--_ .
ENEIRAE
Honorable Marvin Hall, Commissioner
Board of Insurance Commissioners
Austin. Texas
Dear Mr. Hall: Opinion No. O-3250
Re: Authority of the Board of In-
surance Coinmissioners to
issue to the United States Avia-
tion Underwriters, Inc., a permit
pursuant to Article 5065, Revised
Civil Statutes, under the facts and
circumstances disclosed.
Your request for an opinion of this Department is before us, from
which we quote:
“The United States Aviation Underwriters, Inc., a corpora-
tion irmorporated under the laws of the State of New York, desires
to submit an application for a license from the Board of Insurance
Commissioners pursuant to Article 5065, R. C. S.
“This company’s attorney advises us that The Uni,ted States
Aviation Underwriters, Inc., is a corporation whi.ch investigates
and keeps advised of developments in engineering and aero dynamics,
of developments in individual models of airplanes designed and sold
by designers and manufacturers, of the inherent hazards, if any, in
the individual airplane, and of the matter of legal l,iabili.ty that may
be involved as to the pilot of the airplane, its passengers and third
persons, as well as legal liability relative to the operation and con-
trol of airports. It obtains experience data relative to aviation risks
and losses and supplies all such information, data and experience
for the benefit of licensed local recording and solicitors of insurance
companies admitted to do business in the State of Texas, as well as
on behalf of the company itself. Its service includes the proper as-
sembling of an insurance policy against fire or casualty hazards, or
both, to meet the needs of an applicant for aviation insurance.
‘“As a result of your opinion No. O-1931, approved February 19,
1940, the following question arises: Is the Board of Insurance Commis-
sioners authorized to grant to the United States Aviation Underwriters,
Honorable Marvin Hall - page 2 - O-3250
ITIC., a permit pursuant to Article 5065 of the Revised Statutes of
1925, said United States Aviation Underwriters, Inc., being a cor-
poration incorporated under the laws of the State of New York with
a permit from the State of Texas pursuant to Subdivision 49 of Arti-
cle 1302, authorizing it to act as trustee under any lawful express
trust committed to them by contract and as agent for the perform-
ance of any lawful act?
“Your advice in the premises will be greatly appreciated.”
You are respectfully advised that it is the opinion of this Depart-
ment the permit requested by the United States Aviation Underwriters, Inc.,
should be refused.
A part of the proposed activities of the applicant is apparently to
furnish to insurance companies advice with respect to ‘the matter of legal
liability that may be involved as to the pilot of the airplane, its passengers
and third persons, and as to the operation and control of airports.” This
would appear to be the practice of law in an unauthorized way in this State,
under the provisions of the State Bar Act, But we do not need to put our
answer upon this ground.
Section 1 of Article 1524a of Vernon’s Codification of the Civil
Statutes, dealing with loan and brokerage companies, is as follows:
“This Act shall embrace corporations heretofore created and
hereafter created having for their purpose or purposes any or all
of the powers now authorized in Subdivisions 48, 49 or 50 of Arti-
cles 1302, Revised Civil Statutes of Texas, 1925, and heretofore or
hereafter created having in whole or in part any purpose or purposes
now authorized in Chapter 275, Senate Bill Number 232 of the Gene_ral
and Special Laws of the Regular Session of the 40th Legislature. No
such corporation shall act as agent or trustee in the consolidation of
or for the purpose of combining the assets, business or means of
other persons, firms, associations or corporations, nor shall such
corporation as agent or trustee carry on the business of another.”
This Act was passed by the 42d Legislature (1931) -- being Ch. 165,
S. B. 165.
The United States Aviation Underwriters, Inc., being a corporation
organized under the laws of the State of New York,~with the corporate powers
enumerated in subdivision 49 of Article 1302, of our Revised Civil Statutes,
_--- A
Honorable Marvin Hall - page 3 - O-3250
upon obtaining a permit from the Secretary of State to transact its corpor-
ate business in Texas, wou,ld, of course, acquire authority to transact such
business in Texas only,in accordance with the laws of Texas relative to the
powers conferred upon Texas corporations, under Subdivision 49, that is to
say, in accordance with Article 1524a, Vernon’s s,tatutes, above quoted.
By the express provisions of Section 1 of Article 1524a, “No such
corporation (Texas) shall act * * * as agent or trustee to carry on the busi-
ness of another.”
“To carry on the business of another” is to carry on or do the cor-
porate business where that other is a corporation. It does not require that
the whole of such corporate business of another corporation shall be thus
carried on, but it is enough that any substantial part or act of the corporate
purpose or business be done or carried on -- even an isolated act. This is
the universal rule governing the construction of the phrase “doing business”,
in connection with permits to,foreign corporations to transact or carry on
their business in the domestic state. Phelps v. Jesse French & Sons Piano
Co., 65 S. W. (2) 374; Kimble-Krough Pump Co. v. Judd, 85 S. W. (2) 579;
S. R. Smyth Co. v. Fort Worth Glass & Sari,,, Co., 105 Tex. 8, 142 S. W. 1147;
Buhler V. E. T. Burrows Co., 171 S. W. 791, 11 Tex. Jur., p. 169, fi 496.
The activities enumerated in your letter contemplated by the Under-
writers is essentially a part of the corporate business of the insurance com-
panies whom it would serve. The companies could not successfully carry on
their business without such data and information as applicant’s service con-
templates. They must procure this service, however, from some person, or
from some corporation having corporate power to supply it.
Not only is the contemplated activities of the United States Aviation
Underwriters, Inc. ultra vires, but they are expressly forbidden by law.
Moreover, Section 1 of Article 5062a of Vernon’s Codification of the
Revised Civil Statutes, declares:
“Insurance agents as that term is defined in the laws of the
State shall for the purpose of this Act be divided into two classes:
local recording agents and solicitors.”
This undertakes to divide all insurance agents, as that term is defined
in the laws of the State, into two classes, to-wit: Local recording agents and
solicitors. There can be no insurance agent who does not fall within one of
these classes, for it comprehends all insu,rance agents.
Honorable Marvin Hall - page 4 - O-3250
Section 3, in the final sentence thereof, declares:
“The Boar.d shall not issue a license to a corporation.”
These provisions are a part of the Act of 1931, 42d Legislature. They
appear to be sufficient within themselves to demand a refusal of the per-
mit requested of you.
We are not unmindful of James N. Tardy Co. v. Tarver, 39 S. W.
(2) 848, wherein the Supreme Court held that a corporation possessing suffi-
ciently broad charter powers, w’as entitled under the laws of this State to be
licensed as an agent for a company writing fire, marine and casualty insur-
ance. In that case the extent of the corporate powers of the applicant corpora-
tion was not decided by the court -- it was not an issue in the case -- for,
says the opinion, “respondent concedes that relator James N. Tardy Company’s
charter is broad enough to authorize it to act as an insurance agent.” While
Article 1520 of the Revised Civil Statutes then in force with respect to loan
and brokerage companies contained the identical language as the present
Article 1524a of Vernon’s Codification, forbidding such corporations to carry
on the business of another, as above stated, the court did not pass upon the
charter power of the applicant, so that, whether James N. Tardy Company
was a loan and brokerage company or not, has nothing to do with the point
actually decided by the court. The respondent may have conceded too much
in the defense of that case, but whether he did or not, the conceded issue
was not determined by the court.
Again, Article 5062a, above quoted, was not then effective, so that
the case under review is in no wise in conflict with our conclusion here ex-
pressed. On the contrary, it impliedly supports our conclusion that ,a corpora-
tion forbidden by law of its existence to carry on the business of another should
not be appointed or permitted by a State instrumentality to carry on such busi-
ness of another.
Very truly yours
ROVED MAY 14, 1941
Approved
Opinion
FIRST ASSISTANT Committee Ocie Speer
ATTORNEY GENERAL Assistant
BY
OS-MR Chairman