THEA~TORNEYGENERAL OF TEXAS

WILL WILSON A’CFORNEY GEXSERAL

Hon. $3111~ Stealcley Sectietary of State Capitol Station Austin, Texas

Dear Mr. Steakley: bag 30, 1958
Opinion No. WY-.440 Re: Should the Zecretarg’ot S,tate accept arid file Article8 of Incorporation In which the corporate name includes one of ’ the words, “discount”, “redts&unt”, “guaranty*, or “surety”, and related questions.
You have requested our opinion answering five questions concerning the granting of charters to corporatlons~ under the Business CorporatFon Act which conttiin proposed purpose Blauses and corporate 

### names contalnfng certain descriptive words. Your first question is as follows:

“Should the Secretary of State accept and file Articles of Incorporation which include one or more of the following purposes: !‘aI/ To endorse and guarantee protilssorg notes, drafts, bills of exchange, ‘,warranta, bonds, debentures, arid other negotl,able and non-negotiable instruments and evidences of indebtedness; and to guarantee the payment of the principal and interest thereon e

“b 6 To Guarantee any contract or under taking between individuels, 

### or bbtween private corpora: tions, OPbetween indlviauals, or pirvate corporations and the State, and municipal’ corporation8, 6r counties, or between corporations and individuals.

“c
. To act as surety or guarantor of the fidelity of any person, ftirm or corporation appointed to or assuming the performance’of any trust artsing out of a contract between individuals or corporations, or otherwise; to act as surety 6r guar&htor for the performance of any contract; to act as surety or guarantor. of the debts of any 

### c’orporation, individual, firm, or partnership; to act as agent for the purpose of any lawful act.Hon. Zollle Steaklay, page 2 (Opinion No. 

### WW-440)

“d

. To accun.ul.ate, lend and advance money or glve credit to any person, firm, or corporation, either with or without security, and on such terms as may seem expedient, and to buy, sell, dlsccxlnt and rediscount bonds, negotiable instruments, condltlonal sales contracts, and other evidences of indebtedness .I’ Wewill first discuss the validity of the following proposed purpose:

“b

. To guarantee any contract or undertaking between individuals, or between private corporat ions, or between Individuals, or private corporations, and the State, and mnlclpal corporations, or counties, Individuals

.” or between corporations and
The wording of thla clause la Identical with tht wording of one of the purposes contained in Article 

### 7.01 of the Insurance Code, which was repealed by Chapter 388,/Section 1, Acts 55th 

### Leg., 1957, p. I162. Article 

### 7.01 was part of SubChapter (A), Fidelity, Guaranty and Surety Corporations, and Article 

### 7.01was captioned, “TO Act As Surety”

. Althou& Chapter 

### 7 of the Insurance Code has been repealed, ‘corporations may still be incorporated under the provlslons of Chapter 

### 8 of the Insurance Code for the purpose of engaglng in this type of bualness.

Article 2.0IA, Suslness Corporation Act, provides that cbrporatlons for profit may be organlzed~under this Act for any 

### lawful purpose or purposes, but that no corporation inay’adopt Or be organiced, or obtain authority to transact business 1n’Texs.e under the Act if any one’ of its plrposesls to operate insurance companies of every type and character that o erate under the lnsurance 

### laws of this State. (Art. 2.OIB(4) yd))

. Article 9.14A, 

### Business Corporation Act, 

### also provldes that the Act shall not apply to 

### corporationsorganized 

### for the purpose’.of operating lnsurance companies of every type or character that operate under the Insurance laws of Texas.

Therefore, since the purpose above set forth is-to permit the corporation to Issue contracts of surety or guaranty, such corporation would be operating an insurance business; and under the provlslons of Article 2.01B(4) (d) and Article 9.14A, a charter could not be granted by you 

### under tQe provisions of the Business Corporation Act.

Although the following purpose 

### clause: "c, To act as surety or guarantor of theHon. Zollle Steakleg, page 3 (ww-440)

fidelity of any person, firm OP corporation appointed to OP assuming the performance of any trust arIsIng out of a contract between lndivlduals or corporations 3 OP otherwise; to act as surety OP guarantor for the performance of any contract; to act as surety or guaMntor of the debts of any coPporatloc, individual, firm, or partnership; to act as agent for the purpose of any lawful act (I” does no%use language which Is Identical with certain of the purposes contained In Article 7'.01 of the Insurance Code discussed above, nevertheless, the phraseology evlddnces the Intent of the corporation to conduct Its business for part of the same purposes which were formeplg authbrized by Atiticle 7.01 of ‘the Insurance Code. The purpose, “to act as surety or guarantor of the fidelity of any pepson, firm, or corporation appolnted to or’ assuming the performance of any trust arising out.of a Eohtract between Individuals or corporations, or othe~wlse”,~‘l~ almbst identical with one of the purposes formerly authb??Lzed uriaer Article 7001, which was “to act as surety.and guarantbr bf the fIdeUty of employees, trustees, executors 9 admlnltitP&t6rti, guardians OF others appointed to, or ‘essumlng the p&f 0Mance of any trust,,publ.fc 01”private, under eppolntment of any court or” tribunal, or under contract between private lndfvlduals OP COPporatlons; 0 0 D e
-”

It is clear that although the verbiage of the,fortgolng purpose Is dlffepent from the ,verblage of Article 7.019’~nevertheless, thb nature of the proposed buslness&s’thereunder are ldentlcal, namely, to carry on a surety or guaranty busiaess, which 1s an insurance business, ar.d therefore, since such purpose falls within the prohlbltIons .above described, you would not be au-
-’ thorlzed to grant a charter containing this purpbse to a corporatldh und’ep the provisions of the Business Corporation Act for the reasons above set forthThe same reasoning and the same conclujions are applfcable to that papt of the purpose clause which reads as 

### follows:

4,

. 0 D 0 tb act as sur&g OPguarantor fop the perfbrmance 

### of any contract; to act 

### as surety or guarantoti. of ‘the debts of ‘any corptration, lfidlvldual, firm, or pastnershlp;

. D

. ti All of the’foregolng mrposes are r&stitements in different Verbikge of purpose clauses foFmePly authorlzea’by Article 7.01, Bfid~ ilould authoplze the corporatlbn’ to conduct a surety or ” guaranty business, 

### which is insurance business (Ar%. 5.13, InsuriPnce Code), and therefore you could not 

### iasue~acharter or an amendment or certificate of authority to any corporation underHon. Zollle Steakleg, page 4 (W-440)

the Business Corporation Act to conduct a business for such purpose or purposes.

The remaining part of the purpose clause is “to act as agent for the purpose of any lawful act”

. It Is our opinion that you could not’ issue a charter or approve an amendment thereto, or issue a certificate of authority to any corporation under the Business Corpbratlon Act which conttis this single purpose for the following reasons:

(a) The purpose clause, standing alone, is violative of Article 2.01A which provldtis that corporations for profit maybe organized for any lawful purpose, which DurDose shall be fills stat@ In the articles of Incorporation. The purpose’ “to act as agent for the purpose of any lawful. act” is too vague and ‘Indefinite, since the word5 “for any lawful act” do riot specify the nature of the act which the agent Intends to perform. It Is possible that the acts sought to be performed might, In the opLnIon of the officers end directors of the corporation, be lawful acts, butt such acts might also be In violation of the lciws of this State if accomplished In a particular manner. (b) Prior to the enactment of the ‘Busl-, ness Corporation Act there were three lawful purposes under *Rich a corporation was permltted to act as agent for another. These were, respectively, ~&ubdlvlslons 49 and 108, Article 1302, V.C.S., and Article-1303b, V.C.3~; Subdivision 49, Article 1302, is in part as follows: I, .to act as trustee under any law&i ixpress trust committed to them by contract, and as agent for the performance of any lawful act VW Article 1303(b), V.C.S., uses the identical language, but aUds the tiesfriction that such oorporatlon will be “without banking or Insurance privileges”

.

Sub-division 108, Article 1302, V.C.S., provides as follows:

“Corporationa may be creeted to furnish the agent upon whomprocess maybe si)rved, to act as agent fop rtielpt of ’comirmnlcatlons and notices, to establish and maintain registeredBon. Zollle Bteekley, page 5 (W-440)

offices for corporetfons and other organizations, domestic or. forelgh, and for lndlvlduals, and for the performance of any lawful act In connection therewith; provided, however, no such corporation shall as agent carry on the business of 8nOther.” In addition to the p~ovlso con%alned,ln sub-division 108 that

“no such~corporatlon shell, as, agent; carry on the business of bnother”, all corporations whose purpose clauses~ contain the purposes mentioned ln sub-division 49, Article 1302, and Article 1303(b), were.subJect to the provisions of Sectfon 1, Article 152tie,V,C,S,, which provides that “nor shall such corporation as agent or trustee ‘carry 

### on t’he business of another,” which restriction 1s stfll applicable to corporatfons operating under such purpose clauses 0 (Art 9 g,lgB, 

### Business Corporation Act)

. ~,_

It has been the unfform departmental construction of the office of the Secretary of State over a long period-of pears, following the opfnlons of various’ Attorneys General, that a charter could not be granted ‘nor a permft Issued to a foreign ‘
~’ corporation whose purpose clause oontalned the words, “to act as agent ‘for the performanoe of any’lawful act”, standing alone; but that the entire purpose clauses above se% forth under eub-clivlslons 49 and 108, Article 1302$ and Article 1303(b), V.C.‘S,, must be set forth In the charter or amendment thereto, or permit in the case of a foreign corporation,

In addltlon the Legfs’la%ures of Texas, over a’ long period of years prior to the en&c%men% of the Business Corporation Act, have no% seen fit to enlarge uEjonthe purpose clauses ‘above se% forth which perml%%ed a corporation to act as agent, but have continued the restrfctlve provisIons or words of ~lmltatlon se% forth therein,

1%~ 1s the opinion of this office that a single purposb to “act as agent for the purpose of any lawful act” 1s no% a lawful purpose which maybe contained fn any eher%er OPcertificate of authorfty for the reason that 1% is too indefinite and is not fully stated so as to apprise the Secretary of State OPthe &ubllc at large as to %he performance of whet lawful act or acts the proposed corporatfon contemplates D

The proposed purpose clause whfch reads es follows:

“d. To 

### accumula%e, lend and advance money or give credit to any person, firm, or corporation, either w~lth or without security, and en such.terms as may 

### seem expedfent, and to buy, sell, discount and rediscount bonds, negotiable instruments, conditional sales contracts, and other evidences of lnd,sb%edness *”Hon. Zollle Steakleg, page 6 

### (wu-440)

Is a combination of the purpose clauses set forth in subdivision 49, Article 1302, V.C.S., and Article 1303(b), V.C.S., and is an enumeration of some of the powers granted to trust companies underArticle 

### 1513,V.C.S. It also contains some of the purposes enumerated in Article 342-301 of the Banking Code, which authorlzes the incorporation of banks and trust companies, although the verbiage used In the proposed purpose clause is not Identical with any of the purpose clauses above enumerated.

ose clause could be subdivided into two distinct to accumulate, lend and advance money or give credit to any person, firm, or corporation, either with or wtthout security, and on such terms as may seem expedient,

. . and (2) “to buy, sell, discount and rediscount bonds, negotlible lnatruments, condltlonal sales contracts, and other evidences of indebtedness.”

Analgsl.ng the first purpose, lt may be reduced to the purpose of acoumlating and or without security, sLnce the words synonymous w’lth the words is given as a loan or an advance Fmmaterial because the ordinary business practice followed by both banks as well as lndlviduals and corporations engaged in the business of lending money to the public is for the lender to exercise discretion as to the requirement of security, provided that such loans are not made Ln vlolatlon of the statutory restrictions governing the lending institution. The use of the term “and on such terms as may seem expedient” agaln involves a questton of discretion on the part of the lender, but would not authorize the corporation to lend’or advance the money in vlolation of the constitutional and statutory provisions governing the amount of interest and other charges to be exacted from the borrower. Standing alone, this Furpose clause would not constitute a legal purpose, althou h it is almost identical with the provislons of sub-divlslons & 

### 8 and 49, Article 1302, V.C.S., and one of the purposes contained in Article 1303(b), V.C.S., since the words “without banking and discounting privileges” ~would have to be added to the’purpose clause before-you would be authorlied to issue a charter, approve an amendment, or’grant a certificate of authority to a foreign corporation to engage in business ln Texas ‘forsuch purpose. The addltion of the,qualifglng phrase,

“without banking and discounting privileges”, will be discussed lnthe answer to your second question.

‘The purpose clause authorlelng the corporation “to~buy, sell, discount and r’ediscbunt bonds, negotiable instruments,,F;onditional sales contracts and other evidences of indebtedness, would be lnvalld as to the words “discount and rediscount” since such language Fs almost’ldentlcal with the language in cub-dlvlL’ sion 49, Article 1302, which authorizes a corporation to “purchase,I

Xon. Zollle Steakley, page 7 (ww-440)

sell, and deal In notes, b$$s or securltles, but Without banking and discount1 hg words w&r?a~dr~il’ues, ’ and therefore, uiiless such quallfy-

, as stated above, this clause would not constltu;4! ‘a lawful Frpose. Since the words, “disbount and redisw;,“;, a;e ln direct contradlctLon to the necessarg,,quallPyFng

without banking and discounting pPlvlLeges such words tiould,‘of necessity, authorize the performance of a &ohlblted act. ,.

‘business 0

Dlsooi.antlng”ls one of the finCtlons ef the.banklng’ This is manifest from the~wor%Liig of SMtion 16, ” ArtZcle XVI, Constftution of Texas,‘whlch autharizes “the 

### incorpvoation of corporate bodies wlth bankingand discounting prlvlleges”

. The word “discaunt”, has been held to be Included in the term, “banking”

. ‘Kallskl v. Gossett, Bankina Coti IO9 S.W. 2% 340, 344 (Civ. App. 1937 errdr,ref,i)B Att ‘9sfoner, orneg General’s.Oplnlon No. O-5646, dated Oethber X3$ 1943: arjd’Nb. O-4912’, dated Octbber 17; 1942, H&-ice, any purpose clause. which: atithoritied a corporation tci conduct a business of dtticounting or redlscountltig negotF&ble instrument& or commerclial p&per would .constltute authoi”ltg for the corporation to do B banking buslnesa and would.fall within the prohibltLon of Article 2.OlB( 4) (a) 0 Therefore, you would be without” authority t0 grant a charter OPamendment thereto, or certificate of authority to a forsign corporation for such purpose. It maybe iioted that the phrasing of the proposed purpose clause (d) p su r b&ars a strlklng slmlla~lty to hhe provisions of Artlc (a) and (e) ) V,C,S, (Banking Code of 1943) 0 #&301 e
The last of the proposed pupposes~ls, as follows~

nao To endorse and guarantee 

### pPomiseo~y notes, draft&, bills of exchange, warPants, bonas, debentures, and other negotiable and nbn-,nqgotleble LnZ3tfutient.atin%’evidences of indebtednes~ti; arid to ~~t;;;ef: the payment ‘of the pplnci~l and, int?rest

0 It will be noted %K&$, the propos6d purpose clause tWi%ti’ conta?ns the wbrda, “tb guaPantBe”

. Article 5.13 of the ‘Insiipanbe -Code $a applfcable to any insuranc,eLoti@p&lay OF other organlzatibn writlang any fidelity, surety, or gW&rafitp bonds on risks or op&- ', atlons In Texas, with ceP%aln exbeptFons’,not applicable here, and vests the regulatory power over such oPgahiea%lons In the 'Board bf Insuraiwe Commlsslonem3, The regulatory powers etimera%ed

are. gMerall$ conc&rtied with ratings and pblic$‘formti a Again ref&Plng %b the p~ovlsihw of fotier Article 7.01, one of the ‘. pUrposes named therein Was to ’ guaMn%tie .any contract or undertaking between individuals and bbtW&en~‘prlvate corporations, and between lndlvlduals and private coppopatlons. The purport .of theHon. Zollle Steakley, page 8 ’ (wu-440)

proposed purpose clause is to generally guarantee the payment of written evidences of indebtedness, both negotiable and nonnegotiable. That the wrltten evidences of Indebtedness named in the purpose clause 

### are contractsis so well settled as to obviate the neceasltg of citation of authorltlea.

In Southern Surety Co.’ v. AustlQ 17 S.W. 2% 774 (COUUU. App. ‘1929) it was held th t in gu&anty insurance the guarantor agrees co indemnify theainsured for any loss of money sustained due to the failure of the principal to act. If, on the other hand, it is contended that the obntract to ”be issued by the proposed corporation is one of suretyship, that is, to guarantee the payment of the Indebtedness to the holder of the. written evidence of ‘indebtedness upon the default of the maker, nevertheless it la a contract of insurance since the holder of the written evidence ‘of indebtedness would rely upon the obllgatlon of the corporation under its contract to guarantee the payment of the indebtedness upon the default of the maker.

In National Auto Service Corn: v. State, 55 S.W. 

### 2% 209, 211 (Clv. App. 1932; error dl ) th Appeals stated the general rule ass~oliows~ C ourt of Civil

‘Whether or not a contract 1s one of lnsurante is to be determlned by Its purpose, effect, contents, and import, and not necessarily by the terminology used, and even though it contalns declarations to the contrary.” It is self-evident that’ a corporation organized for the foregoing purpose would have the authority to and could issue contracts of suretyship and guaranty In furtherance of such purpose.

It Is therefore our opinion that the proposed pureose clause would authorize the corporation to issue contracts of surety and guaranty, which’ 

### Is an insurancebusiness, and therefore you would be withat authority to issue any charter or amendment thereto, or 

### cei-tlflcate of authority to any corporation under the provisions of the Business Corporation Act to conduct a business for such purpose.

Your second question Is as follows:

‘Is the Secretary of State authorized to ac’ceptand file a domebtlc corporate charter, or an application for 8~certificate of authorltg of a foreign corporation, contain purpose clause in terms-of subdivisions 48, 49, and 50 of Article 1302, and Article 1303b, if the purposes clauses do not contain the words of llml-Bon. Zollle Steakley, page 9 

### (W-440)

tatlon of these statutes: “without banking and discounting privileges 9 p and ‘not .compet- $.ngwFth each other” in the same line of bus-, 

### Lness ? fl Her6 the basfc’questlofi is wheth’er restrictive provfsions br words~~of lfmftatl6n qualZfylng .~r&wwl putiposes fbr which a coPpor&%lon could be formed:‘iinddeP‘the’ laws of T-exa’s’ prior to the enactment’of the Business Corporation Act, are still ~“’ in full force arid effect 0

As above sttited, Section 2.Cl.A~oS,%he Business Coi+$oration Act provfdez thet coPporatlons organ’ised for profit may be,’ brganfzed for any lawful mppose or plrposss which’Bnis%:.b6 ’ filly stated fn the articles oS.ticorporti%lon. It ,14 a m&%Ebr :OS cornmbnand general knlbbwleiig’e~, of ‘whiqh the:, &Wt& .bft:Texae would take judlclal notice, th&%under’~the &orpWatlon, 1aPz bhich’ eXisted’ ilplor tb ‘the enactment of the’ 

### BusInbes ~Corpor%$loh 

### Act, no corporatfdn SBP profit Wuld be formed excep%. SOPa~Bp&iSii: purpoa6 named fn the s%atiitee gOV~erni.ng .%be’ incorpdra%lon dS‘ ‘
~‘, _~ corporatlohs fop ,proSit, .and then the pippoSb for which”che, cdrporPatl6n wasS@@J@ was conffned solely to the :~rpo6b’~named in the statute 0 In o%hep., Word6 p although thePe ‘were over I10 ‘drf;, Ser’eri%statutory papposea SOPwhich”cotip;Wat,lo~ oould. be fdPmed, 1% has long be&n 

### se%t%ed law ln Telhas.that a chartee cold shots be’ granted to a~

~eorporPr&fonWifoh.:c,on%cr$n@ .rPrps. thanone .of the statutory purposes 0 ,, (1902) 0 

### ‘.gf~,TbX. 4040,67 S.Y. 484

One’ of ~%helegfslis;%lve ilB$dn%s”‘Plin,,.%he ‘bna6%m&&of ‘%h& Business Corpora%fcm AC% ~wa(I’ %b‘pe@fnit P i%~poP&%.tf6ii SOPppbSi% to be Sbrti&d fblp doneOFmore PaWul~.pnv~p$sir, aubjeet: to ’ the ‘extieptfoh8 pPovJfded fn Article' 2’iOlA B. :p”a6tOP .%@“%hib ‘Aclt %her6" beret many lnbs%anbeewhei-e,a. s%&a%oP Le&lsl&u~e eontafnfng & g.eheral, sta iT ” fcifpos'ti ,wab~epa6tXulb$ ttie emesbt;~ %h*t a &iv&%e coPpoPa%ion,,could be SoPme%“‘for any sne o~~:-mo~e oc %,h? ‘PolS6~iiig @P-

..‘, pose8 p ,wlth an enume~atfoaa.the~~~S~~~h~d:,‘%h;e,p~opos68 co~po~!e-:.,,‘- ,:’ tion could adop% %he au%horlzed p%rpPse ,tlausje~ in’ fts,‘&n%fr6%p, : or” ffmi% Fts purposes to one”op ,mbPe oS’~%tiie entire rii@bsr~‘ofP’@.UG ‘, ‘, poses &iatkeJPleecI

%@3Pt3faa. Many of the: a,%a$U%bm,, jxnrpoM5‘eli?iusee
~’ ,:,
.‘I were pref”aced by words’ ~of lfmftatfon OP

### pes%Tfctivs,‘~PbvfsYons upon the authopity of ’the corpoPa%fofi :$o perfokm the, business ./:‘~~ ‘., au%bc@lzed under the $u~pose~~Mlthin a &elP%iifia ~sfihere ,‘6f .iadtlvltg, so thaat’the eorpoP&fon e6uld ~6%,do :bu&lnetib S&Qwhieh.eorpWat%oiM had been’ fortied ‘uh%ePo%her purposes Pablch w&Feregulated by specific State agenofes,’ ~,. :,.~: ,I!

‘, A %yplc?il example of such 8.’purpose clause is to be ‘, found In the provfsfona’,of ’ APtfcige 1303(b) p V,C,S., whfch is as follows; the restrictive p~ovLslowe or worda,,oS 

### lfmF%atfon being ,’ ‘, emphas feed E

‘

.Steakley, page 10 (wi-440)

private corporation may be Parmed for poses, wlthto acousuz1 in notes, bbnds and securities; to act as Trustee under’eny lawful express trust committed to ” tt by contract or will, or under appointment of 

### any court having jurisdiction of the sub’ ject inetter; end es’ agent fork the performance of any lawful act; to subscribe for, purchase, invest in, hold, own, assign, pledge and otherwise deal in and dispose of shares of cepltal stocks, bonds, mortgages; debentures, notes eiid other securities or obligations, contracts and evidences of IndebtMness or domestic cotiporatlons not COmDetinR o;ltfyeign each other In the same line of buslnBag* to borrow money or issue debentures fop carr&g out any 

### or all purposes above enumerated.

. . . .” Other restrictive rovisitina or words of llmltetion are emphasized ln.sub-divisions 48 49, and 50, Article 1302, V.C.S.Subdlvle.lon 48, Article 1302, 1; es follows:

‘To accurmlate end lend money ylthout bsnklng or discountinn DriVileRe~S
.‘I Sub-division 49, Article 1302, IS aa follows:

“For eny one Or more of the following purTo &ccunulate end lend money, purchase

committed to them by contract atid as agent for the performance of any lawful @ct.” Sub-division 50, Article 1302, Is as follows:

.“To subscribe for, pui~hese, Invest ifi, hold, own, assign; pledge 6indtitherwise deal in and dispose of shares.of capital stock, bonds, mortgages d debentui%s , notes and other securltles, obl’igatibns, contracts and eWldencds of ‘inaebtedness of foreign Or domestlc corpoi%tlons not comti6ting with each Other In the 8(u~e linnf busitiesis’; prollded the @wetis 

### and hu?horltg’ herein conme&~ shall in no way effisct any provision of the antl-trust laws of this State.” Sub-division 108, Article 1302, quoted above, contains similar restrictive provisions or words of limitation.Hon. Zollle Steekley, page 11 (WV-440)

Aswas stated in enswer to 

### your first question, the Legislature of Texas 

### over a period of many

### gears prior to the enactment of the Business Corporation Act has used words of limitation or restrlctlve~provlslons In connection with the statutory enactments of lawful purposes for which e corporation could be formed under the laws of Texas. Manifestly, by provldlng such restrictive provlslons or words of limitation It was the ‘leglslatlve Intent to limit the’ purposes for vhLch’e corporatlon might legally do business wlttiln this State so that lt.,could not transact’ builnebs which was properly being transac’ted by other corporations which were uiider.‘.strlct regulatory end ~aupervlsory Ilmltetlona imposed by law, end which were adminlatered by State- offlcers or agencies. Typical examples of such words of limltatlon or restriction were applicable to cbr- ,poratlons 

### formedfor eny of,the purposes contained in sub-dlvislons 48; 49, end 50, Article 1302, V.C.S., Article 1303(b), V.C.S;, end under the present 

### Busln6ss Corporetlon Act Article 15138, V.C.S., all of which car 

### oretlons..ware end ares P IArt. 9.15B, Bualness Corporation Act sub’ ject to the limitations end restrictions imposed by Article 15,2&r; V;C.S., under the supervision of the State Banking Commlsslonerp Formerly all title insurance companies incorporated under former Article 13028, V.C.S., now Chapter’ 9, Texas Inarence Code, were Incorporated by the Secretary of State, but were under the supervision of the Board of Insurance Commlssloners. Banks end trust companies which were created 

### under the provisions of ’ the Texas Benking Code of 1943 are under the supervision 

### of the Banking Commissioner of Texas a Hence, any purposes contained In the general corporation laws which contain words of limitation or restrictive-provisions such as, “without banking and discounting prlvlleges”, although permitting the corporation to perform certain business transactions which were commonto banks end trust oompenles, nevertheIes,s did not permit such corporations to engage in eny phase of banking OP discounting features which forms en integral part. of the banking business, thereby carrying on a banklng business without any supervlslon.

Thls office has held (Attorney Cenerel’s Oplnian No. WW-77, dated April 1, 1957), that the statutory &zrpose clauses authorized under the provisions of Article ljO2’end sub-divisions therebf, Article 1303b
Corporation Act were lawful purposes~ Andy still remain lawful~ purhoses for which a corporation may be organized under the Act, vith certeln exceptions noted therein,

In enacting the 

### Business Corporatlon Act the Legislature manlfestlg did’ not intend to ‘remove the restrlctlve provlsrons or words of llmltatlon whleh qualifiedthe lawful purposes grantedHon. Zollle Steakley, pegs 12 (lfu-440)

by it (Art. p.l5B), but Intended only that such purposes es brlglnally enacted still COIMtitUted lewful pzrpos@ under which 8 corporation oould be ahertetied for one 

### or more lawful purposes which, under the prior law, wee prohibited.

It is our opinion that you world not be euthorleed to. grant e charter or amendment thereto to~‘~edomestic cOrporetlon, or an eppllcetion for 8 certlflcete oft euthority tb e Torelgn cbrpotietlon which cohtelned purposs clause& aubstentially the same es sub-divisions 48, 49, end 50; ArtlOle 1302; or Article’ 1303b, or any other simller purpos&‘cleusea which were eutholiized izs lawful-purposes prior to the enactment of the Bublness Corpeetlon Act, unless such pui?pose clauses contelned’ quaXlfying proVisions or words of llmltetlon which were originally e part thereof. Your third question Is es follovs:

“Should the Secreterj of State accept and file Artlcleb of Incorporetlon Including dlscounting or redlsaountlng purposes if words of llmltetlon lre added, to-wit: or dlacountlng privilegea? I” ‘wlthaut benklng
This quest(ion~~has been discussed end apawered in the answers to your first and second queitlons.

Your fourth question is es followsr

“Should the Secretary of State ecc&pt end file Article& of Incorporation which include surety or. guerenty purporer If words oi’llmltation are added thereto, to-wit: ‘lnbofer es may be’~permltted by law end nothlng cbnt8lnbd herein shell be construed to grant this corporation lnsurence powers?’ ’ Since we have held In 

### emwer to 

### yoimfirst queatlon thiit a purpose to dc a surety or guaranty business would constitute a purpbse tb donen lnsu+nc& business, yo!~ would“not be atithorlesd to grant e charter or at~emendiUnt ‘theMto bra 6i‘certificate 6f auth6rlty for e foreign aorpotietion tb do buslne’ss In Teties-ilnder the pri%lsl~ns of the Bublnebs Corporation Act, end therefore it is lmmaterlel whether the qualifying or restrictive phrase should be added to such purpose.

Your fifth question 1s es follows:

“Should the Seoretery of State eccept and , file Articlea of Incorporation in which theHon. Zollie Steakley, page 13 (Wu-440)

corporate name includes one 

### of the words, ‘&iscount ’ , !~redlscount I, ‘guerenty’ , or ‘surety’?” Article 

### 2.05A62) of the Business Corporation Act refers to the “Corporete Name es follows:

“It shell not contain any word or phrase which lndlcetes or implies that It Is organized for any purpose other then the one or more of the purposes contained in its articles of lncorporation. ” Since we have held that you are Ytthbut authority to grant e cherter or en amendment thereto, or a certificate off authority to

’ a foreign corporation to-do a discounting, redlsbountlng, guaranty or surety business, the use of such words lh the corporat6 namewould be in violetion of Section 2.05A(2) of the Business Corporation Act.

The Secretary of State is without authority. to issue e charter or grant a certificate of authority to a foreign corporation for the purpose of doing business es e fidelity, surety, or guer-- anty business, which is the business of lnsurence, or for the purpose of doing a beriklng business. Words of llmltetl~n or restrlctlve provlslons contained In lawful stetutory purpose cleuaes of private corporations for profit in effect prior to the enectment of the Business Corporation Act ere &till in full foroe end effect as to any lawful Furpose for which e corporation mey-be formed under the provisions of Article 2.OlA, Business Corporation Act. A corporetlon mey not use In Its corporete tieme,eny word or phrehe which is not descriptive of one of the purposes for which the corporation is formed. CKR:wb :wc Very truly yours, APPROVED

: WILLWILSON Opinion Committee Attorney General of Texas Geo. P. B>ackburn, Chekrmen Mary K. Well By s/C.K. Rlcherbs Milton Richardson C.K. Rlcherds Fred Werkenthln Assistant Reviewed for the Attorney General By: W. V. Geppert