Hon. William A, Harrison Opinion No. WW-490 

State Board of Insurance 

10th and Brazes Street6 Re: Applicability of Texas BusiAustin, Texas ness Corporation Act or other 

general corporate laws to 

Dear Sir: insurance companies 

You have asked our opinion as to whether the Texas Business 

Corporation Act1 is applicable to insurance companies coming within 

the purview of Articles 2.18 and 3.69 of the Insurance Code or whether 

Title 32, V.C.S., is applicable or whether both are applicable. We 

assume that your question is directed to only those insurance companies 

that are corporations and this opinion Is so limited. 

Article 2.18 of the Insurance Code provides: 

"The laws governing corporations in general shall apply 

to and govern insurance companies incorporated in this State 

in so far as the same are not inconsistent wi:h any provision of this Code. None of the provisions of this Chapter 2 

shall apply to insurance companies organized or operating 

under the provisions of Chapter 3 or Chapter 11 of this Code, 

and Chapters 10, 12, 13, or 14 of this Code." 

Article 3.69 of the Insurance Code provides: 

"The laws governing corporations in general shall apply 

to and govern insurance companies organized or operating under this Chapter 3 in so far as same are not inconsistent 

with the provisions of this chapter." 

By letter supplementing the opinion request, you have furnished us with the factual situations upon which this request is based. 

For clarity and brevity, we have set out at length these situations 

in subsequent portions of the opinion captioned "application". 

Article 2.18 in its present form and Article 3.69 were enacted in 1955 as part of S.B. 12, Acts 54th Leg., R.S. 1955, ch. 363, 

p. 916. Article 3.69 is an entirely new legislation; however, Article 

1 

For brevity's sake the Texas Business Corporation Act will be abbreviated throughout this opinion as T.B.C.A. 
Eon. William A. garrison, page 2 (WW-490) 

2.18 contains substantially the same language it did in the 1951 Act 

codifying the insurance laws. The only change was the addition of the 

last sentence to Article 2.18. "Words used in the original Act will 

be presumed to be used in the same sense in the amendment." 82 C.J.S. 

899, Statutes, para. 384. Accordingly, the corporate law contemplated 

and referred to by Article 2.18 prior to the enactment of Senate Bill 

12 and the Business Corporation Act in 1955 must necessarily be the 

general corporate law as it existed prior to the enactment of the T.B. 

C.A .--i.e., Title 32, V.C.S. There is nothing in S.B. 12 to indicate 

that the language, lllaws governing corporations in general", as it appears in Article 3.69 was intended to refer to a body of law differing 

from that referred to in the identical language as it appears In Article 2.18 as amended by S.B. 12. Therefore, unless the enactment of 

the Business Corporation Act changes or modifies the situation, the 

body of corporate law referred to in Article 3.69 as well as Article 

2.18 must be the corporate law existing prior to the enactment of the 

Business Corporation Act. 

The Business Corporation Act does, however, modify the application of Article 2.18 and Article 3.69. 

While both the Business Corporation Act and S.B. 12 became 

effective on the same date--i.e., ninety days from adjournment by the 

Legislature, the legislative history is significant. The Business 

Corporation Act was finally passed on March 29, 1955, a day subsequent 

to the initial Senate passage of S.B. 12. The Business Corporation 

Act was signed by the Governor on April 15th while S.B. I.2 was first 

passed by the House on Way 4, 1955. Thus, at the time of the passage 

of S.B. 12 the Legislature knew of and had recently passed an Act which 

was to apply to domestic corporations organized or to foreign corporations being admitted into Texas after its effective date. Presumably, 

both statutes were actuated by the same legislative policy and intent. 

They pertain to the same subject matter insofar as Articles 2.18 and 

3.69 are concerned and are therefore in par1 materia. Accordingly, 

they should be construed together. 

Admittedly, there are limitations upon the applicability of 

the Business Corporation Act to insurance companies by the terms of 

the Act itself. Article 2.OlB (4) in effect prevents any insurance 

company from: 

(1) Adopting the Business Corporation Act. 

(2) Organizing under the Business Corporation Act. 

(3) Obtaining authority to transact business in this State 

in accordance with the procedure prescribed by the 

T.B.C.A. (This obviously has reference to foreign 

corporations.) 
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Hon. William A. Harrison, page 3 (WW-490) 

Article 2.Ol.B (4) does not preclude by its terms the applicability of the T.B.C.A. to insurance companies in those cases in which 

the Insurance Code is silent, but merely prevents an insurance company 

from doing one of the three acts mentioned. Since the Insurance Code 

provides methods for organization of domestic insurance companies, the 

provisions of the Insurance Code would control the procedure for organization of a domestic insurance company; and since under Articles 2.18 

and 3.69 of the Insurance Code the general corporate law controls only 

when "not inconsistent" with the Insurance Code, the provisions of Articles 2.18 and 3.69 preclude domestic insurance corporations from organizing under the general corporate law, whether that law is found 

in the Business Corporation Act or in Title 32, V.C.S. In like manner, 

foreign insurance companies obtain their certificate of authority to 

transact business in this State in accordance with the procedures set 

out in the Insurance Code rather than the procedures set out in the 

general corporate law. Thus, in the absence of the limitations (2) 

and (3) described above, a domestic corporation could not have organized under the Business Corporation Act nor could a foreign corporation 

obtain a certificate of authority to do business in this State under 

the Business Corporation Act. Therefore, these two (2) limitations 

are not determinative of the question asked. The effect of adopting 

the Business Corporation Act is that after the adoption, all provisions 

of the Business Corporation Act apply. (Article g.lkC (4), T.B.C.A.) 

Such a result when applied to an insurance company would clearly be 

wholly inconsistent with the regulatory scheme of the Insurance Code. 

Likewise, this limitation is not determinative of the question. 

Article 9.14A, T.B.C.A., provides: 

"Art. 9.14. To What Corporations This Act Applies; 

Procedure for Adoption of Act by Existing Corporations. 

"A. This Act does not apply to corporations organized for the purpose of operating banks, trust companies, 

building and loan associations or companies, insurance 

companies of every type or character that operate under 

insurance laws of this State and corporate attorneys in 

fact for reciprocal or interinsurancexchanges, railroad companies, cemetery companies, cooperatives or limited cooperative associations, labor unions, or abstract. 

and title insurance companies whose purposes are provided 

for and powers are prescribed by Chapter 9 of the Insurante Code of this State, nor to corporations organized 

for the purpose of operating nonprofit institutions, including but not limited to those devoted to charitable, 

benevolent, religious, patriotic, civic, cultural, missionary, educational, scientific, social, fraternal, 

athletic, or aesthetic purposes; provided, however, that 

if any of said excepted corporations are hereafter organized under special statutes which contain no provisions 
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Hon. William A. Rarrison, page 4 (WW-490) 

in regard to some of the matters provided for in this Act, 

or if such special etatutes specifically provide that the 

general laws for incorporation shall supplement the provisions of such statutes, then the provisions of this Act 

shall apply to the extent that they are not inconsistent 

with the provisions of such special statutes." (Emphasis 

added.) 

Observe that the corporations excepted by the general language 

set forth in Article g.lkA, T.B.C.A., from the general applicability 

of the Business Corporation Act may, nevertheless, have it supplement 

and apply to them under the following conditions: 

(1) When the corporation is "hereafter organized". 

(2) Under a special statute. 

(3) Containing 

A. No provisions in regard to some matters provided 

in the Business Corporation Act. 

B. Or containing a specific provision that the general laws for incorporationshall supplement provisions of such statute. 

Obviously, the insurance companies referred to in Articles 

2.18 and 3.69 meet the third condition. While the term "special" statute sometimes refers to acts which regulate the rights or interests 

of a particular or designated person or which relate to a particular 

person or thing of a class as distinguished from en act which applies 

uniformly throughout a class (39 Tex.Jur. 29, Stats., Sec. 12), it is 

also frequently applied to statutes such as the Insurance Code that 

pertain to a limited or subclass of persons or things or corporations. 

(This was the sense in which the term, special statute, was used in 

the following cases: Flowers v. Pecos River Company, 138 Tex. 18, 156 

S.W.2d 260 (lgkl), and cases therein cited, Townsend v. Terrell, 118 

Tex. 463, 16 S.W.2d 1063 (Comm.App. 1929, opinion adopted), Cole v. 

State, 106 Tex. 472, 170 S.W. 1036 (1941)) From the reading of the 

statute, it can be seen that all of the excepted corporations are governed by statutes that are "special" in the latter sense. Accordingly, 

the term "special" statute as used in Article 9.14, T.B.C.A., must be 

used in the same sense so that insurance companies organized after the 

effective date of the Business Corporation Act would be a corporation 

"hereafter organized under special statutes". 

It can therefore be concluded that insurance companies coming within the purview of Articles 2.18 and 3.69 of the Insurance Code 

and organized under the Insurance Code after the effective date of the 
Hon. William A. Harrison, page 5 (WW-490) 

Business Corporation Act also fall within the proviso to the general 

exception set forth in Article 9.14A, T.B.C.A.; thus, the Business 

Corporation Act when not inconsistent with the applicable portions of 

the Insurance Code governs such of the insurance companies contemplated 

by Articles 2.18 and 2.69 as are incorporated after the effective date 

of the Business Corporation Act. 

Does the Business Corporation Act in like manuer apply to' 

similar foreign insurance companies initially admitted to Texas after 

the effective date of the Business Corporation Act? 

Can a foreign insurance company admitted to do business in 

Texas come within the purview of Articles 2.18 or 3.69 of the Insurance 

Code? 

Article 21.43 of the Insurance Code states: 

"The provisions of this code are conditions upon which 

foreign insurance corporations shall be permitted to do 

business within this State, and any such foreign corporation engaged in issuing contracts or policies within this 

State shall be held to have assented thereto as a condition 

precedent to its right to engage in such business within 

this State." 

This article governs all foreign insurance companies except 

those excepted from the provisions of Chapter 21 by Article 21.41 of 

the Insurance Code. This article was originally enacted in 1903 as 

Article 3096ee (Acts 1903, p. 94). At that time it specified: 

"That the provisions of this act as well as all the 

terms and provisions of chaRters 1, 2, and 3 of Title 58 

of the Revised Civil Statutes of Texas are conditions upon which foreign insurance corporations shall be permitted 

to do business within this State, and any such foreign 

corporation engaged in issuing contracts for policies within this State shall be held to have assented thereto as a 

condition precedent to its right to engage in such business 

within this State." (Emphasis added.) 

At that time Title 58, Article 3046, provided: 

"The laws relating to and governing corporations in 

general shall apply to end govern insurance companies incorporated in this state insofar as the same are'not inconsistent with any provision of this code." 

Thus, the part of the 1903 Act which became Article 21.43 

of the Insurance Code made Article 3046, R.C.S. 1895, which became 
Hon. William A. Harrison, page 6 (WU-490) 

Y 

Article 2.18 of the Insurance Code, applicable to foreign insurance 

companies admitted to do business in Texas as well as to domestic insurance companies. Therefore, Article 2.18 would apply to foreign insurance companies admitted to do business in Texas except those organized or operating under Chapters 3, 10, 11, 12, 13, or 14 of the Insurance 

Code. Article 3.69 expresses the same basic legislative intent and effects the same result as Article 2.18, insofar as Chapter 3 insurance 

companies are concerned. This IS especially emphasized by the close 

identity of language of the two articles, both of which are enacted 

in 1955 as part of S.B. 12. Furthermore, Article 3.69 applies to "insurance companies organized or operating under this Chapter 3", By 

adding in Article 3.69 the term "operating", which does not appear in 

Article 2.18, the Legislature evidenced and emphasized its intent that 

a foreigo Chapter 3 insurance company would fall within the purview 

of Article 3.69 so that the general corporate laws would apply and govern when not inconsistent with the Insurance Code. 

Having concluded that foreign insurance companies can fall 

within the purview of Articles 2.18 and 3.69, it remains then to determine whether the Business Corporation Act applies to foreign as it 

does to domestic insurance corporations. We recognize that the proviso to the general exclusory language in Article g.lkA, T.B.C.A., uses 

the term "hereafter organized" and that at first blush this would seem 

to limit the proviso to domestic corporations. Nevertheless, there 

are other circumstances that dictate a different result. 

Basically, it is a question of whether a foreign insurance 

corporation is going to be treated in the same manner and subject to 

the same limitations and afforded the same rights and powers as a domestic insurance corporation similarly situated. There is nothing in 

Article 2.18 or Article 3.69 of the Insurance Code nor in S.B. 12 which 

would evidence a legislative intent or justify a construction which 

would result.in a different standard being applied to foreign corporations than domestic. Likewise, Article 21.43 of the Insurance Code 

evidences the legislative intent that foreign and domestic corporations 

should stand on the same footing and be governed by the same laws. 

Article 1532, V.C.S., and Article 8.02, T.B.C.A., likewise provide that 

foreign corporations which obtain a certificate of authority pursuant 

to either Article 1529, V.C.S., or Chapter 8, T.B.C.A., shall stand 

on the same footing and shall have the same rights and responsibilities 

as a domestic corporation. (Fundamentally, of course, the powers of 

a foreign corporation are further limited by their charter provisions 

and by the law of the jurisdiction in which they are incorporated. 

17 Fletcher Cyclopedia of Corporations, para. 8317, p. 80, et seq.) 

These statutes relate to the same subject matter and are in pari materia and should therefore be construed together. 82 C.J.S. 801, Stats., 

para. 366. Construing these statutes in that manner, a legislative 

intent is manifest that a forelm insurance corporation coming within 

the purview of Articles 2.18 or 3.69 of the Insurance Code is limited 
Hon. William A. Harrison, page 7 (WW-490) 

by the same body of laws as would a domestic insurance corporation 

similarly situated. Although a foreign corporation does not obtain its 

certificate of authority under Title 32, V.C.S., or under the Business 

Corporation Act so that it would fall squarely within the purview of 

Article 8.02, T.B.C.A., or Article 1532, V.C.S., there is at least one 

case which would effect the same result in the absence of any statute. 

In the opinion of Lytle v. Custead, 23 S.W. 45 (Tex.Civ.App. 1893), 

the Court stated: 

"Then there was no law regulating foreign corporations 

in Texas at the time the account was nade, and, such being 

the case, the Sierra Blanca Mining and Smelting Company being regularly incorporated under the laws of a sister state, 

the comity existing between sovereign states would place the 

corporation on an equal footing with those of this state." 

~Emphasis supplied.) 

Thus, as to such a foreigo corporation admitted to Texas after 

the effective date of the Business Corporation Act, the Business Corporation Act would supplement the Insurance Code provisions; and as to 

such a forei@ corporation admitted to Texas p&~r to the effective 

date of the Business Corporation Act, the general corporate laws found 

in Title 32, V.C.S., and elsewhere would supplement the Insurance Code. 

Thus far, we have not commented on the applicability of the 

Business Corporation Act to domestic insurance companies incorporated 

prior to and for-i@ insurance companies admitted prior to the effective date of the Business Corporation Act. As to these companies we 

conclude that the Business Corporation Act presently cannot and does 

not supplement the Insurance Code; accordingly, as to these companies 

at present, the general corporation statutes such as those set out in 

Title 32, V.C.S., apply and supplement the Insurance Code. As previously pointed out on page 2 of this opinion, Articles 2.18 and 3.69 

of the Insurance Code refer to the corporate law as found in Title 32, 

V.C.S., except insofar as the Business Corporation Act modifies that 

effect. Generally, Article g.lkA, T.B.C.A., excludes from application 

of the Business Corporation Act insurance companies subject to the provision above discussed. This proviso cannot apply to domestic insurance corporations organized p&or to the Business Corporation Act or 

to foreign insurance companies admitted to do business iti Texas prior 

to the Business Conoration Act, for the proviso only applies to corporations "hereafter organized". Furthermore, Article 9.15A, T.B.C.A., 

expressly states: '. . . e&sting coroorations shall continue to be 

governed by the laws heretofore applicable thereto." 

Because of the express prohibition of Article 2.OlB (k)(d) 

insurance companies cannot adopt the Texas Business Corporation Act. 

Thus, 'it does not now apply to domestic and foreign insurance companies 

which were operating in Texas on the effective date of the Business 

Corporation Act. 
Eon. William A. Earrison, page 8 (WW-490) 

"APPLICATIONS" 

In your supplementary letter you point out that the Insurance 

Code is silent as to problems presented in the following fact situations: 

I. (1) A domestic life insurance company organized under 

Chapter 3 of the Texas Insurance Code in 1940 which wishes to change 

its name and desires to file an application with the State Board of 

Insurance to reserve a particular name for a short period of time is 

not authorized to utilize the procedure set out. In Article 2.06A (Z), 

T.B.C.A., for the reason that the Business Corporation Act does not 

apply at present to such corporation so as to supplement the provisions 

of the Insurance Code. (2) A domestic stock life insurance company 

organized under Chapter 3 of the Texas Insurance Code in 1958 which 

wishes to change its name and desires to avail itself of the procedures 

set out in Article 2.06 of the T.B.C.A. may do so in order to reserve 

the proposed name. 

II. (1) The XYZ fire insurance company, a Chapter 6 fire 

and marine company organized in 1951, may voluntari~lydi~sol_v_e without 

obtaining unanimous consent of its stockholders by following the pro-- 

cedure set out in Title 33, V.C.S., and particularly that set out in 

Article 1387, V.C.S. The Business Corporation Act does not now apply 

to such a company. (2) A general casualty company organized under 

the provisions of Chapter 8 of the Insurance Code in 1957 may voluntarily dissolve without the unanimous consent of its stockholders in 

accordance with the procedure set out in Chapter 6 of the Business 

Corporation Act. 

III. (1) A foreign stock life insurance company which if 

it had a certificate of authority would be operating under the provisions of Chapter 3 of the Insurance Code and which desires to register 

its name as provided by Article 2.07, T.B.C.A., may do 80 by following 

the procedure6 in Articles 2.06 and 2.07 of the Business Corporation 

Act. (2) A foreign generalcasualty company which if it had a certificate of authority would be subject to Chapter 8 and Chapter 2 of 

the Insurance Code and which desires to regis its @me as provided 

by Article 2.07 of the Business Corporation Act may do so by following 

the procedures set out in Articles 2.06 and 2.07 of the Business Corporation Act. 

IV. (1) A foreign stock life insurance company having a 

certificate of authority snd.operating under the provisions of Chapter 

3 of the Insurance Code which desires to change its cove and 

to utilize the procedure established by Article 2.06, T.B.C.A.,and 

which was first admitted to do business in Texas in 1953 and has been 

continuously operating In this State since that time may not follow 

the procedures set out in the Business Corporation Act. The Business 

Corporation Act does not now apply to such a corporation. (2) A 
Eon. William A. Harrison, page 9 (UW-490) 

foreign fire and marine insurance company operating under the provisions 

of Chapter 6 which was first admitted to do business in Texas in 1948 

and which has been continuously doing business since that date In Texas 

cannot utilize the procedures set out in the Bus,iness Corporation Act 

inchanging its name. The Business Corporation Act does not now apply 

to such corporations. 

It goes without saying that the functions performed by the 

Secretary of State under the general corporate laws--the Business Corporation Act or the provisions of Title 32, V.C.S.,--would, as to lnsurance corporations, be performed by the Department of Insurance. 

The tenor of your next question is whether an insurance company must adopt the Texas Business Corporation Act before it is applicable to the company. As we have previously stated, an insurance company cannot adopt the Texas Business Corporation Act. The Business 

Corporation Act does, however, apply to certain insurance companies 

by virtue of the proviso to the general exceptions set out In Article 

9.1&A, T.B.C.A. Therefore, we answer your second question in the negative. 

Questions 3, 4, and 5 will not be answered since they are 

predicated upon our answering questions 1 and 2 in a different manner. 

Since title insurance companies are subject to a special Act 

(Acts 55th Leg., R.S. 1957, p. 753, ch. 311) with respect to the Texas 

Business Corporation Act, we are excluding them from the scope of this 

opinion. We are not passing upon the applicability of anything stated 

in this opinion to title insurance companies. 

We have not been asked whether the statutes set out Fn Title 

32 will continue to apply after five years from the effective date of 

the Business Corporation Act to foreip and domestic Insurance companies 

within the purview of Articles 2.18 and 3.69 of the Insurance Code which 

were incorporated under Texas laws or admitted to Texas prior to the 

effective date of the Business Corporation Act. The question 16 most 

difficult to resolve and the law is very unsettled and confusing. This 

is perhaps not a proper subject for an opinion since the Legislature 

'is yet to meet and the question could be resolved by the enactment of 

additional legislation which would become effective prior to September 

6, 1960 (five years from the effective date of T.B.C.A.). Accordingly, 

you are advised that this opinion does not pass on that question. 
Eon. William A. Harrison, page 10 (HW-490) 

The Texas Business Corporation Act Is the 

law "governing corporations in general" 

referred to in Articles 2.18 and 3.69 insofar as domestic Insurance corporations 

organized after and forelgu insurance corporations admitted to Texas after the effective date of the Busiuess Corporation 

Act provided that such insurance corporations came within the purview of Articles 

2.18 and 3.69 of the Insurance Code. This 

results although the insurance corporation 

has not "adopted" the Busiuess Corporation 

Act. As to all other insurance corporations falllug withiu the purview of Articles 2.18 and 3.69, the Business Corporation Act does not now apply and the "laws 

goveruFng corporati;;;;s in general" are 

those found in Title 32, V.C.S., and elsewhere other than in the Business Corporation Act. 

Very truly yours, 

WILL WILSON 

Attorney General of Texas 

By /dbd’d+N 

Wallace P. Finfrock 

Assistant 

hTF:lm 

APPROVED: 

OPINION COMMITTEE: 

Gee. P. Blackburn, Chairman 

Lawrence Jones 

Henry G. Braswell 

J. Milton Richardson 

REVIEWED FOR TBE ATTORNEY GENERAL 

BY: 

W. V. Geppert