Hoaorabie 0. P. Lockhart

Board of,Insurancehmissfoners Austin, Texas Dear Sir: opinion Ho. o-3979 Rer The duties of a receiver and the fuuotion of theAttorney General. Your request for nn eplnion has been reoeived by this department. Delowwe net out the body of your letter. "Thfs letter will be acco~~~ied by a 26-page report of the investigation of theaffair. of the Southern Underwriters and the United Employers Casual* Compauy of Houston, Texas, the latter now in reoeivership and **in** process of liquidationby 

### uur Consemator, Mr. Vi11 0. Knox. "Please study this report and, assuming the findings oan be substantiated by legal, competentproof, pleaee give us your opinion upon the follwing points in ocnnectionwith the matter refleoted by suoh report. "1. Was the aapital stock of the United Employers Casualy Company 'subscribed in good faith and fully paid for' a6 required by Artioles 4991 and 49931

“2. Do you think it lawful and proper for your Department to institute and prosecute a oivil aotion for the recovery of $ZgO,OOO subsoribed oapital atook, and for such other srprs as may be recovered from+hose who appear to be liable therefor asreflected by tie report and as may be found by further imvestigatiom, such suit to be filed on~behalf of the State and this Board for the benefit of the oreditors of the United Ymployers Casualty Company?'

“3. Do you find that the provisd.ws of any ariminal'or penal laws of the State have been violated by any persons in the transactions reflected by the report, ,andif so, 611 your Department alone, or in oonjunction with the proper subordinate,>erlocal prosecuting atterneys, institute and prosecuteto a final eonelusion the meoessary criminal proceedings?" A epitome of tho report mentioned im your letter, in so **far** as it oonoerns our question, is as follO~.S: A, and associates, proposed to organize and promote Y insurance Company. B, the principa, stockholder in X Insurance Company, alledgedly leansA, and associates,money **which** is deposited in a bank amd represented to be subscribed and paid-up-

.



### Hon.0. Y.Loakhart. page2 (O-3979)

oapital stook of i-ho Y IusuranoeCompauy. 

### On theb@miaof aa affidavit sipsd by the **bank**presidst thnt tha msnsy bsloagsd ts 

### andwasat ihe disposal of Y InsuranceCompany, ths 

### lattercompany is granted

a ohartsr anda psrmitto do business in thir Stat.. A wd assosiatssthan agres to b\l(y a building from X InsuranssCs8~. (h that suy day, Y aonpany **withdraws** by 

### oheoktheentire au~unt pariously on 

### dopssit. The **oheok Is**  sndorssd by B.



### Yourquestion

nusberad 

### on iaquirssifX wmpa8y.s sapital#took was "subsoribsd

in good faith and fully paid **for"** as required

### by statutory provisions. It is the consideredopinion of this 

### doprtmwt thatthequestion is one of oaot, and, 

### inaooordana ulth doparWsntal 

### pliq, ~6 must dooline

to pass upOa 

### it. Your question nuukred 

### tworsquests thisdeparknt's opinion as uhether or not it would bs lawful and **proper for**  **tha Attomy**  Caneral 

### to instituts oiril prooeedingr, looking ts ths **rowvery** of the alleged oapital stook of the saw **for** the bsnefit sf the 

### wsditors of the defunot oonoern. We have bssn unable to find upr statutory prmision ossmanding or authorizing this dspartuent to intsrasds oa behalf of 

### tho orsditers of adefunctinmrauoo oompsw. Thisiunotion rouldappsartoba the. positive duty of the Liquidator

### prsvidsd **for** in Artiols M)680, Vornon*s Annotatsd Civil Statutss. The psrt$nrt, part of that Article reads: 'The said reosiror and his **mooemors** in offiss sbll he wstod v opsration of law dth the title ts all of the propsrty, oontraotsand rights of aotion of sush insursri . . . "Upon taking possession of the assets of a delinquent insurer the **reoeiv** lr shall, subjoot te the direotion of the osurt. imnediatolyproaeed to oonduct the business of the inqurer, **or** to take suoh step8as may bs nsssssary to oonserVe the assets and proteot 

### therightsofpelioyholdsrs and olaimants for the **purpom** of liquidating,rehabilitating,

### roinauring, reorgsnixing,

**or** 

### oomervimg theaffsirs of the insurer. . . 9, the oapital stock of any oorporatisn is irrevocablydedioated to the satirfaotionof all the Obligation6 the oonsarnMy assuue. It is the 

### ummt of 

### moneyoontributed by the **shu6 omers**  **66 the**  

### flnanoial **hEi** for the proseoutionof tha oorporatsbusiness. It is 

### forthe soourity of ths publis rho ahsose to transaot buSine86with 

### thatprtioulu oonoarn. 'Iheliquidator or nseivsd 

### is ohargod 

### dth it8 oontrol andadninistration for the banefit of ury olaimant or 

### oroditm of ths oorparation. The Stat0 as a gorsmusntal agsn0y has no 

### fimatoial interest 

### in *s oapital stock. I%Orightsof ths individual 'alai-f will hs adequatsly pratsotad in this situationby the 8tatutory **liquidator.**

### . -

Hon. c. “

. Lo&hart, p*ge 3 (O-3978)

Y&r third question inquires if any ariminal or penal statute has beanviolated. If so, you ask if this departmentwill conduat,a prosecution. We advise that this should be discussedwith the ~localprosecutingattorneywho is expressly charged by statwte pi& the conduct of any ariminal proseoution. Yours very truly ArlTORNiY

GENEBAL OF TEDS ~% /a/ lb* J. 'Fanning Wm. J. Fhnning 

### Assislant % /8/ Gnlndy m.1lia.m

**Grundy** Williams

Opinion Conmittee ByBWB ohairman