. . .:

-IHon. J. P. Bryan Opinion NO. 

### O-831 County Attorney Re: Brazoria County Legality of “bond proceedings contracW’ between county and a Angleton,Texas~ party that has no license to pracDear Mr. Bryan: ’ “’ tic,e law .,

This”is in reply to your letter of May 

### 9,.1939, in which you request the opinion of this department as to the legality’ of certain “bond proceedingscontracts” .whichare described in your letter.

coin your letter you make the following ~statement:

“For a certain sum, say one per cent of the amount of ,the

-bondissue the bond brokerwill enter into ,a contractwith Brazoria County to work’~ out,~ a scheduleof the amount and type. of bond to be sold for the particularproject suggested, and then procure the services .ofan attorney to prepare

~thevarious orders, notices and other instruments

required to make up the transcript of the bond proceeding, pay the costs of the election,

printing of the bonds and furnish the’ opinion of a recognizedbond attorney. It is conceivablethat the various orders to be passed by the court, the notices, etc., which make ,up.

the, transcriptcould be prepared by a person not an attorney;however, all proposals that have been made to the Commissioners’ Court of this County have been that the brokerswill furnish acceptableattorneys to prepare the transcriptof the proceedings. As I understand it, perhaps more than half of the costs of proceedings contr&t will go to, pay ~sttorneys’

fees.!

You further state that the part.ies who contractwith the county~

in the above describedmanner are not licen.sed to practice law, but are individuals who are interested. in purchasing konds.. you request our opinion as to whether or not such contractsare illegal as constitutingcontractsprovidingfor unlawfulpractice of law by unlicensedpersons.Hon. J. P. Bryan, page 2 

### (0-831.)

It'being admitted that the personswho enter into the proceedingscontracts describedin your letter are not licensed .to

practice law, the first question to be determined is whether or not the undertakings which such personshave contractedto perform on behalf of the county of Brazoria amount to llpractice of law".

The "practiceof law", as generallyunderstood,is the doing or performing of services in a court of justice in any matter depending therein throughoutits various stages and' in conformity

with~the,

adopted,rulesof procedure;but it is. not confinsd to performing services inan action or proceeding pendingincourts of justice ancl;.in,a larger sense,it' includes legal advice and counsel and~the preparationof legal instruments and contractsby which legal rights are secured although such matters may or may not be pendingin snycourt.i 

### 7 C.J.S. 

### ?t 1t.7g3'*

,; ,z. I' ..,,,.

",.'. .: ., The.~~r~ctice.,of:latr'has'also beenIdefinsd.as~

follows: ,L. ~~'~

::. :-

,~ "In litigated,matters It involvesnot only ~the"actual:representatlon.~~f the clfent fn.,court, but also services rendered in advising a client
as tohis ca.use

ofactlon or defense. ;'Thepractice of.~l&iwal&b~

includes'

the'~giving'of~:edvice 'or :: rendering services requiring~.~the ruse'oflegalI 'L skill or .knowledge.lj~, '138Kan. 

### 899,

~~page 

### 907,.:28:,' p.(2d>

### ~765;

-769.,;, ,.:,,,,f,~ 1. :'

.. :,'.. ~,, u.
The: foregoing definltions'or ~ubsbstaritislly.

similar
ones have':been,repeatedQ approved:by"the

appellate courts of
numerous states..'

,.Some'of~:the

.decisions

which have approved one of the foregoing-definitions'of the,-practice.of,law or .substantially similar onesi~ are herewith cited: ', .'

In Re:, "'Opinion~of

the Justice's

(Mass~j"~194

N.E. 313; Rhode Island Bar Association v. Automobil Service Association (RhodeIsland)"179~%Lr. 

### 139j Eley v..Miller,.'34,N.E. 

### 836; Paul
v. Stanley (Washingten) 12 Pai (2) 401% People:-v. People:s

Stock Yards State'Bank (Illi) 

### 176 N.E. 911; Crawford~v. McConnell (Okla.)49 Pac. (2) .!5.%;.Childs v. Smeltzer (Penn.:) 171 Atl. 883; Cain v. MerchantsNat'1 Bank & Trust Co. of Far o (N.Dak.1

### 268 N.W. 719; Re: Eastern' Idaho TrustCo.~ (Idaho) Fichettev. Taylor (Minn.)~2!% N,W. 910. 8 Pap. 157; '.

... ./ In'Texas by statute, Artihle'430aPenaZCode of Texas, the practice'of'lawis prohibitedby any corporation;:'per,son; firm~'or~

association.of

personsexcept natural per~sons who. are': members of the Bar regular1 admitted and licensed topractice law. Section 2 of Article 3Ca provides c ', a.5

follows: .~

~ c. ',L'.,' '.~

,. . ,. ,.~ ..;. l

Hon. J. P. Bryan, page 

### 3 (0-831)

“For the purpose of this Act, the practice of law is defined as follows: Whoever (a) In a representative

capacity appears as an advocate or draws papers forms any ac

4 pleadings,or documents,or perin connection

with proceedings pending or prospectivebefore a court or a justice of the peace, or a body commissionor officer board, committee, consti c uted by law and having authority to take evidence in or settle
or determine controversies in the exercise of the judicialpower of the State or subdivision thereof; or, (b) For a consideration, reward or pecuniarybenefit, present or anticipated,, direct,
or indirect,advises or counselsanother as to secularlaw or draws a paper, document or Instrument effecting or relating,tosecular rights; or, (c) For a consideration, :reward,,

or pecuniary benefit,present or anticipated, direct or lndireat, dae~s

any act in a representative capacity in behalf of another tending to obtain or,secure for such other.;the. preventionor.

ths redress of
a wrong or the enforcementor establishment of a right; or (d) For a consideration, direct orindirect, gives an opinion as to the validity~of the title to real or personalproperty, or 

### (3) As a vocation, enforces settles adjusts
or compromises

defauit~~c%%&overted~~or disputed account s, claims or dsm&ds between persons with neither of whom he is in privity or in the relation of employer ,sndemployee in ths ordinary Sensej is ‘practicing law. ,. l

It

We believe it ~requires no extended ar,gumenttoe&blish that the preparationof orders, notices and other instruments which are necessary to giv,e validity to an election to authorizethe issuance of bonds are matters,which require legal skill and learning on the part of the person undertakingto prepare such instruments. The various constitutional and statutory provisions

with respect to the proceedings necessary. to a valid issuance of bonds must be strictlycompliedwith,; and it is ‘a matter of common knowledge in the legal professionthat the field of bond law is a specializedand technicalone which requires experience and study by a trained mind as a prerequisiteto the practice of such branoh of the law. It seems plain to us that a person who unde,rtakes to superviseall of the, necessary steps leading up to :abond election and the issuance of bonds thereunder, inaluding the preparationof necessary orders notices and other instrumentsand the furnishingof ~alegal op nion upon the l validity of ‘a‘bond issue is unmistakably undertakingto~praotice law.Hon. J. P. Bryan, ‘page 4 

### (o-831)b

You are, therefore,advised that, in our opinion, the contractsdescr1bed.i.n your .letter.

insofar as isuchcontracts provide for the preparationof orders, notices,’ or other legal .documents and”the’ furnishing .of

~a legal o-pinion upon the validity of {he bond issue constitutecontractsto practice law. If such~contracts are entered into by persons who are not ~licensed to pr.actice

law ..in this State, the ‘same are illegal, for the reason thatthe subjectmatter of snd the consideration

agreed t,o

\be paid by the .bond

broker for such contractsconstitute.illegal transactions,

-‘prohibited
as well by the common law as the statutory law of this State.

We ‘reach.this

result whether we accept as ,thecontrollingdefinition.of the practice of law. that definition set forth’in’Section 2~ of Artiole 430a,:

Texas .Penal

Code, or, independently

of the ‘-statute;

,,the~,‘.definitions

which have been announcedand ap~proved .by‘Oarious

appellatecourts .throughout the Unitedestates.

. We-believe

.that.no;

serious.contenti,on can be made to the effect that :.subdivisions (b)‘~and

(c) of- Section 2 of Article 430a; Per@. Code ‘,of. ‘Texas; are~,.not

vi,olated

,by the undertakingscontained‘in the.:-contractsde’scri.bed in your letter insofar as ~:such contractsprovide.

‘for Ethel drawing of orders, notice8 and ‘other;legal instrumentsand,

the furnishing of legal opinions:uponthe validity ,o$the bond’issuel ‘:
.Themost recent‘discussion ,,by a- Texas Appellate Court of-aquesti.onanalagous ‘to.the one:presented:in

your opinion request ‘1,s found in Montgomeryv. Utilities’ Insurance co., 117 S.W.(2).‘486 by the Beaumont Court of Civil Appeals. This case 1s~’

Howe pen 2t ing for,

decision i.n

the gupreme Court of Texas. In the Montgomery case, an insurance companyhaving issued a liabilitypolicy in which it agreed to investigate all accidentsand claims covered by the policysnd to defend its assured free of cast in any a&ion brotight to recover a, .losscovered by the policy, .subsequently entered into an in- -‘~dependent

agreementwith the -assured whereby the insurance .‘~ company agreed to defend any suit brought: against,its~

assured.
as a result of a certaincollision. Such independent. agree-~ ment was termed,.a ‘1non-waiver18

agreement,

and it further providea that the insurances company should negotiate a’ settlement of the claim against its assured, and failing in such ~endeavor, that ‘the insurancecompanywould ‘select and employ lawyers of. its own choice to defend the case. However, the insurance ” company did not agree or .bind- itself. tom pay any judgmentor court ‘costs

resultingfrom said suit. Attorneys selected. and. employedby the insurancecompany subsequehtly defendanta suit brought against the assured, and in such **suit** judgment was rendered against the assured.‘:~The owner of such judgment,then, institutedsuit thereon against the. insurance company. In holding that the non-waiver agreement was illegal and invalid, the Court said:Hon. J. P. Bryan, page ,s (0-831)

“That agreement,by its terms and by the construction

placed upon,

it by the insurance company itself in its pleadings in the present suit,was a contractto practice law. It was thereforein violationof the penal statutes of this statewhich mak it unlawful ‘for any corporationor any person firm, .or as,sociati~on of persons, except natur a! personswho are members of the bar regularly admitted and licensed, to practice law. Act 43rd Leg. p. 

### 835 Ch. 238, Vernon’s Ann. Penal ,Code Art. 430a. hing in contravention

of the sta ute

t the agreement was lllegsl and of no effeat:”

,m*** A aorporation:cannot praatiae law, and of aours it aannot lsgally contr,aat to do State v. C. S. Dudley & Co.Inc. 

### 340 Mom @?? 102 S W .(~2d) 895. State ex rel. V. Retail Cret3.t Men:s*Ass’n 16i.Tenn. 450 43 S.W.(2d) 918; Boykin vs. Bo&ns, 

### $74 Ga. 

### $11, 162 SJb 796; In re Co-operativeLaw Co. 198 N. Y. 479, 

### 92 N. g. 15 32 z. R. A. N. .s. $j 1.39 Bm, 8th Bep. 

### 839, 18 Ann. Gas. 879; Eley se Miller, 7 Ind.App. 99 

### 34 N.8. 8365 Richmond Ass'n ,of Credit hen bc. v. Bar Ass’n, 167 

### Va.327 189 S.E. 153; .&ate ex rel. vi Merchants*Proieetive Corporation 

### 189 Calm. 

### 531, 209 Pa 3630 Bennie ‘v. Triangle Ranch Co. 

### 73 Cola. 586 216 P. 718; In re .Otterness 181 mm. 254 233 

### N.W.33.8 ~73A.L.R. 133.9*

Bla$ & White Opera&g Co.
v. Grosbart,lb7 N.J.L. 63, 15;r A. 

### 630.~ Inc.’

“*** And since a corporationcannot praatice law directly.



### it cannot ‘daso lndi,re+y by employing competentlawyers to practke for it. That would be an evasionwhich the .law would not tolerate. 2 A.C.L. 946. State v. C .S. Dudley & Co., 

### Inc. 34C'Mo.852, 102 S.W.(2) 

### 895. The interventionof a aorporationas general employer of the attorneybetween him and ‘theclient ~1sdeStrUCtive of the necessary and i~mportant relation of trust and undivided loyaltywhich ~mustexist between attorney and client. ‘Divided obligations in trust relations are obnoxiousto the law. and i&,one more so than in that of attorne~y and ali-

. People v. People’sTrust Co., 180 App.Div. 

### 494, 167 N.Y.S. 

### 767, 768."

The Montgomery case, supra, togetherwith the deal,slons here~inafter

cited effectively

dispose of eny aontentlo~n whiahHon. J. P. Bryan, page 6 (0-8j!l>,

might be made:%0 the ‘ef!ZeM s:that he, Go&t&&t2 a.e’&i”ibed in your letter~.sPtiplyprovrde %‘tirthe

!per~~rrnapc~~‘~~.P~g~~services by a licensed attor$ey;‘: . .,

In the~.Montgomery

*&se it.

wassaid tha&~:sinee .a corporation cannot,

practice ‘law,

directly,.,

(it.-danno42?;

do..soindirectly by emplaying.%bmpetenttla\JyeSs:-t~..:praatl’ce zfor“itt,..

~:Sim&srl.y, with respe.ot

o,theeti’onMxt3~

inquired abcut~by~,yau&it i,s our opinion th&t :.inl’~isen~ed~bon~. broker, not.‘being

authorizedto practice law ‘;dii%ctly; cannot -do’ so Indirectly-by

employfng competent lawyers to.

furnishhia6’~~ith:.k~gal.o~inions and-legal instruments

which- the’ broker, ti-.+xrnIn the situation

present.ed

by your: ;etteri

no dontrsctualrela- . . .i., transmj.ts::to.“the.

county. tlonshlp exists between the county and the licensed,attorney. The county’s’

aeaX$ngs’-‘&e’with;a boiid4M&er~ an&‘th” bondbroker ins turn empl&y&,i &~,att&@&.!.-:~&. p@iy$ty &f &@tk&t$ :Lnbp. r&atlonship of.

attorney and;.cl~ent~-8x9sts.betljeeii ?he,.~att,erney

amployed by the?

broker: and, j$he :?%iznty<

:#’

_. T@$: s&e r~c<..‘f$:‘$ee~ &&e&Yn: &e;eci’&~hs, of the AppellateCoi$t’ts:

ini other,! StatWs. ‘I.n(C&WTo$d.~; @Con@@1

. (Okla.)49 Pa~..:f2),:.55l,~;:‘a. c.ontr.@was+

heId @agal. ‘in

which a person not licei%& to: pro’ctl&’

Tay. tio’nt#@ted..wtith~

certain Olclahoma

Cc&y teijc’

p.ay$% to;

dist’erm$ne..

the legality of taxes asse ssad age&n& property,,. to’ ;flle’z prot’esW%h&%o.f;1 and If neoessary,.,

eni&*, at,FernBy~s

,,to file ,syits~,

;for \the
.,.., “covery of illegal tati8.p.

:
?&y ‘cqur*:-~:?i*ld:

:

. \. “Clearly

we ,,%h&&“:the.

&&&iCf ‘by’h&h

i&&‘k’at& undertook to perform a type of servicewhich could only be ‘perpormed

.by:orie’ who had~dePionstrat’~~~‘~s qualifications

by!: obtatning

: a l$cens~.

:t’o:’ pradtice la&t: ”

.Ip ‘~C&in v; z~ertihhants~

,Nati’onal~~Bank

& Trust:.

Company of Fargo ,,(N.-

lRik.)~~-26%,.N.h

719~i.in,‘whlch~

ase the +ssWon’under consideration

tjas’ the ?&all& of trsinsaotion~s ,fn’ :%hitih a bank and tru’st’~,.:i?ompany,-thrbugh~.iatt~m~y~~’ &iqXloyed

by’-‘iC”un3?srtook

t prepare for a ‘co,nslderat+$ ‘de~e,ds;,:~mortgages,

trust agreements, assignment’s

and other,

legal $nstruments. The’,‘cotxrt h&L&~ that such transactionsconstituted UIegal pract%ce’

~ofthela~. With respect i-d

tha’ bapk’s++nte,nt‘$on,‘- that such transactfons were performed’

.by, ,legally.

licenpe~d

~attorneys,

the Court::said:-:,
“Since It (the bank)has no right to praoti.ce: law directly, ,$t,

cannot do so indirectlyby empl’oy,idg’

a l’i’censed;

attorney:

‘to Ipraictiae

~for:‘i%t,
as t&t- would:

be ‘amere evasion of then 1aw.K .‘Hon. J. .i). Bryan,. page 7 

### (0+831).~- :.,

In Bepew v. Wichita Association of Credit Men (Kansas), 

### 49 Pac. (2) .1041, the Court said:

“One who conferswith clients, advises them as to their legal rights, and then takes the business to an attorney and arrangeswith him to look after it in court is engaged in the practice of law.”

In Re CooperativeLaw Co.,(N.Y.) 92 N.E. 15, it was held that since a corporation cannot practice law directly, it cannot do so indirectly by employing competentlawyers to practice for it as that would be an evasionwhich the law will not tolera e.

i To the same ,effect are: In re: Otterness (Minn.) 232 N.W. 

### 318, and People ex rel ‘Los Angeles Bar Asso~ elation v. Cal. ProtectiveCorporation (Cal.) 244 Pac. 1089.

In the recent case of Rhode Island Bar Association
v. AutomobileServiceAssociation (Rhode Island), 

### 179 Atl. l.jy,
an exhaustiveand able discussionand review of the history of the decisionsand reasons for prohibitingthe practice of law by unlicensedpersons is found. In that case an automobile service association, for a stated annual fee, agreed to furnish legal counsel free of charge to representand defend members of the assoclatlonin cases involvingviolationsof traffic laws, and also agreed to furnish such counsel for the purpose of prosecutingand defending,on the part of the member, cl:.%,?-~rr:; and suits for damages for and against the members. The CourL after quoting the contract in detail says:

“Each of the severalnumbered paragraphs of the respondent’s (A.S.A.)contractwith its ,customers calls for legal service of some kind except paragraphs 

### 3, 6 and 11. True, this legd service is to be renderedhot by them personally, but by counsel designated

by them. Ostensibly such service is freo, but actually it Is by far the major part of the consideration

which the customerreceives for his member ship fee

. Out of eleven paragraphs,only three are not of a legal nature,and‘twoof those are so inconsequential

as to be disregarded.

“These respondentsthen are engaged in selling legal advice and assistancein associationwith a duly licensedmember of the bar of this court. Their association

with this member does not absolve them from responsibility. We see no differencein their
case from that of the respondentIn Re Co-operative Law Co. (1910) 

### 198 N.Y. 479, 92 N.E. 15, 16, 

### 32 L.R.A.:. .-f.r4

Hon. J. P. Bryan, page a w-831)

LN.3.) 55, 13,9

Am.St.Bep. 839 19 Ann.Cas. 879, where the court says: !!!he ~,relatlon

of attorney and client is that of master and servant in ~a limited ,and dignified senses,

and it involves the highest trust,“and confidence. It canti& be ‘delegated without conse’nt,

and it cannot exiet betw.een an attorney,

‘employed

by
a corporationto practice law for :it,and,,,,a. client of the corporation, for he would be subject to ~the

directions of the:.corporation,, and not ‘to~the

dire’tit,ions

of the clierit.lf

In another,

place in the opinion, -theCourt says:
“‘Thus,indir&tly~~through the’ respond&i Morri’s,“they

have bee,n

assuming to,

conduct

~,a, law practice on a wholesale busin6ss .&ale ~:, reaching.,

throughout,

the state

.. What these r,e- ~.$ondents,

~cann0.t

,legally

:do ‘.dJr,e&ly

~they; may nc$ do :in&lrect:ly; The.y saq’..they

,have rcon-,., ~::

:, ,:. ,-~ ducted ‘t.his

busipe% for:

tw~elve ~ye,@s yithaut.

: i 1., :

,,, interference: ThS$ my w'ell be;. ?I$ #:pe,qe

LngJh .;

~. Of’ l;iqe does ‘hot.aiid

can+ .~convert

,,into; ,alegal. I act, what ,‘I s ;illeg,al.”

.
’ “” In ~Iview”

of.. the above cited &&ho&tie’s ‘and other,3 ‘.t,oo &me~rous”% ‘quote

in ‘this..

opinion~,~,

,:we ‘a& donstrainedto .hold that the”contra6t.s .described:in

your letter;,:‘insofar as such contradtsprovide. for’~ the furni.shing

.of ,,legal opinions
on bond issues and for ,th’e’pprep~ation of ‘orders,

notices and other. documents of.~a

legal nature, contemplateand provide for the ‘pract~ice

,of law by an %unlicenseg~‘person and;~ therefore, such @itract s are ‘illegal..

‘
, APP.RCVEB

ArJG 

### 25,: 1939 "~ /s/ Gerald C. Mann ,.:: ATTORNEYGENERAL OF TEXAS

APPROVED:OPINION ‘CG+TTEE BY: ,?WE..

CHAIRMAN ~,
RM1l3T:wb Yo6.s ‘verytruly NJ!TOE@Y.,GENERAL

OF TEXAS
By /s/ Robert E. Kepke Robert, E. Kepke,,,

Assistant

:

.,

,.