. 

OFFlCE OFTHE ATTORNEY GENERAL OFTEXAS 

AUSTIN 

Hon. trrak 3. Xear 

Amlrtult s4ewit1e, Cw~t*lonu 

boontary of stcte 

mst in) Trxar 

ikar sir: 

sting thr opin78 sattsr, hQ8 

::p+ny 18 an inmrnesa or~alli.l(l life 

ot th* provisiona 

statute0 or Texas, 

UI and toll to the 

d8” eantalnlng the tol- 
Hon. Trank 0. rear, Page So. 8 

aadcraiont ooupoar oootalnrd la pol~oiar Llmled 

by the Co ,?cv ~6 arrlgnod rOr that j)uT~Osa. 

Vs accordance with unmlmus roclutloa of 

tbo rtookholderr of the Century Llfo Imirano~ 

Con$wky, it 18 agree4 that no bitldoadr @hall 

bo deolartd or ;.a16 on thb oapltsl hook OS the 

aor,zany until the prlnolpal OS t!Sr oartlifoate 

an4 all lntsrrst duo oader lt rka11 hava been 

rotired and paid ln full, and lo event the Cmpany abculd br lfguidateb the ob:lgatlomumr 

thlr osrtlfoatr #hall bo prlcr, und l perlor 

.lam to that or tt* rtoakholdrrs. 

=;ltn acoordanoe with thr lawo of the State of 

Texas the anoimt ot t!Ar oertlf~oste tmethar 

with the interat thereon rl;all be payable only 

out OS the rurplur of tta Cozwny after worldlrq for all the re~orvea and other llabilltier 

OS the Comjant. 

*Tkis oertifioate 1s tranrferablo only oa 

the bcoks of the Company la person or by duty 

authorized attorney u;on ltr aurrsnder properly 

ene0rrea. 

=XEl Tl'ML?S3 Xi12W?stha Century ilte lmsurnnoe Cosqany ha8 oauaod tbl.8 orrtifiostr to be 

signed by its duly autkorleeb ofttows 6nd lta 

oori3orete seal to bo herytoDatfpl tk.18 

by 0r , . . -* 

Searotary Tras idont . c 

ghera is no cxpres* itatutcry awth~orlty for 

Chapter 3 Izmuranoe Cor;o?ation@ to borrow money) neither 

18 there any rtatutory &Tohlbltlon aC;alnot tbd exerOie@ 

Of such :o~er. Thsro im, 0r oOurm, co 8tatutOry auttorizatlon ior the lssusnce oi tbeoo ;r:;OSsd eU>luS 

oe-tlrloate bc:ida. 

Prlrato 

It la t33:c0ad, as a goneral ;r3;oalt:on, ttat 

oorporotlorm rmy, wlthout oxgrecr rtotutoty auttOPlty, torr-w nosy u?.en neoesmry In the legltlaatr 
non. PTank D. Kecr, ?6&. 30. 3 

ocurso oi tlm oorporato brulnrrr. -18 ~~10 wouid, it 

&eem8, llk6wlse applr to M lnraraooo oo,qorrtion suoh 

a8 the C*aturf Life Inrumx* Ceqx4. 

WI, thsrbr0r0, OOGOO~~, iOr th0 ?w?o~o~ 0f thi8 

oplnlon, thot the Century Lilr Irmuranor Col.;a.ny bur tho 

pawar to borrow annoy rbsn naoessary in tka l~itbtito 

oourso of itr buslzosr, omflnlr~ ourorlrsr only to thr 

puertlaa as to ubothw the progor*d 8810 OS l uoh murplu8 

oortltiaato boa68 rould ba a le it&et@, lartul end authorissd eSerOlSo ai t&o 8ener a! laplied power to borrow 

money* On this question, tCore are no prOOdMt8 in 

Tarar. 

The plm of ISSUing aad 8Olliry to th0 FUbilO 

8uob 8ur7l1.u oertlflosto bond8 by tho Century Life IJIwrance Ooqa.ny, whereby lt may raise ~omy, oloarly 18 

not tha raploymnt of tte ::auai an& ocrmwclal raotkod 

of borrowiq money. Tke trrnaaotfon will not embhoo 

an unequlrooal obligation to return the ;rz?erty borrowed at regular int6rvci0, or at a rttited timma nor doe8 

It uabreod l sthtod, or repbr, or oartnin tfne for tts 

payment of intorest. It draoes only,+ obl&atfx to 

repay the IWEJS Mvanoeb olct of thr rurplro i,t t;r*-oabpnny in 4xoecs 0r g30,OOO. ~auid/or from tho proaeede 

Of 44rtain 6ndQWASent OWpOnb OOEtaftbd in pOifOie8 i8- 

sued by the ooiapary and assigned tsr that pur;~ao~, with 

the tritereast thereon gapable only out cf the 8urslu8 of 

the ooz.pany. Thera 18 A0 ;ower la thr holder8 0r suah 

in,nrtrumantso sraot payaftnt, dlthar of ;rlnolpal and 

interest, at ang atatod time, or at any tlzao, ?or that 

Rattu. The osrtlfloate3veat: in the QPmer a patu inters8t in the oa;ital or property oi the oowa4, in 

ease of llr\Alction, than the stookholder thtceioiVe8 

poaseaa; and tto oertlflootor further doalaro the ropapieat of tbe'prlcoip4L ttewof with interest, when and 

it ever dot0 to be superior to the right Oi the ItOokholders to dfvldends. Iurtherzora, In the oontraot of 

rubsoriptioo for suoh 06itifiOtte8, fhero n?pwr8 tL:i* 

prorisionr 

*oa co.l;llathn of t. Is subecrl;tion ltls al80 

*reed that f&ore stall be doilvored to m nithout ,Cilrtl;sr osat s?.:clsas 3 the ospltal st ..ak 

of the century iX%%eurance can';any, ruiiy 
lion. ?rank 0. Seat, Pa&e lo. 4 

. 

% 

ia and non-Mae88abie, uhloh aaid l tea k ha8 

em dmvooltd with tha ooacant tor tbl8 purpo80~" 

It ia olear beyorb a4 Cuoatlcm that tha tranrl otlonr oonturiplatrd by thr Centw Llfo Inauranoa COBpany la the sales of tkeoo 8Ul'@UO outifioata bonds 

are ad 'hUl8- and tho OO~panf f8 uOt *bOrWWin6" a8 

thooe t8rt8o S4aook In their ordinUy OMOrOlal a~16 

legal 8011Oee In fwt what relrtlon to thr,oaa,oany the 

oer%lfioeta holdu voula l ta n6in , a 1-1 senoo, whethof a8 8 prsfrrrod staokholde? or as an annuity ouster, 

or ';oJIothln# 018e, %a imatarLll 8UffiO4 for thla oplnion, than ~$11 oartalnly not br oreeta thr usual 

dobtor-ordltor , borrowor-landrr , ralat ion vt.lah 18 

known arind lllootrrtrd la ordlnaxy oosmreiai tranaaotlonr 

uksroin !nonoy 18 loamd and borrowed. 

It la our oooold4r4d oplnlon that the prlaoiples 

wnounoed by rr. Juatioac) I3aKeanaa a.?d Butler In the 

oaae of Taylor ~8. Z%lladokQA and ilsadlag 1al:uay 031~ 

panf, et al, and UCalsWnt V6 . Ptlla4al~~la and 8sadi~ 

a5liway OOZ;SMJ, at al, 1 X84. a6p. 386, oorroot;y state 

the let wpllaabla to tho,iaatter under donslderatlon in 

thir opialon. 

At pp So0 and 391 In the abava 08&a, Yr. Suatloe 

Xoltonnan My8: 

*X&ataver porrU th4 defendant h88 &I the pro+ 

iru oar only be found in lto gercnl authxlty 

to borrow ooaoy. Walther In the oEarter oi th8 

dofar?dant, 301 in tho 8wzlal aot wLloh m&t&r1Z.8 it to sell bcnd8, whioh It cay ~6~0 below 

par, 18 anything ooztalned to 145alleo t&o oontested propoaltion, UdO88 it oad be put on the 

i3OtiRB Ot 8 108fb %a8 it them to10 oharaotar? 

I think p?aia.ry not. It doe8 not proposo to 

oreate tbo mlatlon of debtor and oreditar botween the dsfsndant and th8 4UtSOrlb4r8. Tha 

mozep obtalml by tko defeidant oould wt be r8- 

g4rd4d as borrowed, beoeuso tkat iD.plie8 SO-laburaezeent, an4 lt la not deaandablo by ;yhX;bl orlbera or gayable by the defendaS. 

rot the aaarntial and dlotlngulstlng Qml%tie8 
. 

of a loan. It oontuplnter l 8tlpul8tlon thnt 

the rubscrlbere, In oordderatlon of the oua 

paid-not lrnt-by thu, rfxll bo l ntltlod to rooeiro, ln a reaotr and unorrtain oontlngmoy, a 

portion of the drtondant'r l srnlnjje, to be IUDuro4 by a eertnln rnta per oont, upon three thee 

the l ume paid by thorn, nnd eftor thnt da11 partlolprta 1~1th the ecmsoa rbardoldere in the dirlelon OS the reelduaq l er o ingeBy uhat i alloweblo a0rinitim of l lorn or borro vinl uoh g a 

~~in6tloa oan be rbrroed I am at a 1088 to eon- 

#or will tho lsrt that it 18 to be l vld.nOBi 01 the 8&d DrltiIk4 Of tb0 d~f8dUIt 

ohango Itr inho?mt $baraoter end brlq it withLn the ran@ of a power to alob it ia not otherrlu raforabla. 

‘In one reepeot, nad in one 0~~17, door the 

plan propored ruamblo l loan, rod thet 10 In the 

resiilt to be attained. They are both txpodhnte 

tor rrifilq money, Jut tbg *tbo& g ~00omx418~- 

At 2~ 398 and 395, in oonourri~,ti. Justioo 

Butler l nye: 

“That the dsir,?naatr hnre ;ouor to borrov 

monay 18 not quostiozrd, and oould not be. WC.. 

pl8latlffr assert, hox*r*r, that ttle 18 not a 

~p~;eltlon to bo?rou mo~b~, but l l ob8me to 8011 

The derendnnte OAlm 

a proicsltlon to borrow 

that it la l trlotlv 

- oonoedlng that, l? it 

10 not, buC rlrtuall~ 18 to sell stook, thy hare 

no latiul authcrlty to oarry it out. Thr l rltal 

18SUO of 1&W 18 ehbarp1y dorlned Md preesnte6. 

It lr GIN thnt ndthsr nqxiroe nor admit8 oi *ttsrdsd dteousel.on. Btery l h.ilaelbh d0mfti0n 

or the term borrow or loan, am ap;lled to rrmay 

acd oousrrolel transactloss, embrrooe an obl.lga- 
Eon. lrack D. wear, ?age Uo. b 

tlon to rmarn the ~mpwtr borrowA A loan 

of awn.7 i8 u!iirorMl~ underdocad to b8 the 

dellwry O? l Oer tdn em t0 wOW8r, on oontnot for its cdu.rn 68&l8=117 with inter*et, 

88 OOCtp~n8StiOfI ?Of It8 dOt8CtiOn UIb ~80. Ts 

Oall tb. pSm8ot Of GoW7 t0 s:?OthaZ, who 18 

to ?o Oein en6 P WIa nM tl~ r +k ia is l 8 hle Ovn, 

in OOIi8ld~~tiO~ ?OP Ut MLIIUi b4n8fls 02 3ZW?lt, 

8 lOM, would Saw to be l P18h d8P8@ Of hn6uW.. 

men 18 SO 8Uoh thw kfIOW t0 8W?OO 

or trraMOtion# in WOO87 l 8 M 1rrwIwmable 10~ 

in the 8SnoS bera 1nvolVed. @o+wnfMnf8 bale 

18WIed Obl~&itiOzl8 WitbOUt $rOVi@lOn of 8ti&&atlon for c(l~ym& of the grlnaripal borrouedg 

but euoh Obl@tiUIe are r*detmable at plwuure. 

Rumlng, howwe?, for aa lnd~flc1t.o tiae, vlth 

no pziwer in the holder to oxaot prymeat, the 

bare oor& to bo Peg&r&ad Se lrredewaable usan 

lnreataent in them 18, themtore, traetei and 

deeOrlb,sd, not 08 a loa0, but a8 the pUI%hW Of 

ain ooiImsrul0l 

tremea0t1on*. App171Iq thlr tort to th. DrODO8- 

ition here uador tocsfderatlon, It b4om8 plain 

that tba treomotlon oo:~tes>lsted 18 not a lo-. 

*.*" fUn&arsocrlry ours) 

Purther, frooi t&e not0 to tb0 *bore Oa se, l t pa 

39s we quote: 

l m * 6 In tk e o a a e o f Eo c t T. ~ulokellror 

;aln. Co. 70 X.Y. 139, 0.6 ooc;5n7 being ia nS86 

of fu&de, the rtoolcholder~ adopted 4 bplav protldlzq that rtookholdorr who 8hOdd 8tUPa%d8? 

t&dim Oel%ffiO¶t88 an4 38~ five do115?8 00 each 

sm. of etoak ahould bo l ntltlad $0 the l -e 

nuabor a? 8hSr@8 of >rOfm-~d rt.:~ 

&culd be entitled to 3 :er oat tk:::~ to be 
I&IA. Prank D. ?har, Pa&O HO. T 

. . 

paid out 0s the gmfite 0s the o~;any, any 8wplru tbaraafter to bo dlrld~d pro rata eaoq 

ooraon Md sr0fmro4 StoOkholder8. Yhe oawt 

bald tC8t it 414 not fSl1 nlthia the ?ovartO~- 

borrow aono7, and W&B ultra rlree. lolpr a., 

8SJ8: 'It *aa not 8 borrovlag. ?'h. idea t$ barr078b.g i8 nof fiihd 00s tmiOS8 tbOm 18 in th@ 

8& ?ea r uOt th8t%?OE l jGOUIf8cO, f undorrtandiry 

that what 18 borrowed ~111 b8 npd.4 0s roturnti th8M t~n8aOtiOn8 1% 1, 

:%,pii!i:tl:!h it 18 oslled, but nbai, la 

?eeB4 

. 

~,ty8aotlon 10, that the oourtr eon- 

. 

3%. SSIO Of SJMOtt 1. OOEtbfitO~O 06tWiihtd 

Jllnsm 00.‘ ut al, 808 ?ed. Rep. 881, l~voln6 bond8 18. 

rued by a oomoratlon by wElsh It aersed to pal thou 

?a843 rrlue with interest tit 0s aortafn ?uud8 areated 

?rOn the IL& 8ur3h8 0~cifi4p Of the OOIS3a~ ~6 in th0 

event of liquidation or 6188O'iutiw, tha ob~igstloo 

8bCBl:d attaob to a 1 the run&S as& 4SSSt8 Of the O-y, 

tiT@ather with Other :ZOViSlOll8 8fSil8l’ t0 th8 8UPJdW 

ooawfloate boa48 under tonslderstion horeln. ¶%a 

oaurt held that the in8tntariStS trr curotion Wr8 ad 

provable tQSili8t th4 08tSt.S O? the batkrupt OOrpUl’StiOn, 

for th roawn that they oreatrd EO ilxed llabllltiy 

agalnet it. 

It ir, therefore, 0~~~op1ixfon that the graoral 

lwllod authority 0r tto century Life Inrorsaar co-,any 

to borrow nonq? roil4 not lSgsllz8 it8 gropoarlt ospedil t rw ralrl 

l uP?lUs Oetti? 7 

ItLOWy,J XUUEiiJ~J, thb fSSURn0~ ~6 8Sh Of 

oat0 bonUa ruoh 88 the 8US&Ih whloh l Oocm~anled your letter. 

A8 obsaned in the beglnnb Of tttl8 crpliiioa, tha 

8pOOlfiO 8tatUte8 0s t,xae rolatlng to insurance oorgoratlow ad petloularly to thos8 ormtod under Obapter 

3, Title 78, ibvl~ed Civil stetUb8 O? Tax&o, 1928, a# 

8madSd, do not SxprSSely authorit 8uob insuranos Scm3snlae to borrow mocby, nor do tksy prohlblt the eXerOlee 

or 8-h ?ower. It 18 8fgCifiM5t, althoe UOt &iVelk 

OOUttrOiing ?OIW ih thi8 OphiOn, that the lb&htW 

ia emSting Chapter 1, Tltlo 08, Rarlssd Civil St8tutae 

Of %S8, 1928, 

P~nlbe, &lb f 

l r tr lnlto ~ mutual lii0 lnsurano8 Oaas?eo floallt authorlab l dVanOO%Ont8 to Suoh 
73 

la sur eno@ * 0093sDbly eMo y poroo la a a ILmnu l lDll4 .T 

to the pursh.40 oi tha pmporod surplus oertliloato 

bodr to b, ~M OU& by th* Centu?r Lit8 hat&r-* Collgu~. 

t?h b l uthOr iuti1o n 0 fo und iB Ar ti 48lb, r up r a , 

m0 ra0t tbd the hgi014tun d*Oti lt ~00r8rarl, t0 OSpn44ly 4ubhorlx• rueh Cb4pter t ooap4ni.o to rueln 

l 4vuiewmnto in thlo mumo~, definitrly lntlloateo that 

it oonoelted mok pew? to bo ma-alatent la lnour~oo 

eorporrtlono oreated uader rnd by authorlt~ of t&a otatutro thorotofara anaot.4 by it. Chaptar t of (IOWTOO, 

mo ori(%n4lly l no o tela 4 1909. fhlr 00n0fd**t10* oartdnlf 1rw aspha to t&o poaftlonrr hare t&m la 

thlo op f nlan; nuwll, t&t, oonood~ the powu la m 

lnou~0ao4 oorpor8tian ln Tax40 to borrow monq, the turtbrr gowar to lm~~m rurplor o4rSltlo4to bonda, a8 ecmtenplated b 

bo 14g4ll7 L 

tW&nttq IAS. fnmiranoa WJI~, oaonot 

. 

You 41-0, themfora, r4opootf~11~ 4dvlsoa that lt 

lo tha oplaioo of thlo dogrrttaaat thab the Coatury Life 

Imetwanoe Compaay of fort Worth 

06 under the 14wa of T41141, to I 

Toras, lo not autcorti4ou4 ruqilar osrtlrloato 

boadr with th4 term an4 oondltloao and la tbr mncrr 

oontuplated, u l 4t out la tziio opinloa aad in your 

lettw. 

WAtob