Court Opinion

ID: 4134068
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:45:38.322937+00
Date Added: 2024-06-11T14:31:41.455940
License: Public Domain

The Honorable Martin Dies, Jr.     Opinion No. M- 600
Secretary of State
State Capitol Building             Re: What statutes control
Austin, Texas                          the Secretary of State
                                       In his administrative
                                       Forfeiture of charters
                                       and certificatesof
                                       authority of corporations
                                       For Failure to timely pay
                                       Franchise taxes; and what
                                       statutes apply to his
                                       reinstatementOF such
Dear Mr. Mes:                          charters and certificates?
      Your opinion request presents the FoIlowIng questions:
             "1. Article 12.17(2), Taxation-General,
      Vernon's Civil Statutes, Article 7.01B(l),
      Texas Business Corporation Act, and Article [1396-j
      7.01B(l), Texas Non-Profit CorporationAct all
      provide For admlnlstratlveForFelture by the
      Secretary of State For+FalIure to pay Franchise
      tax. Under which of the above statutes should
      the Secretary of State Forfeit the charter of
      domestic corporationsand Certificateof Author-
      ity of foreign corporationsfor Failure to pay
      franchise  tax in the time prescribed by law?
              2. Does the $50.00 reinstatementFiling
      Fee and the twelve month limitation In Article
      7.01E. Texas Business Corporation Act and Article
      [:396-l   7.01E, Texas Non-Profit Corporation Act
      apply to reinstatementprovisions of Article
      12.17 3(b) Taxation-General,Vernon's Civil Statutes?"
      In answer to your First question, it,ls the opinion of this
office that the Secretary of State may Forfeit the charter or
certlflcateof authority of a business corporationFor Failure
to pay Franchise taxes under authority of Article 7.01B(l),

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.     .

    Hon. Martin Dies, Jr., page 2      (M- 600)

    Texas Business CorporationAct and Article 8.16B(l) of the
    same Act, respectively,or under the authority of Article 12.17,
    Title 122A, Taxation-GenEal, Vernon's Civil Statutes. Likewise,
    the Secretary of State may forfeit the charter or certificate
    of authority of a non-profit corporation under authority of
    Article 1396-7.OlB(l),,Texas Non-Profit CorporationAct and
    Article 8.15B(l), of the same Act respectivelyz under the
    authority of Article 12.17, supra.
          These statutes were passed by the 61st LegislatureIn
    1969. The language of Articles 7.01 and 8.16, Texas Business
    Corporation Act and Articles 7.01 and 8.15, Texas Non-Profit
    Corporation Act are Identical In so far as they prescribe a
    procedure by which the Secretary of State may Forfeit charters
    and certificatesof authority of the respective corporations
    and thereafter reinstate such charters and certificateswhere
    the requirementsFor reinstatement,set out In those statutes,
    are met.
          Article 12.17, supra, as amended In 1969, Is a relnact-
    ment of the procedures theretofore given under Article 12.17 and
    provides additionalprocedures whereby charters of domestic
    corporationsand certificatesof authority of Foreign corpora-
    tlan~,admlniatratlvelyForfeited as provided by that Title, may
    be rbvlved by the Secretary of State when the requirementsFor
    reinstatementset out In the statute, are met.
          The grounds For Forfeiture under 12.17, supra, are fallure
    to pay the Franchise tax, or File Franchise tax reports. The
    grounds For forfeiture under the provisions of the Texas Business
    Corporationand Texas Non-Profit Corporation Acts, also Include
    Failure to pay the Franchise tax or File Franchise tax reports.
          Article 12.17, supra, and the other provisions of the
    Texas Business CorporationAct and Texas Non-Profit Corporation
    Act, provide different procedures For the Forfeiture and revival
    of charters and certificatesof authority by the Secretary of
    State. Articles 7.01 and 8.16, Texas Business Corporat.lon Act
    and Articles 7.01 and 8.15, Texas Non-Profit CorporationAct,
    were passed on the same day and are the last expressionof the
    Legislature. In so Far as there Is any conflict between Article
    12.17 and these later statutes In the Texas Business Corporation
    and Texas Non-Profit Corooratlon Acts. the latest exoresslon of
    the Legislaturewould co&rol. De Jei~s de ia 0, In-Fe
    154 Crlm.Rep. 326, 227 S.W.2d 212 (1950).

                              -2864-
Hon. Martin Dies, Jr., page 3       (M- 600)

      We do not regard the statutes as conflicting. We observe
at the outset Section 9, of Senate Bill No, 603, which includes
the amendments to Articles 7.01 and 8.15, of the Texas Non-
Profit Corporation Act, and S.B. No. 604, which Include the
amendments to Articles 7.01 and 8.16, of the Texas Business
Corporation Act. These two sections read as Follows:
             "Nothing In this Act shall Invalidateany
        of the procedures hereby changed by this Act which
        have been Initiated prior to the effective date of
        this Act, and under such circumstances&ing the
        Secretary of State and any other state agency affected
        Is authorized to proceed under the appropriatepro-
        cedures authorized prior to this Act or as changed
        by this Act." (The word "and!'In brackets was ln-
        eluded In Sec. 9, of the Texas Non-Profit Cotiporatlon,
        Act only.)
        In 14 Tex.Jur.2d 642, Corporations,Section 544, it Is
said:
             "Althoughdissolutionor Forfeiture of a
        charter terminates the existence of a corporation,
        our constitutionand statutes preserve a distinction
        between Forfeiture of a charter and dissolution.
        Statutory provisions relating to Forfeitures of
        charters are found in portions of the Revised
        Statutes deemed to remain effective after enact-
        ment of the Business Corporation Act. With one
        exception, provisions relating to involuntary
        dissolutions are Found In the Business Corporation
        Act."
      Keeping In mind the above distinction In the statutes,
dealing with different subject matter, we conclude that the
statutes concerned are not amendatory of one another,.and they
do not present any conflict. Under Article 12.17, supra, deal-
ing with Franchise taxes only, the Secretary of State is required
to determine that the corporation taxpayer has 'noassets From
which a Franchise tax judgment could be pafd. Under the other
cited statutes, dealing with corporationsgenerally, no such
requirement is provided therein. Our courts will adopt a con-
struction of the statutes which avoids any conflict wherever
possible.
        The statutes clearly demonstrate the Intent of the Legis-

                           -2865-
.    I

    Hon. Martin Dies, Jr., page 4      (M- 600)

    lature to provide the Secretary of State with both the For-
    feiture and reinstatementprocedures set out In Article 12.17,
    and the forfeiture and reinstatementprocedures set out In the
    Texas Business Corporation Act and the Texas Non-ProfitCorpora-
    tion Act. The Secretary of State therefore may Forfeit and
    reinstate charters and certificatesof authority under either of
    the procedures provided, and the choice of remedies would be
    dictated by the Facts of each case.
          In answer to your second question, It Is the opinion of
    this office that the reinstatementFiling Fees and the twelve
    month limitation in Article 7.OlE, Texas Business Corporation
    Act, and Article 7.01E, Texas Non-Profit Corporatlon'Act,do not
    apply to relnstatementaorForfeitures under the provisions of
    Article 12.17, supra. These First two Articles are identical,
    except For the amount of the relnstatement~FlllngFee, and pro-
    vide, In part, as Follows:
               "E. Any corporationdissolved by the
          Secretary of-State under the provlslo& of
          Section B of this Article may be remd
          by the Secretary of State at any time within
          a-period of tweive months From the date of
          such dissolution, . . . ReinstatementFiling
          Fee of $50.00 L$25.Og shall accom any the
          application For reinstatement." (925.00 For
          Non-Profit Corporations.)  (Pmphasls ours.)
          This statutory language expressly limits the refnstatement
    requirementsmentioned above to corporationsdissolved by the
    Secretary of State under the provisions of Section 3 of Article
    7.01 of the Texas Business Corporation Act and Section 9 of
    Article 7.01 of the Texas Non-Profit CorporationAct.
                               SUMMARY
               The Secretary of State may administratively
          Forfeit charters and certificates of authority
          of corporationsFor Failure to pay Franchise taxes
          under authority of Articles 7.01 and 8.15, Texas
          Business Corporation Act, For business corporations,
          or under Articles 7.01 and 8.16, Texas Non-Profit
          Corporations Act, For Non-Profit Corporations. The
          Secretary of State may alSo Forfeit charters and
          certificatesof authority under the authcrity of
          Article 12.17, Title 122A, Taxation-General,V.C.S.,

                              -2866-
.

    Hon. Martin Dies, Jr., page 5     (M- 6001

          where that statute Is applicable.
                 The reinstatement Filing Fees and the
          twelve month llmltatlon provided For relnstat-
          lng charters Forfeited under Section B of
          Article 7.01, of the Texas Business Corporation
          Act or under Section B of Article 7.01, of the
          Texas Non-Profit Corporation Act, do not apply
          to forfeitures made under authority of Article
          12.17,   supra.
                                             s very   truly,

    Prepared by Wardlow Lane
    Assistant Attorney General
    APPROVED:
    OPINION CCMMITTEE
    Kerns Taylor, Chairman
    Bill Allen, Acting Co4halrman
    Thomas F. Sedberry
    Robert Davis
    William J, Craig
    Ed Esquivel
    MEADE F. GRIFFIN
    Staff Legal Assistant
    ALFRED WALKER
    Executive Assistant
    NOLA WHITE
    Ffrst Assistant

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