OFFICE OFTHEATTORNEY GENERAL OF-I-TEXAS AUSTIN


# %x3. ?al1tt3r c. V:oodward ‘

.. ChQ2rxnan 2onrd of Insuroltco

C0mi8:sicners AU8tAl,Teras 

# c\ ‘.~

Dear Sir:Xon. Kalter C. V:ooCtmrd, EEoy.~18,

1939, rage 2

of the stcckholdorn ITould cur,lify

in pnyzl.ont or tk? cqital atock.
"In order to coz,$ctcour file on 1 AttorneyConoral opinionzz, will you pleaoe rovim tho opinion of AgAl LE., 1938, snd iI you find thatIt~rsci.toa on izgroper oonstruction

of 'thti:Lzui,~.~~~leese, 0fri0i5iiy 8dViti;c

IX!." 7he 0pinion:ortt&".hopEtrtxent written by VI-. Elcliird Broola, X,-r 7 il~:22,~.:1930,

to your l%ym%mmt upon the mm quostion,ua8..,to the effect that notes seowed by roul ostatcwhere thoholders thereofwore :poyora oould not be used:inJwQ?mnt of capitol stock .ofm inswanoe aonpmy,' ~'

Artiolo 4717~,

:f&&x&Civil Statutas of Coxan, 1923, cot& forth the roquirments of~o charter for a life, ho<h and occident insurancecompeny end providen in pxragmph (5) thereof thiat ~tha.chn;-ter

shall sot forth "the iz:ount

of .itscapital stock, not less than one hundroa t.l;ousmd

ollars, cl1 of which cepital steakmust be suSscribed'a;lil

rully pnid up anU in the hands of the incoqorntors before soid articles of incorporation aro. PilUd." Article 4752, TiavisGd Givil Statutco of TCXCS ~192.3, provides for the cxation of 8 limited stock cmpcy in accordancenith the provisionsol Article Z&717, cu:)rn, with limitad rig?t

A o snd privilegesand provides for a.:?iniuun

"actual pnid up czipital of twenty-five tlsxmanci

dol15r3."non. Walter C.. Y?oadmixdr

ticy 10, 1933, ToGo 3

htscla 4705, Xevlsed Civil ZX;t;tutoa of Texas 1923, enmerates certoln items of xhich the capital stook of en Incuroncecoqmny nay consistand Section 3 thereof roods:

"in first aosL~tr~,cs upon mimwberod ma1 eotnto IE this nttrta, the title to which Is valid, end tbo zort~it~o %aluo of which is ~~ 'doublethe mount lomsd thereon, exclusive of buildings,uzlesn~suchbuildingsere insured in nom reSp0nsihlo co32pnily end the poliay or policias.transfe;rred:~o the. aorzpany

teking suah mort@~gc.*,:~, .,j.' ':

: It Gas hold bF the Supike Court of Tn&s in the oase'oi ConorfilE?arklrw~ (1: C-nsueltg

'Ensurunco Conpimy et 01 vo.'?-'noaley

ot al, 222 S!T

QiIl~thzt

n note of a subccriboc?

to ccpital~stockin er. izmurmcc company secixrcb by e uelid fLrsC.r.ic,Yqsc,e on reel estate to v:b.ich tha subscriberhas title, ~tccc$e$. by t!:e

corpor&tion in >aynant for the,stook;~ _.. 4-c'*poyxqf ~&AKLllyrcX?oived" tiithin the mmnlng of~~Lrtic&~ 22, &XtiOE a of the Constitutionand thnrefo:eUaJ.+ ...m:
.. ~.~ Chief 47ustS.&k$&.s~ spo?ci~g~in the above case soid: : ',:~ 'i,: :'~

"1% subsc@b&s note~&curcd by tl valid. first I!?oxt:~alp?

U~;OIl real tiststo,

occqknd by the corporationIn Fnyneilt of o'took,

cmnot 1X3 held as other IA-m praA70rty in tha full nenoe or the Ccm3titutio:i. T>.e corporation thorehy bbtaina somthing X?Gx@t&m tf1e z~ere +~roxise of the oubncrlberto i;oy. it obtoi;ls the right to hove bhe lnnd r@?,ro:jr,riatcd to the peylcont.

of t.he

note. ?'bisis 0 vdu~hle right, a property rIg?.t, 9~ fully so cs cny contract right, end, in gc-norrtl, ~13 voluubla ns my such right. The coxporst;ion rocoived it rind' cwns it. 1% ccx5ti.tut.c: e d.istisct ascot in its hondr;; rccognizod, :;cnrmlly, ~,s..q~o of tht, nest ~~t,eble,

dcsirobloand e~nlly '&r&rtible fdrrin of property.“.‘I,.. -

. ‘--.

‘2,

Ken. r;nltor

C. VJoodww.1,

j'li:r 10, 1939, rage 4

of the Coevxisslon

In tf:i.t Ou!;e of i'rudantial

Liie Insuranaa Cozrpny of Taxctn vs. f'elcxon,

222 P.7 967.
Fe cioh to rx~rticularly call your attention tc the fact.

that In the cane3 of 'Lasher vs. .Smyor

(Tex. Sup, Ct.) 25i 3-g

905 en?.

Sxipcionvs. Tlrnt State Fank of &arlllo (Tax.'

Sup. Ct.) 211 SiY

977;aitcd by ?.Yr. .~ ,, Brook8 In hia oplnion'or &!ril.'Z?;

1938, .thc notoe in " questionwxe unsecured~cin d tix couz$ rightfullyhold .~ ~ them to be **%ere** promlsos, to spay"

and not propertywith- '~. in the msaninn of the:Coxstitution, Article 12, Section 6, The oase of General Eonding& Cnnusltg Insuranca : coIqmlyvs. Ko5clay (Tt?x.~.civ..Ap~i) 174 sr: 1031, 'also 'I: cited by F!ri

Brooks,.wassrproaslgoverruledby the Supreme'

Court 'in

222 3%' 901,: above referred to. ,'
It la, the&ore;'th;c oninion of this Dc~art- ', mentand **you** are so edvj.r.cr!~that the pngncnt or capital stock.of an Insurance eorcI,nny w1thzotcr securedby first mort&ages on unincumhcix~real estate in Texas in valid, aonditlonedupon wstri~t cxnn~lianco v:ith all the provisio'no contained in'Artj.cle 45X3, ,ceuj?ra.

Vie emressly ovcrrule~theopinion.oftlZs l:o~artncnt, dated .April 22; 19W by,,Xr.

*o&s to ye- contrary.

,. ~*ustlng,that tki&:aotisfactorily answers your inquiry,we'are 'v

IA:A!i