Court Opinion

ID: 4139102
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:43:50.143096+00
Date Added: 2024-06-11T14:07:21.449289
License: Public Domain

OFFICE      OF THE   ATTORNEY     GENERAL     OF TEXAS
                                          AUSTIN

Eonorablt:Claude Isbell
secretary of :?tate
kuetin,      Taxes

Attention:        J. L. Mc3arlty
Peer Sir:
                                        Opinion MO. G-781E

          :‘:e
             hare reoeived pur
IS quoted a8 r0n0w8:

          *%a00 Mile    c:
          tloned below.
          this alab und
          105 of Artlal
          stetutss.
                                                 these attorneya that the
                                                   araileble, lnmmuoh
                                                   t
                                             JIBrefloated that wa he6 al-
                                              lub with   the   name *Kaea
                                              s tiled on June 26, 1919,
                             and benefit of the State by this
                              ever, of the opinion that thle fee
                              I and that e flllnr;tee in thm mm
                             vc been colleated by this offloe ln
          aonnsatlon with such fllln~. '20are of t?m opinion  that
          such a alub should be subJeat to 8 mlninwn annual ,frea-
          chlss tax, at t>at time in the sum of S10.00 and qndbr
          the prea8nt statutes, in the sum of $2G.~0. Te a6 ad-
           uloed these attorneys on Farah 15th.
   Hon. Claude Isbell - Page 2

             "On March 18th, these attorneys further advised
        us that they were of the opinion that suoh a olub oould
        be organized under the provisions of Section 105 of
        Artiale 1302 of Vernon's Annotated Texas Revised Civil
        Statutes.                                 .
              We hand you herewith a photostatlo oopy of this
        proposed incomplete, unexecutecland unacknowledged
        charter and respeatfully ask you for your opinion as to
        the following:
.~#es---l--
        -..,
          ._..
             ~,
                  "First: Whether or not the proposed oharter
                           should be filed by this offloe under
                           any Seation of Artlole 1302 of the
                           Texas Revised Civil Statutes.
                  Yeoond:   In the event that such propoaea
                            charter if aompleted and properly
                            exeoutea and aoknowleagea, should
                            be filed by this offloe, please ad-
                            vise what the proper filing fee
                            should be an8 if the aala dub would
                            be subjeot to an annual rranohlse
                            tax."
             Before the proposed charter oan be properly oonsldered for
   filing by the Secretary of State, it must first meet the statut.ory
   requlraments pertaining to iorm. It 1s neoeseary that the charter
   contain all apeoifla items as set out in Articles 1304 and 1312,
   V.A.C.S., and it must be properly subscribed and aoknowleclgefl  pur-.
   suant to the provisions of Artiole 1305, V.A.C.S. Upon satisfying
   the statutory provisions relating to form, the oharter may then,,be
   viewed from the,standpolnt of compllanae with substantive laws.
             A corporate name la essential to the exlstenoe of a cor-
   poration as it 1s made so by statute.    There is no general statute
   in Texas preventing a corporation from taking any name that it may
   seleot, although by Article 4700, V.A.C.S., insurance companies are
   prohibit~eafrom selecting a name similar   to that of another existing
   insuranoe oompany so as to mislead the public. At common law, how-
   ever, oorporations generally were prohibited from seleotlng 9 name
   similar to that of an existing oorporation so as to deceive the
   public and this rule of law now prevails in Texas. Suoh a slmilarlty
   OT names ten& to create oonfuslon with Espect to suoh oorporate
   aatlvlties as contraotual negotiations, mail alstrlbution, and many
   others too nunemus to mention here. It 1s the duty of the Seoretary
   of State to inquire into a similarity of corporate names and reject
   the proposed charter of a new corporation when it offers the adoption
                                                                   4;s

Ron. Claude Isbell - Page 3

of a name which so nearly resembles that of an already existing cor-
poration as to be misleading. Names for oorporatlone are of an un-
limited source and we believe it to be no hardship upon the incor-
porators here who propose the name Y~aco Rifle and Pistol Club" to
seleot a name substantially different from that of the already
existing corporation; namely, "Waco Rifle Club." For a further dls-
cussion of similarity of corporate names, see 14 C. J. 310 and
Rlldebrand on Texas Corporations, Vol. 1, iV29, p. 128.
          The lnoorporators here have stated the purpose of their
proposed corporation in Article Two of the charter to be as follows:
           "This association 1s formed for the purpose of edu-
      cating citizens of the United States resident in our
      oommunlty in the art of the safe handling and use of Sire-
      arm6."
          To authorize the foregoing purpose, the incorporators have
suggested either subdivisions 2 or 105 of Artiole 1302, V.A.C.S;,
whioh we quote as follows:
           "2. The support of any benevolent, charitable, eau-
      oatlonal or missionary undertaklng.
           "105. Corporations may be created for one or more of
      the following purposes, namely: Religious, Charitable,
      Literary, Scientific or Educational. Acts 1945, 49th Leg.,
      p. 119, oh. 81 B 1."
          In 1945, the 49th Legislature added subdivision 105 to
Artiole 1302 and by doing so simply authorized any one or comblnatlon
of purposes already listed in subdivisions l-.anb2 of the Article
(See opinion of thls offioe addressed to you numbered O-0043 and dated
November 5, 1945). A selection of one of these two subdlvlslons 1s
immaterial here as the provisions of both overlap and our problem is
to determine generally whether the term educational as used in eaoh
can be reconciled with the purpose as stated in the charter.
             The charter must speolfy the purpose for which the corpor-
ation 1s to be created with sufficient clearness to enable the Seore-
tary of State to see that the purpose listed is one providea for by
the statute.     In determining this, the Secretary OS State is not
restricted to the literal wording of the purpose olause in the oharter
which adopts the very words of the statute, hut he may oonslderall
features of the charter and olroumstances surrounding the proposed
incorporation to aeclde whether the primary object of the corporation
1s within the statutory    purposes suggested here, 1. e., eduoational.
*
r                                                                      49      ,..

    eon. Claude Iabell - Page 4

               In the case of Razen v. National Rifle Ass'n of Amerioa,
     101 Fed. 26 432, the United States Court of Appeals (D.C.) had before
     it a aorporate charter listing its purposes as (1) educating the
     youth of the nation in marksmanship, (2) improving marksmanship of
    members and (3) encouraging msrksmsnahip throughout the country. The
     Court, in holding that the personally of such corporation was not ex-
    'empt from the taxation statute,  stated that although these activities
    might be in some small measure eduaational, not one of the objects
     was neoeasarilg or exclusively educational in character. In the case
     of Vredenburg v. Behan, 33 La. Ann. 627, the Court held that a rifle
     olub organized under a statute  providing for the creation of corpor-
     ations for "literary, scientific and charitable purposes" was not
     properly organized within said statute.   In the case of State v. Fuai-
     neaa Men's Athletic Club, 163 S.W. 901, the Court of Appeals of Ma-
     aourl held that a corporation organized to provide its members with
     entertainment and exhibitions of agility and activity auoh as boxing,
     basketball and other sports, was not organized for eduaatlonal pur;
     poses. To the same effect, see Mohawk Mills Aaan. v. Miller, 22 N.Y.S.
2nd 993.
              It appears that the aaaoolation here is to be formed for
    the benefit and advantages of its members as a olub so that they may
    enjoy, exhlbit.and beoome sdept in the art of rifle and platol'ahoot-
    w3.   In carrying on this objeative, eduoation is but an incidental
    feature. It la not the exaluaive  or prlnolpal objeot of the aaaoci-
    ation. If rifle and pistol ahooting,were primarily educational, then
    the term oould, with equal propriety, be extended to include nesrly
    everything pertaining to the oaoupationa, endeavors, experienose and
    pleasures of man, as theae~are to some extdnt educational in nature;
    We believe the Legislature, by authorizing eduoational purposes for
    corporations, intended those oorporatlona to be engaged in aomethlng
    more than inoidental eduoatlon, 1. e., a corporation must have for its
    primary purpose the giving of inatruotiona in some reoognlzed field
    of knowledge. Consequently, it la our opinion that the purpose of the
    asaooiation here does hot come within the meaning of the~term eduas-
    tlonal as used in aubdTiiTaiona2 and 105 of,Article 1302, V.A.r
              It is our further opinion that the purpose of this oorpor-
    ation does oome within t.heprovisions of and is authorized by aub-
    division-4 of Artiole 1302, which we quote as follows:
              "To support and maintain bicycle clubs, and,other
         innocent sports. Acts 1897, p. 189; G.L. vol. 10, p. 1243."
              This department has frequently construed the above subdivi-
    sion and the term "lnnooent sportsn has been defined at length in our
    opinion numbered O-2866 ad$.ressedto the Seoretary of State and dated
EM. Claude Iebell     - Fags 5

XovaPtb8r 15, 1940j to rhlah you my refer.         A typioel   exemple or
**part* cad one almost alweya lleted bf the authoritise           14 *hunting*.
We belleve   bwfti   afstol and rifle    shootlag to be almaZy allied       with
%untlng*,    and wltr?ot..t further elsboratlon   on tha matter it 1s our
opinion that the art and sport of TiSfle and rlstol          shooting* exer-
~oired lawfully and an nasied in the ahemer oleerly        oomes within the      ,
term ninnooent aports” ab epeolflsU       in eubdlvlslon   9 af Xrtlale 1302,
V.A.C.6.
          Artiole  5914, Q.l..U .S., eatabllshee   the feea to be oberged
by the seontary   or State upan the filla      or in oharter, the pertinent
parta of whioh we quote belowr

            “Upon flllng    esoh ahsrter, emendment or su pleaent
     tbnto     of a aorporetlon     for the support of pubPio worehip,
     any benevtolent, ahedteble,       eauaatlonal,    mis~lonury, IAt-
     rrery or roientlfla      underteklag,   tke  melntenanoe of a Ub-
     rery, tha gromotlon of a publla oemterp not far profit and
     tb enoouregement OS rgrlonlture         and kortioulture,       to aid
     lte memben in produolq        aad merketlag agrloulturel          pro-
     Euota, or for aaqulrlng, reislng,         breeding     fattening    or
     matrketingilve atoak, U filing        See of Ten fWJ.00)        ;nollors,
     and for rung       the esml-ennusl rinenaial       rt8tement or euah
     agriotitural     pro&iota or live etook oorporstlon,         Tea (!310.00)
     Dollere,   uhlah shall lnolude tha annual llaensa fee.
           “Upon flli!~    eaoh eherter,    smendment or eupllament      there-

           As we have hsld thet the propored aeaoolatlon here is not for
the support of an e&aostlouel undertaking,  it follonr   thst said aeso-
clatlon fall8 wlthfn the statutory langua&e reedinu *piveto oorpor-
atlon or&ted fcir any ather purpose isxtended for mutuel. .I benefltw
and that acnnequently the $50.00 flllug  fee 1s spplioeble   end due.
          Artlale IO&%%, Q.~,.C.~., authorizes   the fran~blea tax for
every domeetlo an4 forelffn aorporation   ahartered or lmmrfrsd    to do
buefnees in Texas.  %a quote below only that part of the etatute wbleh
we believe applieeble to the fa8te here;
           *.....provlded, that suoh tax shnll not be leatar fMan
     Twenty rollare  (.“aO) in the oaae of s    oorporatlon,
     f&t those without oaplt@$letoek, md provide8 further +w=,
     %a tax ehell in no ca~se~iiiputed on a sum leea than the
     aeeeesed velue, for State ad valorem tax purpoaee, of the
     property  owned by the oorgmtion    in this State.” (Xmphssle
     edaec) .
                                                                    51

Hon. Claude Isbell - Page 0

          Purs,uantto the wording of the foregoing statute, it is
our opinion that the minimum Twenty Dollar ($20) annual Sranchise tax
should be assessed against the corporation proposed here.
          Article 7094, V.A.C.S., lists the types of aorporations ex-
empt from payment OS the Sranohise tax and is quoted as follows:
          "The Sranohise tax imposed by this chapter shall not
     apply to any insuranae company, surety, guaranty or Sidelity
     company, or any transportation aompany, or any sleeping,
     oalace car and dinins oar oom~sn~ whioh is now reauired to

     for private proSit,--
                         or corporations organized Sor the purpose
     of holding agricultural fairs and encouraging agrioultural
     pursuits, or for striatly eduoational purposes, or Sor purely
     publio oharity." (Emphasis added).
          The aharter revealk that the association has no aapital
stook; but is it one organized Sor the exolusive purpose of promoting
the public interest? :Kathink not.1 She Suoreme Court of Oklahoma
In the oase of Jtate v. Crockett, 206 p. 81i, deiines "publio interest"
thus:
         nPublic interest means more than a mere ouriousityr
    it means something in whioh the public, the oommunity at
    large, has some peouniary interest, or some interest by
    which their legal rights or liabilities are aiieoted."
          All statutory eSeItIpt$.onS SIYXntaxation are strictly oon-
strued and one olaiming an exemption must bring himself olearly within
the statutory exemption. MoCollum v. Assooiateg Retail Credit Men OS
Austin, 41 S.5:.26 45. The association here is purely a private oon-
oern, oreated for the advanoement OS a private end and whose objeot is
to promote private interests. It is to be formed for the beneSit and
advantages of its members and the Sranohise oonierred is 'tobe exer-
cised in their behalf. Consequently, it is our opinion that it is not
a oorporation organized to promote pub110 interest and theresore does
not come within the foregoing provisions OS the exemption statute.
          To reoapitulate, and speciiically answering your two qnes-
tions in the order asked, it is o"r opin~ionthat the proposed,oharter
here under oonsideration may be properly filed under Section 9 OS
Artiale 1302, V.A.C.S., when it is validly subscribed, soknowledged
                                                             I,.,
                                                                    52

  Hon. Claude Isbell - Page 7

   and oom leted; ttit the proper Siling S3e to be oharged is FiStty
   ($50.00P Collars and that the oorporation is subjaot to an annual
   franchise tax as required by law.
                                         Very truly yours

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