June 2, 1939

Hon. Tom L. Beauchamp secretary of state Austin, Texas
Dear Sir: Opinion No. O-747

Fkl: Incorporationof American Legion Corporations.
We are In r&klpt of your lettbr of May 

### 3, 1939, in which you request an opinion from this department upon the followingquestions:

"The typical purpose clause of applica- %ions for charter for the American Legion corporationsreads as follows:
"'It shall have all the rights powers and privilegesgranted to and conferred upon corporations

by provision of Subdivision 2, Article 1302, Chapter 1, Title 

### 32, of the Revised Civil Statutes of the State of Texas, which reads in haec verba:
""The support of any benevolent, .cheritable,

educationalor missionaryundertaking"and particularlyincluding the following: 'I'(e)To preserve and strengthencomradeship among its members; to perpetuate the memory and history of our dead; to support and maintain education in the moral, intellectual atid physical developmentof those who served in, or who mag.serve in, the Army, Navy, Marine .Corpsor Coast Guards of the United States of'dmerica,in any foreignwar, insurrection

or expedition,

which service shall be governed by the issuance of a campaign badge by the Government of the United States of America; and to maintain true allegianceto the Govern-Hon. Tom L. Beauchamp, June 2, 1939, Page 2, (O-747)

ment of the Unlted States of America, and fidelityto Its Constitution and Laws; to foster true patriotism;and to malnt&l'n a'nd extend the institution of American freedom: "'l(b)To act as a charitableand benevolent organization for the purpose of promoting the welfare, alleviatingthe suffering, and assistingand aiding those who have served, or may serve, with the military forces of the United States of America In foreign lands, their widows, orphans and dependantsand relations."
"Thisdepartmentreqriests tha% you amwer the followingquestions:
"1

. In suoh corporatton, with purpose as outlined above, authorlaedto incorporateunder subdivision2 of article 13029
“2 , Are our fees for filing a charter containingthe same or Lmllar purpose clauses $10.00 or $50.001
"3. Is such a corporationentitled to be exempt from the payment of franchisetax under the provisionsof article 70947"
The purposes for which corporations may be formed in the state of Texas are enUner8teQ In Article 1302, Vernont8Annotated Civil Statutes.

Section 2 of said article readp as follows:
"The support of any bdnevolent,charltable, educationalor mlseilonary UndertakIng."
The first question 1s whether or not reotlon 2 Is statutoryauthority for the lnoorporatlon of American Legion oorporatlons whom typical purpose clause 18 set forth in your letter of request quoted at the outaet of thi8 opinion.
,

We don not think there la any doubt that suoh objectivean the following fall within the category of “educational”

purposes

:,

.-- --

Hon. Tom L. Beauchamp,June 2, 1939, Page 3, (O-747)

' l ** to perpetuatethe memory and hlstory of our dead; l l l It
' l * l to support and malntaln education in the moral, intellectual and physicaldevelopment of those who served in, or who may serve in, the Army, Navy, Marine Corps or Coast Guards of the United States of America, in any foreign war, insurrection

or expedition,

which service shall be governedby the issuance of a campaign badge by the.Go~ernment of the United States of America; * l l " l * *and to maintain true allegiance to the Governmentof the United ftates of America, and fidelity to its Constitution and Laws; to foster true patriotism;and to maintain and extend the institution of America freedom: l l l"fl Furthermore,the followingaim of an American Legion Corporation is undoubtedly "charitable":

" l * l To act as a charitableand benevolent organizationfor the purpose of promoting the welfare, alleviatingthe suffering,and assisting and aiding those who have served, or may serve,with the military forces of the United States of America in foreign lands. their wldowsn orphans and dependantsand reiatlons. +)o+

It la not placing a strained construction the followingpurpose clauses to hold that they are olent' in their nature: upon"benevIt l l l To preserveand ship among its members; l l l stnrengthencomradeand, of course:

It l l l To act as a charitableand benevolent organizationfor the purpose of promoting the welfare, alleviatingthe suffering,and assisting and aiding those who have served, or may serve, with the military forces of~the United States of Amerloa in foreign lands, their widows *it* ,,

orphans and dependants and relations.- *. .-.

Ron. Tom L. Beauchamp,June 2, 1939, Page 4, (O-747)

Thus, an analysis of the typical purpose clause of an AmericanLegion Corporation reveal8 that the manlfold objectivesare each and every one wlthlh the purview of Section 2 of Article 1302, Vernon'sAnnotated Civil Statutes.

We wish to cite one Supreme Court-.of Texas aut$r;t; in this matter. We feel that the case of Conley,

Daughters of the Republic (1913) 156 SW 197 (SU rem; Court of Texas, Brown, C.J., deliveringthe oplnP ion is very much in point in its elucidationof the phrase "educational undertaking"

used in Section 2 of artlcle 1302, Vernon'8 AnnotatedCivil Statutes.

In the cane of Conley v. Daughter8 of the Republlo, the Daughter8 of the Republic of Texas which was organleedas a corporationfor the declared purpose of perpetuating

the memory and spirit of the men who achieved Texas' Independence, and to encouragehistoricalresearch into the early history of Texas, and promote the celebration of Independence Day of the Texas Republic, and erect monument8upon place8 made historic in the war for Texas Independence,

was held a corporationorganleed for "educational" purposeswithin the second subdlvl8lonof Article 1121, Revised Statutes,which wording is identical with that of Section 2 of Article 1302, Vernon'8Annotated Clv11 Statutes. The court held that "education" in a etatutory sense meant not merely instruction received at school, but the whole oour8e of training,both moral, intellectual, and physical. The followingexplanation of the term "educational"by the Supreme Court is governing in the present instance. "ihe AttorneyGeneral asserts that the corporation

wa8 not lawfully created under the statute of thin atate, because the law does not authorlte the creationof uuch corporationfor the purpose8 named In its charter. The eecond subdlvl8lonof article 1121, Revised Statutes, reada: 'The purposes for which private corporations may be formed are: l l * (2) The support of any benevolent,charitable,educationalor missionaryundertaking.' The purpose of this corporationis clearly 'educational.'Whatever educates &within the meanlnq of 'educational undertakl!U.' Education in thesense as used in the statute includes: "In its broadest sense,
l * l not merely the instruction received at school or college,but the whole course of tralnlng, moral, intellectual and physical; is notHon. Tom L. Beauchamp,June 2, 1939, Page 5, (O-747)

limited to the ordinary instruction of the child in the pursuitsof literature. It comprehends a proper attentionto the moral and religious sentimentsof the child. And it Is sometimes used as synonymous with 'learning'." 14 Cyc. p. 1230. The sentimentof regard for the mem-m- m of tho=who Rave their lives for the blessu of this nreat state stimulates patriotism, and is in the h*hest sense educational. The facts to be preservedfurnish the means of the best education for the young men and women of this state. The purRos6 is laudable in its influencewon the present Enoration; it is laudable,educational, g&benevolent for the future citizens. This qU08tion 18 asked: 'Shoulda state commit 138 intereststo corporations? I This court has naught to do with the policy of the state on that question. All lltlganta 'lookalike' here. However, we will say that this is not 8UCh a SOU~~SsS Corporation as needs to have a watch upon its actions. The heart, the soul, and splrlt of patrlotl8mare the capital employedby those women which would not detract from the authorityand power of the state. On the contrary,those ladies,wlth no hope of gain to themselves, undertook to substitute for the state18 fund, which would have been created by taxation,the voluntaryofferings of the people - a tribute of patrlotlsm, sanctifiedby love for the state, and reverence for the memory of her heroic dead. Can there be danger from such a car oration? not
. ” (Underscoring ours P We think

. It is our opinion, in answer to your first question, that American Legion Corporations, with the typical purpose clause set forth in the letter of request, derive and possess the necessaryauthority to lnoorporate under Subdivision2 of Article 1302, Vernon's AnnotatedCivil Statutes,whloh reads:

"The support of any benevolent,cbarltable, educationalor mlsslonaryundertaking.
Your second question asked whether the fees of the Secretary of State for filing a charter containingthe same or elmllar purpose clauses to that quoted in your letter of request are $10.00 or $50.00,

Article 3914, Vernon'sAnnotated Civil Statutes, prescribingfees of the Secretary of State, provid68, in part as follows: .Hon. Tom L. Beauchamp; June 2, 1979, Page 6, (O-747)

'Upon filing each-charter, amendment,or supplementthereto of a corporationfor the support of public worship, any benevolent,charitable, educational, missionary,literaryor sclentlflcundertaking,the maintenanceof a library, the promotlocof public cemeterynot for profit and the encouragement of agriculture and horticulture,

to aid its 'members in producing and marke~tlng

agricultural

products,or for acquiring,raising, breeding, fatteningor marketing live stock, a filing fee of Ten ($10.00) I)OllarB,

end for filing the seml~annualflnanCfal 8tat6m6ntOf such 6SgrfCUltUral prOdUCt or live Stock corporation, Ten ($10.00)Dollars, which shall include the annual license fee."
Since we have held'thetan American Legion Corporation with the purpose clause as set forth in your letter of request,may bs incorporated under Section 2"of Article 1302, as within the purview of "any benevolent;charltable,educational or mlsslonaryundertaking",it follows that in answer to your second question the fee of the Secretary of State for the flllngof the charter of such corporations would be $10.00, as prescribedin the second 8 article 3914,‘above quoted. "opinionsof AttorneyGeneral, biennial report, 1914-1916,See
p. 471." In this opinion it was held that a corporation,the purpose of which is stated to be the accumulation end loan of money to young men to defray their expenseswhile studying for the christianmlnlstry and to young women to defray their expenseawhile studying to be christianmissionarlee, where such corporationis organiced for charitablepurposes and not for profit,may be incorporated under SubdiViSiOn2 of article 1121, Revised Civil Statutes; and that the fees for filing the charter of such corporationis $10.00; and finally that such corporation18 nO$ subject t0 8 franchisetax. ArtfClSs 1121, 3838 and 7403, ROViSOd Statutes, 1911, were considered.

The~thlrd'

question asked in your letter of request Is whether or not such a corporationincorporated with a purpose clause, such es that quoted in the letter of request, is entltled'to

be exempt from the payment of a franchise tax under the provlslonsof artlole 7094, Revised Civil Statutes, 1925.

Artlhle 7094, Revised Civil Statutes, 1925, read8 88 fOllOW8 I

"CorDoration exempt.- The franchisetax lm- 8 posed by this chapter shall not apply to any insurance company, surety, guaranty or fidelity company, or any transportation company, or any sleeping,. .

*m-.

.‘i-

.

Hon. Tom L. Beauchamp, June 2, 1939, Page 7, (O-747)

palace car and dining car companywhich is now required to pay an annual tax measuredby their gross receipts, or to corporationshaving no capital stock and organized for the exclusive purpose of promotingthe public interestof any city or town, or to corporations organized for the purpose of religiousworship, or for providing places of burial not for private profit, or corporationsorganized for the purpose of holding agrlcultural,falrs and encouraging

agrlcultural pursuits,or for strictly educational purposes,or for purely public charity."
Under this statute corporations organized "for strictly educationalpurposes,orfor purely public charity" are exempt from the payment of a franchisetax. The corporations under consideration are formed for educational and charitablepurposes. It is our opinion that the American Legion corporations with purpose clause set forth in your letter are brought within the exemption,and ere excused from payment of the franchise tax under the provisionsof article 7094. It wes within legislativecontemplation that just such American Legion Corporations be exempted, since they are to a high degree of a benevolent,charitable,educational and patrioticnature. See opinions of Attorney General, biennial report, 1914-1916,p. 471, supra.

It is, of course, recognizedthat corporations organizedunder Section 2 of Article 1302 have no capital stock and are non-profitlegal entitles.

Trusting that the above fully answers your lnqulries,we are Yours very truly
ATTORNEY GENERAL OF TEXAS

DS:omb:eac
APPROVED: /s/ Gerald C. Mann BY /s/ Dick Stout Dick Stout Assistant
APPROVED OPINION ATTORNEY GENERAL OF TEXAS. COMMITTEE BY /a/ H.Q.B. CHAIRMAN