Court Opinion

ID: 9678614
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:25:41.966114+00
Date Added: 2024-06-11T18:17:06.264757
License: Public Domain

Justice HECHT,
concurring in the judgment.
While I agree that this case must be remanded to the trial court, I write to set out my understanding of the reasons for doing so, which I think are the same as the Court’s.
Since it was first enacted in 1937, the Texas Electric Cooperative Corporation Act has enumerated certain powers of electric cooperative corporations and then added a catchall provision, which the parties have referred to as subsection 18, that a cooperative may — to use the current statutory language that has remained essentially unchanged over the years—
perform any other acts for the cooperative or its members or for another electric cooperative or its members, and exercise any other power, that may be necessary, convenient, or appropriate to accomplish the purpose for which the cooperative is organized.... 1
The operative phrase — “necessary, convenient, or appropriate” — is a broad one. The word “necessary” may mean “indispensable” 2 or much less, as Chief Justice Marshall observed:
If reference be had to its use, in the common affairs of the world, or in approved authors, we find that [“necessary”] frequently imports no more than that one thing is convenient, or useful, or essential to another. To employ the means necessary to an end, is generally understood as employing any means calculated to produce the end, and not as being confined to those single means, without which the end would be entirely unattainable.3
Black’s Law Dictionary defines “necessary and proper” as “appropriate and well *83adapted to fulfilling an objective.”4 “Convenient” means “suited to the needs or the circumstances of a particular situation”.5 Combined, the three words describe a very-general power on which the provision imposes two restrictions: it must be exercised for an electric cooperative or its members, and it must be exercised to accomplish the cooperative’s organizing purpose — that is, to provide for rural electrification.6
The ECCA was amended in 1997 by House Bill 3203 to add to the end of the catchall provision this clause:
including other or additional purposes benefiting members and nonmembers, whether directly or through affiliates, described in Section A, Article 2.01, Texas Non-Profit Corporation Act (Article 1396-2.01, Vernon’s Texas Civil Statutes).7
Except as provided by this clause, the Texas Non-Profit Corporation Act does not apply to electric cooperatives.8 HB 3203 was titled, “relating to the disposition of unclaimed funds by nonprofit cooperative corporations”,9 and to that end it amended four statutes besides the ECCA and added a section to the Property Code.
About the time HB 3203 passed, petitioner HILCO Electric Cooperative, Inc., an electric cooperative corporation organized and operating under the ECCA, formed a for-profit corporation, HILCO United Services, Inc., doing business as HILCO Propane, as a wholly-owned subsidiary to market propane. Within weeks, six of HILCO Electric’s members,10 including four competitors of HILCO Propane, respondents in this Court, sued both corporations (collectively, “HILCO”), alleging that the ECCA did not authorize HILCO Electric to own and operate a for-profit corporation.11 HILCO answered that its actions were permitted by state law.12 The plaintiffs moved for summary judgment on their allegation that HILCO’s actions were entirely illegal.13 HILCO moved for summary judgment on its assertion that its actions were legal.14
*84Neither the plaintiffs nor HILCO limited their contentions to the effect of HB 3203; both expressly relied upon the ECCA as a whole, and HILCO even invoked state law generally. But for reasons that are not apparent, neither the plaintiffs nor HILCO have ever actually argued anything but HB 3203. Specifically, neither the plaintiffs nor HILCO ever addressed in their motions for summary judgment whether the “necessary, convenient, or appropriate” provision of subsection (18), prior to the amendment by HB 3203, would permit an electric cooperative to own and operate a for-profit subsidiary in general, or HILCO Electric to own and operate HILCO Propane in particular. Why the parties thus limited their arguments is not apparent. The trial court’s ruling was not so limited. In granting HILCO’s motion and denying the plaintiffs’, the trial court expressly held that “Texas law, including the ECCA and HB 3203, permits HILCO Electric Cooperative, Inc. to create and own for-profit corporations, including HILCO United Services, Inc., d/b/a HILCO Propane”. The parties have not expanded their arguments on appeal, but the court of appeals, like the trial court, ruled broadly, holding that “electric cooperatives are prohibited from creating and owning for-profit companies” 15 and that “HILCO is not authorized to create and own a ‘for profit’ corporation.” 16
In this Court, petitioner HILCO and the respondents all agree that the principal issue is whether “electric cooperative corporations such as HILCO Electric Cooperative, Inc., have the legal authority to create and own for-profit subsidiary corporations such as HILCO United Services, Inc.” As before, however, they argue only the effect of HB 3203. Respondents contend that “[i]t has not been disputed by Petitioners that there was no authority for this type of activity prior to 1997.” Petitioners respond that “[t]he most that can be said with respect to prior statutory authority for HILCO’s actions is that the parties’ cross-motions for summary judgment focused only on HB 3203.” The Court correctly concludes that we should not adjudicate the broader issue when the parties have limited their arguments to HB 3203. The most we should decide is whether HB 3203, by itself, authorizes electric cooperatives to own for-profit subsidiaries.
It rather clearly does not. The other amendments contained in HB 3203 all relate to “the disposition of unclaimed funds by nonprofit cooperative corporations”, the title of the bill. That fact alone does not preclude the bill’s amendment of subsection 18 from being broader, although respondents argue that if the amendment is broader than the title of the bill, the state violates the one-subject rule of article III, section 35 of the Texas Constitution.17 *85But the nature of the rest of HB 3203 certainly suggests that all of the provisions were intended to be read alike. HB 3203 obviously relaxes both of subsection 18’s restrictions on electric cooperatives’ general, catchall power: it allows electric cooperatives to act to benefit persons who are not members of cooperatives for “other or additional” purposes permitted by section 2.01 of the Texas Non-Profit Corporation Act. But the amendment cannot reasonably be read to add a type of authority altogether detached from the provision’s core “necessary, convenient, or appropriate” limitation. To read the phrase, “including other or additional purposes”, as including purposes wholly unrelated to “the purpose for which the corporation is organized”, the immediately preceding phrase, is like saying that X’s purpose is to fly airplanes, including boats. The general word “other” necessarily refers to a purpose related to the previously stated purpose,18 rural electrification, and while “additional” could take in different purposes, “including ... additional” relates back to rural electrification. Though section 2.01 permits nonprofit corporations to be organized “for any lawful purpose or purposes”, the reference to that provision in amended subsection 18 cannot reasonably be read apart from the “necessary, convenient, or appropriate” limitation. If HB 3203 allowed an electric cooperative to pursue “any lawful purpose”, the amendment would not only swallow original subsection 18, it would gulp down the whole Electric Cooperative Corporation Act.
This is what I think the Court means by its ejusdem generis argument. Although the Court actually says, “we hold that the phrase ‘any lawful purpose’ ... is limited to purposes similar in kind or class to the twenty-one identified categories” in section 2.01,19 I think it intends to construe only subsection 18, not section 2.01. That is, the Court’s opinion should not be read to limit the purposes of nonprofit corporations under section 2.01. Nothing in this case requires us to construe section 2.01.
HILCO also argues that its expansive view of HB 3203 is supported by the provision that the bill added to the Property Code. Part of that provision, section 74.3013(g), states that nonprofit cooperative corporations
may engage in other business and commercial activities, in their own behalf or through such subsidiaries and affiliates as deemed necessary, in order to provide and promote educational opportunities and to stimulate rural economic development.20
HILCO argues that operating a propane business will stimulate rural economic development. Presumably, HILCO would make the same argument for virtually any economic endeavor it chose to pursue. That reading of section 74.3013(g), like HILCO’s reading of the amendment to subsection 18, would eviscerate virtually all of the limitations of the ECCA as well as other statutes governing other types of nonprofit cooperatives. By “stimulat[ing] rural economic development” the Legislature could not reasonably have meant engaging in any and every economic enterprise.
We have received briefs from eight ami-ci curiae. One, an electric cooperative,21 tells us that it has owned an interest in a *86for-profit company that designs and markets software for other cooperatives and that its investment in that company has never been questioned as exceeding its authority under the ECCA. It argues that its ownership of a for-profit corporation is “necessary, convenient, or appropriate”. Two others, also electric cooperatives,22 say that they have formed for-profit affiliates since HB 3203, one to provide fiber-optic voice and data transmission, and the other to provide a range of services including internet access, cable television, natural gas, security, and fire protection. Three amici23 argue that a national trend toward the convergence of the electric, gas, and telecommunications industries promises great benefits to rural customers if cooperatives can provide all of these services. These six amici urge that electric cooperatives not be prohibited from owning and operating for-profit corporations to engage in these activities. The Court’s opinion clearly does not erect any sueh prohibition but simply leaves in place the long-standing statutory requirement that a cooperative’s operations be “necessary, convenient, or appropriate” to accomplish rural electrification.
Two amici24 express concern that the court of appeals’ opinion could be read to hold that nonprofit corporations cannot own for-profit corporations. Notwithstanding any language in the court of appeals’ opinion, nonprofit corporations are statutorily permitted to own for-profit corporations.25 Implicit in the Court’s remand of this case to the trial court is the assumption that HILCO Electric would be authorized to own and operate a for-profit subsidiary if it can show that doing so is “necessary, convenient, or appropriate” under ECCA. The amici’s concerns thus do not survive this Court’s opinion.
For these reasons, I join in the Court’s judgment.

. Tex UtiiXode § 161.121(10); see Act of March 30, 1937, 45th Leg., R.S., ch. 86, § 4, 1937 Tex. Gen. Laws 161, 162-163 (“Each corporation shall have power ... (18) To do and perform, either for itself or its members, or for any other corporation organized under this Act, or for the members thereof, any and all acts and things, and to have and exercise any and all powers as may be necessary, convenient, or appropriate to effectuate the purpose for which the corporation is organized.”), previously codified as TexRev.Civ. Stat. Ann. art. 1528b, § 4(18) (Vernon 1997), and repealed and recodified by Act of April 24, 1997, 75th Leg., R.S., ch. 166, §§ 1, 9, 1997 Tex. Gen. Laws 713, 953-54, 1018.

. Webster’s Third New International Dictionary 1510-1511 (1961).

. McCulloch v. Maryland, 4 Wheat. 316, 17 U.S. 316, 413-414, 4 L.Ed. 579 (1819).

. Black’s Law Dictionary 1052 (7th ed.1999).

. Webster’s Third New International Dictionary 497 (1961).

. Tex Util.Code §§ 161.122-.123.

. Act of May 24, 1997, 75th Leg., R.S., ch. 904, § 4, 1997 Tex. Gen. Laws 2847, 2849-2850.

. TexRev.Civ. Stat. Ann. art. 1396-2.01(B)(3) (Vernon 1997) ("This Act shall not apply to any corporation, nor may any corporation be organized under this Act or obtain authority to conduct its affairs in this State under this Act ... [i]f any one or more of its purposes for the conduct of its affairs in this State is to organize ... Rural Electric Co-operative Corporations. ...").

. 1997 Tex. Gen. Laws at 2847.

. Midlothian Butane Gas Company, Inc., doing business as MidTex LP Gas; Rodney R. Jenkins; Lynn B. Gray; Sam Crain; Don Duke; and David R. Heald.

. Plaintiffs alleged that “neither Subsection (18) of the Act [the ECCA], as amended by HB 3203, nor any other provision of the Act, authorized HILCO Electric to create or own [HILCO Propane], a ‘for-profit’ corporation.”

. Defendants asserted that "state law, including the ECCA and HB 3203, permits HIL-CO Electric to create and own for-profit corporations, including [HILCO Propane]”.

. Plaintiffs argued that "[t]he ECCA, either in its prior form or as amended by House Bill 3203, does not authorize HILCO Electric to engage in the sale and distribution of propane gas” and that "the ECCA does not authorize HILCO Electric to create or own ‘for-profit’ subsidiary corporations such as [HILCO Propane].”

. HILCO argued: "The only issue to be resolved by this Court in the summary judgment motions filed by Plaintiffs and Defendants is *84whether HILCO Electric has the power to create and own a for-profit subsidiary corporation like HILCO U.S. ... Whether the law permits HILCO Electric to do this requires an interpretation of the Electric Cooperative Corporation Act ("ECCA”) and H.B. 3203, which amended the ECCA.”

. Midlothian Butane Gas Co. v. HILCO Elec. Coop., Inc., 43 S.W.3d 677, 678 (Tex.App.Waco 2001).

. Id. at 681.

.Tex. Const, art. Ill, § 35("(a) No bill, (except general appropriation bills, which may embrace the various subjects and accounts, for and on account of which moneys are appropriated) shall contain more than one subject, (b) The rules of procedure of each house shall require that the subject of each bill be expressed in its title in a manner that gives the legislature and the public reasonable notice of that subject. The legislature is solely responsible for determining compliance with the rule, (c) A law, including a law enacted before the effective date of this sub*85section, may not be held void on the basis of an insufficient title.”).

. See Carr v. Rogers, 383 S.W.2d 383, 387 (Tex.1964).

. Supra at 81.

. Tex. Prop.Code § 74.3013(g).

. Pedernales Electric Cooperative, Inc.

. Denton County Electric Cooperative, Inc., doing business as CoServ Electric, and Trinity Valley Electric Cooperative, Inc.

. National Rural Electric Cooperative Association, National Rural Utilities Cooperative Finance Corporation, and Texas Electric Cooperatives, Inc.

. Texas Society of Association Executives and Texas Automobile Dealers Association.

. Tex.Rev.Civ. Stat. Ann. art. 1396-2.02(A)(7) (Vernon 1997) ("... each [nonprofit] corporation shall have power ... [t]o purchase, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, mortgage, lend, pledge, sell or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in, or obligations of, other domestic or foreign corporations, whether for profit or not for profit, associations, partnerships, or individuals, or direct or indirect obligations of the United States or of any other government, state, territory, government district, or municipality, or of any instrumentality thereof.”).