THEA~~ORNEY GENERAL OFTEXAS

Hon. William A. Harrison Opinion Wo. WW-235 Commissionerof Insurance State Board of Insurance Austin 14, Texas Rer Whether the TM-County Wutual Insurance Companyuas organized and operating as such on Way 22, 1953, and thereby entitled to the industrial exemption contained in Article 17.02 of the Insurance Code. And related Dear Wr. Harrison: question.

Your request for an opinion is based upon the following facts:

Article 17.02 of the InsuranceCode exempts county mutual insurance companies "organizedand operating as a county mutual fire Insurance company on Way 22, 1953, whose business is devoted exclusively to the writing of industrial fire insurance policies. I .' from the provisions of S. B. 107, Acts 53rd Legislature, Regular Session 1953, Chapter 196, Page 540 and S.B. 15, Acts 54th Iegislature 1955, Chapter 117, Page 413. On Warch 12, 1953, the Doard of InsuranceCommissioners issued a temporary permit to Tri-CountyWutual InsuranceCompany to organize a county mutual fire insurance companyunder the provisions of Qapter 17, InsuranceCode. This permit granted the company authority to solicltand receive applications for insurance

### ana collect premiums thereon and issue receipts tharefor as provided by statutes,but not to issuepolicies of insurance or pay claims.

Thereafter, on June 4, 1953, and based upon affidavits, general interrogatories,policy forms, rates and applications dated and filemarked June 2 and June 4, 1953, the Board of Insurance Commissionersgranted to the Tri-CountyMutual Insurance Company a certificateof authority to pursue the business of a countymutual fire Insurance company in accordancewith the provisions of Chapter 17, Insurance Code.

Between the issuance to the company of the temporary permit and permanent certificateof authority, S. B. 107 became effedtive on Way 22, 1953, and made certain financial requirements of'countymutual insurance companies. However, S. B. 107 contalned the following exemption:Ron. William A. Harrison, page 2 (WI+235)

'Theprovisions of this Act shallnot apply to any countymutual insurance companynow organized and operating as a countymutual fire insurance companywhose business Is devoted exclusively to thz writing of industrial fire insurancepolicies.

. . . Thereafter,on June 20, 1954, the companywas issued a certificateof authority to transact the business of an lndustrial countymutual fire Insurance companydevoted exclusively to the writing of industrial fire insurancepolicies.

However, on July 10, 1955, the companywas issued a certificateof authority only to continue the business in force as of December 31, 1954, because of failure to qualify under the provisions of S. B. 107.

This certificateof authority of July 10, 1955, was issued in compliancewith the provisions of S. B. 107 prior to the effective date of S. B. 15. S. B. 15, which became effective September 7, 1955, contained the exemptionwhich is of primary concern to this request and it is as follows:

1, .Provided,however, that neither the provisions of this Act nor the provisions of Senate Bill No. 107, Acts of the 53rd Regular Session, Texas Legislature, 1953, effectiveWay 22, 1953, shall apply to any countymutual insurance company organized and operating as a countymutual fire insurance company on Way 22, 1953, whose business is devoted exclusively to the wziting of industrial fire insurancepolicies.

(Now found in Article 17.02 of the Insur- &e'Code).
We quote from your opinion request the following: "The Tri-CountyWutual InsuranceCompanywas not issued a certificateof authority for the year ending Way 31, 1957. The companyhas made application for a certificate of authorityunder the industrial exemption contained In S.B. 15 for the year ,* ending Way 31, 

### 1958.There appears to be no question .L,, that on September 7, 1955, the effectivedate of S.B. fe 15, Tri-County was devoted exclusively to the writing

of industrial.

business. However, there is some question as to whether the company is entitled to a certificate of authorityunder the industrial exemption contained in S.B. 15 because itmust have been 'organized and operating as a countymutual fire insuranceHon. William A. Harrison, page 3 (W-235)

company on Way 22, 1953'. The company reoelved its first certificateof authority on June A, 1953, after having received a temporarypermit to organize a countymutual fire insurance company on lCarchl2, 19%.
"We respectfully requestyour opinion as to whether the Tri-CountyWutual InsuranceCompany was organized and operating as a countymutual fire insurance company on Kay 22, 1953, and thereby entitled to the industrial exemption contained In S. B. 15, (Article17.02)?
"We further request your opinion as to whether there is any sort of waiver, esto,ppel, or bar against the State Board of Insurance from raisrn,g this question at this time due to the fact that the Board of InsuranceCommissionerson June 4, 1953, and July 20, 1954, issued to the company unrestricted certificatesof authority after the effectivedate of S. B. 107, Kay 22, 1953." The scheme of organizationof countymutual insurance companiesprovided in Chapter 17 of the InsuranceCode at the time the Tri-CountyWutual Insurance Company obtained Its temporary permit was as follows: The Board of InsuranceCommissioners issued a temporarypermit to the applicant to allow the solicitation of enough policies of insurance to satisfy theminimum requirementsof the Code. When theseminimum requirementshad been satisfied, then, and not until then, the charter could he granted, the companywould be fully organized and could operate as a countymutual insurance company. See Articles 17.02-17.05 of the Insurance Code,before the amendatory act of 1953. The temporarypermit issued to Tri-CountyPlutualInsurance Company on March 12, 1953, was only for thispurpose of organization. Its certificateof authority to operate as a countymutual fire insurance companywas not issueduntil June 4, 1953, after the effectivedate of S. B. 107, Way 22, 1953. Therefore, the company was not organized and operating as a countymutual fire insurance company on Way 22, 1953.

Your second questionmust also be answered in the negative. The issuance of certificatesof authority to the company in such form as those of June 4, 1953, and July 20, 1954, was not authorizedby statute due to the fact that apparently the company had not qualifiedunder the provisions of S. B. 107 and, as stated above, was not organized and operating on Way 22, 1953. Normally no estoppelwill arise against the StatEfrom the exerciseof its regulatorypowers, and certainly therewould be none as a result of unauthorized actions of a Stateboard. Weatherly v. Jackson, 123 Tex. 213, 71 S. W.2d 259 (1934);Carruthersv. Rogan, 96 Tex. 113, 70 s. w. 18 

### (1902).” -

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Ron. William A. Harrison, page 4 (WW-235)

SuMkARY

The Tri-CountyMutual InsuranceCompanywas not organized and operating as a countymutual fire insurance company on Way 22, 1953, so as to be entitled to the industrialexemption contained in Article 17.02 of the InsuranceCode. There is no estoppel against the StateBoard of Insurance from raising this question at this time.
Yours very truly,
WILL WILSON Attorney General of Texas

FWE:pc APPROVED: OPINION COMWITTEE:
H. Grady Chandler, Chairman FRANE W, ELLIOTT, JR. Assistant

Wary Kate Wall
W. R. Hemphill Roger Daily
REVIEWEII

FOR THE ATTORNEY GENERAL BY: Geo. P. Blackburn