Untitled Texas Attorney General Opinion ( 1943 )

OF’kICZ OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
,;“\
\ \
Dear air: Opinion no . . 4%55$6
R45: May tb0 00rarlc a te
payableXalg_ out b?
surplus, in tlie$o
.gwbposoU be lsgarjy “\
issued and sold bi\the
,/ ‘Jsion ‘~rservve Life In-
/ ./‘8llrml00 $ompany , inoor-
<.’ ‘. poratedxunder Chapter 3,
...
Title .4e of the Rev ised
Y Girt.1 etatutes BP amend-
...-. ” e&j x
./ \,
‘..
Your i0tter.a >Auguet 19,~.l9+3, requesting the
opinion of this departmnt on the abovs/stated question is
aa follows:
1’‘
~. ‘,.‘.,
“Ih my letter of August 14, I forwarded
to ,&u a‘+py of ‘correspondence between Honor-
abie,$ae~er Moore aqd ,~the writer with rererence
,‘to a p~opoadd,.rorm or” oertlfloate to be rold by
ilJuion tieserve Lire Insurance Compsny payable from
‘its surplus:.. Additional oopiea lncludlne the sur-
plus certifioate are enclosed for your ready re-
rereooe;.. Mr. ~ItIsore has requested me to rerer
the mstter to you. Copy of the request and copy
0r the xmicler of laoorporatlon 0r the insurance
company are enc loscd.
“Till. you pLeaae advise m wnethsr the
certificate payable oqly out of surplus, in the
form proposed, ray be legzlly issued md sold by
Union AeserVe Lif 0 Insurance CocIpauy, incorpora-
tad under Chapter 3, Title 78 of the Heviaed
Civil statutes a8 mended7”
The proporrd oertliioate under ooneideratlon
readr an follow8:
“THIS CERTIFIES that John Doe, the holder
hereor, ha8 pald Into thr 8urplur of UNION RESEW’S
U.F% I!WiiCE CONPm, herelnsrter oallcd 'COmpaayr*
the mm or Dollarm,#
4 ), and the Company agree8 to pa
intereat thereon at tb rate o? five per oent (bj I
per annum la the manner hereinafter net forth. fn-
terost la payable on the first day8 of January an&!
July or eaoh mar. The prinoipal is payable on the
day or - io Pallure to
Tan7 lnnstallment when due’rha-t th8 option of
the owner or holder hereof, mature the prlnolpal, to-
gether with all intereat then due.
*A8 to th8 Compauy, thie Certfiloate 18 payable
only out or the 8urplur OS the Company and no other
asset8 of the Company 8hsll ever be llabb thereror.
‘For value reoelved, the payment of all prinol-
pal und Intereat ln the amount8 and at the tim8 stated
above i8 hereby guarauteed unoondltlonally by Charlea
A. ;doCormiok oi Austin, Texa8.
*In oaae or the llquldatlon or the Company,
and a8 between th8 stockholder8 and oertlrloate
holder8, the right8 oi the Certificate Holders ahall
be in all thing8 wperior to the right8 of the Stook-
holder8 or the Company.
“Thir la one or a ‘number of oertlfioatem. total-
ing ii princl2al
all due a8 to pr lncipal and interest at the aame time
a8 i8 this Certirloate.
“The iesuanoe ot thl8 Certlricate ha8 been au-
thorized and dlreoted by the unanimoun vote of all
the stook ot the Colpany, and by the uuanlmoue vote
or the Directors of the Company.
720
Zionorablo 0. P. LookhArt, pueo 3
*IN 1IzN”;Stl ‘XER~OOB, The Union 288ene
Lite Inruranoe Company ham oausrd thir Certifi-
cate to be aigned by It8 duly authorized oi-
rioerr and ltm Oorpotate seal to be horaunta
aftiX8d thl8 day or A 19-0
“Oharlom A. UoColalOk oi Auetin,. Texam,
hereby afiixes him mignature herato am uzkoondi-
tional guarantor o? tha pwmmnt of thir Certl-
r*08te, aooordlng to it8 tenor and 8rr46t.*
%e thlnlc that the surplus certirlcate proposed by
the Union Heaerve Llfo Inruranos Company oan be dlstinp,ulshed
rrom the oertirioate oi the Century Life Inauranoe Company
whioh was dimapproved dn.OaT OplniOn No. O-1814.
It IS oonorded in our Opinion No. O-1814 that the
right to borrow money 18 inherent in a oorporation, mubjeot,
however, to the limit at ions whioh may be placed u.pon it the
.. 1``s of the goverment to which it is responsible. Ry issuing
and selling the above mentioned oertlrloate the Union Reserve
Life Insurance Company seek8 to exerolsa it8 premgstlte am
a corporation to borrow .mney, but meek8 to ooatraot with
those rro3 rhom It may borrow mney, that such money will be
paid back at a partioulsr time, and bear a particular rate of
innreat, but that it will be paid baok,only rroln a apeoial
.
It Is stated by Couoh on Insurance in Volum8 1,
page 505r.
as * * amag the oorporata powars enJoyed
by a oorporatlon famed to oarry on insurance
business my be meat loned the right to aoquire
ad bold such roal estate as Is necessary and
proper for futurs use in aarrylng on it.8 business,
to borrow money toepay lossem, or to protect its
asseta. + * l ” (To the sa;pb errsot see Am, Jur.,
vol. 29, p. 84)
The attorney for the Union iieserve Life Insurance
Company lnrorms urn by various letter8 written to us in oonneo-
;ioonorsble 0. 2. Loolrhrrt, pdge 4
tion with the question under oonsideratlon that ths proposed
certificates are not to bs aolQ to ths pub110 gemsrally but
-dl?S to bs aold to a very Lisitad i?JKCberOi psCSon8, sad that
the proposed certificates are not to be larksted in such a
way as to oom within ths tsrm8 of ths 3aOurltie8 AOt. In
oonnsotlm with the rorsgolng statmeat it ir to be understood
that ws sxprss8 no oplnloa rhsther suoh propossd osrtitloats8
ars srouritles within the abasing of ths Saouritler Aot. This
is a utter to be dsteralned by the Secretary of Stat*.
It is oonosdsd also 10 the Oorrsspondsnos of ths
attorney abovs msntloaed that “it is not eontsnplated anf
Mfloer. or direotor of ths Company will purchase any of ths
propass osrtif ioates,w
In answer to the above stated question you am
respeotiullJ edrissd that there la no statute prohibltfng
an lnsursnos oompauy suoh as the Union Reaervs Wfe Snsuranos
Cospang from borrowing raonsy in ths nanasr propossd by said
~ompuny by the iaeuanos of said proposed oertlfloatsr nhloh
- ars nsrs evidence of tbo money borrowed by said Company.
Yours rsry truly
By v-
Ardsll Ullliams
~sslstaat