Untitled Texas Attorney General Opinion

PRICE DANIEL ATTORNEYGENERAL August 73 19.52 Hon. GarlanG Smith tisuklty Insurance Commis~sioner Boand of Insurance Commissioners Austin 14, Texas Opinion No. V-1497 Re: Legality of desig- nating as title insurance agents persons, firms, or corporations operat- ing abstract plants under lease arrange- Dear Mr. Smith: ments. Your request for an opinion asks whether the Board of Insurance Commissioners should refuse to approve certain contracts between title insurance companies and their "representatives" because the contracts submitted to the Board indicate that the agent is a "lessee" rather'than an "owner" of all or a part of abstract plant facilities used or to be used by him in conducting an abstracterss business. The question arises under Article 9,22 of the Insurance Code, which provides as follows: "Art. 9-22 o Rebates and Discounts "No commlsslons, rebates, discounts, or other device shall be paid, allowed or per- mitted by any corn&any,domestic or foreign, doing the business provided for in this chap- ter, relating to title policies or underwriting contracts; $rovided:this shall not prevent any title cdmpany'from appointing as its representa- tive in any county any person, firm or corpora- tion owning and oper,atingan abstract plant In such county and making such arrangements for division of premiums as may be approved by the Board." (Emphasis added.) The question involved in your request Is whether a..personwho leases frsm,another the physical facilities which make up an abstract plant, and with such facilities Han, Garland Smith, page 2 (V-1497) conduzts an absitractbusiness on his own responsibility, is a rson . 0 * owning and operating an abstract plant,F within the meaning of Article gf,22of the Insur- &ice code;' In other words,.Is a.person who leases all or a partof such Paailities necessarily excluded from the terms of the statute even though he operates the plant and conducts an abstract business therein? The word "owner" does not have a fixed meaning 8S a legal term and its ~slgnific8ncemust.be determined from the context and:purposes of the statute in which it is used. Realty Trust Co. v, Craddock, 138 Tex. 88, 112 S.W.2d 440, 443 ,(193t5) D The term Is used in Article 9,22 'of the Insurance Code to describe a class of persons to whom a title Insurance company may pay commissions, and is in the nature of an exception to the general prohibl- tion 8gainst~pa+ing oommissions or rebates in procuring title Insurance business, The policy of,the law thus in- dicated is that commissions may be paid only for the ser- vices of an abstracter In marketing title insurance, We cannot conaelve of any reason why a lessee In control of ebstaaot dani? fac$litles and actually engaged in the busgnes's ks dot-ln~a.~ositSon-to'se~ve~,thetitle insur- ance cempanp and fhe,.publlc8s properly and adequately as a person having a different type of interest or estate in the facilities. The term "owner" is often construed to include one holding property under lease. Fleishman v, State, 89 Tex. Crim. 259, 23lS.W. 397 (1921); Fort Worth & D.S.P. Ry, CO. V. Judd, 4 s.w,2a 1032, 1035 6Texo Civ. APP, 1928, error dism,) o It is entirely consistent with the purposes of this statute to give the term "owner" such a,construc- tion. We therefore advise that a lessee Is not neces- sarily+,xoluded from the ph:ase "person 0 0 D owning and operating an abstract plant as ,used in Article 9.22, and that the Board should not disapprove such contracts merely because the %epresentative" may be a lessee as to all or part of the plant Pacilitles~ Ron, Garland Smith, page 3 ('J-1497) SUbMARY A ~aoa "owning'and operating an 8bs"tMo'tplgnt)' i%utborixet3 by Art,icle 9.22 of the Insuranae~Code,toreoelie ~wd&3elone~ from'title Insurance compan- ies, may include a person operating such a plant under a lease, APPROVED: Yours very truly, Mary K, Wall PRICE DAIiIEL ~.- Reviewlag Assistant Charles S. Uathevs First Assistant IOb/rt