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### ORNEY GENERAL OFTEXAS

Honorable Sidney Latham Secretary of State Austin, Texas
Dear Sir: OpinionNo. O-6045 Re: Whether a marketing association is authorized t@ engage In the oil business or other purposes not specificallymentioned inArticle 5740,Vernon's Annotated Civil Statutes, and related questions. Attention: Mr. R. J. Long. Head of CharterDivision

Your letter of May 24, 1944, requesting the opinion of this departmentregarding the questions stated therein is as follows:

"Thisdepartment has on file an application for a permit to do business ih Texas by the Indiana Farm Bureau CooperativeAssociation, Inc., an Indiana corporation. We are accompanying this letter with our complete file relative to this application. "Thisdepartment has in its suspense fund $50.00 as the filing fee for said application. "Pleaseadvise this department on the following questions relative to said application: "1

. Is a marketing association authorized to engage in the oil business or other purposes not specificallymentioned inArticle 57401 "2

. Is a foreignmarketing associationrequired to pay franchise taxes? "3

. Pleasedefine for the benefit of this department the powers of a marketing association as set out inArticle 5740, especially the powers to manufacture, sell, supply and finance.
"4

. Should this department approve the enclosed application for a permit?"Honorable Sidney Latham, page 2 O-6045

The IndianaFarm Bureau CooperativeAssociation, Inc., isan Indiana corporation, organizedand doing business under theAgriculturalMarketing Statutes of Indiana,which are inmany respects, similar to Article 5740, Vernon's Annotated Civil Statutes. Said corporationhas made application for a permit to do business in the State of Texas, and the purpose of the business desired to be transacted in Texas, as shown in the application for a permit, is:

"To engage in any activity in connectionwith the marketing or selling of agriculturalproducts of itsmembers, or with the harves~ting, preserving,d,rging, processing, canning, packing, storing,handling, shUp%, or utilization thereof, or the manufacture or marketing of the by-products thereof; or in connectionwith the manufacturing, selling or supplying to itsmembers of machinery, equipment or supplies; or in the financing of the above enumeratedactivities; or in any one or more of the activities specified herein, and to extend such activity to non-members and their products as limitedby Article 5738, as heretoforeamended." The foregoing statutewas amended by House Bill No. 295, Acts of the 48thLegislature,Regular Session, 1943, authorizing citrus and other agricultural caretakers or organizations to organize and operate on a cooperativebasis.

Chapter 8, Title 93,Vernon's Annotated Civil Statutes, pertains to marketing associations. Article 5740 of this Chapterprovides:

"An associationmay be organized to engage in any activity in connectionwith the marketing or selling of the agriculturalproducts of itsmembera, orwith the harvesting,preserving,drying, processing, canning,packing, storing,handling, shipping, or utilization thereof, or the manufacturing, or marketing of the by-products thereof; or in connection with themanufacturing, selling or supplying to its members of machinery, equipment or supplies; or in the financing of the above enumeratedactivities; or in any one or more of the activities specifiedherein. Provided, however,any such activitymay extend to nonmembers and their products limited by Article.5738 as heretoforeamended." Article 5742,Vernon's Annotated Civil Statutes,designates a number of powers which any association organized under said Chapter 8, Title 93, possesses. Article 5744, Vernon's An-.- ,

Honorable Sidney Latham, page 3 O-6045

notated Civil Statutes, sets forth certain requirements to be set out in the articles of incorporation. Article 5763, Vernon's Annotated Civil Statutes, provides:

"Theprovisions of the general corporation laws of this State, and all powers and rights thereunder shall apply to associations organized hereunder exceptwhen in conflictwith the provisions of this chapter. Provided, however, that any cooperativemarketing association incorporatedunder the laws of any other State may apply for and be granted a permit to do business In this State and pay the same filing fee as required of domestic corporations organized for a similarpurpose. Provided further, that such foreign cooperativemarketing associations shall not be required to have a paid-up capital or any portion of the capitalpaid-up in order to be entitled to such permit,” Article 5764, Vernon's Annotated Civil Statutes, provides:"Eachassociation organized hereunder shall pay to the Commissioneran annual license fee of ten dollars but shall be exempt from all franchise or license taxes. For filing articles of incorporation, an association organized hereunder shallpay ten dollars, and for filing an amendment thereto, two dollars and fifty cents." Article 1529 and Article 1532,Vernon's Annotated Civil Statutes, are as follows:

Article 1529: "Any corporation for pecuniaryprofit, except as hereinafterprovided, organized or created under the laws of any other State, or of any territory of the United States, or of any municipality of such State or territory, or of any foreign government, sovereignty or municipality,desiring to transact or solicitbusiness in Texas, or to establisha general or special office in.thisState, shall file with the Secretary of State a duly certified copy of its artlcles of incorporation;and thereupon such official shall issue to such corporation a permit to transactbusiness in this State for a period of ten years from the date of so filing such articles of incorporation. If such corporation is created for more than one purpo!e, the permitmay be limited to one or more purposes.Honorable Sidney Latham, page 4 O-6045

Article 1512: "Such corporations,on obtaining suchpermit, shall have and enjoy all the rights and privileges conferredby the laws of this State on corporations organizedunder the laws of this State."
It is not necessary to determinewhether the charter and the various amendments thereto authorize the above mentioned corporation to engage in the oil business and other purposes not specificallymentioned in Article 5740, Vernon's Annotated Civil Statutes, in States other than Texas. It is clear that the corporationswould not possess suchpowers in this State. Generally speaking,apart from the limitations which have been establishedby express enactment, the power of any particular corporation Is limited by the purpose for which itwas incorporatedas expressed in the special statute authorizing its creation or in the charter filed under the general corporation statute. The principal rule that has been formulated for the interpretationof charter powers is that only suchpowers are given as are clearly embraced in the words of the Act or charter or derived therefrom by necessary implication in view of the object of the grant.

In every grant of corporatepowers, there Is implied a power to do whatever is necessary or reasonable, appropriate to the exercise of the authority expressly conferred. There are numerous authorities supporting this statement , and we deem itunnecessary to cite such authorities herein.

After carefully considering Chapter 8, Title 93,Vernon's Annotated Civil Statutes, it is our opinion thatmarketing associations organizedunder said chapt,er. can begorganized only for the purposes as specified in Article 5740, and that such associationspossess only suchpowers as are set forth inArticle 5742 and those Fmpliedpowers to do whatever is necessary or reasonable, appropriate to the exercise of the authority expressly conferred by said statute. It is our opinion that a corporation organizedunder Chapter 8, Title 93, does not have any legal authority to engage in the oil business or any other businesses or purposesnot specifically mentioned inArticle 5740, and has the impliedpowers to do whatever is necessary or reasonable, appropriate to exercise the authority conferredby statute.

Specifically referring to your first question, You are advised that it is our opinion that a foreign corporation organized under statutes similar to the StatUtes contained in Chapter 8, Title 93, supra,when it procures a permit to transact business in this State, is not authorized to engage in the. ,

Honorable Sidney Latham, page 5 O-6045

oil business or other purposes not specificallymentioned or Implied in Article 5740, although the charter of any such foreign corporationmay authorize such corporation to engage in the oil buslnesa or other businessesnot specified or mentioned in Article 5740. Referring to Article 1529,Vernon'8 Annotated Civil Statutes, in the case ofWestern Public Service Corn any v. Meharg, 288 3.W. 141, (rehearingdenied 292 S.W. 168P it is stated:

"Inview of the comprehensivenature of the first declarations expressed in article 1529, it appears to us that the concluding sentence is permissive in favor of the corporation so long a8 the purposesnamed in its charterdo not include some for which franchises are not grantable to domestic corporations and does not include a combination of purposes not permitted to domestic corporations. So long as the charterpurposes are within this legltimate range, the foreign corporation is entitled to get that forwhich it asks. * l *"
As heretofore stated, a domestic corporation organized under Chapter 8, Title 93, would not have the legal authority to engage in the 011 business nr other purposes not specificallymentioned or implied inArticle 5740, and in view of the opinion cited In the precedingparagraph, it Is the opinion of this department that a foreign corporation could possess no greater powers than those of domestic corporations. Therefore,we respectfully answer your first question in the negative.

We now consideryour secondquestion. Article 7084, Vernon's Annotated Civil Statutes, requires that every domestic or foreign corporationheretofore or hereafter chartered ore organized todo business in Texas, or doing business in Texas, shall pay a franchise tax according to the applicableprovisions of said statute and the applicable provisions of Chapter 3, Title 122,Vernon's Annotated Civil Statutes. (Article 7084 being contained in said chapter and title)

Article 7094,Vernon's Annotated Civil Statutes, exempts certain corporations from the franchise tax heretofore mentioned. However, corporations such as the corporationunder consideration Is not exempt by said statute. Domestic corporations organized under Chapter 8, Title 93,Vernon's Annotated Civil Statutes, are exempt from franchise taxes. It i8well established that the franchise tax 18 not a tax upon the property of the corporationnor upon its income,but is a'oharge made by the State against the corporation for the Privilege of doing business in Texas. (SeeRiMebrand, Texas Corporations,Honorable Sidney Latham, page 6 o-6045

Vol. 3, page 420 and the authorities cited therein)

Article 7084, supra,requiring corporations to pay a franchise tax isa general statute.

Article8 7094 and 5764,Vernon's Annotated Civil Statutes, exempt certain types of corporations. In order for a COrpOratiOn t0 avail itself Of these exemptions, itmust clearly show that it comeswithin the exemptions.

In the case of McCallum, Secretary of State v. AssociatedRetail CreditM-enof Austin, 41 3. W. (2d) 45, Feferrlrg to Article 7084 and Article 7094, Vernon’8 Annotated Civil Statutes, Judge Crftz said:

"Therule Is thatwhere a tax is leviedby a general law and one claims an exemption therefromby reason of some exemption Statute, he must bring himself clearlywithin the exemption. In otherwords an intentionon the part of the Legislature to grant an exemption from the taxing power will never be implied from language thatwill admit of any other reasonable construction. Such an intentionmust be expressed in clear and unambiguous terms, or must appear by necessary implicationfrom the language used."
We do not think that the corporationunder consideration comeswithin the exemptions contained inArticle 7094 or Article 5764. Therefore, it 18 our Opinion that a farm marketing association having a permit to do business in this State is subject to the franchise tax a8 required by Article 7084. In connectlonwith your second question,we have also carefully consideredSection 1, Article 8 of the State Constitution,regarding equaland uniform taxation,and the authorities citedunder said provisions. It is our opinion that OUP answer to your secondquestlon Ln no way contravenes the provisions of the Constitutionheretoforementioned.

Your thLrd question is 80 broad and general that this department can serve no useful purpose by attempting to answer the same. If you have any particular question concerning the powers of marketing associations to manufacture, sell, supply and finance as mentioned InArticle 5740,Vernon's Annotated Civil Statutes,we will be g,ladto give same our prompt attention. Therefore,we respectfullydecline any answer to your question number three.

With reference to your fourth question,you are respectfully adViSed that It Is the opinion of this department that you should approve the application of the IndianaFarmHonorable Sidney Latham, page 7 O-6045

Bureau CooperativeAssociation, Inc., to a0 business in this State. It will be noted that the purposes of the business said corporationdesire8 to transact in Texas are such purposes a8 are mentioned inArticle 5740, Vernon'8Annotated Civil Statutes, and the purposes Stated In Said appllcatlon do not reflect that the corporationdesires to do In this State an oil business or any other businessesnot specifltallymentioned In said Article 5740. A permit granted under the applicationwould not authorize the foreign corporatFon to conductan oil business in this State or any other business in this State not authorizedby Article 5740,Vernon's Annotated Civil Statutes.

When the IndlanaFarm Bureau CooperativeAs8oclatlon, Inc., adopt8 the provisions of the MarketingAct, It adopt8 either intentionallyor unintentionally, the above quoted Article 5740 a8 itspurpose clause thus acquiring all the rights and privileges afforded by theAct, a8 well a8 becoming bound by Its limitations.

The term "OilbUSine85" a8 USed in this opinion is used as such term 18 ordinarllgdefined and UnderStOOd, and a8 used ln Subdivisions 36 and 37 and 38 of Article 1302, Vernon's Annotated Civil Statutes.

We are returning herewith the entire file accompanying your Inquiry.
Yours very truly
ATTORNEY GENERAL OF TEXAS

By s/ArdellWilliams Ardell Williams AssIstant
AW:EP:wc

APPROVED OCT 4,.1944 s/GroverSeller8 ATTORNEYGENERAL OF TEXAS Approved Opinion CommitteeBy s/BWB Cha.irman