**OFFICE OF** **THE ATTORNEY** **GENERAL OF**  **TEXAS AUSTIN** 

ilonorableho. 9. YoAdamr, Cordmdoner, Btate 

### Deprctment of Qanklng Auatfa, r62au
**Dear iire**  **WAdam**

**eve #ubjeot-matter** 

**ate** and Investors

.,domhiled In a 

### authorbed to do euumt to the prcrisiimJ 

### ot the **oorporatioas nod** by represeateootion with a

### recent examination authority ot oae regarding 

### the &fscretiooary

tho Comolimaionerin **coapeot to**  **a propomd**  auiculbpant **to** 

### a trta8t **agreePent** filed by Mtbjcct oorporatton rbloh 8enld permlt saidaorporatioa to Cnruivtl**Lnwrance** poliaiem in conneotivn with mortgage loan8 pledged as onll8teral 8fXurity and held br a 

### cocporaCetruetee ot this state, 

### containing
a loss payable olnuae lo favor oP **the htest**  **ore** 

### 8yabtoate**or its**  **asmlgafi. Our**  **lstter of** 

## 442

Bonorablo Jno. 4.UAdams - paga 2

dAte_JAnuary 13th vhlch 

### is attached touches upon tbe aubjeat mstter.

*We are also enclosing **two original**  lat

### ters reeeired SromYr. Edward Y. Burke, 

### Assistant to Qenaral Counsel for **aubjeet** aor

### puration, one dated 

### February18th aad another dated Yabruary 

### el8t,the latter suggesting **an** 

### altematlte plan vhich 

### embraaeaa oortit%aa

### tion as to ln8urMee ootorago 

### being ma%ntalaed in oouaeatioa with a giron loan.

*au should like adrioe 

### as to vbether or not tho Comvilaaionerin his dlaoretion aould Approve either on0 ot tho plaoe submitted by Yre burko.l 0 0.î

aection 7 at Article 1622a, Vernon's Civil Statutoa, **dealing** with loon and brokerage aompaaiee, insofar as pertinent, ia es tollova~

sAl1 boada, notes, **certiricates,** debentures, 

### or other ebligatlOn8 sold in Texas **by** any oorporation atteuted by a provision at this Aot ahall be secured 

### by aeouritiea ot the reaaonable market value, equaling 

### at least at all tfmea the 

### Saoe +alue a? auah **bonds,** 

### notes, cortiFioate8, debentures or othar ObligAtiOnSr It such oorporatian 88118 in 

### Texasbonds, notes, oertitieatea, debeot

### ures or other obligations upon vh%ah it re

### ooireahietallment poymollts,**auah**bonds, **notes,** oertiiioatea, debentures aud other **ob** ligations sOal **be** secured at all times **by ae**  auritioa hating thereasonable market value 

### equal to the withdrawal or Gvncellation value or suah obligations outstanding. Said **aecur** itlea shall be plaoed in tha hnnda ol a oorporation having trust power8 approved by the Jianking Commissioner of Tea88 as Trustee under **a trust**  **agreement,** the terma of which shall be approved in writing by the Banking **Commiasioaer** Of Texas, or at the option of any such oorpora**tioa** vhioh sells in 

### Texas **bonds,** 

### a&es, oer-

# .c- .

**nonorable Jao.**  

## a. haldame - page 3



### tltioatea, dobonturea **or** Other obligations upon vhlch it raaeirea lnatallment **payments,** such corporation siayupon application to, aod opprotal **by,** theBaoking 

### Cewdasioner et 

### Texasdepoait aeauritiea having a

### reaaon

### able**market** value aqua1 to thewithdrawal **or** aanccllation ralua of such obllgatioaa outataodlog with **the** State 

### Treamurer ot 

### Toxaain lieu ot suchdeposits 

### vitb a **Trua** 

### teo as sot **Sorth** breinoboro, proridad that, la the waut suoh dopcait 

### islrda with the 

### StateTrwsurc 

### ofTaxaain lieu ot arch trustee: (1) Such **corperatloa** shall tile a eertitied **atatummt** 

### of reserve liability a& detailad **list ot**  

### l 

### eouritiea w depedted, aai-aanuall~ vitb tha BanJUq Comdaa**loner** at Tcxas, **vbiob** OertltLcation ahall be vu&da

### by

### aCwtitiod public 

### Aaoountant, who shall be approved 87 

### and **be** aatisfrotovy to the Bonkiag Ccmiaaioncr. 

### Thecorporation shall pay a **tea** ot **Oiitem** ($lS.OD) Dollars 

### for filing 

### esch tmah 

### statement. (2) Said se

### curities ahall **be**depeaitcd with the State 

### Treasurer uuder a trust agreement, the 

### terms ot **which** shall be approred **by** the Panking Cow&s8ionar .”

~‘JWieflystated, the plans submitted by counsel Par theparticular companies imolved 

### Are aa follevar

1. Tha acapany will **furnish** the **dapoaltarr** with a oortitioata 

### asfollovat

“Loan uo. uama - @This 

### is to certlry that adequate tire insuraoca protection in being maintained **in** connection with the abora 

### loan,and aaid ioauranoa i

### abeing hold by the Investors 

### Syndioate of hioneapolis, Minnesota.*

2. Ao 

### amndment to the trust agreement deleting the raqu&rcmcnt tfith**reapeOt to**  the furniahin~ of the **AS signments** with the pollcios **And** inserting **n requirement**  **to**

## 444

**Llenorable Jno,**  **Q+**

### UAdsmS **-** page 4

the sff'eatthrt the **0ompany** furtish 

### aoertiricate 

### similar to therorm quoted above.

7Jmre 18 

### a broad **diooretion** lodged in 

### the Banking Commissioner In 

### Sbotion 7 **above quoted** 

### with **respect to**  the moaaribies 

### to **be**plsdged by **a** loan ahd **brokerage comp~.**  rhat diror%tion, however, is not 

### an **arbitrary one,**  **but is**  that dimarstion that should **be** axeraised 

### by ah szsoutite or sdmihistratire orflasr charged ritb the duty or approtiag such 

### seourftissas aollatsral 

### to the companJ*s 

### outstandingobligation8 to thepublio. me **statute rqulres**  **such** 

### seourltiea to be sof the 

### reasonable market value, aqua1 at Isart St 811 times **the faa@**  value ot suchbonds, notes, oertiiieates, 

### bebfintures, or other QbligStiOllS*,where mah obllgationa. hare barn sold and paid 

### tar, and 

### in asses uhere sueb 

### obligations hark been sold oninstallmeat **payanents** *by securities having 

### the reasonable market value equal to thewithdrawal or asnaellatioa value of **auob**obligations **outstanding.*** **The etatuts**  thus makesthe reasonable market 

### value OF the 

### accurfties deposited the measure of **8aaurities** required or tba iaauiag and depoalting aorporations. What thatreusnnable **market**value is, has be4n faotu8lly uubmittcd to the detarminotlon of th6 l+ankingComrsissionarfor hi8 oPfioia1 approval.
Nor, the plans proposed by the particular ooupanies under oonaideration oontmplate tbQ doposit of aotas 

### secured by aattgage or other lien upon improved real estate, which ubwaotsr of instruments undoubtsdly could **be** ell~lbla and sdequate under tbc 

### test of reasonabl6 **market** value of **nuah note**  **and ifenD**  **lut** nhsro, 

### as is usually the sass, the value OPthe note is materially affeoted by the value of the 

### auildiags uponthe lsnd mortgsgsd, naosmsaril~ 

### auinsuranoe **pollay** in Tator of **tbo** holder of such paper rould be **an** essential element in appraising **tbe market** salue of the

### note, **and**consequently the adsquaoy of **the** security **of sbich**  it
was a part.

Ye are 

### thaaforo of 

### the opinion the sukPJestion8of aounsel 

### ror the oompanies should not be follored, for **this** 

### Tould **bs to** 

### aoospt the personal liability ot the **company**in lieu OP the securitie,urequired by law.