Court Opinion

ID: 4136746
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:17:05.363374+00
Date Added: 2024-06-11T14:35:12.033591
License: Public Domain

August    19,   1957

Hon. Zol,lie Steakley          Opinion No. ww-234
Secretary of State
Capftol Ftati.on              ‘Re:    Whether a corporation    o?i:;!r5z.ed
Austin, Texas                         pursuant to Chapter :j of l,!.p
                                      Insurance Code cJntj,nues in .li:gal
                                      existence   after Ihe effe,:bt.i,y:e
                                      date of S.B. lC*:-. and r&ail:-,:I
Dear MrO S teakley :                  questl,ons.
              You have requested the opinion of Chl,s office     ,u: the
const.r;ction    of Sections 2 and 7 of Senate Ri.l.1 165,’ coll:f.l?,d
;a5hapte;l~~89      Vernon’s Texas Session Law Service,    55th L-g.,
     ) ‘2.       . You have submitted five questi.ons which relate
to js!ir duties as Secretary of State in the f:ilfng of ,zmenjments
to their charters by existing     corporations thereunde,r.
     &?ts~t;,‘
             on
              i No. 1: Does a corporation    organized DW-
     suant to Chapter 7 of the Insu~rance Code cont!r:ii?
     fn 16gal existence  after the effective    date of
     Senate Bill 1651
     Question No. 2:   If your answer is affirmati~ve ti:
     the foregoing,  is such a corporation   required to
     amend its charter immediately upon th,:n effective
     date of Senate Bill 165, or d,o such’corporations
     have the right to avail themselves of bhe provi-
     sions of the Act at any time after it?; t:ffective
     date ?
           Section     1 of the Act provides:
           “Chapter 7 of the Insurance Code, as enacted
     by Chapter 491 of the Acts of the 52nd Legislature,
     1951, is hereby repealed,”

           Section     2 of the Act provides:
           “Trust companies may be created,     and any cor-
     poration,   however created,   may amend its charter
     in compliance herewith, or a foreign corporati,on
     may obtafn a certificate     of authority  to do busi-
     ness in Texas for the following     purpose:
Han, Zollie   Steakley,   page 2   (WW-23i)

           “ITo act as trustee,    executor,  administra-
     tor, or guardian when designated by any person,
     corporation,  or court to do so, and as agent for
     the performance of any lawful act, including        the
     right to receive deposits made by agencies of the
     United States of America for the authorized ac-
     count of any individual;    to act as attorney-in-
     fact for reciprocal   or ,interinsurance   exchange. I!@

             Senate Bill 165 will become effective    on August 22,
19!V9 at which time all corporations      heretofore  created under
the provisions     of Article 7.01 of the Insurance Code or whose
charters contain any of the purpose clauses therein named,
will cease to be corporations      de lure and may no longer exer-
cise the general powers conferred by their charters.         Hunt v,
Atkinson, 12 S.W.2d 142, 145 (Comm.App. 1929); 18 C.J.S, Par.
196
    9 pe 502; . Senate Bill 165 contains no savings clause or
“grandfather    clause” preserving   the corporate existence   of
corporations    created thereunder.
           However, since the Act which repeals the purpose
clause authorized by Article    7.01 also provides that any cor-
poration,  however created,   may amend its charter so as to be-
come a trust company for the purposes set forth in Section 2
cf the Act, it was manifestly    the legislative.intent      to pea-
mit corporations  organized under the provisions        of Article
7.01 of the Insurance Code to amend their charters in accord-
ance with the provisions    of Section 2 of the Act so as to
continue their corporate existence.
            Since the Legislature     did not provide for a definite
period of time during which corporations        created under the pro-
visions   of Article    7.01 could continue their corporate exist-
ence ‘to permit their charters to be amended under the provisions
of Section 2 of the Act, and since upon the effective         date of
the Act such corporations      will cease to be corporations    de JUE,
ariy corporation    desiring  to amend its charter pursuant to the
pravlsions    of Seation 2 of the Act must submit its charter
amendment so that the Secretary of State may file it cont?,mpor-
aneously with the cessation       of the corporate existence,
     guestion No. 2:   Is a corporation   seeking to amend
     its charter In compliance with Senate Bill 165 re-
     quired to first  adopt the provisions   of the Texas
     Business Corporation Act?’
     guestion No. 4:  If your answer to the foregoing    is
     negative, will charter. amendments. filed .pursuant to
     Section 2 of Senate Bill 165 be governed by the
Hon. Zolli,e     Steakley,      page 3   (W-234)

      general corporation  laws or by the Texas Busl-
      ness Corporation Act?
               Section   7 of    the Act provides   in part as follows:

               “The genera!. laws for incorporation         and
      governing of corporations,           and the provisions
      of Article      1513, Revised Civil Statutes of
      Texas, and the provisions           of the Texas Business
      ;:-zpora.tPon Act shall. supplement ,the provisions
        ? ‘2hi.s Act and shall a.r>i.:; to such t?1:st, c:>m..
        :z::ies to the extent that they are non;; .;~nc:.:ri-
            tent i?c.:rewl‘1 ; I:rovi.ded, the ppy;j .;) ;;>ns of
          ,~.
          ’i.cle ?,OlA ~ermit~~ting a coryior:i:i.,,;~. 7.c ,‘,,i*,~,:’
           .L‘tli+i one ;~,urpo:;z:shall no!, aI>;:;,J, i I *‘I
              Article   7.15A of the Rusiness c,orycra:i.on Act pro-
vide:; *.;at , with certain exceptions    not hnre pertinent,   exist-
ing co,‘:! orations shall continue to b’e governed by the laws
heret::,l‘-sre applicable    thereto.
            Article   7.1&B of the Business Cc-~;*pora~:ionAct pro-
vides hat for a period of five years aft;,?r t!:? effective        da,te
of th;a Act, it shall not be applicable      to any domes tic co,rpcra-.
tion duly chartered and existing      on said effect:l~~ve da!e u:~:lt;.r
such corporation     shall, during the five-year    periad, 1 o:Lantar-,
ily elect to adopt the provisions      of the Business Cor;.orati.or;
Act in the manner provided by Article       7.1&C. It woui~c: ;hczr: ~.
fore appear that any existing     corporation    which has not adopted
the provisions     of the Business Cor oration Act could amend its
charter as provided in Article     131 c 9 Revised Civil Stat,utes of
Texas, as amended, without the necessity        of adopting the provi-
sions of the Business Corporation Act.
            However, any,corporation     which was originally     incor-
porated under the provisions     of Chapter 7 of the Insurance Code
could not amend under the provisions       of Article   1314 for t:rie
reason that the latter article      provides that any privar ? crpor-
ation organized for any purpose mentioned in Title 32 ~1:y ;;ml~
amend or change to another purpose mentioned in Title : 1, The
purpose for which a private corporation        was created ur-12~~1~A:-=-
title   7.01 of the Insurance Code is not contained in Title 32,
nor is the purpose authorized under the provisions          of Section
2 of Senate Bill 165 contained in Title 32,          Hence 9 co’rpora-
tions created under the provisions       of Chapter 7 of the lnsur-
ante Code may only amend their charters by first         adopting the
provisions   of the Business Corporation Act and amending their
charters in the manner provided in Articles        4.01 to 4.05, inciu-
sive, subject to the limitation      on Article   2.01A provided in
Hon. Zollie   Steakley,    page 4    (WW-234)

Section   7 of the Act,   which limits     the corporation     to one pur-
pose*
           Corporations which were created under the provisions
of Title 32, Revised Civil Statutes of Texas, and for the pur-
poses named therein, must adopt the provisions     of the Business
Corporation Act since, although such corporations     were organ-
ized for purposes mentioned in Title 32, nevertheless     amendments
so as to change the purpose of such corporations     under the pro-
visions  of Article   1314 are confined to purposes mentioned in
Title 32.   In enacting Senate Bill 165 the Legislature    did not
provide for its inclusion    as a part of Title 32, Re,vised Ci,vil
Statutes of Texas, or as an amendment to any article     contained
therein.   Therefore,   the purpose mentioned in Section 2 of the
Act is not a purpose mentioned in Title 32.
           It will be necessary for any corporation,    however cra-
ated, desiring   to amend its charter under the provisions   of Sec-
tion 2 of the Act, to first   adopt the provisions   of the Texas
Business Corporation Act and thereafter   amend its charter in the
manner therein provided.
      Question No. 5: If you hold thatthe        filing of char-
      ter amendments~oursuant to Section 2 of Senate %.:~I.
      165 is governed-by the Texas Business Corporation Act,
      is this office     authorized to file and approve Re-
      stated Articles     of Incorporation  in the form prescribed
      by Article   4.07,   or must the instruments filed pu,rsuant
      to Section 2 of Senate Bill 165 be in the form of an
      amendment to the charter and governed by Art!cles: L.Cl-
      4.05,  inclusive7
              Article   4.07A(2) of the Business Corporation Act pro-
vides that a corporation        may, by following     the procedure to
amend the articles       of incorporation    provided by Articles      4.01
to 4.05,     inclusive,    authorize,  execute, and file restated arti-
cles of incorporation        which may restate the entire tex,t of the
articles     of incorporation     as amended or supplemented t;;; all
certificates      of amendment previously     issued by the Se::r.~?-;iry of
State, and as further amended by such restated art.Xle,:_,,:~-
corporation.       'Inasmuch as it is a condition      precedent i,:<.: :jny/
corporation,      however created,    to adopt the Business C~yr;-ratl.Jn
Act in order to amend its charter under the provisions               c>YSec-
tlon 2 ,of the Act, the provisions         of Article   4.O7A(2) ,prvtde
an spti:Jnal method of amending the charter of the co:rp:a.ration.
It 1~s the opinion of this office         that the Secretary~ cf State is
autho:ri,Zed to file and approve restated articles           of in:~r~ora-
tion as authorized by the provisions          of Article    407Aj2) of the
Business Corporation Act as an alternative            to fiing    tn.- c~barter
Hon. Zollie    Steakley,   page 5    (WW-234)

amendment as provided      in Articles   4.01   to 4-05 of the Business
Corporation Act.
                                    SUMMARY
             A corporation   created under the provisions    of
      Article   7.01 of the Insurance Code ceases to be a
      corporation    de lure on August 22, 1957, the effect-
      ive date of Senate Bill 165.       If such corporation
      desires to amend its charter under the provisions
      of Section 2, Senate Bill 165, it must submit its
      proposed charter amendment to the Secretary of
      State for filing     contemporaneously with the effect-
      ive date of the repeal of Chapter '7 of the Insurance
      Code.
            All corporations,    however created, desiring     to
      amend their charters under the provisions     of Section
      2 Senate Bill 165, must first      adopt the provfsions
      of! the Business   Corporation Act and thereafter    file
      such charter amendment under the provisions      of the
      Business Corporation Act.
                                     Yours very truly,
                                     WILL WILSON
                                     Attorney General of Te:cas

                                            I            A,
                                     Rv e
                                     -*c. K. Richards
CKR:wb                                Assistant
APPROVED:
OPINIONCOMMITTEE
E. Grady Chandler,     Chairman
W. V, Geppert
John Reeves
James N. Ludlum
REVIEWED
       FOR THE ATTORNEY
                      GENERAL
BY:           Geo. P. Blackburn