Court Opinion

ID: 4142979
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:28:12.895022+00
Date Added: 2024-06-11T14:33:55.434537
License: Public Domain

OFFICE   OF THE AlTORNEYGENERAL    OF TEXAS
                         AUSTIN

Hon. %I. J. Lavaon
Seoretary or State
hrtin,  Texas

                                                 n Richardron

                                         oducte berore

Dear Sir:

     an e!nendmen~ inereaalng the authorized capital
     stook to iS,OOO,OOO.OO for wh-llchthe correct g2.60
     filing fee har been paid thie Department.

          “Ths amendment anpears fc be in the pmper
     form, but its rtook is divided into two olaeser
     -- 100,000 ehsree of coszon etook and 25,000 eharen
     or preferred ntook. noth oommon   and preferred are
     voting etook and both olagsea of stook reoeire
     dirldendn not to exceed 8% per ennua, the only
                                                                   ,
                                                                           811

Bon. Wm. J.    tareon,    Page 2

     difterenoe between the ooimnon and preferred @took
     Ir that the preferred may be redeemed or retired
     upon EO days notloe end that It shall be prererred
     an to 'amset  and the dlrldendr oumuletlve'.

          'Tha plan of operation is to eel1 the oommon
     rtook to producers, but the preferred stock nay
     be Bold to non-uroduoers.  So far 86 we know, thlr
     im the rlrst time the cucstlon hsr erlsen a6 to
     preferred stock having the rlght to vote end being
     rold to non-producerl.

          'booordlng to Article 6743 of the Revised CIvIl
     Statutes, xeabers   of the oorporatlon or common stook-
     holders must be prod~ucers. ~rtlole 5750, hoverer,
     provide6 'any e6socIatIon oresnlced vlth stock under
     thi6 law EAJI 16eue preferred stock with or wlthout
     the rlght to vote'.

          “The ouestton In this connection la whether,
     when the preferred stock ha6 the right to vote, ltr
     owner6 are therefore member6 of the corporation and
     murt be prOdUOOr6, or whether being preferred Itook-
     holderr ther need not be produoere.

          ‘8inoe the pmjeot  16 the large63  one to be 6ub-
     lltted to thi6 Eecartaent under the Cooperative
     &rk6tlng bOt, we requeet an opinion rrom your Depart-
     ment on this point berore the charter mendsnent la
     approved.   The ChArter amendment 16 attached  hereto
     for your OOn6ideratlOn."

              Article    5743,   Vernon's Annotated civil Statute8 reeds
a@ ro11orr:

            ‘(A)  Under the term6 and conditions WescrIbed
      ill it6 by-laws, en aaeoclation may admit an members,
      or is6ua aomaon 8took, only to persona engaged in
      the production of the agricultural products to be
      handled by or through the eesociatIon, lnoludlng
      the lealeer and tenant6 of land U66d for the pro-
      duotlon of 6Uch pmduots    and any lessors end land
      Ownere who receive a6 rent art of the croo raised
      On the leared preaI6e6.    (by xi a member of a non-
      6took   a68oolatlon b6 other than a natural pereon,
                                                                I

                                                                    812

Hon. Wm. J. Lawson, Peg0 3

      suoh member may be presented by any lndlvldual,
      assoolate orrloer or member thereor, duly author-
      ised in wrItlng.  (01 Any aeeooletion es derlned
      In Artlole 5738 (01 may beooao A member cr 6tock-
      holder of any other .a66ociAtion or as6ooietlons
      organized hereunder.'

            Article 5744, Vernon's Annotated civil Statutes,
provldes   In   part   as   roilowrt

            I    . ff organized with cacltel stock   the
      amount'oi suoh oaoltal 6tock end the number'oi
      rhare6 Into whloh'lt 16 divided end the par value
      thereor.   The capital 6took may be divided into
      preferred And common #took. If 60 divided the
      Artioles  of Inoorporation must oontain a state-
      ment of the number of shares of etock to whloh
      preference Is granted and the number of 6hares
      of stooli to whloh no preferenoe 18 granted and
      nature and extent of the preferenoe und prlvl-
      lege6 granted to eaoh. . .*

            Artiole 6750, Vernon's Annotated   Clvll Statutes
provides   ln part:
           0    . Any as6ooLation organized with stook,
      under ih;s law, may 186U6 preferred stock, with
      or without the right to vote...'
          Article 6720, Vernon's Annotated Clvll Statutes
among other things provldesr
           '(1) That no mdxber of the aesooletlon 16
      tiloded more than one vote beoauee Of the amount
      of 6t:ok or membership OapitAl he sey own ther6ln
      . . .

          It 16 apparent that under Article 6743, eupra, oom-
aon rtook can be 166ued only to pereons enyased in the pro-
duction of agrioulturel products to be hAndled by or through
the arsoulation, eto. ~onsldtrlne Articles5744 end 5750, muera,
together, it 1% evident that oomDanlt6 or acsooldtlsne organ-
Ired under the 'Cooperative l.;ar'ketIng
                                       Aot* may Iscue preferred
Stook, rlth or ulti-.Dutthe rlght to vote.  It will be noted
.

Bon. Urn. J.    Lawon,   P*gr 4          ,

that thr ?&operative ~brketing   hot’ does nOti rcqulrs  the
ouners of preferred stock in assoolatlone  or convsnlelr
orgsnlsad under the aot to be produoers or enrage in the
produotlon of aqrioultural vroducte ta be handled by or
through the aeroaiatlon or company.   At, as above etated
muah aesoolstlona or companlee may :seue Drererred 8took,
wlth or without the rlghf! to vote. The charter amend-
ment o? the I”smere and "On.9umcrs Con&any reads In part
am follows:

           #Said rharea are to be dlvlded into two
      (2) claeses, to-wit: Ccmson and iref erred,
      of which l.gO,otJOBharclr shall be common and
      25,000 &ares ahall be preferred.     Lath holder
      of oomson stock bnd each holder of preferred
      stock #hall be allowed one vote regadlsse     of
      the amount of stock owned by such ehare
      holder. . .”

          In view of the foregolnp  statute, the Farmers
and Concrumerr Comoany may lesue preferred etoak with or
without the right to vote, but It 1s act?arent from the
above quoted portion of the charter amendment that  the
bolderr of the preferred stook are allowed to rote. l’here-
fore, the above stated question la respcatfully answered
in the negative.

               Trusting that   the foregoing fully anewere your
inquiry,   we are
                                             Yours very   truly,

                         x1    /   1   ATTORNEY‘XHEFUL OF TFXAB

    FIR ;T AS’SIS”ANT
    ATTC)HMEY G%W.AL                              Ardell Yilllams
                                                        Asslatant
Aullh