--_ . 

ENEIRAE 

Honorable Marvin Hall, Commissioner 

Board of Insurance Commissioners 

Austin. Texas 

Dear Mr. Hall: Opinion No. O-3250 

Re: Authority of the Board of Insurance Coinmissioners to 

issue to the United States Aviation Underwriters, Inc., a permit 

pursuant to Article 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., a corporation irmorporated under the laws of the State of New York, desires 

to submit an application for a license from the Board of Insurance 

Commissioners pursuant to Article 5065, R. C. S. 

“This company’s attorney advises us that The Uni,ted States 

Aviation Underwriters, Inc., is a corporation whi.ch investigates 

and keeps advised of developments in engineering and aero dynamics, 

of developments in individual models of airplanes designed and sold 

by designers and manufacturers, of the inherent hazards, if any, in 

the individual airplane, and of the matter of legal l,iabili.ty that may 

be involved as to the pilot of the airplane, its passengers and third 

persons, as well as legal liability relative to the 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 in the 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 to grant to the United States Aviation Underwriters, 
Honorable Marvin Hall - page 2 - O-3250 

ITIC., a permit pursuant to Article 5065 of the Revised Statutes of 

1925, said United States Aviation Underwriters, Inc., being a corporation incorporated under the laws of the State of New York with 

a permit from the State of Texas pursuant to Subdivision 49 of Article 1302, authorizing it to act as trustee under any lawful express 

trust committed to them by contract and as agent for the performance of any lawful act? 

“Your advice in the premises will be greatly appreciated.” 

You are respectfully advised that it is the opinion of this 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 to the pilot of the airplane, its passengers 

and third persons, and as to the operation and control of airports.” This 

would appear to be the practice of law in an unauthorized way in this State, 

under the provisions of the State Bar Act, But we do not need to put our 

answer upon this ground. 

Section 1 of Article 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 in Subdivisions 48, 49 or 50 of Articles 1302, Revised Civil Statutes of Texas, 1925, and heretofore or 

hereafter created having in whole or in part 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 in the 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 a corporation 

organized under the laws of the State of New York,~with the corporate powers 

enumerated in subdivision 49 of Article 1302, of our Revised Civil Statutes, 
_--- A 

Honorable Marvin Hall - page 3 - O-3250 

upon obtaining a permit from the Secretary of State to transact its corporate business in Texas, wou,ld, of course, acquire authority to transact such 

business in Texas only,in accordance with the laws of Texas relative to the 

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 of Section 1 of Article 1524a, “No such 

corporation (Texas) shall act * * * as agent or trustee to carry on the business of another.” 

“To carry on the business of another” is to carry on or do the corporate business where that other is a corporation. 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 in the domestic state. Phelps v. Jesse French & Sons Piano 

Co., 65 S. W. (2) 374; Kimble-Krough Pump Co. v. Judd, 85 S. 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, fi 496. 

The activities enumerated in your letter contemplated by the Underwriters is essentially a part of the corporate business of the insurance companies whom it would 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 1 of Article 5062a of Vernon’s Codification of the 

Revised Civil Statutes, declares: 

“Insurance agents as that term is defined in the 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 

in the 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, in the final sentence thereof, declares: 

“The Boar.d shall not issue a license to a corporation.” 

These provisions are a part of the Act of 1931, 42d Legislature. They 

appear to be sufficient within themselves to demand a refusal of the permit requested of you. 

We are not unmindful of James N. Tardy Co. v. Tarver, 39 S. W. 

(2) 848, wherein the Supreme Court held that a corporation possessing sufficiently broad charter powers, w’as entitled under the laws of this State to be 

licensed as an agent for a company writing fire, marine and casualty insurance. In that case the extent of the corporate powers of the applicant corporation was not decided by the court -- it was not an issue in the case -- for, 

says the opinion, “respondent concedes that relator James N. Tardy Company’s 

charter is broad enough to authorize it to act as an insurance agent.” While 

Article 1520 of the Revised Civil Statutes then in force 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 of another, as above stated, the court did not pass upon the 

charter power of the applicant, so that, whether James N. Tardy Company 

was a loan and brokerage company or not, has nothing to do with 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 in no wise in conflict with our conclusion here expressed. On the contrary, it impliedly supports our conclusion that ,a corporation forbidden by law of its existence to carry on the business of another should 

not be appointed or permitted by a State 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