Case Information
*1 R-337 Hon. Paul H. Brown Opinion No.
Secretary of State Austin, Texas
Re: The designation of notes re- ceivable as "property" with- in the meanln of XII, Section i? , Constitution Dear Sir: of Texas.
You have submitted the following request for the opinion of this department.
"1 . There has ~been submitted to this department applications for proposed cor- porate charters wherein the following sit- uation appears:
"a . In payment for capital stock sub- scriptions notes receivable secured by chat- tel mortgages on automobiles Is shown.
"b . Current assets of the proposed corporations include customers accounts re- ceivable.
"2 . Do the items shown in 8 and b, foregoing, 'or either of them, coiistitu6
property within the meaning of 12, Section Constitution of Texas, and, if so, what investigation, if any, should the Secretary of State make In respect to ei- ther E or b_?"
Article XII, Section the Constitution of Texas is as follows:
"No corporation shall issue stock or bonds except for money paid, labor done or property actually received, end 811 fictl- ,tlous ,lncreaee of stock sr indebtedness
,shell be void." Article Revised Civil Stetutea of Texss, 1925, which was enacted pursuant to the abov6 constltu- *2 - Hon. Paul R. Brown - Page
tional provision, is In part as follows:
"Before the charter of a private cor- poration created for profit can be filed by the Secretary of State, the full amount of its authorized crpFta1 stock rust be in good faith subscribed by its stockholders and fifty per cent thereof paid in mesh, or its equivalent in other property or la- bor done, the product of which shall be
worth to the company the actual value at which it was taken or at which the pro-
perty was received. The affidavit of
those who executed the charter shall be
furnished to the Secretary of State, show- ing: . . . .'
"2 . The cash value of any property received, giving its description, loos- tion and from Whom and the price et which It was received; . . .n.
That notes receivable secured by chattel mort- gages on automobiles and customers' accounts receivable are persona1 property subject to taxation is conclusively demonstrated by the Legislature definition thereof con- tained in Article Revised Civil Statutes of Texas, 1925, which is in part as follows:
"Personal property, for the purposes of taxation, shall be construed to in-
clude all goods, chattels ard effeots, and all moneys, credits, bonds and other evl- dences of de-d by citizenmthis
State, whether the aeme be in or out the State; . . ." (EmphaaFs added).
Article 7149, Revised Civil Statutes of Texas, 1925, defines the term “credits” as follows:
"ICredits.'-The term. 'credits.?
wherever used in this titie, shall bb
held to mean and Include every claim and demand for money or other valueble thing, and everv annuity or sum of money receiv- able at stated ueriods. due or to become due, and all cleims end demends secured bx deed or mortgage, due or to become due." nmphasis added)
Hon. Paul H. Brown - Page
In the oaae of OIBesr-Rester Glass Company et al, 101 Tex. 43,1, 1.08 S.W. 967, the Supreme Court Texa a, construed the meaning of Article XII, Section of the Constitution of Texas aa follows:
“The terms in which this section of the Constitution is expressed indicates the purpose that the assets of the corpora- tion should be somebfh~substantlal, and of such e character that they could be sub- jected to the payment of claims against the corporation a§ wel,l 88 to secure the share- holders in ,their rights in the capital stock. . . .‘I,
In view of the rbove legislative and judicial construction, it .1a. the opinion of ,this department that notes receivabl,e secured by c.hattel mortgages on sutomo- biles and cuatbmel)sV accounts receivsble constitute pro- perty within the meaning of Article XII, Section Con- stitution of Texas.
Referring to the s,ecwnd pert of your question as to what i,nve8tlgation, If anyJ should the Secretary of State meke in ,reapect to the above property, it is presumed that pour query pdfbrs to the a3certrlnment of the “value” such property. 1309, Revised Civil Statutes of Texas,
1925, which mubt be construed in connection with supti, is as follows:
“If the Secretary of State is not satis- fied, he’8.ary, at the expense of the inocr- porators ,‘, requi,re other 36 tisfac tory evidence before he ah*11 be required to receive, file and record such charter,” the Su-
The foregoing article was c snatrued by preme Court of Texas in the case of Beach et 81, vs. Mc- Kay, State Secretary, 191 S.W. as f0llews:
“The question whether the stock had been subscribed in go@d faith, and whether 50 psr cent thereof Md been paid ia Gosh, or i&3 equivalent, ai?3 questions of fact to be deterained by the ~aaretary of state by the exercise of a discretion ledged with him by law. . . .”
Hon. Paul B. Brown - Page 4,
Therefore, the nature and extent of any fur- Therefore, the nature and extent of any fur- ther investig6tlon of the,v@lue OS 8uah property, if ther investig6tlon of the,velue OS 8uah roperty, if such investigation Is deemed neaeasary, such investigation Is deemed neaeasary, lisi whbilg is8 wholly f within your dlscretioti, within your dlscretioti,
Bates receivable aec’urad by ohattel mortgagee on automobiles and ouetoaers 1 acaounts receivable oonatitute property ywat of aapi- which may be received la tsl stock subaarlptions u thin the moan- r
ing of Article XII, Beotlen 6, OOMtitu- tion of Texas. Investigation may be made by the Seoretary of State 80 to the value of such property under the provi8iona of Artiole 1309, R.C.S., and the aatum and extent thereof lies wholly within his dis- cretion. I
Yours very truly ATTORNEY GEliBRAL OF TEXAS CW/lh t April’ 25,
A I, @EEERAL A