Court Opinion

ID: 4139005
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:42:45.922014+00
Date Added: 2024-06-11T14:37:10.923902
License: Public Domain

Honorable Claude Isbell
secretary of state
Capitol Station
Austin, Texas                           Attention:   J. Byron Brown

                                        Opinion No. O-7309
                                        Re: Filing the charter of
                                             the Texas Real Estate
Dear Sir:                                    Association.

          We have received    your letter   of July 19, 1946, which
is quoted as follows:

           "Submitted herewith is a photostatic    copy of
     the charter of the TEXASREALESTATEASSOCIATION
     which has been presented to our office     to be filed.
     Such charter states as its purpose clause the fol-
     lowing:

            "'The corporation    is being formed for the pur-
            pose of establishing      and maintaining uniformity
            in the commercial usages pertaining to reel es-
            tate transactions    throughout the State of Texas,
            to acquire, preserve and disseminate valuable
            business information and to adopt rules, regu-
            lations and standards concerning transactions
            connected with real estate,       and through educa-
            tional methods, meetings of members, and dis-
            semination of literature,      to better business
            conditions   in connection with real estate mat-
            ters.    Said association    shall have the power to
            provide and maintain suitable offices        to per-
            form its incorporated purposes.'

            "The attorney6 for the said association   have re-
     quested that such be filed under Sub-Section 105 of
     Article   1302, Revised Civil Statutes,   1925, and con-
     tend that the proper filing    fee is $10.00 and that
     such corporation    should be exempt from franchise taxes.

            "It has been the policy of this office   to require
     similar associations    to file under Sub-Section 53 of
     Article    1302, Revised Civil Statutes, 1925.
Honorable Claude Isbell,   page 2 (o-7309)

           “I would be pleaeed   if you would answer the fol-
     lowing:

           “1.   Should the Secretary   of State   file     this
                 charter?

           “2.   If so, under which Sub-Section of Article
                 1302 does the purpose clause fall?

           “3.   What Is the proper filing fee and fran-
                 chise tax to be charged?”

            We shall proceed to answer your questions in the order
presented.   You have stated that the attorneys for this proposed
corporation   have requested that the charter be filed under Section
105 of Article   1302, V. A. C. 9. We quote that section es follows:

             "105.  Corporations may be created for        one
     or more of the following purposes, namely:            Reli-
     gious, Charitable,     Literary,  Scientific or      Educa-
     tional.     Acts 194.5, 49th Leg., p. 119, ch.       81, § 1.”

             It is apparently the intention of the incorporators    to
place their corporation within en “educational”       purpose, as that
term is used in the foregoing section,      by adding to their purpose
clause the phrase “through educational methods.” The establish-
ment end uniformity of commercial usages and the preservation       as
well es dissemination     of information pertaining to real estate
may be in 6ome small measure educational but if so it exists only
incidentally    es education is not the principal    object of an aaso-
ciation of this nature.      As such, it is our opinion that the pur-
pose of the association     here does not come within the term educa-
tional es used in Section 105 of Article 1302, V. A. C. 9. (A
detailed discussion    of corporations   organized for educational  pur-
poses is stated In an opinion of thie office       addressed to you dated
May 1, 1946 and numbersd O-7212.)

            You have further stated that it has been the policy of
your office   to require corporations with similar purpose clauses
to file under Section 53 of Article 1302, V. A. C. S., which we
quote as follows:

           “53. To organize cotton exchanger, chambers
     of commerce and boards of trade, with power to
     provide end maintain liultable rooms for the con-
     duct of their businees, and to establish  and main-
     tain uniformity in the commercial uses of cities
     end towns, to acquire, preserve end disseminate
     valuable business information,  end to adopt rules,
Honorable Claude Isbell,     page 3 (o-7309)

     regulations  end standards of claesiflcation,    which
     shall govern all transactions   with the cotton trade,
     end with other commodities where standarda and clas-
     sifications  ere required, end generally to promote
     the interest  of trade and increase the facilities
     of commercial transactions.    Acts 1899, p. 58.”

           A comparison of the above quoted Section of Art. 1302
with that of the purpose clause of this association    reveals a
close similarity   of language.   It is our opinion that Section 53
we8 designed to authorize the formation of a corporation     such as
we have here.    In fact,  it is obvious that this purpose clause
wee framed pursuant to the language contained in Section 53 with
the addition of the phrase "through educational    methods", which,
in our opinion, doe6 not change its effect.

            From a reading of Section 53, it is seen that a cotton
exchange, e chamber of commerce or e board of trade may lncorpor-
ate thereunder.    The association  here may be classified   within
the term "board of trade" es a group of men organized for the
advancement of business in the field of real estate.       A "board
of trade" has frequently been defined by our courts and is done
so simply end adequately in the cese of Northwestern Municipal
Association   v. United States, D. C. Minn., 22 F. Supp. 18, a6
follows:

            "A 'Board of Trade' is e body of men organized
     for the advsncement and protection   of business inter-
     ests."

          Consequently, we may Say that if you are otherwi6e EatiE-
fled with the charter, you may file seme under Section 53 of Article
1302, v. A. c. S.

          The proper fees to be charged by the Secretary of State
upon the filing  of a charter ere determined by Article 3914, V. A.
C. S., the pertinent parts of which we quote below:

           "Upon filing    of each charter, amendment or eup-
     plement thereto of a corporation       for the 6UppOI-t.   of
     public worship, any benevolent,       charitable,     education-
     al, missionary,    literary   or scientific    undertaking,
     the maintenance of a library,       the promotion of a pub-
     lic cemetery not for profit,       end the encouragement
     of agriculture    and horticulture,    to aid its member6
     in producing and marketing agricultural         product6, or
     for applying,    raising,   breeding,   fattening or market-
     ing livestock,    a filing   fee of Ten ($10.00) Dollars,
     end for filing    the semi-annual financial       statement
Honorable Claude Isbell,   page 4 (O-7309)

     of such agricultural products or livestock  produc-
     tion, Ten ($10.00) Dollars, which shell include the
     annual license fee.

            "Upon filing  each charter, amendment or supple-
     ment thereto of a private corporation     created for any
     other purpose intended for mutual profit or benefit,
     e filing   fee of Fifty ($50.00) Dollars.    . . ."  (Em-
     phasis added)

           As we have determined that the association  here does
not have en educational  purpose, it follows that it fells within
the language emphasized above end that the proper filing   fee is
Fifty ($50.00) Dollars.

           Article 7084, V. A. C. S., authorizes a franchise tax
for every domestic end foreign corporation   chartered or author-
ized to do business in Texas.   We quote below only that pert of
the statute which we believe applicable   to the facts here?
           (1. . . provided, that such tax shell not be less
     then Twenty ($20.00) Dollars in the cese of any cor-
     poration,   including those without capital stock, end
     provided further that the tax shall in no case be com-
     puted on a sum less then the assessed value, for State
     ad valorem tax purposes, of the property owned by the
     corporation    in this State."

          Pursuant to the above statutory wording, it is our opin-
ion that the minimum of Twenty ($20.00) Dollars annual franchise
tax should be assessed against the corporation  proposed here.

             In conclusion,  we must, of course, determine the appli-
cability   of the franchise tax exemption statute to this proposed
corporation;    namely, Article 7094, V. A. C. S., which we quote
in part es follows:

           "The franchise tax imposed by this chapter
     shell not apply to , . . or to corporations  hav-
     ing no capital stock end organized for the ex-
     clusive purpose of promoting the public interest
     of any city or town. e .'

          We have set out above the only possible   phrase of the
Article under which this corporation might qualify.    It is fun-
damental law that where e tax is levied by .a general law end one
claims en exemption therefrom by reason of en exemption statute,
he is required to bring himself clearly within the exemption.
The exemption statute,  es pertinent here, requires a corporation
Honorable Claude Isbell,      page 5 (O-7309)

to be organized for the exclusive purpose of promoting the public
interest.   We cannot say that this corporation   is so organized.
On the contrary, we gether from a reading of the entire charter
end the general nature of the orgenization    that the primary pur-
pose of the association  is essentially  for the private benefit
of its members. The leading Texas case in this regard is McCallum
v. Associated Retail Credit Men of Austin, 41 S. W. (2d) 45, where-
in our Supreme Court held that the Credit Men's Association     of
Austin, whose purpose clause and organization    we6 very similar
to the one presented here, we6 not exempt from the payment of the
franchise tax.   The Court made the following   observations:

             "The Association's     charter   purposes      reed as fol-
     lows:

           "'The purpose for which it is formed is to ec-
     quire, preserve, end disseminste valuable business
     information,  end to adopt rules end regulations in
     connection therewith.'

            "A careful reading of the entire statement of
     facts demonstrates that the primary purposes of the
     Association,    es disclosed   by the charter end its mode
     end manner of operation,      ere not for the exclusive
     purpose of promoting the public interest      of e city
     or town, but for the personal benefit of its members.
     Certainly,    the Legislature   never intended to exempt
     such a corporation     from the tax imposed by Article
     7084."

           It follows from our foregoing statements that the pro-
posed corporation   here is not exempt from the payment of the fran-
chise tax es levied by Article 7084, V. A. C. S., eupra.

             We trust   that this   satisfactorily     enswers your inquiry.

APPROVED AUG9, 1946                                    Very truly     your*
/s/  Carlos C. Ashley
FIRST ASSISTANT                                 ATTORNEY
                                                       GENERAL
                                                             OF TEXAS
ATTORNEY  GENERAL
                                                 By   /s/    Jack K. Ayer
                                                             Jack K. Ayer
JKA-bw-lm                                                       Assistant

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