Case Information
*1 OFFICE OF THE A'ITORNEY GENERAL OF'TEXAS AUSTIN
~OnoxablQ usi. J. Lawson
secretary of stQte
Aumtin, TooaS Attention; Ihank D. Keex,
Dear Mrr
8eourlSies Caumissioner 0plnien BO. 0-3097 Rea Does the *Goopercltive Mvanoe- meat XmorporateP have authority to isrue meieb~rrhlg aad fnvert it8 funfls in the manner eet out in its Gonatitution, and related queetions4
Your ltiti3r of August al, 194l, requeeting an opln- ion of tbia departsat upon the quertlons rtatod berein bar beon reoeitad .
il6 quote from four htter ae folltmsr Ym Jtme 50 194l the Cooperative A&QMS- aent Innaorpoxate~ ffled a charter dth the ofiioe of the Secretary of State which contained the rollowinq purpose ClQUSW
w’The gurpoae for whioh SQfd aapwation is fommd is to organloe laborers, worklnmea wage earners, and farners, cdl businees people co protect ncd edvence theaselvem in their rerioue glrault 8. *
*You will note that the capital atock of this aorporation oanaist8 of bSOO.00 divided into 100 rrbarao of $5.00 eaah,
“1 am enolosi~ for your ez.amineSlon and Oon- ai&eration of the c&ecrtion8 hsxsinafter asked a copr of the ohwter of 8ueh Eerporatioil. *2 "The osrpnation has tidoptad a ocmrtitu-
.a: tion and a plan r0r eelline: memberships as distinot firm the oapltal rtoek, the aost of suoh me~lborrbips b&x$ $la&O per par, Of the W&O0 aollseted, $6.00 shall be depollted in a trtxst fuud for the purpose of puroha&iag owmon stoak in differant industries.
mlaing $6.00 of first year’s duer sre to be oared for expenses, praaotions and mainten- aaoe o? the or&an.nisntionr
The swond year Pa&G the #l&O0 Qus shall be usad for expsnrrer, and other
&10&O deposited In mash fun&
"$1.00 sf the tblrd tsar shsll Ea us.4 isr ia sash expu~sss and OU.00 shall be depod.~e~ pzespeotus and ooastltutlba tiolr PkIS wAttaohed hem80 t0 iB8Uh is & The oorpontion wh PT eh the oerpow- of a propwe has ap- pUedtottialMpak~e~tfor krulingaa b wmthsr or not suoh mambershlpm eonst,ltuts saourity within the pro~irlsns of tks !lWas securities Aot and before idYfsl4 them aa to podtloa ef this B artmeat with rs8proO thersto ws vmld kppreo ate heving'the bene- s ;;t$: your opi.nloa a# to the folltning y-
~1.) tr swh oorpmtion ruthorissa ts i8sw mambemhips on the plaa 8Uggestid”l
"8.) Are sush ammb6nhipr sesuritiu within the meanla~ of ths Ten8 Eeewitlss Aot?
V5.) May stmh aorporatisn legally barest its fund8 in the IoBfUNr 6et Out ilI 8U@h Ph&?’ Vader the Cosstitutian St the abws nntiomd ODE- pemtion, the run48 OS u&id o~2wrstiss ara to bs~iave+d as aet out in your let8rr md the swmberrbip'fe8s arcal*b to bs used as msntioned theFeln. Bsr ths third y6ar sf the SQEUI smnberehip @l&O shall be plaoed in t&S ti8arv6 aa- oouat, Qnd 61,Oii in ths Operating aoaowt, as Stated by youa I *3 an4 i,n the em14 ratio a8 ths t.hlrd year thersaftsp.
Artisle~l90E, Vernon~8 Jinnotated Civil Statute8, reta forth the 4uxv0888 for whfoh private ooiQ?Mations may ba Somad., and aeotlcn 83 thsrsoS,.aB anendsd by House Bill No. 16, kStS~Of ths 47th &?&83.@tUCe, 1941, lWld8 118 fOl- 1-r :~. .
., i 'To orgaaia~~$ .laboriwa norking men wage
tKMleT8, aad fRd&S 'tto p&'O#tWti th4lWSlY;, in 1, their variow purruit8; pmia04, however, no aharc
ter shall OS issued hereafter to labswrr, work- ing men, or 'wage sarnars~, or Qiendmsnt graatsd cbarter of a sorpomtioa prutiously ors- ats4 to or(panits laborers,~uorkisg msn
oarnars, or ‘iusy be hm&!6gftar c&~h~t! under ~~g~ite~laborers, work1 ma, or "fs by %ao~~ttwy tat, say -8s eammrs, of pernon, askwdutlon or 60 oratitm, for ooeh pnrpos~s rithout aa Iaver 38 ation filw haYl?q boon mde by tbr Cdsrlonrr oi Iabw Stat;Lr tie8 ao~smlc~ meh appllaa*tioai and a Taror- bls rsamumemlstion made thereor) by sa$,d C&a- mlmsioasr to tha0eoretarjr of &ate. 3t 3.8 apreeely. prwldsd that'ao imert&*cion @r reoomnndatfon by th6 Oolpmicrrioaar of,Laboe
Sta~ti8ties shall be.rsqulm4 or made o? appl%- oatfonm from faxmin ior a abar8errR :-
In OOMiaering your fix8t question a8 8tatsd above, we axa f,irst aonoernsd with the prspasitfon rhsth& or not the aboos ntmtiimed oorporation he8 ths ~powsr mvler it8 chsrt6r on4 the law8 Of thi8 mat. to iSWM me&ershlps en the plan hurotofore 9asntionsd~ &umWall~ apss]rSx&& tbs powers or the corporation are thooe osppnssl Oonfsrrsd upon it its ehartsr or the atntutss aSd thoes LpUed imm %Xpxae8 powiars or inoideatsl. to the eqtStesOs Of thS ha8 no powsr to 40 an aot corporQtion. The oo~pomtion where it la not uithln the express, is&31104 ST issi4Snta1 ~snors resulting rroz the charter, where it ir pfohiblt- ed by the ohaster ar 8oiue sp+miel 8tStute, or WbmJ it $S prohibited by a Banera 8tatate applioable $s bcbth mtttpal, an4 artifioial per6ozus. Thiweioxo, In detedaiag *rtretbW a oopporaticn ha8 the power to 40 an a~$, it,%8 Bstissarg *4 first tc irefer to ?ihe oharter to m.61) whatbar the power~ls expressly by lzplioo~lon, thm ta sxa~iim the .acnrsrred ohwter aAa the statutes tblaclng to acrpomtlons twsee it the a& ie pro+ibitrd, and then in some oared to~~ooaeult the r;enerurl lrtatutsr to eeb ii the aNi is illegal even in QC:X3 Of AAt- ~0~001111~ Xtwillbs noted thr'b the langwi~s oonbaSne6 in
$; f the tamose elatme ret forth 2A fha ohac~-er of iha above Pi men?, oAed oor,noration ir rabskntially the 8ame a~,the ! lmguagb In the firat alatuie af Bsotion 83 of Artiole 1302, j( uurra . It was stated in tha oas6 of Ehnith 7; Worth, . ;.... .;:-’ 157 fJ* w* 740:
&’ The crtatutory rapuisaaeat t&fit the pur- &: para ai the so~psnbton shall ba statad in the
ohartsr ww Lntindod tcr the pretebtion of Looorpxatoru and etoakh~labn, awl the k; publ.10, in ordar that they,‘w b* adTl,eed a# il tha obaraot0r of Itr o@#p#r~~:aot~vitler,
and to enable the f&ate; t.qM~@~%ta propor !~. orfll?ers, to ooubot ri1iAfj :t*m and frarjblr8 % tare&, and to upervlm zu#I eontrol~the Am I an& punleh the adn-are of it8 ~tm~obioe~" ;~., I : It Is atat* in *q JhrZaprudonoo,, -Vol. lo, Q.
"Xn oonrmotion dth'the 8tatrmamli of tha purposes of the oqrgoratlen, t&a prinois&l is #at t&u3 MOQO of thb purpoaar proporltion enumerated fn the statute taunt nbt bo'eweti- it Ia oonsldsrwl bs the poliop atI.
of th; hia8 law to lhdt the rf@i6 of inooc- pporation to tha spaolfla ptuporaa authorize?
by atatuta. Obneml ruler of rtatutcry oon~ atruction are followad In asterarinlng the
~oc;pe of the various purpomrr em&mated in the atatuta."
Ho doctrina of the lar corpooratioA8 tramsoend8 in iZI~O~tPId.that whlah ~A~OUAOO~ that the kiAQof tr:8M- aUtiona in which the cOTi.OZWtiOA aray ema56 ard 14B5all.y ltiit- et%) nor is any policy more flrm.Ij sstabllilhed by the Conati- tution, eratutes and judiolal deo;taions of the State. The concept that,:a oorpc?mtian WM lnvaatbd with only llmltad legal powers 1s not a doatrho of the 064180~ law. (Moosr'r.
453 Bpnorabls Wm. J. Unman, Fegb 6
a, w. 179; Texas ;hlrlmrudbnco, With rdsrenoa to the 00~8tr~uofion of obartrr power8 it Ia atatae tn !&x&s JuFiuprUtlbnoe, Volt LO, p. 8781 "The pri~9ipQl rt+b has bebn to~w- for the lntorpretetloa oi oharter powers
latea is ,that only uueh powan are glre~ as am la the word6 of tbo sot or clearly eabraoad oberter or derived therefrom neoeoaary lm- plioatlbn iA ~ibW oi the ,objeet,oi the ptrnt.
Anoah% cardleel rule apgLying
charters under rhioh speetrl Ilsst-rly to pr rilb$er era clb.lmed $8 tOst any 8mblguity oc doubt must be resolved in,iiwor oi ths pub110 as agdnut the! grantees ef tho chart&r.'
with retbna?r to inalU6Wl powerr, it is dated In 'Abram &rl8prudenos, Vol. 10, p* 879;
"In e+ary gnat of corgonte pasts, there Is impllod a powor to do wbatrrer ir neabssary or maaelurbly a?proppriato to the exwol~s of tho authorlt$ xp~w8lp oonferrbd. This state- ment of thu prin*lQltJ asstamo8 that tha pwer 6xbruised~l8 irio%dentaf.~to an ezprmsed pwbr; tnasaotionr dlfrer~ la kiad from those whioh oorp?ratlon Is binpowrsd sntnr into oannot be regarded as iAO%dSAt&
“A 6btbPmlning footOP in dsoldind what&W thu asser6id parer 1s pewees@d by the 8aQpora- tioa a8 inoldqntal Its srpr*SS@kd putpoSb8 I@ wbather the trandaotlon 18 tU\tpL in the era- eht tion of a bueinese of that kind, grmat we P being given to dominant ptrrpO80 of thb aorporation. ,rA laLgUag5 Of 5 hadit% at+ thority,
-'If ths mmmu be such [88] am u8ually resorted to and a din-sot lesthod ofacooa- puehlng the puqo8b of the incarparation, they are within it8 panore~ if they be Un- umal an6 tea6 in an indiraot axmnur 0el.y to promoto fta iAtbreB%8, they are held to hb ultra Tlrbs.'*
It 1s well establishetl that a oorporation may *it or restriot the aaope of it6 parers anil autheslty j ~' ,, ocnferred by ths statutes as a general law,,b~I;p~gog.le
n~nrlalcnr In the artloles at laoomoration. e It lm further stated in the abwei mentioned Vol. 8, & hi,' ad&her Cyolopm%a Uorgbratlona on pq 1968:
*A power 18 'implied when *reasormbly neo~ersasy! to enable the aorporatian to ao- ooqllsh the objietr OS ft. oxsatlon.* It is rwther stated tlatfhsr in the abbots~men-
, ., ticno rolums on 0. 1990: ,A.’ : :’ “A ROWBS WhitOh the hW till. SttgaF6 *S crxietlng by l~:gUcmtion met be ona in a
nenae nboerrasy, - thet is, aoedful, rultmble, and propsr to acoonplish the objeat oi the gent, - kanti oae that is direotly and ime- diatrlx7 amroprirte areoution of the npaolfio power@ and not ene that ham but a indin& smote relatfoa to th8 8Ught rpeoido purpose of the oolrperetion.
V,n Term rule is rtatad l s tollowa: 'Y& 8host if tha maann be such a? 8z% umnlly rii#brtad do, and 4lrwt mthod oi aoeompliah- ina;. the gumone of the ihefarporatloa, they are Qithin itO PC!WO?lBe If they ae ummaml, an4 tend in an indiraat maanw only to promoto ita .,’ intemmt8, they ass helA be ultra r%rw.' !
*A lmdla~ tsxtboolt writsr lay8 down the rule:ea follcmm: Wmteter bo a oomg+$r lsgitisatai busfnss8, the ampan my tostsr it by all t&s usual means; but f t nmy not go b.goriQ thi8; It may not UpdsZ' th6 prOtens
cf fostering, oHm@e Itsall in proewdlng8 Mth whioh it has ne lsra;it$.aato~oon,Omm. In next place, the emalltr haoo h-et, deGesmlnod &ah mnann n&d be dlrwt, *7 Bo!.wnble TQa. JI I+Llbon, Page 7
With r.-terema to the above nantloned rules ard ot.parcs set out by Fletcher In his work on acrporationa, It 1s etated on p. 1776, Vol. 2:
*The rules laid down abov4 84 to inrplled powers are qell osttlad end are, st prs- sent Qay, not c~en ~usstlcned by oourts or wdters. The dlificulty oomea in apglylng the ruleah It le efasy say that a powor is lmplled if it 1s ‘reasonably n60essarjc to the exercise of express pfzwer8, but there
is no teat to 4aeiar whether a pertiaular aat, done by a ~rtfoular corboration umisr particular alroumetanow, la kaot&y
1140ollaary.' OS couma, many aota are olearly, on ona side OS tfim line OP other. But
there are lllan~ 01054 to thu dlylding lfne, which oaea8loalr mar0 ox 1088 aontuaion in thm dmalaiona. The result la the mls that *futhsr 4.n aot ovmea with&a the bapliod
pvwpa or.4 oorporatlon Qmst be deter-
nine4 in eaoh earn frcm all ita faotm 6nd
4lrotlDM)tnn048.'*
ft ia clear tbitttha pumoae o&m44 aa stated la the obartar of the aboy leentionsd eorporatlon and the ,atrt- utb tmlar whloh it ma lnuorpratad do40 not vxprerrly eon- far upon the oorporati#+ the power ierur mezubarahi~a aa aboy mmticned. ~tYa do cot thl& that'thr iaa~ing tha mmbsrrhipa herrtofom mentioned.fs a dimat mst;llaa ol aooomplfahing thr purpose of the inoorpcration of aeld OOQI or eq +eam ~subh a8 .are urwlly resorted py to, but that aua%msthod8 and reet?m~ are -~~a1 and tend in ~1 fir- dirmt man&r only to prC!nOte the intrrWta Of th4 001pOm- tion. 'fherefora, It la our opinion $hat thr Coo am::: Adwmo4zsent fnooraorated ha8 no loss1 4uthorltY PO the abora mentlc&h mkbarships on-the plan he%sinrbovo stated.
As we have answered your first yueetic@ in tha negative, pour seoond snd third puostlona raqulrr no dis- aus.d.onr
Trusting that we are
Inquiry,