Court Opinion

ID: 4142369
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:21:11.394682+00
Date Added: 2024-06-11T14:34:29.375254
License: Public Domain

OFFICE OF THE ATTORNEY GENERAL OF TEXAS
                              ADSTIN
Gerald C. Mann
Attorney General

Honorable D. Richard Voges
County Attorney
Wilson County
Floresville, Texas
 Dear Sir:                       Opinion No. O-3984
                                 Re: Can an injunction be secured
                                      to restrain a corporation
                                      from soliciting legal work
                                      for itself or for its attOP-
                                      neys and from practicing law?
           You have asked the opinion of this department on the abo’io
 and related questions contained in your letter of September 6, 19?~1,
 from which we quote:
           “On the facts herein stated, and questions ask-
      ed, will you please give me an opinion:
           ” ‘AI Company, a corporation is engaged in the
     business of printing stationery and selling office
     supplies, in connection with its printing business,
     its agents solicit the printing of Bonds and Warrants.
     A prospective customer is about to issue warrants, and
     in determining the cost of the printing of such war-
     rants, it is stated by the soli.ci.ting agent, that the
     co& of the printing would be $34.00; and that the
     legal work could be done in Austin for $30.00; that
     the prospective customer could get the legal work done
     in Austin for the sum of $30.00; that this legal work
     would include all of the legal work, but would not in-
     clude a Bond Attorney’s Opinion. It is not stated who
     the attorney is, nor is it stated that the prospective
     cus:omer would have to see the attorney, or that the
     customer would have to make any arrangem,ents. In
     other words, the impression is left, that the printing
     house would furnish all the legal work for the sum of
     $30.00.
Honorable D. Richard Voges, Page 2

             'Does this constitute practicing law?
          "Can the Corporation or its soliciting agent be
     proslecutedunder the existing law?
          "Can an injunction be secured restraining such
     corporation from so soliciting legal work, for itself;
     or for its attorneys, and from practicing such law?"
          Your first question is answered in the affirmative by our
Opinion No. O-831, written by Robert E. Repke, Assistant Attorney
General, and addressed to Honorable J. P. Bryan, County Attorney of
Brazoria County. Since that opinion deals with a fact situation
which is very similar to that outlined by you (except for the bond
attorney's opinion) we take the liberty of quoting from it at
length:
             "In your letter you make the following state-
     ment:
          "For a certain sum, say one per cent of the
     amount of the bond issue, the bond broker will enter
     into a contract with Brazorla County to work out a
     schedule of the amount and type of bond to be sold
     for the particular project suggested, and then procure
     the services of an attorney to prepare the various
     orders, notices and other instruments required to make
     up the transcript of the bond proceeding, pay the
     costs of the election, printing of the bonds and fur-
     nish the opinion of a recognized bond attorney. It is
     conceivable that the various orders to be passed by
     the court, the notices, etc., which make up the trans-
     cript could be prepared by a person not an attorney;
     however, all proposals that have been made to the Com-
     missioners' Court of this County have been that the
     brokers will furnish acceptable attorneys to prepare
     the transcript of the proceedings. As I understand
     it, perhaps more than half of the costs of proceedings
     contract will go to pay attorneys' fees.'
          "You further state that the parties who contract
     with the county in the above described manner are not
     licensed to practice law, but are individuals who are
     interested in purchasing bonds. You request our opinion
.

    Honorable D. Richard Voges, Page 3

         as to whether or not such contracts are illegal as
         constituting contracts providing for unlawful prac-
         tice of law by unlicensed persons.
              “It being admitted that the persons who enter
         into the proceedings contracts described in your letter
         are :notlicensed to practice law, the first question to
         be determined is whether or no,t the undertakings which
         such persons have contracted to perform on behalf of
         the county of Brazoria amount to ‘practice of law.’
             “The ‘practice of law,’ as generally understood,
        is the doing or performing of services in a court of
        justice in any manner depending therein throughout its
        various stages and in conformity with the adopted rules
        of procedure; but it is not confined to performing serv-
        ices in an action or proceeding pending in courts of
        justice and, in a larger sense, it includes legal ad-
        vice and counsel and the preparation of legal instru-
        mentv and contracts by which legal rights are secured
        although such matters may or may not be pending in any
        court. 7 C. J. S. p. 703.
              “The practice of law has also been defined as
         follows:
              “‘In litigated matters it involves not only the
         actual representation of the client in court, but also
         services rendered in advising a client as to his cause
         of action or defense. The practice of law also includes
         the giving of advice or rendering services requiring
                                             1 138 Han. 899,
         the use of legal skill or knowl.edge.
         page 907, 28 P. (2d) 765, 769.
              “The foregoing definitions or substantially simi-
         lar ones have been repeatedly approved by the appellate
         courts of numerous states. Some of the decisions which
         have approved one of the foregoing definitions of the
         practice of law or substantially similar ones, are here-
         with cited:
              “In Re: Opinion of the Justices (Mass.) 194 N. E.,
         313; Rhode Island Bar Association v. Automobile Service
         Association (Rhode Island) 179 A. 139; Eley v. Miller,
         34 N.E. 836; Paul v. Stanley (Washington) 12 Pa. (2d)
         401; People v. Peoples Stock Yards State Bank (Ill.)
Honorable D. Richard Voges, Page 4

     1.76N. E. 911; Crawford v. McConnell (Okla.) 49 Pac.
     (2d) 551; Childs v. Smeltzer (Penn.) 171 A. 883;
     Cain v. Merchants Nat’3 Bank & Trust Co. of Fargo
      N. Dak.) 268 N.W. 719; Re: Eastern Idaho Trust Co.
     IIdaho) 288 P. 157; Fitchette v. Taylor (Minn.)
     254 N.W. 910.
          “In Texas by statute, Article 43Oa, Penal Code
     of Texas, the practice of law is prohibited by any
     corporation, person, firm or association of persons
     except natural persons who are members of the Bar re-
     gulal?lyadmitted and licensed to practice law. Sec-
     tion 2 of Article 430a provides as follows:
          “‘For the purpose of this Act, the practice of
    law :Lsdefined as follows: Whoever (a) In a repre-
    sentative capacity appears as an advocate or draws
    papers, pleadings, or documents, or performs any act
    in connection with proceedings pending or prospective
    befo:rea court or a justice of the peace, or a body,
    board, committee, commission or officer constituted by
    law ,andhaving authority to take evidence in or settle
    or determine controversies in the exercise of the
     ‘udicial powor of the State or subdivision thereof; or,
     b) For a consideration, reward or pecuniary benefit,
    i’
    present or anticipated, direct or indirect, advises or
    counsels another as to secular law, or draws ‘1paper,
    document or instrument affecting or relating to secu-
    lar rights; or, (c) For a consideration, reward, or
    pecuniary benefit, present or anticrpated, direct or
    indirect, does any act in a representative capacity in
    behalf of another tending to obtain or secure for such
    other the prevention or the redress of a wrong or the
    enforcement or establishment of a right; or (d) For a
    consideration, direct or indirect, gives an opinion as
    to the validity of the title to real or personal prop-
    erty, or (e) As a vocation, enforces, secures, settles,
    adjusts or compromises defaulted, controverted or dis-
    puted accounts, claims or demands between persons with
    neither of whom he is in privity or in the relation of
    employer and employee in the ordinary sense; is prac-
    tici.nglaw. . . .I
          “We believe it requires no extended argument to
     establish that the preparation of orders, notices and
.   .

        Honorable D. Richard Voges, Page 5

             other instruments which are necessary to give valid-
             ity to an election to authorize the issuance of bonds
             are matters which require legal skill and learing on
             the part of the person undertaking to prepare such
             instruments. The various constitutional and statutory
             provisions with respect to the proceedings necessary
             to a valid issuance of bonds must be strictly complied
             with, and it is a matter of common knowledge in the
             lega:.profession that the field of bond law is a spec-
             ialized and technical one which requires experience and
             study by a trained m,ind as a prerequisite ,tothe prac-
             tice of such branch of the law. It seems plain to us
             that a person who undertakes to supervise all of the
             necessary steps leading up to a bond election and the
             issuance of bonds thereunder, including the preparation
             of necessary orders, notices and other instruments and
             the furnishing of a legal opinion upon the validity of
             a bond issue is unmistakably undertaking to practice law.

                  “We reach this result whether we accept as the
             controlling definition of the practice of law that
             definition set forth in Section 2 of Article 430a, Tex-
             as Penal Code, or, independently of the statute, the
             definitions which have been announced and approved by
             various appellate courts throughout the United States.
             We believe that no serious contention can be made to
             the effect that subdivisions (b) and (c) of Section 2
             of Article 43Oa, Penal Code of Texas, are not violated
             by the undertakings contained in the contracts describ-
             ed in your letter insofar as such contracts provide for
             the drawing of orders, notices and other legal instru-
             ments and the furnishing of legal opinions upon the
             validity of the bond issue.
                  “The most recent discussion by a Texas Appellate
             Court of a question analogous to the one presented in
             your opinion request is found in Montgomery v. Utili-
             ties Insurance Co., 117 S. W. (2d) 486, by the Beau-
             mont Court of Civil Appeals. This case is now pending
             for decision in the Supreme Court of Texas. In the
             Montgomery case, an insurance company having issued a
             liability policy in which it agreed to investigate all
             accidents and claims covered by the policy and to de-
             fend its assured free of cost in any action brought to
             reco~vera loss covered by the policy, subsequently
Honorable D. Richard :Voges, Page 6

   entered into an independent agreement with the assured
   whereby the insurance company agreed to defend any
   suit brought against its assured as a result of a cer-
   tain collision. Such independent agreement was term-
   ed a ‘non-waiver’ agreement, and it further provided
   that .theinsurance company should negotiate a settle-
   ment of the claim against its assured, and failing
   in such endeavor, that the insurance company would
   select and employ lawyers of its own choice to defend
   the case. However, the insurance company did not agree
   or bind itself to pay any judgment or court costs re-
   sulting from said suit. Attorneys selected and employ-
   ed by the insurance company subsequently defended a suit
   brought against the assured, and in such suit judgment
   was rendered against the assured. The owner of such
   judgment then instituted suit ,thereonagainst the in-
   surance company. In holding that the non-waiver agree-
   ment was illegal and invalid, the Court said:
         “‘That agreement, by its terms and by the construc-
   tion placed upon it by the insurance company itself in
   its pleadings in the present suit, was a contract to
   prac t:Lcelaw. It was therefore in violation of the pen-
   al statutes of this state which make it unlawful “for
   any corporation or person, firm, or association of per-
   sons, except natural persons who are members of the bar
   regularly admitted and licensed, to practice law. Acts
   &3rd l$ssg,p. 835, Ch. 238, Vernon’s Ann. Penal Code,
   Art.      . Being in contravention of the statute the
   agreement was illegal and of no effect.”
        “1 * * ** A corporation cannot practice law, and
   of course it cannot legally contract to do so. State
   v. C. s. Dudley & co. Inc. 340 MO. 852, 102 S.W. 2d)
   8%; State ex rel. v. Retail Credit Men’s AssIn, 1A3
   Tenn. 450, 43 S. W. (2d) 918; Boykin v. Hopkins, 174 Ga.
511, ~62 S. E. 796; In re Co-operative Law Co., 198
N.Y. 479, 92 N.E. 15, 32 L. R. A. N. S. 55, 139 Am.
   St. Rep. 839, 19 Ann. Cas. 879; Eley v. Miller, 7 Ind.
   App. 529, 34 N.E. 836; Richmond Assn. of Credit Men,
   Inc. ‘7.Bar Assn. 167 Va. 327, 189 S.E. 153; State ex
   rel v. Merchants’ Protective Corporation, 189 Cal. 531,
   209 P. 363; Bennie v. Triagle Ranch Co. 73 Colo. 586,
   216 P. 718; In re Otterness, 181 Mix-n.254, 232 N.W.
318, ‘73A. L. R. 1319; Black & White Operating Co. Inc.
   v. Grosbart, 107 N. J. L. 63, 151 A. 630.’
-

    Honorable D. Richard Voges, Page 7

              "l* * **  And since a corporation cannot practice
         law directly it cannot do so indirectly by employing
         competent lawyers to practice for it. That would be an
         evasion which the law would not tolerate. 2 R.C.L. 946;
         State v. C. s. Dudley & co. Inc. 340 MO. 852, 102 S. W.
         (2d) 895. The intervention of a corporation as general
         emplcyer of the attorney between him and the client is
         destructive of the necessary and important relation of
         trust and undivided loyalty which must exist between
         attorney and client. "Divided obli&ations in trust re-
         latic'nsare obnoxious to the law, and in none more SO
         than in that of attorney and client.' People v. Peoples
         Trust,Co., 180 A.D. 494, 167 N. Y. s. 767, 768.'
              ‘1* + * ,”

              "In the recent case of Rhode Island Bar Association
         v. Automobile Service Association (Rhode Island), 179
A. 139, an exhaustive and able discussion and review
         of the history of the decisions and reasons for prohibit-
         ing t,hepractice of law by unlicensed persons is found.
         In .tktat
                 case an automobile service association, for a
         stated annual fee, agreed to furnish legal counsel free
         of charge to represent and defend members of the associa-
         tion in cases involving violations of traffic laws, and
         also agreed to furnish such counsel for the purpose of
         prosecuting and defending, on the part of the member,
         claims and suits for damages for and against the members.
         The Court after quoting the contract in detail says:
              "'E~tchof the several numbered paragraphs of the
         respondent's (A.S.A.) contract with its customers calls
         for legal service of some kind, except paragraphs 3, 6
         and 1.1. True, this legal service is to be rendered not
         by them personally, but by counsel designated by them.
         Ostensibly such service is free, but actually it is by
         far the major part of the consideration which the CUS-
         tomer receives for his membership fee. Out of eleven

    (Note: In the Montgomery case, quoted from above, the decision of
    the Court of Civil Appeals has since been reversed by the supreme
    Court (138 S. W. (2d) 1062), on the ground that the Insurance company
    was defending the suit to protect its own interest, rather ,thanthat
    of the insured. But we think the authorities cited by the Court Of
    Civil Appeals in that case are applicable to the facts you give.
-

    Honorable D. Richard Voges, Page 8

        paragraphs, only three are not of a legal nature, and
        two of those are so inconsequential as to be disregard-
        ed.
               “‘These respondents then are engaged in selli~ng
        legal advice and assistance in association with a’duly
        licenisedmember of the bar of this court. Their as-
        socia~tionwith this member does not absolve them from
        respo:asibility. We see no difference in their case
        from that of the respondent in Re Co-operative Law Co.
          1910 198 N.Y. 479, 92 N.E. 15, 16, 32 L. R. A.
       ,I N.S. 1 55, 139 Am. St. Rep. 839, 19 Ann. Cas. 879, where
        the court says: “The relation of attorney and client
        is th,stof master and servant in a limited and dignified
        sense, and it involves the highest trust and confidence.
        It cannot be delegated without consent, and it cannot
        exist between an attorney employed by a corporation to
        practice law for it, and a client of the corporation,
        for he would be subject to the directions of the corp-
        oration, and not to the directions of the client.“’
              “In another place in the opinion, the Court says:
             ” ’Thus, indirectly through the respondent Morris,
        they have been assuming to conduct a law practice on a
        wholesale business scale reaching throughout the state.
        What these respondents cannot legally do directly they
        may not do indirectly. They say they have conducted
        this business for twelve years without interference.
        This may well be, but mere length of time does not and
        cannot convert into a legal act what is illegal.’
              “In view of the above cited authorities and others
         too numerous to quote in this opinion, we are constrain-
         ed to hold that the contracts described in your letter,
         insofar as such contracts provide for the furnishing of
         legal opinions on bond issues and for the preparation of
         orders, notices and other documents of legal nature, con-
         template and provide for the practice of law by an un-
         licensed person and, therefore, such contracts are il-
         legal..
               ”
.   -

        Honorable D. Richard Voges, Page 9

                  Article 430a of the Penal Code of Texas, cited by you,
        provides, in part, as follows:
                    “Art. 430a.   Corporation or association practicing
             law.
                  “Seetion 1. It shall be unlawful for any corpora-
             tion or any person, firm, or association of persons,
             excerltnatural persons who are members of the bar regu-
             larly admitted and licensed, to practice law.
                  “Section 2. For the purpose of this Act, the prac-
             tice of law is defined as follows: Whoever (a) In a        :~
             representative capacity appears as an advocate or draws    ‘-
             papers, pleadings, or documents, or performs any act in
             connection with proceedings pending or prospective be-
             fore a court or a justice of the peace, or a body, board,
             committee, commission or officer constituted by law and
             having authority to take evidence in or settle or deter-
             mine controversies in the exercise of the judicial power
             of the State or subdivision thereof; or, (b) For a con-
             sideration, reward or pecuniary benefit, present or
             anticipated, direct or indirect, advises or counsels
             another as to secular law, or draws a paper, document or
             insizument affecting or relating to secular rights; * * *.
                    ” * w * .

                  “Section 6. Any person, firm.,corporation, or as-
             sociation of persons violating any of the provisions of
             this Act shall be guilty of a misdemeanor. If any pro-
             visi~znof this Act is violated by any person individual-
             ly or by any person or persons representing a corpora-
             tion, or association, or by a corporation, the defendant
             or defendants upon conviction shall be punished by a
             fine of not more than Five Hundred ($500.00) Dollars nor
             less than One Hundred ($100.00) Dollars.
                  “Section 7, Any agreement by any person, corpora-
             ~tion,or association in violation of this Act shall be
             illegal * * * .‘I
                  We think the opinion of the Beaumont Court of Civil Appeals
        in the case of Stewart Abstract Co,, et al v. Judicial COmIiSSiOII Of
        Jefferson County, et al, also cited by you, is conclusive on the
Honorable D. Richard Voges, Page 10

question of whether an injunction will lie to restrain the illegal
practice of law. We quote from that opinion:
          "The next question then is: Did the trial court
     have :powerto enjoin the illegal practice of law. We
     think unquestionably the courts do have such power.
     McCloskey v. San Antonio Public Service Co., Tex. CiV.
     APP., 51 S. W. (2d) 1088, writ refused. Unauthorized
     prac,ticeof law constitutes a contempt of court. People
     ex rel. Ill. Bar Assn. v. People's Stock Yards State
     Bdnk, 344 111. 462, 176 N.E. 901; Clark v. Austin, 340
     MO. 467, 101 S. W. (2d) 97-f. Injunction is a proper
     remedy to prevent unlawful practice of law when asked
     by attorneys acting for themselves and other affected
     members of their profession. Fitchette v. Taylor, 191
Minn. 582, 254 N.W. 910, 94 A. L. R. 356, Supreme Court
     of Minnesota. And a corporation may be restrained by
     injunction from the performance of acts which constitute
     the practice of law. Dworken v. Apartment House Owners
     Assn, 38 Ohio ~pp. 265, 176 N.E. 577. The practice of
     law vitally affects the public interest and the courts
     have power to enjoin unlawful practice, or take such
     other steps within their constitutional powers as may be
     necessary to suppress such practice. Rzndall v. Brig-
     ham, 7 Wall. 523, 19 L. Ed, 285; Fitchette v. Taylor,
     191 Kinn. 582, 254 N.W. 910, 94 A. L. R. 356. See also,
     annotation to latter case in 911A. L. R.,pages 359 et
     seq.
           "A corporation has a legal right to employ an at-
     torney or maintain a legal department to handle its own
     legal  business, furnish it opinions, legal counsel or
     advice for its own benefit in connection with the per-
     formance of its lawful duties. We do not mean to hold
     otherwise. But a corporation mcty not furnish legal
     services to others and collect fees or profits therefor,
     directly or indirect1    and it may be enjoined from do-
     ing so. 2 Rawle C. L. 9t' 6; State ex rel. McICittrickV.
     C. S. Dudley & Co., 340 MO. 852, 102 s. W. (2d) 895.”
          You state that the "impression is left that the printing
house would furnish all the legal work for the sum of $30.00," AS-
suming that such is the nature of the contract made by the corpora-
tion, acti_ngthrough its soliciting agent, it is our opinion that it
is illegal, being in contravention of Section 7 of Article 430a of
.,e

      Honorable D. Richard Voges, Page 11

      the Penal Clode;that the responsible officers of the corporation and
      its soliciting agent may be prosecuted under Section 6.of said arti-
      cle; and that an injunction may be secured to prevent the corporation
      and its agents from a violation of said article.
                                                  Yours very truly
                                             ATTORNEY GENERAL OF TEXAS

                                             BY
                                                           W. R. Allen
                                                             Assistant
      WRA:RS

      Approved:   October 16, 1941
       $ - Grover Sellers                      Approved:   Opinion Commit&t
      First Assistant Attorney General         By:   B. W. B., Chairman