## TEE ATFORNEY GENERAE. CDP TEXAS

March 31. 1949

Honorable G. C. Morris, Chairman Senate Insurance Committee 51st Legislature Austin, Texas Opinion No. V- 800. Re: The constitutionality of Senate Bill 376, by Bullock, reiative to retaliatory reserve andtax requir.ements onforeign insurance companies, inview of the requirement that revenue bills originate in the House of Representatives.
Dear Senator Morris:

You request an opinion as towhether or notSenate Bill 376 violates that provision of the Constitution which requires revenue-raising bills to originate in the House.

The portion of Senate Bill 376 under inquiry follows:

‘Whenever. by any law or regulation in force withoutthis State, any group of individuals, society, association or corporation of this State transacting the business of life insurance, personal accident insurance, ‘life andaccident insurance. or health andaccident insurance, or agent thereof. is required to make any deposit of securities thereunder for the protection of policy-holders or otherwise, or to make payment oftaxes. fines, penalties, certificates of authority. valuation of policies, license fees, or otherwise, or any special burden is imposed upon any such insurance organization greater than is imposed by the laws or regulations ofthis State upon similar insurance organizations ofHon. G. C. Morris, Page 2 (V-800)

any other state or country. or their agents, the said insur~anceorganization of such states or countie~sshall be andthey are hereby re,quired. as a condition precedent to their transacting business in this State, to make a like deposit for like purposes withthe State Treasurer of this State andto pay to the officers or agency of this State designated by Texas law to receive such payment, andif there be noofficer or agency so designated, then such payment shall be made tothe said State Treasurer for taxes, fines, penalties, certificates of authority, valuation ofpolicies, license fees, andotherwise, a charge or payment at a rate or basis ‘equal to the rate or basis of such charges andpayments imposed or required by the laws or regulations of such other state or country upon such insurance organization of this State andthe agents thereof andto perform any such special burden so imposed. Any such insurance organization of anyother state or country refusing for thirty (30) days to make any such deposit or to make payment of such fees or taxes, or to perform such special burdens, as above required, shall have its certificate of authority revoked by the Board of Insurance Commissioners, provided that in the computation of any such deposit, payment, tax or fee liability no credit, diminution or exemption shall be allowed any such insurance organization of any other state or country in excess of a similar credit, diminution or exemption allowed similar Texas insurance organizations transacting the business of life insurance, personal accident insurance, life and accident insurance, or health andaccident insurance.”

Article III, Section 33, Constitution of Texas, provides:
“All bills for raising revenue shall originate in the House of Representatives, but the Senate may amend or reject them as other bills.”Hon. G. C. Morris, Page 3 (V-800)

It should be.notedthatthe above quoted constitutional article is similar to Article I. Section 7, Clause 1, ofthe United States Constitution, which reads:

“All bills for raising Revenue shall originate in the House of Representatives; butthe Senate may propose or concur withAmendments as onother Bills.”

Inconnection with revenue bills, it is said in 59 C.J. 531. Section 24:

“As a general rule the constitutions provide thatbills for raising revenue must originate in the house of representatives, or the lower house, as it is called. The precise meaning of the claulse ‘to raise revenue’ is to levy a tax as a means of collecting revenue, a provision for a direct tax against all theproperty in a state for governmental purposes, andshould notbe extended to include bills the incidental result of which may be to create revenue. .”

said: InUnited States v. Norton (1876). 91U.S. 569, the Court

“The Constitution ofthe United States, article 1, sec. 7, provides that ‘All bills for raising revenue shall originate inthe House of Representatives.’

“The construction ofthis limitation is practically well settled by theuniform action of **Congress.** According to thatconstruction. it

‘Has been confined to bills to levy taxes in the strict sense ofthe words, andhas notbeen understood to extend to bills for other purposes, which incidentally create revenue.’ Story, Const. Sec. 880.” (Emphasis is added throughout this opinion).

InTwin City National Bankv. Nebeker (1897), 167U.S. 196. it was held:

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Hon. G. C. Morris, Page 4 (V-800)

“It is sufficient in the present case to say that anact of Congress providing a national currency secured by apledge ofbonds ofthe United States. andwhich, in the furtherance of that object, andalso to meet the expenses attending the,execution of the act. imposed atax onthe notes in cir.- culation ofthe banking associations organized under the statute. is clearly not a revenue bill which the Constitution declares must originate in the House of Representatives. Mr. Justice Story has well said thatthe practical construction ofthe Constitution andthe history ofthe origin of the constitutional provision in question proves that revenue bills are those that levy taxes inthe strict sense of the word, and are notbills for other purposes which may incidentally create revenue. 1Story, Const. Sec. 880.”

The earliest decision in Texas concerning Article III, Section 33, Constitution of Texas, was in Day Land andCattle Co. v. State, 68 Tex. 526, 4 S.W. 865. in which Justice Stayton wrote:

“It is further urged thatthe act of February 25. 1879. is invalid, because it originated in a bill introduced in the senate, which, it is claimed, was abill to raise revenue. The Constitution provides that ‘all bills for raising revenue shall originate in the house of representatives.* (Constitution, art. 3. sec. 33)

. . ..

“To hold that such abill was one for raising revenue would require theplacing onthe language of the Constitution a construction which such language has never received; a strained construction, which should never be placed onlanguage contained in a Constitution or a statute. Similar language is found in the Constitution ofthe United States and, as said by Judge Story, ‘The history of the origin of the power already suggested abundantlyproves thatit has been confined to bills to levy taxes in the strict sense ofthe words, andhas notbeen understood to extend to bills for other purposes which may incidentally create revenue:”Hon. G. C. Morris, Page 5 (V-800)

The Court of Criminal Appeals in Gieb v. State (1893). 3 Tex. Grim. 514. 21S.W. 190, said:

‘The act complained of is not abill raising revenue, within the meaning of article 3 Section 33, ofthe constitution, which provides that

‘all bills for raising revenue shall originate in the house of representatives.’ This provision of the constitution has reference to bills .raising revenue for such general purposes as the legislature is required or authorized to raise, andto cover such appropriations as are made bythatbody,

. . .I

In James v. Gulf Insurance Co. (1944). 179S.W.2d 397, (Tex. Civ. App., reversed on other grounds, 143 Tex. 424, 185 S.W. 2d 966), the court hadunder consideration Senate Bill 144, Acts 1943, which provided for the transfer of portions of certain taxes, license fees, or assessments already levied, collected anddeposited in certain special funds or accounts in the State Treasury under other existing statutes, tothe General Revenue Fund. The act did not authorize the collection of anymore revenue thanthe statutes levied or assessed. Justice Blair, citing Day Land &Cattle Co. v. State andGieb v. State, supra, as well as others. said:

‘But the primary purpose of Senate Bill 144was to provide for the disposition of surpluses in special funds andit is therefore not a bill ‘for raising revenue.’ To be such a bill under Sec. 33 ofArt. 3, it must levy taxes, and does not include abill for other purposes even thoughit may incidentally create revenue.”

The Supreme Court ofColorado in Colorado National Life Assurance Co. v. Clayton (1913). 54 Colo. 256. 130Pac. 330, hadbefore it acase involving anact requiring all insurance companies doing business inthe state to pay to the Commissioner of Insurance twoper cent of the amount ofpremiums received. In holding that the act, which originated in the Senate,. was not a revenue measure withinthe constitutional provision requiring revenuemeasures to originate in the House, the Court said:

“A bill designed to accomplish some welldefined purpose other thanraising revenue is not

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Hon. G. C. Morris, Page 6 (V-800)

a revenue measure. Merely because, as anincident to its main purpose, it may contain provisions, the enforcement ofwhich produces a revenue, does notmake it a revenue measure. Revenue bills are those which have for their object the levying of taxes inthe strict sense of the words. If the principal object is another purpose, the incidental production of revenue growing out ofthe enforcement of the act will not make it abill for raising revenue. The primary object andpurpose of this bill was to regulate insurance companies andthe insurance business in the state.” (Emphasis ours.)

Obviously, Senate Bill 376 onits face is a regulatory or retaliatory measure. andnot one themain purpose ofwhich is to levy atax in the strict sense ofthe word. As we construe it, the bill has for its primary purpose the requirement offoreign insurance companies seeking to do business in Texas to conform with certain regulations andlaws ofthis state, if like or similar regulations andlaws of other states in which such foreign insurance companies are domiciled are imposed uponTexas insurance companies seeking to do business in such other states. Accordingly, it is our opinion that origination of the act in the Senate did not violate Article III, Section 33, Constitution of Texas.
suh4M4RY Senate Bill 376 is not a revenue raising bill withinthe meaning of Article III, Section 33. ofthe Texas Constitution. It therefore may originate in the Senate of Texas. U.S. v. Norton, 91 U.S. 569; Twin City National Bankv. Nebeker. 167U.S. 196; Day Land &Cattle Co. v. State, 68 Tex. 526. 4 S.W. 865; Gieb v. State, 31Tex. Grim. 514. 21S.W. 190; Colorado National Life Assurance Co. v. Clayton, 54 Colo. 256, 130 Pac. 330. Yours very truly.

FIRST ASSISTANT ATTORNEYGENERAL ATTORNEYGENERALOFTEXAS

JAA:gw:erc Assistant