” --
THE ATIVKNEY GENERAL
OF -XAS
AUSTIN. TEXAS 78711
February 19, 1968
Honorable Clay Cotten Opinion No. M-202
Commissioner of Insurance
State Board of Insurance
1110 San Jacinto Street
Austin, Texas 78701 Re: Interpretation of the
word “State” as used
In Articles 4769 and
7064, Vernon’s civil
Statutes, as applied
to Investment of the
highest percentage
of admitted assets of
foreign companies li-
censed In Texas, when
computing the gross
premiums tax on ln-
Dear Mr. Cotten: surance companies.
You have requested this office to Interpret the word
“S ta te ” as used In Articles 4769 and 7064, Vernon’s Civil
Statutes, as applied to investment of the highest percentages
of admitted assets of foreign companies licensed in Texas,
when computing the gross premiums tax on insurance companies.
The above statutes allow tax reductions to insurance companies
meeting specified conditions pertaining to the ratio that
their investment in Texas securities bears to their invest-
ment in similar securities in the State in which they have
the highest percentage of their admitted assets invested.
The pertinent language, which is used repeatedly in both
of the above statutes,is:
II
. . . the amount that It had invested In
similar securities in the State in which it then
had the highest percentage of its admitted as-
sets Invested . . .”
Attorney General’s Opinion No. V-422 (1947) mentions
the possibility of .a tax reduction under Article 4769, V.C.S.,~
for a Mexican Insurance company, but the opinion does not
-970-
Honorable Clay Cotten, page 2 M-202
decide the question now In issue, In one Texas case the
court held that the word “state,” as used In a federal statute
relating to prohibition of common carriers’ exemption from
liability, did not include foreign nations. Houston E. & W.T.
Ry. v. Inman Akers and Inman, 134 S.W. 275 (Tex. Clv. App.
‘1911, no wri!?). At page 2’(‘(, the court stated:
“The word ‘state, I as used in the Consti-
tution of the United States, has been uniformly
construed to mean a constituent member or part
of the federal Union having an independent local
governmental organization D 0 *”
In-Eidman v. Martinez, 184 U.S. 578, 22 S. Ct. 515, 46 L.
Ed. 697 (1902),- the United States Supreme Court stated at page
591:
“It need, only be added that while the words
‘State or Territory’ are used in treaties, and
perhaps also in some acts of Congress regulating
our International relations as including foreign
States, they are used in the Constitution and in
ordinary acts of Congress as applying only to
States or Territories of the United States.”
In construing a state statute governing service of process,
the Supreme Court of New York County held that the word
“state” did not include a foreign nation. Fair v. Kenny,
171 N.Y.S. 694, 695, 103 Misc. 412 (1918). At page byb the
court stated:
I,
D the Legislature,
* 0 in providing for
service by ‘attorneys and counselors at law
in any other state, I evidently must have had
In mind the United States and its territories,
where such a nomenclature commonly prevails.”
The following pertinent quotation is taken from 81 C.J.S.
856-857, States @ 1:
“While the word ‘state’ has various meanings,
as used In the federal Constitution, it has a
definite, fixed, certain legal or technical mean-
ing, which excludes the signification attached
to it by wrlt,ers on the law of nations. The term
-971-
-
Honorable Clay Cotten, page 3 M-202
‘state, 1 in American Governmental parlance, Is
used as designating a member of the Union, in
contradistinction to the United States as a
nation, and It ordinarily has such meaning where
used In the Constitution, in the acts of Congress,
and in the statutes of the several states.”
In creating Articles 4769 and 7064, V.C,S., the
Texas Legislature could have easily Included foreign nations
In the tax reduction provisions If It had so intended. There
is no persuasive Indication in either statute that the Legis-
lature contemplated giving a tax reduction to an Insurance
company having the highest percentage of its admitted assets
Invested in any foreign nation or subdivision thereof. It
is our opinion that the Legislature did not Intend to give a
reduction in gross premiums tax to any Insurance company which
does not have the highest percentage of its admitted assets
invested wlthin one of the states of the United States.
We conclude that the word “State” in Articles 4769 and
7064, V.C.S., as used in the provisions governing reduction
in gross premiums tax, refers only to a state which is a part
of the United States. Therefore, an insurance company having
the highest percentage of its admitted assets Invested in a
foreign nation does not meet the conditions necessary to qualify
for any reduction In gross premiums’tax under the above statutes.
SUMMARY
-------
The word “State” as used In Articles 4769
and 7064, V.C.S., as applied to investments of
the highest percentages of admitted assets of
foreign companies, licensed In Texas, when com-
puting the gross premiums tax on Insurance com-
panies, refers only to a state which Is a part
of the United States,
Ve& truly yours,
orney General of Texas
Prepared by C. Fielding Early 1
Assistant Attorney General
-972-
Honorable Clay Cotten, page 4 M-202
APPROVED:
OPINION COMMITTEE
Hawthorne Phillips, Chairman
Kerns Taylor, Co-Chairman
W. V. Geppert
Ralph Rash
Pat Cain
John Grace
A. J. Carubbi, Jr.
Executive Assistant
- 973 -