Court Opinion

ID: 4131962
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:21:31.915595+00
Date Added: 2024-06-11T14:33:32.753324
License: Public Domain

The Attorney             General of Texas
                                     December     13,   1979

#ARK  WHITE
.ttorneyGeneral

                  Honorable Geoge W.Streke, Jr.            Opinion No. MW-9 9
                  Seoretaq of State
                  Office of the Secretary of State         Re: Incorporation of local record-
                  Austin, Texas 787ll                      ing egen* life insurance agents,
                                                           end physical therapists under the
                                                           Texas Professional Corporation
                                                           Act

                  Deer Mr. Strekc

                        You ask several questions regarding incorporation under the Texas
                  Professional Corporation Act, V.T.C.S. art. l628e. Your first question is as
                  followa:

                             Can the Secretary of State approve ertkles of
                             incorporation pursuent to the Texas Professional
                             Corporation Act thet have es a purpose the authority
                             to act es a local recording agent under the Texas
                             Insurance Code?

                         Article 2L14 of the Texas Insurance Code, which provides for the
                  licensing of local recording agents, was emended by the sixty-sixth,
                  legislature to permit iezuence of a license to “a Texas Cotporetion omenieed
                  or existing under the Texas Business Corporation Act or the Texes
                  Professional Corporetion Act. . . .” ins. Code art 2L14, S S(c)@ Acts 1979,
                  66th Leg., ch. 800, et 2043. Prior to this amendment, a license for a locel
                  recordng egent could be issued only to a colporetion organized or existing
                  under the Texes Business Corporation Act (TBCA). Acts l969,6lst Leg., ch.
                  225, S 3, et 668.

                        A.cotporetion may not be ogenieed under the TBCA if it engages in
                  eny activity which requires a license from the state end if a corporation may
                  not hold such a licenma. Tex. Bus. Corp. Act. Ann., art 2.OlB(2). The
                  learned professions could not, es a general matter, incorporate under the
                  TBCA end this could not derive the tex advantages of doing business in
                  corporate form. See Hell, Professional Incolporetion in Texas - A Current
                  Look, 48 Tex. L.Ev.    84 (1969). ln 1969 the legislature enacted the Texas
                  Professional Corporation Act (TPCA), V.T.C.S. art. l628e, effective
                  January 1, 1970. The TPCA authorized the formation of corporations to

                                                P.   306
                                                                                                   .    -
.   .

        Honorable George W. Strake, Jr.    -   Page Two        (NW-99)

        render a “professional service,” defined as any personal service which cannot be rendered
        without obtaining a license and which could not legally be performed by a corporation
        prior to the passage of the TPCA. V.T.C.S. art 1528e, S 3. Corporations could be licensed
        as local recording agents prior to the effective date of article l528e, and thus the TBCA
        was the appropriate statute for fncolporation of local recording agents

              The recent amendment to article 2L14 of the Insurance Code permits issuance of a
        license to corporations organized under the TPCA for the purpose of acting as local
        recordng agents In our opinion, this amendment should be construed as an authorization
        for local recording agents to incorporate under the TPCA. In Attorney General Opinion
        M-551 (1970) this office construed the following amendment to the architecture statute,
        V.T.C.S. art 2494 as specifically authorizing the profession of architecture to be
        performed by a corporation:

                     A firm, partnership or corporation carrying on the practice of
                   professional engineering . . . may engage in the practice of
                   architecture in this State. . . .

        Acts 1969, 6Jst Leg., ch. 802, S8, et 2360. This language was held to authorize the
        practice of architecture under the TBCA, despite language in the TPCA making that
        statute expressly applicable to architecture. V.T.C.S. art 1528e, S S(a); Attorney General
        Opinion M-551 (1970). See also R. Hamilton, Corporations end Partnerships, 24 SW.L. J.
        9L98 fl97OL Construed as authorization for incorporation of local recording agents under
        the TPCA, section 3(c)(l) of article 21.14 becomes en exception to the general proviso
        making the TPCA inapplicable to professions which could incorporate under the TBCA
        prior to 1970. In case of conflict between a general provision end a special provision
        dealing with the same subject, the former is contrdled by the letter. Trinity Universal Ins
        Co. v. McLaughlin, 373 S.W.%d66 (Tex. Civ. App. - Austin 19631, reh. den., 374 SW.2d
        350, no writ Moreover, the amendment to article 2L14, as the more recently enacted
        statute, prevails in the event of conflict with earlier enacted provisions. State v. Easeley,
        404 S.W.Sd296 (Tex. 1966). In answer to your first question, you are authorized to approve
        articles of incorporation pursuant to the Texas Professional Cotporation Act for
        performance as a local recorcing agent under the Texas Insurance Code.

              Your second question is as follows

                   Can the Secretary of State approve articles of incorporation
                   pursuant to the Texas Professional Corporation Act that have as a
                   purpose the authority to act as a life insurance agent under the
                   Texas Insurance Code?

              The sixty-sixth legislature emended section 4(d) of article 2LO7-1 of the Texas
        Insurance Code to allow the licensing as a life insurance agent of a corporation formed
        under the Texas Professional Corporation Act as well es one formed under the Texas
        Business Corporation Act. Prior to the enactment of the TPCA, corporations could not be
        licensed as life insurance agents    -See Acts 1955, 54th Leg., ch. 213, S 4(d), at 623.

                                                    .   7P-l
                                                                                     .

Honorable George W. Strake, Jr.     -      Page Three   (MW-   99)

However, article 2L07-1 was amended in 1977 to allow the licensing of colporations
formed under the TBCA. Acts 1977, 65th Leg., ch. 579, S 5, at 1428. Now the 1979
amendment to article 2LO7-1allows the licensing of corporations formed under the TPCA.
In our opinion, the Secretary of State may approve articles of incorporation pursuant to
the TPCA for the purpose of serving as a life insurance agent under the Texas Insurance
Code. Service as a life insurance agent fits the definition of “professional service” under
section 3(a) of article 1526e, V.T.CS. It cannot be rendered without obtaining a license,
see Ins. Code art 2LO7-1, S 3, end prior to the enactment of the TPCA, it could not be
performed by a corporation. Moreover, the reasoning relied upon in our answer to your
first question also requires en affiimetive answer to your second question.

      Your third question is as follows:

            Should a corporation having as a purpose the authority to act as a
            physical therapist be incorporated under the Texas Professional
            Colporetion Act or the Texas Business Colporetion Act?

      When the TPCA was enacted, physical therapists were not required to be licensed in
Texas and your office allowed their incorporation under the TBCA. Since January 1.1972,
physical therapists have been required to be licensed by the Texas Board of Physical
Therapy Examiners See V.T.C.S. art 45l2e; Acts 1971, 62nd Leg., ch 836, SS 8, 18, et
2542. Your office in&s      us that physical therapists have incorporated under both the
TPCA and the TBCA.

       In our opinion, the Texas Professional Colporetion Act is the appropriate statute
under which physical therapists should incorporate.          The definition of “professional
service” in the TPCA consists of two parts: (1)any type of personal service which cannot
be rendered without obtaining a license and (2) which prior to the passage of the TPCA
could not by reason of law be performed by a corporation. In our opinion, these two
conditions are linked so that the second condition is premised upon the assumption that
licensing was required of a particular profession prior to the passage of the TPCA. The
professions listed as examples in section 3 of article l528e were all licensed professions
prior to the enactment of the TPCA. See e.         V.T.C.S. ah 30s; Acts J9l9,36th Leg., ch.
38, et 63 (attorneys); V.T.C.S. art 4la,s”” 8; Acts 1945, 49th Leg., ch 315, et 517 (certified
public accountants); V.T.C.S. arts. 4548, 4548a; Acts 1919, 36th Leg., ch 31, et 50
(dentists); V.T.C.S. art 7465a, S ‘I; Acts 1953, 53rd Leg., ch. 342, et 844 (veterinarians).
We do not believe the second con&ion is applicable to professions which could be
practiced without a license prior to the enactment of the TPCA. Therefore, the fact that
physical therapists could incorporate prior to the enactment of the TPCA would not
prevent them from incotporeting under that statute.

      Physical therapists may not now, in our opinion, incorporate under the TBCA. They
are within the article 2.OlB(2)exclusion to that statute because they engage in an activity
which requires a license and the license cannot be granted a corporation. An examination
of article 4512e, V.T.C.S., indicates that a physical therapist license may be issued only to
individual applicants and not colporetions. See SS 3, 8,13, 19. See also Attorney General
Opinion H-442 at 5 (1974). Thus, they may nolonger be incorporated under the THCA.

                                            p. 308
Honorable George W. Strake, Jr.    -     Page Pour     @tW-99 )

     Your final question is as follows

           If a corporation may ba formed for a purpose authorized under the
           Texas Business Corporation Act, is the formation of a corporation
           under the Texas Professional Corporation Act for that same
           purpose necessarily prohibited by the Texas Professional
           Cotporetion Act?

     We believe that the TBCA end the TPCA were intended to be mutually exclusive
when the latter statute was enacted In prior opinions, this office has treated them as
mutually exclusive. Attorney General Opinion H-442 (1974)states as follows

              This Office has held that by virtue of these provisions, after the
           effective date of the TPCA, any profession except the practice of
           medicine can be incorporated end the services can be performed by
           a professional corporation- Attorney General Opinion No. M-551
           @370X The only question Is under which act may those engaged in a
           particular activity Incoiporete.

The constmction of the TPCA which we adopted in answering your question concern@
the incorporation of physical therapists is based on the assumption that professions wllI be
able to Incotporete under one or the other of the two statutes     However, as our answers
to your first two questions show, the TBCA and the TPCA are no longer mutually
exclusive.    The legislature clearly has the power to chqe         the mutually exclusive
character of the two statutes, and we believe it has done so in its amendments to the
Insurance Code See w                    187 S.W.2d 917 (Tex. Civ. App. - Austin, writ ref’d)
(one legislature c=t     bind its successors). In the absence of express language like that
Included in the recent amendments to the Insurance Code, we believe the mutually
exclusive character of the two statutes persists

                                         SUMMARY

           The Secretary of State may approve articles of incotporation
           pursuant to the Texas Professional Corporation Act that have as a
           purpose the authority ‘to act as a local recording agent or a life
           insurance agent under the Texas Insurance Code.          Physical
           therapists   may incotporete      under the Texas Professional
           Corporation Act but not under the Texas Business Corporation Act
           The Texas Business Corporation Act end the Texas Professional
           Corporation Act are as a general matter mutually exclusive, but
           the legislature has acted to permit specific professions to
           incotporete under either statute.

                                             &gy;g *
                                                Attorney General of Texas

                                           P.    309
Honorable George W. Strake, Jr.    -   Page Five   (MJ+99)

JOHN W. PAINTER, JR.
First Assistant Attorney General

TBD L. HARTLEY
Executive Assistant Attorney General

Prepared by Susan Garrison
Assistant Attorney Qeneral

APPROVED:
OPINIONCOMMITTEE

C. Robert Heath, Chairman
David B. Brooks
Bob Gammage
Susan Garrison
Rick Gilpin
Tom Pollan
Williem G Reid
Nancy Ricketts
Bruce Yow@hod

                                        P.   710