Honorable W1111atn A. Narrlaon 

Commissioner of Insurance 

Austin, &xas 

Dear Mr. Harrison: 

Opinion No. WW-1337-A 

Re: Authority of the Insurance 

Department to issue original 

or renewa& local agents’ 

lioenses to firms, or partnerahlps composed. partly 

of individuals who do not 

qualify by examination as 

local recording agents and 

who are not actively engaged in writing insurance. 

You have reque.s “d tha,t thlso,fflce reconsider its 

opinion e-1337 whl%h$i % volvea 

we quote:‘,fram your letter:: : 

the following, Que#.lon&~hlch 

, 

. 

. 

. ., 

. I 111.. ,,i 

Is this D&&me& authorlz~ed to. issue either 

an orlginal or renew&l of local recording agent’s license 

to a firm or partnership lf’ such firm or partnership Is 

oomposed partly of indivl&u#ls whi, qualify as local 

recording agents and partly of individuals who do not 

qualify and who are aot active In the writing of insurance 

busfness? In answsrmng ‘this c&&Won, assume that all 

o,f the@rsons 1nbWeted ln such firm are partners. 

“2~. fifth yo.ur ~anawer. to question NG. 1 is in the negative, 1s this Department authorized to !ssue”either an 

original or reneyal of looal recording agent’8 l~loense to 

a firm or partnership If such firm or partnership .is 

composed partly of lndlvlduals who qualify as local, 

recording agents and partly of individuals who have an 

interest on’1 in the ~proflts of such firm and have no’volce 

or author1 + y ln the BOaratIon of such firm? (i.e. the 

aurvlvlng widow of a partner with such widow’s Interest 

limited by the ‘partnership agreement to an Interest only 

in the p~otlta of the firm with the surviving partners 

to have full authar1ty.W its operation). 
Honorable William A. Harrlson, page 2 (WW-1337-A) 

“3. If your answer to question No. 1 or question 

No. 2 Is In the affirmative, I request your opinion as 

to whether or not this Department should require all 

persons named in the license to me,et the requirements 

of Section 6 of Article 21.14 (pertaining to written 

examination) before Issuing such license.” 

These questions are directed specifically to the provisions of Article 21.14 of the Texas Insurance Code, the 

relevant portlbna of'wh%oh.read Be;follows:' : 

II 1 . . 

':'Sec. 3. Application for License; To Whom License 

May be Issued; Corporationa Not to Be Llcensed.-cWhen 

any person or firm shall dealre to engagc In business 

as a local recordlng,agent for an insurance company or 

insurance carrier, he shall make application for a lfcense 

to the Board of Insurance Commissioners, in such form as 

the Board may require, which application shall require a 

algned endorsement by General or State or Special Agent of 

a qualified insurance company or Insurance carrier that 

applicant Is a resident of Texas, trustworthy, of good 

character and good reputation, and la worthy of a license. 

!$he Board 16 authorize4 to issue licenses to firms or to 

3zndlvldualengagln&aa partners In the insurance business, 

provlded the nampe, of all 'persons .interested in, such firm 

are named In the Pioense, and each named as active In the 

business of the partnerahlp qualify, and it be ,established 

that none not aotlve have interest In partnership princlpally to have written and be compensated therefor for 

Insurance on property controlled through ownership, 

mortgage or sale, family relationship, or employment; and 

provided further, that all licensed agents must be 

reeidents of Texaa . . . The Board shall not Issue a 

license to a corporation. 

“Sec. 4. Acting Without License Forbidden. ‘-:-It 

shall be unlawful for any person or firm or partnership 

to act as a local reoord%ng agent or solicitor In 

procuring buslnese for any insurance oompany, corporation, 

interinsurance exchange, miutual, reciprocal, association, 

Lloyd6 or other Insurance carrier, until he shall have 

In force the license provided for herein. 
Honorable William A. Harrison, page ,3 (w-1337-A) 

“Sec. 5. Active Agents or Solicitors Only to Be 

Licensed: --No license shall be granted to any person, 

firm or partnership, either as a local recording agent 

or solicitor, for the purpose of writing any form of 

insurance, unless it is found by the Board of Insurance 

Commissioners that such,person or firm Is, or Intends 

to be, actively engaged in the soliciting or writing 

, of Insurance from the public generally; that each person 

or lndivldual of a firm Is a resident of Texas, of good 

character and good reputation, worthy of a license, and 

Is to be actively engaged In good faith in the business 

of Insurance, and that application is not being made %n 

order to evade the laws against rebating and discrimination either for the applicant or for some other person. 

Nothing herein contained shall prohibit his insuring his 

own property or properties In which heXhas an interest; 

but it is the Intent of this section ta prohibit coercion 

of insurance and to preserve to each citizen the right 

to choose his own agent or Insurance carrier, and to 

prohibit the licensing of an individual or firm to 

engage in the insurance business principally to handle 

business which he controls only through ownership, 

mortgage or sale, family relationship or employment,..'.. 

‘,I 

“Sec. 6. Examination Required; Exceptions.--If appllcant for a local recording agent's license has not prior 

to date of such a.pplfcation, been licensed as'a, local 

reoording agent; or If the.appllcant for a solicitor's 

license has not been licensed as a local recording agent 

or as a solicitor prior to date of such application, the 

Board of Insurance Commissioners shall require such 

applicant to submit to a written examination covering 

all kinds of Insurance or contracts, which license if 

granted, will permit the application to solicit. Any 

applicant for local recording agent's license who has 

prior to the date of auah application been licensed as a 

local recording agent, shall be entitled to a local 

recording agent's license without examination, provided 

the other requirements of this article are meet. Any 

applloant for solicitor's license who has been licensed 

as a local reoording agent or as a solicitor prior to 

date of such application, shall be entitled to a solicitor's license without an examination, provided the other 

requirements of this article are met," 

You have informed ua that at various times there have been 

different and conflicting administrative constructions of this 

statute by the Insurance Commlsslon. One construction attempted 

to harmonize the provisions of the section. For a long period 
..,~ 1 

.r 

. 

. 

Honorable William A. Herrleon, page 4 (WW-1337-A) 

of time, the administrative construction was that the provision8 

were in direct conflict and the exception was ignored, and 

everyone partiaipatlng in an Insurance agency was required to 

hav.e a license. 

In contdaering your first questicn, It is apparent that 

we are faced with a matter of statutory construction, as there 

appears to be a basic repugnancy in the provisionsof Section.3 

,ana Section 5. The language of Section 3 authoris& the Boar d 

to issue licenses to firms or to individuals engagtng as partner8 

l ~ In the insurance business and, by inference at least, indicates 

that some of the members o?,,the partnership may be.active and 

other8 not active if ‘it.,.59 . . . establishes that none not 

active have interest In .Qartnership principally to have written 

and be comQet&sated therefor f@r insurance on property controlled 

through ownership,’ . . . s Cn the other hand, Sectian 5 specifically provides that no licensee shall be granted to any 

person, firm or partnership unless the Board of Insurance Commissionem first fMa that ” , . . LIoch person or firm is, or intends 

to be, actively engaged in the eolicltlng or writing of 

insurance from the public generally; that each person or individual of a firm 16 a xW!Jiflent of Texas, of good character and good 

reputation, northy of.a license, and is to be actively engaged 

Tn good faith in the business of insurance, . : :’ 

WeJeare aware that a fundamental rule of statutory construction requ ,res 

i 

that a statute be construed as a whole and that 

all of it “parts be harnonited, if possible, so as to give 

effect. to this entire act acoorUlng to the evident intention of 

tha Legislature. 39 Teat. Jur. 209, Sec. 113. In the instant 

case, however, ,we do not believe that the general ana somewhat 

ambiguous language of Sectlon3 can be harmonized with the plain 

an&specific provisions of Section 5. Unaer such circumstances 

it is an equally fundamental rule of statutory construction 

that in case of a conflict between a general Qrovision and a 

special provision dealing with the same subject, or between 

general language and specific language, the special or specific 

provision will control. 3 

3 

Tex. Jr. 212, Sec. 114; City of San 

Antonio v. Toepperwein; 10 Tex. 43, 133 SW 416. 

One of the spedific Qurposes of this act, as expressed 

~ in Section 5, is to prohibit the licensing of an individual to 

engage in the insurance business principally to handle business 

which he controls through ownership, mortgage or sale, family 

relationship or emplbyment. If we construe Section 3 a8 creating 

an exception for those partners who are not active, the contraaictory effect of such construction would result in the 

statute providing, in effect, that no license shall be granted 

to a firm unless all members are active, except in a case where 
Honorable William A. Harrison, page 5 (WW-1337-A) ' 

one or more members are inactive. The previously quoted 

specific language of Section 5, that each person or individual of 

a firm is to be actively engaged in the business of insurance, 

would thereby be nullified and one of the central purposes of 

the statute would thereby be frustrated. 

. 

As previously suggested, the language In Section 3 that. 

might be construed as authorizing inactive members of a partnership and as exempting them from the licensing requirements of 

Article 21.14 Is somewhat ambiguous. We think the provision in 

Section 3 providing that the names, of all persons Interested in 

the firm be named in the license, and that "each named as active 

in the business of the partnership qualify" means.nothlng more 

than that there shall be no hidden or silent partners and that 

each person who is named as a partner shall qualify as an 

insurance agent under the licensing requirements of Article 21.14. 

The language providing that it must be established "that none not 

active have interest In partnership principally to have written 

and be compensated therefor for insurance on property controlled 

through ownership, mortgage or sale, family relationship, or 

employment" does pose more difficulty. Considering the overall 

purposes of thisstatute, we believe the true meaning of this 

language is simply that it must be established that there are 

no inactive persons In the partnership principally to write 

controlled business. 

As previously indicated, we believe that the clear and 

specific language of Section 5 must control and that the general 

and ambiguous language of Section 3 must yield In the event of 

a conflict. This construction of the statute is strengthened 

by the fact that Article 21.14 contains specific exceptions from 

the.licensing requirements in Section 2 and Section .20, and specific exceptions from the examination requirements in Section 6 

and 6a. Had the Legislature intended to authorize inactive partners and exempt them from either the licensing or, examination 

requirements, it ia only logical that It would have done so 

clearly and explScit3.y as in the case of the other exceptions. 

While not controlling of the conclusions we have reached, 

there are certain questions that might arise under a contrary 

cans%ruction of this statute. For example, Article' 21.11 

prohibits any agent from paying, directly dr~-Ind~$tiectly,"any 

oom,mission to any person.or firm. not duly licensed by the,board 

as an insurance agent. Would,an active dUCy licensed partner 

violate this provision by sharing his profits with an inactive~ 

non-licensed partner, or In other words, is this indirectly 

paying a commission to a person not duly licensed? 
., I.,, , l,. . 

Honorable William A. Harrison, page 6 (WW-1337-A) 

L I 

Additionally, this Office in Opinions No. o-2453 and 

O-2453A issued ln 1940, concluded that limited partnerships 

were prohibited from engaging in the business of insurance 

agents. in this State. This ruling was based on the provision 

of ~Artlcle 6110, V.C.S., which prohibits a llmltea. partnership 

from carrying on any banking or insurance business, and this 

same provision is contained In the Texas Uniform Limited Partnership Act. Article 6132a, Section 4. A so-called “Inactive” 

partner could thus not be a llmltea partner but would be a 

general partner, who ordinarily la an agent of the partnership 

for the purpose of its ,,buslnesa. In this situation, however, 

he would have no authority to act for the partnerehip ln Its 

insurance business. 

For all of the forgoing reasons, we conclude that your 

first question should be answered.in the negative. 

.Tiour second question asks, In effect, whether an exception could be made if the inactive partner has an Interest only 

in the profits of such Plrm and has no voice or authority In 

the operation of the firm. We find no basis In the statutes 

for any such exception, and accordingly answer your second 

question in the negative. 

Cur answer to the first and second questions make an 

answer to your third question unnecessary. 

. Opinion No. W-1337, as originally wrltten,.ls therefore 

withdrawn and this opinion substituted therefor. 

SUMMARY 

The’provialb’ns of Secglon 5 of ArtZclei21,14;of the 

Texas Insurance Code prchiblt the Insurance. Department 

from issuing a local recoralng agent’s llcense,to a 

firm or partnerahlp unless each individual or member of 

~ the partnership is to be actively engaged in good faith 

In the business of insurance and meets all of the other 

quallficatlons requlrea for such license. 

Sincerely yours, 

WILL WILSON 

Attorney General of Texas 

‘%Y 

Robert Flowers 

Assistant 
Honorable Willlam A. Harrison I, pdge ,.7, (W-1337-A) 

APPROVED: 

OPINION COMMITTEE 

Cecil Rbtsch 

Llnwara Shivers 

REVIEWED FOR THE ATTORNEX GENERAL 

BY: Leonard Passmore 

.