Case Information

*1 OFFICE OFTHEATTORNEY GENERAL OF-I-TEXAS AUSTIN

%x3. ?al1tt3r c. V:oodward ‘..

ChQ2rxnan

2onrd of Insuroltco C0mi8:sicners

c\ ‘.~ AU8tAl, Teras

Dear Sir: *2 Xon. Kalter C. V:ooCtmrd, EEoy.~18, 1939, rage 2

of the stcckholdorn ITould cur,lify in pny- zl.ont or tk? cqital atock.

"In order to coz,$ctc our file on Attorney Conoral opinionzz, will you pleaoe 1 rovim tho opinion of AgAl LE., 1938, snd

iI you find thatIt~rsci.toa on izgroper oonstruction of 'thti:Lzui,~.~~~leese, 0fri0i5iiy 8dViti;c IX!."

7he 0pinion:or tt&".hopEtrtxent written by VI-. Elcliird Broola, X,-r 7 il~:22,~.:1930, to your l%ym%mmt upon the mm quostion,ua8..,to the effect that notes se- owed by roul ostatc where thoholders thereof wore : poyora oould not be used:inJwQ?mnt of capitol stock .of m inswanoe aonpmy,' ~'

Artiolo 4717~, :f&&x&Civil Statutas of Coxan,

1923, cot& forth the roquirments of~o charter for a life, ho&lth and occident insurance compeny end providen in pxragmph (5) thereof thiat ~tha.chn;-ter shall sot forth "the iz:ount of .its capital stock, not less than one hun- droa t.l;ousmd dollars, cl1 of which cepital steak must be suSscribed'a;lil rully pnid up anU in the hands of the in- coqorntors before soid articles of incorporation aro.

PilUd."

Article 4752, TiavisGd Givil Statutco of TCXCS

~192.3, provides for the cxation of 8 limited stock cm- pcy in accordance nith the provisions ol Article Z&717, cu:)rn, with limitad rig?t A o snd privileges and provides for a.:?iniuun "actual pnid up czipital of twenty-five tlsxmanci dol15r3."

non. Walter C.. Y?oadmixdr ticy 10, 1933, ToGo 3

htscla 4705, Xevlsed Civil ZX;t;tutoa of Texas

1923, enmerates certoln items of xhich the capital stook of en Incuronce coqmny nay consist and Section 3 thereof roods:

"in first aosL~tr~,cs upon mimwberod ma1 eotnto IE this nttrta, the title to which Is valid, end tbo zort~it~o %aluo of which is ~~ 'double the mount lomsd thereon, exclusive of buildings, uzlesn~such buildings ere insur- ed in nom reSp0nsihlo co32pnily end the poliay or policias.transfe;rred:~o the. aorzpany teking suah mort@~gc.*,:~, .,j.' ': : It Gas hold bF the Supike Court of Tn&s in the oase'oi Conorfil E?arklrw~ (1: C-nsueltg 'Ensurunco Conpimy et 01 vo.'?-'noaley ot al, 222 S!T QiIl~thzt n note of a subccriboc? to ccpital~stock in er. izmurmcc company secixrcb by e uelid fLrsC.r.ic,Yqsc,e on reel estate to v:b.ich tha subscriber has title, ~tccc$e$. by t!:e corpor&tion >aynant for the,stook;~ _.. 4-c '*poyxqf ~&AKLlly rcX?oived" tiithin the mmnlng of~~Lrtic&~ 22, &XtiOE a of the Con- stitution and thnrefo:e UaJ.+ ...m: ..

~.~ Chief 47ustS.&k$&.s~ spo?ci~g~in the above case soid: : ',:~ 'i,: : '~

"1% subsc@b&s note~&curcd by tl valid. U~;OIl real tiststo, occqknd by first I!?oxt:~alp? the corporation In Fnyneilt of o'took, cmnot 1X3 held as other IA-m praA70rty in tha full nenoe or the Ccm3titutio:i. T>.e corporation thorehy bbtaina somthing X?Gx@ t&m tf1e z~ere +~roxise of the oubncrlber to i;oy. it obtoi;ls the right to hove bhe lnnd r@?,ro:jr,riatcd the peylcont. of t.he note. ?'bis is 0 vdu~hle to right, a property rIg?.t, 9~ fully so cs cny contract right, end, in gc-norrtl, ~13 voluubla ns my such right. The coxporst;ion rocoived it rind' cwns it. 1% ccx5ti.tut.c: e d.istisct ascot in its hondr;; rccognizod, :;cnrmlly, ~,s..q~o of tht, nest ~~t,eble, dcsiroblo and e~nlly '&r&rtible fdrrin of property.“ *4 ‘--. .‘I,.. -

. ‘2,

Ken. r;nltor C. VJoodww.1, j'li:r 10, 1939, rage 4 of the Coevxisslon In tf:i.t Ou!;e of i'rudantial Liie Insur- anaa Cozrpny of Taxctn vs. f'elcxon, 222 P.7 967.

Fe cioh to rx~rticularly call your attention

tc the fact. that In the cane3 of 'Lasher vs. .Smyor (Tex.

Sup, Ct.) 25i 3-g 905 en?. Sxipcion vs. Tlrnt State Fank of &arlllo (Tax.' Sup. Ct.) 211 SiY 977;aitcd by ?.Yr. .~ ,, Brook8 In hia oplnion'or &!ril.'Z?; 1938, .thc notoe " question wxe unsecured~cin d tix couz$ rightfully hold .~ ~ them to be %ere promlsos, to spay" and not property with- '~. in the msaninn of the:Coxstitution, Article 12, Section : 6, The oase of General Eonding & Cnnusltg Insuranca coIqmly vs. Ko5clay (Tt?x.~.civ..Ap~i) 174 sr: 1031, 'also 'I: cited by F!ri Brooks,.was srproaslg overruled by the Supreme' Court 'in 222 3%' 901,: above referred to. ,' ',

It la, the&ore;'th;c oninion of this Dc~art- mentand you are so edvj.r.cr!~that the pngncnt or capital stock.of an Insurance eorcI,nny w1thzotcr secured by first mort&ages on unincumhcix~ real estate in Texas in valid, aonditloned upon wstri~t cxnn~lianco v:ith all the provi- sio'no contained in'Artj.cle 45X3, ,ceuj?ra. Vie emressly ovcrrule~the opinion.of tlZs l:o~artncnt, dated .April 22; 19W by,,Xr. *o&s to ye- contrary. ,.

~*ustlng,that tki&:aotisfactorily answers your 'v

inquiry, we'are

IA:A!i