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 of your 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. It has 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 to make 

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 that the applicant is competent to carry on 

business as a Real E,statn Dealer or Salesman before 

granting such applicant a Real Estate License, 

*Should it be your opinion that the Administrator 

is authorinad or required to make an iavestigatiua as 

to each applicant’s competency before acting on his 

application, we should appreciate being advised as to 

what standard or yard stick may be used by the 

Administrator under the authority ,of the Act to determine competency in passing upon applications 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 that the public interest will be served 

by the issuaxkce of caal estate dealer’s or real estate salesman’s licenses 

to only those applicants who are of good business repute and will conduct 

their business in an honest, fair, just and equitable manner. For the purposse of achieving tkat objective, the Legislature has prescribed in Sec. 6, 

Article 6573a, that the applicant shall fiIe his application for said license 

with the Administrator of the Securities Division of the office of the Secretary of State, and thst certain minimum information and proof shall be included in said application. Section 7 of said Article prescribes the 

residence requirements a6 we11 as certain eIigibility requirements applicable to non-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 to the applicant, in addition to the above dorcribsd, 

as the Administrator of tkr Securities Divfsfon of the 

office of the Sacrotary of State &al1 require. The Adminirtrator of the Socrrrities Division of tha office of the 

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 of ths l pp1icbnt.e 

Sec. 9s, Article 6573r, provides: 

“If ths Admiaistrator of the Securities Division of the 

offica ,af thhr grcrokry of Stsk is satisfied, that ths applicant for rnal o&ate doalar’s or r o d l stak srlem~a’s 

lfconse is of good businar~~npah and that the ,buainrss 

will beg conducted in an honest, fair, just, and equitable 
. - 

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 1 of Article 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 8 and 

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). 

In view 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, if he 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