OFFICE OF THE A7TORNEY GENERAL OF TEXAS AUSTIN

fionorableC. E. Alvia, Jr. County Attorney Corysll Collutp Gatesvilla, Texas

Dear Sir: 

# v
Oplnlon So, O-1470 8s: Reservation or aximp

Vieappraolat4 ve or HoYember 7, eat out in the d Jrouhosewith

yetma a praotloe haa n@anies and real mtatc) n thle oounty but alao ng a part of thePltnsxeiI

-gurpow OS charter have followed suit. As a sesuit of thie praatlae apparently, wide laiaeraf. h&din&a are being b&t up by ~,OrWratf~aU *ibh were chartered r0r a dirrerent puq3oee. In ether words a 

### number or theaa aorgoratlons are doing a big oil bua~nass when the 8aPO iS~nOt uOOlb886;PY, fnoldantal or pr+r fn the 81e~~iae of their true,proper, a&d obartered B¬ions.

### 2

&norable C, E. Alvls, 

### Jr., Page 2

*It QQ~XWJtome that auoh operations are in violation of Chapter 4, TltlQ 32, Art. or theRevised Ci~ll Statutes or Texas.1359, et seq.-hermore, the traditional polloy 0r the law: @at or the rm4. a114sat1oh 

## 0rlaad end the lntsrests therein, does not seem tobe well served by the vast aocmulatlon et suoh interests by great corporate organlsatlons. 0

. . . 41 vamld like to hay4 your views on thismatter, aa I bellQve ltwlll prove tobe of Qvenwider ihterest to Texas ln‘the iuture."
Slnae we da not have th4 charter of.Amy speaif~a lnsursnoe Qospahp or real estnte 108s oorporatlon before us, aud Ilkewlseg sin04 w4 have been turixlshedwith no 

### apecirio fasts and airsmstsnQes relative to the aQquiSitlOn oi any partloular traot of land OF the exQeptlon or ressrvatlon Qr any sertab+ -era1 interest by any suobaompaay, the preparatifonof a a~Qret.4 opinion sn the qnestiohs presented In your letter hssbeen dlffloult; and to a Qonslderable extent thatuhloh r0iti8 represents nomrs'than a Qollatlan or p8rkinent auth&.tlee.

We 

### indulge In t.hQasmsptlon that the lahda rererred I, tewere)lawfULly aoqulred **by** iorQQlo8urs proaesdlaga or otherwlee, either to Qnsble the corporation to carry on Its buslnesa, or to'seouro the paymnt of lndebtedneva or liability due, or belonging to the corporation, or

### forother Msful purposes. Then, upon Bubsequent sale, auinQv8l interest was *rQtaluQdm; audw4 prQsuPe that when you speak oi SUQh aorgoratlons vre~ talnlng a part OS thealneral lntetwts in lands", you refer to the oreation of SOJW suoh estate as ocourr~d inWay vs. Venus 

### (C, C. A. 19511, 35 8. 81. (Zd)467, orXlQln vs. Eusble Oil& Berlnlng co. (T. c; A. 19541, 67 S.W. (26) 9ll,whloh might opsiate as a 

### seversaoeof themineral estate and reserve a vested title in scum

### portion of theminerals in the lnsuranse or real estate loa~eoryratlons involved. See Texas Coqmny vs.Uaugherty [lVl5), 107 TAX. 226, 176 5. PI*717, L. R. A., 1917F 989, Stephen8 County vs';Hid-Kansas OilA-. Gas Company (lo+113 Tex. 160, 254 S.K. 290, 89 A. L. R. 566.

IU this mmneation, Chapter~4 of Title 32 of the Revised civil Statute8 of Texas, 19%. dealing with the pm-Honorable C. IL Alvls, Jr., Page S

ahase and OonYQyEUOQ of lands br aorporatlons gene&l.l~, la relevant (s 

## tg the &YYiS%d Civil tjtatutes

### 0r 1925 provldes that the laws governing aorporatlone in general shall apply to ahd govern lnfiuranoecompanies lnoorporated in this 2tate,,insofar as the same are not inconsistent with those statutes dealing ep4olrlaallywith lnaurancQ companies), andwe quote the **r0114sing** Art&lea 

## rro0suah ahapterr

*Article ZG39. COndltlOnS Of pUrChaS4~ -HO private corporamn shall bepermitted to purahaee any lands under any provision of thfs ohapter, unless the lands so purchased are neaessary to enable such aorporation to do business 1~ this State, or exceptwhere suoh laud 1s purohaeeQ in due course or business to semre the payment or debt.'
~hrtiale l%G. **9~4** 0r **SURPLUS.** -AU pi+ vate oorpomtione authorized by the laws of Texas, to dobusiness in this State, whose maln pur-goee 18not the aoqulsition or ownership Of le.nd8,WaXoh hsve'or.may aaeuire by leeee. marchas or otherwise more land than isseaessary to enable them 'tocarry on their buelness. Shall.Within fifteQn years fmm the date said landw 

### be aoqnlred. In pod faith sell and convey in iS4 elmple all lands soacquired which are not 

### necessary ror the transaotion 0r their buSln688.s (Undersooring ours)
wArtl~l~ 1961. Liquidation. -An lands aoaulred by aorporatlona inpament o *due such comorations shall be sold and 

### eomeped ae herein vrovlded, within flfte4n~y~rw3 iron the 

### date of the aaQuiaition of suoh land.* (Underscoring oursl
mArtiole $362. Corpoxetions prohibited. - No private oorporatlon heretofore orherearter Qhartered or oreated whose main ptargoseof buslness 1s the aoquieltio&or ownership or laud 

### by purchzme, lease or othekslse, shall hereatter beperdtted to aoqulre aaj landwithlc this State by purahase, lease es otherw1oe.e nfU%iCIQ 1364. &Cheat pI'OQQQdin&J.- All corporations holding lands aontrary to the provls10na OS this law shall hold the same subjectHonorable C. E. Ahis; Jr., Page 4

to forfeiturs and eacheat proceedings. The Attorney Oenernl, or any aistrict or oounty attorney, when either of thez ha8 rea8on tobelieve that any corporation 3.8holding landa Inviolation of this **law,** shall institute atit in the naae of the'Stats OfTexas, In Travis County, 

### orin any couatg inTexas where such oorporetion may have an agent, or In any county where any part or the lendmay be situated, against such OOIC poretion, ~8 i8provided for the esoheat of estates ofdeeeased persona dying without devise thereof end havine;no heir8.v
*Article 1565. Dieposition of penalties. - If it be dsteinined upon the trial of said suit that land8 areheld aontrary to this law, the court trytbg said oau8e shall enter judgment condsmning nuo& land8 and ordering them to be' sold a8under execution, the prooeeds of aueh sale to be first applied to the payment of cost8 of 8UCh suit, and the balance to be 

### paid into the State Treasury subjeat to be paid to the stookholders, or person8 entitled to receive the 8aae as owners, upon proper proor made within twelve months from date of aale. 

## Ii the legal representatives of euoh aorporation fail to claim the said balance ofmoney reallred on sale of aaid land, then it ahall e_xcheatto theState and be applied to the available sahool fund. The aourt trying said aause shall allow the attorney representing the State a reaeonable fee, tobe taxed a8 cost in the suit. In no ease shall the State be liable for cost8 or fees U&e88 it 18 SUoOe88fUl in said atit."
The progenitor of these artioles was Senate Bill 4, Chapter 33, General Laws of Texas, 1893, 25rd Legislature, Vol. lo, p. 466, Sea. 4,whiah reeds ln part a8 follwa:

%eo. 4. That all private aorporetions authorized by the l.aW8of Texas, es provided in Chapter 101, Article 566, Aote of 1891, Twentysecond Legialaturs, to do business in thf8 State, whose Biainpurpose is not the aoquisition or ownership OS lands, a8mentioned In the precedih$ seCtions,whloh haVS heretofore ormay hereefter aaquire, by lease, purchase, or atherwi88, wore land than is neae88avy toHonorable C. E,blvls, Jr., Page 5

enable therato carry on their busiue88, aball, rithin fifteen year8 from the time thtsact **tak88** sffeot. or the date said landmay behereafter acquired in good faith sell and convey -i fee eimz4e all land 80 acauired dhih a& not necessary for the traneaatio~ofwth& business. tid no private aor:?oratlonehall be perslittedto purchase any land under the proviaions of this and the preceding 

### aeations unless the lands 80 purchased are neceeaary to enable suoh aorporetion todo business in this State, or except where such land ie lurahesed indue course of business to secure the payment ofdebt.. . .v (Unberscorlng ours)

W al.60aall your attention to Article l320, Revised Civil Stztutssj:1925, nhioh reads In part as followst

*Xvery private corporation a8 such has pwer:*

. .

-“4 

### othetilbe

. .

To purahase, hold, sell, mortgage or aonvep such real estate and

### personal estate a8 the uurnose8 of the aornoration shall require, and also to take;~Id and aonvey auah other property, real. 

### person & mixed, 

### or lair) shall

### be reaufeIte for 

### suah ao~morntlon to aoauire in order 

### to obtain or aeaure the 

### mwaent or any Indebtedness or liability due, or belon - ing to, the cornoration.* (Underscoring ourslg
Article X@, Revised Civil Statutes, 1925, 18 also pertinent; end reads tn part aa Sollows:

*l?oaorporation, doan#stloOT roreign, 

### doing buainesa in this State, shall employ or use its 8toOk;means, a88,&8 or other property, dlreotly or indireotly'@or any purpose whatever other then to aoaompliah the legltlmate buaineas of it8 creation, or those ourposes otherwise permLtted by law; . . ."

*IKITE! The power or acquiring lends is not confined to corporationa formed todeal in real ea$bto. City of San ktonio 9.8.Salvation &my (CiV. App.), 127 8. 91.660, error rsfu8Sd.EfonorablsC. E.Alvia, Jr., Fege 6

Thus, with reepeat to corporations generally, it may be soen that the Legislature bas deolared the publia polfoy of the State to be'that ooorporetionswhose main purpose i8 orWAS (at the time of the pas8a;e of theAct) the acpuiaition of lend are and xere forbidden to acquire land to any extant (seeArticle 1362, aupre), and oorporationa whose main purpose is not the aaquisition of lend,may eaquite the bfme only when neoeeaary for bUSiM88 ;>urposeaor indue eour8e of business $0 seaum the peymant of debt. See Tjestbrookv8. ~88OUd~'ibX85 Lsnd & Irrigation Company~, (C.C. A. 1917), 195 S.Vi.1155; Ca?n;rbell va. Rood, (&as. App. 1931) 35 S.Y;.(26) 93, 85 A, L. R. 266. It is apparent that the intention of the Lsglelaturs a8 exemplified by the original enactment of 1893was that in no event should land be ?urohsaed by corporations unless these conditions were present, end in it8wisdom it further provided for the llquidation of aueh land8within fifteen yeai- when toomuahwaa aaqulred.,
Artiale 4726 of theRevised Civil Statutea, a8 amended, de&s s=ERlV with life, health and accident lneuranoe.o0z~miea, andby Artiole 4Sl9 of the Revised Civil Statutes, Chapter 3 of Title 78 of the Revlaed Civil Statute8 ismade applicable tomutual life insuranoe ooxpanles.

We quoteArticle 4726: *Every such insurance compsny may aeoure, hold, and aonvey real property only for the follnting ~rpoaea and in the following 

### manners
"1. One building afte and 

### office building for its accommodation in the ttiansaation0r its bu8ine88 end for lsaee and rentals end auah office building may be on ground onwhlah the Company 0wns a lease having not leas.thsn fifty year8 to run from the date of its acquisition by the Company, provided that the C-pony shell own.or be entitled to theuse oT, all the improvessnta tinereon,wd that thevalue of such ~provementa.afiall et lea‘t equal thevelne of the ground, end shall be 1 ot leas thaa twenty timea the ennuel average graund rentaL payable under such lease; end provided, eueh offias buildi9" shall have an snnuel avera*;enet rental 0r et least twice suoh annual gound rental; end, provided, further, that suoh Company &all be Liebl8 for and shall pay all State and local taxes levied en& sS8eS8ed 3gsihSt 8*uohBxOUnd end the improveLbentsthereOn whioh iOr :1ur~8aa Of tamit:on, 8bal.lbe deamed real estatesowned by the Coapeny. Provi&ed, that aa RoqUi8itiOn of auohan oftlae bullding on leased ground shallbe approved by the iicmrdot Insurance Co~~IsaIoners of the Stete ot Texas before such Investment.
"2. Suah a8 have been aoqulred ingood faith byway of security for loans previously contracted or formoneys due.

*3. Such n8 have been oonveyed to it in the satisfaction of debta prevlouslp~contractcd in the course of its dealInga.

"4. Suah as have been purohaeed at sale8 under judgment 

### OPdecrees of oourt, ormortgage or other lien8 held by such oos~paniee.

*All euah.real property 8peoIfled In subdivieions 2, 3 8nd 4 of this Article whleh @hall notbe neoeseary for it8 acoonmodatloh la the oomrenient transaction of it8 burdnese 

### shallbe

Consequently, Itmay be eeen thatvith respect to life, health ehd accident lnsurance'compaeiee, the Legialatula ha8 8hortened to five years the period for legal corporate holdlng, 6s eet out in Chapter 4 of Title 32 or the Revised Civil Statutes (Articles 1360-1301~.

A further limltatlon oaArtlolrs X%30-1561 of the 2evIsed Clvll Stetutes, supra, ?aapbe found in an&5008 or theRevised Civil Stetutes, insurance canpanles. Fe quote!

"Art. 5007. 80 8ueh company ahallbe permftted to purchase, hold of Uonvey real estate,Honorable C. E.Alvls, JP., Page 8

except tor the purpose and in themanner herein S8t fQPthi

='I. BOP the ereotlon andmalnteuance 

### or buildings St least ample aad adequate ror the transaation 

## 0rIt.6own business.

“2. Such as Shall hove been mortgaged to it in good faith formoney due.
"3. Suoh a8 shall hove been oonveyed to it in the Satieraotion 

## 0rdebts trrrctedin the course of itsdeaPPeViOU84 oonings and which muSt be taken fnby the company on aaaouat o$ the debt SecruPedby suohmortgage.

-4. Such as ahallhave been purohased at sales upon judgments, decree8 

### OPznortgageeobtalned ormade for such debts. No compeay lncorporated a8 aforsoald shalJ.puTshase, hold OP convey real estate inany other oaess 

### or ror any otheP.przrpose.*

*Art. 5008. All real eatate 80 aoqUlred, eXOfmt as 18 004u~~ed bybuildlllgsused inwhole or in

### Dartforthe aocommodetioa of such oorapanfss 'ill the tPaAlZba4tiOn Or it8bUSiine88:8half. 

### t4XOODt a8 hereinafter orovided. be mid agd dlswsed of 

### Withintenyears after such 001u~aay8hall have aosulred title to the same. Ifomaeh

### aompany shall have euoh real estate for e lonucr DeriCtdthan that above mentioned, Unleae th; said company shall prooure a certificate rrom the Commiealoaer that the interests of the company will suffer materially by a rorced Pals of.such real eatate, inwhich event the time ror the salemay be extended to euah time 88 the Commlsaioner Shall direct in said 4ertlfiaate.v 

### (Undersooring oUr8) Likewise, a spe4ial statute ha8 been enaoted With Peepeot to building and l*n aeaoeiatioas, 

### Artiola 882a46 ef theRevised Civil Stat&k OS 1925, which reads in part 88fO11OWS:

### 289

Table 0. E.Alvie, JP., Page 9

been acquired unless (a) there shell be 8 bulld- ‘ie thereon ocoupled by it a8 an orri t:, Banking 08; OP (bf

coamissioner or Texae on application of th b rd ofdlrectors shall have extend d the t~ze"~lthln which enoh aele ehall bemmie. R

. . . (3ndereaorlng oure)
The facts set rorth in~your let%er are not in +bselves euixcl0nt to present 8 situat,ionfalling within th& purview of Articlea 1549, SSla-14, 46Rl, or 4999, Revised Civil Statutes, 1925, so a8 to enable theAttorney General to rorreit the charter 0r euch corporetlon. Westbrook va. Missouri-Texas Land k Irrigation Co. (C.A. **A.** 1917),,,1955S,W, ll54; Alamo Club vs. The State (C. 0. A.), 147 S.W. S59,i writ 

### refused; Union Men's Pmternal & Senerlalary AE+Q'VS. The State (C.C.

### A.), 190 S.W. 242:Kaplan Dry Goode'Co. ~8. Say; Bra;. ('2. C.A.), 214 8.W. 4S5; 10Tex. Jurle. para.

,* l

I?or**do**we believe the quest&ma eet forth inyour letter aontemplate a eltuatlon inwhioh the land ra8 originally llle@lly acquired, 80a8 to enable the Attorney General to lgstrain the oorporatlon from eoqulrlng more land or

### vlolating the legl8letlva manbate a8 set forth inArticle 1359 of th8Revised Civil Statutes of Tex.68,8upra. Staeahw ve. Rootledge (Sup. Ct.. 1922), 24.18. **91.** 9951 ye&son VS.Wseteti Union Telegraph Company,,269 

### Fed. 598; lfational'Eqtiteble f%oaiety,et al ~8. 

### Alexander, et al (C. C. **A.** 1918), 220 S .W. lS4; C8mpbell vs. Rood (Corn. App. 1951) 55 S.W. (26) 93, S5 **A.** L, R. 266; City ofWink ~8. Griffith Amusement 00. (Sup. Ct.) 1'3 8.W. (Zd) 695..

As regrettable as itmay be that the Legislature he8 not provided amr6 8ummry remedy for the eituatlon described ln your letter,we believe that it has et least provided a complete 

### and exclusive one in ~h@pter 4 ofTitle 52 of the Revised Civil Statutes, rhieh forms a part Of the 18wS against the craatlon 0r perpetuities. 

### kaaerloan Tribune News Colony Co.va. Schuler, 34 0. **A.** 560, 79 S.W. 575.

AS stated in Schaelder ve. SaLlere, 913 Ter. 550, 84 5.W. 417, at page 420:~.

"Under the present law of this atate, enacted mrch 24, 1895, the 

### QOPoration had 15 years from the passage of the lew kand ee the statute now reads, 15 years from the aequlsltlon of the land)Honorable C. E. Alvls, Jr., Page 10

to as11 >lred. the land, and the t5.m lms not yet oxRev. St. lS95, art. 9490. If the State should seoure a dealaratlou of forfeiture, the landswould be sold, and the prooeeds diatributed to the stookholders. Revised statutes 1395, Artlole 949e. This shows that the holding of the land is not unlawful." insertion oure) (Pareathetical

Cousequently, you are respeotfully advised and It Is the considered oplnlon of this dspartaent that under the faots set out in your letter

## 0rNoveaber

## 7, 1039, aad those additional rects assumed$ln this o real estate loan corporations finlou, insurance oo~~p,aates and with the sxoeptioh of the speoial corporations mentioned in the paragraphs to rollor), retaining anineral interest In 

### lands whioh they have originally, lawfully aoquired by foreolosure or otherwise, and subsequently sold atprivate sale, may hold suah lancisor retain such interests ior a period of 15years 

### rroiuthedate of original aoquieltion or suah lands In aocoxdanoe with llrtloles1560 aad 1351 of the Bevlsed Civil Statutes, befom ,beingsubjeot to.forfeiture 

### and escheat proceedings lnstltuted by theAttorney General of Texas aa provided InArtialiii lJ$h
or theRevised Civil Statutes or 1925.

Elth respeat to life, health and aooident insurano~ 

### Wapanles, you are respeflt?ullyadvised tlut such 

### oor~ratloops have rive years Inwhich tb dispose of real estate net necessary in thecrmvenient transaotlon of business, without an extension or time granted by the Commissioner of Iasuranoe.

Moreover, it is tha opinion of this Department that general oasualty insuranoe ooa~nies have ten years inwhieh to die?ose or real estate not aeoessary in the omvenlent traasaation of business, unless granted an extension or time *y the commiseioner 

## 0rInsurancs.

It IS the further oplnlon of this departzientthat buildlug and loan assooiatfotnUmxst disjxme of

### every parcel Or real estate aoquired by euoh aseoclations within five Yeam, 

## ~10~8Rrd.ed 83texk.enaion ortLme

by the RanklagCoxxlssioner of Texas.

we ~hafl beglad

## to itirish amere 

## ap0iriOopinion

v youwill 

### iurniah this department inisrmation as to the parti&lar typ 

### or mr~mtlon and the articles or the Revlsad Civil Statutes under whhh Itwas lnoorpy!ated, and ia addi-

,

# 291

&noreble C. E.Alvis, Jr., Page 11

tion all factzand cireuMtanoes relative to the acquisition or any particular piece of land and the retention or the mineral interest.

Yours very truly
**Al!TOR?fEX**

### GEEWLL

OFTEXAS

BY-R?&& Walter R. Kmh

Assistant