Honorable Sidney Latham

Secretary of State Austin, Texas Attention: Horace B. Sessions Dear Sir: Opinion No. O-63 16 Re: Functions of the Administrator of the Securities Division of office Secretary of State with reference to applications for real estate dealer’s or salesman’s licenses. We are in receipt ofyour letter of recent date requesting the opinion of this department on the above stated matter. 

### Your letter, in part, reads as follows:

“We have recently been presented with the question as to whether or not the Administrator of the Securities Division is authorized or required to investigate each applicant for a Real Estate License to determine such applicant’s competency. Ithas been the policy of this Department in compliance with Section 9 of the Act to issue licenses upon the filing of a sworn application accompanied by three affidavits of recommendation, unless information as contained in the face of the application or in our files relating to the question of the applicant’s good business repute and business practices necessitates an investigation before acting to grant 

### or refuse the license. “We should appreciate an opinion from your office on the question of whether or not the Administrator of the Securities Division is authorized or required under the provisions of either Section 8 or Section 9 

### tomake an investigation of each applicant’s competency upon the filing of an application in this office, and make a

### Honorable Sidney Latham, Page 2 (OP~~~OSIN~.o-6316)

finding thattheapplicant is competent to carry on business as aReal 

### E,statnDealer or Salesman before granting such applicant aReal Estate License, *Should it be your opinion that theAdministrator is authorinad or required tomake aniavestigatiua as toeach applicant’s competency before acting onhis application, we should appreciate being advised as to what standard oryard stick may be usedby the Administrator under the authority ,oftheAct to determine competency in passing uponapplications for Real E&tats Dealers License. Under the provisions of the Real Estate Dealer,‘8 Act (Article 6573a, V.A.C.S.), it is contemplated thatthe public interest will be served by theissuaxkce of caal estate dealer’s or real estate salesman’s licenses to only those applicants who are ofgood business repute andwill conduct theirbusiness in anhonest, fair, just andequitable manner. For the purposseofachieving tkat objective, the Legislature has prescribed inSec. 6, Article 6573a, thatthe applicant shall fiIe his application for said license with theAdministrator ofthe Securities Division of the office oftheSecretary ofState, and thst 

### certain minimum information and proof shall be included in said application. Section 7of said Article prescribes the residence requirements a6we11

### as certain eIigibility requirements applicable tonon-resident applicants. Sec. 8,Article 6573s, provides:

“Application for a ~a1 estate dealer’s or real estate salesman’s license shall contain such other information **AS** 

### totheapplicant, in addition to theabove dorcribsd, as theAdministrator of tkr Securities Divfsfon of the office ofthe Sacrotary ofState &al1 require. The Adminirtrator of the Socrrrities Division of thaoffice ofthe Socretsry **of**Stat. may reqnire such other proof through the application 01:akhorwise as its officers shall deem desirable with due regard to the paramount inkrrst of the public as to thr honesty, truthfulness,‘intogrity, and competrncy ofths

# l pp1icbnt.e Sec. 9s, **Article** 6573r, provides: “If ths Admiaistrator of the Securities Division ofthe offica **,af**thhrgrcrokry ofStsk is satisfied, that ths applicant for rnal o&ate doalar’s or 

### r od l stak srlem~a’s lfconse is **of**goodbusinar~~npah andthatthe,buainrss will begconducted in anhonest, fair, just, andequitable. -

Honorable Sidney Latham, Page 3 (Opinion No. O-6316)

manner, and upon complying with all other provisions of law and conditions of this Act, a license shall thereupon be granted by the Administrator of the Securities Division of the office of the Secretary of State to the successful applicant therefor as a real estate dealer or real estate salesman, and the applicant, upon receiving possession of license, is authorized to conduct the business of a rear estate dealer or real estate salesman in this State.* In Reagan v. Guardian 

### Life Insurance C,o., 166 S. W. (2d) 909. the Texas Supreme Court held that under a statute (Sec. 1, Art. 506813) authorizing the Board of Insurance Commissioners to determine whether licenses should be granted to life insurance agents, the power to make such determination carried with it the power to mahe investigations. In Sec. 1, Art. 5068b, we find the following language:

“Hereafter whenever any person shall desire to become an agent for a life insurance company, . . . , he shall, in such form and giving such information as may 

### be required, make application to the Board of Insurance Commissionera for a license to act as such 

### agent. After the Board of

### Insurance Commissioners shaI1 determine that such person is of good character and reputation, it shall issue the license to such person . . .*
With reference to the authority of the Board of Insurance Commissioners, under the foregoing section, the Court said:

“Section 1ofArticle 506Eb, Vernon’s CiviI Statutes, provides for the licensing, among others, of life insurance agents. The licenses are issued by the Board of Insurance Commissioners, and the statutes clothe the Board with power to determine if the applicant for license is of good character and reputation. Of course, the very power to make such determination carries with it the ower to malce allcGG&y investigatioffZ 

### ours -E!)---

- It is our opinion that the purpose and 

### meaning of Sections 8and 9, Article 6573a, which confer authority upon the Administrator of the Securities Division of the office of the Secretary of State with respect to the determination of the fitness of an applicant for a real estate dealer’s or salesman’s license is similar in meaning and purpose to Section 1, Article 5068b, which confers authority upon the Board of 

### Insurance Commissioners with respect to the determination of an applicant’s fitness for-. ._ ..

Honorable Sidney Latham, Page 4 (Opinion No. 016316)

a life insurance agent’s license. In each instance, wide discretion is given to the respective officers in the matter of determining whether a license shall be issued, and the power to make such determination cariies with it the power to conduct iuvestigatioas. (Reagan v. Guardian Life Ins. Co., Supra).

Inview of the foregoing, it is our opinion that the Administrator of the Securities Division of the office of the Semetary **of** State is authorized to make such investigation, ifhe deems it desirable,

..“ikith due regard to the paramount interest of the public as to the honesty, truthfuIness, integrity, and competency of the applicant.” However, we find no provision in Article 6573a requiring the Administrator to conduct such **an** investigation.

With reference to the standard or “yard stick’ which may be used by the Administrator to determine competency in passing upon applications for real estate dealer’s or salesman’s licenses, we quote :~ the following language of Sec. 9a, Article 6573a: “If the Administrator of the Securities Division of the office of the Secretary of State is satisfied that the applicant for real estate dealer’s or real estate saGm= license is of good business repute and that the business wiII be conducted in an honest, fair, just and equitable manner . . . a license shall thereupon be granted by the Administrator of the Securities Division of the office of Secretary of State to the successful appIicant therefot

. . .” The Administrator is to satisfy himself from all the information and proof required in the application, or otherwise, as to whether the applicant is *of good business repute and that the business will be conducted in an.honest, fair, just and equitable **manner. ”** 

Trusting that the foregoing fully answers 

### your inquiry, we are 

### Yours very truly ATTORNE,Y GE,NERAL OF TE-S

JAE,:ddt-rn BY s/ J. A. E,llis J. A. E,llis Assistant APPR0VE.D DEjC. 15, 1944 s/Grover Sellers ATT0RNE.Y GENERAL OF TE,XAS APPROVED Opinion Committee By G.W.B., Chairman