Honm+KLe Wm. J. Lawson 

Secretary of State 

Austin, Texas 

Dear Sir: 

Attention: Hon. Will Mann Richardson 

Opinion No. O-3991 

Re: May the charter of AvdonxMutual 

Housing Corporation be granted 

under the present statutes? If 

so, will the filing fee be $10.00 

and will it be exempt from the 

payment of franchise tax? 

This will acknowledge receipt of your request for the opinion 

of this department on the hereinabove mentioned question. 

In connection therewith, you submitted to us the application 

for the charter, a copy of the by-laws and a letter from the Federal 

Works Agency in Washington explaining certain provisions in the certificate of incorporation and in the by-laws. 

We quote from your letter as follows: 

"It is the contention of the incorporators 

that this is a benevolent non-profit corporation 

and should pay only the $10.00 filing fee and be 

exempt from franchise tax. 

"This Department has contended that the 

purpose is too broad for us to determine under 

what subdivision of Article 1302 they are seeking to incorporate. It seems probable, however, 

that Subdivision 44 which allows the corporation 

to establish, maintain, erect and repair a department house is the closest to the purpose of 

the corporation. It is the contention of this 

Department that if such a purpose is used, even 

though the corporation is not organized for 

profit, it must pay the $50.00 filing fee and 

the annual franchise tax. 

"This Department has also objected to Articles 7 and 8 of the charter. Article 7 provides 

restrictions not authorized by the statutes on the 

amendment of the charter, and Article 8 provides 

for a dissolution by two-thirds of its members, 

when the Texas Statutes require four-fifths, 
Honorable Wm. J. Lawson, Page 2 

"We would appreciate your examining these instruments and giving us an early opinion as to (1) 

whether this charter may be granted under the present 

statutes and (2) whether if such a charter is granted, 

the filing fee will be $10.00 and the corporation 

exempt from franchise tax." 

Article 1302, Vernon's Annotated Civil Statutes, enumerates 

the purposes for which a private corporation may be formed. The proposed charter is required, by Article 1304, Vernon's Annotated Civil 

Statutes, to state the purpose for which the corporation is formed. 

It has been held by our Supreme Court, in the case of Johnston vs. 

Townsend, 103 Texas 122, 124 S. W. 417, that the purpose should be 

stated with sufficient clearness to enable the Secretary of State to 

determine which of the purposes specified in Article 1302, supra, the 

applicants seek to incorporate under. 

In the case of Smith vs. Wortham, 106 Texas 106, 157 S.W. 740, 

it is stated that: 

"The statutory requirement that the 'purpose' of 

the corporation shall be stated in its charter was intended for the protection of the incorporators and 

stockholders, and the public, in order that they may 

be advised as to the character of its corporate activities, and to enable the State, through its proper 

officers, to collect filing fees and franchise taxes, 

and to supervise and control the use and to punish 

the non-use of its franchise." (Underscoring ours.) 

In the certificate of incorporation, or application for a 

charter, submitted with your request letter, it is stated in the first 

paragraph thereof as follows: 

"That we, the subscribers, of the said County of 

Dallas and State of Texas under the provisions of the 

Revised Civil Statutes of 1925 as amended by the Legislature of Texas, Title 32, Chapter 9, Article 1396 there- 

@ and the regulatory articles succeeding said Article 

1396 and contained in said Chapter 9 together with all 

amendments thereto, do hereby form and incorporate ourselves into a voluntary association for a Benevolent 

w-we, more particularly set out in Article 2 hereafter, and to that end we hereby adopt and subscribe 

the following:" (Underscoring ours.) 

Article 1396 of the Revised Civil Statutes of Texas, 1925, 

Title 32, Chapter 9, reads as follows: 

"Any religious society, charitable, benevolent, 

literary or social association (other than colleges, 

universities, academies or seminaries), and any military 
,-, 

Honorable Wm. J. Lawson, Page 3 

or fire company, may, by the consent of a majority 

of its members become a body corporate under this 

title, electing directors or trustees, and performing such other things as are directed in the case of 

other corporations; and when so organized shall have 

all the powers and privileges, and be subject to all 

the restrictions in this title contained, for the 

objects named in the charter, and shall have the same 

power to make by-laws for the regulation of their 

affairs as other corporations." 

Said certificate of incorporation, in Article 2 there 

states the purpose and cause as follows: 

"Article 2~ Purpose and Powers. The benevolent 

purpose for which this Corporation is formed is to 

manage and operate, under appropriate agreements, 

in the interest of the United States of America and 

the members of the Corporation as occupants thereof. 

Defense Housing Project TEX-41091, constructed by 

the United States, through the Federal Works Admin- 

:istrator, in the town of Grand Prairie, County of 

Dallas, Texas, known as Avion Village, in order to 

provide housing for families of persons engaged in 

national defense activities pursuant to an act of 

P Congress approved October 14, 1940 (54 Stat. ll25), 

ias amended, known as the Lanham Act, and similar pro- 

.jects in the State of Texas for the housing of other 

:?ersons, as may be agreed upon bythe Corporation 

;and the United States; to maintain, protect and safeguard the Project and Project property and secure 

to the Government the orderly and regular receipt 

(of rentals, installment payments and all other charges 

thereon and revenues therefrom; by becoming the purchaser thereof to enable the Government to dispose of 

said Project and Project property as required by Section 4 of said Act of Congress, upon the termination 

of the present emergency as declared thereunder by 

the President of the United States or prior thereto, 

,snd thereby assure the continued usefulness and occupancy of the Project thereafter; to serve as the 

medium and means by which the residents and occupants 

of the Project and houses thereon, as members of the 

Corporation, through corporate owner-ship of the Project 

and Project property on a non-profit mutual participation plan, obtain the benefits and security of homes 

and permanent shelter for their families'and constructive community planning under management of their own 

choosing in keeping with recognized standards of Safety, 

health and wholesome living, together with such services, 

goods, supplies and facilities as are necessary or desirable for the operation of the homes, and in addition 

!Of, 
. . 

Honorable Wm. J. Lawson, Page 4 

thereto benefits which contribute to their general 

welfare including health, recreation and education, 

as citizens of the community. The Corporation shall 

have full powers to accomplish the benevolent purpose for which it is organized, and in the exercise 

thereof shall have each and every power granted to 

corporations organized under the laws of the State 

of Texas, and in addition thereto shall have such 

privileges as are extended to it by the United States 

of America or the laws thereof." 

From the purposes expressed in the application for the charter, 

quoted above, it is the opinion of this department that the Avion Mutual 

Housicg "Corporation ' is neither a religious society, a charitable, benevolent, literary or social association, nor 8 military or fire company, 

within the meaning of those terms as used in Article 1396, supra, authorizing the incorporation of such societies, associations and companies 

under Title 32 of the Revised Civil Statutes of Texas, as amended. 

In the case of State vs, Texas Mutual Life Ins. Co. of Texas, 

et al, 51 S. W, (2d) 405 (Reversed in 58 S. W0 (2d) 37, on other grounds) 

the court, in speaking of the meaning of the word benevolent, used the 

following language: 

"Broadly speaking, the word (benevolent) implies 

'merely wishing well to others; beneficence; doing well.' 

It is a broader term than icharity,' which it includes, 

and with which it is frequently used synonymously. 

Charity in its legal sense implies giving without consideration or expectation of return, Whereas benevolent 

is applied to any act which is promoted by or has for 

its object the well being of others," (Underscoring ours.) 

In the case of Kansas Masonic Home vs. Board of Commissioners 

of Sedgwick County, 1.06 P. 1082, 81 Kan. 859, it was held that the words 

"benevolent" and "charitable" are nearly synonymous in meaning, and s.8 

frequently used are entirely so, especially when applied to purposes or 

institutions. 

In the case of Kappa Gamma Rho vs. Marion County, et al, 279 

P. 555, the Greek letter society, owning the lot on which its fraternity 

house was situated, was held not entitled to have its property exempted 

from taxation, as provided by statute, on the ground that it was not a 

"benevolent, charitable, litemry or scientific society," within the 

meaning of such statute exempting property of such societies from taxation, The court held that "benevolent societies'; as that term was used 

in the statute, meant societies organized with the domimnt purpose of 

doing good to others rather than for the convenience of their own members, 

and dLd not include a fraternity which was merely beneficial to its own 

membe~cs. 
Eon. Wm. J. Lawson, Page 5 

While it appears from the application for the charter that the 

applicants seek to incorporate as a benevolent corporation, and refer to 

the "benevolent purposes for which this corporation is formed," the purpose clause, in our opinion, does not show that the purposes of said corporation are "benevolent" in the sense that said term is used in Title 32 

of the Revised Civil Statutes of Texas, dealing with corporations. 

From the purpose clause in the application, it is clearly shown 

that this objects of the corporation are primarily for the benefit of its 

own members, and not for the benefit or well being of others. 

It is true that the purpose clause states that the purpose of 

the corporation is "in the interest of the United States of America." 

That feature alone, however, does not constitute a benevolent corporation, 

as contemplated by our incorporation statutes. Every corporation in 

Texas, benevolent or otherwise, must have a purpose that is in the interest 

of the 7Jnited States of America, the State of Texas, and the general public, under penalty of being void and unauthorized as against public policy. 

In view of the foregoing, therefore, it is the opinion of this 

department, under the facts stated, that the Avion Mutual Housing "Corporation" can not be incorporated under subsection 2 of Article 1302, 

Vernon's Annotated Civil Statutes, which provides that private corporations may be formed for "the support of any benevolent, charitable, educational or missionary undertaking." 

Whether the charter applied for may be granted under the present 

statutes, depends on whether the purpose, as hereinabove quoted, is stated 

with surlficient clearness to enable the Secretary of State to determine 

that the purpose contemplated is one provided for by Article 1302, supra, 

and that the purposes contemplated do not embrace more than one of the 

subdivisions of Article 1302, Johnston vs. Townsend, supra. 

From the facts submitted to us in connection with your request 

for our opinion, it is the opinion of this department that the purpose is 

not so clearly stated in the application for the charter as to clearly 

show that it is authorized under any of the present Texas incorporation 

statutes and that therefore the application for said charter should be 

refused. 

In view of our answer to your first question, your other questions no longer exist. 

Very truly yours, 

GROVER SELLERS ATTORNEY GENERAL OF TEXAS 

EP:RS:hep 

This opinion BY s/ Edgar Pfeil 

Considered and Edgar Pfeil 

Approved in Assistant 

Limited Conference. 

APPROVED 

OPINION 

COMMITTEE 

BY BWB CHAIRMAN -