                                                      GENERAL




Him.   Zollie Steaklep                       Opinion.No.       WW491
Secretary   of Stat8
Austin,.Texas                                Re:     ‘Wk+W        a foreign corporaticaa
                                                      .that is, a’limited psrt.&er~ must
                                                     tde   out a permit   to do business
                                                     in the:Stde   if the limited part-
                                                     nership engages in certain LIP
                                                     sited activities ,in the State; aud
                                                     whether+ the term *‘persons+*, as
                                                     used- in Section 2 of .t+ Taras
                                                      Uniform Limited Partnership       Act,
De&.Mrr         S$eakley:         .’                 :inclades partnerships.

        :
             kok haves stated    and asked   the following:

        . *m      opfi&ux of your ‘offtce his respectfuRy          requested
       m consideratton   of. the,.foDowing:

            . :+A limited   partnership-is   being    formed    on the basis
       of-Article 613fi of Vern.on,*s Civil 6btutes to be kuown as
       Venazolano   Petroleum.  Ltd. The partnership    is being
       formed to acquire’an    undivided tnterest in certain hydro-
       carbon conces~sions granted by tha Republic. of Venezuela
       and to jotnin the exploration    and development     of said con-
       ceas.ions, and it will not engage .in any activities    except
       such as relate to its properties    in Venezueb+.    San Jacinto
       Ve~zolano,    C. A., ‘a Delaware   corporation    qualified In
       Texas. and registered    in Venezuela,    will be sole general
       partner and the limited partners      Will cbnsist Of a group
       of persons,   some of .whom.are    indtvtduals.    some partner-
        shtps-and some corporations..     The only activity which the
        General Partner’may     perform   for the partnership      in Texas
       will be the .kaeping of books -and records      of transactiona
        carried  out in Venesuefa,   the filing. of a ‘United States In-
        come..Tax Return (Form lO65). the exerciss         Of general
       .suparvtston’over   operating personnel      in~Vanez;uela and
        possibly in some instances the negotiation        Of contracts
        to be performed   iu Venesueg..
Hon. Zollie   Steakley.    page 2 (WW-191)



               “The   questions   presented    under the submitted      facts   are:

              “1. Will’s corporate   limited partner be required   to
         take out a permit to do business   if the partnership engages
         in no other activities than those stated above?

                ‘.‘2. Is a partnership regarded as a ‘person* within the
          meaning of Section 2 of the Texas Uniform Partnership       Act,
          entitled to become a partner’ either initially or by substitution??
                                                               ~.:
               A foreign   -corporation which becomes a limited partner in ,a
Texas,.:limited.partnership      and contributes     capital to the partnership        is
transacting    business in the Smte so as to require qualification             in the State
if the; atts of the partnership     would constitute transacting        business     in the
State if done by theforeign’corpdration          alone or if the actions of the for-
eign corpbration     constitute transacting      business    in the State. Harris       v.
Golumbia :Water & Light Co., 108 Term. 245, 67 S.W. 811.: Ashland Lumber
Co. v. Detroit SaltCo..:     ll4.Wis.    6~6. 89 N.W. 904; Fletcher’s       Corporations
(Pert&Ed.)     85OQ,; Vol.: 17; p. ‘5.53. The extent to which the foreign corpora-
tion is transacting.business~in       the State is to be measured-by         .its’capital
contribution    or investment in the limited partnership.            People ex rel Badische
Anilii   & Soda Fabrik v. Roberts,: Comptroller.           (Court of Appeals.      N.Y., 1897)
46 N.E. 161; Sec. 10 (a) of the Texas Uniform Limited Partnership                    Act (codi-
fied as Article:6,132a,    Sec.’ 10a. Vernon’s:Texas        Civil Statutes); and 32 Tex.
Jur. 312. Partnership,      5 61. If this were not so,~foreign-rorporations               could
circumvent     compliance    with statutory requirements          for obtaining a certifi-
cate of authority:+transact.business           in the Stat&. * Fletcher’i      Corporations,
§ 8517, VoLl7,      pa 686. ..* _j         :

             -Ti&uestion~whether       certain acts:constitute   the transacting   of
business in the State is.mainly, a question of fa&.. ‘Ally the combined acts of
the foreign corporation,   -and&i this instance the..acts~.of thelimited    partner-
ship and the corporate ‘general partneri:must.be       ‘considered;~ Security Co.
v. Panhandle .National Bank, (Texas Sup&t,., ,1908)1’57 S.W. 22, Fletcher%
Corporations   (Perm.Ed,)    Sec..-8464; Vol:l7,   pi 465.

               It is rignificant. that Ef.the limited partnership       was not ~transact-
ing business.in    .the.State, there would not’seem to be’any reason~.f.or the
limited partnership      to”registerwith      the Secretary~of   State. Further.      it
is noted that the -requirementof        Articles 8.01 of the Texas Bus.iness Corpora-
tion Act is ‘*to bansact~businkss!‘:         T:here his a diatinction~ between
 ‘Ltransactig    businesses and zA!doingbusiness       ‘Y Leas-activity    .is.ixecessary
.to have, “tranaactm~~business?’        than~to ‘constituta?‘daing    bustness?       See
Smythe v. Ft. WorthGlass          and Sand Go;;.(Tex&rp.Ct.,        19iz),  142 SW. lI57.
Hom.~Z~llie     Steaklep,.   page   3; (WW-191):.




and the:authoaities    cited a&.discuss.ed,  Although Section B of Article        8.01
of:tiie-Texas: Bnaiites~s Gorp,mation:Act   puts at rest.many    old issues, Secy
tionA of Article    8.81 invokes the requirement    of procuring   a, certificate
of. authority
            more strictly and based on less activity or fewer acts or oc-
currences than the old requirements   of. what constitutad “doing.. business’,
The answer tomyour first question is-~yes:..

           As to.your: aea%nd quest&it               is. a rula under &rstatutes,        thatin
statntory conatrnctian        the omdinarp signification          shall h+ applied, to words,
except. word.6 of art or words. connected: with a par.tiouI+                trade or subject
matter.    Section, Ir of Article     10.,~Vernon%       Taxas. diuiLSt&utea,       A partner-
ship is not ordinarily. thoug,ht. of a.s a. person. under Texas: i&v+- 32. TexJur..
221,Partnership~Sbcc          !k. .: ._ .~:. :. i. ( :.
                 ‘:I:     :_ <I
           A partnership        Ea variously xiewed: as an~entity. a?pd;as. .an:aggre-
ga,ta of individuals,- frequently: separately: viewed oneven the same’page                      of
a decision:or. ofa treatise..         32: TeleJrrr, 22i..223:, Pri&mrs.hip,        Set, 5.;
Third Annual 0.U. & fiascoInstitute,           Southwestern      LegaX Foundation,       pp. 268~
270. However,        it is. not. viewed as. a paraon~ asthat~.term: is normally             used..
It is our opinion that such. mrm aa; Mpersons.*                as used: in: t&is..act. is not a
word of art nor a-word connected with a particular       trade or .subject. matter.
The: individual partners of a ~partnerahip may become li&ite& partners. in
a Texas limited partnership,.  hut. they agust dii so: in thei& fodi&iduaI capacities.

           Iatbe kase.of Port Arthur Trust Company v,‘h&&lrow,.             291.S.. W,
2d 312. our .Supreme Con& cites. Art&La 23,. Sac, 2 p Vernon&           Texas Civil
Statutes. which. pr,ovides that the term “~$arson.- g.eneralE~ shall include
corporations..   Tliere is noi such statute providing that the term Upetson”
shaIl ganera~lly includes partnerships~,    Although some states s.uch asp Okra.-
homa view. a: partnership     assuch  ai distinct entity as to be. capable of, becom-
ing a member of. another firm, we de not.beliive, that: such vtaw x.egsrding
a partnarship   has. been: accepted~ by the Texas courts,       Compare    Eouaton: v,
McCrory,    140 Okra, a:282     P, 149 and McPaddin,.. Wtesa h Kyle Land CO-
v. Texas Rice Land Co.., Ter,C.iv.App,,.      253 S,Bc,. 9l6+ affirmed   Tex.Com..
App.. 265. S&W. 888~ See CiIa%cock:k       Price,  92Tex,    271.: 47.S.YL 9.65 (l89.8);
Martii~ v.’Hemphi&      237
                         __ ELW.. 558 (1922);;. and Ab,oussie v- Abouasie,     270 S.:WKI
2d 636 (Tax. Civ.Appb., 1954):~err.ref.. snd’ the
a partnership   unde~r. Texas law aa con&red        to Oklahoma and Louisiana        law
at 9i Southwestern   Law Jouroa;l.~l74~.and 175..

           In many recent~iiastances  the hgis&ature     has expressly    pro.vidad
in a$statute that the term “person”     shall include partnership;,,   This prac-
                                                                       .
tice has been so. frequent that the faUure to. donso would: seem: axgnificant
 in those cases where there is no express      provision  for such. definition 01
Hon.. Zollie     Steakley,      page 4      (WW-191)




inclusion.’ See Articles’ 5577a. 1528~; 4476,~ 9ll6, 936, 5948, 7149; 7047b,
7057.a. 5664, all Vernon% Texas Civil Statutes.     The answer to your second
question is no.




            A foreign corporation      which has entered into a Texas
     ~limited partnership      as‘alimited    partner must take’out s
      certificateof    authority to transact business      in this~ State
      if the actions,of   the partnership    or of the foreign corpora;
   ” ‘tion,constitute’the    transacting   of business   in the State un-
      der,Article    8.01 of the ‘Texas Business~Corporation        Act,                      .
      if done directly or alone by the foreign corporation.           The                     .
      acts descr,ibed in this request do constitute transacting
      bus’iness in~the.State<      The term “persons”,,     as used’in
      the Texas Uniform Limited Partnership            Act, does not.                         ,
      include .partnerships.

                                                            Very   truly       yours,
                                                                                        ..,
                                                            WU     XhLSON
                                                            Attorney General            of Texas



    ..

                                                                   :.
LJ:pc          ~'.        :.   :,   .' ._                                      Assistant

APPROVED:            ..
                                     .,
~OPINIGN~ COMMITTEE:
       ,

1Tame.a.E. Ludlum,..Chairma,n,
           ,,’ .:    .:
H. Grady Chandler                                .. .‘.~,
J. W. ~Wheele:r: _.            :
Byron F. Fullerton

REVIEWED     FOR. TBE ATTORNE’Y                    GENERAL         ”
BY:
       Geo;.P;  BIackburn: “~~
                             “~ ,~                 ”

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