Honorable Claude Isbell

secretary of state Capitol Station Austin, Texas Attention: J. ByronBrown Opinion No. O-7309 Re: Filing the charter of the Texas Real Estate Dear Sir: Association.

Wehave received your letter of July 19, 1946, which is quoted as follows:

"Submitted herewith is aphotostatic copy of the charter of the TEXASREALESTATE ASSOCIATION which hasbeen presented to our office to be filed. Such charter states as its purpose clause the following:
"'The corporation is being formed for the purpose of establishing andmaintaining uniformity in the commercial usages pertaining to reel estate transactions throughout the State of Texas, to acquire, preserve anddisseminate valuable business information andto adopt rules, regulations andstandards concerning transactions connected with real estate, andthrough educational methods, meetings of members, anddissemination of literature, to better business conditions in connection with real estate matters. Said association shall have the power to provide andmaintain suitable offices to perform its incorporated purposes.'
"The attorney6 for the said association have requested that such be filed under Sub-Section 105of Article 1302, Revised Civil Statutes, 1925, andcontend that the proper filing fee is $10.00 andthat such corporation should be exempt from franchise taxes.
"It has been the policy of this office to require similar associations to file under Sub-Section 53of Article 1302, Revised Civil Statutes, 1925.Honorable Claude Isbell, page 2

### (o-7309)

“I would be pleaeed if youwould answer the following:

“1. Should the Secretary of State file this charter?

“2. If so, under which Sub-Section of Article 1302does the purpose clause fall?



### “3. WhatIs the proper filing fee andfranchise tax to be charged?”
Weshall proceed to answer your questions in the order presented. Youhave stated that the attorneys for this proposed corporation have requested that the charter be filed under Section 105 of Article 1302, V. A. C. 9. Wequote that section es follows:

"105. Corporations maybe created for one or moreof the following purposes, namely: Religious, Charitable, Literary, Scientific or Educational. Acts 194.5, 49th Leg., p. 119, ch. 

### 81, § 1.”
It is apparently the intention of the incorporators to place their corporation within en “educational” purpose, as that term is used in the foregoing section, by adding to their purpose clause the phrase “through educational methods.” Theestablishmentenduniformity of commercial usages andthe preservation as well es dissemination of information pertaining to real estate maybe in 6omesmall measure educational but if so it exists only incidentally es education is not the principal object of anaasociation of this nature. As such, it is our opinion that the purpose of the association here does not comewithin the term educational es used inSection 105 of Article 1302, V. A. C. 9. (A detailed discussion of corporations organized for educational purposes is stated In an

### opinion of thie 

### office addressed to you dated May1, 

### 1946 andnumbersdO-7212.)

Youhave further stated that it hasbeen the policy of your office to require corporations with similar purpose clauses to file under Section 

### 53of Article 

### 1302, V. A. C. S., which we quote as follows:



### “53. To organize cotton exchanger, chambers of commerceandboards of trade, with power to provide endmaintain liultable rooms for the conduct of their businees, andto establish andmaintain uniformity in the commercial uses of cities endtowns, to acquire, preserve end disseminate valuable business information, endto adopt rules,Honorable Claude Isbell, page 3 (o-7309)

regulations end standards of claesiflcation, which shall govern all transactions with the cotton trade, endwith other commodities where standarda and classifications ere required, end generally to promote the interest of trade andincrease the facilities of commercial transactions. Acts 1899, p. 58.”
Acomparison of the above quoted Section of Art. 1302 with that of the purpose clause of this association reveals a close similarity of language. It is our opinion that Section 53 we8designed to authorize the formation of a corporation such as wehave here. In fact, it is obvious that this purpose clause weeframed pursuant to the language contained in Section 53with the addition of the phrase "through educational methods", which, in our opinion, doe6 not change its effect.

Froma reading of Section 53, it is seen that a cotton exchange, e chamberof commerceor e board of trade maylncorporate thereunder. Theassociation here maybe classified within the term "board of trade" es a group of menorganized for the advancement of business in the field of real estate. A"board of trade" has frequently been defined by our courts and is done so simply endadequately in the cese of Northwestern Municipal Association v. United States, D. C. Minn., 22F. Supp. 18, a6 follows:
"A 'Board of Trade' is ebody of menorganized for the advsncement andprotection of business interests."Consequently, wemaySaythat if youare otherwi6e EatiEfled with the charter, you mayfile semeunder Section 53 of Article 1302, v. A. c. S.

Theproper fees to be charged by the Secretary of State uponthe filing of a charter ere determined byArticle 3914, V. A. C. S., the pertinent parts of which wequote below:

"Uponfiling of each charter, amendmentor eupplement thereto of a corporation for the 6UppOI-t. of public worship, anybenevolent, charitable, educational, missionary, literary or scientific undertaking, the maintenance of a library, the promotion of apublic cemetery not for profit, end the encouragement of agriculture andhorticulture, to aid its member6 in producing andmarketing agricultural product6, or for applying, raising, breeding, fattening or marketing livestock, a filing fee of Ten ($10.00) Dollars, end for filing the semi-annual financial statementHonorable Claude Isbell, page 4 (O-7309)

of such agricultural products or livestock production, Ten ($10.00) Dollars, which shell include the annual license fee. "Uponfiling each charter, amendmentor supplementthereto of a private corporation created for any other purpose intended for mutual profit or benefit, e filing fee of Fifty ($50.00) Dollars.

. . ." (Emphasis added)
Aswehave determined that the association here does not have en educational purpose, it follows that it fells within the language emphasized above endthat the proper filing fee is Fifty ($50.00) Dollars.

Article 7084, V. A. C. S., authorizes a franchise tax for every domestic end foreign corporation chartered or authorized to dobusiness in Texas. Wequote below only that pert of the statute which webelieve applicable to the facts here?

(1

. . . provided, that such tax shell not be less then Twenty ($20.00) Dollars in the cese of any corporation, including those without capital stock, end provided further that the tax shall in nocase be computed ona sumless then the assessed value, for State advalorem tax purposes, of the property ownedbythe corporation in this State."
Pursuant to the above statutory wording, it is our opinion that the minimumof Twenty ($20.00) Dollars annual franchise tax should be assessed against the corporation proposed here.

In conclusion, wemust, of course, determine the applicability of the franchise tax exemption statute to this proposed corporation; namely, Article 7094, V. A. C. S., which wequote in part es follows:

"The franchise tax imposed bythis chapter shell not apply to , . . or to corporations having no capital stock end organized for the exclusive purpose of promoting the public interest of any city or town. e .'
Wehave set out above the only possible phrase of the Article under which this corporation might qualify. It is fundamental lawthat where etax is levied by .ageneral lawend one claims en exemption therefrom by reason of en exemption statute, he is required to bring himself clearly within the exemption. The exemption statute, es pertinent here, requires a corporationHonorable Claude Isbell, page 5 (O-7309)

to be organized for the exclusive purpose of promoting the public interest. Wecannot say that this corporation is so organized. Onthe contrary, wegether from a reading of the entire charter end the general nature of the orgenization that the primary purpose of the association is essentially for the private benefit of its members. The leading Texas case in this regard is McCallum
v. Associated Retail Credit Menof Austin, 41 S. W. (2d) 45, wherein our SupremeCourt held that the Credit Men's Association of Austin, whose purpose clause andorganization we6very similar to the one presented here, we6not exempt from the paymentof the franchise tax. The Court madethe following observations:

"TheAssociation's charter purposes reed as follows:
"'The purpose for which it is formed is to ecquire, preserve, end disseminste valuable business information, endto adopt rules endregulations in connection therewith.'
"Acareful reading of the entire statement of facts demonstrates that the primary purposes of the Association, es disclosed bythe charter end its mode end mannerof operation, ere not for the exclusive purpose of promoting the public interest of e city or town, but for the personal benefit of its members. Certainly, the Legislature never intended to exempt such a corporation fromthe tax imposed byArticle 7084."
It follows from our foregoing statements that the proposed corporation here is not exempt from the paymentof the franchise tax es levied byArticle 7084, V. A. C. S., eupra.

Wetrust that this satisfactorily enswers your inquiry.
APPROVED

AUG9, 1946 /s/ Carlos C. Ashley FIRSTASSISTANT ATTORNEY

GENERAL

JKA-bw-lm Very truly your*
ATTORNEY

GENERAL

OFTEXAS By /s/ Jack K. Ayer

Jack K. Ayer Assistant
APPROVED OPINION COMMITTEE BYJs/ BWB CHAIRMAN