Court Opinion

ID: 4136310
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:12:10.377341+00
Date Added: 2024-06-11T14:35:06.078175
License: Public Domain

Honorable   Zollie Steakley                      Opinion No. WW -669
Secretary  of State
State Capitol                                   Re:   Authority of the Secretary
Austin, Texas                                         of State to accept and file
                                                      Articles  of Incorporation
                                                      which include in part a
                                                      purpose clause to engage
                                                      in the business   of dealing
~Dear Mr.   Steakley:                                 in annuities.

             You have asked our opinion as to whether your office may
accept   and file articles of incorporation which include in part the fol-
lowing   purpose clause:

                      “To establish  and carry on a business dealing
            in all types of ,annuities and in connection therewith
            to buy, sell, hold, issue, pledge, assign and deal in
            annuities of all kinds, including deferred   annuities,
            group annuities, variable    annuities, term annuities,
            refund annuities, cash annuities, and installment     an-
            nuities, but without banking, discounting   or insurance
            privileges.”

            It is our opinion that you may not accept       and file such articles
of incorporation.

             Prior to the enactment of the Business       Corporation     Act private
corporations     could only be created with purposes     specifically    authorized
by law.   (These purposes were primarily        set forth in Article     1302, R.S.
 1925.) Prior to the enactment of the Business        Corporation     Act there were
no provisions     which permitted the formation     of a corporation     with the
power to sell annuities other than those provisions        in the Texas Insurance
Code relating to life insurance      companies.    With the passage     of the Busi-
ness Corporation      Act private corporations    could be created     “for any law-
ful purpose or purposes”       with certain stated exceptions D Article      2 .O 1,
Business    Corporation   Act. Article    2.01 provides  in part:

                     “No corporation   may adopt this Act or be or-
            ganized under this Act or obtain authority to transact
            business   in this State under this Act:
Honorable    Zollie    Steakley,           page   2 (~~-669)

                        I
                            .   .   .

                     “(4) If any one or more of its purposes     is to
             operate any’of the following:  . . . (d) insurance  com-
             panies of every type and character     that operate under
             the insurance  laws of this State. . .”

             Additionally,              Article   9.14 provides    in part:

                     “This Act does not apply to corporations       or-
             ganized  for the purpose of operating.   , . insurance
             companies   of every type or character    that operate
             under the insurance   laws of this State. . .”

             Article   3.01 of the Texas               Insurance   Code defines      a life insurance
company     in the following   terms:

                      “A life insurance   company shall be deemed
             to be a corporation    doing business under any char-
             ter involving the payment of money or other thing
             of value, conditioned on the continuance or cessa-
             tion of human Me. or involving an insurance,     guar-
             anty. contract or pledge for the payment of endow-
             ments or annuities.”

Thus, any corporation   with the power under its charter to issue an annuity
contract would. by definition, be an insurance   company.     Therefore, the
purpose clause in question is one prohibited   to private corporations   at-
tempting to organize under the Business    Corporation   Act.

            The question of whether or not an annuity contract is a “contract
of insurance”  or is a “security ” is immaterial to this opinion.

                                                  SUMMARY

                        The Secretary   of State may not issue
                        a charter to a corporation   which has
                        as one of its purposes ‘the engaging
                        in the business  of dealing in annuities.

                                                        Very   truly   yours,

                                                        WILL WILSON
                                                        Attorney General        of Texas

                                                        By    T;liucp&  &!A*
 FBW:jg                                                      Fred B. Werkenthin
                                                             Assistant
,   -

    Honorable   Zollie   Steakley,   page 3 (WW-669)

    APPROVED:

    OPINION     COMMITTEE:

    Geo. P. Blackburn.     Chairman

    B. H. Timmins,   Jr.
    Joe Allen Osborn
    Wm. R. Hemphill
    Leonard Passmore

    REVIEWED    FOR THE ATTORNEY             GENERAL
    BY:
         W. V. Ceppert