- - 

THEAYTOHNEY GENERAL 

OFAUSTIN aa. -s 

N 

Ron. R. L. Dsnlel, Chairman' 

Board of Insureme Ccmmlesionem 

IandOfflceBuilding 

Austin, !l!exaa 

Dear sir: 

Febrnary 3, 1939 

opinion PO. o-222 

Rei Uhethar the Board of Inmnance~~ 

camdae1onera BhoddhaYe jolnt 

oontml over mm8 of mcmey In 

exoeae of $60,000.00 of a 

LloyaE Ineurauoe co. r 

‘, 

Tour latter of January 24W, 1939 to t&la bepartamt,~w+emin 

you aeka queetlonwlth reepeotto the jolntoontrolof theBoard of 

IumrameCumLtaelcmem anU the Attomey-IlwFaotof aL&oyds Inmrenoe 

Canpuny, hae been referred lwthe writer for attention. 

_.. 

In order t&at the~baeis for your queatian~amd lib6 ~mer herein 

givenmightbebettermderstoob byallaffectedby'thia oplnlon,We set 

out UlepertlwntpaFLe of pnn'letter, wblch areas foUom3r " 

~( ~"Art%dls 5017 prodA& that before 'un atterney4n-faot L 

aclpl be~~~li&emd'for lmdelwrit6re .at 8 T&d.@; 6iXepotilt 

of at~least $60,000 in otih, or owwertlble, dt&eable 

eemrlt~eles~aIial1 be pat,up on contributed, and %hat no 

attotie>-in-faot &all be llc&med to transact more than 

one kid of baelneee tder tbie Chapter, unleee t&e net 

aeseta, M defined, belmging to such undemritere at 

Iibyde, shall be ae much aa $10,000 additional for each 

additional kind of lnsman~e designated in the application 

for Hoed. Article 5017e provides for the joint control 

by the~+Wnrneydn-faot for the:~derurlte~ and the 

Board of lamrame Caumisslmars of tbe,aasete of the 

organlzatiq. 

Thel3UGIZSEAHERICAU L.LDtDS of8anAntoniehas heretoforeplaoed$6O,OOOrmder joirrtoontro&of theBoard 

of Inmranae Ccmmiesimerfi ana the aWorney-in-fact for 

8aia cmpany. saia orgmization nuu aewe to contribute 

$lO,OOOmore to its aaseta and wishee to be licensed to 

write an addItIona line of iriearanoe. However, they 

are taldng the position that this eddltiona1$10,000, 

over aa above the.$60,000 previouely plaoea under joint 
” . 

.~ 

Ron. R.-L. Daniel, Febntary 3, 1939, Pege 2 (O-222) 

cc&ml, 16 not reqidred to be umber the joint 

oontrolof theBoard of IuaurauoeCamnIsaIonere and the 

attorney-In-fact. 

Slnoe the statute la not qulte clear as to what 

ltmeana tie queetIm vhloh arleee ia: why ehould the oontrlbntlon of tie a&lltional$1O,OCObe 00naldereb atall 

If the Board hae no oontrol over it2 We will ask yvu to 

pleaee give ue your opinion ee to whether ornottbe ad<lcmal 

$lO,OCG, over and above the $6O,OOOn0wumier joint control, 

which the oaupanynou deeirea to place in ite aeaete for a 

pennit to mite one additional liae should aleo be placed 

under the jolntcontrolof theBoard of heurauce Caumleaionera 

and the attorney-in-faot for the orgsnlzsticn, or ti It 

euffioIent for the tm&rwritera to chow that they have this. I~ 

addItIonal$lO,COO in the handa of the attorney-in-faot'l" 

Be qpeetlon euhdttedinvolvea not only a conetruotion 

of Artlola 5017~5017e'of our etatutea, but requires that we aeaertain 

the legislative Intent18 the pseaage of all the ertloles ino0rp0r8tea 

inChapter 19, Revisad.ClvilStatutee of Texae of 1925. , 

.'. j '~ */ ~. .,. 

Article 5017 rea&e ae iollmler ,;:: ,,~ ..~,i, ; j 

:t,:.,~ ~. 2 ;J,<; .,~ 

go attorney ehall bi I.&&&i for .ths ur&wriGre ;,. i.1: '~ 'I..~., 

ataLl.oyd'e under this ohapteruuleee tbenetsseete, 

iaclndhg tie wt.y fend 0ontributd to tie attorney,.;; !~::~: 

aecmdttee ofundexwrltere, tnzeteee orotheroffloere 

e prOr-~ for h ag &McJ& of @&b+,t, &&J be, ,.b:, -1 ,::,, ,.. 

at lee& sixty tJmae.snd aoliara inoaeh, or convertible, 

edmdssble seoidtlee; nor shall auy attorney be lAomead : .:" 

for enyuuderwritere ataLloyd'e to trmeaotmcm then 

one kiPdofbueinese aa defined in the thirdarticle of 

thIe chapter, uulese the netaeeete, ae they are herein 

definedbelonging to auoh underwriters atUoyd'6, ehall ': 

be (LB mmch as ten thouf~ena dollars sdditi0nai for each 

additional kin& of insurauoe aeeiguated in the application 

for lioenee.' 

Artlole5017e ie the only article of our etai&ae provI&lng 

for aud establieh~ joint oontrol over fide of a Lloyd's and readsl 

"The aesets ofuuderwritere ata Llofi'e to the 

extentoftheminlmt7m reqtm3a uoder the provisIons of 

this ohapter ehall be subdtte8 to * eubjected to the 

joint ooutrol of the attorney-in-fact for such urderwritere 

and theBoard of Ineurauoe Camleeiouere, iu 6Omemmuer 

satisfactory to theBoar&, 80 that the sememaynotbe 

vithdrawn or diverted, or expended, except with the 

approval of the Board au& the purpoeee provldecl for in 

this ohapter. 'Such uuderwritere, however, shall be 

~. 
Eon. R. L Dauiel, Febnmry 3, 1939, page 3 (O-222) 

editled to the intereator lnoolne a~cn~ingfruris~h 

property or aecurltlee ae may be placed mder the joint 

controlof such attorney in fact ed theBoard (LB andwhen 

the same is payable. Provlfled, however, in lieu of aaah 

joint control auy attorney In faot at a Lloyd% now doing 

bueluees Iu tbls State may give baad Iu the sum of twentyfTve thousfuui a0uara for the cafe lraepiug of aaseta, to 

be rdessed onlyonapprovalof theBoard of1usurauc.e 

Camiseloners, aa in suah form ana with co-operate surety 

aa ehallbe approvedby theBoard of Insurance Cammiaslouera." 

Itwillbeuoted that such joiatocM.rolia provide4 for "to 

the extentof them5nImnunder the provialona of th3.e ahapter." The '~ 

rinlmrrmeetablIehedbyArtIole 5017 la $6O,OOO,buttowhattype ob'oanpeny la themiuImmuof$6O,OCOapplIoable? "Iha very lenguas lnArtlola 

5017 makes .It dear that euoh minimum of $60,000 is applloable to a OQLpanyllmitad to writlug one kind or line of lnmranoe. Before itoenbe 

licensea to write an edAitlona1 line of tiurauoe, it mmet * 6hm that 

the &ttomey-id-faothsa InhIe poeeeaaionaaadditional~et~~oi$10,000 

her rad ,above ‘the $60,000 mpuired to vrlte~~tii line of Tnsuranae.. llhae, 

Ifaocdupaufld towrite two line8 of ¶nstammm, 

a llaenee oan t)e Iseuea by the Board of &sunmoe%u%%%?$?&~ 

W three line6 are tObewrItten, the admiaslble aesets lucl&&the 

tyfund,mattotal.$80,000r 

r 

This increase ofaeeeta lufmouu@ of 

10,000 per lide cantimes until every kba or line of lumuMce:~~teP 

In, au¬otierwIae prohibited ByArticle 5015, may be written. ,Ine+h 

of theme caeee the amomt of miaimnm m-ma ie hitea end cohtx0Uea ~~ 

solely by the dumber of lines of lumranoe to be written. ..~ 

l?+ terypurpose~of the Legislat&ei:lu proriabg joint&x&o1 

Of the asseta of each compiuy,~waa nvitifeatly t0 create a safe&ml, bJ 

vhIEh the amete 80 contributed regmdleaa of the ehiuta UA%of,cod&be 

held seoure for the benefit of the polIoyh6ldera. In oamylug out Ruoh 

pwpoae, they provlaed by Article 5017e, for joint control to the extent, 

of the minimum eetabli6hed. 

It :ifd, merefore, fae 0pinim of this a4pa.t-h3d, ahd yea eu-0 

80 adrie6a that the $10,000.00 over 81~3 abem'ti+ $60,000.OO,,ntim&r 

jointoCmtrol,whioh theEIKW3E AMXICAR I3MDs of San Ant+0 proposes 

to oontrIbute for the purpoae of~eeourlng a liceme to write.~other 

1Iue of lumranoe, muat be plaaed m&r the Joint coutrolof'th~--attorneyIn-fact ami the Roard of In.9uzanc.e Camlseioner.9. 

Trusting thatthla au8wem your inqulry,we are 

Youra very truly 

-0FTBxAs 

ATIQWBY -oFTExAs 

Assit3tant 

U:ob-da