Case Information
*1 OFFICE OF THE Al-fORNEY GENERAL OF TEXAS AUSTIN
mnombls % @. hrme
srsr8tiwy or mata Texas
Awtln, naar Sir: Mr. Qaodr A. Qlllanr Attnt
b am in maaipt 0
mant and sa
* (d ) %I apltnl rtlll ea&Mbla $6 - 6aourit~ tar debanturer 6371,039.00, wllhirh irsrmd aaountbq to '3&6,656.% is
132
“The oomgany contanda thettha eubaerlb.6 6apltal stook 1s $974,000,00 and that aapltal emountbg to ~~,QO.OO, subjaat to aall, ir, not aub$mt to filing fws or fmnchlsr tama, their oonhntlon being that $ll&,961.00 adveneod ova? la th8 natuu end abars $20.00 pr ahen ia of upon whtah intanst an ebmno~wnt ia pold aal that tba eepltel aft11 eallael~ la not Qa b We atookhcildorrr aa atodr aubsarlkd until the aI me-
tom 0al.l for l uoh payrqnt. The aanpany*8 arm- mont la that nndar thr +~liah bn tba uorrat aabrarlbrd ahoald be ddmmlned 81) tha ammat
called by the Ulrwto~. end tbrrt uattl e sell ir maa for the unpaid portioa, then w Iy) lk- b%llty oSthepart of'tba 8tookEoldara for ttn ’ lmlanos or the otoak subeoriptloa, heme. M ill- ', rps tea ahaIM ba 8tmO8smd $grlmt thlo portion ,oi the &O&c. &I etlpport of thair oonteutiorl
ueorpts-fraaa rasolution parwd by tha Board :of @ra6tcim on Gbrtmry 1, I.867 a#~# from the
*FM also aall your atkntlou tQ the paialon8 IS 9, 11, 15 16 and 35 of the kl?- 00nkfnsa'on la 1929 tialaa or +a800 T filed tion in thle offi oonaem~'tho neton or this stooli *%tt Will ObEm'Vu that in ti.& X4Wl6ll816 Of 'pa&c&t dated Ootober 25,.1929 1919.9 let, October ~Srptambar 18, 1909, and uaow b r 8, l899, state-
matawara mad0 thetallof tha c8gitalsto0km5
mb-mxrlbed l ppmx$zStoly 755 $hclnoi #Sd In, and rilsng reas paid on tin ant%ra oapltelstimk.
*'iJa, theMrin% roquallt you? oplalan e8 to whloh or t&e roll& 5alomta oar tlllss fwe shell be besedr
~22. u.0. Flowsra, I~af30 3
Wa also raquaat your~opinion aa to whlah following EUW oar Smnahlw tarwIllba oftha euaeaed : pert of ~l%laIa 39u; %Tlead txvil BtelM85, &et 1925, as l ~~~ndsd, Aata 1931, p* 204, a. 120, providbg irrr the flllrrg to* of a fora&n 4orporatlon to rea3sw its right to a6 boelaaea fjl %.a., rsads aa fonowst
"Upon obtainin& a pa!mlt M(Xw ArtloU 1529 and upon,~~ng a arrtl.fiad ogy of any l mmdmnt 8 au lamat uqd4r Art1 0 1537, *aoh pey the roll.o~ing rue atblttad to d0 an ~eod wpN.l etosk w tazabb shell k thet propozt~oBrr ttia~rholr tbalmr, l 8 tha -8 inwhole orlnprt in ln%mxata~ l S.Stb Saip bualMu in MS* plus tha groaa rawi to rrol8 In- T tzaetatk ‘prxae baefnose, baar to tea am e irr ssaatu and reoelpta of tho aorpom&tIqn. 3,n th4 ~56111s ot e ba@nuar~arporatIoa obtainingapotit tci do tha first tlm, mhara It btmiarae In True for hre tlmrs$OfOr. &oak .5@0~4 BO Upi++ in -w, $sa.OOl Dollars thy beeta fllirg rro or rfitg shell bs p&d 66 harsinebove pmlaod end wlthln th4 axplratlon of the ninety (90) day6 aft4r first efulll fil* per tandar Ita pamit, tb oorp0mthOn an affidavit with t&s 8eomtWy Of Stata SXSOUtSd b? OM ct its exeeutits ofriwrrr, ahaPiz@ the ewurAt of gross am&o omploya4 in nilo1a al- sn part in Ln- treateta buaineaa iB Taua the WOW% of ita wtlrq grow maoto at the and o? auoh iint mar With uS&otbar data mquire4 to oalaalda thafa* ltlrd rf~eiiuh tirps shell ,pay to the s.OMtrrp or bets tbabaia~rtbaril~~ronthapr~wa of ifs leeuad otkpltal etoak as banlnb&ore dobr- &tad, +I exeau ol Tan ~o!seand
lsn at,tha mto of rcln %B %OUrWnd
edditioanl part of euoh fm4tlOaal y6ar of th4 llfa of any
1.34 non. 40. %warat %gr 4
oapltil atook 18 laauad andrr an ammdmant
vldodb~in forth .paymntonthr mm&e e tha wee of a ,bsginnsr earpomtlon; We& tbet~thsrinlqmflllng fi*toPr-:uyman~tor eapplaarnt'abalXbr yifty ~4WO.00) iJoilen. .&an th e l aaato l mplayad in Tume.am used jointly in.
oalmlating &mhfaar ar.tha lntreatak~~Prp8 ra- mlpte bmrtotha lutaretete Tazee neipta fror t&n onfirs opsmtio~ in Tsxae,a
ArtLI& w&,, R@r l d Giw Stat&as, 1925~ as emandsd, Aota X931, ~~~ Ul; 265*'Osoridmj 1~ mrt, l e followe:
"(a) .%Ospt as ha&la prorldod, wry domeetloend rarnignoorponts0nhrntoio~
or hsroei%er ahabred ox mathorlmd to do.
buehsea ~in.‘foxoe, .shell, ‘tmor bsfors %ay lstbfwahyaer~ py ias(ltanootothe Baoy- tery of stat4 a fnmohieo tau for the.yser ~llawing, baa.4 npanth.t pmpmblonoftha oapltal l b&; marflacand m- outstending
dirldd proflta, plna ths amount .ot cwtatand- ing bonds, notae end dabentume, other tbsn thorn amtaring lnloaa than a y8ar from data 0r leaua, as the grvae nulpte m its bus&
MU don6 InTexes bsareto tctmlgroee raoslpta of the sorporatlon ?roa lta 4ntlrs bualnsea, yh+oh~taCehellk wmpatrdattha fomwdng mtaa fok 4e4h ~&as a0ttuha’ JJeQmru.
(#l,000.00) nor traotlqnai?plqt thamof&g~. ~.a,'
'Wd do not aederatand your raqr;r~at as lntwd& ti m&w your ur partimntel wnatmmtiask of tha l ~tietutee, dnss .thrXr l na&mant, wlsioh 18 bees& Upon&i AttWay~&mr&*r MT zt;: "Ly$nEh";t";w'-&=i ratiLc &t:*At %rB4 am6 Court of lkxae, &etsa’A~lI l2 *lg7~y&~9~~‘*~* Oplnlona hp. 19l6-1918, PI t2l thet-uplhl atwk of uld oorp4wt~on i5euaa, anu ou$&eiul- lBgJ'm6eBtt<part Oftha alhorlsad'oaltal rsook:~oh be& boon aubaarlbad althwgh not fully #8 % ,+n ax4 qtibjyst
to 0311. ml- the ;w:Fasea cf thlit; opinion vfa roaept you* lo@! aatsblinhad tlapartPPsnta1 construotiono? these stat- otas ar& conoldsr tba umtantiona cf tka taXp9yar tnatba- aaasa of ths %&Uh leave appllaabia to aa& o y-t-b the full amount of ltc atook ahonld not be OOIU damd for tnxatlon or ~iower fu purpouai
~pparantlg unbar thr ?pn4ieb lmf mombars-of the -&lmltad .Caapny are laausb cwrtlZlaeko m tha total pax v6xu0 0r the. shams eub8aribad upon peymant of a-put or all of the par olrlna, in this lnebn~.a rOur poandr on 8ls pmnb prvalua *took, laavln6 two poanU5 par alnraaapald ?or ,wblah the nubsetiber to Gall. ia subjrot TJM rtooktmldar wy notpayup thaunpalt¶ partlono~hls uteok.%n the eb- e4nw of .a 0al.l or wlthatt the wne8nt of the .#lrwto~ ~4 -It 15 ala0 pr4tv$hd that 'adv4nwe lay In rada by the etocDk- :holdare a6.a pnpaymnt~a&aimS fNmra.oallr on thaw ap- ~pald atouk;ahanautho~aad bytha‘dlrabtam. Tbaa pra- am notwmlUu8d ,pajwant8 ~alfkst~eall5 u paynnte ap0.a the ntocdc in its strict uan&o. bat ara aotxeldand mra in tha DBturw of a loan up00 whloh-~&tanat 1U~gald end ln tha is Pada, or tlm oasporr, tlon la diuo2wtl ‘and wont 6.~ aall 1 t, bewmw luoMury 60 '8nfQrM. ulle ior um ~benaat or oeditimt;~ th6'~rpDont shaact*d is 0raua64 me 8n o??a*t' ~O&BinBt; UCh Oti to the 4X@JBt HO? th@ pm$Bwt. tbldU the lmv@ o$ Tsua-e eorpontio@may not lam&m &40kapanB: 9vetiy such sabaerlbrr baoumm a’ numbs
lpw faato on the inoozporatl8f1 OS tim umpad~, and ltmblias WB hoxdsr O?+Lrtavar mmbar 6? #~IWO~ ha has.at~baorlba.?w. 'l'ha 23rll SeOtiw~ IW@% asd & the LO? Wr A5t Of 1862 &OP Wbhh .~aum of awoalation in n airrum 'ay 00 .th4 poaltion o? other parwna uht'agxa~'~ km' ~JOR&MS. *l[t I5 pAin?. ea%d Lord blue ti i!van' c4.a (lHi7); L.R. 2'Ch. hpp. 430, 't&H the orS&kaiaubaorlba~e ara, ,by &t Of Pi* llhR4ant, de&maQ to mars trrlcen tb* rharcl0 mt.O;r poelta thalr 1181~~1'; the Ob et ba@ that tha publla&&tralylrlthc~~~ aanoamthaaab- Mt3" sor~lbepa br the ~~cswa~Atun btmml+ mwWn of *6 use ooRip3ny. r\nd a44~wgottl'5 oaw, 4 zq. 238,
In thhr 88~ of the eub64rib4ra of t&a aeaorandum, tna London tbsn3rmr, no auotmnt ir nrorsoary and ~?rorlnoial, & c;O. j Q. Ah 525)J 'no aIrtry on fh9 M#@~T Of 6@6b0rS 18 n4046rrlllf. ~f0hOl'S
oeme, eupra ~luandsr v. ktomstla Tel* honr
co., .(19OC,1 %. 63. The subseribar ir ihand
to take tha.ah8qus fraa f&e 8omgs4, and to pay oalls dulyasda1Ura any otharnhan- fortheron holder." Vhe ta3aa vi the Pat of 1929 'and .%a** tSdnlir the pr0v1810im0r O40t8. 28 and 157,
lra*s no doubt, ln'tiha oaae oi a'ooaplq, Mt.
Ml by Ilhera~, about tha obll&atlon or shn-
hel&er'a to pey'to the Ocmpa4 the fkll amotint tlhama. 2% worda of .Mm dotie xbit-
of thar %06 tha foregoIng it appmrm. that mm- th4 *to& or the,full amountottho #took Qsitrd brth5.a oor&wzatioa will only pi404 it upon'th ma4 foot- and b4als with othor oorporattoxm 84 th4 at8tuM S.a appllad Qr tha Se* Mtary Of 8tata*a ofrima.
Path relF4Mnor to prrpeynleat5 in Nmpsot of futura 04ll.8, Palaiar's Goap~ny Law, A5tb ~Rdtioh, &at-es at pnga 14G es followBr
l.38 "Ey Lords, I ogrea, hatlon 7 of !l!abla A authorizes the direc:ors of 4 coqmny limited by shares to agrsa with any member for an ad- vnnce of uonay on tha terms that the money so advanced is to b6 sppllec! la discharge of the member'8 llablllty on his aheres~when end aa thet liability .rlpenu Into a debt preeently payabls, en4 that in tha meantime the mmibnber is tc be t3e+itha tc lntaroat en th4 4dVt6xa aa if he ware an ordinary aredltor of the oom- .vaw. 'zhe interest la to bs due to him in tha character o$ orlditor, not In hls oheraatsr aa tmn@tsr . . . . . 2
The member's advanoement against future oalls on hia stock liability doea not iri any wiay mduae the amount or capital stock of the aoflpfjny, although uutll a eall Is 6ade tba prepctywnt hears Interest, lnatead of sharing lo the dlvl- awls. The soncy~ thus edVenced by &o&holders against $lnlr liabUl.t,p on their atoak& oout~lbutep jwt ,aa muoh to the baai- 11888 potenoy of the company and represents a part of the aatwil capital of %h~ aoupany attrlhiable to aapital available wing stock, whqther aharatierlzsd aa~a pre~ymant on future calla or a present paprmnt on ths etaak ti con lets disaharga of lia- blllty ror the unpaid stoak,or subscti~~,on. P An addltloual conal4en!~~onarlsea, however, wl%h '.
refarenclt to the raura 'Ilax Satute, be~suea or the feat thet
139 *n. ii.0. plOw6r6, rslrcl 9
zmaucra of thlb pro*lslon, the U6C688ity for l-6- &talag the dabantarae whsn a ~11 1:; aPad@ upon uapai6 aaplt8l th6 limitation UpOn the Wit~ny'a 6UtibOC~ty is b8Mtt Upda to isetia bonda en4 dabenturaa an4 fltoe a mrlmum mpltallsatlon ~@f bath &Oak an4 debmturra in tile awunt or th6 par valu6 Uo48r tb68a uira~tena68, th6fW.l ai @to mbsotikd &o&. enderlyirg i4alZablo oapltmil, end the autatm4- mwwto5th6 ,ta(l da~knturor noal rmalt in sattiag~ ap o texebla. mpltal tn.rzoaes of tfu muW& llsit mbieh tin eorpontlon maid k math~66 to mch ooder It8 ahe@nr an4 tha lam oi its 8nb St is OUr Op~Olt to #18 8Xt6Ztt St W0ltl.d that dtU10~6, in iBOt l’68illt Of Qapital tlOt 00lltU4&&!4 liGld.Oll in 8 &I by th6 fl'ttBahi@W bX II is tU t8.
It la oar a Foion that th6 tez8bl6 capital of th8 ?atiador Lea4 snd C&t 6 P kquny, Ltd., for t&m purpo8r ch' OLtbt16tiXQ th8 WrpOMtion'8~ &W'Btt fizLn& f@O - b6 b6~,000.00, klngtbr aoeeptrd on#l fullaafmat ofth '&a&88 rabrarli8d and in th6 h8nd8 of atookbold6r8. !i?ia6@ t&O @6BClhi58 tit2 %U b88Sd UpOB -piti dOOk,
srplua and Pnlirid@d &WOfit8, ati Wt68, bonde mPd 4OknWrOr 6ak of otlmr then thoea 8utturhg lataa than ozi6 par i tMu0,~ an4 W@ 40 lWt &lY6 011 Of thM6 f&W68 k+on tU W &tad MUint at taaabl.6 aEpita1 St6st6 tba:m tl&Wt abhi4h tb# -88.tE% 8hofild.k bead, hOW6'(*r, - t.TUUt tbatth abcna tlbwaeionrlll smblo you to aaqate the tax.
Yoaln Yary truly Article 7064, as emended, Includes uutstenalr@ bonds, notes and debentures maturing onegear~@;mora fran date of issue, ae a part or the taxable Uapital of the OorpOWiloi%. zs this oese the members* tuqald llablllty on thelr etoak baa bean pledge4 by the cowany as aecwlty for Its debentures lseue4 amou&ug to $3.k0,656.00 It ia au&w&ad by the ~aompany that if e call should be mad4 upon the unpaid portion of tha stock, a corres::onding, smq.&nt of the dabenturas for+Itlch they ara security must also.be mid up and far that reStson the inclusion of both oallabla ctipltal and the Uebentures w&h in a aupm4tr aapitall~tlo~.~ If the ncceooltp ror ~raflting tha dsbentures upon calling in ths underlyiug cslleble capital, which irr eecLu%Y therefor, arose out of the fact that the aabenturs holder@ would prcbably demand addlLt@tal seaurltp to raplaae this pledged stock, thfs 9fiaia not'ba naa6ssariJ.y trus. Kowver, we flna the follwlng provisloa in the comp~ny*s Artlalea of Aost3cletlont "The total lnsue of suah bonds and deben- turee shall hot at any tins excobd the amount of unpaid ~oapltal . . . .*