- -.
THE ATTORNEY GENERAL
OF TEXAS
GlmAm c. MANN AUSTIN 1% TEXAR
ATFGRNRY GENERAL
HonorableR. C. Waters
CasualtyInsuranceConmissioner
Austin,Texas
Dear Sir: Attention: Mr. T. Jay Foster
OpinionNo. O-1307
Re: Is a motor companyor its employees
subjectto prosecutionunder Art.
570, 571 or 572 of Vernon'sPenal
Code, under facts stated?
We are pleasedto reply to your letter of November8, .1939.
We quote from parts of your letter:
"Mr. Blank made arrangementswith X Motor Company
to buy a new car. He then called his personalinsurance
agent who handledall his insuranceand asked him to write
policiesto cover fire, theft, bodily injury,property
damage,etc., lncuranceon it and went by with his agent
to get the motor number and other data for the agent and
vat3told that hi6 automobileinsurancepolicieswould have
to be writtenby X Motor Company'sagent or companyor the
whole deal wlllbe called off.
n. . *
"Article5055 (R. C. S.) declaresthat, 'It shall be
unlawfulfor any person to act within this State, as agent
or otherwise,in solicitingor receiving applicationsfor
.lssuranceof any kind whatever,or in any manner.to aid in
the transaction6f the business of any insurancecompany
incorporatedip'thlsState, or out of it, without first
procuringa oWtificate of authorityfrom the Commissioner'.
The followi&garticle,5056, declaree,'Who are Agents', and
it is clear that the action6 of X Motor Company'semployees
come within the definitionthere laid down.
. . .
"I have examinedthe penal code and find that there is
no penalty set out specificallyapplicableto a violationof
Article 5055, unless Article 572, P. C. was meant to apply
Hoa. R. 0. Waterr, pag8 2 (O-1307)
by rayingthat, 'Whoeverfor direct or IndirecteompeQ8atlou
rolicltrlnnlrsncrin b&elf of anj inmramce cw of w
kind or chamctrr, or trmnmitr for a perron otbr tha m-
8elf an applicatiolr for a po&iey of inrur&ncr to or from luch
company, or almmed to act la aqotlatlnn of bruxwm wlbh-
out a certlflc8teof suthor$ty to 8ct 8a age& or rolieltor
for ruch co@pauy,or af'trr ruch certificateof authority@hall
haw be- cancelledor revoked, l kelZ be fined not gore than
OM huudreddolkrr.' However,l care wo+ld be very bard to
make under that article for the rearon'that it YO&( be 8ec-
kary to prove that the Motor Companynr ro~lcItingfor Idi-
rect or indirectcompenratlou, I and if at al& porrlble,prore-
cutlonr rhoyldbe rtarted,underrome othar article.
". . .
“Artlele 570, P. C. rayr thst, Whoerer #ha&J do or per-
fory any of the actr or thlngr mentioned In th8 flrrt &tic&e
of this chapterfor 8ny inrurancccom~aayreferredto in aald
articlewithout such companyhay&g firti complied with the
requirementsof the lawn of thlr State, rh8;& bsftied 8ot
lem t& five hundveduov more thau one thourandd@.lav8.1
.Article568, the 'firstartlc4 of this chapter'referred to
in Article 570, declaren Who Are Inmrance.Agent~,~ and lt
la quite clear-frolp this descrlptioqthat X Motor Compauyor
ita employeeaare acting am agents or ro~lcltorn. But Arti-
cl8 570 says, 'Withoutmuch companyhavlug first coqrplled
rith the require?pentr of the IawE of thi8 State' 10 it ap-
pears th8t thil articlewas meant t0 cover 8 case where au
agent had startedrollcLUng o? wrltisg lurumnqe before the
company he purportedto repremnt had 'fir8tcomplledwith
the requirement8of the law8 of thir State' and not to 8 came
like the presentwhere the companyhas colllplled with thq Jaw8
of the State but the Motor Company or its employeesare roXlcit-
lng Insurancewithout a Jlcense from the Cos&rQlomr.
"There la a poeslbillty,however,that ArtlcJe 570, P. C.
may apply to ths present caee even though it was Spp8rentb in-
ten&d for anot@erfipurpore. section 7 of 'Regul8tiorla ior the
LicaneLngof Agentr' (Article 5062a, R. C#S.) provi#er that,
'Whenany Loca@ecordlug Agent who has been appointedby an
Iamuancg Car$er having a permft to do burinere In thf* State
lkal& desireto employ a Sollcltor in the operation of hi8
burlmss, he and 8 comp8uyjoidLy r&all lpakeapplicationfor
8 llcenre-foreuch Solicitorto the Board of Innvance Coqle-
alomrm....~ Ia the.prerentcase the Local RecordingASeat and
8 colpa&y have not $oint4 nude 8ppliC8tiOn iOr 8 liceMe iOr
the X Rotor Campsayor any of itr egp&oyecrand it say be raid
that X Motor CaqpP8uy or~lte rOprQscutative8 arQ 8CtiQg 81
i
Hon. R. 0. W&err, pap 3 (04307)
8ollcltorrfor Iany lnmmm CI company referred to In raid
articlewithout 8uch c-any h8vl8g conpliedwith the n-
qulrementrof th8 law8 of thlr State'88&r Article 570.
"If the lnrurancecomp8nyfor which X Motor C!@tp8ny
18 8ollcltlng18 a foreigncorporation,it ha8 not 'corn-
plied with the requirenentrof the law8 of thlr State'be-
cause Article 5065 (R. C. S.) providesth8t each foreign
ineurancecompany shall deslgu8teem officeror agent
who ir ompoueredto employ it8 agents or rolicltorsln
thin State, end ruch officeror agent rha&l promptlyno-
tify the Cosmtlsslonerin writingof the n8me, title, and
addreer of each person so appointedor employed. Xo of-
ficer or agent har 'promptlynotifiedthe Cos&rrioner ln
writing of the name, title, and addresaof any employeeor
representativeof X Motor Cor~anya6 8 solicitoror agent.
I. . .
"I would appreciateyour opinionas to whetherX Motor
Colqpany,under the fact8 an stated,lo subjectto prorecu-
tion apecifica&lyunder Article 570 or under 572 as affix-
ing the penalty for violationof Article 5055 or if neither
apply and prosecutionlrhould be under the Article 571."
At the outset,we call attentionto the fact that you refer
to the "X.Motor Capany." By mch reference,we aso- that the a&or
company 10 a flrm or a corpor8tica. The great weight of authoritytoday
is that a corporationmay be criminallyliablewhere the punlshnentfor
the offense committed1~ 8 fine and not lmprlsonrpent. 13 Tex. I&a Rev.
252; 272 R. c. L. 765~ 33 A. L. R. 1211. Thin line of authority18 not
followed,however,by the Court of CriminalAppeals of Texas as is shown
by the case of Judge Lynch InternationalBook 8 PublishingCo. VP. State,
(Ct. Crlm. App. lglg), 208 S. W. 526.
In this case, the companywa8 indictedtwig Actr, 35th Leglr-
lature (Third Called Session),c. 36, Sec. 6, appearingon page To8 of
the.printedlarrsof said Called Session,which provided in substancethat
"any person" engaged in the businessof emigrantagent without first hav-
ing obtaineda llcense~ shall be guilty of a mieden&ano,r
and upon convlc-
tlon shall be fined not &era than $100.00. In holdingthat the indict-
ment was bad, the C,purtsaid, throughJudge Lattlmorer
"No mqtion to quash upon any proper ground erasmade,
but, 8s etatedby the A8sirtantAttorney General,there Is
no provirionof law in this &ate under which 8 firm or
corporationten be indictedor tried under the cris!lnal
lawr, 86 menu tdhare been the effort here.
Hea. R. Q. Waterr, pago 4 (0-m)
Eon. Il. 0. Watorr, page 5 (04307)
The motor companyand its ~loyeor are agent*, so you stata,
within the deflnltfoaof Article 566, and they ham ao llceqrer,there-
fore they are mbject to prorecutlolr t@er Article 572.
AE regarda Article 572;& point out that it would bc diffl-
cu&t to prove that colapanrtlop1s balng racelw4 fo rth elrvicra ran-
derkld. & order for the employeea of the motor companyto be held guilty
for rollcltlnglqrurtmce tithont a lieeuro,rnder this Mlcle, It would
be necereary that compenratlonwe recolred for euch rollciting. However,
it lr our opinion that the prorlrlon, “for ~lreat or indirect conpeneation,*
ar wed in Article 572, only relater to roliclting inmranor. In other
wordr, it in our oplhlohthat, under thlr rtatyte, anyam who “tranrgltr
for .aperron other thah hlmaelf,an applicationfor a policy of fnrurance
to or eom such conpany ... without a certificateof authorityto act
4s agent or solicitorfor ruch company,”or anyone *a0 “amume4 to act
dn negotiationof insurancewithout a certificateof authorityto act
as agentor sollcltorfor such company,”lr rubjeet to prosecutionunder
Article 572, supra,regardleraof whether he did or did not so act “far
irect or indlmct compematlon.” It lr our aplnlenthat thlr conclu8lon
4s correctunder the rulea of statutoryconstructlonjhowever,by virtue
of the decisionin the case of Jones vs. State, (Ct. Crlm. App., 19231,
265 S. W. 577, it is not neceesaryto rest our opinionon construction.
In that case, prosecutionwas based upon Section49, Chapter
1138,Acts, Thirty-firstLegislature,which 1s substantially the sane as
Article 572, supra. The only dffference lathe Act6 am: iirrt, the words
“of any kind and character" were ealttea $n Sectloa 49, Chapter 108, Actr,
Thirty-flrmtLeglrlatum; ~ecomlly,the flnr Jmw ken c@gad from “not
lerrt~ oue hundreddollarr”to “not nom than one hundreddollarr.”
The lnformatlonin this case, 88 1s shown oa pags 3 of ths tranecrik$,
mtated ln part that the defendant“did then and there u@awfully for di-
rect and~indirectcompensationsolicitinrrurance la belralfof Protective
Life InsuranceCompany,a@ did then and them tmsnlt for a person other
than himself,to wit, for Sam Kruger,an applicationfor a policy of in-
suranceto said ProtectiveLife Inmrance Compmy, and did then and there
assume to act in negotiationof insurancewithout a certificateef 4uthority
to act as agent and solicitorfor said ProtectiveLife InsuranceConp4nyj
said ProtectiveLife InsuranceCompanythen and there being aa inEUI’B~C0
kompanyagainstthe peace and dignityof the State.”
The defenvt requestedthe followingcharge,as is shown on
page 8 of the transuript:
“You 4re chargedat the requestof the defendantthat
before you can find the defendantguilty ia this case you
must find and believe from the evidencebeyond a reasonable
doubt that said Xmmet A. Jones, the defend& herein, re-
ceived directlyor indirectlyeompensstion for such appli-
cation of the insurancepolicy.”
Hon. R. 0. vaterr, page 6 (0-407)
The lower courtr&pad thlr charge. The defendmt arrlgaed
euch refuralaa error. In holdlagthe refuul of the requertedcharge
proper, the court,throughJudgaRawkim, (*cbredr
“Appellant requested tb court te lnrtruct the jury
that, unlerr appellant biroetly or inUmctly received
com~nratien for hlr awvlcrr, thy wmd.1 acquit him.
Thir char&b vaa properly refured becqrre it l@uwed on-
tlrelythat part of thr imfomatlonuhlch allegedthat
he had trammftted for a perron other them hlmaelfan
appllcatienfor a policy ef inrurum, md had arrumed
to act in negotlatlanfor inruraacrwithout the cartl-
flcate of authorityto a0 do.*
In vlev of our above oplnloa, to the effect that the employeon
of the X Motor Company are eubject to prorecutlon rpaclflcallyunder Artl-
cle 572, lupra, we deem it unnecerraryto conrlderArtlcler570 or 571,
Vemmn~s Penal Code, 19251 however,we direct your attention to reveral
matterr ln connectionwlth the lart two mentionedArtlcler of the Pena
code.
Article 570, VernontrPenal Code, 1925, pro~ldem
Whoever lhall do or perfom eny of the acta or
thlnge mentionedin the firrt article of thir chapter
for any lnrurancecompanyreferred to ln aaid article
without mch companyhaving fir& eml$ed vlth the
requirementaof the 14~1 of this State, rhaJ1 be fined
not lens than five hundrednor more than one thoumud
dollam.*
ArtJcle 568, lupra, im the “flrrt article”which ie referred
to in Article 570, eupra,and lr an fol&owe:
“Whoevernolicltrlnmrance on behalf of any in-
aurancecompany,whether incorporatedunder the lawn
of’thirr or any other State, or foreigngoveNt, or
who take* or traacrmltr other then for hlaeelf,any ap-
plicationfor lnoul;ance, or any policy of inrurance,
to or from such company,or who advertisesor other-
wise given not+ t&at he will receiveor tranemitthe
a-1 or ri@l.,.+eceive or delivera policy of inour-
ance of any a&h company,or who ahall examineor ln-
spect any Sink, or receiveor collector tranmit any
premium of lnrurance, or -kc or forward any diagram
of any buildingor do any other act in the making or
coneummatlngof any contractof lneuraacefor or with
any such inqrance companyother than for hl@seJ.f, or
who rhall examine into, or adjurt or aid in edjuetlng
Eon. R. 0. Watera, page 7 (O-1307)
any lorr for or on brhrlf of any ruch inrurace company,
whether any of such rctr rhallbr don. et the Lnnrtancr,
or by tha employment of #uch krrurum cs, or of or
by say brokar or othw! perron, rhll be held to be tha
agant of the company for which tha act lr done or the
rlrk in taken, an far an relaterto all the requlre+entr
and penaltlcrherein ret forth. Actr C. 8. 1879, p. 32."
In your letteryou lt8tb that there 18 Bome doubt 86 to whether
the inrurancecompanyhas compliedwith the l.aw#of this State aa required
by Article 5062a, Vernon'8Civil Statutes,1925, or Article 5065, Vemon'e
Civil statUte6, 1925. In thir connectionwe direct your attentionto
Article 5062 which providen:
"Wheneverthe Commiraioner&all have or receive no-
tice or informetionof any violationof any provlnionof
thla law, he Ohall immediatelyinvertlgate,or came to
be invertlgated, ouch violation,and if a fire, fire and
marine, marine;tornado,rent, accident,casualty,lla-
bility, health,elevator,diaablllty,plate glara,bur-
glary, bondlng,title, Burety or fidelityinsurancecom-
psny hea violatedany of rruchprovieiona,he rhall tie-
diate3.y revoke fta licenrefor not lens than three months .a
nor more than 6ix month6 for the first offenre,and, for
each offensethereafter,for not leea than one year; and,
if any person,agent, firm or corporationlicensedby eucb
Commlasioner81-a fire, fire a+marlne, marine,tornado,
rent, accident,casualty,liability,health,elevator,
dirabllity,plate glare, burglary,bonding,title, nurety
or fidelityinruraqceagent &al& violate or caue.0 to be
violatedany provl&n of thin law, he,ehall,for the
fir8t offenre,have hlr licenre revokedfor all campanics
for which he ham been licensed,for not leas than three
months, and for the secondoffensehe &all have hi6 li-
Con60 revoked for all companiesfor which he il llcenred
and ahall not thereafterbe licennedfor any companyfor
one year from date of ruch revocation."
With referencpto Article 571, Vernon'8Penal Code, 1925, pro-
vidlnu. 'Whoevervlolateranv urovirlonof the lawn of thin State reps.-
latinzthe buslneno f life,.fireor marine inmurence,nhal&,where the
punirhmentla not o$4?erwine providedfor, be fined not lerr than five
hundred,not(nor).tiore than one thousanddollara,"(italicsours), we
call attentionto that portionwhich 8ay8, "where the punishment16 not
otherwireprovadedfor." In accord with our above rtated opinion,the
penaltyfor unlawfuUy nolicitinginrurance,tranrmittingpoliciee,or
acting in negotiationof lnrurancei6 6pecificall.y providedfor fn Arti-
cle 572, wma.
i-
Eon. R. 0. Watern, page 8 (o-1307)
It 16 our opinionthat the X Motor Company,88 nuch, would not
be eubJectto peqal prosecution,but, the indivldunlwho did the prohibited
act 18 eubjectto proeecutlonunder Article 572, eupra. It la=our further
oplnlonthat the phraee "for direct or lndlmct compeneatlon," in Article
572, relate6 only to the act of rollcltlnglnrurence.
Toum very truly
Nl’ORXEXQElVEMLOFTEXM
By /I/ Walter R. Koch
Ualter R. Koch
Aeelrtnnt
By /a/ Ran-y Bhuford
Iarry dhuford
EB:pbp:.lm
APPROVEDDEC 23, 1939
/a;/ Gerald C. Mann
A!rroRNRY(IERERAL
OF TEXAg
APPROVED
OPINION
C-RE
BY /a/ BUB
CBAIFMAIi
Untitled Texas Attorney General Opinion
Combined Opinion