Court Opinion

ID: 4136153
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:10:25.073337+00
Date Added: 2024-06-11T14:35:05.660934
License: Public Domain

April 21, 1960

Hon. Zollie Steakley
Secretary of State
Hon. Robert S. Calvert
Comptroller of Public Accounts
Capitol Station
Austin, Texas
          Opinion No. W-826
          Rer   The joint responsibility of the.Secretary of
                State and the Comptroller of Public Accounts
                on the administrative procedure of forfeiting
                a corporation’s right to do business.
Dears,* .KSteakley and Kr . Calvert :
          You have requested that in the light of Attorney Gen-
eral’s Opinion No. W-806 you be advised concerning the following :
           “The joint or separate responsibility, duty
   <‘::
      and authority of the Secretary of State and the
      Comptroller of Public Accounts to take the neces-
      sary administrative action and to establish the
      administrative procedure for:
          “1. The forfeiture of the right to do busi-
     ness of a corporation which is delinquent in the
     filing of its franchise tax report and the payment
     of franchise taxes.
           “2., The forfeiture .without.judiclal:ascer-
     tainment of the charter of a corporation whose right
     to do business has beenpreviously forfeited,.and
     which has falled and refused.to have~!itsright to do
     business revived prior to the first day of January
     next ~succeeding the date’of forfeiture of its right
     to do business.’
          Attorney General’s Opinion No.,W-806   to which you re-
fer in your request isin part as follows:
          “It is the opinion of this office that the pow-
     ers and duties transferred to the Comptroller by this
Hon. Zollie Steakley
Eon. Robert S. Calvert, page 2 (NW-820)

    Act were limited to those incident to the col-
    lection of the franchise tax and that it was not
    the intent of the legislature to take away from
    the Secretary of State the authority and duty to
    administratively forfeit a corporation's right
    to do business. Therefore, the Secretary of State
    has the authority to administer the procedure for
    the forfeiture of the right to do business of a
    corporation which is delinquent in the filing of
    its franchise tax report and is delinquent in the
    payment of franchise taxes."
          We will first consider 'ch;:
                                     necessary administrative ac-
tion and procedure in connection With the forfeiture of the right
to do business of a corporation which is delinquent in the filing
of its franchise report or the payment of franchise taxes. The
applicable sLatutory provision relating to the forfeiture of the
right to do business is Article 12.14 of Chapter 12, Title LXX,
Revised Civil Statutes of Texas, which is in part as follows:
         "Any corporation, either domestic or foreign
    which shall fail to pay any franchise tax provided
    for in this Chapter when the same shall become due
    and payable under the provisions of this Chapter,
    shall thereupon become liable to a penalty of ten
    per cent (10%) of the amount of such franchise tax
    due by such corporation. If the reports required
    by Articles 12.08 and 12.09 be not filed in accord-
    ance with the provisions of this Chapter, or if the
    amount of such tax and penalties be not paid in full
    on or before the thirtieth day after notice of de-
    linquency is mailed to such corporation, such cor-
    poration shall for such default forfeit its right to
    do business in this State; which forfeiture shall be
    consummated without judicial ascertainment by the
    Secretary of State entering upon the margin of the
    record kept in his office relating to such corpora-
    tion the words, 'right to do business forfeited' and
    the date of such forfeiture.tl
          The charters of all corparations required to pay fran-
chise taxes under the provisions of Chapter 12, Title 122A, are
filed in the office of the Secretary of State in accordance with
the applicable statutory provisions. Xe are informed tncztthe
Secretary of State also keeps a permanent card index record of
all such corporations upon which all status changes concerning
each individual corucration have been noted heretofore. The rec-
ords reflecting the filing of franchise tax reports and payment
Hon. Zollie Steakley
Hon. Robert S. Calvert, page 3   (W-826)

of franchise taxes which heretofore were kept in the office of
the Secretary of State have been transferred to the office of the
State Comptroller of Public Accounts under the provisions of Arti-
cle 12.22.
          Since this office has held in Attorney General's Opinion
No. W-806 that the Secretary of State alone has the authority to
forfeit the right to do business of a corporation under the provi-
sions of Article 12.14, it is clear that the State Comptroller of
Public Accounts is without such authority. However, such forfei-
ture can only result from the failure of the corporation to file
the required franchise tax reports or pay the franchise taxes when
the same become due and payable, which reports must be filed with
and taxes paid to the Comptroller of Public Accounts in whose of-
fice the records reflecting the filing of the reports and payment
of taxes are kept, and which are not available in the office of the
Secretary of State.
          Article 12.15 provides for the administrative procedure
in the office of the Secretary of State governing the forfeiture
by a corporation of its right to do business in this State. By
substituting the words Tomptroller of Public Accounts" for the
words "Secretary of StateI1in those parts of Article 12.15 which
pertain to the administrative powers and duties incident to the
collection and administration of the franchise tax, Article 12.15
would read as follows:
          The Comptroller of Public Accounts shall
     notify each domestic and foreign corporation
     which may be or become subject to a franchise
     tax under the laws of this State, which has
     failed to file such report or pay franchise tax
     on or before the first day of May, that unless
     such overdue report is filed or such overdue tax
     together with said penalties thereon shall be
     paid within thirty (30) days of the mailing of
     such notice, the right of such corporation to do
     business in this State will be forfeited without
     judicial ascertainment, Such notice may be either
     written or printed and shall be verified by the
     seal of the office of the Comptroller of Public
     Accounts, and shall be addressed to such corpora-
     tion and mailed to the post office named in its
     articles of incorporation as its principal place
     of business, or to any other known place of busi-
     ness of such corporation. A record of the date
     of mailing such notice shall be kept in the of-
     fice of the Comptroller of Public Accounts, and
     such notice and record thereof shall constitute
                                                                    ,-

Hon. Zollie Steakley
Hon. Robert 6. Calvert, page 4   (W-826)

     legal and sufficient notice thereof for all
     purposes of this Chapter. . . .”
          Upon a determination by the Comptroller of Public Ac-
counts from his records that the reports required by Articles
12.08 and 12.09 were not filed as required by law, or that the
franchise tax due by a corporation, together with the penalties,
has not been paid within the time prescribed, the Comptroller of
Public Accounts should certify such facts to the Secretary of
State advising him that the corporation, by its failure to file
the reports or pay the delinquent taxes is subject to forfeiture
of Its right to do business in this State under the provisions
of Article 12.14. Upon receipt of such certification the Secre-
tary of State should enter upon the margin of the record kept in
his office relating to the corporation the words “right to do
business forfeited,” and the date of such forfel.iure. The Secre-
tary of State may choose whether to make such endorsement upon
the folder containing the charter of the corporation or on the
permanent card index relating to the corporation since both are
permanent records in his office. The Secretary of State should
advise the Comptroller of Public Accounts as to the date upon
which the entry was made upon the record.
          Article 12.15 then provides as follows:
          II      Any corporation whose right to do
     busineis’miy have been forfeited as provided in
     this Chapter, shall be relieved from such forfei-
     ture by paying to the Comptroller of Public Ac-
     counts at any time prior to the forfeiture of the
     charter or permit of such corporation as herein-
     after provided, the full amount of the franchise
     taxes and penalties due by it, together with an
     additional amount of five per cent (5%) of such
     taxes for each month, or fractional part of a
     month, which shall elapse after such forfeiture
     as a revival fee; provided, that such amount shall
     in no case be less than Five Dollars ($5). . . .‘I
          When the taxes and penalties and revival fee have been
paid to the Comptroller of Public Accounts, he should certify
such fact to the Secretary of State who thereupon shall revive
the right of the corporation to do business within this State by
cancelling the words “right to do business forfeited” upon his
record and endorsing thereon the word ffrevived,ff
                                                 and the date of
such revival. The Secretary of State should then advise the Comp-
troller of Public Accounts as to the date of such entry upon his
records.
          Article 12.15 further provides:
Hon. Zollie Steakley
Hon. Robert S. Calvert, page 5   OdtJ-826)

          “. . . If any domestic corporation or foreign
     corporation, whose right to do business within this
     State shall hereafter be forfeited under the provi-
     sions of this Chapter, shall fail to pay the Comp-
     troller of Public Accounts within one hundred and
     twenty (120) days after such forfeiture, the amount
     necessary to entitle it to have its rights to do
     business revived under the provisions of this Chap-
     ter, such failure shall constitute sufficient ground
     for the forfeiture, by judgment of any court of com-
     petent jurisdiction, of the charter of such domestic
     corporation, or of the permit of such foreign corpor-
     ation. It shall be the duty of the Comptroller of
     Public Accounts, after such one hundred and twenty
     (120) days next following such forfeiture, to certify
     to the Attorney General the names of all corporations,
     domestic and foreign, whose right to do business with-
     in this State shall have been forfeited as hereinbe-
     fore provided, and upon receiving such certificate the
     Attorney General shall forthwith institute suit against
     such corporations under the provisions of Article 12.16
     of this Chapter."
          Under the foregoing part of Article 12.15 it would be
the duty of the Comptroller of Public Accounts to supply to the
Attorney General the factual situation concerning the failure to
pay the amounts necessary to entitle the corporation to have its
right to do business revived, thereby authorizing the Attorney
General to institute suit against the corporation under the pro-
visions of Article 12.16.
          Your second request concerns the responsibility, duty,
and authority of the Secretary of State and the Comptroller of
Public Accounts to take the necessary administrative action and to
establish the administrative procedure for the forfeiture of the
charter of a corporation whose right to do business has been prev-
iously forfeited and which has failed and refused to have its right
to do business revived prior to the first day of January next suc-
ceeding the date of forfeiture of its right to do business. You
then request advice as to whether the Secretary of State has the
sole responsibility, duty, and authority to forfeit the charter of
a corporation without judicial ascertainment and what information
should be furnished or certified to the Secretary of State by the
Comptroller or the Attorney General in order that the corporate
charter may be forfeited without judicial ascertainment.
          The applicable provisions of Article 12.07 which author-
ize the forfeiture of the charter of a corporation without judi-
cial ascertainment are as follows:
Ron. Zollie Steakley
Hon. Robert S. Calvert, page 6   (WW-826)

          'TIpondetermination by the Secretary of
    State that any domestic corporation whose right
    to do business has been previously forfeited by
    that officer, and which corporation has failed
    and refused to have its right to do business re-
    vived pursuant to the provisions of this Chapter,
    and which corporation fails to revive its right
    to do business prior to the first day of January
    next succeeding the date of forfeiture of its
    right to do business, and which corporation has
    no assets from which a judgment for the franchise
    tax, penalties, and court costs may be satisfied,
    and approval of such determination by the Attor-
    ney General, the charter of any such corporation
    may be forfeited, which forfeiture shall be con-
    summated without judicial ascertainment by the
    Secretary of State entering upon the charter of
    such corporation filed in his office, the words,
     'Charter forfeited,' giving the date thereof and
    citing this Act as authority therefor."
          Only the Secretary of State is charged with the respon-
sibility, duty, and authority to forfeit the charter of a corpora-
tion without judicial ascertainment for the reasons given in
Attorney General's Opinion No. W-406, and in answer to your first
question, sunra.
          However, since all of the records reflecting the failure
or refusal of a corporation which had its right to do business
previously forfeited to revive its right to do business prior to
the first day of January next succeeding the date of such forfeit-
ure are in the possession and under the control of the Comptroller
of Public Accounts and are not reflected by the records in the
office of the Secretary of State, it is the duty and responsibility
of the Comptroller of Public Accounts to certify such information
to the Secretary of State, together with a determination that the
corporation has no assets from which a judgment for the franchise
tax, penalties and court costs may be satisfied, after apprwal of
such determinai.
               Ion by the Attorney General, for forfeiture of the
charter of the corporation by the Secretary of State in the manner
provided in Article 12.17. The action of the Secretary of State
in thus forfeiting the charter of the corporation &thout judicial
ascertainment would be purely ministerial and based upon the certi-
fication by the Comptroller of Public Accounts of the necessary
factual requisites set forth in Article 12.07.
          The Comptroller of Public Accounts has the duty and re-
sponsibility of making the determination that the corporation has
no assets from which a judgment for the franchise tax, penalties,
Hon. Zollie Steakley
Hon. Robert S. Calvert, page 7    (Ww-826)

and court costs may be satisfied, since the corporation's fran-
chise tax report is in the possession of the Comptroller of
Public Accounts and, in addition, he has the authority to examine
the books and records of the corporation under the provisions of
Article 1.04, Chapter 1, Title 112A, R.C.3.
                             SUMMARY
           The responsibility, duty, and authority of the
      Secretary of State and the Comptroller of Public
      Accounts to take administrative action and establish
      administrative procedure for the forfeiture of the
      right of a corporation to do business in the State
      of Texas under the provisions of Article 12.14, Title
      122A, R.C.S., and for the forfeiture without judicial
      ascertainment of a charter of a corporation under the
      provisions of Article 12.17, Title 122A, R.C.S.
                                 Very truly yours,
                                 WILL WILSON
                                 Attorney General of Texas

                                    C. K. Richards
CKRrwb                              Assistant
APPROVED:
OPINION COMMITTEE
M. V. Geppert, Chairman
Richard Wells
Leon F. Pesek
Marvin Brown
RFXIEMED FOR THE ATTORNEY GENERAL
BY:   Leonard Passmore