Bmrdoi Zmuxnce Coml44ioner4 

Auetln, Toxw 

oeatlsmen: Attentionr Mr. D. B. B4rroir 

open 210. O-3015 

: CWWmaction of Articlrr 4725 

wd 4706, concrraing rli&iblo 

InYertmefltr for life in4~cr 

companies and Sira or caogalty 

inrumnce companies in Texap, 

rmpectively, iuvolving puticiFatting ce*l?lcatcr or mutIJa1 

invertwnt cowern.. 

Wo 4ckaowledg4 rmdlpt of your letter of J4nu4ry 2, 1941, repuertiag 4n opl&n from t&l4 &partment upon quertionr propounded, your’lattbr 

belng 4, follows: 

“I am enclosing for your conelderation, in connectIon with 

the question.4 asked in thin letter, the following paperr: 

“‘Proapectm of the HamIlton Inve4tment Plan, Cowolidation of Trust Indenture ~,i the Hamilton Deposltore~Corporation 

audThe International Truet Company as to EamlltonTrust Sham4 

and %m.llton Trurt Shares Certificate.! 

“I am also enclosing 4 Prorpectus of the Ma4sachuaetts Investors Trust and 4 Proepectua of the Boeton Fund, Inc. The 

legality of investment of inlrurance companiesf funds in the 

Hamilton Trust, the Maseachueetta.Inve4tors Tru4t and the Bo4ton 

Fund, ha4 been queati-d and we, therefore reepec~iWJy reque4t 

an opinion from you cihout the matter. 

“In connection with the Hamilton Trust, your attentlon’is 

directed to the statement made on Page 4 of the Proapectum uh4rein there Is stated ‘Thle is not an lnveetment in the stock of the 

Eam11ton .corporst ion, ’ and to the statements nmde on Pags 6 under 

the heading ‘Brief Sumwary of the Hamilton Plan.’ In a letter 

received bythia Departwnt and signed by the President of the 

Hamilton Corporation, there is itated: ‘There la no essential 

difference, 48 far as vc can eee, between investing in our iuna 

and investing ip the individual stocks.’ 
Board of Ine-ce Cwncismiwerr, Page 2 (o-3015) 

“Your attention is alro directed to the fact that & the 

Maseachusetto InveBtorr Trust and the Boston Fund, Incorporztod, 

the imeeting company or individual doer 10 by purchsoa oharer 

of the trwt. Your opl!Um ir respectfully requested in connection with this matter ae to the following quertionr: 

“1. May the fun& of a TezaB Life Inrurance Company be invested with fho Hamilton Depositora Corporot.1~ for Eamlltm& 

Trust Sharer Certificatea and if no, mart the variour rtoc&r purchased by the Hamilton Doporltorr Corporation be rtockr of cornpnniem which me eligible iammtmntr for the iundr of a Texw 

Life Iwuranc e Company in rccordence with the provi#ionn of Settioq 3 of Artlcle 4725 of our insurance ntatuten? 

“2. May the fuuda of a Texan Fire or Cmuzlty Inmuroncs 

Company be inveated with the Eemi~ton Deporitorr Corporation for 

Hamilton Tnmt Shares Certlficatee md if 10, mumt the various 

stocka purchased by the Hamilton Depoaitorr Corporation be rtocko 

of companies eligible for investmontm by Texan Fire and Carualty 

Inmamnce Compeniea in accordance with the pr&rlonn of Article 

4706, Section D of oux ino-ce etatutes? In thir counection, 

it should be noted that the above referred to Article provide8 

in effect that the tide of a Texas Fire sqd Casualty Innurence 

Company may be @vented in the etock of a solvent dividend pkying corporation Incorporated under the lawn of a state in which 

the lnaursnce compzny 1~ duly authprized to conduct an inouremce 

bu8Meso. 

“3. May the fund4 of a Texas Life Inourance Company be inveoted in the Worachuoettr Invemtorr Tnmt Sharer or Booton 

Fund, Inc., and if 10, ie it neces&wy that all of the mtocl&n 

owned by the Trurt be hocka eligible for inrertint .by a Teur 

Life Insurance Company in accdrdssce with Article 4725 of our 

insurance rtatuter? 

“4. May the fur&U of 6 Texar Fire or Canulty Inoursnce 

Company be l+vorted ln Marrachurettr Involtorr Truot Sbareo or 

Booton !Und, Inc. Truot Sharer and if 10, munt the rtocka owned 

by the Truot be eligible inventtmantr for the i~umace compnny 

in accordance with the provisiona of Article 4706 of oy ins.w- 

~4 atrtuttss, and eat the Texan Fire or Camaalty Ineuranc& 

Company be authorized to tranoact buoinern Fn the State .of _ 

Maaeachueettsl” . 

gone of the certificates or &ares mentioned by you arc e.jiglble 

for lnveetzkent by the respective insuranc e compauiee mention& .., 

Life inmrance compaqies incorpore,ted under the lavs Ff,t-i$q State 

are authorized to invest their surplus, or zny part thereof, over.apd sboVe 
Board of Inaurauce Comimioners, Page 3 (o-3015) 

the aaount of their reaervel and capital stock, in the “capital stock, bonda, 

debenturea, b1U.r of exchange, or other comercial notes or bill, and mecurltiem of any aolveat dividend-paying corporation which han not defaulted in 

the paynmnt of any of itr obligationr for a period of five (5) year,, + * it". 

(Vernon’8 Civ. Stat. Anno. Art. k725(3). . . 

Corporationa other than life, health and accident lnauraace compaaier 

organized under the law.wr of Texar are authorized to invert their fundn over 

and above their paid-up capital ntock in: “* * * (d) the ntockr or boadm or 

other rvidencer of iadabteduass of any aolvrnt dividend-payiq corporation, 

incorporated under the lawa of thin State, or of the United Statea, or of my 

atate, country, or province lh which ruch compaay may be duly licenned to conduct an iaaurancs bunlaeaa.” 

It w1l.l thur be reea a security to be eligible for either clam of 

theas Texam corporatlone muot be the direct obligation of the isruing corporation. The statutory definition of eligible rccurltier excludem, therefore, 

etock or rharee evldenclng merely participating lntcrente by the holdem in 

the net profit0 if any of the imrulug concern. Such a plea 11 in the nature 

of a mutual invectaent compaay. 

Au examlaation of the Ilterature of the renpective illruing cwpaniem 

in the present .case dlsclorea that their share8 or certificatetv ‘do not represent direct pecuniary obligations of the lsmlng companies, an contemplated 

by the statutes, but on the contrary, represent aerely psrticlpatiag interest6 

in the net eamlnga (if any) of the issuing concera. For thin reason, such 

stock, shares, or cerbiflcates, by whatsoever name called, do not constitute 

ell.gible iuveatmeute for our inmrao ce companies. 

Moreover, with respect to the Massachuretta Investors’ Truot shares 

or Boston Fund, Inc., lt la not clear that such concern is a corporation, within the meaning of that word, a8 it la ueed in our etatutee, or understood generally. On the contrary, there la evidence in the literature of that company 

lxdlcating it la a mere voluntary aseociation of ludividualn governed by trueteee and not by the board of directors contelnplated by the laws governing corporatione generally. If thin be true, its securitier are not eligible, because 

It is not a corporation, e.8 required by the statutea above quoted. However 

that question may be, its certificatea or &ares fall within the condemoation 

first above diecussed. 

We tmat thin will be a sufficient aumer to your lnquiriea. 

AFTROVED JAIi 22, I.941 

/s/ Grover Sellera 

Very truly yours 

Al7!ORNEf G- OF TEihS 

FIRSI ASSISTART By /s/ Ocie Speer 

ATl!oRi4RYoERERAG Ocie Spser 

Aaalatant 

OS-m-w APPROVRR OPIRIOR Cm 

RY /s/ B.W.B. 

CRAIRMAN