THEA~~~ORNEY GENERAL 

OFTEXAS 

Honorable William J. Lawson 

Se;;;;rqe;;sState. 

Dear Sir: Opinion No. O-3463 

Re: Substitution of purpose 

clause of private corporation by charter amendment. 

We are in receipt of your recent request for 

an opinion as to whether a corporation may amend its charter by changing its purpose from that stated by Article 

1303b, Vernon's Texas Civil Statutes, to that stated by 

Subdivision 47 of Article 1302, R. C. s., 1925, comonlg 

known as the real estate urpose clause, in view of the 

provisions of Article 131 E , R. C. S., 1925. 

You have the following to say concerning the 

established practice in your department: 

"So far as we are able to determine, this 

off$ce has-always held that Article 1314 prohibits the amendment of a purpose clause changing it from one subdivision of Article 1302 to 

another, and has allowed only such amendments 

as leave the purpose within the same purpose 

clause, but add or subtract from its powers under 

that purpose clause." 

Article 1303b, Ch. 2, Title 32, Vernon's Texas 

Civil Statutes, 1925, reads as follows: 

'A private corporation may be formed for 

any one or more of the following purposes, without banking or insurance privileges: to accumulate and loan money, to sell and deal in notes, 

bonds and securities; to act as trustee under 

any lawful express trust committed to it by 

contract, and as agent for the performance of 

any lawful act; to subscribe for, purchase, in- 
Honorable ~~illiam J. Lawson, page 2 O-3463 

vest in, hold, own, assign, pledge and otherwise deal in and dispose of shares of capital 

stocks, bonds, morgages, debemes, notes and 

other securities or obligations, contracts and 

evidences of indebtedness of foreign or domestic 

corporations not competing with each other in 

the same line of business, to borrow money or 

issue debentures for carrying out any or all 

purposes above enumerated. Provided that the 

power and authority herein cp&rred shall in 

no way affect any of the c revisions of the antftrust laws of this State. 

The present charter purpose of the corporation 

in question Is in the language of the above quoted statute. 

Subdivision 47 of Article 1302, Ch. 1, Title 32, 

R. C. S. 1925, provides: 

"To erect or repair any building or improvement, and to accumulate and lend money for 

said purposes, and to purchase, sell and subdivide real property in towns, cities and vil1ages;and their suburbs not extending more than 

two miles beyond their limits and to accumulate 

end lend money for that purpose." 

The proposed amendment in the purpose of the corporate charter is in the exact language of Subdivision 47. 

A private corporation is a creature of the statutes and may amend its charter only as authorized by staute 

and in strict comformity thereto. Attorney General's Oninion, 

November 21, 1933, to Hon. W. W. Heath, Secretary of State. 

Article 1314 of R. C. S. 1925, reads as follows: 

"Any private corporation organized or incorporated for any purpose mentioned in this 

title, may amend or change its charter or act of 

incorporation by filing, authenticated in the 

same manner as the original charter, such amendments or changes with the Secretary of State, A 

corporation created by special Act of the Legislature shall also file with said officer its 
Honorable William J. Lawson, page 3 o-3463 

original charter and such amendments thereto or 

changes therin, if any, as have been made by 

special Act of the Legislature; and the same 

shall be recorded by the Secretary of State, followed by the proposed amendments or changes thereof. Such amendments or changes shall take effect and be in force from the date of any filing 

thereof. The certificate of the Secretary of 

State shall be evidence of such filing. No.amendment or change violative of the Constitution or 

laws of this State or any provision of this title 

or which so changes the original purpose of such 

corporation as to prevent the execution thereof, 

shall be of any force or effect." (Underscoring ours) 

In addition to the departmental construction by 

the Secretary of State's office, we find a number of opinions of this department construing Article 1314, R C. S. 

1925. 

In an opinicn dated June 7, 1924, to honorable 

S: L. Staples, Secretary of State, this department referred 

to Article 1135, R. S. 1911, (now Article 1314, R. C. 9. 

1925) in the following language. 

"The ourpose of thins enactment is seemingly,to prevent a change in the character and 

the purpose or, in other words, the nature of 

a corporation by an amendment of its charter, 

or to reorganize the corporation into a new 

and a different concern, under the guise of an 

amendment or the addition of a new purpose permitted under the statute." 

In an opinion addressed to Mrs. Jane Y. McCallum, 

Secretary of State. dated January 28, 1932, this department 

ruled that by virtue of the provisions of Article 1314, R, 

C. S. 1925, a corporation having as its charter purpose the 

language of Section 37, Article 1302, R, C. S, 1925, could 

not by amendment change its purpose to that set out in Subdivision 38, of Article 1302. Subdivision 37 provides for 

the establishment and maintenance of an oil business with 

certain other enumerated powers and Subdivision 38 provides 

for the establishment and maintenance of B drilling business, 

including the drilling of wells for oil or gas. 
Honorable Williwn J. kwson, page 4 O-3463 

We quote in part from the opinion: 

'By no stretch of the imagination, can .I 

conceive that one whose authority is restricted 

to engaging in a drilling business', has authority either expressly or impliedly to 'contract 

for the lease and purchase of the right to prospect for, develop and use coal and other minerals, petroleum and gas; or to build and own oil 

tanks necessary to be used in the 'oil business"; 

and not necessary in the 'drilling.business', or 

to build-and own cars and-pipes necessary to be 

used in the 'oil business', and not necessary 

in the 'drilling business!. There being such a 

wide difference in the character of the two businesses treated in the two Section, there is 

no danbt in my mind but that the proposed smendment 'so changes the original purpose of the 

corporation as to prevent the execution thereof.' 

State ex rel. Steubenville Gas and Electric tie. 

v. Taylor (Supreme Court of Ohio) 45 N. E. 513." 

The opinion then discusses the cited case and continues: 

"It is also to be noted that unlike the 

amendment proposed by Collins & Plummer Producticn Company, the amendment proposed by the 

Ohio Corporation did not deprive it of any of 

the rights and privileges granted to it under 

its original charter, but wted it with additional rights and privileges which it could 

have just as well obtained at the time of the 

granting of its original charter by including 

them therein. The Ohio Court said the amendment violated that portion of Article 323qa 

set out herein. It will be readily seen that 

the amendment in the instant case more surely 

and definitely voilates certain of the provisions contained in Article 1314 than did the 

proposed amendment in the Ohio case, in that 

the amendment would deprive the corporation, 

under its charter as amended, of the authority 

to do each of those things set out in paragraphs 

1 and 2 on page.aree hereof." (The paragraphs 

referred to point out the charter powers in 

Subdivision 37 which would not be included under 
_ . . 

Honorable ~~illian H. Lawson, page 5; O-3463 

Subdivision 78) (Underscoring ours) 

in Conference Opinion No. 2944, dated Larch 17, 

1934, to Honorable rf. W, death, Secretary of State, this 

department reviewed the history of Article 1314, R. C. S. 

1925, and discussed its application. This opinion apparently approves the holding of the 1932 opinion quoted above 

and states that it "relates to the right to make an absolute and complete change in the purpose clause" and 

"deals with the question of whether a corporation having 

for its purpose clause, one of the subdivisions of the 

statute, might completely substitute another and different 

subdivision thereof as its purpose clausem the kind and 

character of work being entirely dissimilar in the two 

instances." It is pointed out in this conference opinion 

that Article 573, R. S., 1.8'79, provided that "no amendments or changes shall be cf any force or effect which 

are not germain to the,original-purposes or charter of 

incorgoraticn, and calculated to carry out and effect the 

same. It was concluded that "prevent the exeoution thereras used in Article 1314, should be construed to mean 

substantially the same as "germane to and calculated to 

carry out and effect the zame' as used in the original enactment. 

Under the practice of your de artment and the 

long-standing construction of Article 131 fi , R. C. S. 1925, 

by this department, we think a mere readinm of the purposes 

set out in Article 1303b, and Subdivision i; 7, Article 1302, 

is sufficient to demonstrate that they are not germane but 

provide separate and distinct purposes. %bdivision 47 of 

Article 1392 has for its principal purpczes the purchase, 

sale and subdivision of reil property in cities, and the 

creation or repair of buildings or improvement. 'I'he accumulation and lending of money in incidental to the principal purposes and thereby restricted. There is a substantial difference between these purposes and those set 

out in Article 1303b. 

It has been pointed out that the corporation has 

been in liquidation since 1933, and as a result thereof, 

has acquired considerable real estate through foreclosure. 

It is further suzgezted that the corporation has net exercised all the powers authorized by its charter, either 

because of the liquidation or because prohibited by the 

banking laws of the United States and for these reasons 

the amendment would not prevent the further execution0 f' 
Honorable William J. Lawson, pase 6 O-3463 

the original purpose of this corporation. 

this question however, 

In determining 

we think that our examination must 

be confined to the original charter purposes of the corporation, as disclosed by applicable stautes and its charter on file in the office of the Secretary of State, and 

that the incidental acquisition of real estate in the orderly process of liquidation would not affect the corporetion's 

original charter purpcses. 

It is our opinion that a corporation having as 

its charter pur ose 

Vernon's Texas i!i 

the powers set out in Article 1303b, 

ivil Statutes 

stitute therefor Subdivision I; 

may not be amendment zub7 of Article 1302, R. C. S. 

lq2#, by virtue of the provisions of Article 1314, R. C. S. 

1925 0 

Yours very truly 

ATTORNEY GENERAL OF TEXAS 

CCC:LM--pam 

BY Cecil C. Cammack 

Assistant 

APPROVE3 MAY 10, 1941 

Glenn R. Lewis 

Acting A$torney General of Texas 

APPROVED OPINION COMMITTEE 

BY BWB, CHAIRMAN