” -- 

THE ATIVKNEY GENERAL 

OF -XAS 

AUSTIN. TEXAS 78711 

February 19, 1968 

Honorable Clay Cotten Opinion No. M-202 

Commissioner of Insurance 

State Board of Insurance 

1110 San Jacinto Street 

Austin, Texas 78701 Re: Interpretation of the 

word “State” as used 

In Articles 4769 and 

7064, Vernon’s civil 

Statutes, as applied 

to Investment of the 

highest percentage 

of admitted assets of 

foreign companies licensed In Texas, when 

computing the gross 

premiums tax on lnDear Mr. Cotten: surance companies. 

You have requested this office to Interpret the word 

“S ta te ” as used In Articles 4769 and 7064, Vernon’s Civil 

Statutes, as applied to investment of the highest percentages 

of admitted assets of foreign companies licensed in Texas, 

when computing the gross premiums tax on insurance companies. 

The above statutes allow tax reductions to insurance companies 

meeting specified conditions pertaining to the ratio that 

their investment in Texas securities bears to their investment in similar securities in the State in which they have 

the highest percentage of their admitted assets invested. 

The pertinent language, which is used repeatedly in both 

of the above statutes,is: 

II 

. . . the amount that It had invested In 

similar securities in the State in which it then 

had the highest percentage of its admitted assets Invested . . .” 

Attorney General’s Opinion No. V-422 (1947) mentions 

the possibility of .a tax reduction under Article 4769, V.C.S.,~ 

for a Mexican Insurance company, but the opinion does not 

-970- 
Honorable Clay Cotten, page 2 M-202 

decide the question now In issue, In one Texas case the 

court held that the word “state,” as used In a federal statute 

relating to prohibition of common carriers’ exemption from 

liability, did not include foreign nations. Houston E. & W.T. 

Ry. v. Inman Akers and Inman, 134 S.W. 275 (Tex. Clv. App. 

‘1911, no wri!?). At page 2’(‘(, the court stated: 

“The word ‘state, I as used in the Constitution of the United States, has been uniformly 

construed to mean a constituent member or part 

of the federal Union having an independent local 

governmental organization D 0 *” 

In-Eidman v. Martinez, 184 U.S. 578, 22 S. Ct. 515, 46 L. 

Ed. 697 (1902),- the United States Supreme Court stated at page 

591: 

“It need, only be added that while the words 

‘State or Territory’ are used in treaties, and 

perhaps also in some acts of Congress regulating 

our International relations as including foreign 

States, they are used in the Constitution and in 

ordinary acts of Congress as applying only to 

States or Territories of the United States.” 

In construing a state statute governing service of process, 

the Supreme Court of New York County held that the word 

“state” did not include a foreign nation. Fair v. Kenny, 

171 N.Y.S. 694, 695, 103 Misc. 412 (1918). At page byb the 

court stated: 

I, 

D * 0 the Legislature, in providing for 

service by ‘attorneys and counselors at law 

in any other state, I evidently must have had 

In mind the United States and its territories, 

where such a nomenclature commonly prevails.” 

The following pertinent quotation is taken from 81 C.J.S. 

856-857, States @ 1: 

“While the word ‘state’ has various meanings, 

as used In the federal Constitution, it has a 

definite, fixed, certain legal or technical meaning, which excludes the signification attached 

to it by wrlt,ers on the law of nations. The term 

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- 

Honorable Clay Cotten, page 3 M-202 

‘state, 1 in American Governmental parlance, Is 

used as designating a member of the Union, in 

contradistinction to the United States as a 

nation, and It ordinarily has such meaning where 

used In the Constitution, in the acts of Congress, 

and in the statutes of the several states.” 

In creating Articles 4769 and 7064, V.C,S., the 

Texas Legislature could have easily Included foreign nations 

In the tax reduction provisions If It had so intended. There 

is no persuasive Indication in either statute that the Legislature contemplated giving a tax reduction to an Insurance 

company having the highest percentage of its admitted assets 

Invested in any foreign nation or subdivision thereof. It 

is our opinion that the Legislature did not Intend to give a 

reduction in gross premiums tax to any Insurance company which 

does not have the highest percentage of its admitted assets 

invested wlthin one of the states of the United States. 

We conclude that the word “State” in Articles 4769 and 

7064, V.C.S., as used in the provisions governing reduction 

in gross premiums tax, refers only to a state which is a part 

of the United States. Therefore, an insurance company having 

the highest percentage of its admitted assets Invested in a 

foreign nation does not meet the conditions necessary to qualify 

for any reduction In gross premiums’tax under the above statutes. 

SUMMARY 

------- 

The word “State” as used In Articles 4769 

and 7064, V.C.S., as applied to investments of 

the highest percentages of admitted assets of 

foreign companies, licensed In Texas, when computing the gross premiums tax on Insurance companies, refers only to a state which Is a part 

of the United States, 

Ve& truly yours, 

orney General of Texas 

Prepared by C. Fielding Early 1 

Assistant Attorney General 

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Honorable Clay Cotten, page 4 

APPROVED: 

OPINION COMMITTEE 

Hawthorne Phillips, Chairman 

Kerns Taylor, Co-Chairman 

W. V. Geppert 

Ralph Rash 

Pat Cain 

John Grace 

A. J. Carubbi, Jr. 

Executive Assistant 

M-202 

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