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September 7, 1972
Honorable Robert A. Perry
State Representative, 45th District
1154 No. 92nd Street
Seattle, Washington 98103
Cite as: AGLO 1972 No. 71 (not official)
This is written in response to your recent letter requesting our opinion on the following question:
"In your opinion, are the provisions of RCW 29.79.490 (6) applicable to a Washington corporation with its principal office in this state, if the sole stockholder of the corporation is another corporation having its principal place of business here, and qualified to do business here, but organized in a state other than Washington and with a majority of its stockholders residents of states other than Washington?"
We answer this question in the negative.
RCW 29.79.490 (6) is one of several subsections of a 1913 statute which declares it to be a gross misdemeanor for a person to engage in certain described activities in connection with electoral campaigns involving state‑wide initiative or referendum measures. See, § 32, chapter 138, Laws of 1913, reenacted some seven years ago as § 29.79.490 (6), chapter 9, Laws of 1965, and implementing the provisions of Article II, § 1 (Amendment 7) of our state Constitution relating to such measures. This particular subsection applies to any person who:
"Receives, handles, distributes, pays out or gives away, directly or indirectly, money or any other thing of value contributed by or received from any person, firm, association, or corporation whose residence [[Orig. Op. Page 2]] or principal office is, or the majority of whose members or stockholders have their residence outside, the state of Washington, for any service rendered for the purpose of aiding in procuring signatures upon any initiative or referendum petition or for the purpose of aiding in the adoption or rejection of any initiative or referendum measure." (Emphasis supplied.)
In considering your question we will assume the applicability of this statute to the measure or measures to be financially supported by the subject corporation. We note, however, that among the reasons for your request is the reported interest of this corporation in aiding the passage at the November 7, 1972 general election of Referendum Bills 26-30, commonly referred to as the "Washington Futures" referenda. These measures, notably, are not truly referendum measures under the 7th Amendment at all but, rather, are laws imposing state indebtedness through the issuance of general obligation bonds under Article VIII, § 3 of the original state Constitution. See, opinion dated May 11, 1965, copy enclosed, explaining this distinction in some detail. In our judgment, based upon the scope and content of the 1913 act in which RCW 29.79.490 originated, this statute is only applicable to campaigns involving state‑wide initiative or referendum measures which derive from the 7th Amendment and, hence, has no bearing upon corporate financial aid for, or against, laws such as these. See, in particular, the title to chapter 138, Laws of 1913, which reads as follows:
"AN ACT to facilitate the operation of the provisions of section 1 of article II of the constitution relating to the initiative and referendum, to prevent fraud, providing penalties for violations thereof, and declaring that this act shall take effect immediately."
For a clear understanding of the precise thrust of RCW 29.79.490 (6), supra, we believe it well to break it down into the following three component parts:
A person is guilty of a violation of the statute if he ‑ (1) receives, handles, distributes, pays out or gives away, directly or indirectly, any money or any other thing of value ‑
(2) which is contributed by or received from any person, firm, association, or corporation whose residence or principal office is, or the majority of whose members [[Orig. Op. Page 3]] or stockholders have their residence outside, the state of Washington ‑
(3) in exchange for any service rendered for the purpose of aiding in procuring signatures upon any initiative or referendum petition or for the purpose of aiding in the adoption or rejection of any initiative or referendum measure to which the statute applies.
The question you have asked us to consider requires an interpretation of the second of these three components. In AGO 1971 No. 6 [[to A. Ludlow Kramer, Secretary of State on February 2, 1971]], copy enclosed, we concluded that this provision is applicable to a corporation whose principal office is, or a majority of whose members or stockholders have their residence, outside the state of Washington, even though such corporation may possess a certificate of authority to transact business within the state of Washington under RCW 23A.32.020.1/ Accordingly, in the situation you have described the statute is applicable to the activities of the parent corporation because of the out-of-state residence of a majority of its stockholders ‑ notwithstanding that this corporation has its principal office in this state and is qualified to do business herein. In the case of the wholly owned subsidiary, however, a different question is presented.
Here we are also dealing with a corporation qualified to do business and having its principal office in this state ‑ but in this case, instead of being owned by nonresident stockholders the corporation is wholly owned by another corporation also possessing both of these attributes. Therefore, if this parent corporation can additionally be regarded as a "resident" of this state even though incorporated elsewhere and principally owned by out-of-state stockholders, the prohibition of the subject statute will be rendered inapplicable to the subsidiary's financial support of initiative or referendum measures.
The question of where a corporation "resides" is not often considered by the courts because, as suggested in AGO 1971 No. 6, supra, the concept of residence is [[Orig. Op. Page 4]] ordinarily related more to the status of natural persons rather than to corporations or other artificial entities. However, where corporate residence has been in issue before the courts, a general rule has evolved to the effect that ". . . a corporation's residence is at its principal place of business. . . ." See, 13 Am.Jur., Corporations, § 148, as cited in AGO 1971 No. 6 at page 5; also, 19 Am.Jur. 2d, Corporations, §§ 160 and 1459, which enunciates this same general rule.
Although we have found no Washington cases addressed to this issue, we are sufficiently satisfied by the common acceptance of this approach in other states to rely upon it in answering your present question. Therefore, we may advise you that, in our opinion, the subsidiary corporation you have described is owned by a Washington resident (the parent corporation) ‑ in addition to being principally officed and authorized to do business in this state ‑ and for this reason the prohibitions of RCW 29.79.460 (6), supra, are not applicable to this subsidiary corporation's activities.
We trust the foregoing will be of some assistance to you.
Very truly yours,
Philip H. Austin
Deputy Attorney General
*** FOOTNOTES ***
1/Reversing a previous opinion dated April 28, 1952, to former Secretary of State Earl Coe [[AGO 51-53-290]].