               OFFICE        OF THE     ATTORNEY GENERAL         OF TEXAS
                                           AUSTIN
QROVER       SELLERS
ATTORNLI      OLNLRAL




   Ho&mb&    O&udo Irboll
   saoiotarf of utato
   Mrt 10, hxnl
   Attwhtloa, J. L. noaarit~,                  x.84 of chartor
   hu        air:




                        Your roquort     so                      abovo rtatod mat-
   ter liar boa              rocofrod 8ad                       iullf bl thlr     do-
   putmnt.

                                                           I la p a r t lB   follour:




                                       Corpor~tioar luthorls~      )r~ t&o pro-
              tlrioor OS        thlm    Aot dull   not   bo lutboMs.d to bo
              ore&ted lo olt es or torn8 of 8mv than trootp
              fir. haadrod ( 4500) p o p ula tb
                                              lo otu‘
                                                   o r diug
                                                        to the
              last p r r o o dlng
                             ?odoral Co nr ur .
                        Your tlrrt      two qor8tioar    ora:
                        1.    %lmt     pm orot of aombo?rhlp forr om bo
              used to WJ a rolloltor           of mmbora?”
Eoaoroblo Oloudo Xoboll, p-o             2


              2.   %uot     t&   lollolt~ of momb.Frrbe           ont-
      0d 0 1i00~00        or p0mft     fra   tho kouritko       8a-
      mlool~r       of Tox8ot'
              Thelnwwo                      E0Ed up o ath eup-
                       to th o o oq 000t1 odo
pliaabllity of tbm kouritloo    lut (&tlok   F OOa, V.A.U.8.)
to the oolo of uderrhlpo     in owh on oremlaatloo as t&
hoopltal ooo lratino prov1d.d for b &mot. Dill Ro. 181.
h a tio3n (Pnof th e  kourltloo       $lflEoo “oooPlt~” as
                                    rot
follorrr
             “Tim tom *ooourltyn or ~ooourltlool oholl
      lnoludo oar rhuo, ltook, troooary otook, otook
      oortlfloot~ under l totlw tart agroomont, ool-
      lateral trust oortlfloat8, oqulp8oat trust ow-
      tifloato, preorg~alrrtlonoortlfioato or rooolpt,
      luboarlptloa or roorgmlo~tloo outlfisrto, 8ot0,
      bowl, doboaturo,   mort&o#o oootlflr~to or other
      lridonoo of lodobtodnooo, oa7 form of oomorolal
      papop, oortlfio~to  in op nm4or a profit &ulrq
      or putiolpotloa         4groo8oat,     oortlflooto    or mar




                                                                         ours)
          A mmberahlp in 8 hoopltal oooparotlto oortolaly
mu&Y be a l oortlflooto . , . roprooomtl&g . . . an lotoroot
la say w 811 of tin . . .  loooto" of rush rooporatlro, and
tha solo of owh wrborrblp   would bo ~lthia tha purtlor ol
t& Aot anloor lxompt br the prorloloor of kotloa 3. 8ub-
dlrloloo (a) of (kotloa 3 of t&u &ourltloo Aat lo as fallour;
             ‘Aar wowlt   or wmtwrahlp loouod b l ow-
         rrtim ~8~~18 ai lxoloolrol~ for odwot  I0-1,
      r lmtoloat, fratoraal,  okarltablo, or roforutor~
      pwporor and not for            pootmlor~ profit,     ad   a0 part
      of tko wt lunlago of uhioh lnuroo to tho boaeflt
      of mr lto&hoUor,     obomholdor, w ladlrld~l
      mmbor,   oad rharo nc4oamloolo~ or rularoratloa lo
      pold w alron w lr to k paid w /inn in oonamo-
      $roa vlth the dlopooltloa  t&roof.
             IO a bospltal oooporotl+o ooatomplatid bv Muto
  Bill 80. 181 l ohslt8bk     006 rrtla?    Uo $hloL not,   do-
     it. tha faoto th8t  this lll3”4~8omlutoo it ouoh. A oh8rit-
  3  k loporatl.arr~o boos rarlouol~ deflaed in thou      tomu:
              A VblumF~          l
                            oyolatloo  orga~lrodto     otldo far
   wathl~ plymats, modl081, l    urglo81 rrd hooplta P oaro for
   no&or0 vho ~0~0 l  8ploy8oo of l rallval oompaay aad mia-
   toiala6 lovorol hooplt8lo,                             l
                                ~8 not oporatod ooiuoltol~ fu
-- Qhoritabk     purpoooo, 00  no to b olrolqptfro= 000101 MOur’
   lty taxatloa, motvlthot8adIagthot    r8llr87CJfQQ
                                                  8       y& so-
   preol8blo ~lfto to loooolotloa oroh SW,
   ohorlty 08000 voro t&ken   ooro of, 0 ml! 8oooal8tloa hod no
   aot   lwa.l~~.        bith   v. Ao~ldo,      43 F. 8upp. 5l0,   514.
              lUhwltabkg ia ot8tuto lromptlng olmltoblo o o r -
   porotlo8.8 tram the pqmoat of uaomplo mto~no8tloatu
   lo liritod  to or~mtlolu     m@lattriluF"l%eluolvol~ fw aloe-
                                Lulugtoa Coaotory Co. t.    Camonvoolth,
   ?iiii!?%p:i??%,              699, 703.
             Tb torm %aorlty" 81~8~1 connotoo tho pub110 gan-
   woll~, or the publlo 8t 18re0, or 8t le8ot 8n lndoflalte
   uotlon of It, es dirt1 ulohed from 8 dofialto  sootion
   t&roof, ud 8 ‘oharltabYo ~00’ lo oao t&t 8xioto for par-
   loao moortaM,  as tho ubllo lt l8rgo, or mm0   paorol
                                   ?ho poor or tho moody.     In ro Altom~“o
                    ::r?b::,        87 aioo.   955.

             Thocofwo, it lo the oplnloa of this doportunt
   that the ooli of wmborohlpo in tho hoopltal oooporotivoo
   oontomptited by &ado bill lo. 181 lo oubjoot to the pro-
   rloloao of tho kourItloo hot. Ikotlorr7 l ? tho sold & c                ur -
   ltloo Aot protIdoo,
                 ‘In tho oroot *     doolor 00 doflud horoln
          -11     oall w offor for ulo 88 poor~o8tlon
          oortlflo8to    or rooolpto, w ahJ 1 la any wmnor
          oolloit   ouboorlptlono to or la ly propoood ow-
          pwatioa, trust w joint ltwk 8-w            po’oposod
Howroblo O&W               Ioboll, pogo 4



    t0 b8    fmo4,          the       ROO?Otw~         QS    8t8tO      ny       ro-
    qrlro    1s hr deuo it moooaar                 tho lm-    to     protoat
    torA      or p0apeot1+. 0~80?1 lo  ro  OP lWtifiO.t.
    heldoro,   th doa8r 00 .f~orlmg OUOhmar1t100
    for rla    to da sit, 8u moMy0 Md fu&o rooolt-
    odfratb       08c th o r o olf,
                                 x o o pltwh mounts
    thUOoi 80 t& 8OO?Otuf Of 8t8tO Ur &We                                             padu.
    this &t8lhV&d.~   pOmiB&tl-      lmUeO                                              a
    oomolooioao for tbo ulo of oolh kourlty,                                          to bo
    dopooltod lm a trout rooount le oom bank c trust
    oapomy dolw buol~oo la tb     W&to of Tows
    Wtll lWh tf8o 80 lUOhp r o p o o 008pUy
                                      od                                             dl
    hOV0    Odd      th0    BfetrlU sOpita% t0 &U-
                                           (IO-t        Of
    thorloo lt to be@8 burluoo in ¶'oUo, 8t uhloh
    tlu tho bask or trust ooap4ay &il truofor
    lwhfmdototbr      propooodowperationaad    its
    luout1+0 0ff10~0   SW tha pIppou or po?m1tt1n&
    it to uadort8ko Its bmlnooo, In tho lvoat ouch
    P-Po~    0       80 b?OfR dofiud Obn f.11
    rlthin tvo       8ro to ooll the 8lolmm UoUlt
     of oopital noooooar~ Sol, tbo be#mnl~ of boolwoo
     la TOIU, the bei& w trust oaapary ohdl roturn
     to tho oubooribwo that portion of tho Stir
  :-thot hod boon dopooitod undo? muoh proorgoalm-
    tlon    8&FO&WOt. At th                      tlw    of nklng               tho 60-
    posits, ls borola provUod fw, the do@lu w
    loowr aball fvralob to ouoh beak w trust OQ-
    puy the uwo of the mroow p~~ohol~      or sub-
    oerlbla# So oaoh ooorltloo, and tho                                      owunt        of
    moaoy paid lo br laoh.
8bfLOrObl0C18UdO foboll, pvarn5


           fir mavor  to our uooad ~wotlon,    it lo the opln-
loo of thl0 doportwat    Lo t th8 wlioitor  of 8ombobo must
bare l lloooao or per8.U from the 8eorltloo    Ooriooloaer
of   Tu80.

               Your tblrd,              fourth Ua flftb       queotlon0 Uo 80 fol-
lovr,
             3 ‘If tho sot door wt  boron lffoctlro
       ant11 90 dap rftor adjournmat, oan the obrtor
       bet&y    red WV sad laced oa file rltb    u ad
                ld pendlag tL rold offoatlro darl o f tho
              Iti
       oQtt*

            4. 'Cm th8 8OllOltOtl~ Of ruaber8 begin
       aov, prtor to t& lffootlro doto of the 8ot, 8ad
       tho ipods oompoundodto bo rotorned if tho ohortor
       is rojooted?”
            5. 'Cm the Fopoud   umboro                         wv   oator    loto
       the purelmw of 8 propomd site?"
         The lff&otlto dots of Seaato Bill lo. 181 being
Septwbsr 4, l9955,thou qwurtlono ue   woof aad ve deem it
uwocroou~           to onwor            uu.

               Your sixth qw0t10o 101
               6.        %hOt    Vi11  the filiQ# f80 b0 fW O.&J
       lwh     ohortor      or     on omendmont tborototl
               Arti.        Is14 prwld.8          1~   port    as follourr
               ‘The Uar8tory of 8trt8 lo 8uthorlood                         sad
       roqulro& to chuga for the uva of the bt8to tha
       follovirrqothor             fooor
            .. . . .


       p1am.r  mo
       SW any other             purpooo
       or powfl~           8 fllily
Ionoroblo      Clado    Ioboll,     po@ (I


                                                      it81 ltwk Of


                                                   0.00) Dolluo   of
       Its 8utborirod lrgltti  #took Cr ir8otloa81 gut
       thoroof oftor t& flrot.’    (mphaofo ouro)
           In aanor to yr   quootloa lo. 6.~0~  WI dtlwd
tht  8 filing foe of w lmr th8a fifty do mo lo roquirod
         fllfn# of mu& ObutCm, CUmdkOto, Cr l     uppl~mCato
XZOi!?   Cf tho hooplt81 ooopOr8tlrbo provided for ill8eaoto
Bill   lo:   181.

               Your    wrmth      qwot loa lr I
             7. %8r 8 group of oltlsbn8 llrln# 1aCldo
       tbo OOP&kO~.tC~li8itS Of t two-Vith .~~pU+tfOo.
       1B .tOoO~ of r,gW.’ Ol'&.nlSOsad Oprrot. VUOh 0
       oorporrtlorhlf tha hoopItol lo 1008tOd outside
       tha oorpor*to llrlto of rwh rlt7 w tovntg

          ?h~ obrlour lnteat of &noto bill lo. 181 18 to
permit t& ovnlng aad oporotloa of hoCpIt8l oooperotlvoo la
omllor ooaaunltloo vhuo ouoh rorvlroo are not nov ovoll-
lblo. The vordlrrg of 8ootlon 2, hovovor, lo obomaro. It
p?orldoC that rwh  Oorper8tloar %h811 mt b0 8uthWi8.d
to br or tad la lltloo w torar of 8oro,than tuoatpilro
hundred t'g00) popamloa.~   ThiB lOll#IlO600.0 -811 O&J
tbt  owh oorpor&tloao till wt lotablloh W      ulnt81
hooplt8l ooopor8tlvoo & oltloo or tom8 of 8oro th8a B5W
popPkt1oo.   There lo aothiry in tho Aot uhlrh vould prohibit
perrollsrho 00 r*dd*ato of lorgor torn0 from orgotblrlug,
w king nmborr of, 8 OOOpOr8tlve to bo lot8blloh8d 8ad
ulat&laod o&old8 of lwh tow, 00 10~ Co lwh lOOporOtlvo
hoopltol is 1oC.t.d lo t& mdi&tO     1Wtiitf VtMro th0 mm-
bore romlde.
               Your rl#ith qwotlw            18r
                ‘8houl4 tha requiremoats with rorpeot
       to Ogti.tiOa oppou on the SOOTOf the oh4rter
           J 8a 8ffidCVit 8ttOChOd thor*tot’
       or g8’

               ktlClC    Uti pWidO0          88 fOllM@l
mrloroblo C1odo Iobotl, p8p               7


            ‘A ohrtor      must k     poopmod wttlu                fwtha

            1 .The
                 M m o fth e
                           lo r p u8tlo 8~
            “2.
              The purpooo           for       rhlrh lt ir femodl
          ‘1. Tha plooo or plamr vluro                        its buolnooo
     lo to bo truuut8dJ
            ‘4.    fho tom SW rPlloh it lb to l
                                              xiot;

            l
            5.     Tl& oabor     of dlroataro             w    truCtCC8,
     and tha n&me8oml r~oldo~oo                     of thaw rho are &p-
     po1at000 for the flrot feuJ;
            l
            6. The omowt of Its                 Upit.         stock,   lf w,
     8W   tha     aumbor of -es           late rhloh it IO divided.*
            brtiole      1309 ooat8lnr theoa pwirlorror
          “If Uu &orotmf    of bt8ta lo rot o8tlofl~d,
     ho UT, lt tho lxpotm of the Inowporotoro, ro-
     qulre other utlrfbctorX widenem bolero ha till
     ba r+qulrod to roodto, file and rword owh ohut-
     or.’
           You wo adtiud,      thoroforo,    that tboro rued ba no-
thing 00 th# fooo   of t& o&&or       of rwb 8 oorpor8tlea rog8rd-
ln$ the popul8tlo.nat the rlty or twm la or mom rhloh Ouch
OOOpo?8tlvO $8 to bo l8t8bllOhd~ IOVOVO?, tk kOrotUy Of
Stat0 UX PMulm      ltldom00 that    thm ~~iOlO~0 Of tb~ AOt &U-
thoris-    the oro&tloa of luob owporotlwo         ham boeo mot. It
18 the opfnfoa es this deportrat        that   v&n the f8oe of the
ohartu foilo to ohov tb popul*tion of Lhr oltr Cr toYa la
vhloh   t& evr.tlve     hooplt.1 lo to bo bC.tC&        toa Will be
juotlflob lo requlrlxu orldoaoo ootlrfootw~         to 700 of rwh
f8Ot.
            Xow     olnth qwrtloa         1st
                   %OJ    the Cb8FtO? Of OUCh 8 OCFpC.F&tiO~
     pro&         SW tiho lorwwo          of o8plt8l          OtOOk?'
            ktkk         l>@   80 rUadCd            w
                                                    tb0 ~O+iOiollO Of 8CkrutC
Bill No. 181 door sot prohibit                 tb       lo OM U.
                                                               Ofl.plt.1
                                                                      ltbok
bl 8 OO~.tiolr   Uo0t.d     fW            t&    pUl’pCbCCf CVW    8ad OpU.tiU
Eonorobl~ Clouds foboll, flgv 8


8 m-pOiit           000~?8tit.          bOCpit.1.            fP thC 8bCCWCOf 8 ~0.
hlbltloo, vv kaou of              00 romon       vh, lwh ow~.tlon                     lonaot
grovldo So? the I8oMWo of                    C.pit8i         ltuk.

              Your tenth ~wotloa                lor
              10.      ‘If     the oorpor8tloa           lo orgonlnd           ritb
     Out 68pftti @took, ohodd  the o&?to?                             Mko      8      O-
 .----VIDim a0 t0 t& lOUrOO Of th 0
     of the corporatlolr8rd 88 to 1to
      proport, rad oquipntt”
            In vim of Article l.304 sad Artlclo 1302 80 maded
by &wto     Bill Ho. 181, if 8 OWJBW.tiOfl fw tho pwpou    of
ovelag md Cpciotln# 8 ooopor8tlro horn it8l IO orgonlrod vlth-
out c8pltrl   stool, thC ChC.FtOFwod a~? 88k~ 8o~ prorlrloa
regordlag t& oo~oo of tho vor&lng oopltal rnd its right to
own property 8nd 8quipmeat.

              Your llovonth gwotloo                    181

              ll.      vi11 rwh 8 corpor8tIou h8vo to po, 8
      frowhlaa         tax o&adif it does hov vlll rwh tu be
      co8putodt”
              Subwotlon           (8)   of Artlolr           7084    pwldoor
              %Oopt          80   horola prorldod, over, dO8oOtlO
      lrd fopa&@ owporotion                   &rotoforr w horoUter
      ahrrtorod ‘or 8uthUlZCd                 to do buoInoo8 lo Touo,                      or
      doing buoIaooo la hx80, -1,   00 or bofuo  U8,
      18t Of 080h ,vu, po, 10 8dv8Wv t0 th@ 8COrCtU~
      of bt8to        8 irOWUU           tu     fW      t&,oU         fo~ovl~,
     besod upon tiht pro     tioa of tho outotmdIng
      OOpitOl @took, BUPPp”Uo Sod uadlvlded p?Ofit@,
      plus the mount of outot8adlng bonds, not.8 sad
      d.bWLt~O@,             (OUtBtrodf~        baado,        Eotoo    sad   deboe-
      twos oh811 laoludo 811 mitton ltldOwOB of Iadobt-
      odnooo vhloh be8r l rturltf d8tr of OIY (1) m8r
      or more fror d&to of 18ow, on4 8ll lpeh lnotru-
      vats vhlrh bou 8 uturlty doto of lo88 tE,;w
      (1) w fra d&to Of 180~ but vhlrh r
      lado~da,oo rhloh ho rCmOln8d
      porlod of oao (1) yeu w awe
      tlon,     but    vhloh h8vo beon           r o uved
                                                       o rlxtonde4,                   w
Poow8ble C1oudo Iaboll, Poe               9


    roflmaaod by tl¶o 108aoa00 of other lr ldo no oofo
    the lsdrbtod&88, vhothw to the oam OF other
    pot100 8~3 it lo frtlber povidod timt this tom
     ohall     mot lecludc lnotrmonto             vhloh hvo      provlouo-
    1, boom 8&OOifird 00 OUFphlO) 80 th0 ~000 ?O-
    COlpt8 f?~8 it0 bUOlao88 doa0 Lo Teuo b08~0 t0 th0
    tot.1      qO80 rOOOipt8 Cf                      r*tlolrfro8
                                                            its
    omtl?a     bwirU88,   rhi.h t               ooaputod oa
    tho booio of Om Dollor             per Om Thouoond Dal-
    luo (&,OO@ Oz fF8OtfOMl           port tho?ooti     prorldod,
    that   ouch tox -1        not bo lorr thoa hront, Dollus
    (420) la the oooo of mu oor ratioa, lmludin# thooo
    VlkhOut OCplt81 otook, 81~3 t iit ro provldod fwtho?
    thot tho tu ohall in ec O&W bo lcmputed on 8 ma
    &ma tbn tha l08880.d ~olw, for 8t.t.              8d ttiO?rs
    tu purpomoo, of the proport, ovuod by the oorporo-
    tlolrla thl8 btote.        Where 0 fwolgb owporotlo~
   -opplyln& for 8 permit hornthwotoforr dam 116
    bu8laooo in Teur,        owh tox oholl wt       bo papblo
    until the and of one (1) ~eor fmm the &to of ouoh
    permit, lt vhloh tlmo       the tu obU1 bo oompoted
    ocoordly to flrrt you90 bu8feo88~ &ad, 8t tb
     aam8 tiu,      ruoh oorpor8tlon ah811 8100 pay its tu
     in ldvonoo, boood upon the flrrt yoor~o buolecoo,
     for     the   pwlod     frm     the end of    tha   first   you   to
     and 1n01ud;ng no, lot fouwlng.                      In 011 other
     OOOCtB,the tU  -11   by CapUtCd f?a th. d&t.
     oorGolnod in tb roportr roquirrd b7 &tiCloO 7987
     sad 7089. OOpit.1 8tWk 88 lgpllod to OOrpor.-
     tlonr vlthout 00pit.1 ltook rbu  -U   tb. Wt
     l080t 8. ’
              owporotloar vhloh uo vxompt fro8 t&o pIpent
              Tb
of 8 fronohloo tu  ore la a w& to in
                                   d Article 7094, vhloh pro-
tldo8 88 fOlbW81
           "The f?&ooh18. tu irrgO8.d  by thla 0hpt.r
     till wt &ml,     to &Ik, lnouronoo 008pony, wot,,
     gwroaty or fldollty oapoay      w My tronoportotloa
     ocmpoey, or on, rlcoplng, pobco cor sad dining oo?
     oapoay vhloh la 801 raulrod     to p&f 8n onnlwl tu
     w8oar0d   by th03.sgo88   rooolpto, or to oorpor*-
     tlorro horiw no o8pltol ltwk sad org8nl8sd SW tba
     UO1U81+.        PWPOU         Of ~OmOti~      th0 publi8      intOr8Ot
Eooor~blo Claude Irboll, p#o                  10


     of any      oity      0   tom,     or to oorporAtloor           o~ralred
     for   th8          urpo8@ of roll(lioulrorrhlp, or for pro-
     t%dlpu p L oem of burial sot for pirat. proflt,
     or oorporetloar orgmalmd for th8 purpow of hold-
     lag qrloultuml f8lrr mhd lnoourr~lag lplrultur-
     ti pto8Uit8, O? fOF 8tPl8t~~                     td    lt;Oti    puIpO8.8,
     W fW   DWOlY Dub110 Ohri                   f .         -818       OUr8)

            A8     la dlo 4 t.d
                              ia OW           l(L81O)r8
                                                      t0 IOUr fir8t tV0 QW8-
tloor, t& lorpomtloa                  prorlded for in Ram%             I)111lo. 181
U8  lOt O?milOd  f0                   urotf    ubllr       OhUit       and thoroforo
th8 ~8 wt Ulthla th0 lurpt I! 00 pPWld8d ‘Ia0, la Art1010
WY 1 . ft :8 th0 ODioiOa Of th18 d8WtB8Ot    tht  8UOh OOr-
+atloa, vh8tlur it 188~m-l Orpitti-8tOOk W Oat, lU8t
l fl’aWh18. t8X 0ollgUt.d l8 pcorlded for la A&lob   708P .
                                                              v8rr   truly   fOUr8




NJltdb




                                                                                         APPRll+’
                                                                                           OPINION
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