NERAI. 

Secretary of State 

Austin, T,exas 

Dear Mr. Shepperd: 

Re: The legality of char tesing a 

corporation whose purpose 

clause is, *To act as agent 

for the performance of ary 

lawful act.” 

You request an opinion of this office as to whether or 

not you are authorised under Section 49 of Article 1302, V.C.S., to 

approve a charter which has for its purpose: *To act aa agent for 

the performance of 4ny lawful act.” 

The creation of corporations and the power t&y shall 

possess are governed by the Conrtitution and statetea. The Texas 

Constitution, Section8 1 and 2, Article XII, forbid& the croation of 

corporations “except by general law” and directs ~Iw kgiaiatura 

“to enact general laws . , ~ for the creation of private corporationa.” 

Pursuant to this constitutional mandate the Legislature 

has provided by statute the purposes for which corporations may 

be created in this State. One such purpose is expressed in Section 

49 of Article 1302, V.C.S., as follows: ‘“For any one or more of 

the following purposes: To accumulate and lend money, purchase, 

sell and deal in notes, bonds 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.” This purpose as now expressed in the statute had its origin in C.S.S.B. No. 83, Acts 36th Leg., R,S. 1919, ch. 

83, pa 134. Section 1 of this act provides as follows: ‘“That corporations may be created for any or all of the following purposes, towit: To accumulate and lend money, purchase, sell and deal in 

notes, bonds, and securities, but without banking and discounting 

privileges. To act a8 Trustee under any lawful express trust committed to them by contract and as ag.ent for the performance ofy 

lawful act. But no corporation organized hereunder shall act aa agent or trustee in the consolidation of or for the purpose of combining the asaeta, buSin666, or mean6 of any other persons, firms. 

corporations or associations, nor shall such corporation as agent 

or trustee carry on the bueiness ot another *” 

Section 2 of this act commit@ the rupervision of corporations incorporated under the 8ct to the Commissioner of Insur- 
Hon. John Ben Shepperd, Page 2 (V-1075) 

ante and Banking, the official who at that time had supervision of 

both insurance and banking, thus Indicating the legislative intent 

as to the business characteristics of the corporations authorised 

to be created under the act. The 1925 codification re-enactad this 

corporate purpose in the language as it now appears in Arttcle 1302, 

Section 49, V.C.S,, which is as follows: 

“This subdivision aball embrace corporations 

created for any or all of the following purposes: To 

accumulate and lend money, purchase, sell and deal 

in notes, bonds, and securities, but without banking 

and discounting privileges; and to act as trustee under 

any lawful express trust committed to them by contract 

and as agent for the performance of any lawful act, No 

such corporation &ail act as agent or trustee in the 

consolidation of or for the purpose of combining tire assets, business or means of any other persons, firms, 

associations or corporations, nor shall such corporation as agent OP trustee carry on the business of another. No such corporation shall be authorieed to engage 

in or carry on any such business unless it shall have 

an actual paid in capital of not less than ten thousand 

dollars.” 

The only difference nbted in the two acts is that the purpose clause 

as expressed in the 1919 original act separates the purposes into 

two sentences, and the 1925 codification cxpre8res the purpose ia 

one sentence and uses a semicolon instead ad a pes%od after the 

phrase ““but without banking and discounting privileges* and before 

““to act as trustee under any lawful express trust committed to them.” 

This difference, however, is without significance, for we think the 

scope and purpose of the act in defining the cbaracten of corporations to be organized thereunder to be the same. The supervision 

and control of such corporations is by the 1925 codification committed to the Banking Commissioner0 insurance and banking supervision having been in the meantime separatsd. Tbe same corporate 

purpose is again repeated in Ssa.riWo,?!kQ&&ts 4@h&rg., 1927. ch. 

275,‘~. ,414, with certain added purposes not important here, Section 1 of this act reads as follows: 

“A private corporation may be formed for any 

owe or more of the following purposes, without banking or insurance prfvileges: To accumulate and loan 

money, to sell and deal in noter, bonds and securities; 

to act as Trustee umber any lawful express trust committed to it by cot&act, and as agent for the pesformante of any lawful act 0 0 r ‘* 

We find that the Legislature by S.B. No. 165, Acts 42nd 

Leg., R.S. 1931, ch. 164, p* 280, dealt further with corporations in- 
Hon. John Ben Sheppard, Pag,e 3 (V-1075) 

corporated under Subdivision 49 of Article 1302, Revised Civil Statutes of Texas, 1925 (the same as now appears as Section 49, Article 1302, V.C.S.). Section 1 thereof reads as follows: 

“This Act shall embrace corporations heretofore 

created and hereafter created having for their purpose 

or purposes any or all of the powers now authorized in 

Subdivisions 48, 49 or 50 of Article 1302, Revised Civil Statutes of TexG, 1925, and heretofore or hereafter 

created having in whole or in part any purpose or purposes now authorized in Chapter 275, Senate Bill Number 232 of the General and Special Lara of the Regular 

Session of the 40th Legislature. No such corporation 

shall act as agent or trustee in the consolidation of or 

for the purpose of combining the assets, business or 

means of other persons, firms, associations or corporations, nor shall such corporation as age&or trustee 

carry on the business of another.” 

This act had for its primary purpose the further regulation of corporations theretofore and thereafter created having for their purpose or purposes any and all of the powers now authorized in Subdivision 49 of Article 1302, Revised Civil Statutes of Texas, 1925, 

and other subdivisions not necessary to enlarge upon here. Section 

11 of this act specifically repealed Articles 1520 to 1524, inclusive, 

of the Revised Civil Statutes of Texas, but specifically retained the 

purposes of Subdivisions 40, 49 and 50 of Article 1302, Revised Civil Statutes of Texas, 1925, and enlarged the regulatory powers conferred upon the Banking Commissioner in.connection with such corporations. This latter provision of Section 1 of S.B. No. 165 is now 

embraced in Article 1524a. V.C.S., under the heading of Corporations for Loaning Money and Dealing in Bonds and Securities without Banking and Discounting Privileges. The Legislature in specifically repealing Articles 1520-24, inclusive, of the 1925 codification, under the heading Loan and Brokerage Companies, obviously 

thought their retention no longer necessary, as indeed it was not, 

since the regulatory matters therein dealt with were now to be covered by Article 1524a, V.C.S. It is significant to note that the Legislature was careful in all of these legislative enactments to make 

clear that such corporations as agents and trustees were not authorized to carry on the business of another. 

It is quite evident from an examination of these various 

statutory provisions that it was not the intent of the Legislature to 

authorize the creation of corporations ‘“To act as agent for the performance of any lawful act,” as a separate and independent purpose, 

This is merely an additional and related power which corporations 

authorized to be created under these various statutes might exercise. The primary purpose which the Legislature had in mind in 
. . 

Hon. John Ben Shepperd, Page 4 (V-1075) 

the enactment of these various statutes was to deal with loan and 

investment corporations or corporations to accumulate and loan 

money, to sell and deal in notes, bonds and securities, but without 

banking privileges. These corporations might also act as trustee 

and as agent for the performance of any lawful act committed to 

them by contract, in connection with such business. 

It is quite clear that what is now Section 49 of Article 

1302, V.C.S., as originally erected and as dealt with in subsequent 

legislation by the various acts we have pointed out above, did not 

have for its purpose originally or by.any subsequent traatment 

thereof by the Legislature to set up as a separate and distinct purpose the formation of corporations ‘“to act as agent for the performance of any lawful act,” but marely granted this as au additional or 

incidental power to the loan and investment business. 

If we should attribute to the Legislature an intent to set 

up a separate and distinct purpose in the use of the language ““To 

act as agent for the performance of any lawful act,” the effect of 

this would be to virtually nullify and render useless all the other 

subdivisions of the statute specifying the particular purpose for 

which corporations might be created, for there is nothing inherently unlawful in any of the numerous purposes for which the Legislature has said corporations may bo formed. In 10 Texas Jurisprudence 622, Corpor&tions, Section 31, it is said: 

“The proposed charter ia requbred to state the 

purpose for which the corporation is fosmed. The 

main purpose of this requirement is, first, to protect 

the public against too great a delegation and aDy USUFption of power, and, second, to afford the means whereby right to a claimed power, or rightful use of an admitted power, may be tested. Thie should be done with 

sufficient clearness to enable the Secretary of State to 

see that the purpose specified is one provided for by 

the statute, and it must therefore deLiare with certainty 

the scope of the business or undertaking to be 

rohnston v. Townsend, 103 Tex, 122, 125, 124 

119101. 

The Supreme Court said in the case of Smith v, Wortham, 106 Tex. 106, 157 S-W, 740 (1913): 

- 

“‘The sCtutory requirommbt that the “purpose’ of 

the corporation rhaU k stated in its charter was intended for the p&ec&vn of the incorporators and rtockholders, and the public, in order that they may be advised as to the character of its corporate activities, and 

to amble ths tit&e, through its proper officers, to col- 
Hon. John Ben Shepperd, Page 5 (V-1075) 

lect proper filing fees and franchise taxes, and to supervise and control the use and to punish the nonuse of its 

franchise . 0 , ” 

You refer in your request to the case of James N, Tardy 

Co. v. Tarver, 120 Tex. 591, 39 S.W.2d 848 (1931). Judge Speer 

took note of this case in Opinion O-3250 and in that opinion said: 

“We are not unmindful of James N, Tardy Co. v. 

Tarver, 39 S. W. (2d) 848, wherein the Supreme Court 

held that a corporation possessing sufficiently broad 

charter powers, was entitled under tha laws of this 

State to be licensed as an agent for a company writing 

fire, marine and casualty insurance. In that case the 

extent of the corporate powers of the applicant corporation was not decided by the court -- it was not an issue in the case -- for, says the opinion, ‘respondent 

concedes that relator James N. Tardy Company’s charter is broad enough to authorize it to act as an insurance agent.’ While Article 1520 of the Revised Civil 

Statutes then in force with respect to loan and brokerage companies contained the identical language as the 

present Article 1524a of Vernon’s Codification, forbidding such corporations to carry on the business of another, as above stated, the court did not pass upon the 

charter power of the applicant, so that, whether James 

N. Tardy Company was a loan and brokerage company 

or not, has nothing to do with the point actually decided 

by the court. The respondent may have conceded too 

much in the defense of that case, but whether he did or 

not, the conceded issue was not determined by the court.” 

Conceding, as we think we may, that the Secretary of 

State should have refused the charter in the Tardy case, it was nevertheless issued and the State never thereafter took affirmative action by quo warrant0 to cancel it. The Supreme Court did not, therefore, find it necessary in the Tardy case to pass upon this collateral issue and did net do so. As stated by Judge Speer: ““The respondent may have conceded too much in the defense of that case, but 

whether he did ortnet. the conceded issue was not determined by 

the court. ” 

You are therefore respectfully advised that it is the 

opinion of this office that you are not authorized to grant a charter 

which has for its sole purpose 

of any lawful act,” 

‘“To act as agent in the performance 

aad should refuse to grant a charter for this purpose alone, 
. ‘\ 

-_ 

Hon. John Ben Shepperd, Page 6 (V-1075) 

SUMMARY 

The Secretary of State is not authorized to issue 

a charter under the authority of Section 49 of Article 

1302, V.C.S., or any other statute, which has for its 

sole purpose “To act as agent in the performance of 

any lawful act.” This is merely an added 01 incidental 

power which the corporations authorized to be chartered under that section may exercise, and is not a Separate and distinct purpose within itself. 

Yaws very truly, 

PRICE DANIEL 

Attorney General 

APPROVED: 

W. V. Geppert 

Taxation Division 

Assistant 

Joe R. Greenhifh 

First Assistant* 

LPL/mwb