Court Opinion

ID: 4140268
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:57:02.603894+00
Date Added: 2024-06-11T14:46:29.510569
License: Public Domain

HE   A       ORNEY     GENERAL
                       OFTEXAS

Honorable Sidney Latham
Secretary of State
Austin, Texas
Dear Sir:              Opinion No. O-6045
                       Re: Whether a marketing association
                            is authorized t@ engage In the
                            oil business or other purposes
                            not specifically mentioned in Art-
                            icle 5740, Vernon's Annotated Civil
                            Statutes, and related questions.
Attention:   Mr. R. J. Long. Head of Charter Division
         Your letter of May 24, 1944, requesting the opinion
of this department regarding the questions stated therein is
as follows:
        "This department has on file an application
   for a permit to do business ih Texas by the Indiana
   Farm Bureau Cooperative Association, Inc., an In-
   diana corporation. We are accompanying this letter
   with our complete file relative to this application.
        "This department has in its suspense fund $50.00
   as the filing fee for said application.
        "Please advise this department on the following
   questions relative to said application:
         "1. Is a marketing association authorized to
    engage in the oil business or other purposes not
    specifically mentioned in Article 57401
         "2 . Is a foreign marketing association required
    to pay franchise taxes?
        "3 . Please define for the benefit of this de-
   partment the powers of a marketing association as set
   out in Article 5740, especially the powers to manu-
   facture, sell, supply and finance.
        "4 . Should this department approve the enclosed
   application for a permit?"
Honorable Sidney Latham, page 2         O-6045

         The Indiana Farm Bureau Cooperative Association,
Inc., is an Indiana corporation, organized and doing business
under the Agricultural Marketing Statutes of Indiana, which
are in many respects, similar to Article 5740, Vernon's An-
notated Civil Statutes. Said corporation has made application
for a permit to do business in the State of Texas, and the
purpose of the business desired to be transacted in Texas, as
shown in the application for a permit, is:
         "To engage in any activity in connection with
    the marketing or selling of agricultural products of
    its members, or with the harves~ting,preserving, d,rg-
    ing, processing, canning, packing, storing, handling,
    shUp%,    or utilization thereof, or the manufacture
    or marketing of the by-products thereof; or in con-
    nection with the manufacturing, selling or supplying
    to its members of machinery, equipment or supplies;
    or in the financing of the above enumerated activities;
    or in any one or more of the activities specified
    herein, and to extend such activity to non-members
    and their products as limited by Article 5738, as
    heretofore amended."
         The foregoing statute was amended by House Bill No.
295, Acts of the 48th Legislature, Regular Session, 1943,
authorizing citrus and other agricultural caretakers or or-
ganizations to organize and operate on a cooperative basis.
         Chapter 8, Title 93, Vernon's Annotated Civil Statutes,
pertains to marketing associations. Article 5740 of this
Chapter provides:
         "An association may be organized to engage in
    any activity in connection with the marketing or
    selling of the agricultural products of its membera,
    or with the harvesting, preserving, drying, process-
    ing, canning, packing, storing, handling, shipping,
    or utilization thereof, or the manufacturing, or mar-
    keting of the by-products thereof; or in connection
    with the manufacturing, selling or supplying to its
    members of machinery, equipment or supplies; or in the
    financing of the above enumerated activities; or in
    any one or more of the activities specified herein.
    Provided, however, any such activity may extend to non-
    members and their products limited by Article.5738 as
    heretofore amended."
    Article 5742, Vernon's Annotated Civil Statutes, designates
a number of powers which any association organized under said
Chapter 8, Title 93, possesses. Article 5744, Vernon's An-
.-   ,

         Honorable Sidney Latham, page 3         O-6045

         notated Civil Statutes, sets forth certain requirements to be
         set out in the articles of incorporation. Article 5763, Ver-
         non's Annotated Civil Statutes, provides:

                  "The provisions of the general corporation
             laws of this State, and all powers and rights there-
             under shall apply to associations organized here-
             under except when in conflict with the provisions
             of this chapter. Provided, however, that any co-
             operative marketing association incorporated under
             the laws of any other State may apply for and be
             granted a permit to do business In this State and
             pay the same filing fee as required of domestic cor-
             porations organized for a similar purpose. Provided
             further, that such foreign cooperative marketing
             associations shall not be required to have a paid-up
             capital or any portion of the capital paid-up in order
             to be entitled to such permit,”
                  Article 5764, Vernon's Annotated Civil Statutes,
         provides:
                 "Each association organized hereunder shall
            pay to the Commissioner an annual license fee of ten
            dollars but shall be exempt from all franchise or
            license taxes. For filing articles of incorporation,
            an association organized hereunder shall pay ten dol-
            lars, and for filing an amendment thereto, two dollars
            and fifty cents."
                  Article 1529 and Article 1532, Vernon's Annotated
         Civil Statutes, are as follows:
                 Article 1529:
                 "Any corporation for pecuniary profit, except
            as hereinafter provided, organized or created under
            the laws of any other State, or of any territory of
            the United States, or of any municipality of such
            State or territory, or of any foreign government,
            sovereignty or municipality, desiring to transact or
            solicit business in Texas, or to establish a general
            or special office in.this State, shall file with the
            Secretary of State a duly certified copy of its art-
            lcles of incorporation; and thereupon such official shall
            issue to such corporation a permit to transact business
            in this State for a period of ten years from the date
            of so filing such articles of incorporation. If such
            corporation is created for more than one purpo!e, the
            permit may be limited to one or more purposes.
Honorable Sidney Latham, page 4          O-6045

        Article 1512:
         "Such corporations,   on obtaining such permit,
    shall have and enjoy all   the rights and privileges
    conferred by the laws of   this State on corporations
    organized under the laws   of this State."
         It is not necessary to determine whether the charter
and the various amendments thereto authorize the above men-
tioned corporation to engage in the oil business and other
purposes not specifically mentioned in Article 5740, Vernon's
Annotated Civil Statutes, in States other than Texas. It is
clear that the corporations would not possess such powers
in this State. Generally speaking, apart from the limitations
which have been established by express enactment, the power
of any particular corporation Is limited by the purpose for
which it was incorporated as expressed in the special statute
authorizing its creation or in the charter filed under the
general corporation statute. The principal rule that has been
formulated for the interpretation of charter powers is that
only such powers are given as are clearly embraced in the
words of the Act or charter or derived therefrom by necessary
implication in view of the object of the grant.
         In every grant of corporate powers, there Is implied
a power to do whatever is necessary or reasonable, appropriate
to the exercise of the authority expressly conferred. There
are numerous authorities supporting this statement , and we
deem it unnecessary to cite such authorities herein.
         After carefully considering Chapter 8, Title 93, Ver-
non's Annotated Civil Statutes, it is our opinion that market-
ing associations organized under said chapt,er.
                                              can begorganized
only for the purposes as specified in Article 5740, and that
such associations possess only such powers as are set forth
in Article 5742 and those Fmplied powers to do whatever is
necessary or reasonable, appropriate to the exercise of the
authority expressly conferred by said statute. It is our
opinion that a corporation organized under Chapter 8, Title
93, does not have any legal authority to engage in the oil
business or any other businesses or purposes not specifically
mentioned in Article 5740, and has the implied powers to do
whatever is necessary or reasonable, appropriate to exercise
the authority conferred by statute.
         Specifically referring to your first question, You
are advised that it is our opinion that a foreign corporation
organized under statutes similar to the StatUtes contained in
Chapter 8, Title 93, supra, when it procures a permit to trans-
act business in this State, is not authorized to engage in the
.   ,

        Honorable Sidney Latham, page 5         O-6045

        oil business or other purposes not specifically mentioned or
        Implied in Article 5740, although the charter of any such
        foreign corporation may authorize such corporation to engage
        in the oil buslnesa or other businesses not specified or
        mentioned in Article 5740. Referring to Article 1529, Vernon'8
        Annotated Civil Statutes, in the case of Western Public Service
        Cornany v. Meharg, 288 3.W. 141, (rehearing denied 292 S.W.
168 P it is stated:

                 "In view of the comprehensive nature of the
            first declarations expressed in article 1529, it ap-
            pears to us that the concluding sentence is per-
            missive in favor of the corporation so long a8 the
            purposes named in its charter do not include some for
            which franchises are not grantable to domestic cor-
            porations and does not include a combination of pur-
            poses not permitted to domestic corporations. So
            long as the charter purposes are within this leglti-
            mate range, the foreign corporation is entitled to
            get that for which it asks. * l *"
                 As heretofore stated, a domestic corporation organ-
        ized under Chapter 8, Title 93, would not have the legal au-
        thority to engage in the 011 business nr other purposes not
        specifically mentioned or implied in Article 5740, and in
        view of the opinion cited In the preceding paragraph, it Is
        the opinion of this department that a foreign corporation
        could possess no greater powers than those of domestic corpor-
        ations. Therefore, we respectfully answer your first question
        in the negative.
                 We now consider your second question. Article 7084,
        Vernon's Annotated Civil Statutes, requires that every domestic
        or foreign corporation heretofore or hereafter chartered ore
        organized to do business in Texas, or doing business in Texas,
        shall pay a franchise tax according to the applicable provi-
        sions of said statute and the applicable provisions of Chapter
        3, Title 122, Vernon's Annotated Civil Statutes. (Article
        7084 being contained in said chapter and title)
                 Article 7094, Vernon's Annotated Civil Statutes, ex-
        empts certain corporations from the franchise tax heretofore
        mentioned. However, corporations such as the corporation under
        consideration Is not exempt by said statute. Domestic corpor-
        ations organized under Chapter 8, Title 93, Vernon's Annotated
        Civil Statutes, are exempt from franchise taxes. It i8 well
        established that the franchise tax 18 not a tax upon the prop-
        erty of the corporation nor upon its income, but is a'oharge
        made by the State against the corporation for the Privilege
        of doing business in Texas. (See RiMebrand, Texas Corporations,
Honorable Sidney Latham, page 6         o-6045

Vol. 3, page 420 and the authorities cited therein)
         Article 7084, supra, requiring corporations to pay
a franchise tax is a general statute.
         Article8 7094 and 5764, Vernon's Annotated Civil
Statutes, exempt certain types of corporations. In order for
a COrpOratiOn t0 avail itself Of these exemptions, it must
clearly show that it comes within the exemptions.
         In the case of McCallum, Secretary of State v. As-
sociated Retail Credit M-enof Austin, 41 3. W. (2d) 45, Fe-
ferrlrg to Article 7084 and Article 7094, Vernon’8 Annotated
Civil Statutes, Judge Crftz said:
         "The rule Is that where a tax is levied by a
    general law and one claims an exemption therefrom by
    reason of some exemption Statute, he must bring him-
    self clearly within the exemption. In other words
    an intention on the part of the Legislature to grant
    an exemption from the taxing power will never be im-
    plied from language that will admit of any other rea-
    sonable construction. Such an intention must be ex-
    pressed in clear and unambiguous terms, or must ap-
    pear by necessary implication from the language used."
         We do not think that the corporation under consid-
eration comes within the exemptions contained in Article 7094
or Article 5764. Therefore, it 18 our Opinion that a farm
marketing association having a permit to do business in this
State is subject to the franchise tax a8 required by Article
7084. In connectlon with your second question, we have also
carefully considered Section 1, Article 8 of the State Con-
stitution, regarding equal and uniform taxation, and the au-
thorities cited under said provisions. It is our opinion
that OUP answer to your second questlon Ln no way contravenes
the provisions of the Constitution heretofore mentioned.
         Your thLrd question is 80 broad and general that this
department can serve no useful purpose by attempting to answer
the same. If you have any particular question concerning the
powers of marketing associations to manufacture, sell, supply
and finance as mentioned In Article 5740, Vernon's Annotated
Civil Statutes, we will be g,ladto give same our prompt atten-
tion. Therefore, we respectfully decline any answer to your
question number three.
         With reference to your fourth question, you are res-
pectfully adViSed that It Is the opinion of this department
that you should approve the application of the Indiana Farm
Honorable Sidney Latham, page 7          O-6045

Bureau Cooperative Association, Inc., to a0 business in this
State. It will be noted that the purposes of the business
said corporation desire8 to transact in Texas are such pur-
poses a8 are mentioned in Article 5740, Vernon'8 Annotated
Civil Statutes, and the purposes Stated In Said appllcatlon
do not reflect that the corporation desires to do In this
State an oil business or any other businesses not specifl-
tally mentioned In said Article 5740. A permit granted under
the application would not authorize the foreign corporatFon
to conduct an oil business in this State or any other business
in this State not authorized by Article 5740, Vernon's Anno-
tated Civil Statutes.
         When the Indlana Farm Bureau Cooperative As8oclatlon,
Inc., adopt8 the provisions of the Marketing Act, It adopt8
either intentionally or unintentionally, the above quoted
Article 5740 a8 its purpose clause thus acquiring all the
rights and privileges afforded by the Act, a8 well a8 becoming
bound by Its limitations.
         The term "Oil bUSine85" a8 USed in this opinion is
used as such term 18 ordinarllg defined and UnderStOOd, and
a8 used ln Subdivisions 36 and 37 and 38 of Article 1302,
Vernon's Annotated Civil Statutes.
         We are returning herewith the entire file accompany-
ing your Inquiry.
                                Yours very truly
                            ATTORNEY GENERAL OF TEXAS

                               By s/Ardell Williams
                                    Ardell Williams
                                          AssIstant

AW:EP:wc

APPROVED OCT 4,.1944
 s/Grover Seller8
ATTORNEY GENERAL OF TEXAS
Approved Opinion Committee By s/BWB Cha.irman