VERNON'S TEXAS CIVIL STATUTES
CHAPTER 12. ISSUANCE OF STOCKS AND BONDS
Art. 6520. [6717] Regulating stocks, bonds, etc.
Among other things, the power and authority of issuing or executing
bonds, or other evidences of debt, and all kinds of stocks and
shares thereof, and the executions of liens and mortgages by
railroad corporations in this State are special privileges and
franchises, the right of supervision, regulation, restriction and
control of which has always been, is now, and shall continue to be
vested in the State government, to be exercised according to the
provisions of this and other laws.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6521. [6718] Incumbrance above value of road
No bonds or other indebtedness shall be increased or issued or
executed by any authority whatsoever, and secured by any lien or
mortgage on any railroad or part of railroad, or the franchises or
property appurtenant or belonging thereto, over the reasonable
value of said railroad property; provided, that in case of
emergency, on conclusive proof shown by the company to the
Commission that public interests or the preservation of the
property demand it, the Commission may permit said bonds, together
with the stock in the aggregate, to be executed to an amount not
more than fifty per cent over the value of said property.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6522. [6719] To ascertain values, etc.
The Commission shall ascertain, and in writing report to the
Secretary of State, the value of each railroad in this State,
including all its franchises, appurtenances and property. After it
shall have prepared said report the Commission shall give the
company interested ten days notice in writing by registered letter
to the president, treasurer or receiver of said railroad, to the
effect that said report is ready to be made, and that if it has any
objections thereto it must file them in writing within forty days
after said service, or the same will be so deposited with the
Secretary of State as correct. If the company files with said
Commission any objections to said report, the Commission shall duly
investigate and pass on same, and if it concludes that its report of
value is too low or too high, then it shall make the necessary
correction before filing it. If no objections are filed within the
time permitted, or being filed and on examination found without
merit, the Commission shall forthwith file its said report in the
office of the Secretary of State, where it shall remain as a public
record, as a limitation for the issuance of indebtedness under the
limitations prescribed in this title. To promote public interests
and protect private rights, the Commission, after due notice under
the rule herein prescribed, may correct its report of the value of
any railroad at any time it may deem proper.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6523. [6720] Effect of sale of road
Every judicial or other sale of any railroad in this State which
shall have the effect to discharge the property so sold from
liability in the hands of purchasers for claims for damages,
unsecured debts, or junior mortgages against such railroad company
so sold, shall have the effect to annul and cancel all claims of
every stockholder therein to any share in the stock of such
railroad; and it shall not be lawful for said purchasers, or for
any railroad company to operate said railroad, to issue any stock in
lieu of the old stock or to allow any compensation therefor in any
manner whatever, nor shall all or any part of the debt to satisfy
which such sale is made be continued or held as a claim or lien on
said property.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6524. [6721] Purchasers may issue bonds, etc.
The purchaser of said property who procures it clear of
incumbrance, or any company organized by his consent to operate
said railroad under and in pursuance of the laws of this State, may
issue stock and bonds in the proportion that he may deem advisable,
subject to the rules and limitations prescribed by law.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6525. [6722] Authority to issue bonds
Should any company or corporation authorized to construct, own or
operate a railroad in this State desire to issue bonds or other
indebtedness, to be secured by lien or other mortgage on its
franchises and property in advance of the completion of the said
railroad, it shall make application to and first procure the
consent of the Commission thereto. In said application, it shall
exhibit to the Commission its contract with the construction
company, if it have any, the profile of its completed road or part
of road, the evidence of its right of way, depot grounds, terminal
facilities, the extent and value of work done or in the process of
completion, the amount of property received, the amount of stock
subscribed and the amount paid in, and all other necessary facts
showing the value of the franchise and property proposed as
security for said contemplated debts. If on investigation, the
Commission is satisfied that the company is acting in good faith,
and that its contract with the construction company is reasonable
and fair to the public, then it shall authorize the execution of
said indebtedness and a lien to the extent necessary for the demands
of the work, at no time to be fifty per cent over the value of the
whole property and franchises. In executing said bonds, the
company shall comply with Article 6526, and have them registered as
required in Article 6527.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6526. [6723] Certificates of stock
Each railroad company now existing, or which shall hereafter be
organized, or which shall be re-organized under the laws of this
State, or which shall increase its stock under the laws of this
State, shall issue certificates to the subscribers to its said
stock under the following regulations: A majority of the board of
directors shall meet in person in this State, at the principal
office of such company, and shall cause to be made a list of the
subscribers to such stock, showing the number of shares subscribed
by each, the amount of stock represented by each share and the
amount actually paid, labor done or property received on each share
of stock, and shall cause to be affixed to each name on said list a
number, beginning with number one, or the next highest number of any
certificate previously issued. The president of the board, or
presiding officer of the meeting at which the issuing of such
certificates of stock is authorized, shall make a certificate
signed by him in person to said statement to the effect that the
same is correct, and that the amount of money paid, labor done and
property received as stated is correct. Such statement shall
thereupon be entered at large upon the minutes, and, after having
the seal of the company affixed thereto, shall be attested by the
secretary of the company, and deposited with the Commission, and by
it filed and preserved in its office. The secretary of the company
shall then be authorized to make out and deliver to each stockholder
in said list a certificate corresponding with said statement in
number, name, number of shares, amount of stock represented by each
share, and the amount of money or its equivalent paid upon each
share; which certificate shall be signed by the president of the
said railroad company, attested by the secretary, with the seal of
said company affixed. No railroad company shall increase its stock
unless all existing shares of stock shall have been paid in full, or
all unpaid shares of such stock have been sold out as forfeited
under the law. When the certificates to be issued are for increase
of stock, the statement herein required to be made by the board of
directors shall state that all existing shares of stock have been
paid in full, or that all shares not paid in full have been sold out
or forfeited under the law. In no event shall the stock exceed the
value of the railway property, and the correct aggregate amount of
stock so issued by each railway company shall be certified to and
registered in the office of the Secretary of State by or at the
instance of the Commission.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6527. [6724] Prerequisites
When any railroad company in this State desires to make, issue, and
sell any bonds, or evidences of debt, which are to become a lien on
its property, it shall comply with the laws of this State regulating
the same, and in addition thereto shall have said bonds prepared,
signed by the president of the company, and attested by the
secretary, with the seal of the company attached thereto. Each bond
shall be numbered, beginning with number one, or the next highest
number of any preceding bond issued by it, and continue
consecutively until all are numbered. The bonds shall be dated,
made payable at a time not exceeding thirty years from date and
shall bear interest not exceeding six per cent per annum. Said
bonds, when thus prepared, shall be presented to the Commission,
with a written statement, signed and sworn to by the president of
said company, showing the amount of the stock of said company and
the amount of outstanding bonds, if any, of said company. If said
bonds are such as are permitted under this law, and the Commission
shall be so satisfied, it shall approve said bonds, and shall issue
to the Secretary of State a direction to register said bonds,
specifying the numbers, dates, and amounts thereof. Said
Commission shall keep in its office a correct record of the bonds so
approved by it, giving the name of the company, the numbers, dates
of execution and maturity of the bonds, the amount and rate of
interest of each, and the date of approval. This provision shall
not apply to receiver's certificates where the amount does not
exceed one hundred thousand dollars.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6528. [6725] Registering bonds
When such bonds shall be presented to the Secretary of State with
said direction to register, he shall register said bonds by
entering a description thereof in a book to be kept for that
purpose, which shall show the date, number, amount, when due, the
rate of interest on each bond, and also the date when the same is
registered. The Secretary of State shall indorse on each bond,
under the state seal and his official signature, together with the
date thereof, as follows: "This bond is registered under the
direction of the Railroad Commission of Texas." Provided, however,
that at the direction of the Secretary of State the state seal may
be a facsimile seal in lieu of the manually impressed state seal and
his said signature may be his facsimile signature in lieu of his
manual signature. No bond or other evidence of debt, hereafter
issued by or under the authority of any person, firm, corporation,
court, or railroad company, whereby a lien is created on its
franchise or property situated in this State, shall be valid or have
any force until the same has been registered as required herein.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Amended by Acts 1953, 53rd Leg., p. 582, ch. 225, Sec. 1, eff. May
27, 1953; Acts 1993, 73rd Leg., ch. 300, Sec. 23, eff. Aug. 30,
1993.
Art. 6529. [6726] Forfeiture of charter
If any railroad company owning or operating a railroad in this State
shall issue or consent or cause to be issued any bonds or other
evidences of debt to be or become a lien on its railroad property so
owned or operated, or shall issue any stock not in accordance with
the provisions of this chapter, such action shall work a forfeiture
of its charter.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6530. [6727] Certificates, bonds, etc., void
Every certificate of stock in any railroad company, and every bond
and other evidence of debt operating as a lien upon the property of
such railroad company, which shall be made, issued or sold without
first complying with the provisions of this chapter shall be void.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6531. [6728] False statement
Each railroad director, president, secretary or other official, who
shall knowingly make any false statement upon which to secure the
registration of any bond or other evidence of debt as aforesaid, or
who shall by false statement knowingly made procure of the
Commission direction to the Secretary of State to register the
same, and which shall be by the Secretary of State registered, or
shall with the knowledge of such fraud negotiate, or cause to be
negotiated, any such bond or other security issued in violation of
this chapter, shall be liable to any creditor of such company for
the full amount of damages sustained by such wrongful conduct.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6532. [6729] State not liable
Nothing in this law, and no act done or performed under or in
connection with it shall be construed to make the State of Texas
liable to pay or guarantee, in any manner whatsoever, any
obligation, debt or claim executed or assumed under or by virtue of
its provisions.
Acts 1893, p. 56; G.L. vol. 10, p. 486.
Art. 6533. [6730] Construction of branch lines
Any corporation incorporated for the purpose of constructing,
owning, maintaining and operating a railroad under the laws of this
State, which has outstanding stocks and also outstanding bonds
secured by a mortgage lien upon its property, or by any other
character of lien, may amend its charter in the manner provided in
this title, and in accordance with the Constitution and laws of this
State, and may provide by such amendment for the making of any
extension or extensions, or branch line or lines that it may desire
to construct, and may issue stocks and bonds, or bonds, in an amount
equal to the reasonable value of such extension or extensions, or
such branch line or lines, and such terminal properties as it may
acquire, the same to be issued in accordance with the provisions of
this chapter. The Commission is hereby empowered to authorize the
execution and issuance of such stocks and bonds, or bonds, and in
determining the right to issue such stock and bonds, said
Commission shall not consider the amount of outstanding stock or
indebtedness, or bonds previously issued and secured by a lien upon
the property of such corporation theretofore constructed;
provided, that any existing mortgages or liens upon the property of
such corporation constructed or owned prior to the time of making
such amendment of its charter and to the construction of such
extension or extensions, or branch line or lines, or to the
acquiring of such terminal properties, shall not attach to or
become a lien upon the extension or extensions, branch line or
lines, or terminal properties constructed or acquired under such
amended charter. This article shall not be so construed as to in
any wise repeal or impair any other provision of this chapter or of
the existing laws of this State except in so far as the same may be
changed by the provisions of this article.
Acts 1901, p. 257.
Art. 6534. [6732] May issue for double tracks
Any railroad company chartered under the laws of this State,
whenever the Commission shall find it advisable to authorize it to
do so, may construct, own and operate an additional line of road
upon its right of way, together with all necessary sidings,
switches and turnouts, and may issue stock and bonds, or bonds, in
an amount equal to the reasonable cost of such improvements, the
same to be issued in accordance with the provisions of this chapter;
and the Commission may authorize the execution and issuance of such
stock and bonds, or bonds. In determining the right to issue such
stock and bonds, or bonds, the Commission shall not consider the
amount of outstanding stock, indebtedness or bonds previously
issued and secured by lien upon the property of such corporation
theretofore constructed.
Acts 1903, p. 131.
