## NERAI.

Secretary ofState Austin, T,exas

Dear Mr. Shepperd: Re: The legality ofchar tesing a corporation whose purpose clause is, *To act as agent for the performance ofary lawful act.”

You request an opinion ofthis office as towhether or not you are authorised under Section 49 ofArticle 1302, V.C.S., to approve acharter which has for its purpose: *To act aa agent for the performance of **4ny** lawful act.”

The creation ofcorporations and the power t&y shall possess are governed by the Conrtitution and 

### statetea. The Texas Constitution, Section8 1and 2,

### Article XII, forbid& the croation of corporations “except by general law” and directs ~Iwkgiaiatura

“to enact general laws

., ~for the creation ofprivate 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 ofArticle 1302, V.C.S., as follows: ‘“For any one or more of the following purposes: To accumulate and lend money, purchase, sell and deal innotes, bonds and securities, butwithout banking and discounting privileges; to act as trustee under any lawful express trust committed to them by contract and as agent for the performance ofany 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 1of this act provides as follows: ‘“That corporations may be created for any or all ofthe following purposes, towit: To accumulate and lend money, purchase, sell and deal in notes, bonds, and securities, butwithout 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 ofcombining the asaeta, **buSin666,** or mean6 ofany other persons, firms. corporations or associations, nor shall such corporation as agent or trustee carry on the bueiness otanother *”

Section 2of this act commit@ the rupervision ofcorporations incorporated under the 8ct to the Commissioner ofInsur-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 tobe created under the act. The 1925 codification re-enactad this corporate purpose in the language as itnow appears inArttcle 1302, Section 49, V.C.S,, which is as follows:

“This subdivision aball embrace corporations created for any or all ofthe 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 ofany lawful act, No such corporation &ail act as agent or trustee in the consolidation of or for the purpose ofcombining tire assets, business or means ofany other persons, firms, associations or corporations, nor shall such corporation as agent OPtrustee carry on the business ofanother. No such corporation shall be authorieed to engage in or carry on any such business unless it shall have
an actual paid in capital ofnot 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 ada pes%odafter the phrase ““butwithout banking and discounting privileges* and before

““toact as trustee under any lawful express trust committed to them.” This difference, however, is without significance, for we think the scope and purpose ofthe act indefining the cbaracten of corporations tobe organized thereunder tobe the same. The supervision and control ofsuch 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 1of this act reads as follows:

“A private corporation may be formed for any owe or more ofthe following purposes, without banking or insurance prfvileges: To accumulate and loan money, to sell and deal in noter, bonds and securities; toact as Trustee umber any lawful express trust committed to it by cot&act, and as agent for the pesformante ofany lawful act 00r‘*
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)

ofArticle 1302, Revised Civil Statcorporated under Subdivision 49 utes ofTexas, 1925 (the same as now appears as Section 49, Article 1302, V.C.S.). Section 1thereof reads as follows:

“This Act shall embrace corporations heretofore created and hereafter created having for their purpose or purposes any or all ofthe powers now authorized in Subdivisions 48, 49 or 50ofArticle 1302, Revised Civil Statutes ofTexG, 1925, and heretofore or hereafter created having inwhole or in part any purpose or purposes now authorized inChapter 275, Senate Bill Number 232 ofthe General and Special Lara of the Regular Session ofthe 40th Legislature. No such corporation shall act as agent or trustee in the consolidation of or for the purpose ofcombining the assets, business or means of other persons, firms, associations or corporations, nor shall such corporation as age&or trustee carry onthe 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 ofthe powers now authorized in Subdivision 49 ofArticle 1302, Revised Civil Statutes ofTexas, 1925, and other subdivisions not necessary to enlarge upon here. Section 11ofthis act specifically repealed Articles 1520to 1524, inclusive, ofthe Revised Civil Statutes ofTexas, but specifically retained the purposes ofSubdivisions 40, 49and 50ofArticle 1302, Revised Civil Statutes ofTexas, 1925, and enlarged the regulatory powers conferred upon the Banking Commissioner in.connection with such corporations. This latter provision ofSection 1ofS.B. No. 165is now embraced inArticle 1524a. V.C.S., under the heading ofCorporations for Loaning Money and Dealing inBonds and Securities without Banking and Discounting Privileges. The Legislature in specifically repealing Articles 1520-24, inclusive, ofthe 1925 codification, under the heading Loan and Brokerage Companies, obviously thought their retention no longer necessary, as indeed itwas not, since the regulatory matters therein dealt with were now to be covered byArticle 1524a, V.C.S. It is significant to note that the Legislature was careful in all ofthese legislative enactments to make clear that such corporations as agents and trustees were not authorized to carry on the business ofanother.

It is quite evident from an examination ofthese various statutory provisions that itwas not the intent of the Legislature to authorize the creation ofcorporations ‘“To act as agent for the performance ofany 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 ofthese 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 ofany lawful act committed to them by contract, in connection with such business.

It is quite clear that what is now Section 49 ofArticle 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 upas a separate and distinct purpose the formation of corporations ‘“toact as agent for the performance ofany lawful act,” but marely granted this as auadditional or incidental power to the loan and investment business.

Ifwe should attribute to the Legislature an intent to set upa separate and distinct purpose in the use of the language ““To act as agent for the performance ofany lawful act,” the effect of this would be tovirtually nullify and render useless all the other subdivisions ofthe statute specifying the particular purpose for which corporations might be created, for there is nothing inherently unlawful inany ofthe numerous purposes for which the Legislature has said corporations may boformed. In 10Texas 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 ofthis requirement is, first, toprotect the public against too great adelegation and aDy USUFption ofpower, and, second, toafford the means whereby right toa claimed power, or rightful use ofan admitted power, may be tested. Thie should be done with sufficient **clearness** to enable the Secretary ofState to see that the purpose specified is one provided for by the statute, and it must therefore deLiarewith certainty the scope ofthe business or undertaking tobe rohnston v. Townsend, 103Tex, 122, 125, 124 119101.
The Supreme Court said in the case ofSmith v, Wortham, 106Tex. 106, 157S-W, 740 (1913):

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“‘The sCtutory **requirommbt** that the “purpose’ of the corporation rhaU k stated in its charter was intended for the p&ec&vn ofthe incorporators and rtockholders, and the public, in order that they may be advised as to the character ofits 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 ofits franchise

. 0, ”

You refer inyour request to the case ofJames N, Tardy Co. v. Tarver, 120Tex. 591, 39 S.W.2d 848 (1931). Judge Speer took note ofthis case in Opinion O-3250 and in that opinion said:

“We are not unmindful ofJames N, Tardy Co. v. Tarver, 39 S. W. (2d) 848, wherein the Supreme Court held that acorporation possessing sufficiently broad charter powers, was entitled under tha laws ofthis State tobe licensed as an agent for acompany writing fire, marine and casualty insurance. In that case the extent ofthe corporate powers ofthe applicant corporation was not decided by the court -- itwas not an issue inthe case -- for, says the opinion, ‘respondent concedes that relator James N. Tardy Company’s charter is broad enough toauthorize it to act as an insurance agent.’ While Article 1520 ofthe 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 ofanother, as above stated, the court did not pass upon the charter power ofthe applicant, so that, whether James N. Tardy Company was a loan and brokerage company or not, has nothing to dowith the point actually decided by the court. The respondent may have conceded too much in the defense ofthat 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, itwas nevertheless issued and the State never thereafter took affirmative action by quowarrant0 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 ofthat 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 ofthis office that you are not authorized to grant acharter which has for its sole purpose ofany lawful act,” ‘“To act as agent in the performance aad should refuse to grant a charter for this purpose alone,. ‘\

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

SUMMARY
The Secretary ofState is not authorized to issue
a charter under the authority ofSection 49 ofArticle 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 tobe 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