Court Opinion

ID: 4143609
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:35:40.556996+00
Date Added: 2024-06-11T14:40:02.251843
License: Public Domain

OFFICE OF THE ATTORNEYGENERAL OF TEXAE
                           AUSTIN
-c.yu(r(
 --R&L

  i,.
f?onorakleGeorge !i.Sheppard, Page 2

13CO outstanding 5haraS, ormad IA part qs followa:
          A own8 103 Shar48;
          A’8 Wire OWA5 508 8h5m5;
          C OWAS 104 shame.
The mmatAin(5 shares iA *00rp0rat10n I” are dltldad WOW
a large xslmbtro? other persona, none ot raid other pdreona
OWAiA& DOM than a iat?Shal’sseaoh.
          Aooording  to the information you hare given U5,
the parties in a616 wpartnsrahlp x” hare a vote and volo4
~;t~~;;oAtral at the partnamhip In proportlou to their
           We praauma that auoh la the oaae by virtue of
a partd8hip   agreement.
         Tcu state that A aad 0 lra the aau?e~+aona      iA
both *partnarrhlpx" and woorporatlon I.*
           IA d4temiAinp; whether the lt’cresoperated by
*partnership r” and those opmsbed by ~oorporatlon T” oon-
atitUt6  OA4 eh8IA or two aaparato ohalna, we must dooidr
whether or not en of said atore~sam *ultlmatelJroontrolled
or dlreotrd by on0 mana omant o* aaaoolatlon of ultlma
gmeAt+*     S~OtfOtiO~f         the %X85 Ch4iA St0la Txf zi*“’
    ouao ill To. 18, Aots 1935, 44th legislature, 1st Called
SeSSIon, and whioh 18 codified a% Art1018 lllld in Vemon~a
AAAOtOtsd p4Ali oOd4 Of %Xf~6) p1pOlidU58 rOiiOW5t
          "300. 6. The provisions of this Aot shall
     b4 GOA5tZW5d t0 apply t0 every perSOIl,WeAt,
     reocivez, trust.ee,fim, oorporation, oopartner-
     ship or assooistlon, either dcne6tlO or r0raigh
     whloh is controlled or held rith others by mejor-
     ity 6tcok oWA4rShip or ultkFatsly OOAtrOli4d or
     directed by one menmg5E4At or 5SSOOiStiOA oi Ul-
     t&ate managearnt."
          980. 7. The term *atore* es used ic thla
     Aot shall be oonstruaclto eQan and inolude any
     store or stores or any msraeatile estsblfskent
     or esteblie!ments not apeoiliaallf exempted with-
     iA t,bfSAct wh$Ch 4XC OWAdd, OpSl=Sted,!CainteiA-
     eQ, or COAtrOll5d by the saae p6lpOOA,agUAt, r*-
     aalrer, trustbe, r inn, OO~pOl'EitiOA,
                                          oopartaerahlp
Honorable George If.Sheppard, *asa 3

     or aesoolation, either domeatio or toreIgn, in
     which goods, wares, or merohendlae of any kind
     are mold, at retell or wholeaale.m
          IA the oaae of R. E. Butt Orooory Co., v. Sheppard,
157 S. W. (&I) 825 (writ of error rotund) the Court oi Civil
Appe6la at Austin, held th6t by tlrtu6 of meld 8eOtiO66 6
and 7 ii one person ownad a majority oi the atook in two or
more oorporationm all of the 6toror 0pemea by 551A oor-
poratlona oonstituted OAO ohalar end the court maid:
          *Sea. 6 was mmlfeatly lnt*ndad to prevent
     large ohslnm of stores, whloh noelve the bene-
     fit6 flowing tFOa auoh syatm (OoMiderOd red
     enumerated ln pert by tha$J. S. SUQNWJ aourt in
     State Board of Tax Com!.ra. f. Jaekmon, 805 U. 5.
     527, 51 S. at. 540, 75 I..Edi 1248, 7% A. L. R,
     1454 75 A. L. R. 1556, ana in Hurt v. cooper,
     130 +ex. 453, 110 S. ki, (Rd) 696 auatalnlng
     the ralidlty o? the Act aa oolutjtutlng a ra6aan-
     able olaaaltloatlon), rrOm olroumentfng the tax
     burden6 lmpo6s4 u~dor the &It, by organieing
     aepanto corporatioaa to operate them, the
     oapltal stook of whloh, or a majority Oi it, b6-
     lng owned by e.parfnt oorporetion or holding
     oompany, or by aa lndl*l6uel or la6oclatlon o?
     indlriduala. Thus through a oommon management
     or 00Ai~ld over a number Of indiridual Unit6 Of
     oorporatlona $h! a;learpurpose of the law wo~3.A
     be Ae?eateA.
          ** * * The ownership by Butt oi W% of,the
     stook in 0118oorporetion, 6Ad of 75% Or the etook
     in the other, grva him auoh u~liied OOAtrOl of
     both oorpor5tion5, through such atook ovmsrnhlp,
     as to bring the atarea OuAed 5Ad oontrolledby
     6uOh separate oorporatione under the provisionm
     0r the Bcti end required thatt9e]r gt treated
     as one chain for tar purpOOOB+
          In this 0551)you hare asked about, no 0110person
owne e majority of the stock or lntereat in both the partner-
ship aAd the OOrporatloA, or even in one of the&   A, 0's
wife, and C, together, own a majority of the atwk in *oar-
poratlon Y-i and A aad C, together, own a majorfty of the
                                                               717

lnter68t in *partn*r*hip X*.
          In Attorney Uenaml*~  OpiniOa Be. 0400,  dated
Yarah 10, 1939, we mede a holding in lmguye   a8 folla81
           "It in our belief that tbo phn8o '*hioh
      18 l * ' ooatfollmd l * * by OIU mnag8men~ or
      a88oOi8tiOB of tith8t8 DwMgem8Bt’ in Ek6tiOB
      6, 8nd the phrase *storm * l * oontrollod by
      the 88nieoopartnerebip or aaaooiatlon~ la S~O-
      tion I, doe8 not ncwn that tbm eontool or man-
      agsment rust be In on8 indivlQual pweon, but
      it   mean8 what It         8aya. and that la the *tom*
      81% in thr ewe  ohaia if tbo oontrol and man-
      8g e m nt
              1 8in,tha 6 mmolrrooiatia     or OOQU%BOT-
      ship.  Ey the SIQU a8soaiatioa    or oopwtaermhfp
      a6 used there 18 waat the *am group of peopXo.
             *rr          threr IUB, or aay othar am-
                    a grouQ of
      ber,   could rent?dnor govwn, or had luthoritf
      over 88~8~~1 8toxw, having authorit? @vet MU
      of the rterea by ~1x4~8 of own@& a majority of
      the ateok or the rorpor&loa  that b&d tbbrtltlo
      to those ltore8, and batiry author&W over thm
      othot atom&by rirtao of boily; mrJorlty  HOPI
      of the part&r&i    that onnod thea, than there
      rtorea would all & in the ume ohaia jaot thr
      mama a8 ii oae lndirldadl person eontmlled  CL1
      o r the lta ~a .’                        4-.~
                                                  ,

we 8till 8dlmw ta that oplaloa.   R8 bellw8 itii8 lxpporb-
ed by the reornt oa80 or Florida Iaduatrfal  Ck?mmi88loav.
Gary-Lookhart Drum Capany, Ino,, (Sup, CL o? yla,) 196
80. 868, in nhiah it wa8 helQ thet fopr 8eparate aerpora-
tions rhould be considered a8 on8 aploymnt    onit for tax
purpose8 under the Florida Un8mpleym8nt Caapan*ation Law
by virtue 4f the f8at that the 8am mwup oi pornon owned
a majority of the atoak in laoh ot the 8orporatioB8, al-
tbowh no d.ngle per8on owned a majority OS the *took In
any of maid oorperatlon6. In th8t oa8e the oourt 8aidz
             “The    ownershfp of stook ln the faur 8or-
      p~~&wna,        ata4i801088d by the m,oord, ir a8
             :
             a*Ferry CorporatlanI
I4onorableOeorge H. Sheppard, Page      5

          **Egtate Of G. i?.til@y 69 *ban*
          *'-f".6. Loakhut
          **Claude %. Oary        r :2ft
          ** Celia J. &ry          1 share
             "(oaoh sham of o~ual value)
          Vol8y Corpor8tioat
          Wary Estate                'SC)ShnS
          WP. 0. Loekhart             S?,ShaZ'W
          *(1.0. 8Wl2@~8              8% 8har.S
          “Celia J. Wry                1 Sh4l'a
             *(*aoh ahan     of ocwl r8luo)
           mPoti at. Joe CarporatIon!
          rOella J. Oaa                  S ShW'OS
                                        86 *barra
          =p":0" %hat
          V3wnice Lookhart              "I :2r
          “thiSsUed                     ssShW'@O
              *(oaoh sham ef Mual t3k10) .a?::
          “Leeebusg Corporatlont                    1.,
                                                     ,;,_~_
           *K. il.:
                  Taylor                8s 8h-E
           "I'.0. Lsokhart              88 Shalul#
           -2. w. oary                  84 *ban*
              “(eaoh ShlW 0r apu8l      raluo)'
           -No one or tha four oorpratlaa8       atpleya
     am many am eight people, but wmulsfi~    the
     iour am a rir~gloa@lO~nt    unit, sight proph
     or more me employed.

           "It is a&altted on tha r8bco1-4      #at  8 em@*
     Sty of the 8took in woh ot the four oorpen-
     tlona &I aaed by a ocmmen iatrnat unit, fs-wit,
     ?'.0. Lookhrfi Slidth0 ckry 21 St&. 'f'b8        6t8tUb,
     SUPM,   prOrid@    thrti -   h&b&O     g WBit,  togather
     with one or ram auplOybg UBfit8, WhOa Omd            Or
     controllo dinotly       or lndixvo%lr    br the nm     ln-
     tere8t8, or rhioh ownm CTroontm~s OM Or Iore
     other eiripla in(c uttltr~,aud rhiah,    if trmatmd am
     a mingle un I t with oth8r m@loyin@ unita o+r*ln-
     tere6t8, er bath would be an 8W?lplbMT.
     the OOneluSioBx~i8 inorltable        that hh# LOU
Hononble   George 8. Sheppard, Page 6

     OOTpOrt3tlOnSare 411emsploymnt unit bOOeU88
     they are OaCh !ukIeI!
                         the COntXWl 8kIdownership
     Of the Sama inter~8fSh to-ritt f'. 0. halchart
     and Gary Estate.      w
          fn this oaao A and c together hav8 th8 oontml
of *paktnerahlp'X" by virtue   af to&ether owning 64.14# et
th8 intBre8t in raid pastnerahip.    A8 StSt8d ab0r8, in this
partner8hip eaoh partner ham 8 vote and voloe In the man-
a&bment Of the parbnershlp In prOpWt:OB to hi8   :ntO#at.

            EOwever, u00rpor6tiorIF is not ooatrolled aby
the 8ame oopartuarahip or l88o01at1on,* to-wit, A and C
unl888 the StO@k ~rm8d by A'S Wfh 18 doemrd In law to br
tinder the control of A. Aand Cto&ether own Eo9 sharer
of rteok in said corperatlon but there are 1300 outatand-
iE& ahWe&      A'8 tit8 OWtMJ868 BUT88 of StOOk in 8aid
oorporetlaa, and it A io deemed in law am oontrolllug th8
8taok Owaod by hi8 M.fS, thou A and C oontrol a to$al Of
116 lbare8, and would thrraby togother cm a majority oi
the rtook and would oontlal Miti aorparat~io&   79~8answer
to thl8 queatlon d8pWIde on rhother the etoek   owfM6  by
A’s rite  is ths oo88!unity property of her an4 hei hprbnnd
or ir bar **parate property.
          'Ths St8tW.8 (Artloh  4619, 17.0. 8.1, lxo*pt tar
a short tinre-* from 1913 to 1985 -- has always VeatSd th8
Tight Of QOntKBl and diSpOS:t:OB Of   th8 OOEIIUBit~   pTOp8rty

in the hueband." OJ 5%. Jur. 109, =~StSlOT      18 CORWllitf
property 18 under the eontro1, miI&gelaentand di8QO8ttiOE
Of the hUebard iLOBS, whether it b8 the earnings Of both
jointly, the earnings of the ~huabaudalone, or the,oaTuln68
of the wit8 alone."   BS Tax. Jur. 108. The two foregoing
SentSMSS am baaed On Art:018     4619 Of %2tlOtl'SknnOtat@d
ROVi88d Glrll &8tUtSS   Of 'feXa8,of which %3OtiOu 1 8aySt
           "$80. 1: All property 8oquind by either
     the humbendor rite duriiq m8rrie$8, OXOept that
     whloh la the separate pmperty Of either, shall
     b8 deumd the omnOn property of the husband
     and wife; and all the etteota whlah th8 husband
     and Wit8 PQSSeSS St the time the lBWTiw8 lyIy
     be dl88OlVOd shall be ZWgWdOd am oC~BEOBOffOOt
     or gains, unless the contrary be 8atisf8OtoTily
     proved) Outing aoverture the common prOpSr0y
     of the husband and nits my Abe di8pO8ed a? by
                                                               720

Honorable Dsorne E-r. shespaI-4,   P4fce 9

      the hurbnnb only;    pe~lded, haer~r,.if the
     huabaad ahall hate dlrappeand   and hi8 where-
     aboutr &ml1 hare beon 444 r4m4in uaknom    to
     the tire oontinuouely ror more than twelra
     mOnth8, the wife ah&l1 4ftet auoh twelie month
     porlo4 an4 until the hueband returns to her
     and the lftld~rit hereinafter proddo& ror in
     made atutfile4 ror rc8ord.  hare lull oontrol,
     SWUgOMnt   UNI  ui8pOBitiQn Oi th0 CCSBFQtULity
     property, 4114 ehall hate the same power. with
     refsrenae thereto le me oanfe2~e4 by law upon
     the hwbund, 4nU $ez =,Otsehall be 44 thou.
     0r 4 femme sole.

In the 0464 0r Coleman v. ~0h4n,  m   6. w. 695, hit   0r
wmf   nfuse4) the cmlrt 0r Clrll ApFeal* et 8ml Antonio

          "+ * * The nor48 aommuuity property with ~8
     4re rueh 88 r&de   to property owxwd in ammoa
     between the husband em4 wife, a kind of marital
     pwtaerrhlp, an4 by our rtatutes  defined in 4rti-
     01e 4619, R. S. Qf auoh property, both under
     the oft11 law an4 our atatuter aerteinlnnnthere-

     where th-ereire no restrictions. T h e wit*.
                                                l-8
     to hat8 had only the right or partAt$$netpon the
     tenalnation 0r the marital rights.
     (%ndcrsooring our01
See elm    the oa8e or Stow v. Jaokwn,  109 Tex. 58S, E3.0s.
W. 953,   an4 the text %nw or K4rital Rightr In Tens,  Jr4
Ed.” by 6poer, jmgs 193.
          On the other ban4 tha Constitution of Texan (Ar-
title XVI, S~eotlon15) provides that 4 mrried    wm4n  oan
own IO arate property, an4 the rtotute (Article 4614, R.
c. 6.'3 give8 the control of the wffe's regarate   property
lxolueivcly to the rite. Artlde 4614 Or ~0~3IQn’8 AnnQtat-
a4 Revised Clvll Statutes of Taxer,,s4g4,t
          -'Allproperty or~thc wife, both real en4
     personal, owned or olallcedby her before Ifarrlmge,
                                                              .~.:> i* _

                                                              721

Rmorable    George R. Sheppard, Fag* 8

     and   that aoquirrd sfterrrardby gitt, devise, or
     desoent, a6 slso the lnoreass of all lands thus
    aoquirsd, ehall be the separate property    oS the
    wire.   The wire shall hare the sole &anagement,
    control, an4 disQ~sltiQn of her separate prop-
    erty, both real and personslt grQrl4e4, howover,
    the joinder of the husband ln the manner naw
    provided by law for aonveysnae8 OS the 6epsmts
    rwl estate   of the wire mill be neoessary to
    the 15ou&%brsnO6or aonveyanoe by ths wife of
    her lsds, and the joint rignature of the hus-
    ban4 and wit* shell be neoesw     to 4 transfer
    of stocks an4 bon48 beloaglng to her or Qt
    which she may be glvon oontrol by tbls.~law.”
In the o48eof Levln v. Jetrers, leg Tex. 83, 8% 6. W:. (84)
81, the sUpx39@0CCrUrtQi %x48 saidt
           ** + * The gre4ntlngto the tire oS the
    sole oontrol an4 management ot her separsto
    prQpOrty by n800884ry   iE@liaatiQn ClOti   hot,
    in the making or aontracts in respeot thereto,
    with all suah lnoldentsl power 48 will render
    effeatual   the parer expressly grsnted. It must
    be remembered that a marrled runan owns 5~ her
    own right her 6eparste property. E%en as swh

In a discussion of the right of a married wo~~snto own an4
control separate property in 23 %x. Jur. 88, It *St
          "* * * she may own stock In a raIlma    or
     any other private oorporetion, en4 she may a~-
     qulre the e&le in any OS the way6 usual, a6 by
     gurohaee, gift, devise or desoent. 2hs nay In
                            the owner of benk stook,
     the same manner becor?le
     and a6 such 16 subjeot to all statutory regula-
     tions an0 assessments.  InBee&, Our statutes
     expressly deolan, that chsrters sag be subacrfb-
     ed by marri*G women who nzieg
                                 be stoakholders,,
     officers and elrsotorv In private corporations.
                                                                     722

Honorable George HI. Sheppard, P4ge 9

     Our statutes of oonrey~os by ths wire or
     atooks an4 bonds owned by her nsoem~arily re-
     cognize her right of lndlvi4ual ownershlp.~
             Whether the stock owned by A’s wife is oommunlty
property or her 8epuets property Is 4 f4ot question on
wbioh you have not given u6 sny inrormation.      fr this stook
Is oomuuslty property lt Is rubjeot to A’s oontrel,      and ln
such bass A and 0 together oontrol both apartnsrship      P an4
Woorporatlon P.      In other word8 *partnership  F snd *oar-
poration Y” are ~oontrolla4    by the same oopartnership   or
4ssooiatioa.”     %wevcr, if the *took owned by A’s wife 18
her sepsrate property she oontrols    it, and A 4nd C 40 not
oontrol Woorporation Y.”
             It Is appsrent by the rorsgtolng dlsousslon    that
we oannot answer your questloss       a4tegorlaally. we 04n odlf
say that lr the stook la %orporstfon        P ownti by A’s wife
Is the oammfty      property or her 4nb her husband then the
two Qrganlzatlons are *oontrollsd       by the ssme aopartnersblp
or easooiatlon,*    to-wit,   A and 0, an4 all of the stores
operated by the two orgenizatlcdxv constitute      one ohain; but,
if the stook Is the sepawte pro erty of Atit Wit0 then tba
two organlzatlons     are not contra s led by the seme oopartner-
ship or association,      and the 8tons   QpsNted  by the two
argaulsetlons    oonetitute   separate ohalns.

                                     Yours very truly
                                 ATIQRXEY QJhtAL OF TEXAS

                                 BY &-@k
                                            Ceoil .C. Hotsoh
                                                   AsSistant