### OFFICE OF'IHE A’ITORNEY

### GENERALOFAU0TIN

xonorable 

### 0.P.Lockhart,Chalmmn Board of Inauranoe Comnlissloners Auemn, Texas
Dear Slrr opinion 80. 

### o-4065 Ret IS the plan of the Reserve Loan Life IXWUW.lOe COUipq end the American Liberty Oil Company as desoribed lawful?
YOUZ'letter reQU88tiJQ dill Opinion of this d8partXl8nton 

### th8&bovemtatedqu8StiOnreadsasfOllOWb;

"'pheR86erVe LO038L.ifeIlMlUl'aBO8 Compaay Of 

### Dal&m, Texas,SeorganlsedpursuanttoChapter

### 3, Title78,Revised01~11**Statute8** 

### of **Texan,** vith **$250,000** 

### capital,andthe

### Ammriaan LibertyOilOompany, 

### as it8 ndaneindloates, Is presumably lnoor

### poratedfor 

### thepurpose of producing, refining, and marketing orude 011 and Its products, iaoludlng 

### retail distribution. Mr. Clint MurcUsonandLlr. Toddle Lee Wynne **are** Stookholders and director8 In the life $neuranoe company, and are the principal stockholders In the 011 company.

**“ A**  plan haa been Submitted to us for approval in **a** policy fom and +pplioatlon form vhersby life polioies are bff8rQd to the publia 

### generallybythe Insurance company 

### forwhlahthe 

### first**year** premiwns **are** agreed to b8 paid, and actually paid inadvanoe, jointly **by** the Bmployer of the asetied and by the oil company in oertaln agr88d proportions, and these facts are reflected in the face of the polioiea themselves.
*We understand the 011 oom@any has set up a fund of $50,00O'to b8 Used for this purpose and charged to adV8rtAdIkg of the 011 oompany, vhose name, of course, appears in the faoe of the polioy as having donated

. its share of th8 first year premiums. Obviously the plan Is designed also to increase the business of the.

**Roiorable** 0. P. Lookbart, Chalmaan, Page 2

**bUminC8** compeny, and 

### thusthis 8Oh8mS rebounds to the benefit of the ocunmon8tOCkhOldr88 In th8 two **oompani8S** atboth ends of the line.

.JlW.,**“ The**  authorities cited in "Insurance,".24 Tex.

Sections 137, and 231, and In Couch on **Inaurano8.** ~Sectlona107, 350, 605, and 606 seem to indicate that 8inC8, 80 far aa **Ye** h8V8 been able t0 dlaoover, Ye have no statute forbidding the practice mentioned **a** bOV8, it I8not illegal tie88 by r88aon Of the community of ownership, **interest,** and control aa between the two oompanIe8 which might be 8 form of rebating, dIacrlml~tlon, or Other practioe forbidden by the **atatUt88** hereafter m8ntIOn8d. Or OOntram t0 public polloy generally.
'We respectfully Invite your attention to the provisions ofArt10183 568, 569 and 578 of the Penal COdS, end Artlolea 5053, 5056 end 5064 ,ofth8 R8VI88d Civil Statutes, vhioh 

### mayhave **aon8** 

### bearing upon 

### the questions here propounded.

**%8** reapectiully 

### askyourOpkIOn 88'tO vhether the plan **above** outlined Is lavful and should be approved by ua in polIolea end applioation forms),or vhether the scheme contravenes the provlalons of en$ oonatitution or statutory provialon or la oontrery t0 publPo pOli.ayOtherWIse In View Of~the COmBunIty Of Oi?n8rahlp,iPt8F88t, and OOntrOl (LBbetVe8n the **tV0** COlIlp.Sn188."

**btiOl8**

**.** 53,Vernon18 Annotated Civil Statutea, among other thlnga, **50**

prov de8 in 8ff8Ot that no inducement t0 in8UranO8 ahalL b8 m&d8 U~~l88aap8oified in th8 poliay 

### or OOntreCt Of In8Ul"IXLO8.Apparently this requIr8ment ha8 been complied with 

### by **inaertbng into**  the tiSUIWlC8 pO11C3.88Ol?COntr8cta the fOllOWIll p8regr8pht '

'This policy Is Iaaued in cOn8Id8ratIOn of the eppllcat1on therefor, 

### a copy ofwhich Ia attaahed hereto andmade 8 part hereof, end of the p8gment **in** advane of the **first premium**  of $ C8dpt ~Of#FhlChis h8IWby 8Ck330v18dg8d~iOkh&%Bonorable 0. P. Lo&hart, (W&man, Peg8 3

maintain this DO~IOP In for08 for the D8riOd termImating on the - kayof ,

### i9 and' itVi11 b8 Conm8d in for08 UpOn %h8 &8r payment of $ on 

### saiddateandbnthe every - dayOS thereafter until thmicy anniversary nearest tie date onwhich the Insured attains the age of years oruntil the prior death of the iDaui%i%ie said 

### firstprcuuium only to be paid jointly bj, employer of the insured) end 

### oor.poratlon)."
w8 **h&V8** 08Z'8fullyoonSId8red the St8t&ll8ntiOll8d in **your letter**  and are of the opieion that the proposed plan of the Reserve Loan Life Inaumnae Campeny and 

### theAmeriaan Liberty 

### OilCompany does pot contravene any of these statutes.

It la stated In Wuohla Cyalopedla 

### of InauHnae Law, 

### Vol.

### 3,pOg8 

### 1962,thatc

"Paynent of Insurance premIuma la not neceaaarIly the personal act of the 111aured,oonsequently, end as ageneral rule, anyonemaypeythe premIuma or 8aaeiraaienta

on 911Insurance polloy or benefit 

### aortISIaat8, vlth the result that, if rooepted‘ the p8y**ment** Is as valid as IS

### madeby the Lnatand hizaaelf, and t&Is vhether **the** payment was voluntary, or pwauant to request of,:or 8 contraat with, the person or persona responsible 

### forsuch payment, this being 8sp8cl8llg true In the case 

### ofrequest 

### orexpress contraot, provided, 

### ofaourae, that there are no elements of vagering aufflclimt to avoid the aontraot of Insurance, or auoh payments are not prohibited by 8 statute, and are not made after the polloy he8 C8888d tob8 

### avalid and enforceabla OOntr8Ct. l + lm With reference to the payment of premiums on Insureno poliolea, the general rule as Stated in Corpus Awls, Vol. 32, p. 1197, la 8a follovarHonorable 0. P.,Lookbart, Ch&lramn, Page 4

"Premiumsmay be paid by insured or beneflOi8~, orby someone forhim, even though the on8 so pay&g has no insurable Interest.' App8r8ntly, under tbn general XWleS 8bOV8 mentioned, ' the payment of Insuranoe premiums aanbe made by anyone vhere such payments **are** not prohibited by statute. Ue have failed to find any Texas Statute prohibiting auah payments.

In the 0888 of **Thayer** et al vs. Vathem et al, 44 S.W. **906,** it **is atat6dt** 

"Bec8ua8 the parties oolnpoaing both ocanpaniea are the same isno bar to their dealing with e8Oh other. All the law requires 

### inouchcasesisthat thetimnaaatlon shall be free 

### from fraud and exeouted in good faith.' This Ma 8 suit brought 

### for the oon#truotion 

### of **a** trust agreement, and to **requlrq** one of the trustees, to aoaept atook of the nebvcompany, and frenafer the franohlaea **ehd** property of the DaU.aa Rapid-Transit **R8fiVay** Coaqany to the nev aorp~ration ocganized by virtue of said trust agreeawnt.

In Fletcherta Cyolopeti Corporations Vol. 2, p. 

### 1857, **it i8**  Stated8

llhenever 8 oorporatlon has 

### psver toBaLs a oontract,It canaa&e It vlth 

### anether oorporatlon aa veil 88 en Indlvldual.orpartnership. Hovever, ithas been held that oontraota between two oorporations, In order to bind either of them, atuatbe vlthln the povera 

### ofboth.
"If the right to oontraat exists, it is inmaterial if the same offiaers and.stockholders oontrol both contracting corporatlone; if there **is** no **b8d** faith.!'
Bovever, 

### asv8 

### understand% e question before us, v8 do not have the pPopO8ition of two aepa 8 oorporations contreating vith each other vlth the same offioera and atookholdera. Apparently thereHonorable 0. P. Lockhart,

lano contraot whatsoever pany and the Reserve Loan **Ch8irmanl Page**  

### 5

-jr Sl8l'8lJr

8gX'88St0p8y between the American Liberty Oil ComLife Inauranoe Comp8ny. The 011 aomand $oea pay a part of the pr8mIum .~ on 811 polIcI8s of a certam aLaa*.

The question la raised vhether theAmerlaan Liberty Oil Company ha8 the leg81 pover and authority t0 perfollnthe 

### 8bOVem8ntiOn8d act8 as **adV8rtiSing** for aald oompany. It 18 stated in Fl8tCh8r'S Cyclopedia on Corporations, Vol. 2, page 

### 178'7r
"A corporatlorimay adopt any proper **means** of advertising its bualneaa or Its enterprise, lrnd **make**necessary contracts with the publishera of newspapers or others for auoh purpose."
It la further stated in the same volume on page 

### 17881
'538moat dlffioult of alI.questions relating to implied pqvera lawhether, in a partlaular case, 8 corporetlon m8y rid 8 person or 8 firm or 8nother company when Its purpose Jn so doing la to lnoreaae its ovn busln888. ThIa queatlon'often arises in connection with donations by a oorporatlon to aid an enterprLa8, the auaceaa of vh5oh **Vi=** 

### incre888 the business of the donating oorpor8tlon, In connea~ tlon with the power of the corporation tobecome a guarantor or 8 surety to help 

### aperson, Slnn or another corporation, where the efSeot'v111 be to enable the corporation tcmake a sale or obtain a steady customer or to Oth8IWiSe help its buainesa; and In various other phases. Itmoat frequently a+ rises in connection with the buaI.neaaofbrewing c~anles, land companies, street oar oompanI8a and the 15.k8. All that can be said la that the olrcumstances of the particular aaae largely control the question; that some oourts +re more liberal then others In allowing corporations to do acts which a level-headed business man, 8s an individual, would do to help his business; that the undoubted tandenay; Of th8 courts la in the direction of upholding such aota. .* + I .uHOnOr8bl8 0. P. Loakhsrt, Chelnnan, Page 6

It is our opinion that the above mentioned plan Is not prohibited by law end that the Department of Inaura.noemay **legally 8pprOV8**  application and policy.fonna containing the above QUOtWd par8@'8ph.

Trusting that the foregoing fully enavers your Inquiry,
**we** are Yours very.truly

A~alatsnt **AWtej**