Court Opinion

ID: 4143115
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:29:50.319897+00
Date Added: 2024-06-11T14:33:58.885727
License: Public Domain

--_      .

                                                                ENEIRAE

Honorable    Marvin       Hall, Commissioner
Board of Insurance         Commissioners
Austin.   Texas

Dear      Mr.   Hall:                          Opinion    No.   O-3250

                                              Re:    Authority     of the Board of In-
                                                      surance    Coinmissioners        to
                                                      issue to the United States Avia-
                                                     tion Underwriters,        Inc., a permit
                                                      pursuant    to Article     5065, Revised
                                                      Civil Statutes,    under the facts and
                                                      circumstances       disclosed.

              Your request      for   an opinion    of this   Department      is before     us,   from
which      we quote:

               “The United States Aviation      Underwriters,  Inc., a corpora-
        tion irmorporated   under the laws of the State of New York, desires
        to submit an application   for a license    from the Board of Insurance
        Commissioners     pursuant   to Article   5065, R. C. S.

             “This company’s         attorney     advises     us that The Uni,ted States
    Aviation    Underwriters,        Inc., is a corporation          whi.ch investigates
    and keeps advised          of developments         in engineering     and aero dynamics,
    of developments         in individual       models    of airplanes     designed     and sold
    by designers       and manufacturers,           of the inherent      hazards,     if any, in
    the individual      airplane,    and of the matter         of legal l,iabili.ty that may
    be involved      as to the pilot of the airplane,           its passengers       and third
    persons,     as well as legal liability          relative    to the operation       and con-
    trol of airports.        It obtains     experience      data relative     to aviation    risks
    and losses      and supplies      all such information,          data and experience
    for the benefit      of licensed      local recording       and solicitors      of insurance
    companies       admitted     to do business        in the State of Texas,       as well as
    on behalf of the company            itself.    Its service     includes    the proper     as-
    sembling      of an insurance       policy    against fire or casualty         hazards,     or
    both, to meet the needs of an applicant                 for aviation    insurance.

                ‘“As a result   of your opinion No. O-1931,   approved  February     19,
        1940, the following     question  arises:  Is the Board of Insurance   Commis-
        sioners    authorized   to grant to the United States Aviation   Underwriters,
Honorable        Marvin     Hall   - page   2 - O-3250

    ITIC., a permit   pursuant    to Article  5065 of the Revised      Statutes  of
    1925, said United States Aviation        Underwriters,    Inc., being a cor-
    poration   incorporated     under the laws of the State of New York with
    a permit    from the State of Texas pursuant        to Subdivision     49 of Arti-
    cle 1302, authorizing      it to act as trustee  under any lawful express
    trust committed      to them by contract     and as agent for the perform-
    ance of any lawful act?

               “Your     advice    in the premises    will   be greatly    appreciated.”

         You are respectfully     advised  that it is the opinion  of this Depart-
ment the permit    requested  by the United States Aviation     Underwriters,   Inc.,
should be refused.

            A part of the proposed           activities   of the applicant    is apparently     to
furnish   to insurance   companies           advice with respect      to ‘the matter     of legal
liability  that may be involved     as        to the pilot of the airplane,      its passengers
and third persons,     and as to the         operation    and control    of airports.”     This
would appear     to be the practice          of law in an unauthorized       way in this State,
under the provisions      of the State         Bar Act,    But we do not need to put our
answer    upon this ground.

               Section    1 of Article 1524a of Vernon’s   Codification     of the Civil
Statutes,      dealing    with loan and brokerage   companies,     is as follows:

            “This Act shall embrace            corporations      heretofore     created   and
    hereafter    created    having for their purpose           or purposes      any or all
    of the powers     now authorized        in Subdivisions       48, 49 or 50 of Arti-
    cles 1302, Revised        Civil Statutes of Texas,          1925, and heretofore        or
    hereafter    created    having in whole or in part any purpose                or purposes
    now authorized       in Chapter     275, Senate Bill Number            232 of the Gene_ral
    and Special     Laws of the Regular          Session    of the 40th Legislature.         No
    such corporation       shall act as agent or trustee           in the consolidation        of
    or for the purpose       of combining        the assets,    business     or means    of
    other persons,      firms,    associations      or corporations,        nor shall such
    corporation     as agent or trustee         carry    on the business      of another.”

               This    Act was     passed   by the 42d Legislature        (1931)   --   being   Ch.   165,
S. B.   165.

           The United States Aviation    Underwriters,   Inc., being a corporation
organized   under the laws of the State of New York,~with      the corporate   powers
enumerated    in subdivision 49 of Article   1302, of our Revised    Civil Statutes,
 _---      A

Honorable         Marvin    Hall   - page   3 - O-3250

upon obtaining     a permit   from the Secretary        of State to transact     its corpor-
ate business    in Texas,    wou,ld, of course,     acquire   authority  to transact      such
business   in Texas    only,in accordance       with the laws of Texas       relative    to the
powers   conferred     upon Texas    corporations,      under Subdivision      49, that is to
say, in accordance      with Article    1524a, Vernon’s      s,tatutes, above quoted.

            By the express   provisions  of Section 1 of Article    1524a, “No such
corporation    (Texas)  shall act * * * as agent or trustee    to carry   on the busi-
ness of another.”

            “To carry   on the business       of another”     is to carry    on or do the cor-
porate business     where   that other is a corporation.           It does not require     that
the whole of such corporate        business     of another     corporation    shall be thus
carried   on, but it is enough that any substantial           part or act of the corporate
purpose    or business    be done or carried       on -- even an isolated        act.  This is
the universal    rule governing     the construction       of the phrase     “doing business”,
in connection   with permits     to,foreign     corporations      to transact    or carry   on
their business    in the domestic      state.    Phelps    v. Jesse French        & Sons Piano
Co., 65 S. W. (2) 374;      Kimble-Krough         Pump Co. v. Judd, 85 S. W. (2) 579;
S. R. Smyth Co. v. Fort Worth Glass             & Sari,,, Co., 105 Tex. 8, 142 S. W. 1147;
Buhler   V. E. T. Burrows      Co., 171 S. W. 791, 11 Tex. Jur., p. 169, fi 496.

             The activities   enumerated    in your letter contemplated       by the Under-
writers    is essentially   a part of the corporate     business   of the insurance     com-
panies whom it would serve.         The companies      could not successfully      carry   on
their business     without such data and information        as applicant’s   service    con-
templates.      They must procure      this service,   however,   from some person,        or
from some corporation         having corporate     power to supply it.

           Not only is the contemplated    activities of the United States Aviation
Underwriters,    Inc. ultra vires, but they are expressly    forbidden  by law.

                 Moreover,    Section    1 of Article    5062a   of Vernon’s   Codification   of the
Revised         Civil Statutes,   declares:

                 “Insurance   agents as that term is defined   in the laws of the
        State   shall for the purpose   of this Act be divided   into two classes:
        local   recording   agents and solicitors.”

            This undertakes    to divide all insurance     agents, as that term is defined
in the laws of the State, into two classes,       to-wit:   Local recording   agents and
solicitors.    There  can be no insurance      agent who does not fall within one of
these classes,    for it comprehends     all insu,rance   agents.
Honorable      Marvin      Hall    - page    4 - O-3250

             Section     3, in the final      sentence      thereof,      declares:

             “The      Boar.d   shall   not issue    a license         to a corporation.”

These provisions      are         a part of the Act of 1931, 42d Legislature.     They
appear  to be sufficient           within themselves   to demand a refusal    of the per-
mit requested    of you.

             We are not unmindful          of James N. Tardy Co. v. Tarver,               39 S. W.
(2) 848, wherein       the Supreme      Court held that a corporation            possessing        suffi-
ciently   broad charter       powers,     w’as entitled      under the laws of this State to be
licensed    as an agent for a company            writing     fire, marine    and casualty       insur-
ance.    In that case the extent of the corporate                powers   of the applicant       corpora-
tion was not decided        by the court      --   it was not an issue in the case -- for,
says the opinion,       “respondent      concedes       that relator    James N. Tardy Company’s
charter    is broad enough to authorize             it to act as an insurance       agent.”       While
Article    1520 of the Revised        Civil Statutes       then in force    with respect      to loan
and brokerage       companies     contained       the identical     language    as the present
Article    1524a of Vernon’s        Codification,       forbidding    such corporations        to carry
on the business       of another,    as above stated, the court           did not pass upon the
charter    power of the applicant,         so that, whether        James N. Tardy Company
was a loan and brokerage           company       or not, has nothing to do with the point
actually    decided    by the court.      The respondent          may have conceded        too much
in the defense      of that case, but whether          he did or not, the conceded          issue
was not determined         by the court.

           Again, Article    5062a, above quoted,     was not then effective,     so that
the case under review     is in no wise in conflict     with our conclusion     here ex-
pressed.    On the contrary,    it impliedly   supports   our conclusion    that ,a corpora-
tion forbidden   by law of its existence     to carry   on the business   of another    should
not be appointed   or permitted     by a State instrumentality     to carry   on such busi-
ness of another.

                                                                        Very   truly   yours
      ROVED      MAY       14, 1941

                                            Approved
                                            Opinion
FIRST ASSISTANT                             Committee                                   Ocie Speer
ATTORNEY    GENERAL                                                                     Assistant
                                            BY
OS-MR                                            Chairman