TEIEATTORNEYGENERAL
OF TEXAS
PRICE DANIEL
ATTORNEYGENERAL
July 16, 1948
Hon. George B. Butler, Chairman
Board of Insurance Commissioners
Austin 14, Texas
Attentioaz Mr. Will G, Knox
Legal Examfner
Oplnl.on No. V-636,
Re: Authority of a title
Insurance company
under Article 1302a,
v.c.s,, to acquire an
abstract plant in a
county of less than
90,000 populatioa.
Dear Sfr:
By letter dated June 10, 1948, you request
advice as fellows~
“A @roup of citizens of Cherokee
County have advised us that the7 will
in due course submit Articles of Inc-or-
peratfon for a title corporatiQn te be
erganfzed under Article 1302a and h&v6
stated that they wish te purchase any
abstract plant in Cherokee County.
“Please advise me whether a title
corporation orflhfied~~under Article
1302a, Vernon”s Annotated Cfvll Stat-
utes, may purchase an abstract plant
in the county of its domicile, having
a pe~pulatlcn OS less than Ilinety Thou-
sand according to the last preceding
~Foderal consus,”
Article 13028, V.C.S,, was originally enact-
ed as H.B. 153, Acts blst Leg., R, S,, 1929, Chapter 80,
page 77Q Nowhere therain was a title insurance company
Hon. George B, Butler, Page 2, V-676,
prohibited from acquiring an abstract plant fn any
county of any size, On the contrary, it clearly con-
templated the acqufsitfon of such’plants in any coun-
.ty as a necessary incident bf the business authorized.
The caption of the original Act provided
fn parts
“An Act authorfzfng the creation
of corporatfons for the purpose of COQ-
piling and/or acquiring and owning ab-
stract plants in this or any other state,
and to compfle Andy sell abstracts of
tftles therefrom and to insure the title
to lands and Interests therein and liens
thereon, o 0 *”
The Act then provided:
“Section 1. Private corporations
may be created for the following named
purposes 8
“(I.). To cempfle and own9 or to ac-
quire and own records or abstracts of title
to lands and interests in lands; and to
insure titles to lands or interests there-
in, booth in Texas and other states of the
United States; and fndemnffy the owners
of such lands9 or the holders of fnter-
ests fn or Ifens on such lands9 against
loss or damage on account of encumbrances
upon ,er’defects in’ the tftlo to such lands
or fnteres tr therefn 0
“Such corporations ray also exercise
the followfng powers by fncludfng.same in
the charter when filed orfgfnally, or by
amendment;
“(2) Make and sell abstracts of tit;.
fn any co-ties of Texas or other states.
Section 2 of the orfgfnal Act was described
in the caption as?
n0 0
,* regulating the amount of paid
fn capital of all corporations operating
under thfs Act, n oN
Hon. George B. Butler, Page 3, V-636,
It was then provided by Sectfon 2 that:
“All corporations created and/or oper-
atfng.under the provisions of this law
must have a paid-up capital of not less
than One Hundred Thousand ($lOO,OOO,OO)
Dollars D Any corporation organized here-
under having the right to do a title in-
surance business may invest as much as
fifty per cent of its capital stock in
an abstract plant or plants, provided the
valuation to be placed upon such plants
shall be approved by the Board of Indur-
ante Commissioners of this State. D 0”
Thus, nothing in the caption or the provis-
ions of Section 2 of the original Act indicated an
intention to do more than to regulate the amount and
character of permissible capital and to place a liml-
tatlon on the proportion of capital which might be
invested In abstract plants.
By amendment, Section 2 was changed by S.B.
283, Acts 43rd Leg,, R, S., 19339 Chapter 222, page
750, to Its present form. The caption of the amenda-
tory Act provided:
“An Act to amend Section 2, of an
Act passed by the Legislature of~Texas9
February 26, 1929, House Bill No. 153,
relatldg to tftle Insurance business and
the capital stock of corporations doing
such a business; regulating the amount
of capital stock of companles.Whfch may
be invested in abstragt plants; and de-
claring an emergent p 0
Section 2 of the original Act as thus amended thare-
upon read:
“Sectfon 2. All corporations creat-
ed and/or operating under the provisloas
of this law must have paid up capital of
n,;;l:;is than One Htidred Thousand($10Q,OOQ,OO)
e Any corporation organized here-
under having the right to do a title insur-
ance business may invest as much as fifty
(50%) per cant, of Its capital stock in an
abstract plant or plants, provided the valu-
ation to be placed upon such plant or plants
Eon, George B, Butler, Page 4, V-636.
shall be approved by the Board of Insur-
anca Commfssfoners of this State; provided,
however, that ff such corporation is not
doing a trust business as provided in See-
tfon 1, Artfcle 4 of the Act hereby amended,
and maintains with the Commissioner of. In-
surance the deposft of One Hundred Thousand
($lOO,OOO,OO) Dollars, in securfties is pro-
,vfded in Section 6 of the Act hereby mend-
ed, such of ft.8 capital in excess of fifty
(50%) per cent, as deemed necessary to fts
business by its Board of Directors may be
fnveated in abstract plants; and provided
further that no such corporation may herr-
after acquire more than one abstract plant
in any one county and shall not hereafter
acquire any plant in any county in this
State having a population. of less than nine-
ty thousand (90,000) according to the last
preceding Federal census.”
It is to be noted that nothing in the ca -
tion of the amending Act would indicate an intent -9 on
to more than to regulate the investment of capital
stock. Nothing is there present to indicate an inten-
tion to prohibit entirely the acquisition of abstract
plants in smaller counties. In other word,s, the ca -
Mona of both Acts as they relate to Section 2 dea-3
solely with security and soundness of invrstnent pol-
icy. This fs also borne out by the emergency clause
of the &mandatory Act, which readsn
‘The fact that under the exlstFng law9
the people dealing with the aforementioned
corporations have not had rdeqyte protec-
tion oruates an emergency. 0 0
‘pae taxt of Section 2 as orfg:inally enacted and as
amended indicates an intention to leave the concorns
free to invest in abstract plants provided not more
than 502 of the capital is utilized for that purpose.
The amendment offered an exception to theme
502 limitation in the utilization of capital for iq-
vestment in abstract plants, where such a concern did
not do a trust business and where it maintained
$100,000.00 on deposit as security for its commit-
rents e Iti such event, it was allowed to Invest In
- *
Hon. George B, Butler, Page 5, V-636 0
excess of 50% of its capital in abstract plants. But
this concession carried a proviso or llmltatlon which
the Legislature must have considered an appropriate
security measure by preventing concentration of such
excessive Investments of capital in one county and by
preventing such excessive Investments In small coun-
ties o These provisions do not, then, prohibit any
such “Investment” or “acquisition” in a county of less
than 90,000 population where the concern will not have
Invested more than 502 of its capital stock In abstract
plants as a result of such “mcquisltfon”,
Such a construction is consistent with the
validity of~Section 2 as amended as being germane to
the cmptlon, and does not bring the statute Into con-
flict with the rule stated in 39 Tex. Jur., pp. 104,
105, Section 48, thmt:
“A title expressing r purpose to amend
a statute in a certain particular is decep-
tive and rfslemding in so far as the body
of the Act purports to &mend the prior l&w
in other partlculrrs s The amend&tory Act
is void to the extent that its provisions
go beyond express limitations or the scope
of the title.”
A construction that the amendment was intended to and
does prohibit under all circumstances the acquisition
of mn abstract plant in a county of less than 90,000
population would, in our opinion, effect an amendment
and provide to not only Section 2, but also to Section
1 of the original Act, authorizing such concerns to
require abstract facilities and to nmake and sell ab-
stracts of title in an ceunties of Texas.’ (Empha5is
supplied) This woul T-E e a broader amendment than ap-
pears to have been intended,
That the last “proviso” in Section 2 Is a
limitation only on the next preceding “proviso” is
supported by the cases cited to the text of 39 Tex.
,Jur. 193, Section 102, to the effect that:
“Ordinarily a proviso is limited to
the clause which next precedes it and to
which ft Is rttached. So where there are
successive provisos, the qualifying terms
of the lrst will be understood is refer-
ring to the one next preceding,
Hon, George B, Butler, Page 6, V-636.
This language is cited in Tide Water oil Co. v. Bean,
148 3. W, (2d) 184, 191 decided by the Court of Civil
Appeals at Dallas in 1941, which also cites the text
of Frix vq State, 148 Tenn. 478, 256 3. W. 449, 451,
where the Court said:
"The rule of construction being t&t
s proviso must be limited to its appllca-
tlon in the particular section of the stat-
ute in which It is found, unless a contrary
intent clearly appears9 certainly it should
be held that the effect of a proviso in an
amendatory statute should be limited in its
application to the statute in which it is
found, and not extended to the original stat-
ute of which the statute containing the pro-
viso fs an amendment."
You are therefore advised that 8 title insur-
mnce corporatfon orgrnlzed under Article 13028 may ac-
quire an abstract plant in a county of less than 90,000
populrtion if anch will not ef’fectthe investment of
more than 5O$ of its capital stock in an abstract plant
or plants.
A title fnsurmncr corporation organ-
ized under Article 13028, V, C, S., may
rcqufre mn rbstract plrnt fn 8 county hav-
in less than 90,000 population, ff such
wif 1 not result in the investment of more
than 50s of its c&pita1 stock in an rb-
strrct plrnt or plants.
Yeu~a wry truly
A??RWED~ ATTORNEYGENERAL OF TEXAS
$&2i5&d&
BY Idd I&Denial
Assistant