Case Information

*1 --_ .

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 the United States Avia- tion Underwriters, Inc., a permit pursuant to Article 5065, Revised Civil Statutes, under the facts and circumstances disclosed.

Your for an opinion of this Department is before us, from request 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 the Board of Insurance Commissioners pursuant 5065, R. C. S.

“This company’s attorney advises us that The Uni,ted States

Aviation Underwriters, 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 and third persons, as well as legal 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 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, 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, *2 ITIC., a permit pursuant 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 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, should be refused.

A part of the proposed is apparently furnish to insurance advice with respect to ‘the matter of legal that may be involved 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. 1 of Article of the Civil

Statutes, dealing with loan and brokerage companies, is as follows:

“This Act shall embrace 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 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, or means of other persons, firms, associations or corporations, nor shall such as agent or trustee 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 in subdivision 1302, of our Revised Civil Statutes, *3 _--- A

upon obtaining 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 to the 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 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 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 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 in your letter contemplated by the Under- writers is essentially a part of the corporate of the insurance com- panies whom it would serve. The companies could not successfully on their business without such data and information as applicant’s service con- templates. They must procure this service, however, from some person, from some corporation having corporate power to supply it.

Not only is the contemplated of the United States Aviation Underwriters, Inc. ultra vires, but they are expressly forbidden by law.

Moreover, of the Revised Civil Statutes,

“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.

Section 3, in the final sentence thereof,

“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 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 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 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 should not be appointed or permitted by a State instrumentality on such busi- ness of another.

Very truly yours ROVED MAY 14, 1941

Approved

Opinion Ocie Speer FIRST ASSISTANT Committee Assistant ATTORNEY GENERAL BY Chairman

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