Untitled Texas Attorney General Opinion ( 1960 )

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