Court Opinion

ID: 4136138
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:10:15.290863+00
Date Added: 2024-06-11T08:45:45.356551
License: Public Domain

TEKEATTORNEYGENERAL
                                           OFTEXAS
                                         AUSTIN     x~.TexAs
  W’ILJL. WILSON
AlTORNEYGENERAL

                                                 June 7, 1960

        The Honorable   Zollie        Steakley            Opinion   No. WW-841
        Secretary of State
        Austin, Texas                                     Re: Whether the Secretary      of
                                                          State can rescind a final admin-
                                                          istrative forfeiture  of a corporate
                                                          charter done under the provisions
                                                          of Article  7096. V.C.S.
        Dear      Mr.   Steakley:

                          We quote from     your Opinion Request      as follows:

                                   “Southwestern     Wire and Cable Company was
                          incorporated    as a Texas corporation       in 1952. The
                          corporation   failed to file franchise     tax report as of
                          May 31, 1956, and the usual notices from this office
                          were forwarded      to the corporation    at the address
                          shown on the 1955 Franchise       Tax Report.      Default
                          continuing, this office forfeited     the right to do busi-
                          ness of the corporation     on July 2, 1956. The cor-
                          poration delinquency was certified        to your office
                          under our regular procedure        and on February      1,
                          1957, inquiry was made of the Tax Assessor            of Dallas
                          County (the home office of the corporation)          concern-
                          ing assets on the tax rolls from which a judgment
                          might be satisfied for the franchise        tax delinquencies;
                          the office of the Tax Assessor       replied in the negative.

                                   “Pursuant   to the provisions   of Article   7096,
                          this office in December,    1957, determined     that South-
                          western Wire & Cable had ‘no assets from which a
                          judgment for the franchise     tax, penalties,  and court
                          costs may be satisfied;’ your office approved this
                          finding on December     3rd and on December       9, 1957,
                          this office forfeited the charter of the corporation       in
                          the manner provided by Article       7096, the forfeiture
                          being consummated      without judicial ascertainment
                          by entering upon the charter of the corporation        the
                          words ‘Charter Forfeited.’

                                    “Under date of September   8,~1959, one Mr.
                          William    Kearney applied to this office for the corpor-
Hon. Zollie   Steakley,   page 2   (WW-841)

              ate name reservation   of Southwestern Wire & Cable
              Company and on October 13, 1959, a certificate  of
              name reservation   was issued by this office to
              Ke,arney pursuant to Article 2.06b of the Texas
              Business Corporation   Act.

                       “Is the statutory act of forfeiture    by this
              office on December     9, 1957, of the charter of South-
              western Wire & Cable Company pursuant to Article
              7096 a final act with the statutory result that the
              name Southwestern     Wire 81 Cable Company there-
              after became available,     wherefore   the certificate
              of name reservation     issued by this office on Octo-
              ber 13, 1959, of Southwestern     Wire & Cable Company
              was valid and the Secretary     of State is without power
              to refuse to approve the tendered articles       of incorp-
              oration of Southwestern     Wire & Cable Company?”

              The laws pertaining     to the amount, administration,    collec-
tion and failure to pay franchise     tax were contained in Articles    7084
through 7097, V.C.S.    (Repealed     by the Acts of 1959, 56th Legislature,
effective September   1, 1959, now    incorporated  in Title 12 2A Taxation -
General)

             Failure     to pay franchise   taxes has always subjected corporate
charters  to forfeiture.     Prior to h4ay 17, 1951, judicial forfeiture  was the
sole method provided.        However,   in 1951, Article 7096, V.C.S., was amended
by adding thereto a second paragraph         providing for an administrative   for-
feiture as follows:

                        “Upon determination      by the Secretary   of State
              that any domestic corporation        whose right to do busi-
              ness has been previously      forfeited by that officer, and
              which corporation    has failed and refused to have its
              right to do business    revive,d pursuant to the provi-
              sions 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 Attorney Gen-
              eral, the charter of any such corporation        may be for-
Hon. Zollie   Steakley,   page   3   (WW-841)

              feited. which forfeiture  may be consummated        without
              judicial ascertainment   by the Secretary    of State enter-
              ing 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.*’

              The role is generally    accepted that the officers    of a board
or of a department have the power to rescind their action on a matter
that has not become final.       See State anking    Board of Texas v.
McCullough,     et al., 316 S,W.2d 259 (Tex,Civ.App,       error ref. n.r.e.).
The fact situatron recited in your bequest states that all the necessary
conditions of an administrative      forfeiture  existed and that all steps
prescribed    by the statute were followed, including the entry of the
words,   ‘“charter forfeited”    upon the corporate    charter in question.
This was a final act, and not capable of being rescinded         by the Sec-
retary of State unless such authority is granted therefor.

              No provision   is made in this article   or elsewhere     for the
Secretary   of State to review an administrative     forfeiture   of corporate
charter.   You have stated that your department has construed the lack
of express   authority in the statute to permit the Secretary       of State to
review his action, as precluding     any reconsideration      or review by the
Secretary   of State once he has acted in compliance       with Article    7096
and has forfeited the charter of a corporation.       In this construction,
we concur.

              The general rule is that administrative     departments   and
agencies have only such power and authority as is conferred         upon
them in clear and unmistakable      terms by the Legislature.     Commercial
Standard Insurance Company v, Bolad of Insurance Commissioners,
WApp., 0                          1931, wrrt ref.); Teacher Retirement
System, et al, v. Duckworth,     260 S.W.2d 632, opinion adopted by the
Supreme    Court m 264 S . W . 2d 98 (1954). For an exception to this rule,
not applicable  here, see Southwestern      Savings & Loan Ass%. of Houston
v. J. M. Falkner,   331 S.W.2d 917 (1960) e

             Therefore, it is our opinion that the forfeiture of a corp-
orate charter in compliance   with Article 7096, V.C.S.. is a final act
and cannot be rescinded   by the Secretary  of State.

               It follows that the corporation  Southwestern    Wire & Cable
Company ceased to exist and thereafter ( its name was available.
Article   2.06b. Texas Business     Corporation  Act. A certificate   of
reservation    for this name issued by the Secretary     of State in com-
Hon. Zollie   Steakley,   page 4   (WW-841)

pliance with the law would be valid, and, therefore, the Secretary   of State
is without power to refuse to approve the tendered articles   of incorpora-
tion of Southwestern Wire & Cable Company, if such articles     meet all.
of the requirements.

            Questions concerning the equitive between the parties,        includ-
ing estopN$ and constructive    trust. are not administrative    but judicial
and, consequently,  the Secretary   of State has no jurisdiction   to determine
them.

                                       SUMMARY

             After the administrative      forfeiture    of corporate    charter pur-
suant to Article   7096, V.C.S., defunct corporation’s        name became avail-
able; and a certificate    of name reservation      issued by the Secretary       of
State in compliance     with Article 2.06B of the Texas Business           Corpora-
tion Act is valid.   Thereafter,    the Secretary     of State is without authority
to refuse to approve tendered articles        of incorporation    under said re-
served name if such articles       meet other requirements        because the
Secretary  of State cannot rescind a final administrative          forfeiture   accom-
plished pursuant to the provisions      of Article    7096, V.C.S.

                                              Very   truly yours,

                                              WILL WILSON
                                              Attorney General      of Texas

                                              BY
                                                   Richard A. Wells
                                                   Assistant
RAW/pe

APPROVED:

OPINION    COMMITTEE:

W. V. Geppert, Chairman
Wallace P. Finfrock
John Reeves
Marietta Payne
Marvin Sentelle

REVIEWED    FOR THE ATTORNEY              GENERAL
BY:
     Leonard Passmore