Court Opinion

ID: 4143901
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:38:57.009414+00
Date Added: 2024-06-11T14:29:31.989541
License: Public Domain

OFFICE   OF   THE   ATTORNEY   GENERAL   OF   TEXAS
                                  AUSTIN
QrruOC.Mucn
*-aolcnu

     Bonorable Los Br*,   Comulrrioner,
     Deprrtmont of Bankbag
     AmtIn, Texas

                                                       ed such shares
                                                     Morris Plan Bank,
                                                     ing taken out a
                                                    do but3illame
                                                                in
                                                   d related quoetlons.

                                           of Port loi%h, rort

                         ing adopted these powers, the
                       to the Pederal Deposit Insurance
                      for insurance of It.6deposits.
          2his application vas acoompaniod by aopies of
          tho charter papera, etc., vhioh refle@%Xl the
          fact that the corporation hae a capital rtoak
          of $100,000.00, of vhich $92,60OrOO Is ommd
          by Uld-Continent Banoahares, Inc. of Wilrdnp-
          toD,~Delavare, a foreiep corporation,vhioh,
          10 far as ~8 can ascertain, ham no permit to
          do bueheee in this State.
Donorablo Lee Brady - Pago 2

          'At the requert of the FDIC we roepeot-
     ?ully lubxlt the folloving questlonr(

          #l. Is the Uid-Contimnt Bumhares,
     Inc. a foreign corporation, lawfully doing
     business in the State o? Tezast

          #2. Are the Mid-Continent Bane&ares,
     Inc. and the liorrisPlan Bank of Fort North,
     or either or both, exercising banking privi-
     legee in violation of the privileges o? Sec-
     tion 18, Article 16 of the Texas Constltu-
     tion, or in violation of any other lav of the
     State of Tezasl
          .In the light of the Saote set out above,
     is the Port Worth Yorris plan Bank law?ullp
     entitled to exercise banking privileges ae
     provided for under Chapter 9 of the Banking
     Act including 6. B. No. 288t'

          The Norris Man hank of Fort Worth is a regularly
Org8IdzOdUorris Plan Bank under Chapter 9 of the Devised
Civil Statutes of Texnsr The Bank has been doing businees
for several years. It has complied with the requirements
of Sonata Bill No. 288, passed at the regular session of
the 48th Legislature (1989) and is now regularly author-
ized to do the things specified in such amendmmt, to-wit;

          'To receive money on time deposit, amd
     to purchase, sell, discount, or negotiate
     bonds, notes, certificates Of inoeetmont and
     chose8 in action for the payment of money at
     a time olther fixed or uncertain, ati to re-
     ceive paymmte therefor in installments or
     otherwise, with or without an allowance of
     intereet upon such instal1ments.s
           The Bank has applied for insurance under the
 Federal Deposit Insurance Corporation Act, and the Cor-
 poration has raised the questions which you have submit-
 ted to us.
           Mid-Continent Bancaharee, Sm. is a private cor-
 poration, organized under the laws of the State of Delaware,
                                                          ::.‘
honorable Lee Brady - pago S

whose oorporate pup080 Is as   r0ii0r88

          *To promte  organhe, om, uegotiata
     for, uqulrs aDafor dispose of the indus-
     trial banks, Industrial   loan oomes,     in-
     vestment oompanies and oorporations organ-
     ized for the prpose o? aoquiring shares of
     stook in wch baaka and/or a0        OS# and
     ordinsrily referred to as ho1r ng mmpanies,
     snd/or shares 0s stock or interests in the
     same.  To do any and all things neaessary,
     incident to, or rhlch may be deemd advls-
     able in oonnetflon rlth promoting, aaqulring.,
     ovning or dieposing of industrial baa&s, in-
     dustrial loan oompanies, imestment ooapan-
     lee and shares of stock or interests there-
     in, provided, horwer, that nothing contain-
     ed in this CertlSloafe shall be deemed to
     give the corporation the parer to engage ia
     the business OS banking.’
          The corporate purposes are such larger than
those abovo specified, but what ve have said is su??i-
cient for the purposes of this opinion.
          Th3 Constitution (Article XVI, Section 16, as
amcuded in 1CW) with respect to bodies with banking am2
discounting prlvileges prorides#

          ‘The Legislature shall by general lavs,
     authorize the lncorporatlon OS oorporate bod-
     ies slth bankhe ad discounting privileges,
     and shall provide iOr a system OS State super-
     vision, regulation and control of suuohbodies
     which will adevafely protect and secure the
     depositors and oreditors thereof.
          *lo such corporate body shall be charter-
     ed until all of the authorlsed oapital stook
     has been subscribed aad paid for in full In
     oash. Buch body corporate shall not be author-
     lred to engage in business at more than one
     plaoe shioh shall be designated in Its charter.
          *NO foreign  oorporation, other than the
      national banks of the United States, shall be
Ponsrable Lea Brady - Page 4

     permittedto erecoissbanldq or dlsoounting
     prlvllegesin this #tats.’
          The oapltal   atook 0s the Xorrls Plan sauk          0s
Fort lorth ls ~100,000m, all paid, OS -hiah #@2,600.00
Is owned and held by th,aMid-ContinentBumshares, Sm.,
which corporatlon, as ciove state&,is a foreign oorpora-
tlon, and shioh has no przdt to do buslnesr In this State,
          UtW~?luenosdby the fact that Ulddontlnent
Banashares,1~. owns the oOntrOllinginterestin the
shares of the Morris Plau Bank of Fort Torth, there is
no doubt that the honk Is lattully suthorlsed to trans-
aot the business for vhioh it was incorporated,lnolud-
ing the added powers oonte.inedin the amendmentof 1939.
          ls are further o$ the opinion the situation
is not changed by reason of the fact that the Ibid-Contis-
ent does ouu the controlling interest in the ahares of
tha Texas bsnk.
          In   Xiwoney YE. Moroney,   226   8.   V.   181,   if Is
said:
          sSt Is well cettlQd that a shareholder
     ln a corparatlon is in na sense the legal
     owner of the property of the corporation.
     The corporation is a legal entity, and the
     title to Its assets is vested in the corpora-
     tion. The stockholder does own, however,
     his shares, stock, or interest whatsoever in
     the corporation, and this oarries with it
     oertain legs1 rights, but they are not the
     rights o? a legal owner 0s the corporatlon~s
     assets in ~hola or in part. This distinction
     holds good even thou@ all the stook may be
     held by a single iudlridual,s
            Upon this +nolple It 1s the general, if not
the universal dootr%ne,that the mere ?a&     that a for-
eign corporationholds stook in a domestic corporation
does not of itself ooustitute doing buslness by the
foreign oorporatlon In the state o? the domestic corpor-
ation,  even though amh mner8hip is the oOntrOllingIn-
terest in the stock a? the dolpestio COrpOratiOn.   See I7
tletohervs Cyor Oorporatlon Law, 800. 24901 20 C. J. 88~.
lCo r p o r a tio,n
                  Sea. I8411 I2 R. C. L, P. 8. aCorporatlo5ss
Honorable LCZ Brady - Page 6

mo,   &&J   23   Am. Jur. 5Corporatlono6,Sea. 374.
          This dIstinctIon,however, met be noted. If
the Soroip corporation ownbg stock in the aO~stiO
corporation acquire6 or holds such stock as a part of and
in accordance with Its corporate purpose -- that is, as
n holding company -- the foreign corporation is thon do-
ing business in the State of the dometio corporation.
Bee Bankers aolding Corp. vs. kaybury, 297 P. 7401 11
Fletch0rt6 Cyc. of Corporation Law, Sec. 8, 490   14 A.
Corpus Juris, Sec. 18411 20 C. J. Sec. *Corpora1ions5
Sea. 1841~ 12 Rawle C. L, P. 8. 5CorporationsmBee. 5.41
23Axi.Jur. 5Corporationsm,Sec. 374,
          In the situation last stated.the doing of busi-
ness by the foreign corporation in the state other than
that of its doudcllo is not the doing of the business of
the dosestic corporatloc, but It is the doing of Its own
business. Concretely stated, the situation is this: The
&lid-Continenthancshares, Inc. IS doing business -- that
Is, carrying on Its corporate business -- in Texas wben
It acquires and holds the capital stock, or any part
thereof, of the borris Plan hank of Fort Vorth, but such
business Is that of holding stock, emi not that of con-
ducting a basking business. In trut!:,tllL3Lid-Contin-
cntts charter expressly dmies to it the right to carry
on a banking business.
          We have an express statute In this Etato-som-
tines referred to as the Stan&ard-HumbleAct -- which
roads as follow6t
                'IShenany foreign corporation with-
      out a permit to do business in this State law-
      fully own8 or my lawfully own or acquire
      stock In Texas corporations, it shall not be
      uu.lawfW for such foreign corporation to Vote
      that stock and participate in the management
      and control of the bUSin     ati affair6 of
      such Texas corporation, as other stockhold-
      srs , subject to all laws, rules and regula-
      tions governing Texas corporations,and es-
      pecially subject to the provisions of the
      anti-trust lavs of the State of Teras.. --
      Rev. CiV. Stat. (Vernon'*6codification)
      Article 5333a.
                                                               .:

Honorable   Lo0 BraQ   - Pago 6

          me tJIpM66 00 OpiIdOn a6 t0 the effect of this
StPtUt0 other thUl in r66p6Ot t0 the ri@lt Of such for-
elm corporation to vote such Stock and otherwise partlc-
ipate In the managemsnt Oi the affalrs of the domsstio
oorporation as any other shareholder.

          Apply*   these prlnolples, and upon these con-
siderations, we rsspeotfully answer your questions as fol-
lWD,

           1. Ire express no opinion as to vhether or not
the Mid-Continent Banoshares, Inc. IS larfully doing busi-
n066 In the stat4 of Texas. We do hold, however, that it6
notlrltle6, as disclosed by you, cl0 not atieot the StatUS
or rights of the Iborris Plan Bank of Tort Worth ns n Texas
corporation to carry on Its corporete purposes and affairs.

          2.   This question should be answered in the nega-
tive as t0 both bStitUtiOn6   -- the &id-Continent Bano-
shares, Inc ., and the YOrrls Plan Bank of Fort Worth.   In
this connection it 16 pertinent t0 gay the inCOrpOratiOn
of the Morris plan Bank of Port Worth Should not be con-
sidered n subterfuge or scheme for the carrying on of the
Uid-Continent Bancshares, Inc. busine65, for the bUSln058
of the two corporations -- that is, the corporete purpose
-- is not the same. The corporate business of the Liorris
Plan Hank 16 that of a banking oorporatlont whereas, the
oorpornte business of the blid-Continent (insofar 86 perti-
nent here) is that of n holding corporation.

          Trusting that what we hare written ~111 hnoe
answered your questioos 6atl6factorlly, we are

                                Very truly your6

                           ATTOJUW    G.m#DRAL OF Ty

                           BY