Court Opinion

ID: 4137674
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:27:34.555639+00
Date Added: 2024-06-11T14:30:45.063124
License: Public Domain

August 28, 1950.

Ron. George B. Butler, Chairman
Board of Insurance Commlsaloners
Auetin, Texas             Opinion No. v-1099.
                           Re:   The legality of an ameod-
                                 ment to the charter of a
                                 farm mutual ineurance com-
                                 pany organiced under Arti-
                                 cle 4860a-20, v.c.s., to
                                 permit removal of its home
                                 office outside the county
                                 of Its authorleed insur-
Dear Sir:                        ante activity.
          You have requested the opinion of this office
with regard to a farm mutual Insurance company, organ-
ieed under and within the definition set out in Article
4860a-20, V.C.S. Such company, under authority of its
original charter, established its home office in the
county of It8 authorieed insurance activity as provided
in Article @60a-20, Section 15. It now propose8 to
amend its charter 80 as to authorize the relocation of
its home office in another county outside the area of
its authorieed territorial limit of insurance activity
under the indicated statute, In a conference with the
proper administrative oi'ficialof your department, it
was determined that your questions submitted may be
stated aa follows:
            (1) May the company amend its charter?
          (2) May the company amend Its charter 1n such
a manner a8 to permit relocation of Its home office in
another county, 80 as to authorize it to write Insurance
In the county of relocation if such county of relocation
is outside the original territorial limits for writing
insurance prescribe&~-inArticle 4860a-20, Section 15,
V.C.S., and prescribed In the original constitution, by-
Iaws and articles of association of the company?
          County mutual Insurance companies, a8 initlal-
ly defined, authorized and regulated in 1937 by the 45th
Legislature, which first passed the Act subsequently
Hon. George B. Butler, Page 2   (v-1099).

codified as Article 4860a-20, V.C.S., were clothed with
most of the eSSentia1 chanacteriatlc8 of the type of mu-
tual Insurance companies authorized to write Insurance
other than life insurance, as set out In Chapter 9 of
the Insurance Title in Vernon's Civil Statutes, except
on certain enumerated riSk8. Since then they have op-
erated with but slight statutory regulation until 1947
when the Legislature amended Article 4860a-20 and pro-
vided more detailed exactiona of such companies. For
one thing, It then deflned a Sub-ClaSSifiCatiOn of coun-
ty mutual Insurance companies by providing that those
maintaining more than 609 rural riSk8 or operating on
the assessment-as-needed plan, as therein defined, should
be termed farm mutual insurance companies, which classl-
flcatlon exempted them froD certain statutory requlre-
menta. It i8 with regard to companies coming within the
statutory definition of farm mutual insurance companies
that you Inquire.
          Your first question r.egardsthe authority of
those farm mutual8 to amend their charters. An exami-
nation of Article 4860a-20, V.C.S., a8 last amended In
1949 by the 50th Legislature, reveals no specific au-
thority stated therein to amend it8 charterssubsequent
to Its Initial grant. It will be observed that other
types of Insurance companies have varying specific and
general grants of legislative authority to amend or
alter their charters. Thus, for example, authority for
life insurance companies to amend may be found in Arti-
cle 4719; atithorltyfor Chapter     mutual lnstiance com-
                                  8
panies may be found In Article~$~lg;   and authority for
Chapter 9 mutual insurance compatiiesmay be~found itiAr-
ticle 4860a-4. The absence of specific authority to
amend the charters of farm mutual Insurance companies
in Article 4860a-20, the statute providing for their
creation, does not preclude their   8mending when we ob-
serve the provlslons of Article 4715, applicable alike
to all insurance companies, including farm mutuala, as
follows:
          "The laws governing corporatlona in
     general Shall apply to and govern lnaur-
     ante companies Incorporated in this State
     in so far as the same are not lncon8lstent
     with any provlsion of this title."
          Under the general COrpOratiOn statutes it is
provided and ha8 long been established that corporate
charter8 may be amended. qhU8, Article 1314, V.C.S.,
reads, In part:
Eon. George B. Butler, Page 3   (V-1099).

          "Any private corporation organieed or
     Incorporated for any pUrpOSe,mentiOn.edin
     this title, may amend or chaage its charter
     or act of incorpoiatlon. F . ."
           There being no provision in Article 4860a-20
pertinent to the securing of the charter by a farm mu-
tual 1nSUrance company and to continued SUbSeqUent op-
erations thereunder by such company which would be
inconsistent with the foregoing general provision au-
thorizing other corporatlons to amend their charters,
we find authority to amead their charters as other
domestic insurance corporations, through the Board of
Insurance Comaiasloners, by the reference In Article
4715 to $he general corporation laws of this State
and to the unquestioned authority  of domestic corpor-
ations enerally to amend their charters under Artl-
cle 131fi.
          We also Observe in this connection that we
have been Informed that county mutual insurance com-
panies have been uniformly permitted since 1937 to
amend their charter8 by the Board of Insurance Commla-
alonera 80 as to change the company name. It is, Of
course, well established that departmental conatruc-
tion by the agency of the State admlnlsterlng the pro-
visions of a particular statute is entitled to weiEht
in construing-statutes where ambiguity exists. St&
;~D~v~Employers  Ins.Tex.
        Butler, 142       692,
                      ASS'n v. 181 S.W.2d 269
                                          Tex. (19m
                               Hol;mes,145      158, 196
S.W.W 390 (1946).
          Therefore, In answer to your first question,
it 18 the view of this office that farm mutual insup
ante companies, organized and operating under Article
4860a-20, v.c.s., may amend their corporate charters.
          Having concluded that such companies have au-
thority to amend their charter8 generally, we turn to
your second question regarding their authority to amend
their charters to permit relocation of their home office
in another county In such a manner as to authorize their
writing insurance In the county of relocation, when,
without such amendment, they would be confined to the
original territory as provided In Article 4860a-20,
Section 15, V.C.S*, and as prescribed in the orlglnal
constitution, by-laws and articles of association of
the company.
Hon. George B. Butler, Page 4    (V-1099).

          lhi8 queatlon is clearly directed at the prac-
tice, accepted among other types of insurance companies,
of purchasing charters and moving companies to new ter-
ritories. We have, however, la connection with the type
of Insurance company under consideration here, a statu-
tory restriction on the territory in which these compa-
nies inaywrite insurance. T!hatrestriction, found in
Section 15 of Article 4860a-20, V.C.S., reads as follows:
          "A County Mutual Insurance Company may
     write Insurance (a) in any County adjoining
     the Countr in and for which It is organized,
     or (b) In any County In which no County Mu-
     tual Insurance Company has been organiced, or
     (cl anywhere, If Its reserve   fund, or pollcy-
     holder8 contingent liability, or both such re-
     serve fund and contingent llablllty taken
     together, exceed8 the au311of Fifty Thousand
     ($50,~0.00) DOllarS." (ElaphaSiSsupplied.)
          It 18 provided 1n Section 3 that the original
application to sollclt Insurance as a county mutual in-
surance company shall state "the locality of the prin-
cipal bUSine88 of such company". Further lde~tlflcatlon
for enforcement of the statutory restrlctlon as to the
territory In which such companies may write Insurance
Is provided in the requirement found in i3ectlon4 of the
statute, which provides that the charter and articles
Of IuCOrpOratiOU Of Such companies shall State, aPtoUg
other things, "the place of Its principal office". As
a matter of fact, as to county mutual Insurance compa-
tiles,the Board Of InSUPatiCeCO~l88iOi3er8 18 required
to make an ltivetitlgatio~
                         prlbr to granting a charter to
determine "the probability that the territory to be
served can SUppOrt such company". Section 2a.
          Since the original and continuing territory
in which such companies may write iUStu?anCeis deter-
mined by the county la and for which it Is organized,
under Section 15, such &ompanles could not, by moving
the home office SUbSeqUent to organization, alter Or
In any way change the original authorized territory
of writing lnsuranoe. The technical connotation In
the Insurance field of the terms "writing insurance*
refers to the location of the risk Insured.
               Therefore, your second question is enswered
to the effect that a farm mutual Insurance company 18
not authorleed      to amend Its charter so as to permit re-
locatiqn of the home office in another wunty and there-
by aut]iorlze,     by the fact of reloca%a)lone,    such
Eon. George B. Butler, Page 5   (V-1099).

company to write Insurance In the county of relocation,
when such county of relocation is outside the original
territorial limits for writing insurance prescribed la
Article 4860a-20, Sectlorl5, V.C.S., and prescribed
in the original constitution, by-laws and articles of
association of the company.
                      SUMMARY

         A farm mutual Insurance company, organ-
    i8ed and operating under Article 4860a-20,
    V.C.S., may amend Its corporate charter. It
    may not, however, by amendment of Its charter,
    constitution, by-laws or articles of aesocla-
    tlon, authorl8e the relocation of Its home
    office in a county other than the county of
    it8 organization so as to permit the company
    to write insurance in the county of reloca-
    tion, when that county is outside the author-
    ized territorial limits for writing insurance
    prescribed in Article 4860a-20, Section 15,
    V.C.S.
APPROVED:                       Yours very truly,
Red kDanie1                       PRICE DANIEL
State Affairs Division          Attorney General

Everett Hutchinson
RXeCUtiVe ASSiStant
Charles D. Plathews
First ASSiStant

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