Court Opinion

ID: 4136476
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:14:02.60786+00
Date Added: 2024-06-11T14:35:09.076097
License: Public Domain

Ausns     11.   TExAn

                       September 22, 1958

Hon. Zollie Steakley       Opinion No. WW-503
Secretary of State
Capitol Station            Re:     The authority of the Secretary
Austin, Texas                      of State to accept and file
                                   Articles of Incorporationwhich
                                   include, in part, the following
                                   purpose clause: "To establish,
                                   maintain, and carry on a general
                                   currency exchange business and
                                   in connection therewith to issue
                                   checks, travelers'checks, money
                                   orders, and other negotiable in-
                                   struments,but without banking,
                                   discounting,or insurance privi-
Dear Mr. Steakley:                 leges.
          Your request for the opinion of this office is in
part as follows:
         "The opinion of your office is respectfully
    requested concerning the authority of this office
    to accept and file Articles of Incorporation
    which include, in part, the following purpose
    clause under which it proposed to engage in busi-
    ness in this State:
          "'To establish, maintain and carry on a gell-
     era1 currency excha se b siness and in connection
     therewith to issue Ehecki travelers'checks. w
     orders, and other negotiable instruments but with-
     out banking, discounting or insurance privileges.'
     (Emphasisadded)
          "Insofar as I have been able to ascertain, it
     has been the uniform departmentalconstructionof
     this office since'the enactment of the Business
     CorporationAct that the sale or issuance of money
     orders and travelers'checks constitutedone of the
     purposes of banking and the Business Corporation
     Act was not applicable to such corporationsunder
     the provisionsof Article 2.Olb&)a and 9.14A. It
     is further noted that there is no provisionunder
     Article 1302, R.C.S. for authorizinga corporation
                                                       ..   -

Hon. Zollie Steakley, page 2   (WW-503)

     to engage in business for the purpose of carry-
     ing on a general currency exchange business or
     issuing or selling travelers'checks or money
     orders.l'
          Article 2.Ol.A,Business CorporationAct, provides
that '*(c) Corporationsfor profit may be organized under
this Act for any lawful purpose or pur oses. . . .I' However,
under the provisions of Article 2.01B(f )(a) no corporation
can be organized under the Act if any one or more of its pur-
poses is to operate a bank.
          It appears from your request that the uniform de-
partmental constructionof the office of the Secretary of
State has been that the sale or issuance of money orders or
travelers' checks constitutedone of the purposes of banking.
          In Opinion No. WW-440 (pp. 6~7 and 9-12) this office
held that under the provisionsof the Business CorporationAct
where articles of incorporationwere submitted containingpur-
pose clauses identical with or similar to purpose clauses au-
thorized under the provisionsof Title 32, Chapters 1 and 2,
Vernon's Civil Statutes, and particularlyArticle 1302, with-
out the qualifyingwords or clauses of limitation contained
therein, such qualifying words or clauses of~~limitationwould
have to be added before you would be authorized to grant a
charter or amendment thereto to a domestic corporation,or
issue a certificateof authority to a foreign corporation.
The purpose clause referred to in your letter of request spe-
cifically states that the corporation shall be "without bank-
ing, discounting or insurance privileges,"and therefore it
is not subject to the disqualificationreferred to in Opinion
ww-440.
          You further note that there is no provision in Arti-
cle 1302, v.c.S., authorizinga corporation to engage in busi-
ness for the purpose of carrying on a general currency exchange
business or issuing or selling travelers' checks or money or-
ders. While it is true that prior to the enactment of the
Business CorporationAct a corporation could only be formed in
this State for one of the purposes authorized by legislative
enactment, nevertheless it is a matter of common knowledge that
one of the legislative purposes in enacting the Business Corpor-
ation Act was to permit a corporation to be organizedfor any
lawful purpose, or, stated conversely for any purpose not pro-
hibited by law, even though prior to the effective date of the
Business CorporationAct a corporation could not be formed for
such lawful purpose because the Legislaturehad not specifi-
cally authorized or designated such purpose as a lawful purpose
for which a corporation could be created.
_   ,

        Hon. Zollie Steakley, page 3   m-w-503)

                  The establishment,maintenance,and conduct of a
        general currency exchange business in connectionwith which
        the corporation could issue checks, travelers'checks money
        orders, and other negotiable instrumentsis a lawful business.
        State v. Currency Services. Inc 218 S.W.2d 600 (Sup.Ct.MO.
        1949). Therefore, since the pu$ose clause referred to is a
        lawful purpose you would be authorized to accept and file the
        proposed articles of incorporationunless the purpose clause
        could be construed to be for the purpose of operating a bank,
        and therefore prohibitedunder the provisionsof Article
        2.01B(4)(a).
                  We have already noted the qualifyingwords or limit-
        ing clause that the corporation shall be "without banking,
        discounting . . .'privileges." These words of limitation
        should be sufficient to render the proposed corporation sub-
        ject.to forfeiture of its charter by appropriatelegal action
        in case it violated its corporate purpose by engaging in the
        banking business. However, it is well settled law in Texas
        that a corporationmay be chartered for the purpose of engag-
        ing in certain business activities which are also engaged in
        by banks without enga ing in the banking business. Xaliski v.
        Gossett, 109 S.W.2d 3 60 34-k iCiv.App.1937 error ref.);
        Be&m&        ct n Credit Ass n v. Zeiss, 193 Tex. 152, 264
        SrW 2d 95 ",; (:;53,    For example see sub-divisions48 and
        45 'Article 1302 and Article 1303tb), V.C.S., and compare
        Article 342-301;'AttorneyGenerals' inions, Bienniel Report
        of 1912-1914, p. 342; Attorney Genera
                                            ? Is Opinion No. WW-440.
                  It is the opinion of this office that the proposed
        purpose clause contained in your letter of request is.for a
        lawful purpose not prohibited by Article 2.01B(4)(a). >
                                       SUMMARY
                  The Secretary of State has the authority to
             accept and file articles of incorporationwhich
             include, in part, the following purpose clause:
                  "To establish, maintain and carry on a gen-
             eral currency exchange business and in connection
             therewith to issue checks, travelers'checks,
Hon. Zollie Steakley, page 4   (Ww-503)

      money orders and other negotiable instruments,
      but without {anking, discounting,or insurance
      privileges.t'

                               Yours very truly,
                               WILL WXLSON
                               Attorney General of Texas

                         I
                                  C. K. Richards
CKR:wb                            Assistant
APPROVED:
OPINION COMMITTEE
Gee. P. Blackburn,Chairman
Wallace P. Finfrock
Howard Mays
Milton Richardson
RBVIEWED FOR THE ATTORNEY GENERAL
BY:      W. V. Geppert