            OFFICE    OF THE   Al-fORNEY   GENERAL   OF TEXAS
                                    AUSTIN




mnombls % @. hrme
srsr8tiwyor mata
Awtln, Texas
naar Sir:                        Attnt    Mr. Qaodr A. Qlllanr




                     b am   in   maaipt    0




     mant and sa




               * (d) %I apltnl rtlll ea&Mbla $6 -
     6371,039.00,wllhirh 6aourit~ tar debanturer
                        '3&6,656.%
     irsrmd aaountbq tois
                                                                     132




        “The oomgany contanda thettha          eubaerlb.6
  6apltalstook 1s $974,000,00and that the                aapltal
  emountbg to ~~,QO.OO,          subjaat   to    aall,   ir,   not
  aub$mt to filing fws or fmnchlsr tama, their
  oonhntlon being that $ll&,961.00
                                 adveneod ova?
  end abars $20.00   pr  ahen   ia la th8 natuu            of
  an ebmno~wnt     upon whtah intanst    ia pold         aal
  that tba eepltel aft11 eallael~     la not Qa          b    We
  atookhcildorrr aa atodr    aubsarlkd until        the aI me-
  tom 0al.l for luoh    payrqnt. The aanpany*8arm-
  mont la that nndar thr +~liah bn tba uorrat
  aabrarlbrd ahoald be ddmmlned 81) tha ammat
  called by the Ulrwto~.  end tbrrt uattl e sell
  ir maa for the unpaid portioa,then     w Iy)lk-
  b%llty oSthepart of'tba8tookEoldara   for ttn
’ lmlanos or the otoak subeoriptloa, heme. M ill-
',rps tea ahaIM ba 8tmO8smd$grlmt    thlo portion
  ,oithe &O&c. &I etlpport  of thair oonteutiorl
  ueorpts-fraaa rasolutionparwd by tha Board
 :of @ra6tcim on Gbrtmry 1, I.867a#~#from the




       *FM also aall your atkntlou   tQ the paialon8
 00nkfnsa'on       IS9, 11, 15 16 and 35 of the kl?-
 tialaa or +a800
               T   tion filed in thle offi    la 1929
 oonaem~'tho neton or this stooli
       *%tt Will        that in ti.&X4Wl6ll816 Of
                   ObEm'Vu
'pa&c&tdated Ootober25,.1929 October let,      1919.9
~Srptambar18, 1909, and uaow b r 8, l899, state-
 matawara mad0 thetallof tha c8gitalsto0km5
 mb-mxrlbedand lppmx$zStoly 755 $hclnoi #Sd In,
 and rilsng reas paid on tin ant%ra oapltelstimk.
           theMrin% roquallt you? oplalane8 to
      *'iJa,
 whloh or t&e roll&   5alomtaoar tlllssfwe
 shellbe besedr
~22. u.0. Flowsra,I~af30
                      3


         Wa also raquaatyour~opinion
                                   aa to whlah
     oftha followingEUW oar Smnahlw tarwIllba
     euaeaed :




               pert of ~l%laIa39u; %Tlead txvil BtelM85,
               &et
1 9 25,
      a sl~~~ndsd, Aata 1931, p* 204, a. 120, providbg irrr
the flllrrgto* of a fora&n 4orporatlonto rea3sw  its right
to a6 boelaaeafjl%.a.,    rsads aa fonowst
         "Upon obtainin&a pa!mltM(Xw ArtloU
    1529 and upon,~~ng a arrtl.fiad ogy of any
    lmmdmnt 8 au lamat uqd4r Art1 0 1537, *aoh
                             pey the roll.o~ing
                                              rue
                                                       atblttad        to   d0 an




    the ~eod wpN.l etosk w tazabb shell k thet
    propozt~oBrr ttia~rholr      tbalmr, l8 tha -8
    lS.Stb   Sa ip      inwhole orlnprt in ln%mxata~
    bualMu in    T   MS* plus tha groaa rawi to rrol8In-
    tzaetatk‘prxae    baefnose,baar to tea ameirr ssaatu
    and reoelptaof tho aorpom&tIqn.3,nth4 ~56111s       ot
    e ba@nuar~arporatIoaobtainingapotit tcido
    btmiarae   In True    for tha first tlm,    mhara It
    hre tlmrs$OfOr.    .5@0~4     BO Upi++    &oak in -w,
    thy beeta fllirg rro or rfitg        $sa.OOl Dollars
    shell   bs p&d 66 harsinebove   pmlaod   end wlthln
    ninety    (90) day6 aft4r th4 axplratlon of the first
    per    tandar Ita pamit, tb oorp0mthOn    efulll fil*
    an affidavitwith t&s 8eomtWy Of Stata SXSOUtSd
    b? OM ct its exeeutits ofriwrrr,ahaPiz@the ewurAt
    of gross am&o omploya4in nilo1aal-sn part in Ln-
    treatetabuaineaaiB Taua and the WOW% of ita
    wtlrq grow maoto at the and o? auoh iint mar With
    uS&otbar data mquire4 to oalaalda thafa*  ltlrd
    rf~eiiuh         tirps        shell   ,pay   to   the   s.OMtrrp        or   bets
    tbabaia~rtbaril~~ronthapr~wa
                        etoak as banlnb&ore dobr-
    of ifs leeuadotkpltal
    &tad, +I exeau ol Tan ~o!seand
    lsn at,tha mto of rcln
    edditioanl               %B     %OUrWnd
    fm4tlOaal  part of euoh
    y6ar of th4 llfa of any
                                                                1.34

 non. 40. %warat   %gr 4


     oapltilatook 18 laauadandrr     an ammdmant




        vldodb~in forth      .paymntonthr mm&e
     e tha wee of a ,bsginnsr earpomtlon; We&
     tbet~thsrinlqmflllng fi*toPr-:uyman~tor
     eapplaarnt'abalXbr yifty ~4WO.00)iJoilen. .&an
     th elaaato lmplayadin Tume.am used jointlyin.

     oalmlating &mhfaar    ar.tha lntreatak~~Prp8   ra-
     mlpte bmrtotha lutaretete  Tazee neipta        fror
     t&n onfirs opsmtio~ in Tsxae,a
         ArtLI& w&,, R@r     ld   Giw Stat&as, 1925~ as
emandsd,Aota X931, ~~~Ul;         265*'Osoridmj1~ mrt, le
followe:
              "(a) .%Ospt as ha&la prorldod,wry
    domeetloend rarnignoorponts0nhrntoio~
    or hsroei%erahabred ox mathorlmd to do.
    buehsea      ~in.‘foxoe,     ‘tmor bsfors %ay
                           .shell,
    lstbfwahyaer~ py ias(ltanootothe Baoy-
    tery of stat4 a fnmohieo tau for the.yser
    ~llawing, baa.4 npanth.t pmpmblonoftha
    outstending     oapltallb&; marflacand m-
    dirldd      proflta,plna ths amount .otcwtatand-
    ing bonds, notae end dabentume, other tbsn
    thornamtaringlnloaa than a y8ar from data
    0r leaua,as the grvae nulpte m     its bus&
     MU don6 InTexes bsareto the tctmlgroee
    raoslptaof the sorporatlon?roa lta 4ntlrs
    bualnsea,yh+oh~taCehellk wmpatrdattha
    fomwdng mtaa fok 4e4h~&asa0ttuha’ JJeQmru.
              nortraotlqnai?plqt
    (#l,000.00)                  thamof&g~. ~.a,'
         'Wddo not aederatandyour raqr;r~at
                                         as lntwd&         ti
 m& w y o ur
           ur p a r timntel
                        wnatmmtiask o ftha l~tietutee,
                                                    dnss
.thrXrlna&mant, wlsioh18 bees& Upon&i AttWay~&mr&*r
             MT   zt;:   "Ly$nEh";t";w'-&=i ratiLc
&t:*At     %rB4
am6 Court of lkxae, &etsa’A~lI l2*lg7~y&~9~~‘*~*
Oplnlonaand hp. 19l6-1918,PI t2l
thet-uplhl atwk of uld oorp4wt~on i5euaa,   anu ou$&eiul-
lBgJ'm6eBtt&ltpartOftha alhorlsad'oaltal rsook:~oh
be& boon aubaarlbadalthwgh not fully #8% ,+n ax4 qtibjyst
to 0311.  ml- the ;w:Fasea cf thlit;
                                   opinionvfaroaept you*
lo@! aatsblinhadtlapartPPsnta1construotiono?these stat-
otas ar& conoldsr tba umtantiona cf tka taXp9yartnatba-
aaasa of ths %&Uh leaveappllaabiato aa& oy-t-b
the full amount of ltc atook ahonldnot be OOIU damd for
tnxatlonor ~iower fu purpouai
           ~pparantlgunbar thr ?pn4ieblmf mombars-ofthe
-&lmltad.Caapnyare laausbcwrtlZlaeko    m tha total pax
 v6xu0 0r the. shams eub8aribadupon peymantof a-put or all
 of the par olrlna,in this lnebn~.arOur poandr on 8ls pmnb
 prvalua *took,laavln6two poanU5 par alnraaapald ?or
,wblah    the   nubsetiber        ia   subjrot   to   Gall.    TJM rtooktmldar
 wy notpayup thaunpalt¶   partlono~hls uteok.%nthe eb-
 e4nw of .a0al.lor wlthatt the wne8nt of the.#lrwto~ ~4
 -It 15 ala0 pr4tv$hdthat'adv4nwelay In rada by the etocDk-
:holdarea6.a pnpaymnt~a&aimS fNmra.oallr on thaw ap-
~paldatouk;ahanautho~aad bytha‘dlrabtam. Tbaa pra-
,pajwant8      ~alfkst~eall5           am   notwmlUu8d         u   paynnte    ap0.a
the ntocdcin its strictuan&o.bat ara aotxeldandmra in tha
DBturwof a loan up00 whloh-~&tanat 1U~galdend ln tha
wont    6.~aall is Pada, or tlm oasporr, tlon la diuo2wtl ‘and
1 t, bewmw luoMury 60 '8nfQrM.ulle ior um ~benaat          or
oeditimt;~th6'~rpDont    shaact*d is 0raua64    me 8n o??a*t'
~O&BinBt;
       UCh         Oti       to the 4X@JBtHO? th@ pm$Bwt.                    tbldU
the   lmv@     o$ Tsua-e       eorpontio@may           not    lam&m &40kapanB:




                9vetiy     such    sabaerlbrr     baoumm      a’ numbs
         lpw    faato    on the inoozporatl8f1
                                            OS tim umpad~,
         and ltmblias WB hoxdsr O?+Lrtavar mmbar 6?
         #~IWO~ ha has.at~baorlba.?w.'l'ha
                                         23rllSeOtiw~
         LO? Wr A5t Of 1862 &OP Wbhh IW@% asd & the




         .~aum of awoalation in n airrum    'ay 00 .th4
         poaltiono? other parwna uht'agxa~'~ km'
         ~JOR&MS. *l[tI5 pAin?. ea%d Lord blue ti
         i!van'c4.a (lHi7);L.R. 2'Ch. hpp. 430, 't&H
          the orS&kaiaubaorlba~eara, ,bythe &t Of Pi*
         llhR4ant,de&maQ to mars trrlcen
                                       tb* rharcl0mt.O;r
         poelta thalr1181~~1'; the Ob et ba@ that tha
         publla&&tralylrlthc~~~   Mt3"aanoamthaaab-
         sor~lbepabr the ~~cswa~Atun btmml+  mwWn   of
       use    ooRip3ny.    r\nd   a44~wgottl'5        oaw,   4 zq. 238,
       In thhr88~ of the eub64rib4ra         aeaorandum,
                                                  of t&a
       tbsn3rmr, no auotmnt    ir nrorsoary tna London
       and ~?rorlnoial,& c;O.j Q. Ah 525)J'noaIrtry on
       fh9 M#@~T          Of 6@6b0rS     18 n4046rrlllf.       ~f0hOl'S
       oeme, eupra ~luandsr v. ktomstla Tel* honr
                   %. 63. The subseribarir ihand
       co., .(19OC,1
       to take tha.ah8qusfraa f&e 8omgs4, and to pay
       fortheron  oalls dulyasda1Ura any otharnhan-
       holder."
               Vhe ta3aa vi the Pat of 1929 'and.%a**
       tSdnlirthe pr0v1810im0r     O40t8. 28 and 157,
       lra*s no doubt, ln'tiha  oaae oi a'ooaplq,Mt.
       Ml by Ilhera~,  about tha obll&atlonor shn-
       hel&er'a to pey'to the Ocmpa4 the fkll amotint
       of thar    tlhama.  2% worda of .Mm dotie xbit-




              %06 tha foregoIng it           appmrm. that       th4   *to&      mm-



or the,fullamountottho #took Qsitrdbrth5.aoor&wzatioa
will   only   pi404   it upon'th       ma4    foot-      and    b4als    with
othor oorporattoxm
                 84 th4 at8tuM S.aapplladQr tha Se*
Mtary Of 8tata*aofrima.
          Path relF4Mnorto prrpeynleat5 in Nmpsot of futura
04ll.8,Palaiar'sGoap~nyLaw, A5tb ~Rdtioh, &at-esat pnga
14G es followBr
                                                                   l.38




              "Ey Lords, I ogrea, hatlon 7 of !l!abla A
        authorizes the direc:ors of 4 coqmny limited
        by shares to agrsa with any member for an ad-
        vnnce of uonay on tha terms that the money so
        advanced is to b6 sppllec!la discharge of the
        member'8 llablllty on his aheres~when end aa
        thet liability .rlpenu Into a debt preeently
        payabls, en4 that in tha meantime the mmibnber
        is tc be t3e+itha tc lntaroat en th4 4dVt6xa
        aa if he ware an ordinary aredltor of the oom-
        .vaw. 'zheinterest la to bs due to him in tha
        character o$ orlditor, not In hls oheraatsr aa
        tmn@tsr. .... 2
               The member's advanoement against future oalls on
hia stock liability doea not iriany wiaymduae the amount or
                              although uutll a eall Is 6ade
capital stock of the aoflpfjny,
tba prepctywnt hears Interest, lnatead of sharing lo the dlvl-
awls. The soncy~thus edVenced by the &o&holders    against $lnlr
liabUl.t,pon their atoak& oout~lbutep jwt ,aamuoh to the baai-
11888potenoy of the company and represents a part of the aatwil
available wing    capital of %h~ aoupany attrlhiableto aapital
stock, whqther aharatierlzsd aa~a pre~ymant on future calla
or a present paprmnt on ths etaak ti con lets disaharga of lia-
blllty ror the unpaid stoak,or subscti~~,on.
                                        P
               An addltloual'.conal4en!~~onarlsea, however, wl%h
refarencltto the raura 'IlaxSatute, be~suea or the feat thet
Article 7064, as emended, Includes uutstenalr@ bonds, notes
and debentures maturing onegear~@;mora fran date of issue,
ae a part or the taxable Uapital of the OorpOWiloi%. zs this
oese the members* tuqald llablllty on thelr etoak baa bean
pledge4 by the cowany as aecwlty for Its debentures lseue4
amou&ug to $3.k0,656.00 and It ia au&w&ad    by the ~aompany
that if e call should be mad4 upon the unpaid portion of tha
stock, a corres::onding,smq.&ntof the dabenturas for+Itlch they
ara security must also.be mid up and far that reStsonthe
inclusion of both oallabla ctipltaland the Uebentures w&h
in a aupm4tr   aapitall~tlo~.~
               If the ncceooltp ror ~rafltingtha dsbentures upon
calling in ths underlyiug cslleble capital, which irreecLu%Y
therefor, arose out of the fact that the aabenturs holder@
would prcbably demand addlLt@tal seaurltp to raplaae this
pledged stock, thfs 9fiaianot'ba naa6ssariJ.ytrus. Kowver,
we flna the follwlng provisloa in the comp~ny*s Artlalea of
Aost3cletlont
            "The total lnsue of suah bonds and deben-
        turee shall hot at any tins excobd the amount of
        unpaid ~oapltal. . . .*
                                                                                            139

*n. ii.0.plOw6r6,                 rslrcl   9




          zmaucraof thlb pro*lslon,the U6C688ityfor l-6-
&talagthe dabantarae whsn a ~11 1:;aPad@upon uapai6 aaplt8l
is b8Mtt Upda th6 limitationUpOn the Wit~ny'a 6UtibOC~ty to
isetia bonda en4 dabenturaa an4 fltoe                  a mrlmum mpltallsatlon
~@fbath &Oak an4 debmturra in tileawunt or                       th6 par valu6
ai @to mbsotikd   &o&.   Uo48r                    tb68a uira~tena68,    th6fW.l
mwwto5th6     enderlyirgi4alZablo
                                oapltmil,
                                        end the autatm4-
,ta(l
    da~knturornoal rmalt in sattiag~
                                   ap o                            texebla.      mpltal
tn.rzoaes of          tfu muW&    llsit mbieh tin eorpontlon  maid
k math~66              to mch ooder It8 ahe@nr an4 tha lam oi its
dtU10~6,        8nb    St is OUr Op~Olt  that to #18  8Xt6ZttSt W0ltl.d
in iBOt l’68illt in 8 &I liGld.Oll                Of   Qapital    tlOt00lltU4&&!4
by    fl'ttBahi@W
    th6            bX IIis tUt8.

         It la oar a Foion that th6 tez8bl6 capital of th8
?atiador
       Lea4 snd C&t P 6 kquny,  Ltd., for t&m purpo8r ch'
 OLtbt16tiXQ th8 WrpOMtion'8~ &W'Btt fizLn& f@O -                                  b6
 aoeeptrd on#l b6~,000.00,  klngtbr  fullaafmat ofth
'&a&88 rabrarli8dand in th6 h8nd8 of atookbold6r8.
                !i?ia6@     t&O    @6BClhi58   tit2    %U b88Sd   UpOB   -piti      dOOk,
srplua and Pnlirid@d&WOfit8, ati Wt68, bonde mPd 4OknWrOr
otlmr    then    thoea        8utturhg lataa than ozi6 par  i      6ak of
tMu0,~     an4 W@ 40 lWt &lY6          011 Of thM6 f&W68      k+on     tU W
&tad   St6st6         tba:m         MUint at taaabl.6 aEpita1    tl&Wt abhi4h
tb# -88.tE%                    8hofild.k bead, hOW6'(*r,- t.TUUttbatth
abcna tlbwaeionrlll smblo you to aaqate the tax.
                                                Yoaln Yary truly
