Untitled Texas Attorney General Opinion ( 1957 )

GENERAL
Him. Zollie Steaklep Opinion.No. WW491
Secretary of Stat8
Austin,.Texas Re: ‘Wk+W a foreign corporaticaa
.that is, a’limited psrt.&er~ must
tde out a permit to do business
in the:Stde if the limited part-
nership engages in certain LIP
sited activities ,in the State; aud
whether+ the term *‘persons+*, as
used- in Section 2 of .t+ Taras
Uniform Limited Partnership Act,
De&.Mrr S$eakley: .’ :inclades partnerships.
:
kok haves stated and asked the following:
. *m opfi&ux of your ‘offtce his respectfuRy requested
m consideratton of. the,.foDowing:
. :+A limited partnership-is being formed on the basis
of-Article 613fi of Vern.on,*s Civil 6btutes to be kuown as
Venazolano Petroleum. Ltd. The partnership is being
formed to acquire’an undivided tnterest in certain hydro-
carbon conces~sions granted by tha Republic. of Venezuela
and to jotnin the exploration and development of said con-
ceas.ions, and it will not engage .in any activities except
such as relate to its properties in Venezueb+. San Jacinto
Ve~zolano, C. A., ‘a Delaware corporation qualified In
Texas. and registered in Venezuela, will be sole general
partner and the limited partners Will cbnsist Of a group
of persons, some of .whom.are indtvtduals. some partner-
shtps-and some corporations.. The only activity which the
General Partner’may perform for the partnership in Texas
will be the .kaeping of books -and records of transactiona
carried out in Venesuefa, the filing. of a ‘United States In-
come..Tax Return (Form lO65). the exerciss Of general
.suparvtston’over operating personnel in~Vanez;uela and
possibly in some instances the negotiation Of contracts
to be performed iu Venesueg..
Hon. Zollie Steakley. page 2 (WW-191)
“The questions presented under the submitted facts are:
“1. Will’s corporate limited partner be required to
take out a permit to do business if the partnership engages
in no other activities than those stated above?
‘.‘2. Is a partnership regarded as a ‘person* within the
meaning of Section 2 of the Texas Uniform Partnership Act,
entitled to become a partner’ either initially or by substitution??
~.:
A foreign -corporation which becomes a limited partner in ,a
Texas,.:limited.partnership and contributes capital to the partnership is
transacting business in the Smte so as to require qualification in the State
if the; atts of the partnership would constitute transacting business in the
State if done by theforeign’corpdration alone or if the actions of the for-
eign corpbration constitute transacting business in the State. Harris v.
Golumbia :Water & Light Co., 108 Term. 245, 67 S.W. 811.: Ashland Lumber
Co. v. Detroit SaltCo..: ll4.Wis. 6~6. 89 N.W. 904; Fletcher’s Corporations
(Pert&Ed.) 85OQ,; Vol.: 17; p. ‘5.53. The extent to which the foreign corpora-
tion is transacting.business~in the State is to be measured-by .its’capital
contribution or investment in the limited partnership. People ex rel Badische
Anilii & Soda Fabrik v. Roberts,: Comptroller. (Court of Appeals. N.Y., 1897)
46 N.E. 161; Sec. 10 (a) of the Texas Uniform Limited Partnership Act (codi-
fied as Article:6,132a, Sec.’ 10a. Vernon’s:Texas Civil Statutes); and 32 Tex.
Jur. 312. Partnership, 5 61. If this were not so,~foreign-rorporations could
circumvent compliance with statutory requirements for obtaining a certifi-
cate of authority:+transact.business in the Stat&. * Fletcher’i Corporations,
§ 8517, VoLl7, pa 686. ..* _j :
-Ti&uestion~whether certain acts:constitute the transacting of
business in the State is.mainly, a question of fa&.. ‘Ally the combined acts of
the foreign corporation, -and&i this instance the..acts~.of thelimited partner-
ship and the corporate ‘general partneri:must.be ‘considered;~ Security Co.
v. Panhandle .National Bank, (Texas Sup&t,., ,1908)1’57 S.W. 22, Fletcher%
Corporations (Perm.Ed,) Sec..-8464; Vol:l7, pi 465.
It is rignificant. that Ef.the limited partnership was not ~transact-
ing business.in .the.State, there would not’seem to be’any reason~.f.or the
limited partnership to”registerwith the Secretary~of State. Further. it
is noted that the -requirementof Articles 8.01 of the Texas Bus.iness Corpora-
tion Act is ‘*to bansact~businkss!‘: T:here his a diatinction~ between
‘Ltransactig businesses and zA!doingbusiness ‘Y Leas-activity .is.ixecessary
.to have, “tranaactm``business?’ than~to ‘constituta?‘daing bustness? See
Smythe v. Ft. WorthGlass and Sand Go;;.(Tex&rp.Ct., 19iz), 142 SW. lI57.
Hom.~Z~llie Steaklep,. page 3; (WW-191):.
and the:authoaities cited a&.discuss.ed, Although Section B of Article 8.01
of:tiie-Texas: Bnaiites~s Gorp,mation:Act puts at rest.many old issues, Secy
tionA of Article 8.81 invokes the requirement of procuring a, certificate
of. authority
more strictly and based on less activity or fewer acts or oc-
currences than the old requirements of. what constitutad “doing.. business’,
The answer tomyour first question is-~yes:..
As to.your: aea%nd quest&it is. a rula under &rstatutes, thatin
statntory conatrnctian the omdinarp signification shall h+ applied, to words,
except. word.6 of art or words. connected: with a par.tiouI+ trade or subject
matter. Section, Ir of Article 10.,~Vernon% Taxas. diuiLSt&utea, A partner-
ship is not ordinarily. thoug,ht. of a.s a. person. under Texas: i&v+- 32. TexJur..
221,Partnership~Sbcc !k. .: ._ .~:. :. i. ( :.
‘:I: :_