**OFFICE OF**  **THE ATTORNEY**  **GENERAL OF**  **TEXAS AUSTIN** 

~onortblt **Jno.** Q. Litldua, Commisdonu 

### StateDejwtl;sntofbuikbg Austin, 

### rexas

subject-Eattar th8t it sets **S** action under r **apon thhr**  **above t**  to **the** bet particular trrns**tfon** to Artiolt 1X24*, and **bb o?**  

### nection **12 fhereoi,** 

**8 “** **bondE,** 

### ‘**notefl, ‘** **Otrti~~t**

and 'other ebli~~tions~, 8 Aet, ahall 

### nbt **bb** aonstrabd luds **nottS errouted**  

### by **eorpom** and other fintntit1 tnstita**uy borrowed**  **by sueb**  eorpOrstlOn8 tht utatl tourtt of itr badattr.*

l **Ptrttotort** this **Dqmrtotnt has**  **prmumed tbbt**  **cor porations**  **org8nlseui pursuaat**  to **thb prori0lons**  **st** Arti **l.524a** rbl~b hart sold ~a i8SuS of bdnG8, nSt.8, SSrtifiostts, debeaturss and otbr oblig8tlons **to** a **finbnoial** institution tar the **purpose** of **obtaining worw**  **capital** to **be used**  **by** said 

### corpomtion in the ususl **ooursb tt**  its **Budntss mss**  **tx sludsd**  from Obetlon **2 oi**  the **Sb.orS** leatloned Artisle which ha8 to do with the **bXSminStiOS of**  **W& SOrpOmtioaS**  ml~!tlly 

### or ofttntr**b7** ths Bei~k.ing Comndssioner of Texas.~snocrble Jao. U* LiCAdsms- pagO 2

**‘ it**  **it** rboald bb held **tb8t the**  **only** sxsluslon **ffrOD tbt**  **prOViSiOn Of**  **tb8** tit **%I3 it8**  **SIBthat iS**  **ill** sonnsatloa with laoto* ebligationm **th8t uo**  OxeoutsU **by oorporst~oas**  **to banks**  **end OtbOP**  ~Inswial **institu tions,**  **ChSS it**  **Sould aem**  **ImpOrtWIt iOr**  **tbls Deputmcmt**  to be rdVi.Sbd88 CO &iStil#uiShing ebuaoteristies bstrosn OOLOS ud Ihb **8tbSr** type 9i obllgstloas **rbhb uw**  

### rsiarrtd **to in**  the 18S. **CO-TIC, beads,**  **of!Ftiila~tbs, de**  **bbDtWS0~** bt0. the ?mJs of thb roasoalng on the put sf this DepsrtsMnt **la rbspSot**  **to tbs**  **prooadure which**  **it haa**  **rolloral h88**  bbon to **the** tifebt **that** 

### the exsminstion of amb aorporulons tmbrsot 

### a publio latrrest in tbb ssnse of lndlrldusl cltistas orning **tbb** obli~8tlons sf suok CorpOrStions and th8t the 69mb pub110 intbrost **did** 

## BOtpresent 

## itseir in **the** oass of l flnanaial lnnitutiona auetr

## 8s ua **lkmur8no~ cornpony**  emlag the bonds, **mrtUiobtta,** debentures and other type **ot ob\ig~tions**  issued by oorpontloas orgrnised pur8u8nt **to** lrtltlo is240g
*se 

### therefore solisit your sdrlca as to whether
or not this **Ceputo?cnt roust**  **give** Iltersl InteFprctstion **LO** the lant **senttaet of**  

### Saatior **12 et**  **the Act**  **rbiah roultl**  swsi to ueludt only **notes** eseCutsd 

### by oorporstlo~s and held **by** GthCr iinancl~st1tutions and, thus **requlrc** ttA8 Litpartaent to sxarAac **wmmll~ or**  **oftentr** those **cor porations**  which bare lssuod any other typb of obtlfrtion 

### won **though** 

### &heas&e is bald 

### by a financial institution. 10 this OOMS@tiOIB Sb 8Fb PlbSSSd **t0** SnSlOSb 8 

## StT'ibSOf letters, ldtntitled as Ibrblbit.A', **to** and frwm Er. Dsxtu lisailton, Ro8ldmt of the Southwestern 

### Inestors **Cor** yorstloo or Usllss, Dsilss, **texss,** thlcb **1s a**  **direct aasc**  in point. 28 bbre nob in **rbOat** 7b8rs **bmmla~ this**  **tar pOFStiOn,**  **.SltbOUgb their**  **COUDStl SOn8SdsS**  **tbSt thb**  **CorpOrr** tlun ia subiset to exssAnat1oa 

### by this Dcputmeqt.

thou 

### are further drlsbd that 7ou.rvioss **on** this **subjeot** ssy hats **f8r-rtuchin::** tfte8t8, **sines** it 

### is **tntlrt** 17 11~x17 Chat 8 nutbbr of **oorpor8tlons organirtd**  pursuant **t0 ANdOlt**  **lb248 bSlS**  **iSSUbd 8**  **trpS Of**  Obli~StiOn, 

### other than notes, ~hlctr18 held in its tntirbtf 

### by SODS subddlarf 

### corgoratlon**propbrly** olsssiii8blo 8s 8 iiaraoi8l **in** stitution*

'AS &Wt **tS0** Of this inqUil'7, **tb** sbsuld like 8drice bs to tbc rbspOnslbilit7 of this Depsrttmt whioh ewbraces k&e msaniog of tbb term (other obli~stians.~ As s270

**VOnOrublb Jao.**  **Q. LeAd~us**  **- )rgc**  **q**



### S8SSla pOiS8SS

## ht. l ttSabin~ **hOtbt0** 

### 8bS18lMSShoSt **at the**  **&tiOM ciOnOt&l**  **h+OstBsnt Cotpbtatian,**  **Uoust0n,** **FOX&*,** **aa ot**  **OlOW Of**  **busln.88,** Daesmhsr 31, 1919. Turn bsl8.MO **Sb@bt PbflbSts,**  **SmSIk& other**  **tblngs, 8**  trust **fund** 

### l~&blLit~ ia the 

### Up Sf$ **DO**,oa4.?l l This put10u1u SOtyOt8tiOO raa organis JSWWbBt to th8 **ptWib.iOM** of fit10 32, r;h8p,2, APti810 

### 1303b. WI' SbnQbptiOn of 

### the **ttUSt tUti**  

## l **SOOUDt, bS**  **Shm in**  **the b818DOO**  **&Obt, is**  that **the WBO**  **l ’** **O@ ‘** **tSSlltS L)bmblltS**  **subb by**  individuals la **CQMWtiOn with**  8 trsl OStrtt lora **Ubeutbd** by certain in**dl+idUsls 8nd**  **held br**  **subj~t ootpotetloa**  **on 8aaoUm**  **ot ta%**  **Uod iOtUt8Mb**  **bCOPW1** l



### .zO **be** Lot@ ~p~oltio, 

### TOUWe 8dvlmd that r?sny **coryetrilous brvo**  bbSn Otgnirbd for **the pUtpOSb**  **of band**  **ling Sbbt**  **&sy be**  **tbrmsd Ir.**  **Me** A. 1081)x,ths pl8n of **opcr** 8tioa SsibtscLng8n **ogreaent on**  the part at the debtor or the rypllesnt, **Sbo dtslres**  **to finmoe**  **tba** putah8sb **of 8**  hama through subject **oorpor8tlon,** to ptq 

### not only **8** apeel**tied** 8aouot to **be rppllal**  **on the**  prlncips1 **and tntercst**  or the **POttgbgt 10&D,**  but Ipry;rassnt to **p8y an**  8dditionsl mm **b&Oh Siontb**  **to** bs held by tbs **payee** 

### ot bolder at **the** oiOrt&Pl(O 108ll **and St**  **tb0 PrOper**  **time** 

## l pplitd **in pb~cnt**  **of** the taXiIsWhich **bare 800FUed**  

### dUtin(l; **tbQ** TtSr **S~biYi¶t the**  2iortgagtd prap6Xty 

### and, ss iodiebted, t0 8180 prarlds for inmutance tortrap;s. AOtlUllT, **therefore muoh**  tturt **fu?v38 as**  bald 

### by subjeot **‘ ootpor8tion**  8nd m8ny atbrrs functioning in 8 slmil8r **o&JWitT** 8Fa btld for 8 **pbtibd** of twelve &oaths after sblch the trust hand l osauni builds up **throw** monthly p8ments urd in 

### Lb0 sormsl coursa of bsadllry: is b&rZ sppllad **by tbb**  **ESrtmSS** 10 behalf Of **tbb @&WK,eS**  striah8eWuo **qpinst** thhsproperty owned by 

### themortgagee.

%s should 

### like Sp~ifi6 8dvlCO 

### tbubfotb a6 to shsrbtr or no& **such 8**  trusb tund bOt.OUntis althin **tbe** 

### term ,o~Aar obllg8tloo8, 

### as usad in **thb** 18~ **bad,** if w, vbetber
**or oot**  It **booomss** 

### 8auntitorT **OS the**  **pat% of**  

### this **Depart~cnt** 

### IO bXUdBb such COryOrstians that art obll@tal to lnditidu81sin such a lrmulsr~

&tie10 **lb248 tol;ulsteS**  **the** 86tititi68 

### Ot 10&n **abnd broksryb**  **aoupsn&bs,** and Beetioa 4 **tbswaf,** iawtu as psrtintat, 

### 18 Ss fsllaasc

## 274

r&lob oorporatioD taot ho8 oora la Ioxa8 it0 boM0, 

## notrr, r4wrlfioatoo, as**b~obweo o?**  **otbw** 

## l **bl~oUon8 or**  **Lo oftor**  

### lagforwlr la Zaa its 

### bom40,motor, rrtitiUto@, 4eb oaturu orl theo blige tiwo, oh11 pubua ir,oomo **nowepaper ef**  ganro1 

### 8eool~tion in 

### theoount7rboroit ham it, )rirmipal **ph.. of**  **krdawor, em**  **oe** 

### batoro **t&o lat**  **4rj ol**  **lobruy mob**  **7.~** l 

### l ta1WW& or itr oon4itioD 01 the prff1oaa 

### alot **4a7 of**  **Doambew,**la oaa form la oy bo roQuire4 by rho soaklog comismiooer or 

### rams SbO~iRg

uR4a OOUIit8 assoto 

### ud lioWliiib8 and rboll rue l 

### 0 olllr ot awh sl,otmmitmb 

### with tbo Banki~ C l **siona** 

### of Zaoo, to Do11um ( **other rltb**  **a fee**  **of hontpFi+o** 

32b.00) rr illlag. l l . .*

T&Oprtiasme of tbio pCt&iOD IO thot WC

### tien la ei that **Aa101*** **Quota4** 

### by foe iao1rro prsaiM17 blr0MBIO **OlOOSO8** Of obligotion~ **WUmWOted iD**  8-0 **tiOD** 4. **(1) Uctiun**  **la ot**  

### Artiole 1824o**quote4 b7**  **7eu**

•~PVOOand 

### wa8 **latetxlcd** 

### to l

### ervo 0~17eao purpose, thot lo, Lo exabpt tror the **Act** in an7 a~6 a&l rmpeoto 

### whateww l wteo aocutotl b7 ouchoorporatiooo to boa&~ and obhc fA~aDCi&l iDOtiiUtiODC for monq 

### borrem4 **b7 aob**  oorpor8tioos 

### tar U80 iD 

### bh0Uuol OOUrsO

### l t **it8 buoidaoma.~**  

### u other werbm,uch note0 40 **not** 

### oom rithia any prorision or the 

### Act- 

### theyor0 8pee1f1.8117 **asospted. euob**  **aotoo** fr borrow4 8onw,*fr uw in the owol ooltrmeor 

## ISo buoinou;

OIíQ tbaofo ce

rOmQthio(l

l owoto

adl apart 

### from **Um QOD~O,** **IpotW, oOrt&Cioatea,** **dabcntures, and**  

### otbef **Obli&OtiODO** DWtiODbQ tbl’O@OOt **the Aot.** 

**Zho** writer **of tbia**  opinloa, 

### wbilo am7107a4 m Lb0 

### bORk&~ ~OOdOdOOQP 00 **CWDWl** 

### , i8 **OpiRiOll HO.**  

### @@d o44reue4 

### toyou, odriosd with rcepaat to a band **am** Collar:



### ‘The **bond ubittad**  lo ie tho am of ~#o~&o oodim on0 of l owlem OS bead. oggfogatlog &ho pr1nelpol w of @Oo#aoO.oo. it **ia poyobls**  **to rtr.**  **ro@otWa4 08n.r**  **LQ**272

yoncwoble Jm. u. Lcidomu - yoge 6

**7oaro a?ta**  **4at0,** 

### providing **ror annual**  intrsot **at** ?aur **par** oeat. It oootoino no 

### l aoolerotioo olouoe for default on4 **4000 not**  **pwport** to bo aecutad in toror ef w beak or other tinonoiol inotitatioa.

wader Do roaoonable 

### wR8truotioD of Cbo statute8 l

u) it be **aold** that this obiigmtiw is **v0r aone7**  **borrow4 b7**  **ooi4** oupOrtMw ior use 10 the tmol ceuroe Of' it0 bUSiD000.’ **Clear17** it **is** the oouol 0~4 odinor method of ocou6ulotlng 0 coplto1 **for** the **proewutloo** of its oorporote purpeoo of 

### l

otumuloting, on4 IenUiag meoWa Tbim lo **not tho**  **borrowing of**  **mom!7 @for**  **UM** la **the uU01**  **a0ur00 or**  its buuDe00.”

ue **think** bhe o4rioe ~glrea in tbot oplDion tar**rwtly interprets**  

### the **statute.**

~ot~ithotnndlng the exmiptioo **oontoined** in Section 12, tt lo yet true tbat loan amI brokerage coqmnie~ orgmolred mod **operating** under Artlole 18210, (1) Kay not ***offar** for oolo **or** 8ell **its** bonds, **noter,** eerti?icotco, debentures **or** oLhor obligotiOn8 in fexoo* tmlo88 **it** oh011 bat0 oD oatuol **d in**  eopltol **of** not lea8 tboa 'fenTbeuson4 ($lo,ooo.oor'Dollum, (See. 1); (2) lo oubjeot 

### to **em amlaotion**  

### by the umki~g Ceomt88io~ar ii *it boo 

### moldor **otters** to sol1 in Texor its bmdo, Doter, certitiootco, 4obentuFeo, 

### or other obli~otiaoog, (Bee. 2); and (1) 011 

### bonds, ao01e0,

### oertifiooto8, dCbenture8, **or** other Obllgo**tiono** sold ln Texas b7 any suab **corporotloa,** obo\t be secured **iD** tho ooDllOrpOiDtcd Wt in 6-c. 7 Of the **AOC.**

Zhe obviouo purpose of exoo&Dotion mad cnlloteroilnorion OC the oeeuritieo issued by 8uoh eomponlco lo the pOteC?tiOD OC the publie. nd.0 puPpoD by P@~~uw Of the acmptbm lo SW. 12 does 

## not ateul to the proteat- &on ot bo~ko **and** 0th~ finonciol lnocitution8 IendiD~ aoaey to sncb oorporotiono **tor** use in the usual amroe of their bu01~808~ in this re8peot 8 different **ehorooter** Or Qblig8tiOD 10 1D~Omd -- the uouol &tort-time loan. kmk8 0no other **ritt0wol** lnotitutioao lending won- r0r web purpose8 

### a8 ore uWtioasd irrtb0 otorption belng.mbJeer LO con*taDt aomiDatioa, **or0 4Om34**  **to be**  wftiUOibt**17 protected.** 2’73

. **yanoroblo Ju** 

**. Qe**  **&cMuo -**  **pago a** 

Th. ‘bem4s., 

## l

8ortlt~ooto*~, '4rbentorem') and 

### l otha' obligotieoo", *a 11804rhrotyhat 

### theAot,
**m bb.**  **iDOt?UDODt 0**  **Ot** 8hotev.r **IWO** iO#ed by **Lb0 ~ompery** **aad eel4**  **LO** &ho pub110 h **tUO0 rOP**  tbb,perpsoo **of** ~suu~loti~ 8 worki@ wpitol rrOaw **tbdz** 

## l ,,00101ohorbc WWOF (i0**cWWU~Ot0 Bon-**  **tOP** 

### the plwQ- @ l-44* ahwms, tho apresdon, 

### %onw **&WFOMd w**  **aOh OwpOr8tiO~O**  **tOP** US0 ia 

### the**uuol** ssuroo of its busiasso* , coatewplotoo Lb0 a-1, ordiDw pCOOM1 IOWO w 8 **bask,** Or 0-C ti~oaaiol in

## l titut~o o,

to 

## meet

tho our r~cl mc 40 of the o ompanj 18 the peoeoutioR **0r 1ts**  **kOioeoo, obb**  **DOI tor**  **the geat-**  @FJNW&4OM

Of **iDWOOOtDg** it8 OpOPOtill# 0O)itOl. It 10, thorefora, ot **DO lmportomr**  ehmt **euch** 18mtrux8at 

## or**her** rowlag tror the bank ~7 **be 4eaocittmts4** **-** wbotbar **notes,** bond@, OC 

### what **DOt --**  it **is the**  **aabotonme of**  **the trona**  

### l olioa **rotbor** than **its name**  **that eontrolo**  **khe oraption.** 
tb0 *Orb rSOte@ **UStUt** b b@OtiOa **12 4eiiai~**  **Lb0 emImp**  tiOD &I tbiS OOllD~tiOD i0 **USOd** tD it0 **bread aa4**  **gemrio** 

### l **a~mo am**  **wi4o~ln4 rho**  **la4ebte4neoo of**  **a borreuer**  **to a**  loader **tar the**  **pu~pooo** mfmtioaod, regordloom et tha ax**mot**cloodfiootioa at 

### tbe inowumeat **evi4moia~ ouch**  **loon.** 

### A **simple lOU,**  **00** 

### nw4rott, or aa7 other r0n oi laRDi **ob** ligation OVidetmiar:the loon, **rculd bo**  **mutflciamt.**

Again, it tho obli~otion8 **0r meh**  **coopany c-0**  within the cloo~ of obli@tlono **required to**  be **oollatar** 

## l li8ad, **it wuld**  **make oo**  **diftor~0 tbot**  **suoh** 

### ioue in **whole or**  **in port**  **bod bow**  **sol4** to ban&a **or** otbc tlnanci&l inotibuCions, ter **tbaf** or0 8 port at tbr 

### pubIfs to whom amh obligotiooo 8to7mt **be** sold oxocpt tha7 

### bo **properly** 

### oolloternliosd.

**Ab tolloro**  

### troa ahot **we** bore oold **that we**  **are Or**  **tbo** 

## l

**pmon &be**  **departwmtol praotloe**  rontioned **by** ~a3 

## in**Lb10** 

## aoanwtioo

ha8**boca** in **error.**

**(2)** The term 

### l **otbor** obligotianti, as used **bIbrougbout** 

### uabio**Aot,** 

### mewmthe dircxt abligotion OP wl',"" loan and **brekara40 ocmpel3y**  **or t&r**  **tfpo oi** 

, 

### l aetoo~, 

### l

oertiiio8teo~ **or** 

## l 4sbenturoo.~ 

### It is Lb0 ouol on4 **vairorm** rulo of ceaotruetisn **or Ln**  

### l truPent0 0aumeroUng oewtoin puticuloro tollr8sd w the exprSS~lor, **.or** 0tlmP rrab IDstruBmDtr. It 

### lo **what is**  **&own in**  **leg01 tom0**  **as** 

### tba **eluda** 

### mnerlr **dootrino**

**or ~10~** t

Ihe llablllt~ or th0 loua and brok@rqw aon,-



### pay, **frob dome**  **brluroc 8heot** 

## you **quote** 

## l

***00,0~4,71*,** **:s not**  **t&t** 

### of **10~ lower**  **or urj**  **gboolt8, aotea,**  

### certtfieatO@, **debentures,** 

### or other obllgatlonrm
, **that** soul9 call **rer or**  8uthorlre **exanilmtloa ot**  **the eon**  **oern undS**  **tba** 

### Act**s** 

### At 1s l llablllty to 

### bo are, 

### but **it** ulres 

### out of a **tranrrotlon** wholly dlr8kllu tros.tl80imuanoe o? bond8, note*, certifioates, de

### benturea, and the like.



### Of **eouree,** 

### thla 118bllit~ 1s set within the 

### exocptloa mntloned la Sestlon 12 

### at the **Aot,** that 18, it is **Dot** 

### A **note** or otbw **1Dmtrunant** 

### wbstooarar ot the coupany 

### midcnolng 8 loan **for** 

### use **by** 

### the compan~~ in the ururl cowme ot Its **buainers.**



### That **web** 

### a lfoblltty ml@t **be ouch**  **ce** 

### could **beookd a**  **serious Batter**  

### rlth **any going**  **OonearR, i8**  **ob** llOU8. **kut the**  romody **tor ucb**  **a situatton,**  **lt dis**  

### COT~~CL!,

woulU be **for your**  Departaenl te rclatn Chc 

### wtter **L.0 the**  **Attorney** Ciencral**for** appropriate ciatlan.

**Vary truly**  

### yourr