# TEKEATTORNEYGENERAL OFTEXAS
AUSTIN x~.TexAs W ’ILJL. WILSON AlTORNEYGENERAL
June 7, 1960

The Honorable Zollie Steakley Secretary ofState Austin, Texas

Dear Mr. Steakley: Opinion No. WW-841 Re: Whether the Secretary of State can rescind afinal administrative forfeiture of acorporate charter done under the provisions ofArticle 7096. V.C.S.

We quote from your Opinion Request as follows:

“Southwestern Wire and Cable Company was incorporated as a Texas corporation in 1952. The corporation failed tofile franchise tax report as of May 31, 1956,and the usual notices from this office were forwarded to the corporation at the address shown onthe 1955Franchise Tax Report. Default continuing, this office forfeited the right todo business ofthe corporation on July 2, 1956. The corporation delinquency was certified toyour office under our regular procedure and on February 1, 1957,inquiry was made ofthe Tax Assessor of Dallas County (the home office of the corporation) concerning assets on the tax rolls from which ajudgment might be satisfied for the franchise tax delinquencies; the office ofthe Tax Assessor replied in the negative.

“Pursuant tothe provisions ofArticle 7096, this office in December, 1957,determined that Southwestern Wire & Cable had ‘noassets from which a judgment for the franchise tax, penalties, and court costs may be satisfied;’ your office approved this finding on December 3rd and on December 9, 1957, this office forfeited the charter ofthe corporation in the manner provided byArticle 7096, theforfeiture being consummated without judicial ascertainment by entering upon the charter ofthe corporation the words ‘Charter Forfeited.’

“Under date ofSeptember 8,~1959, one Mr. William Kearney applied to this office for thecorpor-Hon. Zollie Steakley, page 2 (WW-841)

ate name reservation ofSouthwestern Wire &Cable Company and onOctober 13, 1959,a certificate of name reservation was issued by this office to Ke,arney pursuant to Article 2.06b ofthe Texas Business Corporation Act.

“Is the statutory act offorfeiture by this office onDecember 9, 1957, ofthe charter ofSouthwestern Wire &Cable Company pursuant toArticle 7096 afinal act with the statutory result that the name Southwestern Wire 81Cable Company thereafter became available, wherefore the certificate ofname reservation issued by this office onOctober 13, 1959, ofSouthwestern Wire &Cable Company was valid and the Secretary ofState is without power to refuse to approve the tendered articles ofincorporation of Southwestern Wire & Cable Company?” The laws pertaining to the amount, administration, collection and failure topay franchise tax were contained in Articles 7084 through 7097, V.C.S. (Repealed by the Acts of 1959, 56th Legislature, effective September 1, 1959,now incorporated in Title 122A Taxation - General) Failure topay franchise taxes has always subjected corporate charters toforfeiture. Prior to h4ay 17, 1951,judicial forfeiture was the sole method provided. However, in 1951,Article 7096, V.C.S., was amended by adding thereto a second paragraph providing for an administrative forfeiture as follows: “Upon determination by the Secretary of State

that any domestic corporation whose right todo business has been previously forfeited by that officer, and which corporation has failed and refused tohave its right to do business revive,d pursuant to the provisions ofthis chapter, and which corporation fails to revive its right to do business prior to the first day of January next succeeding the date offorfeiture of its right todo business, and which corporation has no assets from which ajudgment for the franchise tax, penalties, and court costs may be satisfied, and approval of such determination by the Attorney **Gen** eral, the charter of any such corporation may be for-Hon. Zollie Steakley, page 3 (WW-841)

feited. which forfeiture may be consummated without judicial ascertainment by the Secretary of State entering upon the charter of such corporation filed in his office, the words ‘charter forfeited.’ giving the date thereof and citing this act as authority therefor.*’ The role is generally accepted that the officers of a board or ofa department have the power to rescind their action ona matter that has not become final. See State anking Board of Texas v. McCullough, et al., 316S,W.2d 259 (Tex,Civ.App, error ref. n.r.e.). The fact situatron recited in your bequest states that all the necessary conditions of an administrative forfeiture existed and that all steps prescribed by the statute were followed, including the entry of the words, ‘“charter forfeited” upon the corporate charter in question. This was afinal act, and not capable ofbeing rescinded by the Secretary ofState unless such authority is granted therefor.

No provision is made in this article or elsewhere for the Secretary ofState to review an administrative forfeiture ofcorporate charter. You have stated that your department has construed the lack ofexpress authority in the statute topermit the Secretary ofState to review his action, as precluding any reconsideration or review by the Secretary of State once he has acted in compliance with Article 7096 and has forfeited the charter ofa corporation. Inthis construction, we concur. The general rule is that administrative departments and agencies have only such power and authority as is conferred upon them in clear and unmistakable terms by the Legislature. Commercial Standard Insurance Company v, Bolad of Insurance Commissioners, WApp. 1931,wrrt ref.); Teacher Retirement , 0 System, et al, v. Duckworth, 260 S.W.2d 632, opinion adopted by the Supreme Court m 264 SW

. .2d 98 (1954). For an exception to this rule, not applicable here, see Southwestern Savings & Loan Ass%. ofHouston v. J. M. Falkner, 331S.W. 2d 917(1960)e

Therefore, it is our opinion that the forfeiture ofa corporate charter in compliance with Article 7096, V.C.S.. is a final act and cannot be rescinded by the Secretary ofState.

Itfollows that the corporation Southwestern Wire & Cable Company ceased to exist and thereafter (its name was available. Article 2.06b. Texas Business Corporation Act. A certificate of reservation for this name issued by the Secretary ofState in com-Hon. Zollie Steakley, page 4 (WW-841)

pliance with the law would be valid, and, therefore, the Secretary ofState is without power to refuse to approve the tendered articles ofincorporation of Southwestern Wire & Cable Company, if such articles meet all. ofthe requirements.

Questions concerning the equitive between the parties, including estopN$ and constructive trust. are not administrative butjudicial and, consequently, the Secretary of State has nojurisdiction to determine them. SUMMARY

After the administrative forfeiture ofcorporate charter pursuant toArticle 7096, V.C.S., defunct corporation’s name became available; and a certificate ofname reservation issued by the Secretary of State in compliance with Article 2.06B ofthe Texas Business Corporation Act is valid. Thereafter, the Secretary ofState is without authority to refuse to approve tendered articles ofincorporation under said reserved name if such articles meet other requirements because the Secretary of State cannot rescind afinal administrative forfeiture accomplished pursuant tothe provisions ofArticle 7096, V.C.S. Very truly yours, WILL WILSON Attorney General of Texas

RAW/pe BYRichard A. Wells Assistant

APPROVED:
OPINION COMMITTEE: W. V. Geppert, Chairman Wallace P. Finfrock JohnReeves Marietta Payne Marvin Sentelle
REVIEWED FOR THE ATTORNEY GENERAL BY: Leonard Passmore