OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
Aonorable Gcoree S. She?pard
Co5iptroller of Fublio AOO0u nta
Austin, Texae
Dear sir:
on inmrance apglicanta,
es under Article 7061,
Civil :tatlltes.
rqmt ror our 02inion
on whet3cr or is lteble for the "col-
provided fcr in Article
7C61 of the
ve us and vrhich we ascertained
t!: you are a6 r0il0w0: The
ill rarer to as the cgencg, Is
psrnit to do business in Terns,
t that ita buainees shall be *the
ce oompenles concerning the propri-
cceptine eppllcatlone for lnau*no@.
OS eald agency, with whloh we are oonoerned
king reports to Insurance companies as to
r and veracity 02 persons who are eppli-
nsurence donpanles. when an insurance company
lber,to the aervlce rendered by said agency ds-
n on an applicant with regard to such applicant
as on Insurance risk, said insurance company asks for such ln-
fomatlon trot said agency and the agency seeks to obtain the
inrormation ana convey it to the ineurance oompany. You have
advised us that w?en enid eEency entered Terse it began issuing
lndfvfdusl reports on pers0ne, cover,ine the3 lndlvldually and
not aa engaged in busineER, reportlne on thetr ~reonal rating
or standing for lntx:ence, and t!xt this plnn of opratlng he8
been followed down to the present day.
Honorable George, I?. Sheppard, Page ,?.
You desire to kaow whether or not said agency 1s
required to pay e.tex under Article 7061 on the gross amount
received for buefness done and reports meda as outlined above.
The answer to your inquiry must be found in said
Article 7001, which reeds es follows:
Y?ech indlvlduel, COmFRny, corporation or aaso-
oletion, owning, operating, managing or oontrolllng
any oollectl~ agency, comercial agency or cornor-
cfel reporting oredft eeency within this Stete, end
char&g for colleotions mede, or business done, or
reports mOde, shell make quarterly, on the first days
or January, April, July end October of Each year, e
report to the Comptroller under oath or ths lndlvlduel
or.of the president, tree surer, or superintendent or
such company, oorpoxa t&on, or association, showing
from business done within this State the gross amount
reoaived In tha payment of oherecs tar oollectlons
made end business dcne and reports made durlq the
quarter next peceding. Such J.ndivlduals,. compeeies,
corporations or associationa et the tIme of making
said resort shall pay to the Treasurer oS this State
an ocoupetion tax for the quarter baginning on said
date aqua1 to one-half of one par oant of said gnoas
receipts es shown by said rap0rt.a
Llablllty or said agency for taxaa on aald bualneea
under aaid article depends upon whatlmsr or not said business
18 a ucommarolal agency or ocmmarclal rtportlng credit agbnoy”,
aa those terms are used in the statute: The only Ttxae case
conatrulng this Article Is the case of Rarohants Rtdbook Com-
pany v. Sate,. (Corn. App.) 135 8, C. (2d) 279; and in dtttrmin-
ing whether or not the agency Involved In that cast ma8 a corn-,
mtrolal agency, the ccu.rt said:
*It la undisputed that ths Merchants Red Book
Company is a *reporting ortdit agenoy,’ but epptl-
lent8 strongly urge that it la not a lCommeroIal*
reporting credit agency aa that term wee defined
et the tint of the ori&el enactment of Artlclt
7061. It agptars with reasonable otrtalnty that
the terms *marcentlla egencirs’ and ‘oommarclel
egenoits~, being regarded as synonymous, Dave Sor
a long time bed a derlnlte ffieaning. Set 40 corpus
Jurie, p. 636. In the oest of City o? Brooktltld
Honorable George 8. Sheppard, Page 3
v. Kitchen, 163 MO. 546, 63 S. 'if. 825, 826, the
Supreme Court of lElaaourl, speaking of *co-szserclel
or mercantile egenolea,~~ said: ‘Such agencies are
deflnea to be tetebllshcente which znkt a business
of collecting lnfon5atlon relating to the credit
cherecter, responsibility, end reputation of
nerohanta for the purpose of furnishing the lnforaa-
ion to subscribers, - e.g. a. G. Dun & Co. &enoy,
Bradstreet Company, etc. 5 Am. k Eng. iho. Law (1st
td.) p. 280; Web. Int. Dlct.'
nCor& Juris givec the following dtrlnltlon:
'A oa%earclal or mercantile agency msy be defined
as a person, firm, or corporation angaged In the bus-
iness or collecting infonation es to the financial
standing, ability, end credit of ereons engaged in
business; and reporting Shil same o aubacrfbera or
customers ecplying end -38ying therefor.' (Underscoring
ours)
This darlnitlon by the court corresponds wlth the detiaitlon
of %arcentlle agency* In Xtbater*s New International Dlotlon-
try, 2nd Edition, which says:
*. en establishmnt or institution which
collect '8 iniometion as to the character, rtaponal-
blllty , credit, reputation, etc., of merchants or
otheri-doing buslneae, and furniahea duoh Information
to others for a subscription price; a co-merolal
agency.”
It will be notlotd that the Texas oourte and the dls-
tlonary dtfInltlon considers that the reports must be in rt-
gard to marchants end othera doing budnear. In the oabt In
question the person on whom the report8 are meae art net neo-
tsaerlly merchsnts or persona engaged in’any kind of bualneEa,
but they might be applicants for lnsu--not who art not In any
business ?.t all.
In cmr search of the authorities we fled t&it through-
out the hi&Dry of “comerolal aganclta~ and %trcentilt agen-
cies” they existed f-2 the purpose cf Informing msrchants es to
the credit s6&ndlng and dependability of buyers of merchandise.
An interesting ease on this question Is the ease of Stats v.
Honorable George 9. Sheppard, Page 4
Morgan, 2 3. D’. 32, 40 N. X. 314, by the %preme Court of
South Dakota, which we ,wlll quote from at length, as follows:
* . . . Xercantlle co.meroial agenolss, as we
unders:a.?‘d ths, are establishments whicl: cake a
bdslne;s UP oolleotlnG Inform&km relatlcg to the
Credit, character, raapc~eibillty, general reputation
and other mtters affecting persona, firm, and cor-
porations engaged in businec.6, for the purpose Or
Purnlahirg>his Information to its oustomers for a
cash consider?cticn. These agencies have beeme re-
cognized and pemanent adiuncts to the world of
trade. Their rice and progress are of but recent
date. Aocording to a little Iwrk entitled *The Law
Relating to Mercantile A&enciec ( recently published
by 1. E; J. W. Johoson 8: Co., Ph~ladelphla, and writ-
ten by I. X. Errant, the Amrloan system of mrcan-
tile egencias owes its origin to the work done by
one Church, who waa at first a coannsrclal traveler.
Cn his business tours it wae his custom to make notee
for his own UIB, as to the habits, lto., of different
persons and firms with whom he dealt. Other merchanta,
hearing of hla cuetom, would come to him, and ask ln-
fomotion in relation to the same persons. At last
he waa employed by 30 New York homes to travel in
the ecuth and aest to oollact information to1 then.
Rls labors suggested the idea Of establishl~ug an in-
atltut~on whhioh should r?ake a businers Of collecting
information oonoernlng the reaponsiblllty, eta., of
looal businees firms and oorporatlons t?!at ware seek-
'Ing oredit in the larger oitiee. In 1841 the firat.
organized ‘Yeroantlle AgmoFc waa formed by Lewis
Tappan. Thle was follcwed in l&42 by 0110called *The
Coxaerctal Agency.’ Tha mercantile agency of Tappan
was suooeeded by Benjamin Douglas k, Co., and this
firs by R. C. Dun k Co. A few years arter the estab-
lishment of *The Xeroantils Agency’ and the eCommer-
olel Agenoy’ , 7. Y. Bradstreet established ‘The In-
proved Mercantile Agenay,’ Which was 60120 jvarr after-
wards inoorporated, end kncmqas ‘The Zradstrset Com-
pany. * The mercantile and comercial agencies were
originally establ?shed for the purpose of reporting
the oredit of buyers. It was Bradstreet who first
published a bcok giving ratings. The other 3eenoie6
Honoreble GeorCe B. Sheppard, Page 5
soon followad his example.
been establ
In the oase of Genesee Sav. BaDL v. Xichlgan Parge Company, 52
lL.iCh. 164, 17 F‘. .x
.. . 750, the Supreffie Court of liichlgan said:
" . ??.e busina:s of these agencies is well
known ti ihe comnerclsl coxwnlty. Indeed It is said
by Justice Hepello, in ;,ton, I;ole & Burnham Co. v.
Avery, 63 N. Y. 31, ‘thet the business and office of
these ap,encies ere so well-known, and have been so
often the subject of diacus8iOn in adjudicated canes,
tht the court can take judicial notice of them. Their
bwiness is to collect Information as to the circum-
stances, means, and pecuniary ability of merchants and
dealers throughout the country, and keep accounts thsre-
-that the subecriber to the agency,
to by a customer to sell goods to him on
by restorin& to t?.e figency oz to t?e
lishas, ascertsin the standing and respo-elbllity of-
the customer to when it is proposed to extend credit.”
(Underecorlng oui+s)
In the case of Furry V.I. O*:onnor, 3 Ind. A;p. 573, 28 N. E. 103,
the Appellate Court of Indiana said:
“. . Cormrclal egencles have become vast arfd
extensive iaotors In modern oomzerclal transaotions.
ior furnlsblnE lnfoxxcatlon to retail dealex and .
obbers as *all es to wholesale merchants. Tf\
oourts are bound to know judicially that no vizdor
of goods at wholesa:a oon be regarded es a prudent
business me2 if he sells to a retell dealer upcn a
credit without first lnformine. himeelf through these
mediums of ltUor?n?;tion of tha finsnoial standing of
the customer, end the credit to which he fairly is en-
titled.” (Underecorirq olura)
In the c0se ‘if Stevens v. Ludlun, 46 Elnn. 160, 40 N. X. 771,
the Sup~em9 Court of Kinnesota said:
Honorable Gaorga 11. Sheppard, Page 6
*This bueine6a of a oommercial apancv 16 to
get such infoxmatldn am it can raletive tb the bus-
11106s and pecuniary ability of businesr rmn and bue-
h866 OOIlOerll6, an& OORUllUlliOEite
it t0 6UCh Of it6
trons a8 may have ocoa6ion to apply for it.*
Underscoring ours)
The definition of "OOZIumrcial agency" given in Bouviercs Law
Dlotlonary, Rawlo(e Third Revision, 16 a6 fOllOW6~
“CODERCIAL AC’IPJCY. A person, rim, or cor-
pOl'at.iOn engaged in .tk6 bURine66 Of OOl~OCting in-
formetion a6 to the financial standing, ability,
and credit of pertons engaped in businese and re-
portillg the 666ie t0 6UbECriber6 Or to CU6tOlXr6 6p-
plying and paying thereror." (Underscoring oure)
In 18 h. C. L. 997, we flad a etatement az followea
*YlOrCantilO agenOiO6 Bra 06tabli6hmsnt6 which
make a burrins:: of oollectlng infoxnatlon relating
to the credit. character. reaa~nalb~litv. nenaral
reputation, akd other matterra-affecting per6on6,
fiI%I6. end oorpcretions engaged In busine66, for the
purpose or fUrni6h1ng thle lnfomtion to 6UbfNriber6
thereto for a cash c%nelder Mon. Their object 16
to procure through tub-egOnt6, nervants and corre6-
pondente 6UCh information coneernlng the tN6twOrth-
in066 of parsons and corporaticna engaged in trade
or aommeroe a6 ah611 enable their subroribers rarely
and properly to conduct busine&s with atrungere or
distant cu6toDlbr6.n (Underscoring our6)
Th666 oa6ea bring u6 to the conclu6ion that in order for a
bUPine66 to be that or a Ww2uercla1 agencyw it ntu6t OOMl6t
of making report6 on merchants or others engaged in buaineea.
A~woo.mmoralal reporting oredlt a6enoy” may ooneiet or making
credit report6 upon persona In their individual oapaclties
wlthout regard to their buaineesea. RoweYer, (18 we under-
6tXtnd the naturr of the report6 in puertion they cannot
properly be olasslfied a6 credit reporta.
It 16 our opinion thet the agenoy fn Cuaetion 16 not
rrqulred to pay a tax under Article 7061 bn the gro66 amount
reoeived for the buaine6e done end or sake a report of eaid
. -
Honorable George R. Sheppard, Page 7
buainesm, as in your inquiry and dlecusmed herein.
outlined
Hongver if thlr
agency does other bUdn866 which wmtltut6r
t.he buekear of a ~commerolal agency or commercial reporting
oredlt kgency , ** the lbbility for the tax on such othar buei-
no66 would not be governed by thi6 opinion.
Youre very tNly
Cecil%. Roteoh
Asli6tUt
CCR:GO
/6/ Grover EOllff6
FIRST A:Z.fSTAHT
ATTORmx OjmWAL
This Opinion ConddOrOd and Approved in Limited Conferenoe.