Court Opinion

ID: 4137405
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:24:30.311473+00
Date Added: 2024-06-11T14:36:08.838308
License: Public Domain

EATTORNEY                      GENERAL
                                    OF     TElxAs

PRICE  DANIEL
ATTORNEYGENeRAI.

                                    December     11,   1951

       Hon. Geo. 8. Butler,  Chairman
       Board of Insurance   Commissioners
       Austin, Texas
                                               Oplaien     Not V-1368

                                               I&:     Pr&edune       for Ftpwtiug
                                                       rsal atate      held by an cl*-
                                                       of -3trte  If Be ins urancc
                                                       company under Article
                                                       4769, V.C.S.      (Article  4.03,
       Dear   Mr.    Butler:                           insurrnce     Cede),

                     Ywu request   the opinion       of this office   upon the ques-
       tion presented   in your letter,  which       is as follows:

                       “Pleaoe  see Article,  4766 [Article    3.34, Insua-
              anca    Code] and pwticulWlp       the following   excerpt
              from    Paragraph    2 of the Article:

                       * ‘The investments        nequired   by this Chapter
              may be made by the purchaoe              of not more than one
      :,‘~    building site, and in the erection          thereon of not more
              than one o&lee building,          or in the purchase,   at its
              reasonable       market value, d such office building al-
              ready constructed         and the ground upon which the snme
              is located in a         city of the State of more than four
              thousand @,OgO7 inbabitarts.            All real estate owned
              by life inau@amor compcurira La this State on’Decem-
              ber 31, 1909. and a11 thereaftor           lcquined under the
              ptisirar,        o& tBdr Clmpbet,    ur by ioreclosure    o8 a lien
              tke*s*n     till    be t*crtwd+ tm the extent of its reason-
              able ma&et        vati.    as a part of the investment     required
              by thkw Ckb*w.’

                      ‘It hat ken      the Departmentai     construetien
              thr*qh     the *a~      t&t since l&r inr~aacp        companier
              licesad     la Texas          bcquirt aud hold real estate:
              arbject to the &nltat            lC Article 4726 [Article    3.40,
              W~@aoco       Code],   any nat estate held or acquired        in
              a manner other than antherized           by Article  4726 may
              mt be admitted       as an asset to the company,
    Hon.   Geo.   B. Butler,   Page   2 (V-1368)

                   “Some of the out-of-State      life insurers  doing
            business   in Texas own and hold real estate situated
            in the state of their domicile     which the more liberal
            laws of their state permit      them to do but which would
            be in conflict   with Article   4726 if the real estate
            were located in Texas.        The result is that the out-of-
            State life companies     properly   carry such real estate
            as admitted    assets.

                    “In making their annual tax return as required
            by Article    4769 [Article   4.03, Insurance     Code],   some
            of the out-of-State    companies     list as similar   securi-
            ties in the State in which they had the highest percent-
            age of their admitted assets       invested  only the real
            estate located    in that state which was owned on De-
            cember     3 1, 1909 and all which was, acquired      and held
            by it in the manner prescribed         by our Article    4726.
            See Item 12, Part II of the tax return blank enclosed.

                    “The position   of such companies       is that real
            estate in Texas held outside the provisions          of Article
            4726 would not be an admitted        asset in so far as this
            State is concerned,     and therefore    is not a Texas     se-
            curity, the consequence       being that such real estate
            legally   held in another   state could not be a similar
            security    to Texas  securities.    The Departmental       po-
            sition, with some differences       in viewpoint    here, is
            that real estate legally held in the state in which the
            company has its highest percentage          of admitted   assets
            is similar    to real estate legally   held in Texas,    and
            should be so reported      by such out-of-State      companies.

                    “Will you please advise me whether        real estate
            held by an out-of-State     life, heal,th and accident  insur-
            ance company in the state in which it had its highest
            percentage    of admitted   assets inves,ted should be re-
            ported as a similar     security   in the Texas tax return
            required    by Article  4769, even though a portion,.of
            such real estate holdings would not meet the provi-
            sions of our Article    47267 ”

                    Article    4769, V.C.S.,    which now appears        as Article
    ‘4.03 of the new Insurance        Code, provides       for a gross premiums
      tax with respect     to life, personal    accident,    life and accidtnt,     or
     health and accident       insurance   for profit,    or for mutual benefit or
     protection,    upon such foreign      life insurance       companies   doing
     business    in Texas.      The tax rate is a percentage        of the gross pre-
     miums received,        the tax being payable to the State Treasurer             on
      or before March       15th for the preceding      calendar    year. The stat&ate

i
Hon. Gco.      B. Butler,   Page   3 (V-1368)

provides   for graduated   rates depending    on the ratio of the com-
pany’s investments     in Texas  securities   as of December       31st of
the preceding   year to its investments     in similar   securities    in the
state in which it had the highest percentage       of its admitted    assets
invested.

                It is reflected     by your request       that certain   foreign
insurance     companies      doing business       in this State subject to the
gross receipts       tax provided     in Article    4,03, Insurance      Code,
maintain    that they should not include as a similar              security    any
 real estate owned by them in the state in which they have their
highest percentage        of admitted     assets invested      if the ownership
of such real estate in Texas would be forbidden                 by the provisions
of Article   3.40, Insurance        Code.    It is observed     that the provi-
sions of Article      3.34 defining Texas        securities    in so far as ap-
plicable   to real estate,      coincide   with the provisions       of Article
3.40. In the definition        of Texas    secu*ities     found in Article     3.34,
the only reference        to real estate is in this language:

                “The investments      required     by this Chapter may
        be made by the purchase         of not more than one build-
       ‘ing site, and in the erection       thereon & net more than
        one office   building,   or in the purchase,      at its rearon-
        able market value, of such office building, already              con-
        structed   and the ground upon which the same is locat-
        ed in any city of the State of more than four thousand
        (4,000) inhabitants,      All real estate owned by life in-
        surance    companies     in this State on December        3 1, 1909,
        and all thereafter     acquired    under the provisions       of
        this Chapter,    or by foreclosure       of a lien thereon shell
        be treated,   to the extent of its reasonable        market val-
        ue, as a part of the investment         required   by this Chap-
        ter.”

                The answer      to your question      depends upon the mean-
ing to be accorded       the term Ysimilar        securities.”      The Legisla-
ture defined ‘Texas        securities”     and as to the securities       of the
fereign    state merely     requifed     that the securities      be similar   to
Texas    securities.     Since the Ls.gislature       did not define *similar
securities,”     we may assume         that it is to be given its ordinary
meaning as generally         used and understood.          Webster’s    New In-
ternational     Dictionary    (2nd Ed, 1938) defines         “similar”   as fol-
lows:

                “1.   Nearly   corresponding;       resembling     in many
        respects;     somewhat    like; having     a general   likeness.”

                In 39 Words and Phrases   (Perm.  Ed.)            302-306, sev-
eral   cases   are cited construing the word “similar”             appearing  in
Hon. Geo.    B. Butler,   Page   4 (V-1368)

contracts,    wills,   ordinances,   and statutes,   the general  tenor of
which is to accord the generally         accepted   meaning to the term as
distinguished      from the term “identical.”       These cases poihout
that unless the context indicates        a more restricted     meaning of
the word “similar       ,” the generally   accepted   meaning as common-
ly used is the one that should be adopted.

                Had the Legislature      used the. term “identical      securi-
ties ” instead of the term “similar        securities,”    we would have a
different    problem;   for then it could be logically      urged that only
such real estate as the company owned in the foreign               state iden-
tical with the real estate defined in Article          3.34 shouldbe      includ-
ed and that any other real estate,, although the ownership              thereof
is legal in the foreign      state, should be excluded.      However,       the
Legislature     used the word “similar”        and did not use the word
“identical.    ” Therefore,     it is our opinion that real estate legally
owned by a foreign       insurance    company in the state in which it has
its highest percentage       of admitted   assets invested     is a similar
security    to real estate legally     owned in Texas as defined in Arti-
cle 3.34, Insurance       Code.

                                 SUMMARY

               Real estate lawfully     owned by a foreign      insur-
       ance company in the state in which it has its highest
       percentage     of admitted   assets   invested and which is
       doing business      in this State and is subject to the gross
       receipts    tax imposed    by Article   4.03, Insurance     Code,
       is ‘similar”     to real estate in Texas as defined in Ar-
       ticle 3.34, Insurance      Code, notwithstanding      the owner-
       ship thereof    would be contrary      to the provisions     of
       Article   3.40, Insurance     Code, if owned in this State.
       Such foreign     insurance   company     should include the
       real estate lawfully      owned by it in such foreign      state
       in determining      its tax rate under Article     4.03, Insur-
       ance Code.

APPROVED:                                           Yours very     truly,

W. V. Geppert                                        PRICE     DANIEL
Taxation Division                                   Attorney    General

Everett   Hutchinson
Executiie   Assistant
                                                        L. P. Lollar
Charles   D. Mathews                                        Assistant
Firet  Assistant

LPL/mwb