THEA~~ORNEY GENERAL 

OFTEXAS 

Hon. William A. Harrison Opinion Wo. WW-235 

Commissioner of Insurance 

State Board of Insurance 

Austin 14, Texas 

Rer Whether the TM-County Wutual Insurance Company uas 

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 Insurance Code exempts county 

mutual insurance companies "organized and 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 Insurance Commissioners issued a temporary 

permit to Tri-County Wutual Insurance Company to organize a county mutual fire insurance company under the provisions of Qapter 

17, Insurance Code. This permit granted the company authority 

to soliclt and receive applications for insurance ana collect 

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

Thereafter, on June 4, 1953, and based upon affidavits, 

general interrogatories, policy forms, rates and applications 

dated and file marked June 2 and June 4, 1953, the Board of Insurance Commissioners granted to the Tri-County Mutual Insurance 

Company a certificate of authority to pursue the business of a 

county mutual fire Insurance company in accordance with the provisions of Chapter 17, Insurance Code. 

Between the issuance to the company of the temporary 

permit and permanent certificate of authority, S. B. 107 became 

effedtive on Way 22, 1953, and made certain financial requirements of'county mutual insurance companies. However, S. B. 107 

contalned the following exemption: 
Ron. William A. Harrison, page 2 (WI+235) 

'The provisions of this Act shall not apply 

to any county mutual insurance company now organized and operating as a county mutual fire insurance company whose business Is devoted exclusively 

to thz writing of industrial fire insurance policies. 

. . . 

Thereafter, on June 20, 1954, the company was issued a 

certificate of authority to transact the business of an lndustrial county mutual fire Insurance company devoted exclusively 

to the writing of industrial fire insurance policies. 

However, on July 10, 1955, the company was issued a 

certificate of 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 certificate of authority of July 10, 1955, was issued in compliance with 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 exemption which 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, effective Way 

22, 1953, shall apply to any county mutual insurance company organized and operating as a 

county mutual fire insurance company on Way 22, 

1953, whose business is devoted exclusively to 

the wziting of industrial fire insurance policies. 

(Now found in Article 17.02 of the Insur- 

&e'Code). 

We quote from your opinion request the following: 

"The Tri-County Wutual Insurance Company was 

not issued a certificate of authority for the year 

ending Way 31, 1957. The company has made application for a certificate of authority under 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 effective date 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 authority under the industrial exemption 

contained in S.B. 15 because it must have been 'organized and operating as a county mutual fire insurance 
Hon. William A. Harrison, page 3 (W-235) 

company on Way 22, 1953'. The company reoelved 

its first certificate of authority on June A, 

1953, after having received a temporary permit 

to organize a county mutual fire insurance company on lCarchl2, 19%. 

"We respectfully request your opinion as 

to whether the Tri-County Wutual Insurance Company was organized and operating as a county mutual fire insurance company on Kay 22, 1953, and 

thereby entitled to the industrial exemption contained In S. B. 15, (Article 17.02)? 

"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 Insurance Commissioners on June 4, 

1953, and July 20, 1954, issued to the company 

unrestricted certificates of authority after the 

effective date of S. B. 107, Kay 22, 1953." 

The scheme of organization of county mutual insurance 

companies provided in Chapter 17 of the Insurance Code at the 

time the Tri-County Wutual Insurance Company obtained Its temporary permit was as follows: The Board of Insurance Commissioners issued a temporary permit to the applicant to allow the solicitation of enough policies of insurance to satisfy the minimum 

requirements of the Code. When these minimum requirements had 

been satisfied, then, and not until then, the charter could he 

granted, the company would be fully organized and could operate 

as a county mutual insurance company. See Articles 17.02-17.05 

of the Insurance Code, before the amendatory act of 1953. The 

temporary permit issued to Tri-County Plutual Insurance Company 

on March 12, 1953, was only for this purpose of organization. 

Its certificate of authority to operate as a county mutual fire 

insurance company was not issued until June 4, 1953, after the 

effective date of S. B. 107, Way 22, 1953. Therefore, the company was not organized and operating as a county mutual fire insurance company on Way 22, 1953. 

Your second question must also be answered in the negative. The issuance of certificates of authority to the company 

in such form as those of June 4, 1953, and July 20, 1954, was not 

authorized by statute due to the fact that apparently the company 

had not qualified under the provisions of S. B. 107 and, as stated 

above, was not organized and operating on Way 22, 1953. Normally 

no estoppel will arise against the StatEfrom the exercise of its 

regulatory powers, and certainly there would be none as a result 

of unauthorized actions of a State board. Weatherly v. Jackson, 

123 Tex. 213, 71 S. W.2d 259 (1934); Carruthers v. Rogan, 96 Tex. 

113, 70 s. w. 18 (1902). 
” - 

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

SuMkARY 

The Tri-County Mutual Insurance Company was 

not organized and operating as a county mutual fire 

insurance company on Way 22, 1953, so as to be entitled to the industrial exemption contained in 

Article 17.02 of the Insurance Code. There is no 

estoppel against the State Board 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