Honorable William A. Harrison Opinion No. ini-656

Commissioner of Insurance State Board of Insurance Re: Whether Article Austin 14, Texas 21.11, Texas Insurance Code, the Non-Resident Agent's Licensing Law, isapplicable topersons Dear Mr. Harrison: residing in Puerto Rico

You request a:;opinion "as towhether theword 'State' as used inArticle 21.11, limits ;:?ep;'o‘:i,i.ons of such statute to 'c"eo.:;qer

48 states of theu~litsaj ~~;ates,orwhether j.t extends -toterritories, provinces and commonwealths and in particular Puerto Rico?"

The non-resident agent's licensing law found inArticle 21.11, Texas Insurance Code, provides:

"Upon application, in s,uchform as the Board of Insurance Commissioners may require, anon-resident of this State who isduly licensed to transact insurance other than life under the laws of the State wherein such applicant resides, if such State does not prohibit residents of this State from acting as insurance agent therein, the Board of Insurance Commissioners may issue to such applicant aNon-Resident Agent's license." This provision became part ofArticle 21.11by amendment in 1955, Acts 54th Leg., 1955, p. 604, ch. 210, gl.

It isnot anovel definition of the word "State" to define itgenerally soas to include territories, provinces and commonwealths of theUnited S'ca.tes i~fthe purposes and intent ofa oarticular statute indica%e ~Z1a.L suchadefinition was intended. Talbott v. Sil-derBow County, 139U.S. 438 (1891), was a case 'nvolving an attempt by Montana territory to tax shares of stock owned by an individual inanational bank located within the territory. Congress had passed a statute granting permission for States to tax shares of stock as the territory had attempted todo in this case. The contention was made that the consent was giv~enonly to States as such and did not extend to territories. The Court, basing itsdecision onHonorable William A.Harrison,Page 2. 

### (w-656)

the purpose of the law and the intent of Congress, held that the word "State" should be defined generally soas to include territories. page 

### 444: Inreaching this conclusion, the Court said.at

"Still further, while the word State is often used in contradistinction to Territory, yet in itsgeneral public sense, and as sometimes used in the statutes and the proceedings of the government, ithas the larger meaning ofany separate political community, including therein theDistrict of Columbia and the Territories, as well as those political communities known as States of theUnion." The Court quoted with approval the following passage from Geofroy **V.** Riggs, 

### 133U.S.258,268 (1890):

I!

. . . .separate communities, with an independent local government, are often described as States, though the extent of their political sovereignty be limited by relations to amore general government or to other countries."
Mora v.Majias, 

### 206F. 2d 

### 377,387 (1stCir.l953), was a recent case involving an attempt to enjoin the enforcement by the Secretary ofAgriculture and Commerce of Puerto Rico ofa price regulation setting amaximum price on rice. Inupholding a refusal by a single judge district court togrant the injunction, the Court discussed the applicability of 

### 28U.S.C. 

### s2281,which requires a three judge federal district court for injunctions restraining the operation or execution ofany State statute. Referring to theAct of Congress whereby Puerto Rico was transformed from a territory into a commonwealth, the Court said:

"Puerto Rico has thus not become a State in the federal Union like the 

### 48 States, but itwould seem tohave become a State within a common and accepted meaning of the word
. . . It isapolitical entity created by theact and with the consent of the people of Puerto Rico and joined inunion with theUnited States of America under the terms of the compact.
"A serious argument could therefore be made that the Commonwealth of Puerto Rico is a State within the intendment and policy of 

### 28U.S.C.~2281."Honorable William A.Harrison,Page 

### 3. (w-656)

Turning now toArticle 21.11, Texas Insurance Code, we find in the emergency clause of the act passing theamendment an expression of what the Texas Legislature was attempting todo when they passed the amendment. This clause reads as follows: "The fact that many other States issue

licenses toNon-Resident Agents and permit the division of commission on a retaliatory basis, makes it impossible for a Recording Agent of Texas to obtain aNon-Resident Agent's license in these States and thereby citizens of Texas having property located in these other States are prevented fromhaving the services of their own Recording Agents of Texas for such risks,

. . . .'I The purpose of this amendment is toaccommodate citizens of Texas, who own property in States other than Texas, byproviding a way whereby Texas Recording Agents can obtain NonResident Agent's licenses in those States due to their reciprocity requirements; therefore, the word "State" should be defined to give effect to this legislative purpose.

It isquite possible and probable that Texas citizens will own property in the territories, provinces and commonwealths of theUnited States as well as the other forty-eight States. If such territories, provinces and commonwealths require reciprocity inorder to license Non-Resident Agents, then todefine the word "State" not to include such areas would defeat the intention of theLegislature inpassing this amendment. For example, the Commonwealth of Puerto Rico requires such reciprocity (Puerto Rico Ins. Code, Art. 

### 9.260).

In other words the pilruoseof this amendment is to license non-residents in order that Texas Agents canmeet reciprocity requirements in other jurisdictions, and any construction of this statute which would restrict the licensing ofnonresidents to those residing in the other 

### 48 States would partiallydefeat this purpose.

It is our opinion that the word "State"as used in Article 21.11, Texas Insurance Code, should be given a general construction so that a territory or commonwealth exercising local sovereignty over a geographical area under Federal dominion, as for example the licensing of Insurance Agents, would fall within the scope ofArticle 21.11.Honorable William A. Harrison,Page 4. (wW?%)

SUMMARY

The word "State" as used in the Non-Resident Agent's licensing clause found inArticle 21.11, Texas Insurance Code, includes territories, provinces and commonwealths and in particular Puerto Rico.

Very trulyyours, WILL WILSON Attorney General of Texas

BYAssistant JF:mfw APPROVED: OPINION COMMITTEE Riley Eugene Fletcher, Chairman Marvin Brown Dean Davis Leonard Passmore
REVIEWED FOR THE ATTORNEY GENERAL BY: W.V. Geppert