OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

Aonorable Gcoree S. She?pard 

Co5iptroller of Fublio AOO0u nta 

Austin, Texae 

Dear sir: 

on inmrance apglicanta, 

es under Article 7061, 

Civil :tatlltes. 

rqmt ror our 02inion 

on whet3cr or is lteble for the "colprovided fcr in Article 

7C61 of the 

ve us and vrhich we ascertained 

t!: you are a6 r0il0w0: The 

ill rarer to as the cgencg, Is 

psrnit to do business in Terns, 

t that ita buainees shall be *the 

ce oompenles concerning the propricceptine eppllcatlone for lnau*no@. 

OS eald agency, with whloh we are oonoerned 

king reports to Insurance companies as to 

r and veracity 02 persons who are epplinsurence donpanles. when an insurance company 

lber,to the aervlce rendered by said agency dsn on an applicant with regard to such applicant 

as on Insurance risk, said insurance company asks for such lnfomatlon trot said agency and the agency seeks to obtain the 

inrormation ana convey it to the ineurance oompany. You have 

advised us that w?en enid eEency entered Terse it began issuing 

lndfvfdusl reports on pers0ne, cover,ine the3 lndlvldually and 

not aa engaged in busineER, reportlne on thetr ~reonal rating 

or standing for lntx:ence, and t!xt this plnn of opratlng he8 

been followed down to the present day. 
Honorable George, I?. Sheppard, Page ,?. 

You desire to kaow whether or not said agency 1s 

required to pay e.tex under Article 7061 on the gross amount 

received for buefness done and reports meda as outlined above. 

The answer to your inquiry must be found in said 

Article 7001, which reeds es follows: 

Y?ech indlvlduel, COmFRny, corporation or aasooletion, owning, operating, managing or oontrolllng 

any oollectl~ agency, comercial agency or cornorcfel reporting oredft eeency within this Stete, end 

char&g for colleotions mede, or business done, or 

reports mOde, 

or January, 

shell make quarterly, on the first days 

April, July end October of Each year, e 

report to the Comptroller under oath or ths lndlvlduel 

or. of the president, tree surer, or superintendent or 

such company, oorpoxa t&on, or association, showing 

from business done within this State the gross amount 

reoaived In tha payment of oherecs tar oollectlons 

made end business dcne and reports made durlq the 

quarter next peceding. Such J.ndivlduals,. compeeies, 

corporations or associationa et the tIme of making 

said resort shall pay to the Treasurer oS this State 

an ocoupetion tax for the quarter baginning on said 

date aqua1 to one-half of one par oant of said gnoas 

receipts es shown by said rap0rt.a 

Llablllty or said agency for taxaa on aald bualneea 

under aaid article depends upon whatlmsr or not said business 

18 a ucommarolal agency or ocmmarclal rtportlng credit agbnoy”, 

aa those terms are used in the statute: The only Ttxae case 

conatrulng this Article Is the case of Rarohants Rtdbook Company v. Sate,. (Corn. App.) 135 8, C. (2d) 279; and in dtttrmining whether or not the agency Involved In that cast ma8 a corn-, 

mtrolal agency, the ccu.rt said: 

*It la undisputed that ths Merchants Red Book 

Company is a *reporting ortdit agenoy,’ but epptllent8 strongly urge that it la not a lCommeroIal* 

reporting credit agency aa that term wee defined 

et the tint of the ori&el enactment of Artlclt 

7061. It agptars with reasonable otrtalnty that 

the terms *marcentlla egencirs’ and ‘oommarclel 

egenoits~, being regarded as synonymous, Dave Sor 

a long time bed a derlnlte ffieaning. 

Jurie, p. 636. 

Set 40 corpus 

In the oest of City o? Brooktltld 
Honorable George 8. Sheppard, Page 3 

v. Kitchen, 163 MO. 546, 63 S. 'if. 825, 826, the 

Supreme Court of lElaaourl, speaking of *co-szserclel 

or mercantile egenolea,~~ said: ‘Such agencies are 

deflnea to be tetebllshcente which znkt a business 

of collecting lnfon5atlon relating to the credit 

cherecter, responsibility, end reputation of 

nerohanta for the purpose of furnishing the lnforaaion to subscribers, - e.g. a. G. Dun & Co. &enoy, 

Bradstreet Company, etc. 5 Am. k Eng. iho. Law (1st 

td.) p. 280; Web. Int. Dlct.' 

nCor& Juris givec the following dtrlnltlon: 

'A oa%earclal or mercantile agency msy be defined 

as a person, firm, or corporation angaged In the business or collecting infonation es to the financial 

standing, ability, end credit of ereons engaged in 

business; and reporting Shil same o aubacrfbera or 

customers ecplying end -38ying therefor.' (Underscoring 

ours) 

This darlnitlon by the court corresponds wlth the detiaitlon 

of %arcentlle agency* In Xtbater*s New International Dlotlontry, 2nd Edition, which says: 

*. en establishmnt or institution which 

collect 

blllty , 

'8 iniometion as to the character, rtaponalcredit, reputation, etc., of merchants or 

otheri-doing buslneae, and furniahea duoh Information 

to others for a subscription price; a co-merolal 

agency.” 

It will be notlotd that the Texas oourte and the dlstlonary dtfInltlon considers that the reports must be in rtgard to marchants end othera doing budnear. In the oabt In 

question the person on whom the report8 are meae art net neotsaerlly merchsnts or persona engaged in’any kind of bualneEa, 

but they might be applicants for lnsu--not who art not In any 

business ?.t all. 

In cmr search of the authorities we fled t&it throughout the hi&Dry of “comerolal aganclta~ and %trcentilt agencies” they existed f-2 the purpose cf Informing msrchants es to 

the credit s6&ndlng and dependability of buyers of merchandise. 

An interesting ease on this question Is the ease of Stats v. 
Honorable George 9. Sheppard, Page 4 

Morgan, 2 3. D’. 32, 40 N. X. 314, by the %preme Court of 

South Dakota, which we ,wlll quote from at length, as follows: 

* 

. . . Xercantlle co.meroial agenolss, as we 

unders:a.?‘d ths, are establishments whicl: cake a 

bdslne;s UP oolleotlnG Inform&km relatlcg to the 

Credit, character, raapc~eibillty, general reputation 

and other mtters affecting persona, firm, and corporations engaged in businec.6, for the purpose Or 

Purnlahirg>his Information to its oustomers for a 

cash consider?cticn. These agencies have beeme recognized and pemanent adiuncts to the world of 

trade. Their rice and progress are of but recent 

date. Aocording to a little Iwrk entitled *The Law 

Relating to Mercantile A&enciec ( recently published 

by 1. E; J. W. Johoson 8: Co., Ph~ladelphla, and written by I. X. Errant, the Amrloan system of mrcantile egencias owes its origin to the work done by 

one Church, who waa at first a coannsrclal traveler. 

Cn his business tours it wae his custom to make notee 

for his own UIB, as to the habits, l to., of different 

persons and firms with whom he dealt. Other merchanta, 

hearing of hla cuetom, would come to him, and ask lnfomotion in relation to the same persons. At last 

he waa employed by 30 New York homes to travel in 

the ecuth and aest to oollact information to1 then. 

Rls labors suggested the idea Of establishl~ug an inatltut~on whhioh should r?ake a businers Of collecting 

information oonoernlng the reaponsiblllty, eta., of 

looal businees firms and oorporatlons t?!at ware seek- 

'Ing oredit in the larger oitiee. In 1841 the firat. 

organized ‘Yeroantlle AgmoFc waa formed by Lewis 

Tappan. Thle was follcwed in l&42 by 0110 called *The 

Coxaerctal Agency.’ Tha mercantile agency of Tappan 

was suooeeded by Benjamin Douglas k, Co., and this 

firs by R. C. Dun k Co. A few years arter the establishment of *The Xeroantils Agency’ and the eCommerolel Agenoy’ , 7. Y. Bradstreet established ‘The Inproved Mercantile Agenay,’ Which was 60120 jvarr afterwards inoorporated, end kncmqas ‘The Zradstrset Company. * The mercantile and comercial agencies were 

originally establ?shed for the purpose of reporting 

the oredit of buyers. It was Bradstreet who first 

published a bcok giving ratings. The other 3eenoie6 
Honoreble GeorCe B. Sheppard, Page 5 

soon followad his example. 

been establ 

In the oase of Genesee Sav. BaDL v. Xichlgan Parge Company, 52 

lL.iCh. 164, 17 F ‘. .x . . . 750, the Supreffie Court of liichlgan said: 

" 

. ??.e busina:s of these agencies is well 

known ti ihe comnerclsl coxwnlty. Indeed It is said 

by Justice Hepello, in ;,ton, I;ole & Burnham Co. v. 

Avery, 63 N. Y. 31, ‘thet the business and office of 

these ap,encies ere so well-known, and have been so 

often the subject of diacus8iOn in adjudicated canes, 

tht the court can take judicial notice of them. Their 

bwiness is to collect Information as to the circumstances, means, and pecuniary ability of merchants and 

dealers throughout the country, and keep accounts thsre- 

-that the subecriber to the agency, 

to by a customer to sell goods to him on 

by restorin& to t?.e figency oz to t?e 

lishas, ascertsin the standing and respo-elbllity ofthe customer to when it is proposed to extend credit.” 

(Underecorlng oui+s) 

In the case of Furry V.I. O*:onnor, 3 Ind. A;p. 573, 28 N. E. 103, 

the Appellate Court of Indiana said: 

“. . Cormrclal egencles have become vast arfd 

extensive iaotors In modern oomzerclal transaotions. 

ior furnlsblnE lnfoxxcatlon to retail dealex and . 

obbers as *all es to wholesale merchants. Tf\ 

oourts are bound to know judicially that no vizdor 

of goods at wholesa:a oon be regarded es a prudent 

business me2 if he sells to a retell dealer upcn a 

credit without first lnformine. himeelf through these 

mediums of ltUor?n?;tion of tha finsnoial standing of 

the customer, end the credit to which he fairly is entitled.” (Underecorirq olura) 

In the c0se ‘if Stevens v. Ludlun, 46 Elnn. 160, 40 N. X. 771, 

the Sup~em9 Court of Kinnesota said: 
Honorable Gaorga 11. Sheppard, Page 6 

*This bueine6a of a oommercial apancv 16 to 

get such infoxmatldn am it can raletive tb the bus11106s and pecuniary ability of businesr rmn and bueh866 OOIlOerll6, an& OORUllUlliOEite it t0 6UCh Of it6 

trons a8 may have ocoa6ion to apply for it.* 

Underscoring ours) 

The definition of "OOZIumrcial agency" given in Bouviercs Law 

Dlotlonary, Rawlo(e Third Revision, 16 a6 fOllOW6~ 

“CODERCIAL AC’IPJCY. A person, rim, or corpOl'at.iOn engaged in .tk6 bURine66 Of OOl~OCting informetion a6 to the financial standing, ability, 

and credit of pertons engaped in businese and reportillg the 666ie t0 6UbECriber6 Or to CU6tOlXr6 6pplying and paying thereror." (Underscoring oure) 

In 18 h. C. L. 997, we flad a etatement az followea 

*YlOrCantilO agenOiO6 Bra 06tabli6hmsnt6 which 

make a burrins:: of oollectlng infoxnatlon relating 

to the credit. character. reaa~nalb~litv. nenaral 

reputation, akd other matterra-affecting per6on6, 

fiI%I6. end oorpcretions engaged In busine66, for the 

purpose or fUrni6h1ng thle lnfomtion to 6UbfNriber6 

thereto for a cash c%nelder Mon. Their object 16 

to procure through tub-egOnt6, nervants and corre6- 

pondente 6UCh information coneernlng the tN6twOrthin066 of parsons and corporaticna engaged in trade 

or aommeroe a6 ah611 enable their subroribers rarely 

and properly to conduct busine&s with atrungere or 

distant cu6toDlbr6.n (Underscoring our6) 

Th666 oa6ea bring u6 to the conclu6ion that in order for a 

bUPine66 to be that or a Ww2uercla1 agencyw it ntu6t OOMl6t 

of making report6 on merchants or others engaged in buaineea. 

A~ woo.mmoralal reporting oredlt a6enoy” may ooneiet or making 

credit report6 upon persona In their individual oapaclties 

wlthout regard to their buaineesea. RoweYer, (18 we under6tXtnd the naturr of the report6 in puertion they cannot 

properly be olasslfied a6 credit reporta. 

It 16 our opinion thet the agenoy fn Cuaetion 16 not 

rrqulred to pay a tax under Article 7061 bn the gro66 amount 

reoeived for the buaine6e done end or sake a report of eaid 
. - 

Honorable George R. Sheppard, Page 7 

buainesm, as outlined in your inquiry and dlecusmed herein. 

Hongver if thlr agency does other bUdn866 which wmtltut6r 

t.he buekear of a 

oredlt kgency , ** 

~commerolal agency or commercial reporting 

the lbbility for the tax on such othar bueino66 would not be governed by thi6 opinion. 

Youre very tNly 

CCR:GO 

/6/ Grover EOllff6 

FIRST A:Z.fSTAHT 

ATTORmx OjmWAL 

Cecil%. Roteoh 

Asli6tUt 

This Opinion ConddOrOd and Approved in Limited Conferenoe.