                               ATTORNEY GENERAL OF TEXAS
                                            GREG       ABBOTT




                                                 May 7,2004



Mr. Geoffrey S. Connor                                Qpinion No. GA-0185
Texas Secretary of State
Post Office Box 12697                                 Re: Residency requirements for directors of the
Austin, Texas 7871 l-2697                             TexasMexicanRailwayCompany      (RQ-0133-GA)

Dear Secretary Connor:

        You ask about the residency requirements for directors of the Texas Mexican Railway
Company (“Tex-Mex”), formerly the Corpus Christi,~ San Diego and Rio Grande Narrow Gauge
Railroad Company.’

         You indicate that the predecessor of Tex-Mex was created in 1875 by a special act of the
legislature, effective March 13, 1875 (the “Incorporation Act”). See Act approved Mar. 13, 1875,
14th Leg., 2d C.S., ch. 73, 1875 Tex. Gen. Laws 114. Section 9 of the Incorporation Act provided
that “the permanent organization ofthis company shall be perfected within six months ofthe passage
of this act, and fifty miles of its road completed within two years, and ten miles each year thereafler,
or this charter shall be forfeited as to that portion not built.” Id. at 117. Section 13 of that act
provided “[t]hat this charter shall remain in force for the period of ninety-nine years from the date
of the passage of this act.” Id. at 118. Thus, the Incorporation Act serves as the articles of
incorporation for the entity that became Tex-Mex.

        The Incorporation Act did not provide for an extension of the charter beyond its expiration
date of March 12, 1974. On December 19, 1973, Tex-Mex submitted to the Secretary of State
“Articles of Amendment to the Articles of Incorporation of the Texas Mexican Railway Company,”
which purport to amend the Incorporation Act and extend the existence of the corporation. See
Texas Secretary of State, Articles of Amendment to the Articles of Incorporation of the Texas
Mexican Railway Company (Dec. 19,1973) (filed with Secretary of State on Feb. 28,1974) (on file
with Opinion Committee) [hereinafter Articles ofAmendment]. The relevant portion of the Articles
of Amendment stated that “[tlhe extendedperiod or term of its duration is Fifty (50) years from
March 12, 1974, the date of termination of the original term of the Articles of Incorporation.” Id.
at 1.



         ‘See Letter from Geoffrey S. Connor, Texas Secretary of State, to Honorable Greg Abbott, Texas Attorney
General (Nov. 19, 2003) (on tile with Opinion Committee, nlso nvailoble at http://www.oag.state.tx.us)[hereinafter
Request Letter].
Mr. Geoffrey S. Connor - Page 2                        (GA-01 85)



        The Incorporation Act, i.e., the 1875 Articles of Incorporation, did not impose a residency
requirement on directors of the corporation. You ask whether the Tex-Mex directors must comply
with the residency requirements of article 6288 of the Revised Civil Statutes. See Request Letter,
supra note 1, at 1. In order to answer this question, we must first determine the statutory authority
under which the charter extension was granted in 1974.

         The December 19, 1973 Articles of Amendment filed with the Secretary of State recite that
the articles are filed “[plursuant to the provisions of Article 4.04 of the Texas Business Corporation
Act” (the “TBCA”), which describe the process for amending articles of incorporation. Articles of
Amendment, at 1. But article 2.01 of the TBCA provides, and provided in 1974, that “[n]o
corporation may adopt this Act or be organized under this Act or obtain authority to transact business
in this State . . . [i]f any one or more of its purposes is to operate any of the following: . . (e)
railroad companies[.]” TEX. BUS. CORP.ACT ANN. art. 2.OlB(4)(e).* To be sure, under the terms
of article 9.14 of the TBCA, certain provisions of the TBCA applied to the 1974 charter extension:

                  This Act does not apply to domestic corporations organized under any
                  statute other than this Act . . . ; provided, however, that if any
                  domestic corporation was heretofore or is hereafter organized under
                  or is governed by a statute other than this Act or the Texas Non-Profit
                  Corporation Act . that contains no provisions in regard to some of
                  the matters provided for in this Act     then the provisions of this Act
                  shall apply to the extent that they are not inconsistent with the
                  provisions of such other statute[.]

Id. art. 9.14A (Vernon Supp. 2004). Thus, as your office indicates, while certain procedural
provisions of the TBCA “would permit the form and format for articles of amendment detailed in
article 4.04 of the TBCA to be used by corporations created under special law[,] . . . use of the form
and format and reference in the preamble would not have worked to change the law applicable to and
the character of the corporation.” Wassdorf Letter, suprn note 2, at 2. The TBCA, therefore, does
not apply to the substantive provisions of the charter extension. Accordingly, the Articles of
Amendment filed in 1974 must have been granted pursuant to other law, specifically title 112 of the
Revised Civil Statutes. which relates to railroads.

       Title 112 comprises articles 6259 through 6559 ofthe Revised Civil Statutes. See TEX. REV.
CIV. STAT.ANN. arts. 6259-6559 (Vernon 1926 & Supp. 2004). Article 6268, which was enacted
in 1876 and amended in 1949, describes the process of “renewing a railroad corporation which has


         “‘SubsectionC ofArticle 2.01 of the TBCA, added in 1989,permits certain railroad companies to incorporate
under the TBCA provided that the company operates a railroad passenger service by contmcting with a railroad
corporation and does not constmct, own “I maintain railroad track. [SeeTm. Bus. CORP.ACTANN.art. 2.OlC (Vernon
2003) (added by Act of May 26, 1989,71st Leg., R.S., ch. 971,s 2, 1989 Tex. Gen. Laws 4048.1 This is a narrow
exception that does [not] apply to Tex-Mex because it was created to operate both passenger and freight service and to
own, consttwt and maintain track.” Letter from Lorna Wassdorf,Director, Business & Public Filings Division, Texas
Secretary of State, to Bradley J. Richards, Haynes and Boone, LLP (Nov. 17,2003) (on file with Opinion Committee)
[hereinafterWassdorfLetter]. Inaddition, subsectionCofaticle2.01 wasnotineffect in 1974at the time ofthe charter
X”E%?l.
Mr. Geoftkey S. Connor - Page 3                       (GA-0185)



expired by lapse of time,” ie., by filing a resolution and certificate with the Secretary of State. Id.
art. 6268 (Vernon Supp. 2004). Article 6263 provides that articles of incorporation “shall be
submitted to the Attorney General, and, ifhe finds them to be in accordance with the provisions of
this chapter and not in conflict with the laws of the United States or of this State, he shall attach
thereto a certificate to that effect.” Id. art. 6263 (Vernon 1926). It appears that this procedure was
followed with regard to the Tex-Mex Articles of Amendment. By letter of February 27, 1974,
Attorney General John L. Hill issued the following declaration:

                          I hereby certify that I have examined the attached Articles of
                  Incorporation, as amended, of the Texas Mexican Railway Company,
                  and find them to be in formal compliance with the provisions of
                  Chapter 1, Title 112, and not in conflict with the laws of the United
                  States or of this State.

Letter from Honorable John L. Hill, Texas Attorney General (Feb. 27,1974) (on file with Opinion
Committee). Thus, both statutory law in existence at the time the charter extension was granted, and
the certification by the Attorney General that the amended Articles of Incorporation were “in formal
compliance with the provisions of Chapter 1, Title 112,” which include article 6268, indicate that
since 1974, Tex-Mex has been operating under the aegis of title 112 of the Revised Civil Statutes.

        It has been suggested that the charter extension was granted under the terms of the
Incorporation Act rather than title 112.r As we have noted, the Incorporation Act itself was the
original charter of Tex-Mex.4 Because it did not provide for an extension of the Tex-Mex charter,
the Incorporation Act in effect expired simultaneously with the expiration of the original charter.
Neither the amended Articles of Incorporation signed on December 19, 1973, nor the certification
by the Attorney General in 1974, suggest that the charter extension was made pursuant to the
Incorporation Act. Indeed, they explicitly declare otherwise. As we have noted, the only law under
which the charter could have been extended was title 112 of the Revised Civil Statutes.

        Having concluded that the charter extension was granted under title 112 ofthe Revised Civil
Statutes, we consider whether the residency requirement in that title applies to Tex-Mex. The
Incorporation Act did not address residency requirements for directors ofthe entitythat later became
Tex-Mex. But article 6288 of title 112 does impose a residency requirement:

                          All the corporate powers of every railroad corporation shall be
                  vested in and be exercised by the legally constituted board of
                  directors. Every such corporation shall have a board of directors of


        ‘See Brief from Bradley J. Richards, Haynes and Boone, LLP, to Honorable Greg Abbott, Texas Attorney
General (Ian. 23,2004) (on file with Opinion Committee).

          ‘The 1876 Constitutionprohibited the legislature from “pass[ing]any local or special law. for incorporating
railroads.” TD(. CONST. art. III 8 56. Section 8 of article 10 of the 1876Constitution “include[d] an express provision
     that no railroad in existence at the time of the adoption of the Constitution shall have the benefit of any Mare
legislation except on condition of complete acceptance of all of the provisions of the Constitution applicable to
railroads.” Wassdorf Letter, supra note 2, at 1 (citing Tut. CONST.    art. X 5 8 (repealed 1969)).
Mr. Geoffrey S. Connor - Page 4                (GA-0185)



               not less than seven (7) nor more than fifteen (15) persons, except in
               case of railroad corporations conducting common carrier operations
               on railroad lines comprising a total of two hundred (200) miles, or
               less, of main track, the number of directors shall be not less than five
               (5) nor more than nine (9), each of whom shall be a stockholder in
               said corporation. A majority of said directors shall be resident
               citizens of this State, and shall so remain resident citizens during
               their continuance as such directors.

TEX.REV.CIV. STAT.ANN. art. 6288 (Vernon Supp. 2004) (emphasis added). It is ofcourse the case
that the enactment of a general law does not ordinarily operate as a repeal of a special law by
implication. See State v. Praetorians, 186 S.W.2d 973,976 (Tex. 1945). In our view, however, title
112 did not impliedlyrcpeal the Incorporation Act. The Incorporation Act was a special law, whose
sole purpose was to charter the predecessor of Tex-Mex, and the act continued to operate until 1974.
As we have noted, Tex-Mex has operated from 1974 under title 112, specifically article 6288. That
statute imposes residency requirements on amajority ofTex-Mex directors. We conclude, therefore,
that title 112, article 6288 of the Revised Civil Statutes governs the residency requirements for
directors of Tex-Mex.
Mr. Geoffrey S. Connor - Page 5              (GA-0185)



                                      SUMMARY

                      Title 112, article 6288 of the Revised Civil Statutes governs
              the residency requirements for directors of the Texas Mexican
              Railway Company.




BARRY R. MCBEE
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General, Opinion Committee
