                                                                                                        x

    .;\; /
     \y                 OFFICE      OF THE ATTORNEY   GENERAL                   OF TEXAS
.                                              AUSTIN




             hnorablo     Osville     k.    Csrpenkr
             chufrnn aa Xmoutfre DlroOtor
             Tex6r Un*mploymePt Compen8atioo Co6ani8rlon
             P,uetin, Texan


             Dear Slir




                        #8~h8re rour req                                       lrpretation ot the law
             lpplloablq to the variou8 q                                       under tour tsot dtua-
             tlona outlined in mur lette

                                                                           0uZ letter read81

                                                                                8 not be8n 4.-
                  OlW4488.3                                                        814nten  into

                                                                    lu4ln the tialeot
                                                                    th. k&e 8graement nake8
                                                                    tal ot the bMiner8    18
                                                                     upon the ball18 ot h8r
                                                                    eOrf note, *lab18   in
                                                                    t   8qUd t0 One-h6ti Ot
                                                                         A ona raerota their


                                              part     ia   the   %ntel.or       dooorating bari-
                                           Z4OO@liM8        Et8   #M’Xlitl@8     ,Or plT4tit8
                                  er repar8to propert*. W i4prerent8   to
                  partntr8hfp Or4&i?&x8 thet 8h4 &nb. her 84p6r6t4 QmQ4XtJ
                  are 2lable tor bubinaS8 dobtr ot th,e partnership..A
                  and # h8VO 6iwB$W.h&4 8et4B &?4F4948 ifi their  W@iO~OILt,
                  while Y-, who I8 engaged La another bosine88   which b4
                  owaa a8 his 8Ogar6ti4 plWpf%f,  iii%8dWay8 4mpbr4d
                  tire inditldualr'i
            -..Cerpenter,
lhn. r;rvills                      page   SS




         me ~111 etste esch quecltlon and 8mm4r                   it a8 thsy 8pps6r
ir. your letter in numerlcai order.

          kueetlon (a): "Is 'M legally e partner with h in the
          interior deooretiq bU8ln688?*

          *Teohnleallyy, CL xmrrle6 womn may be a wsrehant or
treder 8t will, 60 far as the Immediate tmfl86OtiOtl of the bulli-
ne88 Is concemea.*      S66 23 Tax. Sur. p. 304. The authorltler
in Terss are generaiiy agreed tlst ths ltry naturo OS 4 msrtmntl~e
businesr i6 such that a cjarrl4d wma         QaPDOt be 0811b a p6rtner.
She, obviously, cannot    do ths thing8 ersmtla~ to a oomerolal
BUOBB86.    Gn the b6816 of the taot8 atat64, ~6 40 not think ti
16 iegdiy    n p&&NW    at the the    the bU6ln668       i8 fOlllcld,  aLthaugh
at th6t time ehe h68 borrow& moa6y at the bank to b8 paid bask
out of the prOfit frOP her bU8in488.          Profit8 Of th4 bUine88
are community property. b64 +eer’s         “hW    of Unite1 Et&@&t& in
‘i6V36a.  p. 967. C~U1668 them    i8 8 CielU    i.tlteIAtiOIl   tQ r4&tily
borrowed money out of reparato property the new MqUi8iti.Oa                 bo-
OOMP community.     See  also  Ypeer,  6Uplq    Seotlon       430  bn4 ~the  aa6e8
there cited. :Zc euoh lntantlon appear8 here.

          kUC8tiOIl (b):     *It not,     18   k36 partner with A in
          that bU6ln488?”

          We think   not.   E hr     in   no   way   recognized     or   taken   part
 in 8tartlng the p4rtnersbip bwine88.       6 be8 r4pre64Bt6d     t4 her
'are4ltora tbet 6h4 6214 her rapante     property 4re liable tot the
 partnership debt. She borrow66 th4 money upcn the b86lr.ot her
own oredit. Certainly @4 ha6 not bo~n4 H by her groai8e          to r4pay
 the bank the,aroney borrowed.    The iaW i8 ~42.2 Bettba     in thi8
 state that. the Wite.aan Only bla4 the hu8b8nd     ror  neO886ari48.
 The money borrowed wa8 tor 8p4auiation in busln688.         B m8y not be
 6de a Q6rlX6r in tbir bu6ine88 8g4in8t hi8 de6lr8 an4 6on84nt
 evea though be may hare a community lntere8t In the pwtnerrhlp
 beoaust of the natum ot tha capital lnve8teU. & 6048 basso an
 intem8t ia the Qartnar6hip in tb6 8M8e that,~he        rOtid 8hare in
 tha comsmlty profit6 but bs oan not be -de,& partner           is tha
 6triDt legal    64n6e against hi8 own will 4n4, OOZi8ent. 818 lntere8t
 16 a legal   lwident   ma not aontraotual.
          ,UO6tiOn(a) I *If I3 I6 a partnnr with A, 16 P In the
          sgploym6nt or the partne6hlp  0r fI 6nd A9"

        L~lnae se have answered the nart preotilng que8tion In
the negative, thl8 inquiry  need not bs answar44, Bowever, the
Eiou.Crvilie L. Capenter, ptige 3


6tatu6 Of 0, a married woman fe likened tc thet of a creditor
of the partnership by the suthorltlas of this M,ste. See 23
Tax. Jur. p. 307 and the authorities there cited.

        Luesticn (a) : “If b-i is in the employffientof the
        partnerehlp of E and k, wtat la the mealiure of
        oontrlbutlon with respect to x.6 empIoymont?w

        An 6nswer to thle question 16 obviated by our reply thst
E 16 not employed In the partnergbip.

        ;;u86tiOU (6): "If i; 16 Iegelly 8 partner, are bar
        earnings or profita from the interior decorating
        buainesa community property subject to the oontrol
        of 81'

        w'e think, under the fact6 given, the earning6 or prorlt6,
if you have used these word6 synonymou6ly, are oommunlty property
and are Bubject  to the control of if. Thi6 is true whether ii 16 a
partner or not in the absence  or a  irt oi t&e prOriL8 by H.
                                     24) 911; A. E. Fslcbard4 Yea.
Schwethsln ~6. Schwethelrt, 1s. 'k. (i:
Co. vs. Jennings, E83 S. A. 296; i6t &tlonal Bank YO. ka‘iihorter,
i79 5. h. 1147.

        C;uestlon if): 'CM E iS&aiiy sir.5 t0 ib6ii    ot     hi6
        and the oommunity lntereret in her future or   pmfit8
        rroni the partnership?
        PO6tntiptiai contracts 6re not tarored by the aourts ot
thla state, but they will be antoraed  when they are patently
just and talr and do not withdraw the funds from exletlng aredltora,
see Creenv. Fergueon, 69 Tex. fiep. SW; Cox v. killer, 54 %3x.
hp. 16.

         E and ;: cannot by agreement bstween   theIL68Ile6 change the
oharacter Of their property 80 66 to OOnVert the oommunlty into
6ep6rst.e. or the eeparate into aommunltp. Se-e 93 Tex. Jur. p. e8~
&eDonalU v. Stevenson, SC 5. a. 777. They are free to nrake
  lit6 of their property, of either aless,    to each other. 23 Tex.
k      tea. 18, also sec. 49.

        iueetlon (g): "In the abaenoe ot 6uah e gift, whst
        i8 the ownership Of 8tOOk6 of gOO46 bought out ot
        the partnership eernia&8 to replenish the 6helYe8
        end there comingled wlth other goods in sueh’a way
        as not to be l$entliiable?*

        The ownership or.euch goo,ae is in A cud In B and X a8
husband an4 wire 66 commumlty property.   ~ahwetheIm Y. SahwetbeIm,
L s.          (2d) 9li; 1st hatlonai Benk vs. 6-:~o?ihorter,
                                                          179 2. L.
LlC7.ti   -

              <uestion  (h): TYould the situation be obangad lf
              H made dally girts to m or any lntereet which he
              eight have in the profits or earnings of the
              partnership buelness?"

        host aaeuredly yes. riha prorlto belonging           to   the   com-
aunlty wou1d that beooma ?Pe Ceparate property.

              kuektlon (1):   *EOCB 5.ubsactlon 19 (r)(4)   0r tiie
              I’axae&xmp~opment  CGmpeneAtlon Aat (Art. fG?Zl-b-19,
              (f) (4) BP&' to the faets stated to render both
              the partnership and 6. *employsrr~?*

              Artiole 5221-b-17 (i) (4) reads AS fo11owAr

         "bny employing unit Chloh together with one or
     more other employing unite, IS ouned or controlled
     (by legally enrorceablc maan~ or otherwIre) directly
     Or lndlreotly by the AAIC~ Interest, Or which owns or
     aontrols one or more other employing unit8 (by legally
     enforaeable meAn Or other&so),    and which, Ii
     treated as A sir@8 unit with suoh other e loylng
     unit, ~0~14 be an employer  uader paragraph 7 1) of
     thi8 AubseetlGn;"

        be presume that your rsteranae la to the rA&I   stated in
CACt SittiatiOD No. 1. x0 have held that ii wad not a partner At
the lweptlon of the partnershlp.     Ii B m~baa a daily gift or the
Community profits ha has Ccqulred no eontrolling interest a8
required in the AbGVC quoted seotlon. The buslnesa Gf ii eAIlXLOt
tben be grouped with the partnersblp to render both ooncerne
1lAb1e ror taxes.    on the other hand, ii there WA8 no girt or
the prdits   end the rtook had been turned an& new stook pnr-
chased with the protlta, the stook has then beoome aommunlty.
9hethCr E is a partner or no t he has by reason of the marriage
eontraat and the status ot the property   oontrol af this property
under  the definition or en employer As quoted In ~aotion 17 (r)
(4) Or Article 5221-b And Saotlon 17 (4) 0r xrtlole 5221-b,
whloh reads A6 iO;llOWs:

           "*hmploylng unit* meens any lndlvlaua1 or type er
      Or@inl%AtlOU, lncludlng any partnarship, asaOOlatlGn,
      trust, aatata, joint-stock  company,  lnsuranoe oonapany,
      or corporatlan, whathar domCstla or foreign, or the
      reoslver, truetae~ln b+rupt6y,     truetee or sucoeesor
      thereof, or tba lagAl rapre~RAtAti~%   0r a deceessd par-
      son,  whioh hAs or subsequent;to 'January 1, 193t%, had in
                                                                         3


lion.    tm111e 3. Carpenter,pace 5


        its employ one or more IndIvSduels parrorming eervloee
        for it wlthln this Ltata. .A11 individuals performlag
        sarvloae wlthln this titeta  rGr any employing unit which
        ZAiEtAinB  two or Sore SCpAratC  establleluzente within
        thie Ltete ehell be deened to be employed by a single
        employing unit ror all purposes or this act. Eeeoh ln-
        dlvltlual employed to perform or to aeel*t in perrorrdng
        the work or cry Agent or employee Of ea CmplOying Unit
        shall be deemed to be employed by 8uch employing unit
        ror all the purpoaee of this rot, whether such lndlvlduel
        was hired or pid   dlreatly by suoh employing unit or by
        such Agent or eaployae, provided the employing unit bad
        actuel or constructiveknowledge of the workw

    The statute la ereaedlngly broad in its lsnguege,end if the
interest of E end ti is community undrr our statutes, H hae the
oontrol es spaoliled in Saotlon I?? (i) (4) ot krtlole 5221-b.

        Under thaee clreumstenaes, both H and the partnership
arc liable for taxa on their partlouler payroll.

            ;;uestlon (j): Would the subeeetlon mentioned
            apply ii :*s contribution to tbo capital of the
            partnership emounted to more then one-half of
            the total capital?"

        In the light ci our other amwers       we think it nnneoeeeary
to enewer thls question.

            Iuaetlon (k): "Ii Vi bad been declared by the Court to
            be A sole trader, how would it afieot the answer to
            question (I)?"

         Ii n has been lagell~ rreed Or the 4lrabllltler or oover-
ture, she ten be and la a pertner. The autborltles in ~axas
agree that attar the emencipetlon by oompllanoe with the atatutory
meen the wife 1s lisbla on her contreot end the husband is not
liable f'orthe contract of the wife in har trading buelnass.
iice Stevens vs. ill16y, 7 ,S. '%. (2d) 883; Speer*s *Law 0r hlarltal
Eights in Zaxes", seation 280.

         Eowevar, the emanelpatlon is not,     by the authorities
or T~XSS,considered a    generel one but is    ltiited to the purpose
ror whloh ?t 1s eought. Sea 23 Tax. fur.       Sec. 269. There is
nothlnE lo the ect thet would indioAt6 en      intention to alter
the statue or pditf3 0r an enterprise as       oommunlty property.
The Laglelature would have no poeer to do      so for the cheraoter
.0r those prGrit8 'or.ae.quipltlone Is rixed   by ~rtlola 16, Seatlon
15 Or our Texea Co4etlt@$on.
EOE.    Crville I-. C8rpenter, PAga 6



          In iirtiols 4619 of Vernon’s Xevleed Civil Statutes, the
Laeislature, by tte CodlrlOAtlOn Or 1925, AFAin placed the oontrol
or the comun1t.y in tte husband. in 25 Tax. Jur. Lea. 87, it is
etAtad thet e6 an incident to the power of dieposition the husband
leak have the exclusive control snd AWULAgeISent or the oomuunlty
property;   thet he my reduce the ooueimity property to poseeBelon~
employ eervects, afonts or make oonoeeelooe regarding the opore-
tlon of the Proparty. But this general uontrol doee not give
him the power to partition the oommunity fXHU the eeparata     pro-
rep     or hlmeelt or or the wire. Oohoa v. Edvarde, 189 S. A.
      .

         The questloc of whether B hae oontrol of the partnerehlp
0r  iiAzd A is than A question or rAat. fias H made dally girt of
.the ProrIte t0 W    Ii he hae an6 those girt6 ara continuing at
 this time f? has no oontrol or owncrehip Or the partnarehlp.  It
must be shown that profits belonging to tha oommlty     have gone
 back into the buslnese end that they oen be traced to aetablleh
 them AS A Part Of the aApita1, B do&! then haV4 control In spite
or tba CJlESllCipAtiG~0r *.

           ?a&   eltPatlon No. 2.

            *X.And i% are husband And wife. H operates a buel-
       naee which wAe puroheeed with eoenuunity runde or li and 8.
       E operatee an ~_apart&ant houee on land whlah ehe holde
       by doe4 tram X granting her a life eetate in euasidera-
       tlon of ten dollers paid out or her separate e&ate,
       with remainder to B upon her- death. The number ot ln-
       dlvl8uale in her eaployrent, when added to the number
       of ?ndIvlduale in E's employment is nor6 than eight.
       This  5itUAtiGn  obtains thrOUghOUt the yB(Lr.*

           *DG~s subsection 19 (r) (4) ,or the Texas Unemploy-
        mant Compensation act (Art. S221-b-17 (i) (4) ) apply
        to render both B end tiemployerr?w

        AgAin, the anewer to your question will depend upon the
exletlng iACtS arising out 0r the operation 0r the apartment
house by G. xi, in the operation or eme, profits arc -de, they
then bsoome aozmunity without regard to the life estate of ii
in the ApArtment.houee.   Ii, in tte operation or the apartment
hou~a, xi usae those protlte or earnings in the operation of the
Apartment house they are ooesnunity end will in tlma become the
OApitAl inVestment.

        Ii, on the other bend, there are not any profit8 Lola the
operation of the Apartment houea there le no theory upon whlak
E has any oommunlty interest ln the Apertaant houee~ e~nd therefore
$4 he6 no oontrol or ownerehlp ot It. If thet be true, the
units nay nGt be groupad together rar the purpose  Or assessment
And oollaotion Gr unemployment eompensAtlon tAxas.
                                                                              _..
                                                                                    3:


Eon. Orrllle L. Carpenter. pat?.            0


           ifact sitUatl05 So. sr

           *a sna 6, husband         end wire, own ana operate two oafs*,
    1   ana  Y, ae oommunlty         property during the par 105'l.
    cm Deoamber 31 1939,             k la de6larUd a 801s trader by the
    court,     ena on January        1, 1988, Ii tranafars all of hi8
    Interest in Cafe P to            K, roaltlng that ha theNbJ   re-
    llnquisbta     all olrlaa        to futnm aamlm$a or profit, to ba
    tbrivta         :rom   ttt   optretion or Cafe I.      At tha aama time
    (bl makes
            the same sort of.tranafar to .8 O? all of her
    interest fn Caft Y. The nunher  of pwpla   oisploycuYdue
    lng 1938 in aach of the oaioa la five."

        "toes Gubseotion 19 (f)   (4) of tht Texas Unemployment
    colopensatlon Srot (Art, SSil-b-17 (r) (4))apply to render
    both       fmploylngunits        a u b jl
                                            eo   t
                                             r~ployara?”

        The facts show that W la a aola trabeq     they furthtr avlnee
a olaar intention of B end 'II to (60 tholr laparata uaya in bualneas.
They laoh attempt   to make UL outrl&ht Bitt  of the aollPtmltr lntar-
rat in oafes X ana I. There la, hawarar a problbltlom on tha
gift of Suturt   lsralada, aata, qu6atlon If,. The laar 88 atetad
In ZS xer. Jur. p. SO:

           *It must ba admittad that tha fraa r¶.@t to maka
    gift8 and aonvo~aaoe8 Of ono*8 prapel%J ilthr to
    ths othtr    apeuat or te another, aeecnpliahaa to. aa
    oxttnt    the aaua end t&t    I am        in t&e legat ordara
    or aaaoeat would aooompllah. Bat,           riawad aa an a6raa-
    melit merely, having for Its obfeat the ahamp In
    tbt legel order8 or aeaaont,       tho,Oontraat    la void;
    but viewed as a aisp0eition      of apaolflo‘proptrt~,
    whether in exlatmoe or In lxpeQtanof,           the truwoation
    10 VaUd.      The latter   tranaaotlon dot8 not in lagal
    rontemplatlon ohawe t@ htlrt It aeraly avoid8 the
    inherltanoe by a detleotlon      OS t@t property."

              I’M    enfomjment of anj such contraota rest8 iran on the
prfnoiplt           of equity rather thao'on their lntrlnnlo atrangth a8 a
oontraot.

        ?arhsps, tha aourtirould rtoognlas thla qraamtnt botwean
B aad K ao valid at; lta lzmtptlon, but wa hare 8orlou8 doubt8
that the prorite of X would @a oonrldorad aa the ~aepatrak Pro-
party of Y. Thus, if the profit8 OS the rsepaatlra oaiea
went baak into tba bualneaeea their ogaraotsrWould in time
revert to that or 00mmnity.    That being true, B noula then win
hate tht power to aontrol the aafa I.
                                 ./
                                                                          34




        Ii that SftUltiQn obtains       the cafes Y and Y would be
ampioyere ?utaer kectiofi 17 (f) (41 of Article W%?l-b, hevleea
Civil Ltatutes.

        f’6Ct   6itUotiOU   SO.   4.

        *if end ilare husband and wife. i;'own@ one share of
    the total of fifty share8 of the etook of a eorporatlon.
    h ownfi twenty-six and one-half &hart& and A owna the re-
    maining twenty-two end one-helf. B optratee another
    business whloh 18 the oombuulty property  of E and li.
    If subeeotlon 19 (t) (4) of the rexa tinemployment Co+
    pcnsetlon Act (Art. 6EZl-b-17 (f) (4) ) appllea, both
    the corporation and E are subject eeployem.*

              the subeeoticn lest rentloned apply?"
        'Iioel)
                                                   -
         The racts recited do not state whether S Is operating
ifi tkie lnstanoe as a Bole trader. However, Artlole 1306 of
varnon*a Rtvista  civil dtetutea proviaea:

        'Charters mey bt eubsorlbed bp married womtn who
    say be stookholdara, offleers iina alreotoro thereoc;
    and their (Late, contracts and deed8 aa suoh ataok-
    holders, otfioera and direatom @hell be aa bliiaing
    and efteotlvefor eU the purpoaea of 6ald eorpora-
    tlon as if they were mnl6n.. The joinder 63313oonsent
    of the husband ana privy trUmlnatlonsseparate end
    apart from plra 8$ali not be rapulrad.*

        Artlole 4714 provides:

        'All property of the wife, both real and personal,
    owued or olaiced by her before zmrrlage, and that aaquired,'
    afterward by gift, devise, or dtaeent, as alao tht
    Inoreeae cl all iarrds thus eoqulrtd, ehall be the separate
    property of the wife. The wit's ahell have the eolt
    managese nt , control, and dispoeltlon of her aeperate
    property, both real e&d personal; provided however, the
    joinder of t&e husband :n t&t mmner now pWfid8d by
    law for convsyencee of the separate reel eatate of
    the wite shall be necessary to the Iroumbramm or oon-
    veganae by the wire oi her laxids. and tht.joInt signa-
    ture of ti.ebusbaud ar;Bwife shall be neoemarp to a
    transfer of stocka and bmda belonging to her or of
    which she tay ba given control by thie law.*

        Thuz,    tht   *ifs has statutory right to oontrol her separate
prdperty.
                                                                     -
                                                                           :?




Bon.WVille     :i. Carpenter, pees 0



         Does L&e requiremoat of thle Article that the huebend join
the wife Ia ths transfer o i stocks give him such control ae Ie
Inten4s4 In L:eotlon 17 (f) (4) of L.rtIole 52El-b. The requlro-
EQnt  or ti to join In tha tranersr does not elve hIz tcs right to
control.    be could not tots the stock of X without her conn@nt,
nor could he olafa, the Inarsare4 value of the StOQh 46 oommunity.
Ogl4Bby   '1. POLtS,   40 6:.‘6. (2a) 61s.
        &? 40 not think E has auoh control of the corporation se
to permit Ite grouping wltb the bueinesa      of ii for tbc purpose
of 4ssdeSeLng  unaizployrent  aosp3nsatlcn tnx48.    kh.lttedly he 40136
not own SQrriOient     stook to control It 8t2a to SEJ that  x's own4r-
ship gives him aontrol Is repugnant to our statutes.

                                        Yocurs very   truly



                                                  .
                                   m                             .
                                        &I+     Morris io4 44
                                                       ikIB318tent




                 APPROVEEAPR 27, lQ40
                  &fLU&L&-

                 ATTORNEY GFDRAL OF TEXAS
