                                June 2,   1939

Hon. Tom L. Beauchamp
secretary of state
Austin, Texas
Dear Sir:
               Opinion No. O-747
               Fkl: Incorporationof American Legion
                    Corporations.
          We are In r&klpt of your lettbr of May 3, 1939,
in which you request an opinion from this departmentupon
the followingquestions:
         "The typical purpose clause of applica-
   %ions for charter for the American Legion cor-
   porations reads as follows:
          "'It shall have all the rights powers
      and privilegesgranted to and conferred
      upon corporationsby provision of Subdiv-
      ision 2, Article 1302, Chapter 1, Title
      32, of the Revised Civil Statutes of the
      State of Texas, which reads in haec verba:
         ""The support of any benevolent,
     .cheritable,educationalor missionary un-
     dertaking" and particularlyincluding
     the following:
         'I'(e) To preserve and strengthen com-
     radeship among its members; to perpetu-
     ate the memory and history of our dead;
     to support and maintain education in
     the moral, intellectualatidphysical de-
     velopment of those who served in, or who
     mag.serve in, the Army, Navy, Marine
     .Corpsor Coast Guards of the United
     States of'dmerica,in any foreign war,
     insurrectionor expedition,which ser-
     vice shall be governed by the issuance
     of a campaign badge by the Government
     of the United States of America; and to
     maintain true allegiance to the Govern-
Hon. Tom L. Beauchamp,June 2, 1939, Page 2, (O-747)


         ment of the Unlted States of America, and
         fidelity to Its Constitutionand Laws; to
         foster true patriotism;and to malnt&l'n
         a'ndextend the institutionof American
         freedom:
             "'l(b)To act as a charitableand benev-
         olent organizationfor the purpose of pro-
         moting the welfare, alleviatingthe suffering,
         and assisting and aiding those who have
         served, or may serve, with the military
         forces of the United States of America In
         foreign lands, their widows, orphans and
         dependantsand relations."
          "This department reqrieststha% you amwer
    the followingquestions:
          "1. In suoh corporatton,with purpose as
    outlined above, authorlaedto incorporateun-
    der subdivision2 of article 13029

          “2 , Are our fees for filing a charter
    containingthe same or Lmllar purpose clauses
    $10.00 or $50.001
          "3. Is such a corporationentitled to be
    exempt from the payment of franchise tax under
    the provisionsof article 70947"
          The purposes for which corporationsmay be
formed in the state of Texas are enUner8teQ In Article
1302, Vernont8 Annotated Civil Statutes.
            Section 2 of said article readp as follows:
          "The support of any bdnevolent,charlta-
    ble, educationalor mlseilonary UndertakIng."
          The first question 1s whether or not reotlon
2 Is statutoryauthority for the lnoorporatlonof American
Legion oorporatlonswhom typical purpose clause 18 set
forth in your letter of request quoted at the outaet of
thi8 opinion.               ,
          We donnot think there la any doubt that suoh
objective an the following fall within the category of
“educational”purposes:
           ,
.--   --




           Hon. Tom L. Beauchamp, June 2, 1939, Page 3, (O-747)


                     ' l ** to perpetuatethe memory and hls-
                tory of our dead; l l l It
                    ' l * l to support and malntaln education
               in the moral, intellectualand physical develop-
               ment of those who served in, or who may serve
               in, the Army, Navy, Marine Corps or Coast Guards
               of the United States of America, in any foreign
               war, insurrectionor expedition,which service
               shall be governed by the issuance of a campaign
               badge by the.Go~ernmentof the United States of
               America; * l l
                    " l * *and to maintain true allegiance
               to the Government of the United ftates of Amer-
               ica, and fidelity to its Constitutionand Laws;
               to foster true patriotism;and to maintain and
               extend the institutionof America freedom: l l l"fl
           Furthermore,the following aim of an American Legion Cor-
           poration is undoubtedly "charitable":
                    " l * l To act as a charitableand benev-
               olent organizationfor the purpose of promoting
               the welfare, alleviatingthe suffering,and as-
               sisting and aiding those who have served, or
               may serve, with the military forces of the Unit-
               ed States of America in foreign lands. their
               wldowsn orphans and dependantsand reiatlons.
               +)o+
                     It la not placing a strained constructionupon
           the following purpose clauses to hold that they are "benev-
           olent' in their nature:
                     Itl l l To preserve and stnrengthen
                                                       comrade-
                ship among its members; l l l
           and, of course:
                     Itl l l To act as a charitableand benev-
                olent organizationfor the purpose of promoting
                the welfare, alleviatingthe suffering,and as-
                sisting and aiding those who have served, or
                may serve, with the military forces of~the
                United States of Amerloa in foreign lands, their
                widows,,orphans and dependants and relations.
                *it*
                                                                        -

                                                             *.   .-.




Ron. Tom L. Beauchamp, June 2, 1939, Page 4, (O-747)


          Thus, an analysis of the typical purpose clause
of an American Legion Corporationreveal8 that the manl-
fold objectivesare each and every one wlthlh the purview
of Section 2 of Article 1302, Vernon's Annotated Civil
Statutes.
          We wish to cite one Supreme Court-.ofTexas au-
t$r;t; in this matter. We feel that the case of Conley,
         Daughters of the Republic (1913) 156 SW 197
(SU rem; Court of Texas, Brown, C.J., delivering the opln-
ionP is very much in point in its elucidationof the
phrase "educationalundertaking"used in Section 2 of ar-
tlcle 1302, Vernon'8 Annotated Civil Statutes.
          In the cane of Conley v. Daughter8 of the Re-
publlo, the Daughter8 of the Republic of Texas which was
organleedas a corporationfor the declared purpose of
perpetuatingthe memory and spirit of the men who achieved
Texas' Independence,and to encourage historicalresearch
into the early history of Texas, and promote the celebra-
tion of IndependenceDay of the Texas Republic, and erect
monument8 upon place8 made historic in the war for Texas
Independence,was held a corporationorganleed for "educa-
tional" purposes within the second subdlvl8lonof Article
1121, Revised Statutes, which wording is identicalwith
that of Section 2 of Article 1302, Vernon'8 Annotated Clv-
11 Statutes. The court held that "education"in a etatu-
tory sense meant not merely instructionreceived at school,
but the whole oour8e of training, both moral,intellectual,
and physical. The following explanationof the term "ed-
ucational"by the Supreme Court is governing in the present
instance.
          "ihe Attorney General asserts that the
     corporationwa8 not lawfully created under the
     statute of thin atate, because the law does not
     authorlte the creation of uuch corporationfor
     the purpose8 named In its charter. The eecond
     subdlvl8lonof article 1121, Revised Statutes,
     reada: 'The purposes for which private corpor-
     ations may be formed are: l l * (2) The support
     of any benevolent,charitable,educationalor
     missionary undertaking.' The purpose of this
     corporationis clearly 'educational.' Whatever
     educates &within the meanlnq of 'educational
     undertakl!U.' Education in thesense as used
     in the statute includes: "In its broadest sense,
     l * l not merely the instructionreceived at
     school or college, but the whole course of traln-
     lng, moral, intellectualand physical; is not
Hon. Tom L. Beauchamp, June 2, 1939, Page 5, (O-747)


     limited to the ordinary instructionof the child
     in the pursuits of literature. It comprehends
     a proper attention to the moral and religious
     sentimentsof the child. And it Is sometimes
     used as synonymouswith 'learning'." 14 Cyc.
     p. 1230. The sentiment of regard -m-for the mem-
     m     of tho=who Rave their lives for the bless-
     u      of this nreat state stimulatespatriotism,
     and is in the h*hest sense educational. The
     facts to be preserved furnish the means of the
     best education for the young men and women of
     this state. The purRos6 is laudable in its in-
     fluence won the present Enoration; it is
     laudable, educational,g&benevolent for the
     future citizens. This qU08tion 18 asked:
     'Shoulda state commit 138 interests to corpor-
     ations?  I This court has naught to do with the
     policy of the state on that question.    All lltl-
     ganta 'look alike' here. However, we will say
     that this is not 8UCh a SOU~~SsS Corporation
     as needs to have a watch upon its actions. The
     heart, the soul, and splrlt of patrlotl8mare
     the capital employed by those women which would
     not detract   from the authority and power of the
     state. On the contrary, those ladies, wlth no
     hope of gain to themselves,undertook to sub-
     stitute for the state18 fund, which would have
     been created by taxation, the voluntary offer-
     ings of the people - a tribute of patrlotlsm,
     sanctifiedby love for the state, and reverence
     for the memory of her heroic dead.    Can there
     be danger from such a car oration? We think
     not . ” (UnderscoringoursP .
          It is our opinion, in answer to your first question,
that American Legion Corporations,with the typical purpose
clause set forth in the letter of request, derive and possess
the necessary authority to lnoorporateunder Subdivision2 of
Article 1302, Vernon's Annotated Civil Statutes, whloh reads:
          "The support of any benevolent,cbarltable,
     educationalor mlsslonaryundertaking.
          Your second question asked whether the fees of the
Secretary of State for filing a charter containing the same
or elmllar purpose clauses to that quoted in your letter of
request are $10.00 or $50.00,                                    .

         Article 3914, Vernon's Annotated Civil Statutes,
prescribing fees of the Secretary of State, provid68, in part
as follows:
Hon. Tom L. Beauchamp; June 2, 1979, Page 6, (O-747)


         'Upon filing each-charter,amendment,or
     supplementthereto of a corporationfor the
     support of public worship, any benevolent,char-
     itable, educational,missionary,literary or
     sclentlflcundertaking,the maintenanceof a
     library, the promotloc of public cemetery not
     for profit and the encouragementof agriculture
     and horticulture,to aid its 'membersin produc-
     ing and marke~tlngagriculturalproducts, or for
     acquiring,raising, breeding, fatteningor mar-
     keting live stock, a filing fee of Ten ($10.00)
     I)OllarB,end for filing the seml~annualflnan-
     Cfal 8tat6m6nt Of such 6SgrfCUltUralprOdUCt
     or live Stock corporation,Ten ($10.00)Dollars,
     which shall include the annual license fee."
          Since we have held'thet an American Legion Corpo-
ration with the purpose clause as set forth in your letter of
request, may bs incorporatedunder Section 2"of Article 1302,
as within the purview of "any benevolent;charltable,edu-
cational or mlsslonary undertaking",it follows that in answer
to your second question the fee of the Secretary of State for
the flllngof the charter of such corporationswould be $10.00,
as prescribed in the second 8 article 3914,‘abovequoted. See
"opinionsof Attorney General, biennial report, 1914-1916,
p. 471." In this opinion it was held that a corporation,the
purpose of which is stated to be the accumulationend loan of
money to young men to defray their expenseswhile studying
for the christianmlnlstry and to young women to defray their
expensea while studying to be christian missionarlee,where
such corporation is organiced for charitable purposes and not
for profit, may be incorporatedunder SubdiViSiOn2 of article
1121, Revised Civil Statutes; and that the fees for filing
the charter of such corporation is $10.00; and finally that
such corporation 18 nO$ subject t0 8 franchise tax. ArtfClSs
1121, 3838 and 7403, ROViSOd Statutes, 1911, were considered.
             The~thlrd'question asked in your letter of request
Is whether or not such a corporationincorporatedwith a pur-
pose clause,    such es that quoted in the letter of request, is
entltled'tobe exempt from the payment of a franchise tax under
the provlslonsof artlole 7094, Revised Civil Statutes, 1925.
           Artlhle 7094, Revised Civil Statutes, 1925, read8
88 fOllOW8 I
          "CorDoration exempt.- The franchise tax lm-    8
     posed by this chapter shall not apply to any insur-
     ance company, surety, guaranty or fidelity company,
     or any transportationcompany, or any sleeping,
.          .

        *m-. .‘i-
    .



                    Hon. Tom L. Beauchamp, June 2, 1939, Page 7, (O-747)


                        palace car and dining car company which is now
                        required to pay an annual tax measured by their
                        gross receipts, or to corporationshaving no
                        capital stock and organized for the exclusive
                        purpose of promoting the public interest of any
                        city or town, or to corporationsorganized for
                        the purpose of religious worship, or for pro-
                        viding places of burial not for private profit,
                        or corporationsorganized for the purpose of
                        holding agrlcultural,falrsand encouragingagrl-
                        cultural pursuits, or for strictly educational
                        purposes, or for purely public charity."
                              Under this statute corporationsorganized "for
                    strictly educationalpurposes, orfor purely public charity"
                    are exempt from the payment of a franchise tax. The corpo-
                    rations under considerationare formed for educationaland
                    charitablepurposes. It is our opinion that the American
                    Legion corporationswith purpose clause set forth in your
                    letter are brought within the exemption,and ere excused
                    from payment of the franchise tax under the provisionsof
                    article 7094. It wes within legislativecontemplationthat
                    just such American Legion Corporationsbe exempted, since
                    they are to a high degree of a benevolent,charitable,edu-
                    cational and patriotic nature. See opinions of Attorney
                    General, biennial report, 1914-1916, p. 471, supra.
                              It is, of course, recognized that corporations
                    organized under Section 2 of Article 1302 have no capital
                    stock and are non-profit legal entitles.
                              Trusting that the above fully answers your ln-
                    qulries, we are
                                                       Yours very truly
                                                  ATTORNEY GENERAL OF TEXAS

                    DS:omb:eac                    BY         /s/ Dick Stout
                                                                 Dick Stout
                    APPROVED:                                     Assistant
                    /s/ Gerald C. Mann             APPROVED
                                                    OPINION
                    ATTORNEY GENERAL OF TEXAS.     COMMITTEE
                                                 BY /a/ H.Q.B.
                                                   CHAIRMAN
