A
..
T~ICATT~EWEYGENERAL
OF-TEXAS
AUSTXN ~.'I.ExAs
PRICE DANIEL
ATTORNEYGENERAL
August 18, 1948
Honorable George B. Butler, Chairman
Board of Insurance Commissioners
Austin, Texas Opinion No. V-661
Re: The legality of the
Insurance Depart-
ment issuing a per,-
mit to a comp*ny to
transact the business
contemplated in Arti-
cle 13028, Sec. 1, par-
agraphs (2), (3), and (4)
without concurrently
issuing a permit to
‘transact business un-
der para. (1) of said
Section and Article,
and related questions.
Dear Sir:
You have requested the opinion of this office on the fol-
lowing situation:
“The Stewart Title and Trust Company, Houston,
Texas, received the approval of your Department of
its original Articles of Incorporation June 24th of
this year. The purposes set out in the Articles in-
clude all of those enumerated in Section 1, Article
1302-A.
“The Company has applied to this Department to
exercise only those charter powers enumerated un-
der numbered paragraphs (2), (3), and (4) of Section
1 and does not wish to apply for a permit to exercise
the charter power described in numbered paragraph
(1) of the above Article.
“Please advise me whether this Department may
issue its permit to the Company to transact the busi-
ness contemplated in numbered paragraphs (2), (3),
and (4) of Article 1302-A, Section 1, without concur-
rently issuing a permit to the Company to transact
Honorable Gcorpt B. Butler, Page 2 (V-661)
business under the provisions of numbered paragraph
(1) of the same Section and Article.
“If your answer should be in the affirmative please
advise me whether .,, (a) the Company will be required
to make the deposit provided for in Section 6 of Article
1302-A; (b) whether the Company is relieved of the re-
quirement of examination by this Department; and (c)
whthtr there is any deposit required of the Company
with the State Treasurer or otherwise, as the condi-
tion prtcedent to the exercise of the trust POWWS pro-
vided for in numbered paragraph (4) of Section 1, Arti-
cle 1302-A.”
Tht caption of Chapter 40, Acts of the Forty-first Legis-
lature, 1929, page 77 (codified as Article 1302a, Vernon’s Civil
Statutair), is in part as follows:
“An Act authorizing the creation of corporations
for tht purpose of compiling and/or acquiring ,and own-
ing abstract plants in this or any other state, and to
compile and sell abstracts of titles therefrom and to
insure tht title to lands and interests ~therein and liens
mian; regulating the amount ot paid in capitalof
all corporations operating under this Act; rtquiring
all corporations creattd or permitted to do business
under this Act and those created undtr Subdivision 57,
Article 1302, and Chapter 18, Title 78, Revised Stat-
utes of 1925, and all other. corporations insofar as the
business of tither comes within the purposes named
above to operate under the control of and subject to
regulations as to forms of policies and prices pre-
scribed by the Board of Insurance Commissiontrs’
. . . ” (Emphasis added)
Section 1 of the Act is in part as follows:
“Private corporations may be created for the
following named purposes;
“(1) To compile and own, or to acquire and own
records or abstracts of title to lands and interests in
lands; and to insure titles to lands or interests there-
in, both in Texas and other states of the United States,
and indemnify the owners of such lands, or the hold-
ers of interests in or liens on such lands, against loss
Honorable George B. Butler, Page 3 (V-661)
or damage on account of incumbrances upon or
dcftcts in the title to such lands or interests
therein.. . .”
This plain and unambiguous languagt indicatts the leg-
islative inttnt of permitting a private corporation to bt formed
for the purpose of (a) “To compile and own, or to acquirt and
lwa rtcords or abstracts of title to lands and interests in lands,”
and (b) “To insure titles to lands or interests therein. . . . and
indcrkmify the owners of such lands, or the holders of interests
,in or liens on such lands, against loss or damage on account of
incumbrances upon or defects in the title to such lands or inter-
ests thcrtin.” Under the rule laid down by the Supreme Court
of Texas in the case of Ramsey v. Tod, 95 Tex. 614, 69 S.W. 133,
a private corporation may be ~formed to engage in eithtr or both
of purposes (a) and (b). In that opinion it was stated that:
s.
. . . if the intent of the original law was to permit
an incorporation for one of the sptcificd~purposcs
only, and a subsequent lcgislaturt had dtsircd to
change the law in so important particular, and to
permit an incorporation for two of the purposes,
they would have expressed their intention in clear
language, and not have left it to be implied by ques-
tionable inferences.. . . ”
However, in the enactment of Section 1 of Chapttr 40, the
Legislature added the following provisions:
“Such corporations may also exercise the fol-
lowing powers by including s&me in the charter
when Mad originally, or by lmen#ment:
,“(2) Make and stll abstracts ef title in any
counties of Tens m other stxtcs.
“(3) To accumulate and lend money, tc pur-
chase; sell or deal in notes, bonds and securities;
but without banking privileges.
“(4) To act as trustee under any lawful trust
committed to it by contract or will, appointment
by any court having jurisdiction of the subject
matter as trustee, rtceivtr or guardian and as
executor or guardian undtr the terms of any will
and’as any administrator of tht estates of dece-
dents under th t lp~intmtnt of the court.” (Em-
phasis added)
.
Honorable George B. Butler, Page 4 (v-661)
It will be noted that Subdivieioncr (3) and (4) are al-
most identical with rome of the purpose clau6eo named in Chap-
ter 275, Section 1, Acts 40th Legislature, 1927, page 414 (codi-
fied a6 Art. 1303b, V.C.S.), and all such corporations exercising
for their purpose or purpose6 any or all of the power6 author-
ized therein either in whole or in part are subject to regulation
by the Banking Commiseioner of Texas under the provision6 of
Chapter 165, Act6 42nd Legislature, 1931, page 280, a6 amended
(codified as Art. 1524a, V.C.S.).
Section 13 of Article 1302a is a6 follows:
“If any company operating under the provi-
sions of this Law shall engage in the character6
of business described in subdivisions (2) and (3)
in the fir6t Section hereof in such manner as
might bring it within the provision ‘of any other
regulatory Statute now or hereafter to be in
force within the State of Texas, all examination
and regulation shall be exercised by the Board
of Insurance Commissioners rather than any
other State agency which may be named in such
other laws, so long as such corporation engages
in the title guaranty or insurance business.”
From the foregoing statutory provisions it is -evident
that the intention of the Legislature in enacting Article 1302a was
to provide for the creation of private corporation6 for the purpose
of engaging in the buriness of compiling and/or owning abstract
plants and to insure the titles to land6 or interest6 therein. The
corporation could at the time of obtaining its original charter or
thereafter by proper amendment, exercise the additional powers
contained in Subrectlonr (t), (3), and (4) above set fort&t but it
was essentiai that the corporation must primarily be created
for and exercise the ~origina! purpose of acquiring andowning
abstract .plants and/or insuring titles to land6 or interests in
lands. The additional power6 are supplementary to and do not
form part of the original purpost6 for which the private corpo-
ration was created.
After the corporation was 60 created, and in case it
availed itself of the privilege of enga ing in any of the businesses
autborined under Sub6ections (2) aad 9 3), it was subject to regu-
lation in the conduct of ouch busincas by the Board of Insurance
Commissioner6 and not by other regulatory bodier such as the
Banking Commissioner, as long as the corporation was engaged
in the title guaranty or insurance bueiners.
The plain and unmistakable language of Section 1 indi-
cat86 that it was not the intention of the Legi6lature to permit a
Honerable George B. Butler, Page 5 (V-661)
corporation to engage in the businesses set forth in Subsections
(2), (3), and (4) without engaging in the business set forth in Sub-
section 1; and therefore your Department would be without au-
thority to issue its permit to the Company to transact the busi-
ness contemplated in Subsections (2), (3), and (4) of Article
1302a, Section 1, without concurrently issuing a permit to the
Company to transact buainess under Subsection 1 of the same
Section and Article. In view of this holding, it is not necessary
to answer the question contained in the last paragraph of your
request.
,SUMMARY
A corporation created under the provisions of
Art. 1302a, V.C.S. may not en age in the businesses
provided for in Subsections (2f , (3), and (4) of Sec. 1
of such Article unless it is primarily engaged in the
business authoriaed under Subsection 1 of the same
Section and Article.
Yours very truly
ATTORNEY GENERAL OF TEXAS
By ‘&a%
C. K. Richards
Assistant
CKR/JCP
APPROVED
ORNEYGENERAL