Court Opinion

ID: 4145455
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:56:55.526637+00
Date Added: 2024-06-11T14:37:04.811980
License: Public Domain

..
                         ;   Ilo.   So78

     #alaoplnlonholdmr
     :Y
        L That real emtatemy not oonstituts all QT y '
          portion of the oapltalhook of a oasualty -
          suraneeoompmy at the time or itr lnaorpor-
          tion.
                                                 t
       8. That no p&ton 0r the oipitP1otook0r a OQG
          ualtyinsuranoeoozip5nymay be-lnvestted
                                              in real
          oathtoat any time aft0.2
                                 the lnnoorporation
                                                 0r
          the 0on;any.
       5. That all or any potiionor the fmds of a stook
          oasualtplnsuranoe   oo;.pany,~
                                      overand abovo its
          oapltalstookmay be used for the purohaseof
          a build-   at leastampleand adequateior the
          trnnoaotlon &the buslneseor the oasualtyln-
          eurenneoompany,uhlohbulldingmay be uned in
          whole or ln part for the aoomno&tion or s-h
         +mrudty lneitanneooqnny in the transaotion
          or Its business.
       v

                   OTTSCEOT Tliii
                                ATTGRNEPOENLRAL

     Iion.
         a'alter
               0. Woodward Chalrm.m
     Board0r Innuranoecd~~ion~r
     astin, Texas
     bearsir: '_
                     oplnlonwo. O-958
                  _, Ret Insurmoe - Capitalatookor oaoualty
                         lnsurnaoeooApony- surplus- Invent-
                         aente- Real estate.
           Tour requontror opinionupon the r0u0wing
     questiona
           "1. Lay rh.l o&ate oonotituto  all or any
        por$1011or the oapltalstock08 a oasualtyinsur-
        anoe oo~penyat the tl.zqor its lnoorporatlon?
              "3. In the eronttbnt the flret quo&ion
        1s answeredln tho negativemay all or any part
        or the oapltalstockor a oasualtpinswme ocm-
        pany to be inveotodin r0cil estateat anYtlme
        after   the inoorporation
                                bf the oonpanp?
            "3. Xny any part of the iundeof a stook
        oasualty00 pany over and abovelto oa?ltalstook
        be investedln real ostate?w
     haa beon reoelvedby this depnrtknt.
         . Tho ZegularSecnlonof the Borty-sixth   Legisla-
     tme paooedlic;leoBill :'o.928, w!vloh
                                         1s an sot mendin;;
     Artlole4705,xrtlole4706 and hrtiole4993,as wondad,
     CUM re;~alin~Art10105001,a~ mendad, or the Rovisod
     civilStatutoa0r Texae,1925. Said Rogee Bill no. 928,
Ho& Kalter6, Woodward,,me"#8

*upa,     reads as r0rmmt
        ‘AN ACT awmQLPg ml010     4706, Art10104706,
    and Artlob 4993 am unded,     and repealing I\rtle
    ale 3006 as amended,of the RotlsedClrilstat-
    utea or T-8 of 1925,do8l&uatlngthe      run& and
    6eourltleeof whlohthe oapltalntook ot lns~r-
    anoe oompanlesinoorporated   under the pro~lslms
    or Title 70, Chapter 8 of the EevleodClrilstat-
    utoa or Texas,shalloonalat,dealgnatlng     the ee-
    ourltlesin whloh fundsof #uoh o~~.psnirm   may be
    inrented;provldlagoertaiaIlnritatlcma    on the
    amountof onpltal#took of guaaral.oaaualty     oom-
    par&~ end requiring  deporitm to be trade by ruoh
    oonpanles; an+ deolarlngan umrgenoy.
    ‘BE IT BWJXED BYTRE LPDISIATURE
                                  mTlIX SPATEOr
        TPASI
        *SeotlaPL
                1. That Artlole4706,Artlole4706,
    and Artiole4993,aa amended,of the Ro~isodCltil
    Statutesof Texas or 1966,be and the-@- are
    hee;;yamndod, ao le to hereafterread as fol-

       *&tlole 4705. Itomeor CapitalStook. The
    oapltal hook or my such lasuranoe oonpaap, ex-
    oept any writingLife,Bealthand AooldentIncur-
    anoo, ahalloonsl&t
             ll.   In lawful     money or the Unitedstates;
        or
             “3.   In bonds     or this 5tate or any oouaty
        or inoorporated  tuwa or city there&, or in
        the nttuok of any nationalbanks or
          "3. In rim             upon uninoumbered
                        riortgagoe
         reale&ate in thla &ate, tho titleto whloh
        1s valid,and the marketYalueof whloh 18
        not.leasthan forty (401 per oeat nor0 than
        the amountloanedthereon. Ii any part of
        the yalueof auohreal estate1s in buildings,
        auoh building shallbe lneuredagainstloss
        by ilre for not leasthan slxtp(60)per oent
        or the ialuethereof,with 108s olauaepayable
        to suoh oompany. Provided,  that the prowl-
        slmlror thle Itilole,with reepeotto the
        Yalue of real *state,oonparod to the amount
        loanedthorooa,shallnot applyto loanase-
        ouredby real ertatowhioh are insuredby the
        PoderalHoualngAdmlniatrator.
           RArtlole4706.InYostnent or Funds. No oom-
        pony, exoeptany wr:tlnSLllo,Healthand kool-
        dent Xnsuranoe,organizedunder tho pro~lslons
        or this Ohapter shallintestite fund6 OY(V and
        abateit8 pal&up oapitalstookla any othercan-
        ner than aa r0mwrt

           *(a)  In bondaof the Unitedstatesor or
         any or the Stateaoi the UnitedStatenproYid-
         ed sunh bonds,        are,   at the   time of pWohaae,
Intnr~at-bearlog   or not la drrauxt.

     "(b Ia bond8 or rlrst lIear 01).
                                    unineumbor-
ed   rea eotato in this State or in any other
Sate, OoWtry or prorlaoeIn whloh suoh oom-
WY may be d&lloenaad      to oonduotan tiaur-
MOO budneos, and provldlngln eanklnetanoe
such real ertateahall ba worth at leastforty
(40) per cent more than the mount loanedthtre-
     The Yalueof ouoh real e&ate ahall be de-
%alnod by 'aYaluatlonmade under oath by two
(8) freeholder~    or the oomty   whore the real
 entatoIs looated,and ii the bulldlngaare ooa-
 eldereda pert of the Yalue 0-ithe real eotate,
 they must be insuredeGalnetlosrby rlre for
 aot lea8 than sixty (60)per oeat oi the Yalue
~theraoi, with losr-payabkolauw to auoh oom-
 WY*
    *(o) In bondaor otherinterest-bearing     evl-~
denoeof indobtodnoss  oi mny oounty,Lnoorpor-
ate4 city town or aohoolor sanitaryor nav-
igation&trio4, la h narlgatlondtntrlotto
oontaIna populationof not loss thin three
hundredaad             thousand(359,000)     ao-
oordlng to the last reoedlngFederalCaneus,
ln this or any other StateIn wiiloh    said oom-
pany nay be duly lloeasod to nonduotan laser-
anoe buslaere, If suohevldonoeo or Indebtednear
arm issuedby authorityor lnw and St interest
u&m then has never been deiaulted.
   "(4) In the stooksor bondsor otherool-
donoes of Indebtednessof any solYen dlvldenll-
'payingoorporatlonlnoorporatedunderthe lawa
of this State,or or the UnitedStates,or of
any State,oountry, or provlnoeIn whioh suoh
ootlpmymny bo duly lloeaaedto oonduotan la-
8uranoebualno8a.
   *(e) In loansugon the pledgeor any mortgage,
hook, OT boa&, Or OtherCYideIiOO  Of LndobtOd-
nesa,aooeptabloas Investmenta  underthe terms
or this law ii the ourrent valueor suohizortgage,
atook,bonds or other twldezioe of Indobtednerr
1s at leant 4wwsaty-tire   (25) per oent more than
tha amount loanedthereon.
    a(i)That the restrlotlone  oontainedIn
subscotlon(b) hereofthat mob real estate
shallbe worthnot lean than forty (40)per
oent of the aaouatloanedthereon,and that
the Yalue of suoh real estateshallbe doterra-
lnod by a Yaluatlonfnade   underoath by two
(3) treeholders oitha oountywherethe real
eetato 1s loonted and ii bulldin&s ax0 oonsld-
ore4 aa a part oftho Yalueof rruoh   real es-
tate they must be insured for the benefitof
the4mortgagee,shallnot applyto loanascow-
06 by real estateIn Texaswhloh are insured
by the Pederal Hoorulng  hdmlnlatrator.
                           notenor bon& or
     g(g) ;Thinterest-bearing
Eon* Walter      00 ‘loodwara,   pa&a $4

      the Vslvsrsltyof Tsms lsausdundersnd by tic-
      tue    of OhapterCO, Aote or the Party-thirdU@’
      lalaturo,    SeoondCal&d &melon.
         %WtSole COOS. Capitaland Depoolts. Oaly
     oompanlea ormlabd a@ dola buslneaaandor the
   prorlslam oi thla Ohapter sL IJ.be subjeotto
    its praplslcms.Suoh:oonpany   shallhare not lose.’
    than  One EhndreQThougand ($100,000) Dollars oi
    Oapltal stooksuboorli?od, paid in, la oash, wlth
    an adaltIonai  PlftyThousshdDollars .(@jO,oOO)
    02 oapltalstooksubsorlbod   and fully paid In,
    %n oash,for every kind ot lnsuranoe  Iborotban
    oae whloh It 1s authorizedto tramaot. Suoh
    oompanleawith Two HundredThousand($200,000)
    Dollars of oapltal&took subsorlbed  and fully
    paid ln, Ia sash,shallbe authorized   to trano-
    aot all and Avery kind or Inauraaoespeolrled
   in’thefirstArtloleof thls Chapter;all of the
   UnitedStates, or of this State,or of shy ooun-
   ty or Iranlolpality of this State,or ti notes
    or bondaaeourodby moitgaeeor trust deed In-
 ~. sure4by the ?edoralEouslngAddniat#AtOr, or
     in bonds or flrat liens upon unlnoumberodreal
    o&ate   la this State,or In any otherStateln
    whloh suoh oompargmay prevloualy    have been ll-
    oeasedto omduot an Inauranoebuslnoss:In
    eitherInatanoe,suohreal estate s&illbe wrrth
    not lssa~thaaiorty (40)per oentmore than ths
    amountloanedthereon. If any part of the value
    or suahreal lstats1s In bulldings suoh build-
    izigS~&hall be i.W3uOd a hst lOBa by rlr5 ro2
    not le.esathan sixty (80$ par sent of tho value
    thereof,wlth,losa-payable    olauaoto the ocmgany.
    The value or euoh real estateshallbe detarmln-
    od by a swornvaluation    mads by two freeholders
    of the oounty whore the roal ostateIs situated,
    Provide4that suoh reatrlotlon    shallnot apply
    to mortgapoainruredby the FederalHousingAb-
    tr.l&etrator.  Upon suoh oompsnpfurnishing    evl-
    denoe satlsinotorto the Coanisslonor      that the
   ‘oapltalstook as h:  orolnpresorlbod   has been all
    subsorlbed  and pald up in oasb ln Sood faith,
    and that rush oaplta$stookhas bem lnvonted
    as hereinproscribed,    and upon the depositof
    the sum or yl’itty Thousand($60,000)   Dollarsor
    auah soourltlea  ‘or in sashwith the StatsTreas-
    urer,than mid Commlssloner     shalllssuoto said
    oompany. a oertlrloate  authorizing it to 40 bus-
    lnesa. NO part or ths oa,7ltal   paid ln shall
    be loanedto say of’flosr   or eald oompany. Tn
   ..t.heeventany suoh oon,my shall be requiredby
    ths law or any otherState,oountry or pro~laoe
    as a requirement   priorto doingan lnsuranoe
    businessthsrelato depositwith the duly ap-
    pointedorilooror suoh otherStats,oountry, .’
    or provlnoe,or rlth the stateTreasurerof
    this  state,any ~eourltles   or cash In exoena0r
    the said deposit oi JiftyThousand($50,000)
    Dollarsherelnbeiore    msatloned,suoh oompany,
    at it8 AIsorotlonmay depositwith thr State
    Treasurerseourltjesor ths oharaoterauthoriz-
    ld by this law, or oash suriloloat    to eaable it
                                                         .,.._;:_

                                                              .(,
 xwi yltsr CI Yooaw4rd,page #a                            :

    to Awt 4Wh requirements.Thi StateTreaaursg
    is herebymthorlzea ana aireoteato ~UO~YO SU&
  ~.
   a OP Odt
         4 Jia
             tfJ
               h OId
                   itl~OiWf~Oi$fto? th0 prOtOO-
    tion of iu po1icyhol4erriOf ths oanpany; Any
    depositsso mtideto meet the raquiramente or any
    otherStat.,oouatry,or provlnoeshallnot be
    Wlthdmwn bythe.ocmjmafoxoe~tupcm flllngwith
    the4Comdesloner0via eim  latisfnotorytobin
    thnt the oosipany
                    baa with4rawnfron budnoc~s,sn4
    has ao unsoouredliabl~ltieo outstanti in app
    suoh othersttite,~oouptry,or provincefp vhloh
    suoh l44ltiaial4epositwas requirea,ana upon
    the fllln&of auoh Svldenoethe ooqany may nlth-
    draw wh 844ltlonaldepositat any time.
       '980.e. Art10108006. Thlm ml010 is hersby
    expresslyrepealed.*
       mtlole 5007,Revi8eacivilStatutisof Texas,
 roaam a4 r0iiowa:
       “No.suohooz~panyshallbe permitted-to purohase,
   .h0iaor conveyreal estate,exocpt  rorthe  pur-
    pose and in the m.anorhereinset forth:
       '1. For the eraotlonan4 malntananoe
                                         of bulla-
     lngs at leastamplenna adoqwto iortho trnns-
     aotlm or tls own business,
      .'.
       '8. suoh 40 shallhero beenmortSnSe4to,lt
     ln gaod faithfor rroneydue.
       "3. Suoh as shallhave been convey84to it in
     the rntlsfaotlon of debtspreviously oostraotab
     ln the oourseot lto dealingsandwhioh mat be
     taken in by the oom)anyoa aooount of the debt.:
     aooureaby auohmmQage.
      "4. Such 4~ shallhave born purohaaednt aale?
    ‘upon judgments,deoressor mortgagesobtained
     or ma4e for suoh debts. No owpany lnoorpomt-
     04 as aforesaid shallpurohaso,hold or oonvep
     ;,“.i:fte in any otheroasesor ror 4ny other

       Art10105008,RevisedCivilStntuteaor Texas,
 row33 as r0xh4:
_*
       wA3.l real estatea0 acquired,exocpt48 16 oo-
    ouple6by bulldingsuse4 in whole or ln partior
    the.acoommIatlon  ai auoh oorqanleoin the trans-
    aotioaof lts business shall,exoeptas hsreln-
    srtsrprid0a. be sod an4 ai4p0seaor wfthln
    ton year4 arterauoh oompanyshallhave acquired
  ; titleto the same, No suohoompanyshallhive
    suoh real eatate for a longerperiodthan that
    aboveffientloiied,
                     unlessthe 84ia oclcpanyshall
    procures oertlflonte  fron the Commissionerthat
    the intercotsof the companywill sufferIcater-
    lallyby 4 toroe sale or suoh real e&ate, in
    whloh eventthe tlms ior the sale may be ostenb-
    04     t0 SUOh tlm4 48 the C~W~WO?   Shau   QireOt
    in     said 00ctiri04tor*
80th   VatOr   th,wOodWUa,   pagb   46

      we have been krromea by the Boar40r xm.r4noe
            oi Texanthat all oasualtyinsuranoooom-
Commissioners
pmle8 aowoperatlng in Texoe were orente4 under the
proilsloasor what 1s now maptierLB, Tltle~TBor the
RevlsodOlvll statutesof ‘24x44.Therefore,we mswor
your qWstiOn8, insofar4s they applyto casualtylnsur-
anoe ooqan.lesorgedzea     unaim Oheiptor 28, Title78 0r J
the Revisoacivil3tatuteeor Texas,as it would servo
no prnotloalpurpose    to dleoua6any questfonwhfohmight
arisewith roierrnoe to a oasualtyoonpanyurhlohmight
have been organized un4erChapter8 of Title78 of the
Revleea ~irii statutecr 0r ~-4,

        The languageof the daptlonof Xouse Bllixor
988 of the Foxliy-sixthLegislature
                                 spsoliioslly lfmlts
the applloatlon of amendo Artloles4705 an4 4706 or the
ReviseacivilStatutes to oasualtyoompanicsand other
name4insuranooo0pIpnnfe.ooroatodUnOer Ohaptera, Title
76, ReVlse4clvllStatutsrof Texas. The oaptloa-d&es
sbowsan lntontlonto limitthe apglloatlon  or anenEe4
Artiol.44993 to oasunltyinswanoe 001+438 0r04teaun-
Car Chapter18, Title 78 Revise4Clvll3tatutesor Tex-
as* Thesearticlesappl~sb,roopectlvely;   to sala oom-.
panleo prior to the pas-0 0r House 811lN0. 928, eupra,
an&this blll showsno lntontfoato &age the typeq or
ooropaaleswhlohoaoh oontrol.
        Wo, therefore,
                     oonoludet&it hrtlole84705 ad
47d6 ot the ReviledCivilStattiesot Tcxas,'4onot ap/
ply to oaswlty itm8r4404~oompaniesorgnnizoaunder
Chapter28, Tltl.78 of the Revised01~11statutoo of
TWSa
        irtlole4993 RevisedCivilStatute8 48 nmonb-
04 by saidEouee Blli No. 928, relatesto ani oontrols
oaswlty insurnnoeoompanlesoroateaunUerthe provlslcn
of what 1s now Ghapterl.B,Title 70 or the RevisedClvll
Statutesof Texar. Thls nrtloleprereaoribed the typo of
eeaurltyin wtiohthe oayltal stook of suohoasunltyin-
4ur4.404oonpaniermay be investo4. The outrightpurohase
of real estateis not lnoludodin the list of approved
seourltles.& our opinion,thls    etatutelo a oontinu-
lng 1imitatZon upon the pow= to investoapltalstook
an4 prohibitsthe lmestmat of.suohfundsin any other
assetsthan thosenaned therein,not only at the tlw
of lnoorporatlon, but at all tlmoathereafter.
       Wo, therefor nnswer your firstan4 seoona
questionsas 4p ii4a to oasualtylnmannoe 00~1 nle8 /
               tle 78, Chapter lE,.oithe Rovi?
oreatadunder Cf:                             on4 Clv-
11 statutesof Texas in the negative.
         Prior to its repealby the last scsslonoi the
Loslglature  through saidRouse Bill No, 92f3,
                                            Artfale
5:‘06, RevisedCl011Btatutos,1925,presorlbed   the man-
nor of lnvestmentaover an4 above the capitalstookor
4 oasualtylneuranoeooapaqpmento under the provl-
slonsor Ohapterl.8,Title IO, Revised01~113tatutos
or Texas. ThO offsot @i the repealof this artiole16
to reaove the llmltatlon plaoedupon the lmestmnt of
all run48oisuoh oompanies,   siooptthe onpltalstook,
ana Lear0the aiaor0ti0nor makingsuoh lnvestnent.ln
-

                                                                        i

    &II. Walter0, w00qwua, pale 87

    the hands or thr Board or Mreotora of         the oorp0r4tlon
    abjeot   tb thr li.mitati044
                               or Artlo* 8007 Ma 6008,
    mifbea civilStatute8or Tsxas.          : .
           In answer to your thirdqwitlon, you are re- ..
               a&lead that it 18 the oplnlonor this Cuppart-
    8pootful.l.y
    ment,that all or a portla~of the fundsof a stookone-
    ualtyinsursnoeooapsny,over an4 aboveits oapltalatook
    my k, used ror tha ereotlon.%a naintenanoe of a bulla-/
    %nS at leastampie ma adequateior the trammotionof
    the buslmss of theoasualtpinsuranoeoocpany. Suoh
    bull4ing mst 0s wad in whole or in psrt for the aoocai-
    modetim or swh oompqy in the transaotlcn  or the bud-
    ness or thn ompany.
            You are‘iurtherrespeotf'ully  nCvlseCth4tit is
    the’oplnion    of this Cepaa%aont~thnt
                                         4 aaeualtylnsuranoo
    ooqany 1s permltteaunder the law sad underNtlole
    5007 of the Revise401~11Statutesof Texas,to 4OqUlre.
    an4 holC~rsalestute     undersootlons2,3 sn4 4 of nrtl-
    ale 6007,but that under Artlole5008,Revlse4~Olvll
    Statutesor Texna,411 real estateso 47quire4,except
    as ls’ooouple4    by the buildingused la #huls or in part
    ror the aooomodatlonor such oompanykr the txansaoti0n
    of the businessof the o~nrpany,   shouldbe 4014end Cla-
    pose4oi within10 yearsaftersuoh oompnny shouldhave
    aoqulrebtitle to the ssme,~1168sthe oarmanyshould
    440~~0a aertlilonte     rromthe Comleslonsrthat the in-
    terost   or the o~mpany would sufferourterlally by a foroed
    sale or euohreal     estate,ln whioh nvent,time for the
    sale plight be extendedto EmOhtim 4s the OcinmiMlonnr
    ‘shoul4Cireotin ml4 petltlon.
              “TEWla&thnt   this anmwersYour 5.nqui.W.
                                                    *a U.
                                  Touravery truly
                                ATTORNEY     OINXRAL      OF TEXAS

                                ~~~iZ=ZL-
    WaJFrob                                                 is.istpbt

          This opinionhas been oonal&red               ln OO$WMOO,
    approveaand ordered rooor404.

                                OERALB
                                    c. NANN ..
                                  Attorney     Oeneral     or Texar