t &tlonal Bank YO. ka‘iihorter, 

i79 5. h. 1147. 

C;uestlon if): 'CM E iS&aiiy sir.5 t0 ib 6ii ot hi6 

and the oommunity lntereret in her future or pmfit8 

rroni the partnership? 

PO6tntiptiai contracts 6re not tarored by the aourts ot 

thla state, but they will be antoraed when they are patently 

just and talr and do not withdraw the funds from exletlng aredltora, 

see Creenv. Fergueon, 69 Tex. fiep. SW; Cox v. killer, 54 %3x. 

hp. 16. 

E and ;: cannot by agreement bstween theIL68Ile6 change the 

oharacter Of their property 80 66 to OOnVert the oommunlty into 

6ep6rst.e. or the eeparate into aommunltp. Se-e 93 Tex. Jur. p. 

&eDonalU v. Stevenson, SC 5. a. 777. They are free to nrake 

e8~ 

lit6 of their property, of either aless, to each other. 23 Tex. 

k tea. 18, also sec. 49. 

iueetlon (g): "In the abaenoe ot 6uah e gift, whst 

i8 the ownership Of 8tOOk6 of gOO46 bought out ot 

the partnership eernia&8 to replenish the 6helYe8 

end there comingled wlth other goods in sueh’a way 

as not to be l$entliiable?* 

The ownership or.euch goo,ae is in A cud In B and X a8 

husband an4 wire 66 commumlty property. ~ahwetheIm Y. SahwetbeIm, 
L s. 

LlC7.ti - 

(2d) 9li; 1st hatlonai Benk vs. 6-:~o?ihorter, 179 2. L. 

<uestion (h): TYould the situation be obangad lf 

H made dally girts to m or any lntereet which he 

eight have in the profits or earnings of the 

partnership buelness?" 

host aaeuredly yes. riha prorlto belonging to the comaunlty wou1d that beooma ?Pe Ceparate property. 

kuektlon (1): *EOCB 5.ubsactlon 19 (r)(4) 0r tiie 

I’axae &xmp~opment CGmpeneAtlon Aat (Art. fG?Zl-b-19, 

(f) (4) BP&' to the faets stated to render both 

the partnership and 6. *employsrr~?* 

Artiole 5221-b-17 (i) (4) reads AS fo11owAr 

"bny employing unit Chloh together with one or 

more other employing unite, IS ouned or controlled 

(by legally enrorceablc maan~ or otherwIre) directly 

Or lndlreotly by the AAIC~ Interest, Or which owns or 

aontrols one or more other employing unit8 (by legally 

enforaeable meAn Or other&so), and which, Ii 

treated as A sir@8 unit with suoh other e loylng 

unit, ~0~14 be an employer uader paragraph 7 1) of 

thi8 AubseetlGn;" 

be presume that your rsteranae la to the rA&I stated in 

CACt SittiatiOD No. 1. x0 have held that ii wad not a partner At 

the lweptlon of the partnershlp. Ii B m~baa a daily gift or the 

Community profits ha has Ccqulred no eontrolling interest a8 

required in the AbGVC quoted seotlon. The buslnesa Gf ii eAIlXLOt 

tben be grouped with the partnersblp to render both ooncerne 

1lAb1e ror taxes. on the other hand, ii there WA8 no girt or 

the prdits end the rtook had been turned an& new stook pnrchased with the protlta, the stook has then beoome aommunlty. 

9hethCr E is a partner or no t he has by reason of the marriage 

eontraat and the status ot the property oontrol af this property 

under the definition or en employer As quoted In ~aotion 17 (r) 

(4) Or Article 5221-b And Saotlon 17 (4) 0r xrtlole 5221-b, 

whloh reads A6 iO;llOWs: 

"*hmploylng unit* meens any lndlvlaua1 or type er 

Or@inl%AtlOU, lncludlng any partnarship, asaOOlatlGn, 

trust, aatata, joint-stock company, lnsuranoe oonapany, 

or corporatlan, whathar domCstla or foreign, or the 

reoslver, truetae~ln b+rupt6y, truetee or sucoeesor 

thereof, or tba lagAl rapre~RAtAti~% 0r a deceessd parson, whioh hAs or subsequent;to 'January 1, 193t%, had in 
3 

lion. tm111e 3. Carpenter, pace 5 

its employ one or more IndIvSduels parrorming eervloee 

for it wlthln this Ltata. .A11 individuals performlag 

sarvloae wlthln this titeta rGr any employing unit which 

ZAiEtAinB two or Sore SCpAratC establleluzente within 

thie Ltete ehell be deened to be employed by a single 

employing unit ror all purposes or this act. Eeeoh lndlvltlual employed to perform or to aeel*t in perrorrdng 

the work or cry Agent or employee Of ea CmplOying Unit 

shall be deemed to be employed by 8uch employing unit 

ror all the purpoaee of this rot, whether such lndlvlduel 

was hired or pid dlreatly by suoh employing unit or by 

such Agent or eaployae, provided the employing unit bad 

actuel or constructive knowledge of the workw 

The statute la ereaedlngly broad in its lsnguege,end if the 

interest of E end ti is community undrr our statutes, H hae the 

oontrol es spaoliled in Saotlon I?? (i) (4) ot krtlole 5221-b. 

Under thaee clreumstenaes, both H and the partnership 

arc liable for taxa on their partlouler payroll. 

;;uestlon (j): Would the subeeetlon mentioned 

apply ii :*s contribution to tbo capital of the 

partnership emounted to more then one-half of 

the total capital?" 

In the light ci our other amwers we think it nnneoeeeary 

to enewer thls question. 

Iuaetlon (k): "Ii Vi bad been declared by the Court to 

be A sole trader, how would it afieot the answer to 

question (I)?" 

Ii n has been lagell~ rreed Or the 4lrabllltler or ooverture, she ten be and la a pertner. The autborltles in ~axas 

agree that attar the emencipetlon by oompllanoe with the atatutory 

meen the wife 1s lisbla on her contreot end the husband is not 

liable f'or the contract of the wife in har trading buelnass. 

iice Stevens vs. ill16y, 7 ,S. '%. (2d) 883; Speer*s *Law 0r hlarltal 

Eights in Zaxes", seation 280. 

Eowevar, 

or T~XSS, 

the emanelpatlon is not, by the authorities 

considered a generel one but is ltiited to the purpose 

ror whloh ?t 1s eought. Sea 23 Tax. fur. Sec. 269. There is 

nothlnE lo the ect thet would indioAt6 en intention to alter 

the statue or pditf3 0r an enterprise as oommunlty property. 

The Laglelature would have no poeer to do so for the cheraoter 

.0r those prGrit8 'or.ae.quipltlone Is rixed by ~rtlola 16, Seatlon 

15 Or our Texea Co4etlt@$on. 
EOE. Crville I-. C8rpenter, 

In iirtiols 4619 of 

PAga 6 

Vernon’s Xevleed Civil Statutes, the 

Laeislature, by tte CodlrlOAtlOn Or 1925, AFAin placed the oontrol 

or the comun1t.y in tte husband. in 25 Tax. Jur. Lea. 87, it is 

etAtad thet e6 an incident to the power of dieposition the husband 

leak have the exclusive control snd AWULAgeISent or the oomuunlty 

property; thet he my reduce the ooueimity property to poseeBelon~ 

employ eervects, afonts or make oonoeeelooe regarding the oporetlon of the Proparty. But this general uontrol doee not give 

him the power to partition the oommunity fXHU the eeparata prorep or hlmeelt or or the wire. Oohoa v. Edvarde, 189 S. A. 

. 

The questloc of whether B hae oontrol of the partnerehlp 

0r ii Azd A is than A question or rAat. fias H made dally girt of 

.the ProrIte t0 W Ii he hae an6 those girt6 ara continuing at 

this time f? has no oontrol or owncrehip Or the partnarehlp. It 

must be shown that profits belonging to tha oommlty have gone 

back into the buslnese end that they oen be traced to aetablleh 

them AS A Part Of the aApita1, B do&! then haV4 control In spite 

or tba CJlESllCipAtiG~ 0r *. 

?a& eltPatlon No. 2. 

*X.And i% are husband And wife. H operates a buelnaee which wAe puroheeed with eoenuunity runde or li and 

E operatee an apart&ant houee on land whlah ehe holde ~_ 

8. 

by doe4 tram X granting her a life eetate in euasideratlon of ten dollers paid out or her separate e&ate, 

with remainder to B upon her- death. The number ot lndlvl8uale in her eaployrent, when added to the number 

of ?ndIvlduale in E's employment is nor6 than eight. 

This 5itUAtiGn obtains thrOUghOUt the yB(Lr.* 

*DG~s subsection 19 (r) (4) ,or the Texas Unemploymant Compensation act (Art. S221-b-17 (i) (4) ) apply 

to render both B end ti employerr?w 

AgAin, the anewer to your question will depend upon the 

exletlng iACtS arising out 0r the operation 0r the apartment 

house by G. xi, in the operation or eme, profits arc -de, they 

then bsoome aozmunity without regard to the life estate of ii 

in the ApArtment.houee. Ii, in tte operation or the apartment 

hou~a, xi usae those protlte or earnings in the operation of the 

Apartment house they are ooesnunity end will in tlma become the 

OApitAl inVestment. 

Ii, on the other bend, there are not any profit8 Lola the 

operation of the Apartment houea there le no theory upon whlak 

E has any oommunlty interest ln the Apertaant houee~ e~nd therefore 

$4 he6 no oontrol or ownerehlp ot It. If thet be true, the 

units nay nGt be groupad together rar the purpose Or assessment 

And oollaotion Gr unemployment eompensAtlon tAxas. 
_.. 

3: 

Eon. Orrllle L. Carpenter. 

ifact sitUatl05 So. 

pat?. 0 

sr 

*a sna 6, husband end wire, own ana operate two oafs*, 

1 ana Y, ae oommunlty property during the par 105'l. 

cm Deoamber 31 1939, k la de6larUd a 801s trader by the 

court, ena on January 1, 1988, Ii tranafars all of hi8 

Interest in Cafe P to K, roaltlng that ha theNbJ rellnquisbta all olrlaa to futnm aamlm$a or profit, to ba 

tbrivta :rom ttt optretion or Cafe I. At tha aama time 

(bl makes the same sort of.tranafar to .8 O? all of her 

interest fn Caft Y. The nunher of pwpla oisploycuY due 

lng 1938 in aach of the oaioa la five." 

"toes Gubseotion 19 (f) (4) of tht Texas Unemployment 

colopensatlon Srot (Art, SSil-b-17 (r) (4))apply to render 

both fmploylng units a ub jl er~ployara? o t ” 

The facts show that W la a aola trabeq they furthtr avlnee 

a olaar intention of B end 'II to (60 tholr l aparata uaya in bualneas. 

They l aoh attempt to make UL outrl&ht Bitt of the aollPtmltr lntarrat in oafes X ana I. There la, hawarar a problbltlom on tha 

gift of Suturt l sralada, aata, qu6atlon If,. The laar 88 atetad 

In ZS xer. Jur. p. SO: 

*It must ba admittad that tha fraa r¶.@t to maka 

gift8 and aonvo~aaoe8 Of ono*8 prapel%J ilthr to 

ths othtr apeuat or te another, aeecnpliahaa to. aa 

oxttnt the aaua end t&t I am in t&e legat ordara 

or aaaoeat would aooompllah. Bat, riawad aa an a6raamelit merely, having for Its obfeat the ahamp In 

tbt legel order8 or aeaaont, tho,Oontraat la void; 

but viewed as a aisp0eition of apaolflo‘proptrt~, 

whether in exlatmoe or In l xpeQtanof, the truwoation 

10 VaUd. The latter tranaaotlon dot8 not in lagal 

rontemplatlon ohawe t@ htlrt It aeraly avoid8 the 

inherltanoe by a detleotlon OS t@t property." 

I’M enfomjment of anj such contraota rest8 iran on the 

prfnoiplt of equity rather thao'on their lntrlnnlo atrangth a8 a 

oontraot. 

?arhsps, tha aourtirould rtoognlas thla qraamtnt botwean 

B aad K ao valid at; lta lzmtptlon, but wa hare 8orlou8 doubt8 

that the prorite of X would @a oonrldorad aa the ~aepatrak Proparty of Y. Thus, if the profit8 OS the rsepaatlra oaiea 

went baak into tba bualneaeea their ogaraotsr Would in time 

revert to that or 00mmnity. That being true, B noula then win 

hate tht power to aontrol the aafa I. 

./ 
34 

Ii that SftUltiQn obtains the cafes Y and Y would be 

ampioyere ?utaer kectiofi 17 (f) (41 of Article W%?l-b, hevleea 

Civil Ltatutes. 

f’6Ct 6itUotiOU SO. 4. 

*if end il are husband and wife. i;' own@ one share of 

the total of fifty share8 of the etook of a eorporatlon. 

h ownfi twenty-six and one-half &hart& and A owna the remaining twenty-two end one-helf. B optratee another 

business whloh 18 the oombuulty property of E and li. 

If subeeotlon 19 (t) (4) of the rexa tinemployment Co+ 

pcnsetlon Act (Art. 6EZl-b-17 (f) (4) ) appllea, both 

the corporation and E are subject eeployem.* 

'Iioel) the subeeoticn lest rentloned apply?" 

- 

The racts recited do not state whether S Is operating 

ifi tkie lnstanoe as a Bole trader. However, Artlole 1306 of 

varnon*a Rtvista civil dtetutea proviaea: 

'Charters mey bt eubsorlbed bp married womtn who 

say be stookholdara, offleers iina alreotoro thereoc; 

and their (Late, contracts and deed8 aa suoh ataokholders, otfioera and direatom @hell be aa bliiaing 

and efteotlve for eU the purpoaea of 6ald eorporatlon as if they were mnl6n.. The joinder 63313 oonsent 

of the husband ana privy trUmlnatlons separate end 

apart from plra 8$ali not be rapulrad.* 

Artlole 4714 provides: 

'All property of the wife, both real and personal, 

owued or olaiced by her before zmrrlage, and that aaquired,' 

afterward by gift, devise, or dtaeent, as alao tht 

Inoreeae cl all iarrds thus eoqulrtd, ehall be the separate 

property of the wife. The wit's ahell have the eolt 

managese nt , control, and dispoeltlon of her aeperate 

property, both real e&d personal; provided however, the 

joinder of t&e husband :n t&t mmner now pWfid8d by 

law for convsyencee of the separate reel eatate of 

the wite shall be necessary to the Iroumbramm or oonveganae by the wire oi her laxids. and tht.joInt signature of ti.e busbaud ar;B wife shall be neoemarp to a 

transfer of stocka and bmda belonging to her or of 

which she tay ba given control by thie law.* 

Thuz, tht *ifs has statutory right to oontrol her separate 

prdperty. 
- 

:? 

Bon.WVille :i. Carpenter, pees 0 

Does L&e requiremoat of thle Article that the huebend join 

the wife Ia ths transfer o i stocks give him such control ae Ie 

Inten4s4 In L:eotlon 17 (f) (4) of L.rtIole 52El-b. The requlroEQnt or ti to join In tha tranersr does not elve hIz tcs right to 

control. be could not tots the stock of X without her conn@nt, 

nor could he olafa, the Inarsare4 value of the StOQh 46 oommunity. 

Ogl4Bby '1. POLtS, 40 6:. ‘6. (2a) 61s. 

&? 40 not think E has auoh control of the corporation se 

to permit Ite grouping wltb the bueinesa of ii for tbc purpose 

of 4ssdeSeLng unaizployrent aosp3nsatlcn tnx48. kh.lttedly he 40136 

not own SQrriOient stook to control It 8t2a to SEJ that x's own4rship gives him aontrol Is repugnant to our statutes. 

Yocurs very truly 

. 

m &I+ 

. 

Morris io4 44 

ikIB318tent 

APPROVEEAPR 27, lQ40 

&fLU&L&- 

ATTORNEY GFDRAL OF TEXAS