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,$ctc our file on 

1 Attorney Conoral 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:or tt&".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 ostatc where thoholders thereof wore 

: poyora oould not be used:inJwQ?mnt of capitol stock 

.of m 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 insurance compeny end providen in 

pxragmph (5) thereof thiat ~tha.chn;-ter shall sot forth 

"the iz:ount of .its capital stock, not less than one hundroa t.l;ousmdollars, cl1 of which cepital steak must 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 accordance nith the provisions ol Article Z&717, 

cu:)rn, with limitad rig?t A o snd privileges and 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 Incuronce coqmny nay consist and 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 ~~ 

'double the mount lomsd thereon, exclusive 

of buildings, uzlesn~such buildings ere 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 Conorfil E?arklrw~ (1: C-nsueltg 'Ensurunco Conpimy 

et 01 vo.'?-'noaley ot al, 222 S!T QiIl~thzt nnote of a 

subccriboc? to ccpital~stock in er. izmurmcc company 

secixrcb by e uelid fLrsC.r.ic,Yqsc,e on reel estate to v:b.ich 

tha subscriber has title, ~tccc$e$. by t!:e corpor&tion in 

>aynant for the,stook;~ 4-c _..'*poyxqf ~&AKLlly rcX?oived" 

tiithin the mmnlng of~~Lrtic&~ 22, &XtiOE a of the Constitution and thnrefo:e UaJ.+ ...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 corporation In 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 oubncrlber to i;oy. it obtoi;ls 

the right to hove bhe lnnd r@?,ro:jr,riatcd to 

the peylcont. of t.he note. ?'bis is 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, dcsiroblo and 

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?. Sxipcion vs. 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 " 

question wxe unsecured~cin d tix couz$ rightfully hold .~ ~ 

them to be %ere promlsos, to spay" and not property with- '~. 

in the msaninn of the:Coxstitution, Article 12, Section 

6, The oase of General Eonding & Cnnusltg Insuranca : 

coIqmly vs. Ko5clay (Tt?x.~.civ..Ap~i) 174 sr: 1031, 'also 'I: 

cited by F!ri Brooks,.was srproaslg overruled by 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 secured by first 

mort&ages on unincumhcix~ real estate in Texas in valid, 

aonditloned upon wstri~t cxnn~lianco v:ith all the provisio'no contained in'Artj.cle 45X3, ,ceuj?ra. Vie emressly 

ovcrrule~the opinion.of tlZs 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