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## ENEIRAE

Honorable Marvin Hall, Commissioner Board ofInsurance Commissioners Austin. Texas Dear Mr. Hall: Opinion No. O-3250 Re: Authority of the Board ofInsurance Coinmissioners to issue tothe United States Aviation Underwriters, Inc., apermit pursuant toArticle 5065, Revised Civil Statutes, under the facts and circumstances disclosed. Your request for an opinion of this Department is before us, from which we quote:

“The United States Aviation Underwriters, Inc., acorporation irmorporated under the laws of the State of New York, desires to submit an application for a license from the Board ofInsurance Commissioners pursuant toArticle 5065, R. C. S.

“This company’s attorney advises us that The Uni,ted States Aviation Underwriters, Inc., is acorporation whi.ch investigates and keeps advised of developments inengineering and aero dynamics, of developments in individual models of airplanes designed and sold by designers and manufacturers, of the inherent hazards, ifany, in the individual airplane, and ofthe matter of legal l,iabili.ty that may be involved as to the pilot ofthe airplane, its passengers and third persons, as well as legal liability relative tothe operation and control of airports. It obtains experience data relative to aviation risks and losses and supplies all such information, data and experience for the benefit of licensed local recording and solicitors of insurance companies admitted to do business inthe State of Texas, as well as on behalf of the company itself. Its service includes the proper assembling of an insurance policy against fire or casualty hazards, or both, to meet the needs of an applicant for aviation insurance.

‘“As a result of your opinion No. O-1931, approved February 19, 1940, the following question arises: Is the Board of Insurance Commissioners authorized togrant tothe United States Aviation Underwriters,Honorable Marvin Hall - page 2- O-3250

ITIC.,apermit pursuant toArticle 5065 ofthe Revised Statutes of 1925, said United States Aviation Underwriters, Inc., being acorporation incorporated under the laws of the State ofNew York with apermit from the State of Texas pursuant to Subdivision 49 ofArticle 1302, authorizing it toact as trustee under any lawful express trust committed to them by contract and as agent for the performance of any lawful act?

“Your advice inthe premises will be greatly appreciated.” You are respectfully advised that it is the opinion ofthis Department the permit requested by the United States Aviation Underwriters, Inc., should be refused.

A part of the proposed activities of the applicant is apparently to furnish to insurance companies advice with respect to ‘the matter of legal liability that may be involved as tothe pilot ofthe airplane, its passengers and third persons, and as to the operation and control of airports.” This would appear tobe the practice oflaw inan unauthorized way inthis State, under the provisions of the State Bar Act, But we do not need to put our answer upon this ground.

Section 1ofArticle 1524a of Vernon’s Codification of the Civil Statutes, dealing with loan and brokerage companies, is as follows:

“This Act shall embrace corporations heretofore created and hereafter created having for their purpose or purposes any or all of the powers now authorized inSubdivisions 48, 49 or 50ofArticles 1302, Revised Civil Statutes of Texas, 1925, and heretofore or hereafter created having inwhole or inpart any purpose or purposes now authorized in Chapter 275, Senate Bill Number 232 of the Gene_ral and Special Laws of the Regular Session of the 40th Legislature. No such corporation shall act as agent or trustee inthe consolidation of or for the purpose of combining the assets, business or means of other persons, firms, associations or corporations, nor shall such corporation as agent or trustee carry on the business of another.” This Act was passed by the 42d Legislature (1931) -- being Ch. 165, S. B. 165.The United States Aviation Underwriters, Inc., being acorporation organized under the laws ofthe State ofNew York,~with the corporate powers enumerated in subdivision 49 ofArticle 1302, of our Revised Civil Statutes,_--- A

Honorable Marvin Hall - page 3- O-3250

upon obtaining apermit from the Secretary ofState to transact its corporate business in Texas, wou,ld, of course, acquire authority totransact such business inTexas only,in accordance with the laws of Texas relative tothe powers conferred upon Texas corporations, under Subdivision 49, that is to say, in accordance with Article 1524a, Vernon’s s,tatutes, above quoted.

By the express provisions ofSection 1ofArticle 1524a, “No such corporation (Texas) shall act * * *as agent or trustee tocarry on the business of another.”

“To carry on the business of another” is to carry on or dothe corporate business where that other is acorporation. It does not require that the whole of such corporate business of another corporation shall be thus carried on, but it is enough that any substantial part or act of the corporate purpose or business be done or carried on -- even an isolated act. This is the universal rule governing the construction of the phrase “doing business”, in connection with permits to,foreign corporations to transact or carry on their business inthe domestic state. Phelps v. Jesse French &Sons Piano Co., 65 S. W. (2) 374; Kimble-Krough Pump Co. v. Judd, 85S. W. (2) 579; S. R. Smyth Co. v. Fort Worth Glass &Sari,,,Co., 105 Tex. 8, 142 S. W. 1147; Buhler V.E. T. Burrows Co., 171 S. W. 791, 11 Tex. Jur., p. 169, fi496.

The activities enumerated inyour letter contemplated by the Underwriters is essentially apart ofthe corporate business of the insurance companies whom itwould serve. The companies could not successfully carry on their business without such data and information as applicant’s service contemplates. They must procure this service, however, from some person, or from some corporation having corporate power to supply it.

Not only is the contemplated activities of the United States Aviation Underwriters, Inc. ultra vires, but they are expressly forbidden by law.

Moreover, Section 1ofArticle 5062a of Vernon’s Codification of the Revised Civil Statutes, declares:

“Insurance agents as that term is defined inthe laws of the State shall for the purpose of this Act be divided into two classes: local recording agents and solicitors.” This undertakes to divide all insurance agents, as that term is defined inthe laws of the State, into two classes, to-wit: Local recording agents and solicitors. There can be no insurance agent who does not fall within one of these classes, for it comprehends all insu,rance agents.Honorable Marvin Hall - page 4- O-3250

Section 3, inthe final sentence thereof, declares:

“The Boar.d shall not issue alicense to acorporation.” These provisions are apart ofthe Act of 1931, 42d Legislature. They appear tobe sufficient within themselves to demand a refusal ofthe permit requested ofyou.

We are not unmindful of James N. Tardy Co. v. Tarver, 39S. W. (2) 848, wherein the Supreme Court held that acorporation possessing sufficiently broad charter powers, w ’as entitled under the laws of this State tobe licensed as an agent for acompany writing fire, marine and casualty insurance. Inthat case the extent of the corporate powers of the applicant corporation was not decided by the court -- itwas not an issue inthe case -- for, says the opinion, “respondent concedes that relator James N. Tardy Company’s charter is broad enough toauthorize itto act as an insurance agent.” While Article 1520 of the Revised Civil Statutes then inforce with respect to loan and brokerage companies contained the identical language as the present Article 1524a of Vernon’s Codification, forbidding such corporations to carry on the business ofanother, as above stated, the court did not pass upon the charter power of the applicant, so that, whether James N. Tardy Company was aloan and brokerage company or not, has nothing to dowith the point actually decided by the court. The respondent may have conceded too much in the defense of that case, but whether he did or not, the conceded issue was not determined by the court.

Again, Article 5062a, above quoted, was not then effective, so that the case under review is inno wise inconflict with our conclusion here expressed. On the contrary, it impliedly supports our conclusion that ,acorporation forbidden by law of its existence to carry on the business of another should not be appointed or permitted by aState instrumentality to carry on such business of another.

ROVED MAY 14, 1941 Very truly yours

FIRST ASSISTANT ATTORNEY GENERAL Approved Opinion Committee
BY Ocie Speer Assistant OS-MR Chairman