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# The Attorney General of Texas April 14, 1981 MARK WHITE Attorney General

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505sro5dw.y. sun. 212 LYbbaL TX. ?wol 5c4n47.5235 Honorable BobSimpson, Chairman House Committee onInsurance House ofRepresentatives Room 125,Reagan Building Austin, Texas 78701 Opinion No. My-321 Re: Application of the Bail Bond Act to insurance companies

Dear Representative Simpson: You have asked several questions concerning the relationship between the Texas Bail Bond Act, article 2372~3, V.T.C.S., and the Texas Insurance Code. Youfirst asked:

1. Is a duly licensed and certified insurance company, qualified and licensed to do business in Texas under the Texas Board of Insurance rules and regulations, etc., subject to the Bail Bond Act (Article 2372~3, as amended, Licensing and Regulation ofBail Bondsmen) when they operate strictly as co-sureties with licensed bondsmen In the writing of court and appearance bonds In Texas, or are they exempt as per section 3(d)ofsaid act? Ingeneral, the Texas Bail BondAct, article 2372~3, V.T.C.S., does not exempt msurance companies engaged In the writing of bail bonds from the requirements of the Texas Insurance Code, nor does the Texas Insurance Code exempt companies writing such bonds from the requirements of the Texas Bail Bond Act. An Insurance company that is duly licensed and certifiid to write bail bonds by the State Board ofInsurance isnot subject to the Iicensing provisions of the Texas Bail Bond Act if the company Isa cosurety with a licensed bondsman. Sections 3(a)and 3(d)ofthe Bail BondAct provide: Sec. 3. (a) No person may act as a bondsman

without the license required under the provisions of this Act, except as provided In Subsections (bl, (cl, and (d)of this section.

..,. (d)Persons who execute bonds as cosureties with a licensed bondsman.’

Honorable BobSimpson - Page Two (R’k-321)

Section 2 of the Bail Bond Act corporations, and therefore Section 3(dP rovides a definition of “person” that includes would exempt an insurance companyacting as a co-surety from the licensing requirement of the Bail Bond Act. We do not address whether a person is necessarily entitled to act as a co-surety with an insurance company while at the same time acting BSsgent for the insurance company without the company’s complying with the licensing requirements of the Bail Bond Act. However, if the insurance company isacting inthe capacity ofa surety, section 3(a)of the Bail Bond Act would require an insurance company to comply with the licensing requirements ofthe act. Younext askthefollowing questions:

2. Is a person duly licensed to make bonds under the Bail Bond Act required to have a Texas Recording Agent’s License, or is he exempt in accordance with section 7(d) of said act, stating that a licensed bondsman shall not berequired to havea Local Recording Agent’s License? In a county subjsct to the Bail Bond Act, the person isexempt. However, in a county not subject to the Bail BondAct, the person must have a local recording agent’s license issued under article 2L14ofthe Texas Insurance Code.

3. Does an insurance company that is licensed with a local Bail Bond Board under article 2372p-3, as amended, have an obligation to register in any manner or form with the Texas State Board ofInsurance to act as co-surety or surety on court bondsorsurety bondsinthe state ofTexas? In Texas, the only corporation that may act on a regular basis as a corporate surety is sn insurance company chartered under chapters 2 and 8 of the Texas Insurance Code. See Attorney General Opinion WW-438 (1958). In Freedom, Inc. v. m, 569 S.W. 2=8 (Tex. Civ. App. - Austin 1978, no writ), the court held that a corporation acting as a professional surety in writing bail bonds was engaged in the insurance business and wasrequired to obtain acertificate 6fauthority from the State Board of Insurance. Further, no provision in the Bail Bond Act relieves an insurance company from compliance with the provisions ofthe Texas Insurance Code regarding its ability to act as a surety. When an insurance company engages in the business ofa surety in a county sub&t to the Texas Bail Bond Act, section 7(b) ofthe act clearly contemplates a dual licensing procedure for the insurance company under both the Bail BondAct and theTexas Insurance Code. Younextask:

4. Isit legal for an individual to use an assumed name if an Assumed Name CertifiCate is duly filed and executed with the County Clerk of the counties in which the individual is doing business,in the writing and posting of bondsin counties not subject to bail bond acts, and must the surety company be

p. 1030Honorable BobSimpaon - PeeThree (NW-321)

registered with the Texas State Board of Insurance when the privately-owned company isthe surety onbail bonds? An individual may use an assumed name in the writing and posting of bonds, provided, however, that the use ofsuch aname does not violate either the statutory or common law regarding names. Nothing inarticle 2372p-3 would prohibit the use of an assumed name by an individual properly licensed ina county with a bail bond board, and neither this statute nor any other prohibits an individual from using an assumed name in counties without bail bond boards. However, the use of an assumed name is proper only after a business entity or individual complies with the filing requirements of chapter 36ofthe Texas Businses and Commerce Cc&. Ifan individual is the surety on bail bonds, then no registration with the State Board of Insurance is required. However, if a corporation is the surety, then it must comply with the regulations set forth in the Texas Insurance Code. The court in Freedom, Inc., supra, held that foracorporation to beempowered to act as a surety it must obtain a certificate of authority from the State Board of Insurance. This requirement applies to every corporate surety regardless of whether the county in which it will operate issubject to the Bail BondAct. SUMMARY (U Section 3(d) ofarticle 2372~3 does exempt an insurance company acting as a co-surety from the licensing requirements of the Bail BondAct. (2) Section 7(d) of article 2372p-3 exempts, M&r certain circumstances, a licensee under the act from the requirements ofholding arecording agent’slicense. (3) Notwithstanding licensing with a local Bail Bond Board, an insurance companyisrequired to comply with the applicable provisiors of the Texas Insurance Code in order to act as a surety or co-surety onibonds. (4) No provisions of article 2372~3 prevent the use of an assumed name; of course, all statutory and common law requirements must be complied with. Furthermore, the only corporation which may act as a surety cn bail bonds is an insurance company, and it must comply with the Texas Insurance Code and obtain a certificate ofauthority from the State Board ofInsurance.

MARK WHITE Attorney General ofTexasHonorable BobSimpson - Page Pour (NN-321)

JOHN W.FAINTER, JR. First Assistant Attorney General RICHARD E.GRAY III Executive AssIstant Attorney General Prepared byThomas M.Pollan Assistant Attorney General APPROVE& OPINION COMMIl’TEE Susan L.Garrison, Chairman C. Robert Heath Thomas M.PolIan Nancy Ridtetts

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