Court Opinion

ID: 9772075
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:06:53.065574+00
Date Added: 2024-06-11T15:42:25.070582
License: Public Domain

CLINTON, Judge,
dissenting.
The result reached on original submission is, in my judgment, the correct one, and its rationale, once the existence,1 organization 2 and commencement of business3 of and by 3-W Appliance Sales & Service, Inc. (“3-W”) as a corporate entity are found,4 is impeccable. The simple rule applied is that the proof must show the alleged owner did not consent to the challenged taking of the stated property.
Now, with considerable hyperbole, the opinion for the majority would grant the State’s motion for rehearing and affirm the judgments of conviction. The claim made by the majority is belied by the very cases it relies on. Thus, in Giles v. State, 97 Tex.Cr.R. 619, 263 S.W. 289 (1924) the proof was made when “each of the other four directors testified that the board of directors as such ”5 had not consented to the felonious abstraction of funds under its control; similarly, in Connelly v. State, 93 Tex. Cr.R. 397, 248 S.W. 342 (1923), “The president of the bank testified that neither he nor any of the bank officials gave appellant permission to appropriate funds of the bank.” Manifestly, the panel opinion does not grant a license to steal from a corporation; it just insisted that an essential element of the offenses be proven by the State beyond a reasonable doubt, and held the burden had not been met.
However, in my view the core problem here was created by the State when its representative determined to plead in the indictment that the owner of the appropriated funds was “3-W,” a corporation, and, accordingly, I am not convinced that the right question has yet been asked: In 1974, when the alleged fraudulent transactions took place, were the abstracted funds owned by a legally functioning corporate entity, namely, “3-W”? In my opinion, they were not, for I am not satisfied the State proved, indeed could prove, “3-W” was that character of corporate business.
While it is certainly true that issuance of a certificate of incorporation by our Secretary of State is “conclusive evidence” of “the corporate existence,” TBCA, Article 3.04, that does not necessarily mean that the named corporation has commenced business. To the contrary, TBCA imposes other requirements in order for the corporation to start up and engage in business.
Among others, TBCA, Article 3.05 prohibits a corporation from transacting “any business or incur any indebtedness,” with exceptions not now pertinent, “until it has received for the issuance of shares consideration of the value of at least One Thousand Dollars ($1,000.00) consisting of money, labor done, or property actually received.” Though Westmoland is shown to have paid into a bank account bearing the corporate name funds to operate the business, we do not know that his payments were understood to be “consideration” for issuance of shares of “3-W”-and it is undisputed that shares were never issued.
For another, TBCA, Article 3.06 dictates that after a certificate of incorporation is issued, “an organization meeting of the initial board of directors named in the articles of incorporation shall be held ... for the purpose of adopting bylaws, electing officers, and transacting such other business as may come before the meeting...” Again, all are agreed that the directors meeting was never held; there were no bylaws or resolutions; and while Westmoland is said to have been “president,” his title is invariably surrounded by quotation marks. General authority to manage the business and affairs of a corporation “can only be jointly *205exercised by the directors as a board and not as individuals,” and during a deliberative meeting.6 Even a majority of directors “in their individual names” cannot act for the board itself, and bind the corporation,7 Star Corp. v. General Screw Products Co., 501 S.W.2d 374, 380 (Tex.Civ.App.Houston [1st Dist.], writ refused n. r. e.). See also Armstrong, “Launching a Corporation in Texas,” 41 Tex.B.J. 1085 (December 1978).
Without delving into the matter more, enough has been pointed out to persuade me that “3-W” never had any more than a paper existence and, as such, could not be and was not the owner of any funds. In this light, the judgment of conviction should be reversed.
I respectfully dissent.
ROBERTS and PHILLIPS, JJ., join.

. Texas Business Corporation Act (TBCA), Article 3.04.

. TBCA, Article 3.06.

. TBCA, Article 3.05.

. As well as the panel opinion, the majority opinion on rehearing proceeds on the premise that the “3-W” corporation was functioning as a legal entity.

. All emphasis is mine unless otherwise indicated.

. Lebowitz, “Recent Developments in Texas Corporation Law- Part I,” 28 Southwestern L.J. 641, 696.

. The majority opinion lays down the dubious proposition that in a case such as this “the only one way to prove lack of consent ... is by circumstantial evidence,” and concludes “further” that lack of consent was proved by that character of evidence, inviting us to “see” three prior decisions of the Court. That the decisions, one an embezzlement case and the others burglary cases, find their record evidence sufficient is of little help in the instant case, and the reader is left with the tantalizing exercise of guessing just what circumstantial evidence the majority deems enough to show lack of consent. As I have developed in the text, that Westmoland, even as an individual director, did not “consent” or “agree” to the purchases that were made, is of no moment, for one cannot act for a corporation unless he is in a board meeting with the other directors. Thus, what Westmoland did or did not do as an individual is utterly worthless as evidence of what “3 W” did or did not do. That, as I understand it, is the lesson of Easley v. State, 167 Tex.Cr.R. 156, 319 S.W.2d 325, 326 (1959) upon which the majority mistakenly relies.