,

THEAT%ORNEY GENEECAL
**XAS**

Honorable J. M. Falkner Opinion NO. c-230 Banking Commissioner Department of Banking Re: Applicabilityof Sections 4 John Ii.Reagan Building and 7 of Article 1524a,V.C.S., Austin, Texas to certain corporations,who are licenseesunder Article 6165b, Dear Mr. Falkner: V.C.S., Texas Regulatory Loan Act.

Your recent request to this office asked our opinion as to whether corporationswho have licenses issued by the Texas Regulatory Loan Commissioner ursuant to Article 6165b, V.C.S., and whose car orate

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as reflected In their Articles of Incorporation would have made them subject to the provisions of Article 1524a,V.C.S., are exempted from compliancewith Sections 4 and 7 of Article 1524a,V.C.S., by virtue of the provisions of Section 29 of Article 6165b, V.C.S.
Section 29, Article 6165b, V.C.S., reads as follows:
II Chapter 144, Acts of the 48th Legislature, Regular Session, 1943, compiled as Article 4646b, Vernon'sAnnotated Civil Statutes of Texas, and Artlcles 5069, 5071 and 5073, Revised Civil Statutes of Texas, 1925, where inconsistentwith this Act shallnot apply to licenseesunder this Act,

mows of Cuer 165. Acts of Lhe 4hd Lenislature. RP on. 1911. u \lernon t _tatedClv;l Statutes of Texas. abolv to SuQ Jicensee. (Emphasisadded.)
The portion of the caption of Senate Bill 15, Chapter 205, Acts of the 58th Legislature,Regular Session, 1968, which relates to Section 29, reads as follows: I, providing that Chapter 144, Acts of the 48th Legislature,Regular Session, 1943, (compiledas Article 4646b, Vernon's Annotated Civil Statutes of Texas), Articles 5069, 5071 and 5073 of the Revised Civil Statutes of Texas, 1925, and Chaoter 165. Acts of the 42nd Legislature.Reaular Session. 1931. as amended. (compiledas Article 1524a, Vernon's

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Annotated Civil Statutes of Texas), where inconh this Act shall not anolv to licensees s stentwit i under this Act;

. . .' (Emphasisadded.)

From a comparison of the captionand Section 29 of the Texas Regulatory Loan Act, it is obvious that Section 29 is broader than the caption. The caption describes the scope of the Act as exempting licenseesunder the Texas RegulatoryLoan Act from the purview of Article 1524a,V.C.S., only where those provisionsare inconsistentwith the Texas Regulatory Loan Act. On the otherhand, Section 29 attempts by the use of the disjunctivenor, to exclude the application of all provisions of Article-4a, V.C.S., to licenseesunder the Act whether they are consistent or inconsistent.
Article III, Section 35 of the Constitution of the State of Texas, 1876, provides in part: ,I But if any subject shall be embraced in an Act; which shall not be expressed in the title, such act shall be void only as to so much thereof, as shall not be so expressed."
The case of Davis v. State, 225 S.W. 532 (Crim.App.lg20), held that:

"It is also urged that there are matters in the bill not comprehendedby the caption,and if so, under the express direction of section 35, art. 3, of our state Constitution, such act would be void as to such extraneousprovision,provided that such uncomprehendedprovisionbe separable from the others."
The Commission of Appeals in ConsolidatedUnderwriters v. Kirby Lumber Co., 267 S.W. 703 (Comm.App.1924), stated th t a:

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. . it has been held, with equal uniformity, that particularprovisionsare not within a given title where no subject at all is expressed in the title; where the ultimate subject exoressed and

ed for are olaia different:where the that orovid provisions are DalDablvulterior or foreign to the title: where they are seDarate.distinct from, and not permane to the sub.lect exnressed;where by no

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intendment they possessa necessary or proper connection with it; where they are disconnected from it and Inappropriateto it; or where the provlsions come clearlywithin the evil to be suppressed." (Emphasisadded.)
However, under the express provision of Article 111) Section 35, of the Constitution,an act contalningmatters no,t includedwithin the caption is void as to the extraneousprovision provided it is separable from the others. Therefore, from the language of the cases cited, it is clear that since the caption contemplatedan exemption from the provisions of Article 1524a,V.C.S., only where they were inconsistentwith the Texas Regulatory Loan Act, but Section 29 attempted to provide exemption from all provisionsof Article 1524a, V.C.S,., whether inconsistentor not, that the Texas RegulatoryLoan Act cannot be given an effect broader than its caption.

Acts 1931, 42nd Legislature,Chapter 165, as amended, which is codified as Article 1524a states in Section 1 that:

"ThisAct shall embrace corporationsheretofore createdhaving for their purpose or purposesany or all of the powersnow authorized in subdivisions48, 49 or 50 of Article 1302, Revised Civil Statutes of Texas, -LWp, xn-b

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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 Laws of the Regular Session of the 40th Legislature."

It follows that a corporationwhose charter contains a single purpose clause authorizing it to accumulateand lend money by obtaining a licenseunder the provisionsof the Texas Regulatory Loan Act is not a corporation subject to Article 1524a, V.C.S., becauseArticle 6165b, V.C.S., is a specialact enacted in obedienceto Article XVI, Section 11, of the Texas Constitution,as amended in 1960, and the provisions thereof relative to its creativepurposesare inconsistentwith the creativepurposes of Article 1524a. A special statutewill control over the provisionsof a general statute,and will be treated as an exception to a general law previouslyenacted. 39 Tex.Jur. 150, Statutes, Sec. 82.

It is, therefore,our opinion that those provisions of Article 1524a,V.C.S., that are not inconsistentwith the

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provisions of Article 6165b, V.C.S., are to be given full force and effect as regards licenseesunder Article 6165b, V.C.S., while those provisions of Article 152&a that are inconsistentwith Article 6165b, V.C.S., are not to be applied against licenseesunder the Texas RegulatoryLoan Act.

We have applied the foregoing standard to the four questions which you propoundedas follows:
1. You asked if a corporationwhose charter contains a single purpose clause authorizing it to accumulate and lendmoney by obtaining a licenseunder the provisions of the Texas Regulator exempt from compliancewith Sections 5 Loan Act is and 7 of Article 152&a,V.C.S., if such corporationoffers for sale or sells in Texas its bonds, notes, certificates,debentures or obligations.

You are advised that such corporation is exempt from Sections 4 and 7 of Article 152&a since that Article applies only to those corporationswho have as corporatepurposes those provisions that would have formerlybrought the corporationwithin the purview of the Banking Commissioner'sauthority. The corporatepurpose noted is within the scope of the inconsistencytest of Article 6165b, V.C.S., but if such corporationoffers for sale or sells in Texas its bonds,notes, certificates,debentures or obligations,and if such acts are found to be, as to that corporation,ultra vires, such acts would be unlawful.
2. Your second questionasked if a corporation whose charter containsanlIor all of the purposes contained in Subsections 8, 49 or 50, Article 1302 or Article 1303b,V.C.S., is exempt from compliance with the provisions of Section 4, Article 1524a, V.C.S., if such corporationhas obtaineda license issued by the Regulatory Loan Commissionerto do businessunder the provisions of the Texas Regulatory Loan Act.

It is our opinion that such corporationwould not be exempt since its purposeswould allow it to do other acts than those contemplatedby the

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exemption in Article 6165b, V.C.S., and must therefore cornly with either paragraph one or two of Section .t activitie;.

Article 1524a,V.C.S., according to its

3. You asked if a corporationwhose charter contained a single purpose clause authorizing it to accumulate and lend money only under the provisions of the Texas Regulatory Loan Act would be exempt from compliancewith Section 4 of Article 1524a, V.C.S., if such corporationmakes loans in excess of the sum of $1500,

You are advised that since such corporation was organizedwith the single purpose of complying with Article 616513, V.C.S., it is within the inconsistency exemption of that statute. Such loans if completedwould be beyond the scope of the purpose for which the corporationwas organized,and if made would subject the corporation to the penalties for acting beyond the scope of stated corporate purposes.
4. Your last question asked whether or not a corporationwhose charter contains a purpose clause authorizing it to accumulate and lendmoney after obtainlnga license under the provisions of the Texas Regulatory Loan Act is subject to the provisions of Article 1524a,V.C.S., if its charter contains in addition one or more of the purposes set forth in Subsections 48, 49 or 50, Article 1302 or Article 1303b,V.C.S.

We are of the opinion that the material facts containedherein are the same as those contained in your questionNo. 2, and the same answer would apply.
The constructionwe have placed upon both Article 152&a, V.C.S., and Article 6165b, V.C.S., is harmonious with the legislative intent in that it provides adequate protection for both the borrower and the investor. The duty of harmonizing the constructionwith the legislative intent is clearly seen in McPherson v. Camden Fire Ins. Co., 222 S.W. 211 (Comm.App. 19201, where the Court at page 212 said:

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It is Incumbentupon the court to asccrtafn tbe'intention of the Legislature, and, If possible by fair construction,uphold it. The constitutional provisions referred to should be construed liberally, rather than embarrass legislation by a construction the strictness of which is unnecessary to the accomplishment of the beneficial ends for which It Wa8 adopted."

SUMMARY
1. A corporationwhose charteraontalns a single purpose clause authorizing it to accumulate and lend money by obtaining a licenseunder the provlsions of the Texas Regulatory Loan Act Is exempt from compliancewith Sections 4 and 7 of Article 1524a,V.C.S.

2. A corporationwhose charter containsany or all of the purposes contained in Subsections 48, 49 or '50of Article 1302 or Article 1305b,V.,C.S.,Is not exem t from compliancewith the provisions of Section t Article 152&a, V.C.S., even though such corporati& has obtained a license Issued by the Regulatory Loan Commissioner to do businessunder the provisions of the Texas Regulatory Loan Act.
3. A corporationwhose charter containsa single purpose clause authorizing It to accumulate and lendmoney only under the provisions of the Texas Regulatory Loan Act is exempt from compliancewith Section 4 of Article 1524a,V.C.S., and It is immaterial if such corporationmakes loans in excess of the sum of $1500.
4. A corporationwhose charter contains a purpose clause authorizing it to accumulate and lendmoney after obtaininga licenseunder the provisions of the Texas Regulatory Loan Act is subject to the provisions of Article 1524a, V.C.S., if Its charter contains in addition one or more of the nurooses set forth in Subsections 48, 49 or 50, Articie isO2 or Article 1303b,V.C.S.
Very truly yours,
WAGGONER CARR Attorney General

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B
AssistantAttorney General
RER:da

APPROVED: OPINION COMMITTEE

W. V. Geppert, Chairman Linward Shivers Paul W. Phy John R. Reeves Pat Bailey Howard Fender

APPROVED FOR THE ATTORNEY GENERAL By: Howard W. Mays

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