Court Opinion

ID: 4132936
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:32:04.734094+00
Date Added: 2024-06-11T09:20:35.517072
License: Public Domain

THE        AITORNEY               GENERAL
                            OF TEXAS
                        Auerrmr. TwAe we711

                                    .      ’

                         November 6, 1974

The Honorable Mark W. White, Jr.                Opinion No. H- 442
Secretary of State
Capitol Building                                Re:      Should (1) branch pilots
Austin. Texas                                            and (2) public surveyors
                                                         incorporate as business
                                                         or profeosional corpora-
Dear Secretary White:                                    tions?

   Your   request for an opinion poses the following questions:

       1. May one or more individuals who hold a com-
       mission as a Branch Pilot form a corporation
       pursuant to the Texas Business Corporation Act
       for conduct of their business, or should such a
       corporation be formed pursuant to the Texas Pro-
       fessional Corporation Act?

       2. May one or more individuals who are Registered
       Public Surveyors form a corporation pursuant to
       the Texas Business Corporation Act for conduct of
       a surveying business, or should such a corporation
       be formed pursuant to the Texas Professional Cor-
       poration Act?

    The Texas Business ‘Corporation Act, Art.         2.01 B(2),   Vol.   3A, V. T. C. S.
(hereinafter TBCA) provides:

       B. No co.rporation may adopt this Act or be
       organized under this Act or obtain authority to
       transact business in this State under this Act:
       . . .
       (2) If any one or more of its purposes for the
       transaction of business in this State is to engage

                                        p. 2037
.   .

        The Honorable Mark W. White, Jr.,     page 2 (H-442)

               in any activity which cannot lawfully be engaged
               in without first obtaining a license under the
               authority of the laws of this State to engage in
               such activity and such a license cannot lawfully
               be granted to a corporation.     (Emphasis added)

            The Texas Professional Corporation Act,    Art.   1528e, Sec. 3, V. T. C. S.
        (hereinafter TPCA) provides:

                (a) ‘Professional Service’ means any type of
               personal service which requires as a condition
               precedent to the rendering of such service, the
               ‘obtaining of a license, permit, certificate of
                registration or other legal authorization, and
               which’prior to the passage of this Act and by
                reason of law, could not be performed by a
               m               including by way of example and
                not in limitation of the generality of the fore-
                going provisions of this definition, the personal
                services rendered by architects, attorneys-at-law,
                certified public accountants, dentists, public
                accountants, and veterinarians: provided, however,
                that physicians,   surgeons, and other doctors of
               medicine are specifically excluded from the opera-
                tions of this Act, since there’are established
                precedents allowing them to associate for the
                practice of medicine in joint stock companies,

               (b) ‘Professional Corporation’ means a corpora-
               tion organized under this Act for the sole and
               specific purpose of rendering professional service
               and which has as its shareholders only individuals
               who themselves are duly licensed or otherwise duly
               authorized within this state to render the same
               professional service as the corporation.   (Emphasis
               added)

            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 and the services can be performed by a professional corporation.
        Attorney General Opinion No. M-551 (1970). The only question is under
        which act may those engaged in a particular activity incorporate.

                                             p. 2038
.

    The Honorable Mark W. White,     Jr.,   page 3    (H-442)

       Your first question concerns branch pilots.     The threshold issue is
    whether it is unlawful to engage in pilotage without a license.

        The laws pertaining to branch pilots may be found in Articles 8248
    to 8257 and 8264 to 8200, V. T. C. S. These statutes provide for the
    examination, recommendation, appointment, and suspension or dismiseal
    of branch pilots.  However, the only liability which is provided for one
    who engages in pilotage without a license is as follows:

                If any person not appointed a branch or deputy
           pilot shall pilot any ship or vessel out of or into
           any port when a branch or deputy pilot has offered
           such service, the person so piloting shall forfeit
           and pay to such branch or deputy pilot the sum of
           fifty dollars to be recovered by suit. Art. 8277,
           V. T. C. S. ; Art. 8257 is to the same effect.

        This provision has been interpreted as follows:

               The statute contemplates that, under certain
           circumstances,    an unlicensed pilot may act. This
           is the effect of article 3803 [now 82771 . . . It can
           be seen that conditions may arise making it pos-
           sible and proper for an unlicensed pilot to be called
           into service,   and the legislature doubtless had such
           conditions in view when it enacted the above article.
           Olsen v. Smith, 68S.W.       320, 323 (Tex.Civ.App.
           --Galveston.1902,    writ ref’d ).

        Thus, while pilotage is “one of the oldest recognized monopolies, ”
    Steinhort v. Commissioner of Internal Revenue, 335 F. 2d 496, 499 (5th Cir.
    1964). and an unlicensed pilot may be liable to a licensed one who has offered
    the same service to a vessel, and may also be enjoined from competing,
    Olsen v. Smith, supra, the activity is not within the exclusion of Art. 2.01 HZ)
    of the TBCA because it is not an activity ‘which cannot lawfully be engaged in
    without first obtaining a license . s . . ” Neither does it come within the
    definition of professional service in the TPCA because it is not a “type of
    personal service which requires as a condition precedent to the rendering of
    such service, obtaining a license . 0 0 0 ” Sec. 3a, Art. 1528e, V. T. C.S.

                                            pa 2039
.   .

        The Honorable Mark W. White, Jr.,      page 4 (H-442)

            Incidentally, we also note that in the only reported case found which
        considered the issue of whether a ship pilot is a professional person, the
        court said: ” A skill such as that of these pilots, which one learns almost
        entirely byworking at it, and not by academic study, is not what is commonly
        understood as a profession.”   Abbott v. United States, 151 F.Supp. 929, 932
        (Ct. Cl. 1957).

            Since it is not unlawful to engage in pilotage without a license, Article
        2.01 B(2) of the TBCA does not exclude branch pilots from incorporating
        under that Act, and in our opinion, that is the appropriate act under which
        branch pilots may incorporate.

             Your second question concerns registered public surveyors.     The
        Registered Public Surveyors Act of 1955, Art. 52821, V. T. C. S. makes it
        unlawful for any person to practice or offer to practice the profession
        of public surveying without being registered or exempted, and provides
        penalties for unlicensed practice of, a fine, confinement in jail, or both,
        It is clearly an activity for which a license is required.

            The question then becomes whether the license of a public surveyor
        is such that it “cannot lawfully be granted to a corporation” within the
        meaning of the TBCA exclusion, and whether the service is the type “which
        prior to the passage of this act [TPCA] and by reason of law, could not be
        performed by a corporation” within the meaning of professional service in
        the TPCA.

            In prior opinions of this office concerning incorporation of professionals,
        express statutory provisions either permitting or prohibiting incorporation
        controlled.  Thus, in light of express provisions permitting professional
        engineers and architects to render their services through a corporation, it
        was held that these professions could only incorporate under the TBCA.
        Attorney General Opinions No. M-539 (1969) and M-551 (1970). On the other
        hand, where specific provisions prevented podiatrists and public accountants
        from creating corporations through which to render their services, these
        professions were held to be within the terms of the TPCA.     Attorney General
        Opinions No. M-1185 (1972), and M-556 (1970).

            There is dictum in a pre-TPCA    Attorney General Opinion No. WW-884
        (1960) that Article 2.01 B(2) was only intended to make clear that the TBCA
        did not repeal by implication the provisions of other laws prohibiting the
        carrying out of special functions by corporations.

                                              p. 2040
.

    The Honorable Mark W. White, Jr.,        page 5 (H-442)

        We agree that express provisions control as to whether or not a
    particular service may be rendered through a business corporation.
    However, we disagree that Article 2.01 B(2)is only a savings clause.
    In the absence of an express protision permitting or prohibiting business
    incorporation of licensed activity, the licensing scheme as a whole may
    be considered to determine whether the activity is such that it could not
    lawfully be practiced through a business corporation.

        The Registered Public Surveyors Act of 1955, Article 5282a, V. T. C. S.,
    speaks in exclusively personal and individual terms, and no provision is
    made for licensing a corporation, nor for permitting the services of
    individuals registered as public surveyors to be rendered through a cor-
    poration.    The act defines “person” as a “natural person” [Sec. 2(c)] and
    provides for registration of persons as public surveyors upon demonstration
    of qualifications including educational achievement and surveying experience.
    (Sec. 6). The act refers to the practice of public surveying as a “profession”
    [Secs. 2(b) & 81.

        Since the act defines person as “natural person” and then prohibits “any
    person” from practicing or offering to practice public surveying, it is
    arguable that a corporation is not expressly prohibited from practicing.
    However, in our view, the structure and language of the act clearly did not
    contemplate that a corporation could be licensed, and brings public surveying
    within those activities intended to be excluded from incorporation under the
    TBCA by Art. 2.01 B(2) of that act. Being excluded from incorporation
    under TBCA, and being otherwise within the definition of “professional
    service” under Sec. 3(a) of the TPCA. it is our opinion that public sur-
    veyors wishing to incorporate must do so under the Texas Professional
    Corporation Act, Art. 1528e. V. T. C. S.

                               SUMMARY

              Branch pilots wishing to incorporate should do so
           under tbe Texas Business Corporation Act.

                Registered public surveyors wishing to incorporate
           should do so under the Texas Professional Corporation.
           Act.

                                         Attorney General of Texas

                                        p.    2041
. .   ‘,

           The Honorable Mark W. White, Jr.,   page 6 (H-442)

           ,Opinion Committee

                                               p. 2042