OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
Honorable Marvin Hall, COmmiSsiOner
Board of Insurance Commissioners
Austin, Yexas
Dear Sir: Opinion No. C-5
Re: May Board'0
missioners a
The above question i
by your letters dated December relating to the
claim against Standard.1 Accide mpany of Detroit,
Mchigan for retaliatory taxes 1940, 1941 and
1942 and the other relat Fire & Marine
Insurance Company of D for the years
1941 and 1942.
inding the existence
of a bona fide cant and recommending to
the Attorney Genera settlement be accepted,
is attached
arises under the provisions
ny law in force without this
corporation, fraternal bene-
eciprocal exchange of this
of is required to make any
ies thereunder for the protec-
holders or otherwise, or to make
payment for taxes, fines, penalties, certificates
of authority, valuation or policies, license fees,
or otherwise, or any special burden is imposed,
non. Uarvin Hall - Page 2
greeter than is required by the laws of this State
for similar foreign corporations or their agents,
. the insurance companies, fraternal beneficiary
societies and reciprocal exchanges of such States
or governments shall be and they are hereby re-
quired as a condition precedent to their trans-
acting business in this State, to make a like de-
posit for like purposes with the State Treasurer
of this State, and to pay to the Conmissioner of
Insurance for taxes, fines, penalties, certificates
of authority, valuation of policies, license fees
and otherwise a rate equal to such charges and pay-
nents imposed by the laws of such other State upoh
similar corporations of this State and the agents
thereof. Any corporation refusing for thirty (30)
days to make payment dsuch fees or taxes as above re-
quired shall have its certificate of authority re-
voked by the Commissioner of Insurance; provided,
that insurance corporations organized under the laws
of any State or country, other than these United
States shall, as to the provisions of this Act, be
considered corporations of that State wherein their
general deposit for the benefit of their policyholders
is made. I1
In connection with this request, we have reviewed a
joint brief filed on behalf of the two companies concerned. We
have also held several conferences with Fr. Albert Boggess, Jr.,
Chief Clerk Recording Agents License Section, who, at our re-
quest, has been very cooperative in furnishing us data from his
file pertaining to the assessments in controversy. Eesides re-
viewing the previous opinions of this department, such efforts,
together with a studied review of the limited nmber of court
decisions, were expended in order to determine, if possible,
the real and basic reasons for the controversy.
We fully appreciate the fact that a tremendous burden
is placed by the Legislature upon the Insurance DepartKent in
enforcing the provisions of the retaliatory law, Article 4758,
V. A. C. S. While this department has previously rendered
opinions to the several Commissioners of Insurance, dating from
January, 1936, we find no particular conflict in their holdings..
Hon. Marvin Hall - pag$ 3
The latest expression from this department appears in our
opinions Nos. O-1997-A and O-2585. In the latter, we
held in an opinion addressed to you that the Insurance
Department is authorized to charge New Rampshire companies
a fee for all soliaiting agents holding authority to
solicit business for Said foreign companies and operating
out of Texas Recording Agencies which have been appointed
by said New Hampshire companies. In the former, addressed
to your supervisor of Agents’ Licenses, we held that the
aggregate of all taxes, fines, penalties, fees, and other
charges imposed by the State of Kansas on a Texas Corpora-
tion operating within its borders should be considered in
applying the retaliatory provisions of the Texas law.
In an opinion rendered to Honorable R. L. Daniels, ’
Commissioner of Insurance, under date of July 20, 1936, it
was pointed out and we quote:
“Unless a given situation clearly gives rise
to retaliation under our statutes, the Retaliatory
Law should not be applied, for the reason that re-
taliatory laws are strictly construed against the
state enacting them, e.nd in favor of the company
or person to be affected thereby. This rule is
announced in many cases, among which is that of
Bankers Life vs. Richardson, 192 Cal. 113, 218
Pac. 586, 591; and Life 6c Casualty Insurance
Company of Tennessee vs. Coleman, 233 Ky. 350,
25 S. W. (2d) 748.”
v:e are constrained to believe that wa have doubtless
given insufficient consideration to your application of this
retaliatory law. Sfnae 1939, such opinions rendered by this
department as may have been useful in your interpretation and
application of this statute, reflect the confusion brought
about by the language employed in the case of Employers Casual-
ty Company vs. Hobbs, Commissioner, 149 Kansas 774, 89 Pacific
(2d) 923, rendered in Kay of that year. The language of the
opinion in that case by the Supreme Court of Kansas appears to
conflict in many respects with our prior opinions. In this
conneation, we call your attention to the fact that none of the
prior opinions of this department were overruled by our opin-
ions 0-1997-A and O-2585 which as a result, must be construed
therewith.
Hon. Marvin Hall - page 4
Coming now to the specifia controversy in question,
there is involved only agents’ license lees, one item of the
named class of burdens which fall within the seaond group
set forth in the statute, as pointed out in an opinion ren-
dered to Honorable Raymond Mauk, written by Mr. Vernon Coe,
Assistant Attorney General of Texas, under date of July 7,
1936.
It is our nnderstanding and baaed upon question-
naire kom in use by the department since the year 1940, that
it has been the praatice of the Insurance Department to apply
in certain case3 our retaliatory law to agent’s license fees
by assessing foreign insurance companies of a given state on
the sole basis of the larger license fee required by the laws
of the foreign state without taking into consideration the
aggregate amount of all taxes, fines, penalties, certificates
of authority, valuation of policies, or otherwise, required
by the laws of Texas and paid by companies of the foreign state
doing business in this State, as a condition precedent. This
is what the department termed assessment by comparing fee
against fee or made.on an nindividual basis”, and was general-
ly done where in response to a question propounded in the
questionnaire to the Insurance Department of the foreign state,
said state officials acknowledged applying the retaliatory law
of their state likewise, namely, “fee against fee”, or “indi-
vidual bases”. With reference to the state of Xichigan here
under consideration, we observe that during the years in ques-
tion, its retaliatory law existed, substantially worded the
same as our statute, Article 4750, V. A. C. S. We can further
assume tram the facts that during these years, Texas aompanies
in the State of Michigan were assessed or subject to aasesa-
ment on the “individual basis,”
We are doubtful that the Legislature intended in en-
acting Article 4758, to authoriae the Insurance Department to
take individually, one item specified therein, namely, Agent’s
License Fees and by comparison, apply the retaliatory provi-
sions of the statute in the face of the aggregate of all taxes
etc. grouped as like items, greatly exceeding in Texas and pay-
able under our laws, the aggregate of such items imposed by the
laws of biichigan. We are convinced that the weight of author-
ity is against such aindiviaual basis” assessment under this
factual situation existing between these two states.
.
Hon. Marvin Hal.1 - page 5
Unless a case arises whereby a state is authorized
to apply the retaliatory provisions of its law, it is further
doubtful but that the only state authorized to allow credit
is the state in which such retaliatory assessment is author-
ized to be made.
Our conclusion is reached from an examination of
the records and all faats.submitted to this department in
aonnection with this request* Same shows grave doubt as to
whether such situation as existed, considering the aggregate
amount of taxes etc. paid by the -Standard Accident Insurance
Company and the kichigan Fire & Marine Insurance Company of
the state of Viahigan to the State of Texas for the years
1940, 1941 and 1942, made a proper case for the application
of the retaliatory provisions of our retaliatory law to the
item of Agent’s License Fees.
It is therefore our opinion that you are authorized
to accept the amounts voluntarily tendered to your department
in settlement of such controversy over these years. This rul-
ing however, is not to be construed aa applying to any other
fact situation or controversy or to affect other companies
or charges and payments made for other years.
We are returning herewith, the brief and other doou-
ments belonging to your file.
Yours very truly
ATTORNEY
GENERALOF TEXAS
BY /S/
Wm. J. R. King
Assistant
WJRK:ff :bb
Encl.
APPROVEDJAN. 28, 1944 APPROVED OPINION EMvIIT-
/s/ Grover Sellers TEE BY-P.W.,Chainnan
ATTORNEYGENERAZOF TEXAS