Court Opinion

ID: 4136082
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:09:38.102267+00
Date Added: 2024-06-11T14:35:05.152525
License: Public Domain

l&n. Zollie Steakley                          Opinion   No. WW-897
      Secretary  of State
      Austin, Texas                                 Re:   Effect of Texas Business
                                                    Corporation   Act upon corpora-
      Hon. J. M. Falkner                            tions whose purposes include
      State Banking Commissioner                    the trust purposes authorized
      Austin, Texas                                 by Subdivision 49. Art. 1302 and
                                                    Art. 1303b.

      Dear Sirs:

               Your request deals with the effect of the Texas Business     Corpor-
       atii   Act upon ceitain corporations    organized  under Subdivision 49 of
       Article 1302, V.C.S.,  and Article   1303b. V.C.S.   Article 1302, Subdivi-
     . sion 49, provides in parti

                    “The purposes       for which private     corporations
             may be formed are:

._                    49. For any one-or more of the following pur-
             poses:.   . .To act as trustee under any lawful express
             trust.coinmitted    to them by contract and as agent for
             the performance      of any lawful act.”

             Article   1303b provides   in part:

                     ‘A  private. corporation    may be formed for any
            one or more of the following purposes,        without banking
            or insurance privileges:.     . . to act as trust&e under law-
            ful express trust committed       to it by’s contract or-will,
            or under appointment of any court having jurisdiction
            of the~subject matter,    and as an agent for the perfor-
            mance of any lawful act. . .”

             You have asked    the ,following   questlons:

                     “1.   Will the Texas Business     Corporation   Act
             apply after September     6. 1960, to corporations    whose
             purposes‘include    the trust purposes authorized by
             Subdivision 49. particle 1302. and Articles 13037
                 “2. ‘If the answer to the first question is ‘No’.
        can such corporations      lawfully continue to engage in a
        ‘trust business’   and, lf so, what law is applicable; and
        if not so, can the corporations     continue to engage in
        the other business    activities  authorized by their cor-
        porate purposes,    and if so, what law is applicable?”

        While there is no statutory ‘definition of “trust company,”
 nevertheless   corporations    created under the laws of the State of
 Texas whose charters      contain the purposes set forth supra in Article
 1302. Subdivision 49. and Article     1303. V.C.S.. have been classified
 as “trust companies-” by the appellate-courts      bf Texas. Stewart v.
 Ramsey. Secretary     of State, 148 Tex. 249. 223 S.W.Zd 78-F
 Barney v. Sam Houston Underwriters,        272 S.W.2d 942 (Civ.App.    1954,
 error ref., n.r.e.).

         Article 2.01 of the Texas Business      Corporation Act, sometimes
  hereinafter   referred   tqas the Act, provides that a trust company may
  not be organized under or. adopt the Act. Article 9.14A provides that
  the Act does.not apply to trust, companies.      Art. 9.14E provides that ef-
_fective September      6, 1960, the Act shall apply to “all domestic corpor-
 ations!’ butt this section by its very terms excludes those corporations
  excepted from the Act by Art. 9.14A.       Since the charters of the corpora-
  tions referred to in your request contain purpose clauses authorizing
.~them to operate as “trust companies”        as defined by the Couits   of Texas,
 we answer your first question to the effect that the provisions       of the Act
 are not generally     applicable  to such corporations.

        The pivotal question is whether such existing corporations     may
 continue. to engage in a trust b,usiness as specified in their charters.
 Our answer to this inquiry is that they may.

         The conclusion    that ,such corporations    could no longer continue
 to engage    in the trust business    must necessarily    be based upon the
 hypothesis that (1) the passage of the Texas Business           Corporation  Act
 in some manner repealed Subdivision 49., Article           1302, and Article  1303h
 authorizing the creation of corporations       with trust purposes and (2) there-’
 fore, such repeal operates.as       a repeal of the charter of companies      pre-
 viously formed thereunder        insofar as they seek to exercise     powers under
 their’tiust.purposes.

        Assuming   the repeal of Subdivision 4.9 and Article 1303b as indi-
 cated in (1) above, nevertheless,    the rule is that the repeal of a general
 act under which corporations      have been chartered does not operate as
 a repeal of the charters  of such corporations,     in the absence.of express
                                                                                      . .

Hon.   Zollie   Steakley,   Hon. J. M. Falkner.    page 3    (WW-897)

intention  to the contrary.
Association,    121 Tex. 603,
nl    T    6a    53 S.W.2d.299;   State v. Texas Mutual Life Insurance
Compzi     of Gexas,‘51    S.W.2&405   (Civ.App..    1932, reversed  on
other grounds 58 cW.Zd       37 (Comm.App.);      Bibb v. Hall, 101 Ala. 79,
14 So. 98; 19 C.JS.     1438, Corporations.   Sec. 1654. As stated in then
citation from C.J.S.:

                 “Whether   or not an enactment of the Legisla-
        ture shall operate as a repeal of a charter.    . . is a
       .question of intent. ., . Repeals by !mpllcation    are possi-
       ble, but are not favored, and the Act will not be held to
        repeal the charter unless there is an express       intention
       ,to do so, or a necessary   implication to that effect arising
        fra   the enactment.”

        Certainly there is no express intent on the part of the Legisla-
ture to repeal the existing charters     of such companies    or to withdraw
from   such companies    the right to operate pursuant to their trust purb
poses.    With sonic exceptions not here pertinent, there are no express
or general repealing clauses in the usual sense contained in the Act.
Paragraph A of Article      9.16, which is the closest thing to a general ~.
repealing clause, simply provides with exceptions,        that no ‘law of this
State pertaining to private corporations      shall hereafter apply to:
(I) Corporations    organized under this Act; (2) Corporations       which ob-
tafn kuthority to transact bus~tness in this State under this Act; (3) E&t-
ing corporations    which adopt this Act.    Nor cariany circumstances       be
gleaned from the terms ‘of.the Act which require a necessary           implica-             I
tion that the Legi5lature    intended for these existing charters     tb be re-
pealed. :

       Having so held, you are further advised that .the Texas Business
C~orporation Act would apply to such corporations  to the extent indicated
by the proviso of Art. 9.14A, underlined below:

                “A.     This Act does not apply to domestic~corpora-
       tions organized       for the purpose of operating banks, trusty
       companies,     building and loan associations          or compa$es.
       insurance companies,.           . . corporate  attorneys     in fact for
       reciprocal    or inter-insurance         exchanges,    railroad compan-
       ies. cemetery       companies,~cooperatives         or limited coopera-
       tive. associations,       labor unions, or abstract~and title insur-.
       ante companies.         . .; provided. however,      that if any of said   +
       excepted domestic          corporatrons    were heretofore      or here-
       after organized under special statutes whrch contain no
       provisions    in regard to some of the matters            provided for
       m this A c t *. . . . or If such special statutes specifically
,::     ..,

        Bon. Zollie   Steakley,        Hon. J. M. Etilkner,    page 4    (WW-R97)

               provide that the general laws for incorporation.       . .~
               shall supplement the provtsmns      of such statutes,
               &en the provisions   of this Act shall apply to the ex-
               tent that.they are not inconsistent   with the provisions
               of such specml statutes.    ’ (Emphasis   supplied)

          The question has been raised whether such corporations                would come
          withii the terms of the proviso,.the          argument being that such corpor-
          ations were ‘not “organized”          under “special    statutes,"   but rather
          under the provisions      of Title 32, R.C.S.,     1.925;the previous “general”
          corporation laws., This conclusion applied generally would lead to
         much confusion and uncertainty and to varying treatment of the differ-
          ent classes    of excepted corporations        where no intent to differentiate
          is apparent.     For example,      it could be said that banks,. insurance com-
          panies, title insurance companie’s, and building and loan associations,
          all .“excepEed”     corporations,     clearly. come within th,e proviso for each
          is formed under particular         laws which provide the.manner and means
         for their organixation.       But even these types of corporations          have been
          tog&e      extent governed and even dependent upon the general. incorpor-
         -ati&n laws for taeii creation.         The iem a in mg excepted corporations      are
          to a varying -degree dependent upon the general corporation law for the
         means of their creation.         Prior .to the Texas Business Corpora&n           Act
          “1303b”     and!‘section    49” corporations       were entirely dependent upon
          the general’corpo,ration      laws for the manner and means of their creation
          with Articles     1303b and section 49 of Article        1302 providing only that
          corporations     with the purposes described        could be formed.      Though not
          immediately     apparent, .cemetery corporations          are iti.the same position
          for although extensive      regulatory     provision has-been made for ceme-
      .. teries (Article 912a-1-27,         V.C.S.),, no pfovision    is made fm the manner
          and means by which such corporations             are to be created.
                                              .
               In WW.490      we have previously           discussed    the meaning   of the term
        “special statute”     bt$ing:
                         ‘.
                          . . .While the’term     ‘special’ statute sometimes
               refers to acts which regulate the rights or interests of
               a particular     or designated   person or which relate to a ‘ii
               parttcular%person      or thing of a~class as. distinguished ftom
               an act whtich applies uniformly throughout a class (39 Tex.
               Jur. 29,‘Stats.,    Sec. 12). it is also f.requently applied to
               statutes such as the. Insarance, Code that pertain to a lim-
               itcd 01 subclass     of persons or things or corporations.        . .
               From the reading of the statute, it can be seen that all
               of the excepted corporations        are governed by statutes.that
               are ‘special’ in the latter sense.        Accordingly,   the term
               ‘special’ statute ‘as used in Article       9.14. T.B.C.A..   must

                                  .’

                                                                    i
                                                       -        i
Hon. Zollie   Steal&y.    Hon. J. M. Falkncz,     page 5      (#,W-897)

       be used in the same sense so that insurance companies
       organized after the effective date of the Business   Cor-
       poration Act would be a corporation   ‘hereafter  organ-
       ized under special statutes.’ ‘*

        In our opinion, there is nothing to indicate that the Legislature
intended to ~treat the various classes     of excepted corporations.differ-
ently with respect to supplementation       by the Business  Corporation Act.
Statutes relating to insurance corporations,       banks, and other related
excepted corporations      are not “special”   because they provide the means
by which articles    of incorporation  will b& filed, but only because th5y
pertain to certain limited classes     of corporations   which are generally
excluded from the Act, the now existing general corporation         laws, and
it is in that sense that such laws are “special.”

       We have no difficulty in concluding that a CO rporaiion chartered
pursuant to Article  1303b or Subdivision 49, Aiticle    1302, containing the
trust purposes,  is an “excepted  domestic corporation.     . iorganized under
[a] special statute*’ pursuant to the p:oviso of Article    9.14A.

        As the’ remaining    inqniries were predicated        on answers   diffe’rent
from   those given above,    they will not be answered.

                                  SUMMARY

          Corporations   previously    organized under ‘the provisions
       of Subdivision 49 of A&&         1302, and Article 1’303b do not
       lose their corporate    existence   or their power to engage in
       the trust business    by virtue of the passage of the Texas
       Business   Corporation    Act.   Though not generally.applicable
       to such corporations,     the Act does apply to the extent pro-
       vided in Article   9.14A.
                                             Very truly yours,

                                             WILL WlLSON~
                                             Attorney General         of Texas

                                             BY

                                                  Assistant     Attorney   General

APPROVED:

OPINION    COMMITTEES:
Houghton Brownlee,       Acting   Chairman
R. V. Ldtin, Jr.
Martha Joe Stroud
Torn McFarling
Charles Cabaniss

REVIEWED FOR THE ATTORNEY                GENERAL
BY:  Leonard Passmore