Court Opinion

ID: 4146159
Source: CourtListenerOpinion
Date Created: 2017-02-18 04:05:02.650244+00
Date Added: 2024-06-11T14:21:22.605611
License: Public Domain

OFFICE   OF   THE   ATTORNEY     GENERAL   OF   TEXAS
                                     AUSTIN

                                                    February 9, 191-59

    Hon. Claude A. Willlam~
    Aoting %olmtary of State
    Austin, Texas
    Dear Sir:

             pocreother tha
             brine aad othe

d

                    V'PIMal powem* --&oh oorporationshall
             htwe the right to borrow money to an amount
             not In exoeon of ita paid up eapitel etook,
             an provided b? law, SO lrfmo 6took -andpre-
             rerred   stook, to mortgage ite tranohleeeand
             property to meure the payment of any debt
             oontraoted for any purposes of suoh oorposa-
             tion, and shall possem all the rlghta and
             poware of oorporationtl  for profit In this
                                        .-
     Claude    A. Wllllm~,   February B, 1939, Page 2

     State whenever the same may be applicable to
     oorporationa.ofthis character. (Acts li399,p.
     202; ACta 1915, pa 259; AOtS 1917, p. 54.)'
          Thus, It is clear that all corporationscovered
by suoh chapter are apeolfioallyauthorized to laaue pre-
ferred atook. A careful examinationof all other etatutea
reapeotlng prfvata oorporatlonareveals the total absence
of apeoifio statutoryauthority for corporations,other
than those authgrlzedby chapter 15, tltle 32 of the Re-
vised Civil Statutes of 1925, to issue preferred atook.
          Artlole 1304 of the Revised Civil Statutes of
1925, in setting forth tha raqulmmenta of the charter it-
self, provides in Sea. 6 tharaof that the aharter muat 8at
fortht
          'The amount of the napital stool, if my
     and the number of almrea into whloh it is dirt-
     ded."
          The matter oftha oraatlon of rights and prafor-
enoea of stock must, tharafora, ba la?+.to the @l-ant
of t&e Interestedpartlea In the axwolaa of their oontrao-
tual rights.
          It la said in Thompson     on Corporationi,Wd ti.,
Vol. 5, P. 276, Pare. S435r
          "It haa bean a~aatad....;.,that   tha law
     usually raqairaa oapital qtook to’be dltidad
     into shares. But Ld tha prratioal oparatlon
     OS oorporatl?natha oapltal atook, ior oonvan-
     lenoe, has oome to ba olaaalfisd Into many
     dlrfarent kinds, wlthout regard to the dirl-
     aion into shares.*
          It @a held in the case of People ex ml. Raosaa
Exporting and Importing Corporationvs. Hugo, 182 Rawle I. Supp.
9, that in the,absence of statutory provisions to the 00~
trarg, a oertlrfoateof inoorporationof a business oorpore-
tion may make auoh prefarenoeabetween atookhold&a as to
lta stock as seea beat, and that the matter of preferewes
la a matter of oonOern only to the atookholdersoi the Oor-
poration.
          The court said in Hamlin vs. Toledo Bt. L. k X. C.
R. Co., 78 Fed. 664:
              *Ordinarily,preiarred atoak ia entitled
Hon. Claude A. Willlams,   February 9, 1939, Page 3

      to no preference over other stock in relation
      to capital. But where there is an expressed
      agreement givfng suoh a preferenoanot prohibi-
      t&d by looal law or the oharter, we see no ree-
      son why it is not a valid oontraot as between
      the oorporationand such preferred stockholders.*
          The dlatlnotlonbetween oommon a 4 preferred stock
resolves itself into a question of prefers4OIB and this is
true whether the stock ie 80 deslgnnted oommon or preferred
or by some other names.
            Tex. Jur., Vol. 10, p. 672 saga:
          *....Thareappaera to Da no seeson to doubt,
     that, between the atock.holdaraend aubjeot tom
     the organisetionagreement,dl#ferent rights JEW
   I)be attached to different oleaaea of atook.*
          This statement In Texas Jurlaprudenoila jo8tIfiad
and supportedby the cease of~.Bt.Beg18 Oendlaa vs. IioreB,
3 si?(ad) 489 by ,theatmtniaalon  0r .Appea$a.,
                                              Tha 04mt held
In ananr to pueatlons oertiflad fti the Qourt of Olril A9-
peals of the 1st Bugwane .JudioialDfatrlot that e.ole8aifI-
oetlon,of atook into o&as A uwl olraa B atook with the ol&aa
A afook having the role vqt%ng ouer waq not in oontrave3itioa
of publio policy, the Oonatitut son or the rtetutaa.
          A otirefuleunination OS the authoritieslaeda
thla Department to the opinion a@ ,pouera so e6rlaad that
private oorporetlcnagonwwlly~uy   iaaua pr*iazmd  atnok
a9011ocmplianoewith lawa 4salIng rith end reapeotlng oor-
poretlona.
          Truqtlng that this aetlrfaotorllyanmrera your
inquiry, we reamin
                                      Very truly yours

                                         \   ~iloytl Arm&r&
                                                   Aaafatant
IA? AW

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