Untitled Texas Attorney General Opinion ( 1981 )

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The Attorney General of Texas
April 14, 1981
MARKWHITE
Attorney General
Honorable Bob Simpson, Chairman Opinion No. My-321
House Committee on Insurance
House of Representatives Re: Application of the Bail Bond
Room 125, Reagan Building Act to insurance companies
Austin, Texas 78701
IWO1 Mli” St.. suita 1402 Dear Representative Simpson:
Dill... TX. 75201
2w742.5244
You have asked several questions concerning the relationship between
the Texas Bail Bond Act, article 2372~3, V.T.C.S., and the Texas Insurance
Code. You first asked:
1. Is a duly licensed and certified insurance
company, qualified and licensed to do business in
Texas under the Texas Board of Insurance rules and
regulations, etc., subject to the Bail Bond Act
(Article 2372~3, as amended, Licensing and Regula-
tion of Bail Bondsmen) when they operate strictly as
505 sro5dw.y. sun. 212 co-sureties with licensed bondsmen In the writing of
LYbbaL TX. ?wol court and appearance bonds In Texas, or are they
5c4n47.5235
exempt as per section 3(d) of said act?
In general, the Texas Bail Bond Act, article 2372~3, V.T.C.S., does not
exempt msurance companies engaged In the writing of bail bonds from the
requirements of the Texas Insurance Code, nor does the Texas Insurance
Code exempt companies writing such bonds from the requirements of the
Texas Bail Bond Act. An Insurance company that is duly licensed and
certifiid to write bail bonds by the State Board of Insurance is not subject to
the Iicensing provisions of the Texas Bail Bond Act if the company Is a co-
surety with a licensed bondsman. Sections 3(a) and 3(d) of the Bail Bond Act
provide:
Sec. 3. (a) No person may act as a bondsman
without the license required under the provisions of
this Act, except as provided In Subsections (bl, (cl,
and (d) of this section.
..,.
(d) Persons who execute bonds as cosureties with a
licensed bondsman.
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Honorable Bob Simpson - Page Two (R’k- 3 2 1)
Section 2 of the Bail Bond Act rovides a definition of “person” that includes
corporations, and therefore Section 3(dP would exempt an insurance company acting as
a co-surety from the licensing requirement of the Bail Bond Act. We do not address
whether a person is necessarily entitled to act as a co-surety with an insurance
company while at the same time acting BS sgent for the insurance company without
the company’s complying with the licensing requirements of the Bail Bond Act.
However, if the insurance company is acting in the capacity of a surety, section 3(a) of
the Bail Bond Act would require an insurance company to comply with the licensing
requirements of the act.
You next ask the following questions:
2. Is a person duly licensed to make bonds under the Bail
Bond Act required to have a Texas Recording Agent’s License,
or is he exempt in accordance with section 7(d) of said act,
stating that a licensed bondsman shall not be required to have a
Local Recording Agent’s License?
In a county subjsct to the Bail Bond Act, the person is exempt. However, in a
county not subject to the Bail Bond Act, the person must have a local recording agent’s
license issued under article 2L14 of the Texas Insurance Code.
3. Does an insurance company that is licensed with a local
Bail Bond Board under article 2372p-3, as amended, have an
obligation to register in any manner or form with the Texas
State Board of Insurance to act as co-surety or surety on court
bonds or surety bonds in the state of Texas?
In Texas, the only corporation that may act on a regular basis as a corporate
surety is sn insurance company chartered under chapters 2 and 8 of the Texas
Insurance Code. See Attorney General Opinion WW-438 (1958). In Freedom, Inc. v.
m, 569 S.W. 2=8 (Tex. Civ. App. - Austin 1978, no writ), the court held that a
corporation acting as a professional surety in writing bail bonds was engaged in the
insurance business and was required to obtain a certificate 6f authority from the State
Board of Insurance. Further, no provision in the Bail Bond Act relieves an insurance
company from compliance with the provisions of the Texas Insurance Code regarding
its ability to act as a surety. When an insurance company engages in the business of a
surety in a county sub&t to the Texas Bail Bond Act, section 7(b) of the act clearly
contemplates a dual licensing procedure for the insurance company under both the Bail
Bond Act and the Texas Insurance Code.
You nextask:
4. Is it legal for an individual to use an assumed name if an
Assumed Name CertifiCate is duly filed and executed with the
County Clerk of the counties in which the individual is doing
business, in the writing and posting of bonds in counties not
subject to bail bond acts, and must the surety company be
p. 1030
Honorable Bob Simpaon - PeeThree (NW-321)
registered with the Texas State Board of Insurance when the
privately-owned company is the surety on bail bonds?
An individual may use an assumed name in the writing and posting of bonds,
provided, however, that the use of such a name does not violate either the statutory or
common law regarding names. Nothing in article 2372p-3 would prohibit the use of an
assumed name by an individual properly licensed in a county with a bail bond board,
and neither this statute nor any other prohibits an individual from using an assumed
name in counties without bail bond boards. However, the use of an assumed name is
proper only after a business entity or individual complies with the filing requirements
of chapter 36 of the Texas Businses and Commerce Cc&.
If an individual is the surety on bail bonds, then no registration with the State
Board of Insurance is required. However, if a corporation is the surety, then it must
comply with the regulations set forth in the Texas Insurance Code. The court in
Freedom, Inc., supra, held that for a corporation to be empowered to act as a surety it
must obtain a certificate of authority from the State Board of Insurance. This
requirement applies to every corporate surety regardless of whether the county in
which it will operate is subject to the Bail Bond Act.
SUMMARY
(U Section 3(d) of article 2372~3 does exempt an insurance
company acting as a co-surety from the licensing requirements
of the Bail Bond Act.
(2) Section 7(d) of article 2372p-3 exempts, M&r certain
circumstances, a licensee under the act from the requirements
of holding a recording agent’s license.
(3) Notwithstanding licensing with a local Bail Bond Board,
an insurance company is required to comply with the applicable
provisiors of the Texas Insurance Code in order to act as a
surety or co-surety onibonds.
(4) No provisions of article 2372~3 prevent the use of an
assumed name; of course, all statutory and common law
requirements must be complied with. Furthermore, the only
corporation which may act as a surety cn bail bonds is an
insurance company, and it must comply with the Texas
Insurance Code and obtain a certificate of authority from the
State Board of Insurance.
MARK WHITE
Attorney General of Texas
Honorable Bob Simpson - Page Pour (NN- 321)
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive AssIstant Attorney General
Prepared by Thomas M. Pollan
Assistant Attorney General
APPROVE&
OPINION COMMIl’TEE
Susan L. Garrison, Chairman
C. Robert Heath
Thomas M. PolIan
Nancy Ridtetts
p. 1032