Court Opinion

ID: 4143396
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:33:12.593317+00
Date Added: 2024-06-11T14:34:02.282958
License: Public Domain

Hon. J. T. McMillin
Deputy Banking Commissioner
Department of Banking
Austin, Texas
Dear Mr. Mciuiillin:              Opinion No. O-2974
                                  Re:   Matter of extending the
                                        charter of Galveston Build-
                                        ing & Loan Company whose
                                        charter has expired by      '
                                        expiration of time.
We have your letter of December 11, 1940, asking for a legal
opinion with respect to the above captioned matter, which letter
is as follows:
     "In Galveston Building and Loan Company of Galveston was
     originally incorporated April 15, 1890, having a purpose
     clause as follows:
          "'Its purpose shall Abe the erection of 'buildingsand
          the accumulation and loan of funds for the purchase of
          real property in cities, town, and villages, and also
          for the purpose of the accumulation and loan of money.'
     "Its capital stock, under the original charter, was
     $500,000.00. The incorporation was for a period of fifty
     years. Subsequently the charter wasanended without change
     in the purpose of the corporation, but increasing the capital
     stock to $750,000.00.
     Vhis company, from its inception, has accumulated money
     through the sale of its own stock, either as a lump sum
     inve,r&.ment
                '.or on a monthly installment basis.  It has
     been engaged largely in lending money thus accumulated to
     its stockholders on real property loans, which are further
     secured by the pledge of its own stock, held by the borrowers
     and paid out by them on a monthly installment basis. These
     loans have all the characteristics of a sinking fund loan.
     The Association now has assets in the neighoorhood of
     $215,000.00 consisting principally of real property notes of
     the character above described, together with a small amount
     of real estate.
Hon. J. T. Nclviillin,
                     Page 2         O-2974

     "Your attention is directed to the fact that the original
     fifty year period expired April 15, 1940. This company is
     undertaking to extend its charter under the provisions of
     Art. &la-21.
     "Article @la-1   provides in part:
          'ItAbuilding and loan association as contemplated by
          this Act is any association or corporation heretofore
          or hereafter formed, created, or organized, which is
          chartered under any bullding and loan law, and/or is
          nrincinallv in the_business of assisting its members
          to buy, improve or build homes, or to remove encum-
          brances therefrom, and which accumulates the lunds thus
          loanea through the issuance or sale of its own stock.'
     "Under the above facts, we respectfully submit the following
     question:
     "Is the Galveston Building and Loan Company entitled to ex-
     tend its charter under Article @la-21, and having thus ex-
     tended its charter, to operate as a building and loan asso-
     ciation in this State?"
You are respectfully advised that the Galveston Building & Loan
Company's charter may not be extended, under the facts stated
Dy you.
Article 1387 of our Revised Civil Statutes, dealing with dissolved
corporations under Title 32, relating to Private Corporations,
declares:
     "A corporation is dissolved:
     "1. By the expiration of the time limited in its charter."
     "1. Dissolution may result from the occurrence of a condition
     subsequent without State action or judicial ascertainment.
     Instances of this node of dissolution are found in the pro-
     vision of the ,generalstatute which declares that a corpora-
     tion is dissolved by the expiration of the time limited in
     its charter, and in a special statute which creates the cor-
     poration and which operates automatically to dissolve it."
     -- 11 Tex. Jur. p. 127, 465.
All corporations are, of course, creatures of the law and they
possess just such attributes, rights and priveleges as are pro-
vided by law and no more. They are creatures of law for con-
venience sake, and possess the attributes of legal entity as a
person capsule of doing the things which they are authorized by
the charter to do and no'more.
 .   I

 Hon. J. T. McMillin, Page 3    o-2974

They therefore possess corporate life as a legal entity in accor-
dance with the charter and the laws authorizing such charter.
when, under the law, that corporate life has expired, there is no
legai entity, for it, too, has expired with the life of the or-
ganization or corporation.
Section 21 of our Building and Loan Associations Act (Ver. Civ.
Stat. Art. 8Hla) provides:
     "Any building and loan association incorporated under this
     or any prior law may extend the duration of time for ighich
     said association was organized by a vote of two-thirds of
     tht capital stock of such association representedvoting
     at any annual meeting of the stockholders of such association
     or at any special meeting called for that purpose; there-
     upon the board of directors shall transmit a copy of the
     proceedings of such annual meeting or of such special meet-
     ing, duly attested, to the Banking Commissioner of 'Texas,
     who shall make a duly authenticated copy thereof, certifying
     to the extension of time of said corporation. Any 'building
     and loan association incorporated under any prior law and
     extending the duration of time for wh~ichit was incorporated
     in the manner herein provided shall be deemed as incorporated
     under and ‘be invested with all the power given in this Act
     the same as though corporation had been originally incorpor-
     ated under it."
'Theextension of the duration of time for the existence of the
corporation contemplates the procedure of the statute will ‘be
taken by the corporation while it is yet a living legal entity.
The statute has no application to a case such as you put, where
the corporation has ceas~edto exist. (See Rev. Civ. Stat. Art.
ljl5a)
Extension of life -- whether physical or legal -- is one thing,
while resurrection thereof is quite another thing. Our statutes
authorize the one but they do not authorize the other.
tiehave assumed (though we do not decide) that Galveston Ruild-
ing & Loan'Company, as described by you, was a 'buildingand loan
association within the meaning of Section 21, above quoted. tie
have also discussed the general statute with respect to the dis-
solution of private corporations, because we think the same is
applicable to building and loan associations, there~being no
special statute touching the matter.
The provision that "no involuntary liquidation of any association
shall be accomplished except as above provided, that is to say,
at the suit of the Attorney General on information and request
of the Banking Commissioner of Texas”, in Section 16 of the
Hon. J. T. McMillin, Page /+   o-2974

Building and Loan Associations Act has no bearing on the question
since the dissolution of an association by the expiration of the
time for which it is chartered is not the "involuntary liquidad
tion" mentioned in the statute.
Trusting that we have sufficiently answered your inquiry, we are
                                    Yours very truly
                               ATTORNEY GENERAL OF TEXAS

                               BY
                                              Ocie Speer
                                              Assistant
OS :hR
APPROVED DEC. 20, 1940
     GROVER SELLERS
FIRST ASSISTANT
ATTORNEY GENERAL