Untitled Texas Attorney General Opinion

PRICE DANIEL
ATTORNEYGENERAL
August 73 19.52
Hon. GarlanG Smith
tisuklty Insurance Commis~sioner
Boand of Insurance Commissioners
Austin 14, Texas Opinion No. V-1497
Re: Legality of desig-
nating as title
insurance agents
persons, firms, or
corporations operat-
ing abstract plants
under lease arrange-
Dear Mr. Smith: ments.
Your request for an opinion asks whether the Board
of Insurance Commissioners should refuse to approve certain
contracts between title insurance companies and their
"representatives" because the contracts submitted to the
Board indicate that the agent is a "lessee" rather'than an
"owner" of all or a part of abstract plant facilities used
or to be used by him in conducting an abstracterss business.
The question arises under Article 9,22 of the Insurance Code,
which provides as follows:
"Art. 9-22 o Rebates and Discounts
"No commlsslons, rebates, discounts, or
other device shall be paid, allowed or per-
mitted by any corn&any,domestic or foreign,
doing the business provided for in this chap-
ter, relating to title policies or underwriting
contracts; $rovided:this shall not prevent any
title cdmpany'from appointing as its representa-
tive in any county any person, firm or corpora-
tion owning and oper,atingan abstract plant In
such county and making such arrangements for
division of premiums as may be approved by the
Board." (Emphasis added.)
The question involved in your request Is whether
a..personwho leases frsm,another the physical facilities
which make up an abstract plant, and with such facilities
Han, Garland Smith, page 2 (V-1497)
conduzts an absitractbusiness on his own responsibility,
is a rson . 0 * owning and operating an abstract
plant,F within the meaning of Article gf,22of the Insur-
&ice code;' In other words,.Is a.person who leases all or
a partof such Paailities necessarily excluded from the
terms of the statute even though he operates the plant
and conducts an abstract business therein?
The word "owner" does not have a fixed meaning
8S a legal term and its ~slgnific8ncemust.be determined
from the context and:purposes of the statute in which it
is used. Realty Trust Co. v, Craddock, 138 Tex. 88, 112
S.W.2d 440, 443 ,(193t5)
D The term Is used in Article 9,22
'of the Insurance Code to describe a class of persons to
whom a title Insurance company may pay commissions, and
is in the nature of an exception to the general prohibl-
tion 8gainst~pa+ing oommissions or rebates in procuring
title Insurance business, The policy of,the law thus in-
dicated is that commissions may be paid only for the ser-
vices of an abstracter In marketing title insurance, We
cannot conaelve of any reason why a lessee In control of
ebstaaot dani? fac$litles and actually engaged in the
busgnes's ks dot-ln~a.~ositSon-to'se~ve~,thetitle insur-
ance cempanp and fhe,.publlc8s properly and adequately
as a person having a different type of interest or estate
in the facilities.
The term "owner" is often construed to include
one holding property under lease. Fleishman v, State,
89 Tex. Crim. 259, 23lS.W. 397 (1921); Fort Worth & D.S.P.
Ry, CO. V. Judd, 4 s.w,2a 1032, 1035 6Texo Civ. APP, 1928,
error dism,) o It is entirely consistent with the purposes
of this statute to give the term "owner" such a,construc-
tion.
We therefore advise that a lessee Is not neces-
sarily+,xoluded from the ph:ase "person 0 0 D owning and
operating an abstract plant as ,used in Article 9.22, and
that the Board should not disapprove such contracts merely
because the %epresentative" may be a lessee as to all or
part of the plant Pacilitles~
Ron, Garland Smith, page 3 ('J-1497)
SUbMARY
A ~aoa "owning'and operating an
8bs"tMo'tplgnt)' i%utborixet3
by Art,icle
9.22 of the Insuranae~Code,toreoelie
~wd&3elone~ from'title Insurance compan-
ies, may include a person operating such
a plant under a lease,
APPROVED: Yours very truly,
Mary K, Wall PRICE DAIiIEL ~.-
Reviewlag Assistant
Charles S. Uathevs
First Assistant
IOb/rt