. . 

; Ilo. So78 

#ala oplnlon holdmr 

:Y L That real emtate my not oonstituts all QT 

portion of the oapltal hook of a oasualty 

t 

y ' 

- 

suranee oompmy at the time or itr lnaorpor - 

tion. 

8. That no p&ton 0r the oipitP1 otook 0r a OQG 

ualty insuranoe oozip5ny may be-lnvestted inreal 

oathto at any time aft0.2 the lnnoorporation 0r 

the 0on;any. 

5. That all or any potiion or the fmds of a stook 

oasualtp lnsuranoe oo;.pany,~ over and abovo its 

oapltal stook may be used for the purohase of 

a build- at least ample and adequate ior the 

trnnoaotlon &the buslnese or the oasualty lneurenne oompany, uhloh bullding may be uned in 

whole or ln part for the aoomno&tion or s-h 

+mrudty lneitanne ooqnny in the transaotion 

v 

or Its business. 

OTTSCE OT Tliii ATTGRNEP OENLRAL 

Iion. a'alter 0. Woodward Chalrm.m 

Board 0r Innuranoe cd~~ion~r 

astin, Texas 

bear sir: '_ 

oplnlon wo. O-958 

_, Ret Insurmoe - Capital atook or oaoualty 

lnsurnaoe ooApony- surplus - Inventaente - Real estate. 

Tour requont ror opinion upon the r0u0wing 

questiona 

"1. Lay rh.l o&ate oonotituto all or any 

por$1011 or the oapltal stock 08 a oasualty insuranoe oo~peny at the tl.zq or its lnoorporatlon? 

"3. In the eront tbnt the flret quo&ion 

1s answered ln tho negative may all or any part 

or the oapltal stock or a oasualtp inswme ocmpany to be inveotod in r0cil estate at anYtlme 

after the inoorporation bf the oonpanp? 

"3. Xny any part of the iunde of a stook 

oasualty 00 pany over and above lto oa?ltal stook 

be invested ln real ostate?w 

haa beon reoelved by this depnrtknt. 

. Tho Zegular Secnlon of the Borty-sixth Legislatme paooed lic;leo Bill :'o. 928, w!vloh 1s an sot mendin;; 

Artlole 4705, xrtlole 4706 and hrtiole 4993, as wondad, 

CUM re;~alin~ Art1010 5001, a~ mendad, or the Rovisod 

civil Statutoa 0r Texae, 1925. Said Rogee Bill no. 928, 
Ho& Kalter 6, Woodward, ,me"#8 

*upa, reads as r0rmmt 

‘AN ACT awmQLPg ml010 4706, Art1010 4706, 

and Artlob 4993 am unded, and repealing I\rtle 

ale 3006 as amended, of the Rotlsed Clril statutea or T-8 of 1925, do8l&uatlngthe run& and 

6eourltlee of whloh the oapltal ntook ot lns~ranoe oompanles inoorporated under the pro~lslms 

or Title 70, Chapter 8 of the Eevleod Clrilstatutoa or Texas, shall oonalat, dealgnatlng the eeourltles in whloh funds of #uoh o~~.psnirm may be 

inrented; provldlag oertaia Ilnritatlcma on the 

amount of onpltal #took of guaaral.oaaualty oompar&~ end requiring deporitm to be trade by ruoh 

oonpanles; an+ deolarlng an umrgenoy. 

‘BE IT BWJXED BYTRE LPDISIATURE mTlIX SPATEOr 

TPASI 

*SeotlaPL 1. That Artlole 4706, Artlole 4706, 

and Artiole 4993, aa amended, of the Ro~isod Cltil 

Statutes of Texas or 1966, be and the-@- are 

hee;;y amndod, ao l e to hereafter read as fol- 

*&tlole 4705. Itome or Capital Stook. The 

oapltal hook or my such lasuranoe oonpaap, exoept any writing Life, Bealth and Aooldent Incuranoo, ahall oonsl&t 

l l. In lawful money or the United states; 

or 

“3. In bonds or this 5tate or any oouaty 

or inoorporated tuwa or city there&, or in 

the nttuok of any national banks or 

"3. In rim riortgagoe upon uninoumbered 

real e&ate in thla &ate, tho title to whloh 

1s valid, and the market Yalue of whloh 18 

not.leas than forty (401 per oeat nor0 than 

the amount loaned thereon. Ii any part of 

the yalue of auoh real estate 1s in buildings, 

auoh building shall be lneured against loss 

by ilre for not leas than slxtp (60) per oent 

or the ialue thereof, with 108s olauae payable 

to suoh oompany. Provided, that the prowlslmlr or thle Itilole, with reepeot to the 

Yalue of real *state, oonparod to the amount 

loaned thorooa, shall not apply to loana seoured by real ertato whioh are insured by the 

Poderal Houalng Admlniatrator. 

RArtlole 4706. InYostnent or Funds. No oompony, exoept any wr:tlnS Lllo, Health and kooldent Xnsuranoe, organized under tho pro~lslons 

or this Ohapter shall intest ite fund6 OY(V and 

abate it8 pal&up oapital stook la any other canner than aa r0mwrt 

*(a) In bonda of the United states or or 

any or the Statea oi the United Staten proYided sunh bonds, are, at the time of pWohaae, 
Intnr~at-bearlog or not la drrauxt. 

"(b Ia bond8 or rlrst lIear 01). unineumbored rea eotato in this State or in any other 

Sate, OoWtry or prorlaoe In whloh suoh oomWY may be d&lloenaad to oonduot an tiaurMOO budneos, and provldlng ln eanklnetanoe 

such real ertate ahall ba worth at least forty 

(40) per cent more than the mount loaned thtreThe Yalue of ouoh real e&ate ahall be de- 

%alnod by 'a Yaluatlon made under oath by two 

(8) freeholder~ or the oomty whore the real 

entato Is looated, and ii the bulldlnga are ooaeldered a pert of the Yalue 0-i the real eotate, 

they must be insured eGalnet losr by rlre for 

aot lea8 than sixty (60) per oeat oi the Yalue 

~theraoi, with losr-payabkolauw to auoh oomWY* 

*(o) In bonda or other interest-bearing evl-~ 

denoe of indobtodnoss oi mny oounty, Lnoorporate4 city town or aohool or sanitary or navigation &trio4, l a h narlgatlon dtntrlot to 

oontaIn a population of not loss thin three 

hundred aad thousand (359,000) aooordlng to the last reoedlng Federal Caneus, 

ln this or any other State In wiiloh said oompany nay be duly lloeasod to nonduot an laseranoe buslaere, If suoh evldonoeo or Indebtednear 

arm issued by authority or lnw and St interest 

u&m then has never been deiaulted. 

"(4) In the stooks or bonds or other ooldonoes of Indebtedness of any solYen dlvldenll- 

'paying oorporatlon lnoorporated under the lawa 

of this State, or or the United States, or of 

any State, oountry, or provlnoe In whioh suoh 

ootlpmy mny bo duly lloeaaed to oonduot an la8uranoe bualno8a. 

*(e) In loans ugon the pledge or any mortgage, 

hook, OT boa&, Or Other CYideIiOO Of LndobtOdnesa, aooeptablo as Investmenta under the terms 

or this law ii the ourrent value or suoh izortgage, 

atook, bonds or other twldezioe of Indobtednerr 

1s at leant 4wwsaty-tire (25) per oent more than 

tha amount loaned thereon. 

a(i) That the restrlotlone oontained In 

subscotlon (b) hereof that mob real estate 

shall be worth not lean than forty (40) per 

oent of the aaouat loaned thereon, and that 

the Yalue of suoh real estate shall be doterralnod by a Yaluatlon fnade under oath by two 

(3) treeholders oitha oounty where the real 

eetato 1s loonted and ii bulldin&s ax0 oonsldore4 aa a part oftho Yalue of rruoh real estate they must be insured for the benefit of 

the4 mortgagee, shall not apply to loana scow06 by real estate In Texas whloh are insured 

by the Pederal Hoorulng hdmlnlatrator. 

g(g) ;Th interest-bearingoten or bon& or 
Eon* Walter 00 ‘loodwara, pa&a $4 

the Vslvsrslty of Tsms lsausd under snd by tictue of Ohapter CO, Aote or the Party-third U@’ 

lalaturo, Seoond Cal&d &melon. 

%WtSole COOS. Capital and Depoolts. Oaly 

oompanlea ormlabd a@ dola buslneaa andor the 

prorlslam oi thla Ohapter s L 

its praplslcms. 

IJ. be subjeot to 

Suoh :oonpany shall hare not lose.’ 

than One EhndreQ Thougand ($100,000) Dollars oi 

Oapltal stook suboorli?od, paid in, la oash, wlth 

an adaltIonai Plfty Thousshd Dollars .(@jO,oOO) 

02 oapltal stook subsorlbod and fully paid In, 

%n oash, for every kind ot lnsuranoe Iboro tban 

oae whloh It 1s authorized to tramaot. Suoh 

oompanlea with Two Hundred Thousand ($200,000) 

Dollars of oapltal &took subsorlbed and fully 

paid ln, Ia sash, shall be authorized to tranoaot all and Avery kind or Inauraaoe speolrled 

in’the first Artlole of thls Chapter; all of the 

United States, or of this State, or of shy oounty or Iranlolpality of this State, or ti notes 

or bonda aeourod by moitgaee or trust deed In- 

~. sure4 by the ?edoral Eouslng Addniat#AtOr, or 

in bonds or flrat liens upon unlnoumberod real 

o&ate la this State, or In any other State ln 

whloh suoh oomparg may prevloualy have been lloeased to omduot an Inauranoe buslnoss: In 

either Inatanoe, suoh real estate s&ill be wrrth 

not lssa ~thaa iorty (40) per oent more than ths 

amount loaned thereon. If any part of the value 

or suah real l stats 1s In bulldings suoh buildizigS ~&hall be i.W3uOd a 

not le.esa than sixty (80 $ 

hst lOBa by rlr5 ro2 

par sent of tho value 

thereof, wlth,losa-payable olauao to the ocmgany. 

The value or euoh real estate shall be detarmlnod by a sworn valuation mads by two freeholders 

of the oounty whore the roal ostate Is situated, 

Provide4 that suoh reatrlotlon shall not apply 

to mortgapoa inrured by the Federal Housing Abtr.l&etrator. Upon suoh oompsnp furnishing evldenoe satlsinotor to the Coanisslonor that the 

‘oapltal stook as h: oroln presorlbod has been all 

subsorlbed and pald up in oasb ln Sood faith, 

and that rush oaplta$ stook has bem lnvonted 

as herein proscribed, and upon the deposit of 

the sum or yl’itty Thousand ($60,000) Dollars or 

auah soourltlea ‘or in sash with the Stats Treasurer, than mid Commlssloner shall lssuo to said 

oompany. a oertlrloate authorizing it to 40 buslnesa. NO part or ths oa,7ltal paid ln shall 

be loaned to say of’flosr or eald oompany. Tn 

..t.he event any suoh oon,my shall be required by 

ths law or any other State, oountry or pro~laoe 

as a requirement prior to doing an lnsuranoe 

business thsrela to deposit with the duly appointed oriloor or suoh other Stats, oountry, .’ 

or provlnoe, or rlth the state Treasurer of 

this state, any ~eourltles or cash In exoena 0r 

the said deposit oi Jifty Thousand ($50,000) 

Dollars herelnbeiore msatloned, suoh oompany, 

at it8 AIsorotlon may deposit with thr State 

Treasurer seourltjes or ths oharaoter authorizl d by this law, or oash suriloloat to eaable it 
.,. ._;:_ 

.(, 

xwi yltsr CI Yooaw4rd, page #a : 

to Awt 4Wh requirements. Thi State Treaaursg 

is hereby mthorlzea ana aireotea to ~UO~YO SU& 

~. a OP Od4t Jita fJ hOId it l ~OiWf~Oi$f to? th0 prOtOOtion of iu po1icyhol4erri Of ths oanpany; Any 

deposits so mtide to meet the raquiramente or any 

other Stat., oouatry, or provlnoe shall not be 

Wlthdmwn bythe.ocmjmafoxoe~t upcm flllng with 

the4 Comdesloner 0via el iatisfnotoryto m bin 

thnt the oosipany baa with4rawn fron budnoc~s, sn4 

has ao unsooured liabl~ltieoutstanti 

suoh other sttite,~oouptry, or province f 

in app 

p vhloh 

suoh l 44ltiaial 4eposit was requirea, ana upon 

the fllln& of auoh Svldenoe the ooqany may nlthdraw wh 844ltlonal deposit at any time. 

'980. e. Art1010 8006. Thlm ml010 is hersby 

expressly repealed.* 

mtlole 5007, Revi8ea civil Statutis of Texas, 

roaam a4 r0iiowa: 

“No.suoh ooz~pany shall be permitted-to purohase, 

.h0ia or convey real estate, exocpt rorthe purpose and in the m.anor herein set forth: 

'1. For the eraotlon an4 malntananoe of bullalngs at least ample nna adoqwto iortho trnnsaotlm or tls own business, 

.'. 

'8. suoh 40 shall hero been mortSnSe4 to,lt 

ln gaod faith for rroney due. 

"3. Suoh as shall have been convey84 to it in 

the rntlsfaotlon of debts previously oostraotab 

ln the oourse ot lto dealings andwhioh mat be 

taken in by the oom)any oa aooount of the debt. : 

aoourea by auoh mmQage. 

"4. Such 4~ shall have born purohaaed nt aale? 

‘upon judgments, deoress or mortgages obtained 

or ma4e for suoh debts. No owpany lnoorpomt04 as aforesaid shall purohaso, hold or oonvep 

;,“.i:fte in any other oases or ror 4ny other 

Art1010 5008, Revised Civil Stntutea or Texas, 

row33 as r0xh4: _* 

wA3.l real estate a0 acquired, exocpt 48 16 ooouple6 by bulldings use4 in whole or ln part ior 

the.acoommIatlon ai auoh oorqanleo in the transaotioa of lts business shall, exoept as hsrelnsrtsr prid0a. be sod an4 ai4p0sea or wfthln 

ton year4 arter auoh oompany shall have acquired 

; title to the same, No suoh oompany shall hive 

suoh real eatate for a longer period than that 

above ffientloiied, unless the 84ia oclcpany shall 

procure s oertlflonte fron the Commissioner that 

the intercots of the company will suffer Icaterlally by 4 toroe sale or suoh real e&ate, in 

whloh event the tlms ior the sale may be ostenb04 t0 SUOh tlm4 48 the C~W~WO? Shau QireOt 

in said 00ctiri04tor* 
80th VatOr th,wOodWUa, pagb 46 

we have been krromea by the Boar4 0r xm.r4noe 

Commissioners oi Texan that all oasualty insuranoo oompmle8 aowoperatlng in Texoe were orente4 under the 

proilsloas or what 1s now maptier LB, Tltle~TB or the 

Revlsod Olvll statutes of ‘24x44. Therefore, we mswor 

your qWstiOn8, insofar 4s they apply to casualty lnsuranoe ooqan.les orgedzea unaim Oheiptor 28, Title 78 0r J 

the Revisoa civil 3tatutee or Texas, as it would servo 

no prnotloal purpose to dleoua6 any questfon whfoh might 

arise with roierrnoe to a oasualty oonpany urhloh might 

have been organized un4er Chapter 8 of Title 78 of the 

Revleea ~irii statutecr 0r ~-4, 

The language of the daptlon of Xouse Bllixor 

988 of the Foxliy-sixth Legislature spsoliioslly lfmlts 

the applloatlon of amendo Artloles 4705 an4 4706 or the 

Revisea civil Statutes to oasualty oompanics and other 

name4 insuranoo o0pIpnnfe.o oroatod UnOer Ohapter a, Title 

76, ReVlse4 clvll Statutsr of Texas. The oaptloa-d&es 

sbows an lntontlon to limit the apglloatlon or anenEe4 

Artiol.4 4993 to oasunlty inswanoe 001+438 0r04tea unCar Chapter 18, Title 78 Revise4 Clvll3tatutes or Texas* These articles appl~sb, roopectlvely; to sala oom-. 

panleo prior to the pas-0 0r House 811lN0. 928, eupra, 

an&this blll shows no lntontfoa to &age the typeq or 

ooropaales whloh oaoh oontrol. 

Wo, therefore, oonolude t&it hrtlole8 4705 ad 

47d6 ot the Reviled Civil Statties ot Tcxas,'4o not ap/ 

ply to oaswlty itm8r4404~ oompanies orgnnizoa under 

Chapter 28, Tltl. 78 of the Revised 01~11 statutoo of 

TWSa 

irtlole 4993 Revised Civil Statute8 48 nmonb04 by said Eouee Blli No. 928, relates to ani oontrols 

oaswlty insurnnoe oompanles oroatea unUer the provlslcn 

of what 1s now Ghapter l.B, Title 70 or the Revised Clvll 

Statutes of Texar. Thls nrtlole prereaoribed the typo of 

eeaurlty in wtioh the oayltal stook of suoh oasunlty in4ur4.404 oonpanier may be investo4. The outright purohase 

of real estate is not lnoludod in the list of approved 

seourltles. & our opinion, thls etatute lo a oontinulng 1imitatZon upon the pow= to invest oapltal stook 

an4 prohibits the lmestmat of.suoh funds in any other 

assets than those naned therein, not only at the tlw 

of lnoorporatlon, but at all tlmoa thereafter. 

Wo, therefor nnswer your first an4 seoona 

questions as 4p ii4a to oasualty lnmannoe 00~1 nle8 / 

oreatad under C f: tle 78, Chapter lE,.oi the Ro vi? on4 Clv11 statutes of Texas in the negative. 

Prior to its repeal by the last scsslon oi the 

Loslglature through said Rouse Bill No, 92f3, Artfale 

5:‘06, Revised Cl011 Btatutos, 1925, presorlbed the mannor of lnvestmenta over an4 above the capital stook or 

4 oasualty lneuranoe ooapaqp mento under the provlslons or Ohapter l.8, Title IO, Revised 01~11 3tatutos 

or Texas. ThO offsot @i the repeal of this artiole 16 

to reaove the llmltatlon plaoed upon the lmestmnt of 

all run48 oisuoh oompanies, sioopt the onpltalstook, 

ana Lear0 the aiaor0ti0n or making suoh lnvestnent.ln 
- 

i 

&II. Walter 0, w00qwua, pale 87 

the hands or thr Board or Mreotora of the oorp0r4tlon 

abjeot tb thr li.mitati044 or Artlo* 8007 Ma 6008, 

mifbea civil Statute8 or Tsxas. : . 

In answer to your third qwitlon, you are re- .. 

8pootful.l.y a&lead that it 18 the oplnlon or this Cuppartment, that all or a portla~ of the funds of a stook oneualty insursnoe ooapsny, over an4 above its oapltal atook 

my k, used ror tha ereotlon .%a naintenanoe of a bulla-/ 

%nS at least ampie ma adequate ior the trammotion of 

the buslmss of the oasualtp insuranoe oocpany. Suoh 

bull4ing mst 0s wad in whole or in psrt for the aoocaimodetim or swh oompqy in the transaotlcn or the budness or thn ompany. 

You are‘iurther respeotf'ully nCvlseCth4t it is 

the’oplnion of this Cepaa%aont~thnt 4 aaeualty lnsuranoo 

ooqany 1s permlttea under the law sad under Ntlole 

5007 of the Revise4 01~11 Statutes of Texas, to 4OqUlre. 

an4 holC~rsalestute under sootlons 2,3 sn4 4 of nrtlale 6007, but that under Artlole 5008, Revlse4~Olvll 

Statutes or Texna, 411 real estate so 47quire4, except 

as ls’ooouple4 by the building used la #huls or in part 

ror the aooomodatlon or such oompany kr the txansaoti0n 

of the business of the o~nrpany, should be 4014 end Clapose4 oi within 10 years after suoh oompnny should have 

aoqulreb title to the ssme, ~1168s the oarmany should 

440~~0 a aertlilonte rromthe Comleslonsr that the interost or the o~mpany would suffer ourterlally by a foroed 

sale or euoh real estate, ln whioh nvent, time for the 

sale plight be extended to EmOh tim 4s the OcinmiMlonnr 

‘shoul4 Cireot in ml4 petltlon. 

“TEWla&thnt this anmwers Your 5.nqui.W. *a U. 

Toura very truly 

ATTORNEY OINXRAL OF TEXAS 

WaJFrob 

~~~iZ=ZLis.istpbt 

This opinion has been oonal&red ln OO$WMOO, 

approvea and ordered rooor404. 

OERALB c. NANN .. 

Attorney Oeneral or Texar