OFFICE OF THE Al-fORNEY GENERAL OF TEXAS 

AUSTIN 

mnombls % @. hrme 

srsr8tiwy or mata 

Awtln, Texas 

naar Sir: Attnt Mr. Qaodr A. Qlllanr 

b am in maaipt 0 

mant and sa 

* (d ) %I apltnl rtlll ea&Mbla $6 - 

6371,039.00, wllhirh 

is 

6aourit~ tar debanturer 

irsrmd aaountbq to '3&6,656.% 
132 

“The oomgany contanda thettha eubaerlb.6 

6apltal stook 1s $974,000,00 and that the aapltal 

emountbg to ~~,QO.OO, subjaat to aall, ir, not 

aub$mt to filing fws or fmnchlsr tama, their 

oonhntlon being that $ll&,961.00 adveneod ova? 

end abars $20.00 pr ahen ia la th8 natuu of 

an ebmno~wnt upon whtah intanst ia pold aal 

that tba eepltel aft11 eallael~ la not Qa b We 

atookhcildorrr aa atodr aubsarlkd until the aI metom 0al.l for l uoh payrqnt. The aanpany*8 armmont la that nndar thr +~liah bn tba uorrat 

aabrarlbrd ahoald be ddmmlned 81) tha ammat 

called by the Ulrwto~. end tbrrt uattl e sell 

ir maa for the unpaid portioa, then w Iy) lkb%llty oSthepart of'tba 8tookEoldara for ttn 

’ lmlanos or the otoak subeoriptloa, heme. M ill- 

', rps tea ahaIM ba 8tmO8smd $grlmt thlo portion 

,oi the &O&c. &I etlpport of thair oonteutiorl 

ueorpts-fraaa rasolution parwd by tha Board 

:of @ra6tcim on Gbrtmry 1, I.867 a#~# from the 

*FM also aall your atkntlou tQ the paialon8 

00nkfnsa'on 

tialaa or +a800 T 

IS 9, 11, 15 16 and 35 of the kl?- 

tion filed in thle offi la 1929 

oonaem~'tho neton or this stooli 

*%tt Will ObEm'Vu that in ti.& X4Wl6ll816 Of 

'pa&c&t dated Ootober 25,.1929 

~Srptambar 18, 1909, and uaow b 

October let, 1919.9 

r 8, l899, statematawara mad0 thetallof tha c8gitalsto0km5 

mb-mxrlbed and l ppmx$zStoly 755 $hclnoi #Sd In, 

and rilsng reas paid on tin ant%ra oapltelstimk. 

*'iJa, theMrin% roquallt you? oplalan e8 to 

whloh or t&e roll& 5alomta oar tlllss fwe 

shell be besedr 
~22. u.0. Flowsra, I~af30 3 

Wa also raquaat your~opinion aa to whlah 

oftha following EUW oar Smnahlw tarwIllba 

euaeaed : 

&et pert of ~l%laIa 39u; %Tlead txvil BtelM85, 

1 925, a s l ~~~ndsd, Aata 1931, p* 204, a. 120, providbg irrr 

the flllrrg to* of a fora&n 4orporatlon to rea3sw its right 

to a6 boelaaea fjl %.a., rsads aa fonowst 

"Upon obtainin& a pa!mlt M(Xw ArtloU 

l mmdmnt 8 au lamat uqd4r Art1 0 1537, *aoh 

1529 and upon,~~ng a arrtl.fiad ogy of any 

pey the roll.o~ing rue 

atblttad to d0 an 

the ~eod wpN.l etosk w tazabb shell k thet 

propozt~oBrr ttia~rholr tbalmr, l 8 tha -8 

l S.StSb a ip 

T 

inwhole orlnprt in ln%mxata~ 

bualMu in MS* plus tha groaa rawi to 

tzaetatk ‘prxae baefnose, baar to tea am e 

rrol8 Inirr ssaatu 

and reoelpta of tho aorpom&tIqn. 3,n th4 ~56111s ot 

e ba@nuar~arporatIoa obtainingapotit tci do 

btmiarae In True for tha first tlm, mhara It 

thy beeta fllirg rro or rfitg $sa.OOl Dollars 

hre tlmrs$OfOr. .5@0~4 BO Upi++ &oak in -w, 

shell bs p&d 66 harsinebove pmlaod end wlthln 

ninety (90) day6 aft4r th4 axplratlon of the first 

per tandar Ita pamit, tb oorp0mthOn efulll fil* 

an affidavit with t&s 8eomtWy Of Stata SXSOUtSd 

b? OM ct its exeeutits ofriwrrr, ahaPiz@ the ewurAt 

of gross am&o omploya4 in nilo1a al- sn part in Lntreateta buaineaa iB Taua and the WOW% of ita 

wtlrq grow maoto at the and o? auoh iint mar With 

uS&otbar data mquire4 to oalaalda thafa* ltlrd 

rf~eiiuh tirps shell ,pay to the s.OMtrrp or bets 

tbabaia~rtbaril~~ronthapr~wa 

of ifs leeuad otkpltal etoak as banlnb&ore dobr- 

&tad, +I exeau ol Tan ~o!seand 

lsn at,tha mto of rcln 

edditioanl %B %OUrWnd 

fm4tlOaal part of euoh 

y6ar of th4 llfa of any 
1.34 

non. 40. %warat %gr 4 

oapltil atook 18 laauad andrr an ammdmant 

e 

vldodb~in forth .paymntonthr mm&e 

tha wee of a ,bsginnsr earpomtlon; We& 

tbet~thsrinlqmflllng fi*toPr-:uyman~tor 

eapplaarnt'abalXbr yifty ~4WO.00) iJoilen. .&an 

the l aaato l mplayad in Tume.am used jointly in. 

oalmlating &mhfaar ar.tha lntreatak~~Prp8 ramlpte bmrtotha lutaretete Tazee neipta fror 

t&n onfirs opsmtio~ in Tsxae,a 

ArtLI& w&,, R@r 

emandsd, Aota X931, ~~~ Ul; 

l d Giw Stat&as, 1925~ as 

followe: 

265*'Osoridmj 1~ mrt, l e 

"(a) .%Ospt as ha&la prorldod, wry 

domeetloend rarnignoorponts0nhrntoio~ 

or hsroei%er ahabred ox mathorlmd to do. 

buehsea ~in.‘foxoe, .shell, ‘tmor bsfors %ay 

lstbfwahyaer~ py ias(ltanootothe Baoytery of stat4 a fnmohieo tau for the.yser 

~llawing, baa.4 npanth.t pmpmblonoftha 

outstending oapltal l b&; marflacand mdirldd proflta, plna ths amount .ot cwtatanding bonds, notae end dabentume, other tbsn 

thorn amtaring lnloaa than a y8ar from data 

0r leaua, as the grvae nulpte m its bus& 

MU don6 InTexes bsareto the tctmlgroee 

raoslpta of the sorporatlon ?roa lta 4ntlrs 

bualnsea, yh+oh~taCehellk wmpatrdattha 

fomwdng mtaa fok 4e4h ~&as a0ttuha’ JJeQmru. 

(#l,000.00) nor traotlqnai?plqt thamof&g~. ~.a,' 

'Wd do not aederatand your raqr;r~at as lntwd& ti 

m& w y o uur r p a r timwnatmmtiask ntel o f tha l ~tietudtneess , 

.thrXr l na&mant, wlsioh 18 bees& Upon&i AttWay~&mr&*r 

&t:*At %rB4 

MT zt;: "Ly$nEh";t";w'-&=i ratiLc 

am6 Court of lkxae, &etsa’A~lI l2 

Oplnlona and hp. 19l6-1918, PI t2l 

*lg7~y&~9~~‘*~* 

thet-uplhl atwk of uld oorp4wt~on i5euaa, anu ou$&eiullBgJ'm6eBtt<part Oftha alhorlsad'oaltal rsook:~oh 

be& boon aubaarlbad althwgh not fully #8 % ,+n ax4 qtibjyst 
to 0311. ml- the ;w:Fasea cf thlit; opinion vfa roaept you* 

lo@! aatsblinhad tlapartPPsnta1 construotiono? these statotas ar& conoldsr tba umtantiona cf tka taXp9yar tnatbaaaasa of ths %&Uh leave appllaabia to aa& o y-t-b 

the full amount of ltc atook ahonld not be OOIU damd for 

tnxatlon or ~iower fu purpouai 

~pparantlg unbar thr ?pn4ieb lmf mombars-of the 

-&lmltad .Caapny are laausb cwrtlZlaeko m tha total pax 

v6xu0 0r the. shams eub8aribad upon peymant of a-put or all 

of the par olrlna, in this lnebn~.a rOur poandr on 8ls pmnb 

prvalua *took, laavln6 two poanU5 par alnraaapald ?or 

,wblah the nubsetiber ia subjrot to Gall. TJM rtooktmldar 

wy notpayup thaunpalt¶ partlono~hls uteok.%n the ebe4nw of .a 0al.l or wlthatt the wne8nt of the .#lrwto~ ~4 -It 15 ala0 pr4tv$hd that 'adv4nwe lay In rada by the etocDk- 

:holdare a6.a pnpaymnt~a&aimS fNmra.oallr on thaw ap- 

~pald atouk;ahanautho~aad bytha‘dlrabtam. Tbaa pra- 

,pajwant8 ~alfkst~eall5 am notwmlUu8d u paynnte ap0.a 

the ntocdc in its strict uan&o. bat ara aotxeldand mra in tha 

DBturw of a loan up00 whloh-~&tanat 1U~gald end ln tha 

wont 6.~ aall is Pada, or tlm oasporr, tlon la diuo2wtl ‘and 

1 t, bewmw luoMury 60 '8nfQrM. ulle ior um ~benaat or 

oeditimt;~ th6'~rpDont shaact*d is 0raua64 me 8n o??a*t' 

~O&BinBt; UCh Oti to the 4X@JBt HO? th@ pm$Bwt. tbldU 

the lmv@ o$ Tsua-e eorpontio@may not lam&m &40kapanB: 

9vetiy such sabaerlbrr baoumm a’ numbs 

lpw faato on the inoozporatl8f1 OS tim umpad~, 

and ltmblias WB hoxdsr O?+Lrtavar mmbar 6? 

#~IWO~ ha has.at~baorlba.?w. 'l'ha 23rll SeOtiw~ 

LO? Wr A5t Of 1862 &OP Wbhh IW@% asd & the 

.~aum of awoalation in n airrum 'ay 00 .th4 

poaltion o? other parwna uht'agxa~'~ km' 

~JOR&MS. *l[t I5 pAin?. ea%d Lord blue ti 

i!van' c4.a (lHi7); L.R. 2'Ch. hpp. 430, 't&H 

the orS&kaiaubaorlba~e ara, ,by the &t Of Pi* 

llhR4ant, de&maQ to mars trrlcen tb* rharcl0 mt.O;r 

poelta thalr 1181~~1'; the Ob 

Mt3" 

et ba@ that tha 

publla&&tralylrlthc~~~ aanoamthaaabsor~lbepa br the ~~cswa~Atun btmml+ mwWn of 
use ooRip3ny. r\nd a44~wgottl'5 oaw, 4 zq. 238, 

In thhr 88~ of the eub64rib4ra of t&a aeaorandum, 

tbsn3rmr, no auotmnt ir nrorsoary tna London 

and ~?rorlnoial, & c;O. j Q. Ah 525)J 'no aIrtry on 

fh9 M#@~T Of 6@6b0rS 18 n4046rrlllf. ~f0hOl'S 

oeme, eupra ~luandsr v. ktomstla Tel* honr 

co., .(19OC,1 %. 63. The subseribar ir ihand 

to take tha.ah8qus fraa f&e 8omgs4, and to pay 

fortheron oalls dulyasda1Ura any otharnhanholder." 

Vhe ta3aa vi the Pat of 1929 'and .%a** 

tSdnlir the pr0v1810im0r O40t8. 28 and 157, 

lra*s no doubt, ln'tiha oaae oi a'ooaplq, Mt. 

Ml by Ilhera~, about tha obll&atlon or shnhel&er'a to pey'to the Ocmpa4 the fkll amotint 

of thar tlhama. 2% worda of .Mm dotie xbit- 

%06 tha foregoIng it appmrm. that th4 *to& mmor the,full amountottho #took Qsitrd brth5.a oor&wzatioa 

will only pi404 it upon'th ma4 foot- and b4als with 

othor oorporattoxm 84 th4 at8tuM S.a appllad Qr tha Se* 

Mtary Of 8tata*a ofrima. 

Path relF4Mnor to prrpeynleat5 in Nmpsot of futura 

04ll.8, Palaiar's Goap~ny Law, A5tb ~Rdtioh, &at-es at pnga 

14G es followBr 

l.38 

"Ey Lords, I ogrea, hatlon 7 of !l!abla A 

authorizes the direc:ors of 4 coqmny limited 

by shares to agrsa with any member for an advnnce of uonay on tha terms that the money so 

advanced is to b6 sppllec! la discharge of the 

member'8 llablllty on his aheres~when end aa 

thet liability .rlpenu Into a debt preeently 

payabls, en4 that in tha meantime the mmibnber 

is tc be t3e+itha tc lntaroat en th4 4dVt6xa 

aa if he ware an ordinary aredltor of the oom- 

.vaw. 'zhe interest la to bs due to him in tha 

character o$ orlditor, not In hls oheraatsr aa 

tmn@tsr . . . . . 2 

The member's advanoement against future oalls on 

hia stock liability doea not iri any wiay mduae the amount or 

capital stock of the aoflpfjny, although uutll a eall Is 6ade 

tba prepctywnt hears Interest, lnatead of sharing lo the dlvlawls. The soncy~ thus edVenced by the &o&holders against $lnlr 

liabUl.t,p on their atoak& oout~lbutep jwt ,aa muoh to the baai11888 potenoy of the company and represents a part of the aatwil 

available wing capital of %h~ aoupany attrlhiable to aapital 

stock, whqther aharatierlzsd aa~a pre~ymant on future calla 

or a present paprmnt on ths etaak ti con lets 

blllty ror the unpaid stoak,or subscti~~,on. P 

disaharga of liaAn addltloual conal4en!~~onarlsea, however, wl%h '. refarenclt to the raura 'Ilax Satute, be~suea or the feat thet 

Article 7064, as emended, Includes uutstenalr@ bonds, notes 

and debentures maturing onegear~@;mora fran date of issue, 

ae a part or the taxable Uapital of the OorpOWiloi%. zs this 

oese the members* tuqald llablllty on thelr etoak baa bean 

pledge4 by the cowany as aecwlty for Its debentures lseue4 

amou&ug to $3.k0,656.00 and It ia au&w&ad by the ~aompany 

that if e call should be mad4 upon the unpaid portion of tha 

stock, a corres::onding, smq.&nt of the dabenturas for+Itlch they 

ara security must also.be mid up and far that reStson the 

inclusion of both oallabla ctipltal and the Uebentures w&h 

in a aupm4tr aapitall~tlo~.~ 

If the ncceooltp ror ~raflting tha dsbentures upon 

calling in ths underlyiug cslleble capital, which irr eecLu%Y 

therefor, arose out of the fact that the aabenturs holder@ 

would prcbably demand addlLt@tal seaurltp to raplaae this 

pledged stock, thfs 9fiaia not'ba naa6ssariJ.y trus. Kowver, 

we flna the follwlng provisloa in the comp~ny*s Artlalea of 

Aost3cletlont 

"The total lnsue of suah bonds and debenturee shall hot at any tins excobd the amount of 

unpaid ~oapltal . . . .* 
139 

*n. ii.0. plOw6r6, rslrcl 9 

zmaucra of thlb pro*lslon, the U6C688ity for l-6- 

&talag the dabantarae whsn a ~11 1:; aPad@ upon uapai6 aaplt8l 

is b8Mtt Upda th6 limitation UpOn the Wit~ny'a 6UtibOC~ty to 

isetia bonda en4 dabenturaa an4 fltoe a mrlmum mpltallsatlon 

~@f bath &Oak an4 debmturra in tile awunt or th6 par valu6 

ai @to mbsotikd &o&. Uo48r tb68a uira~tena68, th6fW.l 

mwwto5th6 enderlyirg i4alZablo oapltmil, end the autatm4- 

,ta(l da~knturor noal rmalt in sattiag~ ap o texebla. mpltal 

tn.rzoaes of tfu muW& llsit mbieh tin eorpontlon maid 

k math~66 to mch ooder It8 ahe@nr an4 tha lam oi its 

dtU10~6, 8nb St is OUr Op~Olt that to #18 8Xt6Ztt St W0ltl.d 

in iBOt l’68illt in 8 &I 

by th6 fl'ttBahi@W bX II 

liGld.Oll Of Qapital tlOt 00lltU4&&!4 

is tU t8. 

It la oar a Foion 

?atiador Lea4 snd C&t P 6 

that th6 tez8bl6 capital of th8 

kquny, Ltd., for t&m purpo8r ch' 

OLtbt16tiXQ th8 WrpOMtion'8~ &W'Btt fizLn& f@O - b6 

aoeeptrd on#l b6~,000.00, klngtbr fullaafmat ofth 

'&a&88 rabrarli8d and in th6 h8nd8 of atookbold6r8. 

!i?ia6@ t&O @6BClhi58 tit2 %U b88Sd UpOB -piti dOOk, 

srplua and Pnlirid@d &WOfit8, ati Wt68, bonde mPd 4OknWrOr 

otlmr then thoea 8utturhg lataa than ozi6 par i 6ak of 

tMu0,~ an4 W@ 40 lWt &lY6 011 Of thM6 f&W68 k+on tU W 

&tad St6st6 tba:m MUint at taaabl.6 aEpita1 tl&Wt abhi4h 

tb# -88.tE% 8hofild.k bead, hOW6'(*r, - t.TUUt tbatth 

abcna tlbwaeionrlll smblo you to aaqate the tax. 

Yoaln Yary truly