Han; Walter C. Woodward Opinion No. 

### -0-1788

Chairman of theaboard .Rer Is Article 1302a of the Hon. R.G. Waters “Title Guaranty Law” applicable to Casualty Ins. Commissioner anextension agreement with regard Board of Insurance Com- to apolicy which had been issued missioners before the enactment of the said Austin, Texas “Title Guaranty Act”

. Dear Sirs: Your letter requesting an opinion has been received and considered by this department.

Asanecessary preliminary to a correct understanding of the question presented we quote’ as follows from your request:

11* * *

“The’~Pioneer Abstract and Guarantee Title Company is a corporation organized in’

### 1919under Sec. 57 of Article 1302, Revised Civil Statutes, 1925, and has neverbeen authorized to write title insurance under Article 1302a. Prior to the passage of the title act, mortgagee policies were issued containing the following provision:

“I* * * Payment, discharge or satisfaction of the said indebtedness secured by the said instruments, except by foreclosure or the extension of said indebtedness or any part thereof without the consent of the company shall fully terminate, avoid and annul this policy and all liability of the company hereunder. ’ IWerequest your opinion on the following questions:

“1. Is the Pioneer Abstract and Guarantee Title Company acting in violation of Article 1302a, Section 

### 3,in offering to extend policy Re:2871, issued prior to the passage of the title act to cover refinancing of loan, (a) if period of extension does not exceed the original maturity of the pOliCyj (b) if policy is extended for period extending beyond the original maturity date?
"2. If the Pioneer Abstract and Guarantee Title Company is within its rights.in extending policy to cover refinancing, is company acting in violation of Section 3,Hon. Walter C.-Woodward Ron. R. G. Waters, page 2 (O-1788)

Article 1302a in charging afee? 

### “3. Is it required that fee for such extension be calculated on schedule of premiums promulgated by the Board of Insurance Commissioners nowin effect? 

### “4. Does the Board of Insurance Commissioners have authority under Section 24, Article 1302a, to prohibit such practice, andwhat procedure should be followed?”

. The kct under consideration is commonly known as the Texas “Title Guaranty Law”, being Chaptes 40, p. 77, Acts 1929, Forty-first Legislature (R.S.) and codified as Article .1302a in Vernon’s tinotated Revised- Civil Statutes. The Act, after making provision for incorporation under the terms thereof, provides, insofar as applicable here, in Section 3as follows:

“Corporations so formed as well as foreign Corporations.and those created under Subdivision 57, aticle 1302 of the Revised Statutes of 1925, or under Chapter 

### 18,Title 

### 78,Revised Statutes of 1925, or any other law insofar as the business of either maybe atitle insurance business! shall ooerate in Texas under the control and supervision andunder such uniform rules andregulations as to forms of policies and underwriting contracts and premiums therefor, as maybe from time to time prescribed by the Board of Insurance Commissioners of Texas; andnoTexas or foreign corporation whether incorporated under this Act or any other law of the State of Texas shall be permitted to issue any title policy or mortgage certificate or underwriting contract on Texas property other than under this Act and under such rules and regulations. Nopolicy of title insurance or guarantee of any character onTexas titles shall be issued or valid unless written by acorporation complying with all provisions of and authorized or qualified under this Act. ***

“The Board of Insuranck~~Commissioners shall have the right- and it shall be its duty to fix andpromulgate the rates to be charged by corporations created or operating hereunder for premiums on policies or certificates and underwriting contracts. ***II The pertinent port& of Section 20 of said Act is as follows:

“If any corporation. domestic or foreign, while holding a-certificate of authority to transact business in this State, shall fail or refuse to comply with any of the provisions or requirements of this Act, the Board ofHon. Walter C. Woodward

Hon. R. G. Waters, page 3 (O-1788)

Insurance Commissioners, upon ascertaining this fact, shall notify such company.by actual notice in writing delivered to an executive officer of such company, of his intention to revoke Its certificate of authority to transact business in this State at the expiration of thirty days af-;er the mailing of such registered letter, or the date upon whi,ch such actual notice is served. If such provisions or requirements are not fully complied with upon the expiration of said thirty’days, it shall begthenduty of said Board to revoke the certificate of authority of such com*)any. ***‘I Further, Section 24 of the Act provides that: liThe terms and provisions of this kct are cond:tions upon which corporations doingthe business provided fcr herein maycontinue to exist, andfailure to comply with any of them or aviolation of any of the terms of this Act shall be proper cause for revocation of the permit and forfeiture of charter of a domestic corporation or the permit of aforeign corporation.tl The rules andregulations announced by thi.s Act became effective onJune 1, 

### 1931.

Wealso consider the ~follow~ing constitutional and statutory provisions germane to a proper consideration of your question. Art.‘l2, Sec. 1. “Noprivate corporations shsll be created except by general laws.”

,Art. 12, section 2. “General laws shall be enacted providing forthe creation of private corporations, and shall therein provide fully for the ad.equate protection of the public, and of the individual stockholders.”

Asnecessary to his opinion, we also quote Article 1318, 

### R.C.S.,1925:

“1111charters or amendments to charters under the provisions of this chapter, shall be subject to the power of the Legislature to alter, reform or amendthesame.” The rule of law applicable to the situation nowconfronting us,. in our opinion, 477, section 

### 5as follows: is correctly stated in 17 R.C.L. 476,

n

....Following -the general principle that alicense is not a-contract, it is clear that it does not in itself create zanyvested right, or permanent right, andthat free latitude is reserved by’the Legislature to impose neworHon. Walter C. Woodward

Hon. R. G. Waters, page 4 (O-1788)

additional burdens on the licensee, OCR to alter the licerise, or to revoke and annul it. Andthis is the general rule

....regardless of whether the term for which the license was given has expired. .~..I’ To the sameeffect, see also Daniel v. Tyrrell &Garth Investment Company, 127 Tex. 213, 

### 93SW2nd 372, Jefferson County Title Guaranty Co. v. Tarver, 119 Tex. 410 &Loan Association 29 SW2nd 316, Shawv. Lone Star Bldg. 

### 123Tex. 

### 373 71 SW2nd 

### 863,Lloyds of Texas v. Bobbitt (6.C.A.) 40 SW&d 897. The Supreme Court of Texas speaking in the case of Daniel v. Tyrrell &Garth Investment Company, supra, which involved the construction of .Article 1302a (supra) said:

“Every corporate charter issued by this State is issued with the power reserved in the state to ‘alter, reform or amend I it. Citing Article 

### 1318,supra,~and commenting that the power reserved in the state to ‘alter, reform or amend’ charters cannot be contracted awayby the corporation.” Continuing with its decision, the court said:

“It is contended by (the plaintiff) that the rules and regulations promulgated by the board, by authority of alaw which became effective after the contract between it andthe title companywas entered into, cannot be applied so as to affect such previous contract. Weoverrule this contention. The police power of the state to regulate the business of title insurance, as to forms of contracts and rates, cannot be contracted awayby the title company.ll Citing Shawv. Lone Star Bldg. &Loan Association, 123 Tex, 

### 373,71 SW2nd 

### 863. (Parenthetical insertion ours). Anextension of an interest bearing agreement is avalid contract. tion). .See 1Williston on Contracts, Section 122 (Revised EdiAlso, the case of Benson v. Phipps, 

### 87Texas 

### 578,by Gaines, C. J.

Here, you are respectfully advised that under the authorities cited above, it is our’opinion, that all private corporations, chartered by this State, assuming to write title insurance must comply with the provisions of Article 1302a, V.A.C.S. In entering into all title insurance contracts, a corporation must take cognizance of, and act according to, all those rules and regulations which are, and maybe, prescribed by the Board of Insurance Commissioners pursuant to that authority vested in them by the terms of the Act. Such compliance is in the nature of a condition precedent to the validity of any title insurance agreementwhich said corporation might enter into. This is applicableHon. Walter C. wooaward

Hon. R. G. Waters. oage 5 

### (O-1788)

to all contracts, pertaining to title insurance, bearing a date subsequent to that date which marked the effectiveness of the “Title Guaranty Act”

. The mere fact that acontract. is an extension agreement will not afford grounds for any possible exemption from the plain and unambiguous provisions of that Act. Webelieve that the answers to your Nos. 1, 2 and 

### 3 questions are apparent from the foregoing and require no further elucidation. In reply to your fourth question, we direct your attention to sections 20 and

### 24of Article 1302a, which, for your convenience, are set out herein,

Trusting that the foregoing satisfactorily answers your questions, we remain Yours very truly 4TTORNEY

GENERAL

OFTEXAS By /s/ Wm.J. Fanning Wm.J. Fanning, Assistant By/s/ GrundyWiiliams Grundy Williams GW: AW:wb APPROVED

FEB2, 

### 1940 /s/ Gerald C. Mann ATTORNEY

GEZUR ALOFTEXAS APPROVED:;zNIO$$OM$TEE BY: 9