Court Opinion

ID: 4136575
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:15:12.889142+00
Date Added: 2024-06-11T09:36:34.529387
License: Public Domain

OF   TEXAS

                                        March   28,   1958

Hon. Zollie Steakley                                  Opinion    No. WW -404
Secretary  of State
Capitol Station                                       Re: Whether non-profit       ceme-
Austin, Texas                                         tery corporations     organized  under
                                                      Article  912a-5,   Vernon’s   Annotated
                                                      Civil Statutes, are subject to the
                                                      Business   Corporations     Act so that
                                                      the corporate    existence   may be per-
Dear   Sir:                                           petual.

       You have asked this office concerning    the authority of the Secretary     of
State’s office to accept and file articles of incorporation   for a non-profit,
non-perpetual    care cemetery   organized under the provisions    of Article   912a-5,
Vernon’s   Civil Statutes, containing a provision  in the charter for perpetual
existence.

       You have stated that it has been the departmental             construction    of your
office since the effective date of the Business         Corporations      Act in Septem-
ber, 1955, that Articles      2.01A and 9.14A of the Act exclude all non-profit
corporations    from the Act regardless       of the purpose for which they are
formed,   and that all such corporations       must be organized        under the provi-
sions of Chapter 1, 2, and 3 of Title 32 of the Revised            Civil Statutes, and
that Articles    1320 of Title 32 limits the corporate        existence    to fifty years.
Prior to the passage      of the “Texas Business      Corporations       Act” (Acts 1955,
54th Legislature,     page 239, chapter 64) all private corporations            except
where otherwise      specifically  provided were     s.ubject   to the provisions      of
 Title 32 of the Revised Civil Statutes of 1925. Article            1319 Vernon’s     Anno-
tated Civil Statutes, classifies     corporations    as follows:

                “Corporations  are either public or private.    A public
       corporation   is one which has for its object the government     of
       a portion of the state.  Private  corporations  are  of three kinds:

                  “1.   Religious.
                  “2.   For charity      or benevolence.
                  “3.   For profit.”

        Article   1320,    Vernon’s     Annotated     Civil   Statutes,     is in part as follows:

                  “Every     private    corporation    as suchhas         power:

                  ‘1.     To have succession   by its corporate  name for the
                          period limited in its charter,  not to exceed fifty
                          years, and when no period is limited, for twenty
                          years. . .”
Hon.   Zollie    Steakley,   page 2 (WW-404)

        Since there was no provision   otherwise  regulating the term of a
“non-profit”    cemetery   corporation organized  under the provisions  of
Article   912a-5,  Vernon’s Annotated Civil Statutes, these corporations
prior to the enactment of the Business     Corporations   Act, were subject
to the limitation of Section 1 of Article   1320 of 50 years duration.

       Article     9.14   of the Texas   Business   Corporations     Act is in part
as follows:

                 “A. This Act does not apply to corporations               or-
        ganized for the purpose of operating banks, trust com-
        panies, building and loan associations            or companies,     in-
        surance companies       of every type or character.          . ., rail-
        road companies,     cemetery       companies,      cooperatives    or
        limited cooperative      associations,      labor unions, or abstract
        and title companies.      D .; nor to corporations        organized for
        the purpose of operating non-profit           institutions,   including but
        not lm-nted to those devoted to charitable,            benevolent,    relr-
        grous, patriotic,   civx,     cultural, mrssronary.       educatronal,
        screntrfrc, social, fraternal,       athletrc, or aesthetrc purposes;
        provided, however, that if any of said excepted corporations
        are hereinafter    organized under special           statutes which con-
        tain no provisions     in regard to some of the matters pro-
        vided for in this Act, or if such special statutes specifically
        provide that the general laws for incorporation              shall supple-
        ment the provisions       of such statutes,      then the provisions
        of this Act shall apply to the extent that they are not incon-
        sistent with the provisions        of such special statutes.”

       Article     2.01   of the Texas   Business   Corporations     Act is in part as
follows :

                  “A. Except as hereinafter        in this Article excluded
        herefrom,     corporations      for profit may be organized        under
        this Act for any lawful purpose or purposes,              which purposes
        shall be fully stated in the articles        of incorporation.       Corpo-
        rations for the purpose of operating non-profit             institutions,
        including but not limited to those devoted to charitable,              bene-
        volent, religious,      patriotic,  civic, cultural,   missionary,     edu-
        cational,   scientific,   social, fraternal,    athletic,   or aesthetic
        purposes,    may not adopt or be organized           under this Act.

                “B. No corporation   may adopt this Act or be or-
        ganized under this Act or obtain authority to transact busi-
        ness in this State under this Act;. . .

                “(4) If any one or more         of its purposes     is to operate
        any of the following:
Hon.   Zollie     Steakley,       page 3 (WW-404)

                            Banks,
                            Trust companies,
                            Building and loan associations      or companies,
                            Insurance    companies   of every type and char-
                            acter that operate under the laws of this state,
                            and corporate    attorneys   in fact for reciprocal
                            or inter-insurance     exchanges,
                            Railroad   companies,
                            Cemetery     companies,
                            Coooeratlves    or limited cooperative     associations,
                            Labor unions,
                            Abstract   and title insurance    companies.    . I”

       Thus, it is clear that a “non-profit”   cemetery    corporation   may not
be organized    under nor adopt the provisions    of the Business    Corporations
Act either because it is a non-profit    corporation   or is a cemetery    company,
The sole question is whether such non-profit       cemetery   corporations    are
subject to the proviso in Article   9.14A of the Business     Corporation    Act
that if any of “said excepted corporations     are hereafter   organized   under
special statutes which contain no provisions      in regard to some of the mat-
ters provided for in this Act, the provisions     of the Texas Business     Corpo-
rations Act shall apply to the extent that they are not inconsistent       with the
provisions   of such special statutes:

        Article     2.02    of the Texas      Business     Corporations      Act is in part as
follows:

                 “A.        Subject to the provisions   of Sections          B and C of
        this Article,        each corporation   shall have power:

                “(1) To have perpetual succession  by its corporate
        name unless a limited period of duration is stated in its ar-
        ticles of incorporation.“’

        Article     3.02    of the Business        Corporations       Act is in part   as follows:

                    “Art.     3.02.Articles       of Incorporation.

                            “A.    The Articles      of Incorporation      shall   set forth:

                                   “(1) . . . .

                                   “(2)   The period     of duration,    which     may be perpetual.”

        There does not appear to be any provision         in the special statutes gov-
erning non-profit    cemetery    corporations    inconsistent   with these provisions.
Therefore,    if such non-profit   cemetery    corporations    organized  after the
effective date of the Business      Corporations    Act are subject to the proviso
of Article   9,14A, the provisions    of Article Z.OZA(l) and 3;02A(2)     above
quoted would apply.
Hon.   Zollie   Steakley,   page 4 (WW-404)

       While it would appear from an examination         limited solely to the
terms of paragraph A of Article 9.14, that non-profit         corporations  are
subject to the proviso in this paragraph,     we believe that a correct in-
terpretation  of the Business   Corporations     Act will lead to a contrary
conclusion.   We call attention to paragraph A of Article 2.01 above
quoted where it is indicated that this Act applies only to corporations
for profit and not to non-profit   corporations,    and further to the defini-
tion of the term “corporation ” in Article     l.OZa-(1)   of the Texas Busi-
ness Corporations    Act, which is as follows:

                 “( 1) ‘Corporation’   or ‘domestic  corporation’    means a
        corporation    for profit subject to the provisions   of this Act. . .”

       Since in any event there is an ambiguity as to whether or not the
terms of the Business      Corporations  Act apply at all to non-profit  corpo-
rations, we believe that the departmental      interpretation   which you have
placed on this Act should be given effect.       This is particularly true since
the Legislature     had convened since the adoption of this departmental
interpretation,    and, although the Legislature   has amended the Business
Corporations    Act, it has not seen fit to amend the Act so as to change
this construction.

       We hold that %on-profit  corporations”  are not governed by the
Business   Corporations  Act and may not take advantage of Article   2.02A(l)
and 3.02A(2)  thereof so as to have perpetual succession  or duration.

       We further hold that the so-called     “non-profit cemetery”   corpora-
tions provided for by Article 912a-5     V.C.S. are not “corporations    for pro-
fit” as used in the Business Corporations-Act      and therefore  are not subject
to its provisions  and in particular  are governed by Article    1320 V.C.S.
rather than Articles   2.02A(l)  and 3.02A(2)   of the Business  Corporation   Act.

       We express   no opinion as to whether or not such “non-profit      ceme-
tery” corporations   should be classified  as “non-profit”   other than under
the specific circumstances    here encountered.    We call attention to the
case of Farmers    v. State, 69 Tex. 561, 7 S.W. 220, wherein the Supreme
Court held a mutual benefit association    to be a corporation   for “profit”.
We believe that it would do violence to the legislative    intent in this par-
ticular context to hold that such cemetery    corporations   were not non-
profit when the Legislature   had denominated    them as “non-profit”    corpo-
rations.

                                    SUMh4AR Y

        “Non-profit”,  p rivate corporations    are not subject to nor
        governed by the Business      Corporations    Act.    “Non-profit”,
        non-perpetual  care cemetery      corporations     organized under
        the provisions  of Article   912a-5,  Vernon’s     Annotated Civil
        Statutes are ‘non-profit”    corporations    to the extent that
        they may not be subject to nor governed by the Texas Busi-
        ness Corporations     Act, and therefore,   such corporations
        may not have perpetual existence.
Hon. Zollie   Steakley,   page 5 (WW-404)

                                            Very   truly   yours,

                                            WILL WILSON
                                            Attorney General          of Texas

                                            By                  .:,              ~_
                                                   Fred B. Werkenthin
                                                   Assistant

FBW:dac

APPROVED:

OPINION COMMITTEE:
Geo. P. Blackburn, Chairman

Wallace   P. Finfrock
Morgan    Nesbitt
Richard   Stone

REVIEWED   FOR THE ATTORNEY             GENERAL
BY: W. V. Geppert