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does not mean that stock can be sold for money to be paid, but must be sold for cash. Of course, it can be paid for in installments, but it must be paid for in money, or in property actually received or by labor actually performed for the company. San Antonio Irrigation Co. vs. Deutschmann, 102 Texas, 201.

It is obvious also that the property which the corporation is authorized to receive in payment of its stock must be such property as the corporation has authority under its charter to take and hold. If the property is not necessary to the conduct of its authorized business, then any contract for its purchase, either for stock or cash, is, unless expressly permitted by its charter, ultra vires, and stock issued therefor would not be paid up stock.

Conyngton on Corporate Organization, Sec. 222.
Powell vs. Murray, 3d Appel. Div. (N. Y.), 273.
Montgomery vs. Brush El. Co., 48 App. Div. (N. Y.), 12.
Thompson on Corporations, Secs. 1604, 1605, 1606, 1643.

Mr. Thompson in his work thus states the rule:

"A corporation cannot accept payment for shares in specific property, unless such property is of a kind which the corporation is authorized by law to take and hold. Thus a railway company which is not authorized to receive and hold lands and goods cannot accept payment for its shares in lands or goods. (Sec. 1643.) * * * And even where the statute or other governing instrument, by its terms, requires payment in money, yet unless the language is such as to import a prohibition of anything but money, the courts are generally agreed that payment may be made in any kind of property which the corporation may lawfully purchase in the prosecution of its business, provided it be done in good faith. The reason is that the law is practical in its requirements and does not require the parties to such a contract to do the vain thing of the subscriber finding

money wherewith to pay his subscription, and the
corporation then handing the money back to him
in payment of property which it desires to purchase
of him. That circumlocution may be avoided, and
the property may be conveyed directly in satisfaction
of what the subscriber owes for his shares. The
general rule, then, is that if 'a man contracts to
take shares, he must pay for them,' to use a homely
phrase, 'in meal or in malt.' He must either pay
in money or in money's worth; if he pays in one
or the other, that will be a satisfaction.
He may

pay in any kind of property or services which the
corporation has power to purchase for its use, pro-
vided the transaction be had in good faith and the
property conveyed at a fair valuation.” Thompson
on Corporations, Sec. 1605.

It will appear from a consideration of these authorities that the money referred to in the Constitution must be paid to the corporation; that the property referred to must be such property as the corporation can use and be delivered to the corporation; and it would follow, we think, that the labor to be performed, as referred to in the Constitution, must be labor performed for the corporation. Since we have concluded that the labor performed by a promoter in promoting the corporation and the expenditures incurred by him outside of attorney's fees and preparation of the charter, charter fees, franchise tax fees, permit fees, and stationery and supplies are incurred, not for the corporation but for the incorporators, it must follow that the class of expenditures herein generally defined as promoters fees, and being the first class expenditures referred to in Section 1, Chapter 32, supra, are not expenditures or services for and on behalf of the corporation, and, therefore, can form no part of the capital stock of the corporation; for the reason that this class of expenditures or service are not money paid to the corporation nor property received by the corporation nor labor done for the corpora

tion, and stock, under our Constitution, could not be issued in payment therefor.

It follows from the foregoing that commissions, promotion fees, organization fees, and other expenses incident, directly or indirectly, to the sale of the shares of the capital stock of the corporation cannot be paid out of the par value of the capital stock of the corporation; and, if such fees are paid by the corporation, then they must be paid by an amount collected over and above the par value of the capital stock of the corporation. Attorney's fees, charter fees, franchise taxes, permit fees, and expenditures for stationery and supplies, although incurred prior to the filing of the articles of incorporation, may be paid out of the capital stock of the corporation after its charter is granted.

We believe that the foregoing answers substantially the various questions propounded to us by your department. Yours very truly,

This opinion has been department in executive recorded.

C. M. CURETON, Assistant Attorney General. passed upon, approved by the session, and is now ordered B. F. LOONEY, Attorney General.

NOTE. The correctness of the conclusions reached by the AttorneyGeneral on the last point considered-the sixth-in the foregoing opinion, may be questioned. The statute deals with the expenses of promotion, commissions on stock sales, etc., incurred before as well as after the corporation was created, and apparently subjects both to the same rule. They are limited in amount, are required to be disclosed to the purchaser of stock, and must be made known to the Secretary of State as a prerequisite for obtaining permit to sell stock. Before the passage of this Act such expenses incurred after incorporation were debts which it could be compelled to pay out of its capital. Those incurred before incorporation were not its debts and it could not ordinarily be held for them. See note, ante, pp. 25-26. Also Weatherford, etc., Ry. Co. vs. Granger, 86 Texas, 350. But this would hardly be the case, even under the above decision, where such payment was contemplated in the original plan of organization, and the stock purchased with distinct notice of this fact; and this announced plan and notice to purchasers of stock is secured by the present statute.




All constituents of the earth's crust, whether solid, liquid, or fluid. Thus petroleum is a mineral. Texas Co. vs. Daugherty, Sup. Ct., 176 S. W., 717; S. C. in Civ. App., 160 S. W., 129; Swayne vs. Lone Acre Oil Co., 98 Texas, 597, 86 S. W., 740, affirming 78 S. W., 380; Southern Oil Co. vs. Colquitt, 28 Texas Civ. App., 292; 69 S. W., 169. And also natural gas. Texas Co. vs. Daugherty, Sup. Ct., 176 S. W., 717; S. C. in Civ. App., 160 S. W., 130; Ohio Oil Co. vs. Indiana, 177 U. S., 190; Westmorland Etc. Nat. Gas Co. vs. DeWitt, 130 Pa. St., 465, 5 L. R. A., 731.



Like other minerals, oil and natural gas belong to the owner of the soil. Southern Oil Co. vs. Colquitt, 28 Texas Civ. App., 292, 69 S. W., 169. They pass by the State's patent to its grantee. Heil vs. Martin, 70 S. W., 430; State vs. Parker, 61 Texas, 265. And by the ordi

nary form of conveyance of title to the land. But being part of the soil (Benavides vs. Hunt, 79 Texas, 383, 15 S. W., 396) conveyance must be in writing. Rev. Stats., art. 1103. It should be acknowledged and recorded. Rev. Stats., art. 6824. And where the land is homestead the wife must join and make privy acknowledgement. Southern Oil Co. vs. Colquitt, 28 Texas Civ. App., 292, 69 S. W., 169. Title to the minerals, such as oil and gas, where separated from that to the soil by conveyance, is still an interest in real property and taxable as such. Texas Co. vs. Daugherty, Sup. Ct., 176 S. W., 717; S. C. in Civ. App., 160 S. W., 129.

But the title of the owner of the soil is modified by the peculiar nature of the mineral in the case of petroleum and natural gas. He has the exclusive right to seek them in his own soil and reduce them to possession. But until he has done so he has no recourse against any other proprietor who, by tapping the same reservoir by borings on his own land, draws them away from their situs and reduces them to his own possession. Ohio Oil Co. vs. Indiana, 177 U. S., 190. The same rule is recognized in Texas in regard to subterranean waters which flow or percolate through the soil; and it is held that the right of any proprietor to draw them away from the land of others into his own wells is absolute, and not subject to the limitation of reasonable use or quantity. Houston & T. C. Ry. Co. vs. East, 98 Texas, 146, 81 S. W., 279.

This peculiarity in the nature of fluid or liquid minerals has an important bearing on the question of the right of the State to regulate oil and gas wells (Ohio Oil Co. vs. Indiana, supra) and also upon the construction and effect of leases and contracts for mining them, as will appear by cases hereafter cited on that subject. The right to such migratory and nomadic minerals has been quaintly likened by the courts to that in animals ferae naturae, which the proprietor of the land has the exclusive privilege of hunting and capturing on his own premises, but no claim upon them when they stray to the lands of another. Ohio Oil Co. vs. Indiana, supra.

But such ownership of the oil and gas, when conveyed separately by the owner of the soil to another, though under the form of a mining lease giving rights to prospect, develop and mine for a royalty, is not a mere license giving the grantee no interest in the minerals till mined and reduced to possession, but a grant to an interest in the land, and taxable by the State as such. Texas Co. vs. Daugherty, Sup. Ct., 176 S. W., 717; S. C. in Civ. App,. 160 S. W., 129.

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