**THE** 

## ATJTORNEYGENERAL OF I‘Ems

Honorable 0. P. Lockhart, Chalrman Board of InsuranceCommlssloners Austin, Texas

Dear Sir: Opinion No. O-4374. Re: Are the $1,220,000;00reiienue bonds issued by the Agricultural and Mec'hanlcal

College of Texas and similarrevenue bonds issuedby other State colleges eligible as tax reducing "Texas securities" under the provlslons'of-the.Robertson Law; Articles“4765-4769,as' amended; and as tax reduciiig Si3hp~ itiesunder Article **7064,** as amended, and are they ellglbleas authorized securitiesunder Article 4725,Vernon's Annotated Civil Statutes?.

Your letter requesting the opinion of thisdepartment on the above stated question reads as follows:

"Pleaseadvisewhether the $1,220,000 -. of revenue bonds issued by the.Agrlcultural and Mechanical College of Texas'for the purpose of building dormitories, equipping power plants.andbuilding and equipping laundry plants; and other slmilar~revenuebonds issued by other State Colleges, such as John Tarleton College at Stephenville (which is a branch of A & M College), Texas State'College forWomen, D:enton;and Texas Tecbnoltiglcal College at Lubbock, which revenue bonds are not secured.bgvalid first ll~ens upon Texas real estatebut only by pledged revenue of the Colleges by or the projects for which theywere fssuea,are eligible as tax reducing 'Texassecurities'under the provisions of the Robertson law, Articles 4765-4769 as amended, and as tax reducing securitiesunder Article **7064**as amended; and whether they are eligible as authorized securitiesunder Article 4725."Honorable 0. P. Lockhart,page 2 o-4374

Article 7064,Vernon's Annot&ted Civil Statutes, provides in part:

"Every Insurance corporation,Lloyd's, or reciprocals, and any other organization or concern transacting the business of fire, marine, marine Inland, accident, credit, title, livestock, fidelity,guaranty, surety, casualty, or any other kind or character of Insurancebusiness other than the business of life Insurance, and other than fraternal benefit associations,within this State at the time of filing its annual statement, shallreport to the Board of Insurance Commissioners the gross amount of premiums receivedupon property located In this State or on risks located in this State during' the preceding year, and each of such Fnsurante carriers shall pay an annual tax upon such gross premlum receipts as follows:

. . . If any such insurance carrier shall have as much as otiefourth of its entire. assets; as shown by said sworn statement, lnvested In any or all of the following securitles:'real estate in this State, bonds of this State or of any county, Incorporated city or town of this State, or other property in this State in which by law such insurance carriersmay Invest their funds, then the annual tax of.anp such Insurance carriers shallbe one and one half (1 l/2) per cent of Its 

### said gross premium receipts;

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. a((
Article 4769,Vernon's Annotated Civil Statutes, provides In part:

"Each life Insurance compariy not organizedunder the laws of this State, transacting business In this State, shall.axinually, on or before theXst day of Mardh, make a report to the Commissioner,which report shall be sworn to by either the president or vice president and secretary or treasurer of such company,w~hlchshall show the gross amount of premiums,

collectedduring the year ending onDecember,31st, preceding, from citizens of this State upon policies of insurance. Each such company shallpay annually a tax equal to four and sixty-five hundredths (4.65)per cent of such gross premium receipts.Honorable 0. P. Lockhart, page 3 o-4374

When the report of the investment In Texas securities,as defined by law, of any such companies as ofDecember 31st of any year shall-show that it has Invested on said date as much as thirty (30)per cent of its total Texas reserves as defined by law, in promlssorg notes or other obligations securedby mortgage, deed'of trust, or other lien on Texas real estate and/or in loans to residents-oFheld by such borrowers, the rate of occupation tax shall be reduced to four and fi:e one hundredths (4.05)per cent;...

...... Each of the above mentioned statutesprovides for a further reduction in-'taxes where greater amounts cif~the'finds' '-- in6ntI6nedin said statutesare invested in the securitiestherein named.

ArMtile 4725, Vernon's Annotated Ci+ill Statutes, sets forth the securities in which & life insurance company or&inlzed'under the lawi of this State may~lnvest or loan Its securities. This statuteprovides in part:

~3, .-~or in the bonds and warrants

. . . . of any 8ducatlonal Fnititutlon of the States of .Texas;or any ~nicipally~owned 'WateFsysGrn or sew& systeti'when special i?evenu&s.'to me&t the principal and interestpaym6nts as they iiCcrue

upoti'suchobligations shall have been' approptiiated,

pledged or otherwiseprovlded by tiuch

municltality or educational lnstitutlon;

. . . . . ArtIdle 4706, Vernon's Annotated Civil Stat&e&, sets fol"thor names the securitiesin which lnstirance comp@nl&;.

. @ixcept'companl&s

writing life, health and accident lxi%uraiice, inaginvest their funds over and above their paid up capital stock.

In view of the foregolfigstatutesyou'ape advised thtit It.ls the 'oplnlonof thls'department that the above?nentiotied
revenue bonds are~not,eligibleas~tax reducing "Texas securitles"~unde?Article 4769 or Article 7064, supra, because ~' &uch bonds are n-et promissorynotes or other obllgatlons'se- ?%Eed by-a.mortgage-; d&d of trust, or titherlien bn~Texas I'sale~st&te,

etc., as set forthln Article 4769 as eligible tax reducing securities. The same can'be said FeltitFveto such-bondswFth refer&c& td~Article 7064 as’ Buch‘bonas~do not come within the securitiesmentioned in sald article.Honorable 0. P. Lockhart, page 4 o-4374

With reference to your question as to whether such bonds are eligibleas authorized securitiesunder Article 4725,Vernon's Annotated Civil Statutes, it is our opinion that such bonds are eligible 8s~ authorized securitiesunder said articlewhen the educational institutionIssuing such bonds provides revenues to meet'the principal and Interest payments as they accrue upon such obligationsby appropriation, pledge or otherwiseprovided by such- educational instltutlon as authorized by Article 4725, supra.

Trusting that the foregoing fully answers your lnquiry, we are
Yours very truly

ATTORNEYGENERAL OF TEXAS

By s/ArdellWilliams Araell-'Williams Assistant

. . AW:GO:wc

APPROTW) MAR 4, 1942 s/Grover Sellers FIRST ASSISTANT ATTORNEYGENEFUL

. _. Approved OplnFon Committeeby s/BWB Chairman