d **OFFICE OF**  **THE ATTORNEY**  **GENERAL OF**  **TEXAS AUSTIN** 
February 9, 191-59

Hon. ClaudeA. Willlam~ Aoting %olmtary of State Austin, Texas Dear Sir:

pocre other tha **brine aad**  othe

V'PIMalpowem* --&oh oorporationshall htwe the right to **borrow money**  **to** an **amount** not In exoeon of ita paid up eapitel **etook,** an providedb? law, **SO** lrfmo **6took** -andpre**rerred stook,**  to mortgage ite tranohleeeand property to meure the payment of any debt oontraotedfor any purposes of suoh oorposation, and shallpossem all the rlghta and poware of oorporationtl for profit In this.- Claude A. Wllllm~, FebruaryB, 1939, Page 2

State whenever the same may be applicableto oorporationa.ofthis character. (Acts li399, p. 202; ACta 1915, pa 259; AOtS 1917, p. 54.)' Thus, It is clear that all corporations covered by suoh chapter are apeolfioally authorizedto laaue preferred atook. A careful examinationof all other etatutea reapeotlngprfvata oorporatlona reveals the total absence of apeoifio statutoryauthorityfor corporations, other than those authgrlzedby chapter 15, tltle 32 of the Revised Civil Statutes of 1925, to issue preferred atook.

Artlole 1304 of the Revised Civil Statutesof 1925, in setting forth tha raqulmmenta of the charter itself, provides in Sea. 6 tharaof that the ahartermuat 8at fortht 'The amount of the napital stool, if my and the **number of**  **almrea into**  whloh it is dirtded." The matter oftha oraatlon of rights and praforenoea of stockmust, tharafora,ba la?+. to the @l-ant of t&e Interested

partlea In the axwolaa of their oontraotual rights.

It la said in Thompson on Corporationi, Wd ti., Vol. 5, P. 276, Pare. S435r

"It haa bean a~aatad....;.,that tha law usually raqairaa oapital **qtook** to ’be dltidad into shares. **But** Ld tha prratioaloparatlon OS oorporatl?na

tha oapltal **atook,** ior oonvanlenoe, has oome to ba olaaalfisdInto many dlrfarentkinds, wlthout regard to the dirlaion into shares.*
It @a held in the case of People ex ml. Raosaa Exporting and ImportingCorporation vs. Hugo, 182 R. I. Supp. 9, that in the,

absence of statutoryprovisionsto the 00~ trarg, a oertlrfoateof inoorporation of a business **oorpore** tion may make auoh prefarenoeabetween atookhold&a as to lta stock as seea beat, and that the matter of preferewes la a matter of oonOern only to the atookholders oi the Oorporation.The court said in Hamlin vs. Toledo Bt. L. k X. C. R. Co., 78 Fed. 664:

*Ordinarily,

preiarredatoak ia entitledHon. ClaudeA. Willlams, February 9, 1939, Page 3

to no preferenceover other stock in relation to capital. But where there is an expressed agreementgivfng suoh a preferenoanot prohibit&d by looal law or the oharter,we see no reeson why it is not a valid oontraotas between the oorporation

and such preferred stockholders.* The dlatlnotlon

between oommon a 4 preferred stock resolves itself into a questionof prefers 4OIB and this is true whether the stock ie 80 deslgnntedoommon or preferred or by some other names.

Tex. Jur., Vol. 10, p. 672 saga: *....Thare

appaera to Da no seeson to doubt, that, between the atock.holdara end aubjeot tom the organisetion

agreement,

dl#ferentrights JEW I)be attachedto differentoleaaea **of** atook.* This statementIn Texas Jurlaprudenoila jo8tIfiad and supported

by the cease of~.Bt. Beg18 Oendlaavs. IioreB, 3 si?(ad) 489 by ,the atmtniaalon

0r .Appea$a.,

Tha 04mt held In ananr to pueatlons**oertiflad** fti the Qourt of Olril **A9-** peals of the 1st Bugwane .Judioial Dfatrlot that e.ole8aifIoetlon,of**atook** into o&as A uwl olraa B atook with the ol&aa A afook having the role vqt%ng ouer waq not in oontrave3itioa of publio policy, the s Oonatitut on or the rtetutaa.
A otireful

eunination OS the authoritieslaeda thla Departmentto the opinion a@ ,pou era so e6rlaad that private oorporetlcna gonwwlly~uy iaaua pr*iazmd atnok **a9011** ocmplianoewith lawa 4salIngrith end reapeotlngoorporetlona.

Truqtlng that this aetlrfaotorlly anmrera your inquiry,we reamin Very truly yours

IA? AW
APPRovxDr **\ ~iloytl**  **Arm&r&** Aaafatant