Untitled Texas Attorney General Opinion ( 1946 )

Honorable Claude Isbell
secretary of state
Capitol Station
Austin, Texas Attention: J. Byron Brown
Opinion No. O-7309
Re: Filing the charter of
the Texas Real Estate
Dear Sir: Association.
We have received your letter of July 19, 1946, which
is quoted as follows:
"Submitted herewith is a photostatic copy of
the charter of the TEXASREALESTATEASSOCIATION
which has been presented to our office to be filed.
Such charter states as its purpose clause the fol-
lowing:
"'The corporation is being formed for the pur-
pose of establishing and maintaining uniformity
in the commercial usages pertaining to reel es-
tate transactions throughout the State of Texas,
to acquire, preserve and disseminate valuable
business information and to adopt rules, regu-
lations and standards concerning transactions
connected with real estate, and through educa-
tional methods, meetings of members, and dis-
semination of literature, to better business
conditions in connection with real estate mat-
ters. Said association shall have the power to
provide and maintain suitable offices to per-
form its incorporated purposes.'
"The attorney6 for the said association have re-
quested that such be filed under Sub-Section 105 of
Article 1302, Revised Civil Statutes, 1925, and con-
tend that the proper filing fee is $10.00 and that
such corporation should be exempt from franchise taxes.
"It has been the policy of this office to require
similar associations to file under Sub-Section 53 of
Article 1302, Revised Civil Statutes, 1925.
Honorable Claude Isbell, page 2 (o-7309)
“I would be pleaeed if you would answer the fol-
lowing:
“1. Should the Secretary of State file this
charter?
“2. If so, under which Sub-Section of Article
1302 does the purpose clause fall?
“3. What Is the proper filing fee and fran-
chise tax to be charged?”
We shall proceed to answer your questions in the order
presented. You have stated that the attorneys for this proposed
corporation have requested that the charter be filed under Section
105 of Article 1302, V. A. C. 9. We quote that section es follows:
"105. Corporations may be created for one
or more of the following purposes, namely: Reli-
gious, Charitable, Literary, Scientific or Educa-
tional. Acts 194.5, 49th Leg., p. 119, ch. 81, § 1.”
It is apparently the intention of the incorporators to
place their corporation within en “educational” purpose, as that
term is used in the foregoing section, by adding to their purpose
clause the phrase “through educational methods.” The establish-
ment end uniformity of commercial usages and the preservation as
well es dissemination of information pertaining to real estate
may be in 6ome small measure educational but if so it exists only
incidentally es education is not the principal object of an aaso-
ciation of this nature. As such, it is our opinion that the pur-
pose of the association here does not come within the term educa-
tional es used in Section 105 of Article 1302, V. A. C. 9. (A
detailed discussion of corporations organized for educational pur-
poses is stated In an opinion of thie office addressed to you dated
May 1, 1946 and numbersd O-7212.)
You have further stated that it has been the policy of
your office to require corporations with similar purpose clauses
to file under Section 53 of Article 1302, V. A. C. S., which we
quote as follows:
“53. To organize cotton exchanger, chambers
of commerce and boards of trade, with power to
provide end maintain liultable rooms for the con-
duct of their businees, and to establish and main-
tain uniformity in the commercial uses of cities
end towns, to acquire, preserve end disseminate
valuable business information, end to adopt rules,
Honorable Claude Isbell, page 3 (o-7309)
regulations end standards of claesiflcation, which
shall govern all transactions with the cotton trade,
end with other commodities where standarda and clas-
sifications ere required, end generally to promote
the interest of trade and increase the facilities
of commercial transactions. Acts 1899, p. 58.”
A comparison of the above quoted Section of Art. 1302
with that of the purpose clause of this association reveals a
close similarity of language. It is our opinion that Section 53
we8 designed to authorize the formation of a corporation such as
we have here. In fact, it is obvious that this purpose clause
wee framed pursuant to the language contained in Section 53 with
the addition of the phrase "through educational methods", which,
in our opinion, doe6 not change its effect.
From a reading of Section 53, it is seen that a cotton
exchange, e chamber of commerce or e board of trade may lncorpor-
ate thereunder. The association here may be classified within
the term "board of trade" es a group of men organized for the
advancement of business in the field of real estate. A "board
of trade" has frequently been defined by our courts and is done
so simply end adequately in the cese of Northwestern Municipal
Association v. United States, D. C. Minn., 22 F. Supp. 18, a6
follows:
"A 'Board of Trade' is e body of men organized
for the advsncement and protection of business inter-
ests."
Consequently, we may Say that if you are otherwi6e EatiE-
fled with the charter, you may file seme under Section 53 of Article
1302, v. A. c. S.
The proper fees to be charged by the Secretary of State
upon the filing of a charter ere determined by Article 3914, V. A.
C. S., the pertinent parts of which we quote below:
"Upon filing of each charter, amendment or eup-
plement thereto of a corporation for the 6UppOI-t. of
public worship, any benevolent, charitable, education-
al, missionary, literary or scientific undertaking,
the maintenance of a library, the promotion of a pub-
lic cemetery not for profit, end the encouragement
of agriculture and horticulture, to aid its member6
in producing and marketing agricultural product6, or
for applying, raising, breeding, fattening or market-
ing livestock, a filing fee of Ten ($10.00) Dollars,
end for filing the semi-annual financial statement
Honorable Claude Isbell, page 4 (O-7309)
of such agricultural products or livestock produc-
tion, Ten ($10.00) Dollars, which shell include the
annual license fee.
"Upon filing each charter, amendment or supple-
ment thereto of a private corporation created for any
other purpose intended for mutual profit or benefit,
e filing fee of Fifty ($50.00) Dollars. . . ." (Em-
phasis added)
As we have determined that the association here does
not have en educational purpose, it follows that it fells within
the language emphasized above end that the proper filing fee is
Fifty ($50.00) Dollars.
Article 7084, V. A. C. S., authorizes a franchise tax
for every domestic end foreign corporation chartered or author-
ized to do business in Texas. We quote below only that pert of
the statute which we believe applicable to the facts here?
(1. . . provided, that such tax shell not be less
then Twenty ($20.00) Dollars in the cese of any cor-
poration, including those without capital stock, end
provided further that the tax shall in no case be com-
puted on a sum less then the assessed value, for State
ad valorem tax purposes, of the property owned by the
corporation in this State."
Pursuant to the above statutory wording, it is our opin-
ion that the minimum of Twenty ($20.00) Dollars annual franchise
tax should be assessed against the corporation proposed here.
In conclusion, we must, of course, determine the appli-
cability of the franchise tax exemption statute to this proposed
corporation; namely, Article 7094, V. A. C. S., which we quote
in part es follows:
"The franchise tax imposed by this chapter
shell not apply to , . . or to corporations hav-
ing no capital stock end organized for the ex-
clusive purpose of promoting the public interest
of any city or town. e .'
We have set out above the only possible phrase of the
Article under which this corporation might qualify. It is fun-
damental law that where e tax is levied by .a general law end one
claims en exemption therefrom by reason of en exemption statute,
he is required to bring himself clearly within the exemption.
The exemption statute, es pertinent here, requires a corporation
Honorable Claude Isbell, page 5 (O-7309)
to be organized for the exclusive purpose of promoting the public
interest. We cannot say that this corporation is so organized.
On the contrary, we gether from a reading of the entire charter
end the general nature of the orgenization that the primary pur-
pose of the association is essentially for the private benefit
of its members. The leading Texas case in this regard is McCallum
v. Associated Retail Credit Men of Austin, 41 S. W. (2d) 45, where-
in our Supreme Court held that the Credit Men's Association of
Austin, whose purpose clause and organization we6 very similar
to the one presented here, we6 not exempt from the payment of the
franchise tax. The Court made the following observations:
"The Association's charter purposes reed as fol-
lows:
"'The purpose for which it is formed is to ec-
quire, preserve, end disseminste valuable business
information, end to adopt rules end regulations in
connection therewith.'
"A careful reading of the entire statement of
facts demonstrates that the primary purposes of the
Association, es disclosed by the charter end its mode
end manner of operation, ere not for the exclusive
purpose of promoting the public interest of e city
or town, but for the personal benefit of its members.
Certainly, the Legislature never intended to exempt
such a corporation from the tax imposed by Article
7084."
It follows from our foregoing statements that the pro-
posed corporation here is not exempt from the payment of the fran-
chise tax es levied by Article 7084, V. A. C. S., eupra.
We trust that this satisfactorily enswers your inquiry.
APPROVED AUG9, 1946 Very truly your*
/s/ Carlos C. Ashley
FIRST ASSISTANT ATTORNEY
GENERAL
OF TEXAS
ATTORNEY GENERAL
By /s/ Jack K. Ayer
Jack K. Ayer
JKA-bw-lm Assistant
APPROVED
OPINION
COMMITTEE
BYJs/ BWB
CHAIRMAN