Court Opinion

ID: 4139752
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:51:11.043412+00
Date Added: 2024-06-11T14:45:09.146153
License: Public Domain

OFFICE OF THE ATTORNEY       GENERAL OF TEXAS
                         AUSTIN

 iionorablcClaude Iabell
 secrekry of state
 Austin, TeIll8

                    Attention: Xr. I. L. BmGarl
                    0p5n10n 30. o-6561
                    Rer Whether the Se0
                         ahou3.dapprova

                                          oration   ha8 a
                                          hich wodLd

                                 1945, requeetln& the opln-
                            @nt8 thu above geeetiou, and
                            sred under the ioLl.oningfactual
                                .“uhere the aubaoribl.ng
                    putpose kk~? uhlah would not persit it
                   buslnaee of the other aorporatlon.*

                ostatio copy of the propo8ed ssvmdnmnt
              blng the above qucpltions, aooonpenlrryour
              ou desire to kcior whether or not aa8#should
be approved and illed.

         The applicablepubdlvlelon ot Brt. 1302, rterised
Civil Statutes of ;Texna,1925, provldea:
Zen. Claude Iaball, pace 2

             wTt~epurpoaaa for which private oorpora-
          tiono may be formad am:
             "34. To trenecaot any nanuraoturingor
          m.inincbuainssa,en8 to purohatiaend aall
          hoods, waroisand merohaendisausad for auah
          business.
             ". . .
             ". . .
             *39. To gurohese and sell gooda, weraa
          end marohandiaeand agrioulturaland farm
          producta."
         The partioularoorporetionainvolved in your quaa-
tlona have, in their ahartar, adopted the foregoing purpoea
oleuae8. Yubdivialon  34 ia adopted by the rubaoriblng Qor-
poretion, end Subdlvlalon39 by the corporationvoting the
lnoreaae in atook and tandsrint:the smndment.
           Under the provisionaof Art8. 1313 and 13l&   R.C.s.,
1925,   the duty ie lmpomd upon tha SaoLMery of Stateto file
acd reoord tha oharter and properauthentloetadamandmanta
thereto when the atookholderaof any oompang ahell turnlah
aatisraotoryeoidonoa to tha Beoratary of State of a oom-
plianoa with the prorl8lonsof Chap. 2, Title 32 (nrtr.
1303-18, inoluaive)V. A. C. S.
         Art. 1320, SUbdivisiOn 7 of aaid atatutaa provide8
that any oorporetionaa 8uoh haa the power to enter into any
obllgetion or oontraot saabntial to the tranaeotionof it8
authorized buainoae.
         Art. 1321 of aaid atetutaa provldse that oorporatlona
may borrow aumey o~i the orcdit of the oorporetlonand may ax-
acute bond6 and promleaorynotas tharafor, and may pladga the
property and income of the oorportation.
         Art. 1349, v. A. c. M., insofar a8 metarial, providea
that no corporation,domastio or foral@i, doing buaineaa in
this state, ahall employ or um tta stock, maana, assets or
ottsr property, diraotly or indlraotly,ror any purpose what-
ever other than to aooompliah the legltlmatabuainaas of lta
creation or thoea purpoaaa otherwise p9rmlttad by law, pro-
vided Mat nothing in thie artiola shall be bald to inhibit
oorporetionarron oontributinCto eng . . . cloio enter-
prieaa. . .
                                                                     ‘706

lion.Claude ;Lsbell, P4@ 3

          It is generally raoognlzed,and by tha waight of
euthorlty that in the ebsenoe of a statute       or oonatitutional
~rovialon to the contrary,a corporationmay take atook of
mothtir  corporation    in payment of, or aa eeourity,    ror a
debt.   16 C. J. ii., Far. a3, p 682; 13 Amer. Jur.,       Par.
791, i: 312;  1  iillCebrend*a Terse  Cor oration8  Par.  80,
p 243, a:.d see iimotatione    in 701. 3i! , kamr. kit. dep.,
P 140.
         Neither the proposed amandment with eooompanying
affidavit nor your letter, diaoloaa any other than a bona
fide laaue ond aubaorlptlonof atook under the above mn-
tiotad and generally reoo&zed   rule.
          The cane of Uolnma and Orlgg8 Mfg. co. v. Holmaa
and Ware611 Eatal Co., 127 Ic.Y. 252, 27 B. &. 831, 24 Ammsr.
St. itap.4l+8,l'urnlahea  tha leading authority and aupport of
the above rule. In that oeae tha prerIdr.at and aaoretery       of
the EenufeoturlngCompany, a oorporatlon,aubaorlbadlndlvldu-
ally for the atook ln a nawl.yforeud oorporetlon,aam being
laaued to a truetee for said offloera.     The nclw oorporatlon
theraaftar purohaaed the entire    plent, meahlnary, and ato.,
of tha plaintiff oorporetion   for whloh it laaued raid atook
ea aforesaid,and said tianufeoturing    Company ratirad from
bualneaa.   The rule wee reoognlzed   in thla oaao that a oor-
poretlon oannot purohaaa or deal in atooke of other oorpore-
tlona unless expraaalg authorlaed    to do 80. Tha ltatute
under which plaintiff oompeny waa Inoorporatadin the state
or caw York provided that *It ahell not be lawful for suoh
company to use any of their fund8 in the puroheac of any
stock in eny other oorporet1on.n
          The court held that add statute was AOt intended
to 1Imlt the power8 of th6 oorporetlonbayond its neoaaaary
powara ln the exaroiaa of lta oorporata franohlse, to-wit:
selling of property, oolleotlonof debta, . . . taking title
to all kinds of property, including the atook of another oos-
pariy in ths peymant of a debt, in holding tha tranaaotionnot
ultra vlres. Tha court raeaoned in the following language;
               *The plaintiff haa mold lta rolling-mIl1
            machli:ery,ato., to the defandant. It has
            taken stock in the lettirroompeny in paymaut
            therafor. Ineamuuh aa this wea done with tha
            oomant  OS all or the stookholdara,It being
            the act of a private corporations,not in any
            manner harming tha publio, wa sac no reason
‘YV   6
          ‘..,,._