Untitled Texas Attorney General Opinion ( 1974 )

THE AITORNEY GENERAL
OF TEXAS
Auerrmr. TwAe we711
. ’
November 6, 1974
The Honorable Mark W. White, Jr. Opinion No. H- 442
Secretary of State
Capitol Building Re: Should (1) branch pilots
Austin. Texas and (2) public surveyors
incorporate as business
or profeosional corpora-
Dear Secretary White: tions?
Your request for an opinion poses the following questions:
1. May one or more individuals who hold a com-
mission as a Branch Pilot form a corporation
pursuant to the Texas Business Corporation Act
for conduct of their business, or should such a
corporation be formed pursuant to the Texas Pro-
fessional Corporation Act?
2. May one or more individuals who are Registered
Public Surveyors form a corporation pursuant to
the Texas Business Corporation Act for conduct of
a surveying business, or should such a corporation
be formed pursuant to the Texas Professional Cor-
poration Act?
The Texas Business ‘Corporation Act, Art. 2.01 B(2), Vol. 3A, V. T. C. S.
(hereinafter TBCA) provides:
B. No co.rporation may adopt this Act or be
organized under this Act or obtain authority to
transact business in this State under this Act:
. . .
(2) If any one or more of its purposes for the
transaction of business in this State is to engage
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The Honorable Mark W. White, Jr., page 2 (H-442)
in any activity which cannot lawfully be engaged
in without first obtaining a license under the
authority of the laws of this State to engage in
such activity and such a license cannot lawfully
be granted to a corporation. (Emphasis added)
The Texas Professional Corporation Act, Art. 1528e, Sec. 3, V. T. C. S.
(hereinafter TPCA) provides:
(a) ‘Professional Service’ means any type of
personal service which requires as a condition
precedent to the rendering of such service, the
‘obtaining of a license, permit, certificate of
registration or other legal authorization, and
which’prior to the passage of this Act and by
reason of law, could not be performed by a
m including by way of example and
not in limitation of the generality of the fore-
going provisions of this definition, the personal
services rendered by architects, attorneys-at-law,
certified public accountants, dentists, public
accountants, and veterinarians: provided, however,
that physicians, surgeons, and other doctors of
medicine are specifically excluded from the opera-
tions of this Act, since there’are established
precedents allowing them to associate for the
practice of medicine in joint stock companies,
(b) ‘Professional Corporation’ means a corpora-
tion organized under this Act for the sole and
specific purpose of rendering professional service
and which has as its shareholders only individuals
who themselves are duly licensed or otherwise duly
authorized within this state to render the same
professional service as the corporation. (Emphasis
added)
This Office has held that by virtue of these provisions, after the effective
date of the TPCA, any profession except the practice of medicine can be
incorporated and the services can be performed by a professional corporation.
Attorney General Opinion No. M-551 (1970). The only question is under
which act may those engaged in a particular activity incorporate.
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The Honorable Mark W. White, Jr., page 3 (H-442)
Your first question concerns branch pilots. The threshold issue is
whether it is unlawful to engage in pilotage without a license.
The laws pertaining to branch pilots may be found in Articles 8248
to 8257 and 8264 to 8200, V. T. C. S. These statutes provide for the
examination, recommendation, appointment, and suspension or dismiseal
of branch pilots. However, the only liability which is provided for one
who engages in pilotage without a license is as follows:
If any person not appointed a branch or deputy
pilot shall pilot any ship or vessel out of or into
any port when a branch or deputy pilot has offered
such service, the person so piloting shall forfeit
and pay to such branch or deputy pilot the sum of
fifty dollars to be recovered by suit. Art. 8277,
V. T. C. S. ; Art. 8257 is to the same effect.
This provision has been interpreted as follows:
The statute contemplates that, under certain
circumstances, an unlicensed pilot may act. This
is the effect of article 3803 [now 82771 . . . It can
be seen that conditions may arise making it pos-
sible and proper for an unlicensed pilot to be called
into service, and the legislature doubtless had such
conditions in view when it enacted the above article.
Olsen v. Smith, 68S.W. 320, 323 (Tex.Civ.App.
--Galveston.1902, writ ref’d ).
Thus, while pilotage is “one of the oldest recognized monopolies, ”
Steinhort v. Commissioner of Internal Revenue, 335 F. 2d 496, 499 (5th Cir.
1964). and an unlicensed pilot may be liable to a licensed one who has offered
the same service to a vessel, and may also be enjoined from competing,
Olsen v. Smith, supra, the activity is not within the exclusion of Art. 2.01 HZ)
of the TBCA because it is not an activity ‘which cannot lawfully be engaged in
without first obtaining a license . s . . ” Neither does it come within the
definition of professional service in the TPCA because it is not a “type of
personal service which requires as a condition precedent to the rendering of
such service, obtaining a license . 0 0 0 ” Sec. 3a, Art. 1528e, V. T. C.S.
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The Honorable Mark W. White, Jr., page 4 (H-442)
Incidentally, we also note that in the only reported case found which
considered the issue of whether a ship pilot is a professional person, the
court said: ” A skill such as that of these pilots, which one learns almost
entirely byworking at it, and not by academic study, is not what is commonly
understood as a profession.” Abbott v. United States, 151 F.Supp. 929, 932
(Ct. Cl. 1957).
Since it is not unlawful to engage in pilotage without a license, Article
2.01 B(2) of the TBCA does not exclude branch pilots from incorporating
under that Act, and in our opinion, that is the appropriate act under which
branch pilots may incorporate.
Your second question concerns registered public surveyors. The
Registered Public Surveyors Act of 1955, Art. 52821, V. T. C. S. makes it
unlawful for any person to practice or offer to practice the profession
of public surveying without being registered or exempted, and provides
penalties for unlicensed practice of, a fine, confinement in jail, or both,
It is clearly an activity for which a license is required.
The question then becomes whether the license of a public surveyor
is such that it “cannot lawfully be granted to a corporation” within the
meaning of the TBCA exclusion, and whether the service is the type “which
prior to the passage of this act [TPCA] and by reason of law, could not be
performed by a corporation” within the meaning of professional service in
the TPCA.
In prior opinions of this office concerning incorporation of professionals,
express statutory provisions either permitting or prohibiting incorporation
controlled. Thus, in light of express provisions permitting professional
engineers and architects to render their services through a corporation, it
was held that these professions could only incorporate under the TBCA.
Attorney General Opinions No. M-539 (1969) and M-551 (1970). On the other
hand, where specific provisions prevented podiatrists and public accountants
from creating corporations through which to render their services, these
professions were held to be within the terms of the TPCA. Attorney General
Opinions No. M-1185 (1972), and M-556 (1970).
There is dictum in a pre-TPCA Attorney General Opinion No. WW-884
(1960) that Article 2.01 B(2) was only intended to make clear that the TBCA
did not repeal by implication the provisions of other laws prohibiting the
carrying out of special functions by corporations.
p. 2040
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The Honorable Mark W. White, Jr., page 5 (H-442)
We agree that express provisions control as to whether or not a
particular service may be rendered through a business corporation.
However, we disagree that Article 2.01 B(2)is only a savings clause.
In the absence of an express protision permitting or prohibiting business
incorporation of licensed activity, the licensing scheme as a whole may
be considered to determine whether the activity is such that it could not
lawfully be practiced through a business corporation.
The Registered Public Surveyors Act of 1955, Article 5282a, V. T. C. S.,
speaks in exclusively personal and individual terms, and no provision is
made for licensing a corporation, nor for permitting the services of
individuals registered as public surveyors to be rendered through a cor-
poration. The act defines “person” as a “natural person” [Sec. 2(c)] and
provides for registration of persons as public surveyors upon demonstration
of qualifications including educational achievement and surveying experience.
(Sec. 6). The act refers to the practice of public surveying as a “profession”
[Secs. 2(b) & 81.
Since the act defines person as “natural person” and then prohibits “any
person” from practicing or offering to practice public surveying, it is
arguable that a corporation is not expressly prohibited from practicing.
However, in our view, the structure and language of the act clearly did not
contemplate that a corporation could be licensed, and brings public surveying
within those activities intended to be excluded from incorporation under the
TBCA by Art. 2.01 B(2) of that act. Being excluded from incorporation
under TBCA, and being otherwise within the definition of “professional
service” under Sec. 3(a) of the TPCA. it is our opinion that public sur-
veyors wishing to incorporate must do so under the Texas Professional
Corporation Act, Art. 1528e. V. T. C. S.
SUMMARY
Branch pilots wishing to incorporate should do so
under tbe Texas Business Corporation Act.
Registered public surveyors wishing to incorporate
should do so under the Texas Professional Corporation.
Act.
Attorney General of Texas
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The Honorable Mark W. White, Jr., page 6 (H-442)
,Opinion Committee
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