### 260

**Oi=FICE Ok** 

**‘ rHE**  **ATTORNEY GENERAL**  **OF TEXAS**  **AUSTIN**

Hoooreble Cleude Iebell secretcry of state Auatin,Texas
itteM&m: flofioreble Xoraoe 8. .*eaione Lieouritlea

commlablor.r

'3ear sir:

rty (30) peraoIIe.The ssouritia8 Diviuion or
ra of the proposed

exa6 Soouritiets

Aot wae **availebxa,** th6 reglstretlon provioloue of.
e neoeessry

.
ornay contend8 that, rinoe thir ID **ntarpriea ifi**  **whioh** the **aubsarlbera pertlalpeted**  in aubsorlbl~ ror **etook,** the Texas **tioaurities Aot**  would have no **epplioa tiOE.** 

**93inoe to**  **our knowledge**  this **mntter ha8**  **not been**  the eubjsot or **httorney** Oenersl*e oplnlon, and wa have no Taxes **oaaea** beering on the eubject,,

**we** 511all rspprCcl%te ::o+rfi>vorin(- **u5** .itil

tlliO&lIon OE the questionraisd4 **by the**  attornej'for the lnoorpd~ators.

%e atteoh Lareto CTcopy or th3 **popoee4 chur**  **tor** an4 efrmvit, togetherwith.our complete aorre8pondenoe file for your l.uforn@tlon in &ivlng tha **mott*r** aon8i46retlon. ;ueehell aypreolate Lhe return of taismatorial.w

The **purposo** clause of theWoo4 Leke Auter Corporstion 0s stated In the Article8 of Inoorporation ia:

mThe purpo8s **for** wnioh the oorporhtion I8 organleod Is to rupply water to thepub110 In the iw0a IalE4comauuity In Trinity county, Texe8.a'

T& amount of the **8took** I8 Three Thourend Dollar8 (,3,000.00)4lvi4od **into** 8Ixtb (60) ihnrea at 

### rlrty Dollar8 (+SO.OO)

### l

eah, all of wtioh oepltel **stook has**  

### beon in good fait3sub8orIbodand the 8um of Two Thousand Two Iiundnd Doller8 (i2,2OO.O0)pal& In as.per~arrIdavlt aooorapanylng the chartar. Tha rpOunt paid **in by**  

### the l **ubearibers wa8**  paid by tha aalo, **tran8rar** and oonveyanoe to the **corporation of**  **th8** propertywhioh we8 purohaaed~iron an agency OS thoUnits4

stetoa **gov4mmont** 46sorlbe4 In the arridevlt eooocnpanying the Art10108 of lnoorporatlon. Cenerelly **apeakhg** the ohar**ter of**  **e priveto**  ~oorporatlonoannot **be** file4 unle88 tha full amount of It8 authorized oapital **stock** he8 bean In go04 **faith** aubrorlbodan4 rirtg per oant (56) thoreor peI4:ln **oaah,** or it8 oquivaloentIn Other property or labor done. (Artlola 1308, **Vernon08** Annotated Civil Statutea). Thin provl8Ion rerefer8 in **term8** to the aggregate mount of oeQlt.81 **stock.** S0 longerrl!th8

con814aratI00re00lv04 rr0m nome 8tookhol4ora **n0ouut8** to rirty par **oat** (SW$) or the total amount of the oa$Ital ***took,** thl8 yrarequirito,o1 Incorporetlon I8 00mpliedwith. (Stringfellowv. Panhandle i:eoklngCornyany,213 4. 3. 250.)

SuboootIon8 (a), 

### (b)and (0) or Seotlon 2, Article 

### WOa, Varnon*8Annot8te4Clvll 

### Statute8are **~8** follow8r

***(a)** T&o **term** *******esourity ’**  **or** *8eaurltlo8* 8haU Inoludoany share, **stook, troaaury**  

### l **took, 8took**  oortlrloate undar a votlng trust ag~oaant, oollatoral **trust** oortIrlcate, **aquipmsnt** tru8t262

06rtifioa tu, prtor,+iilzutioii ccrtiiicoto or receipt, **aubeoription** or raoreonizetion o~rtlficotc, s.ota, **bond, debefitura**  ,mortgo~a o6rtificat.e or other avidenca of indebtedness,an!,form of oOiUU6rOial pap6r, cartiriotit6

in or under 6 i.rofits:iurlI& or pUti.- clpetlon egreem6nt, certlflcata or any inetrument reprcraonting

anj-interest in or under PfiOil, L;68
or mining 16686, fee 

### ortltla, or any oertifloata
or inatrumant repreeentlngor 86our6d **by** en interest in any or all **or** tha oapitol, property, 6aset8, profita or oarri~a of eny oomyeny, inVaatm6I~tCOILtreat, or any other inetrument oommonly known 68 a security, whether eMl6r to those herein **rafarred** to 

### ornot.
***(b)** The term *oompany' ahall inolu46 a aorporatlon, a **pbraon,** joint #took company, pertfiarship, 888OOi8tiOn, OOmQeny, 8yndia6to trIl#t,inoorporatsd or **unincorporated,** h6retofora or horoerter fOrrpSdtSI46r

the 16~8 Of this or any other Stat., oountry , 8OVOId&nty **or politioal**  **8UbdiviDiOn** thoreOS. An ~884 horein, the term ***trust9** 8haU **be daowb**  to inoludo e eOpIleo0 leu trust, **but** ah6u not inoluda
a trust oreat 

### orappointed under or **by virtua**  **of**
8 lO#t will en4 tO@tW&O5t or by 8 **OOUrt Of**  **law** end equity,
*(a) The tom *dealer* **anal1 inaluda**  **every parson**  **or company,**  Other f&en a sa~68~I6n, who engages In this Ytate,~eithar for all or pert 0r hi8 

### orItstime, directly or through en agent, in selling, 0rrOring ror sale or 4611vrry or **solioitlrq 8ubeoriy**  **tiOIl8** to, or Order8 for, or undertaking to 418po8e of, 

### ortobvlte OffOrD **ror,** or sealing in 6ny other PBnnor In ayy **aoourity** 

### Qrseouritiar within thin State. Auy **issuer** other than e **reglataro4** dealer, Of 6 **seourity** or **DSOUriti638** who, dlreotly or **tu-ougn any**  

### poreon

**or oomyany,**  other than a roglstere4 dealer, ortern ror 8616, 60118 Or AT&~@ SuleD Of it8 Own DOOUdty or 8~OUdtiO8 8h811 **bo dOOnL.4**  **a** dOd#r ?Uld
Shall **bo rS~Uir04**  **ii0** oomply with the **proVi#iO&I#** hereori provi464, howav6r. 

### thie **YeotiOU Or**  QrOVi8iOIi8 l h611 not 6Qply t0 8uoh **i#@U~r** if auoh 8eOllrity Or saouriti68 6~ .0rf6ma **ror** aale or 8014 alth6r to **a**:0J10ratll6 Glaude I~bcll, i;yi~;e 1+

action 

### 3 of rrtiols 600s. Vernon*8Annotated Civil Statute8 onuaeratae Oartaln oxumpt tl’tiJiBUOt~OJiU, **tllld sub**  **tbOtiOn (1)**  **Of t&id**  **s6OtiOA it**  **Ma I** **’ OllOV~O:** 

**“ (1)**  Subeoriptions t3 OapILbi 8GOCk LluObasery **to** (;ualIfy

for Incorporation&en eubeoribed **by AOt**  aore than fifteen (15) lnoorporatorr In a proposed Text8 oorporation."

Under the **dafinitiOn 0i**  the **tern “** **8eoUrity ”**  **or “** **8e0Uri tie&P**  there 18 **no** question **but** the atook referred to Is **sub jsot**  **to** theyrorl~Io~a of the Seourltles **Act,** unle88 exempt thereX= **by 80~8**  **prdri8ions of**  theAct. The Tex88 **Security** Aot r6gdXe8 the r6gittrttiOAOf all t6eUdti68 8016 IA Toxcr8 **unleue** 8uah **atouritita** 

### oaw withina 8psoiflo **exemption** from rtgirrtrttion

under Sootions 3 and 23, **and** thehot al80 pro**vides** that pawn8 **makin t**  **any** orfaring and **eale OS**  **8eourltie8 be**  **lioennd a8**  nourity ealert **unlto~** the **saourltler, ere**  aold .X.~ ,~ in exeiapttrsn8sotiont lI8ted 

### under the sxemptioA8 proviatd under **8ald eeotiona**  **above** mentioned.

It will **be** notad that under, **Sib8ection (1)** 

**, seotion**  

### 3, 8upra, **sUb8oriptiOA8 to**  **oapital 8took**  **neoe88ary to**  qwirg **for** inoorpor&d.on I*heA8ub8orIbed **by not**  **more then**  fiftOtA **(15) inoorporatora**  in & proposed Texae oorporatlon **art exmipt**  fP2m the JWOTi8iOA8 Of **tht** SOOllritI~8 bOt. 

### ItMy~:,~~a";;t the **dopartawt8l oonatruotion**  **or** the **Seorttary** 0 **if there**  **wore 010x%** 'than**fifteen (15)**  **subaoribsrs to.**  **oapital** stook or e propoevd Texa8 Qorporetlon tLl6 prOV&DiOA8 'ofthe 3ourItie8 itotwould oe applloeble,unless exempt **b; nome**  provI8lon8 OS the statute. The subsoribereLo capital **etook m6**  A06 **moe88ariig** the iAOOrpOBStOr8. The Inaorporators an the **panon obtaining**  the oharter. **see 2**  uordt **EIAQ I** **’ hrtntn,**  **1st seriar,**  

### 1623. **(tioUidty** 

### v.Parsonset tl, 116 s.L. 907.)

It **18 8tated**  **la HilGebrsnd18**  Texas **Corporation8,** VOluait

'Tha Tou8 **atatute8 do**  **not** dilrerentiate **be tweon**  btookholdsrr* and **‘ eubaorlberr** * **to** the **etook** Of the OOrpOretiOA.For iA6t6flO0 iA VerJlOA'e

AAAOtattd Civil statutea, Artiole 1308, It i8 provided that **before** the charter oun **btr** filed by the &oretary or state, tha full amount ot its oayital **ntook** &et be eubeorlbed **by** Its atockholdaru. IA Arti1313 It in thu stocnholdars t:ict xurriieh

evidence tu thexcrottiry of state t!i6ttlielow has been oompliudwith. fiocordiAGto krtiole 1326 th6 by-luweme::b6 altered, ohaagador timended by a majority vota or the StOOkhOld6ro. 4rtIole 1323 providea that then books aAd raoorda of Lb6 oor>oratiOA ehall b6 open t0 iA8peotiOJl Of any etookholdar. **Artiola** 

### 1336authorizee the forreiture of the **atook** If aw atookholder n6,eleoteto pa? any Inat&.lmentae 

### rsGuIredby theBoard of DireetOrS, aAd Arti016 1345 authorizes an exeoutlon againat a4y of the stockholders to 6n extent equal to the emount of the etook unpaid. UAthe other hand, Artiole 

### 1335 provldee that theBoard Of DireotOrSmey reqUir0 'th6 SUbeorIberS* t0 the oepite1 8tOok to pey the emount eubearibed a6 is prOVided in the by-1awS. In other words, IAmO8t iASttflOt8,

a party who hae subscribed for **StOok** in e oorporetionon ortdlt It deaiguattd es e atookholdereven though he hoe not fully 

### peld for hi8 etook. Tharefora, the **atatutat** do riot fUrAi8h e 801UtiOA Or muoh **USSittJAAOt** iA deoiding th8 above problfma.

. .*

YUbaectiOA (8) Of SeOtiOA 2 of krtiole 6008,VerAon' .iJUIOtOted



### CiVfi

**St&Ate8 18**  **US rOllOWt:** 

*The t0rmt ~8~16~ or *orrer for sala* or *tell' **8hl.l** inolude every diSpOSItiOA, Or 6tteJnytto diePOM Or t 88OUdtJ for **Vtbe.** The term **‘ S&h** * meano **atiP includes**  

### oontraotaand egreements whereby aoouritie8 ere 8old,~treded or orohawedfor moJJey, property
or other thing of value, or uny transfer or agreement to trunrter, IA **trust** 

### orotharwise. kqy seourlty given or deliveredwith or **as** b bonus on eooount of, any pUrohe8e of eeourltleo or other thIAg ortielue, shell be **oo~olusfvs~** prseumod to constitute a part **Of** the **aubjoot of**  ouoh puraheae end to 

### htVo**been sold**  **for value.**  The teW 'Sell'm6eA8 eny eet **by** rhioh a salo io mado, end the term *selec or *Offer tOr 8810' 8hSu. **inOhld@** 8 SUbSOriptIOA, eA OpttOn 

### ior Sth, 

### a'solioitation of 8818,an attemptto ~011,
or an ofror to 8011, diwotly or **by an**  **egent or**  **Sa~OS** 

### man, **by** 

### a olroulsr,lotkr 

### or8dV6rti86m6nt or 

### othar**WiSe,** IAOlUdiAg the deposit IA e United St6ttS POSttirflca or ~11 box ~)rin ULA~ in~m~eri;ltwit;

United ;it,atea nails sithifithis state of a latter, clroular
or other sdvortlaln&matter; yrovidr;d,!iowt)ver, that notninE harsin shell llmlt or dlmiuleh the full meaning or the tarma *aala,' *sell* or 'offer: for anle' **aa** used by or aooaptad ln courta of law or uquity. Provided, further, that ths aala of a aoourltyundar oondltlonawhioh entitle the purohaaer or subaaquantholder to exohangv ths,aaaa for, or to purohaaa noaa other eeourlty ahall not ba deaaad a eula or offer ror sale or suoh other l eourlty;

but no l

xohanga for or sale of suoh othar aaourltg ahall aver **ba** made unleaa and until the aala tharaof ahall have **basn** flrat authorlzad in **Texas** under thisAot, if not exempt hereundur,
or by other prorlaiona Of law.*

saotlon 5 ofmtiole 6000 la in part aa rollowrr

*No dealer, agent or aa1aam.m ahall 8011 or offer **for** 

### aalaany aeourltlealaauadafterthe 

### paaaageof thisAot, exoapt those which ooaewithin the oleaaaa anuaaratad in Subdlriaiono (a) to (a), both lnoluairo,ofSaotion 3 of this **Aot, or**  **Sub** dlvlalona (a) to (1). both lnolualve of section 23 of thla Aot, until the iaauar of such aeouritlea **8hsl.l have**  **beon cranted**  **a porn&t**  **by the**  saoretary of Sate, and no auoh parmlt ahall begraptad **by** the 3eoratary of Stat8 until the laauer of auoh aaourltloaahaU have filed with the Seoratary of State a aworn l

tntaaunt verified under the oath 

### of an l 

### xooutlreoffioor 

### of the lsauerand **attaatad by**  

### theaaoratarytharaof ing inror5atlonri

. .* , .aottlngrorth the r0ii0+

Tha Artfolua of Inoorporatlon of tba **Wood** J,aka**‘ u;ater**  **CorpOrutiOi** dlaoloaa that than ara th~raa incorporatora who here subaorlbodfor a oartainnucnber of aharaa of atook and that thara We a number of other parsons who have aubaoribad **for oerta5.n**  **nun** bera of aharaa of **atook** and that 8UOh aubaorlptlonawhlab hava b~ean paid, aa horalnabove l tatad,ware paid in by the tranefer Of oertalnproparty to 

### theoorporntion. Gonerally **agesking** atookholdoraare

### menboraof a 

### oorporatlonihowarar, thay an not neoaaaarlly tha lnoorporatora. **After** oarorully conaiderin(J your (iueatlon,

**wa** place the l**aaa ooaatruotion**  on **Subaaotion (19,**  **Se+** tlon 3 of Artiola 600a, Veraon* Annotatad Civil Ytetutua aa tho

### 266

,ecrztury or stato,~tfrst is, if there are ~uore thnr~ I‘ifteer (13) subsoribera to the obpltal stook, then the provisions of the _.ccurity hit are applioable. ha there nre snore than fifteen (15)eubaorlbora to the oapltel stock or the proposed **coryora** ti0fi in .ueatlon It 

### is ouropinionLhet the srovlaione of the ,ecurity Aot are applioeble 

### end that the exemptions sat forth in the Leourity **Aot** are not available to the proposed oorporatial. stated differently it will be nooaaaary zor one of the iuOor~oratoraor l ponsora eotlrrg ror the incorporatora to api,lyfor and obtain a **dealer*8** permit in order that the aaourltieaiuayDB aold ln oomplianoewith th0 ?exne security kot. It ie contendedby the attorney for the incorporators that there **hts** been **no** sale **or** will **be** no **sale of**  **atook.** In view or the defifiition of the term *aslea oontalned in the 3acurltloa Aot,
**ne** c.%MOt **agree** with the OOntOntiOA Of **the attorney**  **for tha**  izoorporatorabeoauao the owners of oertaln property are tranaIerr& said property to the oorporatlonror a Oartein number of shares of **atook,** thenumber of shuroa of stock to be rooelved b:each eubaoribarwill be detaraUod%y the reluo of the propertyof eaoh indlrlduel **tranafarmd** to the car oration for aaid stock. Viebelieve that auoh a tranaaotlon o early P comes within t!ledofinitiOn Of 

### the tom *aela~ and, aa 

### heretoforeatotad,
noneOr the oxemptiona 

### oontslnedin the LeourltlsaAot are a?Pllcableto the

### proposedoorporation unbar the raota prasentod.

Go are raturnin& herewith the file aoooapanying your rc ;&uest.