                 THE     ATTORNEY            GENERAL
                             OP     TEXAS

 Gerald C. Mann              AUSTIN    11.TEXAS
                   xxx
ATTORNEY   almurcRAl.



     Hon. Tom L. Beauchamp
     Secretary of State
     Austin, Texas
     Dear Sir:                      Opinion No. O-1028
                                    Re: Is proposed charter of "Tax-
                                         payers Association of Nacog-
                                         doches County" an educational
                                         undertaking within the pur-
                                         view of subdivision,2 of
                                         Art. 1302, Revised Civil
                                        Statutes of Texas, 1925?
          This will acknowledge receipt of your letter of June 23,
     1939, with which you submit the proposed charter of the Tsx-
     payers Association of Nacogdoches County, Texas, with a
     request that we advise you whether or not the purpose therein
     expressed warrants the issuance of a charter under subdivision
     2 of Article 1302, Revised Civil Statutes of Texas, 1925.
           The purpose clause of such proposed corporation is:
           "The purpose for which this corporation is formed
           is to educate the members of this Association and
           the public on questions of Taxation, and to use its
           influence to obtain the economical expenditure of
           public money, the equitable application of the taxing
           power and a fair distribution of all benefits of
           government."
          We have carefully considered such application for
     charter and especially the purpose clause as hereinabove
     quoted, and necessarily reached the conclusion that such pur-
     pose clause does not affirmativaly reflect an educational
     purpose within the purview of the,statute.
          A departmental construction of long standing has for-
     bidden the issuance of charcers.;similarto the one in ques-
     tion. See opinion by Judge George B. Christian, Reports of
     the Attorney General, 1924-1926, page 222, citing with approval
     an opinion rendered during the administration of Chief Jus-
     tice Cureton on March 26, 1919. See, also, opinions by
     Assistant Attorney General Neal Powers, dated June 10, 1932
     and August 20, 1932, and opinion no. O-102& by Hon. Morris
Hodges.
     The rule as to the statement of the purpose clause of
a corporation is laid down in 10 Tex. Jur., p. 622, s 31,
as follows:
     "The proposed charter is required to state the purpose
     for which the corporation is formed. The main purpose
     of this requirement-is, first, to protect the,public
     against too great a delegation and any usurpation of
     power, and, second,,to afford the means whereby right
     to a claimed power, or rightful use of an admitted
     power, may be tested., This should be done with suffi-
     cient clearness to enable the Secretarv of State to see
     that the purpose specified is one provided for by the
     statute, and it must therefore define with certainty the
    .scope of the business of undertaking to be pursued."
     We quote from thenopinion of Judge Christian, supra, as
follows:: ,~
     "The test that must necessarily be applied to any enter-
prise~to determine whether it is primarily educational,in its
nature should exclude ~the educational results thatare purely
ticidental.
  '.         The paramount urpose of power of the enter-
prise must alone determine ehe nature of its undertaking. The
powers and functions ,of all enterprises are the outgrowth of
educational developments, and the common experience of men will
determine .the application of such powers and functions to any
given enterprise. The development of the enterprises known
to the world has resulted in the grouping of related functions
which have been drawn to specific enterprises, and each of
such enterprises is distinguished one from~,theother by the
primary function within each group drawn to it. Such enter-
prises may embrace common functions that are subsidiary and
incidental to the exercise of~that paramount function. This
is common knowledge, and even the courts of our land would
take judicial notice of the fact. It may be safely assumed
that a legislative body, whose personnel is composed of men
drawn from all the walks of life, in enacting legislation
authorizing the incorporation of busines~senterprises is cog-
nizant of the common experience of mankind that paramount
functions are peculiar to certain enterprises. It follows,
we think, that the Legislature has classified corporations under
our laws according to the principal function exercise%by the
enterprise from ~which it has its inception.



                i
Hon. Tom La Beauchamp, Page 3- O-1028


    "That our Legislature intended that corporations
created for education should have their powers defined within
a group of powers which was the outgrowth of the developments
of strictly educational enterprises, is exemplified by the
fact that subdivision 2 of chapter 9, Revised Civil Statutes,
1925, dealing with educational corporations, defines the
powers of the faculty of educational institutions and grants
to the trustees of such institutions the authority to provide
for teachers and agents. In short, the Legislature has under-
taken to authorize the creation of educational institutions
under subdivision 2 of Article 1302, Revised Civil Statutes,
1925, and to define the rights and duties of corporations so
organized in enactments that relate to colleges, academies,
universities and other corporations organized for the purpose
of promoting education. A ain in Article 7094, Revised
Civil Statutes, 1925, the fegislature has exempted from the
payment of a franchise tax corporations organized for 'strict-
ly educational purposes'. It is pertinent to our inquiry
to determine whether all car orations organized under sub-
division 2 of Article 1203, i;
                             evised Civil Statutes, 1925,
for educational purposes are exempt from the payment of a
franchise tax or whether the exemption is determined by the
powers exercised by the corporation."
    "In an opinion rendered by Hon. C. M. Cureton, Attorney
General, on the 26th of March, 1919, the Sec,retaryof State
was advised that a'corporation chartered as an educational
undertaking isby force of the law a strictly educational
institution and that its purpose and only purpose by reason
of the law is strictly an educational one. The question for
~determinationwas whether a business college incorporated as
an educational undertaking under Section 2 of Article
1302 is exempt from the payment of a franchise tax under
Article 7094. After discussing the authorities bearing on
the question of the exemption of educational enterprises from
taxation, Mr. C. i;J.
                    Taylor, Assistant Attorney General, who
wrote the opinion says:
     "The above reasoning leads us to the conclusion that
     the word 'strictly' used in the clause for strictly
     educational purposes embodied in the statute exempting
     certain corporations from the franchise tax, has no
     signification or meaning, because a corporation chartered
     as an educational undertaking can lawfully engage in
     no other pursuit. It is bound by the purpqse clause of
     its charter, which is limited by the statute under which
     it is incorporated. In other words, a corporation
     chartered as an educational undertaking is by force of
 Hon.   Tom.   L. Beauchamp, Page 4, O-1028


        the law a strictly educational institution, anc5its
        purpose and only purpose is by reason of the law a
        strictly educational one. So, to our minds, the
        Legislature has added nothing to the meaning of this
        clause by inserting therein the word 'strictly'.
        "In view of the foregoing, the conclusion seems in-
        evitable that an educational undertakin,gas contemplated
        by subdivision 2 of Article 1302, Bevised Civil Statutes,
        1925, means a corporation having for its primary purpose
        the :;ivingof inst-uction in some recognized field of
        knowledge, and that corporations may not be created under
        this subdivision of our statute wher-eit is apparent
        that the instruction to be given and th@ educational
        benefits to be derived therefrom are incidental to the
        exercise of the primary functions of the corporation'.
        The Legislature intended that corporations created under
        this subdivision of the statute should engage in something
        more than the incidental education which is necessarily
        derived from,business enterprises whose primary purpose
        is to advertise the merits of.a particular business under-
        taking:"
       Looking to the proposed charter which furnishes the basis
 of your inquiry, it is no doubt true'that the undertaking
 therein contemplated would tend to educate, to some extent,
 at least, all those who might come in contact with au-..organiza-
 tions. %t,   as hereinabove pointed out, the educational purpose
 -f a proposed corporation must be the primary one and not merely
 ap incidental purpose that but naturally results from an en-
'deavor. The purpose must be for such an educational undertaking
 as is understood to be educational in the ordinary affairs of
 men. A mere incidental purpose or a limited result,is insuf-
 ficient. See % re Day liePeysters Estate, 104 NO. n. 714,
 State vs. nusiness Men's Athletic Club, 163 S. W. 901.
      We must necessarily conclude, an? you are so advised, that
the purpose clause, above set out, is not for an educational un-
dertaking within the purview of subdivision 2, Article 1302,
Revised Civil Statutes of Texas,_1925. I~iefind no statutory
authority for the granting of such a charter as is made the basis
of your inquiry.
      Ue return herewith, the proposed charter of the Taxpayers
Association of hacogdoches County, Texas.
-HonimTom. L. Beauchamp, Page 5, O-1028


     Trusting that this satisfactorily disposes of your in-
wiry, we are
                                Very truly yours
                           ATTORNEY GENERAL OF TEXAS



                          BY         Lloyd Armstrong
                                           Assistant

 LA:omb/Pm
 ENCL.

 APPROVED JULY 22, 1939
 s/ W. F. Moore
 FIRST ASSISTANT
 ATTORNEY GENERAL
 APPROVED OPINION COMMITTEE
 By T.D.R., Chairman
