J-0 11, 1949 :

Hon. ,J.

Y. Felkner OpinionNoo, V-842. Banking Conanisrloner Au&In, Texas Re: Eligibilityof the State Traemarorte not es.tl=u8teo~f'er
mm: H.I.,

Be&son i corporetionieauDoputj Sealking lag seallritlrr llndw CQ~SShXWP titiole 1524a(v.C.S.). Conritrwtloa

o$ a proposed trust dgrrsmmt,~.end epplioebll* ity of Artlola 696 (V4.S.). Deer sir:

mu hero rsquestod the reoonsldaretion of OpinionHo. V-483 by this office. Pour originalraquoat is res&hd a8 follour:

"The Sem liouaton

Ihiderwriters,

Incr OS Hou8ton, Texas la.8 dan*stlo serporatioh **hevlng** &am **granted a**  oherter **by** the Saorrt~ of State on July 3, 1947, with Sub-So&Ion 49 of Artlale 1302, Revised Civil sptutas or Tixe.8, &I its purpoas OhlaB Ui, bJ +irtUo of anid ~oWVZ%, it la **under** the gdnoral aupsmielon of this Bapertmentpn aaoordaaorwith the provia16~ of Artiols,1624a,Rerlaod Civil. Statutes of Tans.
Q@ld c¶tion now propores to lssue.end soil to the conoral puUo a Siftren-tmr Maturity undwwritor~ Bond sub oOt ta the proVlslon8 of Emotion 7 of rtlolb 2524ao,

Rsvised.CltllStetutas i of Teum, whhhprovldm for oelletorelieetlo*..,ti

La1 o&steadl~ bomPs,.akoter, cartiiioatsa;

daInntur~s~a@ @iabr **eblii** getionl$

8vla l.m

Trus by ~~0ur1t1.8of tlro reesmebls urket relue equeling et leest at l ll tinba tho faae value of suoh obllgetions,which amuritiis ahell ba pleood.’
.

.

**.** Hon. J. 88. Folkimr - Pees 2 (V-842)

**ln.t,he hands**  **of e**  **oorpOr0tiOn h0vi**  **f ’** **s3** trust powvrs opprovodby the IkanLrlny C rrloaer of Texas, as Trustee,under e **trust** egrosmoat or at the option of eny such oar tltin whloh sells in Texes-suchvbll$e I?-- loss

**es heretofora**  **referred** to, such aorpvretloki mey, upon applicetlonto end epprotelbrr the

fi?ii%a ccwl8sionor, deposit aoourlt%vr

8tatv Trvasursrof T&x&s m&r a trust e@sammnt la llou of auoh d-apelta with e **Truotev as**  set forth hsrelPabvva,

**Ns~bJeot** Cvrpvretlon hea Ouhrittod**for** the Coml~~Ionbr~a epprora& its tmut ipba- -0-y thb Wets 'Treeaurrr *a Timtea, tvgvtherrtit 0 speoiranof the bvnllfobligatloarhfall

It propo8va to abll. lo vaolvar'sa~4IfWmiwnta aad, in ooanwliian tkarvvlthtt&w fvllvwlngquestionserv l ubi mlt#d fvrm oplnivns

: "lo h ths torma end condkons vi thv t&M ~onturv vuch as to rerreat'tho approtelthmvof by tha B Cvmlaaivner?

: ., "2* wouu the St&t; Treeeurer., 7 tlr- ' tam OS his crfflalal oepeoity,**bo** &l&1 I.8 to rot u **T&uatU.p*ll)r** the tirma vi th6

l nbdttee ttiut

Ladv h-tura?

"30 Ia the **proposed bond**  **oo~,idmM to**  be ln..la$el

Svma ed doa? It oou WOhim tko claaa vi inatoracl&#

### or &I. at&ma atvatloaod $.n JtitivW'?vi Artlok 1241; 

### Il~~Sao~ 4 civil 8tatMva vi 2 x08? .If so, .wvald tha pr+la,ivaa,bf'A&lo(l6 BM,.hvvlaed Civil **St0tutcis of**  **TeXU, ala0**  **applft ”** 

Yvu have aLao raqmat W up~a mom&d- *r&ion ths bond 

### rvferrsd tv 

### so 1)eld **by the**  **8U** Svuitam~ndvrwr%tvra, lgw,;lo **m@.P** "g ovlletorelit*tlvn, m o vf obli~etlcm

.



### a6 to the eromtr far whlo oaoh bond la TV bv ool;l.rtsrgl~aed~

FOP th0 p\rrpoae of thlr B#,$.@ba, queatlona (1) end (2) am QlaaurseQ0ad enawanwe th@thvr,

Tbo psrtimant rovlaionaof 8vatilon 7 of &t-l010 1624e,,Varnom~a Clri E ntetutra,

l pv as ~ollvwarHon. J. I(. Falkner - Page 3 (V-842)

"All bonds, notes, aortifioetes,debonturas, or athe+ vbllgetlons sold In Texas by my corporation

effeated by a provlsZonof this &et shall **bd** scoured by securitiesof' the reasonable

market value, equalingat least et ell tiaeo the Sam value of such bonds, notes, oortlSlaetea, debenturesor other obllgetlons. IS such aorporatlon sells in Texas, bonds, notes, osrtlSloetss,dsbentures,.,or other obligations

upon which it receives lnstallaent

paJluntsp auoh bondag noteso cei%lTloates,deb@ntuIWs

### ana other obligations shallbe mowed at all tlmea **by seourltles**  having **the** reasonablemarket value equal to the wlthdi5awLl

or oauosllatlouvalue of such obligatlcmsoutstsndiag,,Said ssourltles shall be.&laCmd.Luthe h@ds of a eorporatlon brii~lng.trust

powera approved by the Banking Conpnlssiotaer

of Texas.as Trustes under e trust agree&&t, the terms of which shall be opproved In writIn&-.hy.

tbe...Banklngnp~ssloaervi Taxes, or et the option .oS any lrach

oorporatlon wh.&h sells In Texea* bonds, notes, oertifioetes,debentures,or other obligations upon which it receives instel&f@ pag*lents, such corporation

may upon appllaat$otl t@,.and approvalby, the Banking **C~asiotier** of Texas deposit-securitiax having a reas&abIe market value equal to the withdrawalor cenoellatlonvalue of such obligationsoutstanding with the State Treasurer of Texas in lieu of such depositir

With e Trustee as set forth heroinabove,o Q on (Enlphesis supplied,.)

The underwriter*s

bond issued by the ~QPI HoustonUnderwriters,Inc., la what ia kuoWn as a asingle-payment

"type of bond or obligation iu that the entire considerationfor the sale thereof is payeble at the time of its delivery,'end therefore is not the tVpe of bond referredto in Sac, 7 upon which the Issuer reoelves a considerationlln installmentpaylllenta+"

Under the pro&Ions of Section **? ‘** **ab&** quoted It is mandator

g that the collateral securing the UnderwritersBonds be placed In the hauds of a corporation having trust powers approved by the Banking Commissloner of Texas as Trustee under a trust agreemesit, the tams of which shall be ep~reved in wrltlngby the Banking c~ssloner of Texas, end the State Treasurer in

:Non 3’.!:. F!nI.knur

_ I’afsQ

4 (V-842)

his Sficlal aepacitywould not **be** eligible to aot **as** Truetee, If tbo.Und4rwritsrs~Bon~s in qu4sti4zl VW4 #old upon tho’installmont @RA, tlieA

at tb4 4ptiCm of the 3an1

&lUSt7OA Fnd4I'Ur~tOlW, IIIO., .tb4 d4pet ot’ the collitsra3.

aeour~ti4s could be.madswith t”b,@ats Treaaur4.r

in the:mannerand form provided @r Jjsbtlan .7, ,b@ since the Underwriters,Bonds in questionare not being sold upoAth ins -~%3ing14-paym6nCn

plan, it is tloh.ha irW;...~yugt.~powrs, ap 'miaglich ~P'tii:d:'~iigt44 bc *g. @pp dltfom W :t+ tjlpst .$ndelItur tcate@~:Uptiti the ii~@+d2.l~y 0

act.as Trustee, $0 no+ WtWd Odmiesimaer 29 ary t;heref

.a14Hon. J. M. FaUmr - Page 6 (V-842)

Houston Undorwritore,Inc., shrll be swmrod by **444w** itiee of th4 r4asenablemarl& valme equal* et 14ast at all **timoa** the face value of suah **bon&--or** other **ob** lIRetI4As. Under the expresspmwiaions of th4,bond **ia** qu4stioA, the isstur, 9u EoulltOA mdorwrit4rs, IAN., is obligatsdto pay to the bondholdsrflft44n ywrs from the date of the bond the mm of )l,OOO.OO **or** mw4, whleh shall oonsist of **(A)** $750.OO'Inoash; (B) 25 fully ~Id~AOA-as8lOstiablO shar.8 Of the capital stock of Sam Houston Undmrw&itetis, IPC., valuod,$orthe purpode of the bond at #2SO.O0; and
as may acoru4 to the bondho i (C) such annual bwuwoa

iOASi of t&.bond. d4r undrr the other proviaThe oompanj further obll 8atra 1tsel.f wIthIn thirty day8 

### rrata tha data.of.th.4 **bon** tq dellvor to the bondholderthe 26 rharws of staak r4farMd to 'iA (B) aboro,'md **further** obllgatos itself at my t3.m after the 4~d 0r ths first y4rr,frn the'date oi the bond
or at the **end** of an) suoooedlng year thdroefterc)

to par to tha **bondholdar** the 4ash aurrendm valu4 themof aa s4t'fOrth IA the table On page 3 of the bond, both of uhich obligationsuw dlreot obligationsof th4 iaauor.

**‘ fh4**  issuer has'& direct obligation to perfomi all of the oond~tia~~Imp4sod upon It adsr the terms of the %tdoiwrltem%Bonds aAd upon Its fail- to,pez'fm
e of swh obl&b9ilmse..%ha .Lammr.wouldb4 subject t0
a judgment ior the ~poriflo **performem** o OS suakt obllgw tione Or in.

lima theroof$ &Ad'-iA the OrOAt of its in+bility to perlorm Its obliglition, to,dolirortlu 8herW of stook **in** qAaatirn,' it **roald ba**  lIabl4 ir &nag@8 **for** the noAperf4rmaA4 of such abll'grtI4A..

**Howe94r,** that prrt of ths UAdOrWrit4rsBond (B) which provides for the twenty-five (25) fully paid nanars4ssableahares of capital stook of th4 aomp hmein valued at Two Hum&?ed Fifty Dollars ($260*OO Is not aA "other (diMat.)4buatioA rlthin thg.neaning of Sootion 7, Art1414 1524a, which would require Its oollatoralisatlon therounder. The **toti** "other obligationen as ue4d IA Artlolo 1624a means direct 4blIgatiOAsof the lesu~$ ay*bX4 in fixed a8 bonds, notea, &4aw.fim L b 

### *ad ,dclbentulwr. 8.4 **Oman** corpI v. lau.

BOO% CO.~,

177 ~18, 49, 187 IT& 606 Tmd,

It Is th4I'Of&We

the OpiAiOA of this offi, that

. . the bond in question Is such a **bond** or other obligatloa of the Sam Houston Undsruritera,Inc., whloh Is roqulred to be collaterallse~ **under** the provisionsof SOOtiOA'7~ &-?ticle

1524a, V.C.S.; and the faglure to col3.at4ral~t4 tlloao bonds by~tha issum b4forr offer- them for dale
or selling then would subj.4at tti **comppny** to tha patiOItHon. J.. M. Palkner - rage 6 (V-642)

PreeoribedIn tho la& paragraphof: motion 7, whloh would bo tho forfeitureof Its ohartor and a receivership **at** the suit **of** the **Attorney** Generalbroughtat iy;;;geet of the Bankl~ CommIssloner of the State *

The UndorwrltorrBond oontaine the tollowing provialonat the bettor of page 1:

**“ An**  amount oqud to **‘ or**  In ucoin of the GuaranteedCash Surrender Voluo. of this Bond shall be investedtn United Stat08 GovernmentBonds, First.xortgago Loans on real estate situatedin the Stat0 ol Toxae .and/orother eeourltlas whioh ar*'qualifIed inverrtmont

for the Capital Stoats, Surplus and Ramlive funds of an Old Line Legal ReBOFVO Life InsuranceCompan~.aud$bo.sa$d aeourltlssshallbe depositedin Trust with the Treasurerof the State af bxea.as ro-. &r~dkgT~sBj~ Cotiaslollei' of tho
or the bonoflt of tho Bondholderso The sosurltlos heroin referridto shall at all times have **a** roraonablo arrket value equal to the maratood ea@h value of this rmd.al.1

other Binida

of this clam outstand~o"

thus c&ljIng~wIth tho pFovIsIonof so&ion 7 last above quotod requiringa **doflnlto** dosorlptlon of tho oharaotorof aollatoralroourlngtho pryaont of mob .'obligation.

The proposodunderwritor*n: bond ir In legal form and OQOI uithin the class of Iastrmnonta or obllo gatlonsmentioned In Seetlon 7 of Article 1524a, R.C.S, of Texaco,

**and** rhou&d be oollatqralicad in aooordanco with thei

provlsto~baf Saetlon 7 for oollat6ralIzation
of a ueIngle~pa~tn bond or othor obligation. Sin00 the underwrltercr

Bond la #old upon the "rlwl~- plan and not upon the *partIrbpayMnt or Inrt plan," tho provlaionaOS AFtIolo 696, Tit10 21, Revised ClvIl.Statutoa,

arr not applicable.

. Sinoo it Is tho oplnlonof this ofilcw that the Undorwrltsra

Bond rororrod to 1s the trpe of ablI#atlon roquirlng ool.latoralleatIon as a *rlngle-payment bond or obligation, you requort our opinionab td tho amount for which said boqd I* to be oollatorallred.r

Hon. J. Y. Falkn9r - ?ago 7 (V-&i2)

.

while the free of thr. bon@ for tho paymotit

to tha **bondhol0m b$**  trlmarll~ call8 **hd irruer**  **of** the
~sumof $l,OOO.OO or **awe** at the explratlozi of 15 year8 from date theroof,qevertholescl, upon the delivery to tho.boudholderof.

the 25 8,bnrelr

of th9 capital stock '.ofthe company at tb8 rgrood valuation 9f $260.00, that part of the obllgrtlonof the 188~6~ ha9 been dlsoharged, whIoh leaves the obllgatlonof th9 %rruer In full force and effeot to py &t **mhturitp** ,#ta the 8um of @O.OO In cash, the Guaranteedl&tii&y Value,' plu8 any bonuses rooeIre&undop olauso fc),which are of no fixed amount and may posalblybe of no amount at all* The tcras of the bond a180 0411 **for** the pawest to the bondho&iier

of o9rtaj.n

&umo **lieted under**  the guaranteed ohah #mrrenderValw 

### l y9ntuaUt1.r~ QlLphgS 3 6f the bond upon oortaln

mnoad-th9 n$ao6 yalu& of $ho Unde~Itq,$a Bond which nuet be SrpOrbd #t all tIaies b reasonablemark9t orLu9 theroef U$ $$ qMuFltlo8 of the

9 e@,+@; .9&dtho laankCa8nel88io~ of Texas should rrqU%r9 +$%a% surk under9r tbr*s bond b9 ool~@taralIeed by ti9 (196aitwith tho Trurtee of ruoh reo~itlos a8 may W9 r;j$$i+med by hIa which **have** a **roaecnrble qll?ket**  valuo oquiNkot tr t&at U(cunt,

overruled. opinion Ho. V-483, approvd

!i!Qlw The Stbto Troasuror of Poxha I8 not oll- &lb19 to act a9 Truatloe Sor a odn;r)rorat.lon ire s~bondu or ot&or obligaticum'undm tll9 provlalens 6f brt. lS24r, **V,U.S.,** Wbloh ara.

.Eon. J. H, Falknor - Pa&O 8 (v-842)

cm :wb c, Ke Rlahard8. A88htut