OFFlCE OFTHE ATTORNEY GENERAL OFTEXAS AUSTIN Hon. trrak 3. Xear Amlrtult s4ewit1e, Cw~t*lonu boontary stcte of mst in) Trxar ikar sir: sting thr opin- 78 sattsr, hQ8 ::p+ny 18 an inmr- nesa or~alli.l(llife ot th* provisiona statute0 or Texas, UI and toll to the d8” eantalnlng the tol- . Hon. Trank 0. rear, Page So. 8 aadcraiontooupoar oootalnrd la pol~oiar Llmled by the Co ,?cv ~6 arrlgnod rOr that j)uT~Osa. Vs accordancewith unmlmus roclutloa of tbo rtookholderr of the Century Llfo Imirano~ Con$wky, it 18 agree4 that no bitldoadr @hall bo deolartd or ;.a16on thb oapltsl hook OS the aor,zany until the prlnolpal OS t!Sr oartlifoate an4 all lntsrrstduo oader lt rka11 hava been rotired and paid ln full, and lo event the Cm- pany abculd br lfguidateb the ob:lgatlomumr thlr osrtlfoatr #hall bo prlcr, und lperlor .lam to that or tt* rtoakholdrrs. =;ltn acoordanoe with thr lawo of the State of Texas the anoimt ot t!Ar oertlf~oste tmethar with the interat thereon rl;all be payable only out OS the rurplur of tta Cozwny after world- lrq for all the re~orvea and other llabilltier OS the Comjant. *Tkis oertifioate 1s tranrferablo only oa the bcoks of the Company la person or by duty authorized attorney u;on ltr aurrsnder properly ene0rrea. =XElTl'ML?S3 Xi12W?stha Centuryilte lmsur- nnoe Cosqany ha8 oauaod tbl.8 orrtifiostr to be signed by its duly autkorleeb ofttows 6nd lta oori3oreteseal to bo herytoDatfpl tk.18 by 0r , . . -* Searotary Trasidont.c ghera is no cxpres* itatutcry awth~orltyfor Chapter 3 Izmuranoe Cor;o?ation@ to borrow money) neither 18 there any rtatutory &Tohlbltlon aC;alnottbd exerOie@ Of such :o~er. Thsro im, 0r oOurm, co 8tatutOry au- ttorizatlon ior the lssusnce oi tbeoo ;r:;OSsd eU>luS oe-tlrloate bc:ida. It la t33:c0ad, as a goneral ;r3;oalt:on,ttat Prlrato oorporotlormrmy, wlthout oxgrecr rtotutoty au- ttOPlty, torr-w nosy u?.en neoesmry In the legltlaatr non. PTank D. Kecr, ?6&. 30. 3 ocurso oi tlm oorporato brulnrrr. -18 ``10 wouid, it &eem8, llk6wlse applr to M lnraraooo oo,qorrtion suoh a8 the C*aturf Life Inrumx* Ceqx4. WI, thsrbr0r0, OOGOO``, iOr th0 ?w?o~o~ 0f thi8 oplnlon, thot the Century Lilr Irmuranor Col.;a.ny bur tho pawar to borrow annoy rbsn naoessary in tka l~itbtito oourso of itr buslzosr, omflnlr~ ourorlrsr only to thr puertlaa as to ubothw the progor*d 8810 OS luoh murplu8 oortltiaato boa68 rould ba a le it&et@, lartul end au- thorissd eSerOlSo ai t&o 8ener a! laplied power to borrow money* On this question, tCore are no prOOdMt8 in Tarar. The plm of ISSUing aad 8Olliry to th0 FUbilO 8uob 8ur7l1.u oertlflosto bond8 by tho Century Life IJI- wrance Ooqa.ny, whereby lt may raise ~omy, oloarly 18 not tha raploymnt of tte ::auai an& ocrmwclal raotkod of borrowiq money. Tke trrnaaotfon will not embhoo an unequlrooal obligation to return the ;rz?erty borrow- ed at regular int6rvci0, or at a rttited timma nor doe8 It uabreod l sthtod, or repbr, or oartnin tfne for tts payment of intorest. It draoes only,+ obl&atfx to repay the IWEJSMvanoeb olctof thr rurplro i,tt;r*-oab- pnny in 4xoecs 0r g30,OOO. ~auid/orfrom tho proaeede Of 44rtain 6ndQWASent OWpOnb OOEtaftbd in pOifOie8 i8- sued by the ooiapary and assigned tsr that pur;~ao~, with the tritereast thereon gapable only out cf the 8urslu8 of the ooz.pany. Thera 18 A0 ;ower la thr holder8 0r suah in,nrtrumants to sraot payaftnt, dlthar of ;rlnolpal and interest, at ang atatod time, or at any tlzao,?or that Rattu. The osrtlfloate3veat: in the QPmer a patu in- ters8t in the oa;ital or property oi the oowa4, in ease of llr\Alction, than the stookholder thtceioiVe8 poaseaa; and tto oertlflootor further doalaro the ropap- ieat of tbe'prlcoip4L ttewof with interest, when and it ever dot0 to be superior to the right Oi the ItOok- holders to dfvldends. Iurtherzora, In the oontraot of rubsoriptioo for suoh 06itifiOtte8, fhero n?pwr8 tL:i* prorisionr *oa co.l;llathn of t. Is subecrl;tionltls al80 *reed that f&ore stall be doilvored to m nith- out ,Cilrtl;sr osat s?.:clsas3 the ospltal st ..ak of the century iX%%eurance can';any,ruiiy lion.?rank 0. Seat, Pa&e lo. 4 ia and non-Mae88abie, uhloh aaid ltea k ha8 %em dmvooltd with tha ooacant tor tbl8 pur- po80~" It ia olear beyorb a4 Cuoatlcm that tha tranr- lotlonr oonturiplatrd by thr Centw Llfo Inauranoa COB- pany la the sales of tkeoo 8Ul'@UO outifioata bonds are ad 'hUl8- and tho OO~panf f8 uOt *bOrWWin6" a8 thooe t8rt8o S4aook In their ordinUy OMOrOlal a~16 legal 8011Oee In fwt what relrtlon to thr,oaa,oany the oer%lfioeta holdu voula l ta n6 in,a 1-1 senoo, wheth- of a8 8 prsfrrrod staokholde? or as an annuity ouster, or ';oJIothln# 018e, %a imatarLll 8UffiO4 for thla opln- ion, than ~$11 oartalnly not br oreeta thr usual dobtor-ordltor , borrowor-landrr , ralat ion vt.lah18 known arindlllootrrtrd la ordlnaxy oosmreiai tranaaotlonr uksroin !nonoy18 loamd and borrowed. It la our oooold4r4doplnlon that the prlaoiples wnounoed by rr. Juatioac) I3aKeanaaa.?d Butler In the oaae of Taylor ~8. Z%lladokQA and ilsadlag1al:uay 031~ panf, et al, and UCalsWnt V6. Ptlla4al``la and 8sadi~ a5liway OOZ;SMJ, at al, 1 X84. a6p. 386, oorroot;y state the let wpllaabla to tho,iaatterunder donslderatlon in thir opialon. At pp So0 and 391 In the abava 08&a, Yr. Suatloe XoltonnanMy8: *X&ataver porrU th4 defendant h88 &I the pro+ iru oar only be found in lto gercnl authxlty to borrow ooaoy. Walther In the oEarter oi th8 dofar?dant,301 in tho 8wzlal aot wLloh m&t&r- 1Z.8 it to sell bcnd8, whioh It cay ~6~0 below . par, 18 anything ooztalned to 145alleot&o oon- tested propoaltion, UdO88 it oad be put on the i3OtiRB Ot 8 108fb %a8 it them to10 oharaotar? I think p?aia.rynot. It doe8 not proposo to oreate tbo mlatlon of debtor and oreditar bo- tween the dsfsndantand th8 4UtSOrlb4r8. Tha mozep obtalml by tko defeidant oould wt be r8- g4rd4d as borrowed, beoeuso tkat iD.plie8 SO-la- buraezeent,an4 lt la not deaandablo by ;yhX;b- lorlbera or gayable by the defendaS. rot the aaarntial and dlotlngulstlngQml%tie8 of a loan. It oontuplnter l 8tlpul8tlon thnt the rubscrlbere, In oordderatlon of the oua paid-not lrnt-by thu, rfxll bo lntltlod to ro- oeiro, ln a reaotr and unorrtain oontlngmoy, a portion of the drtondant'r lsrnlnjje,to be IUD- uro4 by a eertnln rnta per oont, upon three thee the lumepaid by thorn, nnd eftor thnt da11 par- tlolprta 1~1ththe ecmsoarbardoldere in the di- rlelon OS the reelduaq ler o ingBye uhat i allow- eblo a0rinitim of l lorn or b o r r o ving luoh a ``in6tloa oan be rbrroed I am at a 1088 to eon- #or will tho lsrt that it 18 to be lvl- d.nOBi 01 the 8&d DrltiIk4 Of tb0 d~f8dUIt ohango Itr inho?mt $baraoter end brlq it with- Ln the ran@ of a power to alob it ia not other- rlu raforabla. ‘In one reepeot, nad in one 0``17, door the plan propored ruamblo l loan, rod thet 10 In the resiiltto be attained. They are both txpodhnte tor rrifilq money, Jut tbg *tbo& g ~00omx418~- At 2~ 398 and 395, in oonourri~,ti. Justioo Butler lny e : “That the dsir,?naatr hnre ;ouor to borrov monay 18 not quostiozrd,and oould not be. WC.. pl8latlffr assert, hox*r*r, that ttle 18 not a . ~p~;eltlon to bo?rou mo~b~, but l lob8me to 8011 The derendnnte OAlm that it la l trlotlv a proicsltlon to borrow - oonoedlng that, l? it 10 not, buC rlrtuall~ 18 to sell stook, thy hare no latiul authcrlty to oarry it out. Thr l rltal 18SUOof 1&W18 ehbarp1ydorlned Md preesnte6. It lr GIN thnt ndthsr nqxiroe nor admit8 oi *t- tsrdsd dteousel.on. Btery lh.ilaelbh d0mfti0n or the term borrow or loan, am ap;lled to rrmay acd oousrrolel transactloss,embrrooe an obl.lga- Eon. lrack D. wear, ?age Uo. b tlon to rmarn the ~mpwtr borrowA A loan of awn.7 i8 u!iirorMl~ underdocadto b8 the dellwry O? l Oer tdn em t0 wOW8r, on oon- tnot for its cdu.rn 68&l8=117 with inter*et, 88 OOCtp~n8StiOfI?Of It8 dOt8CtiOn UIb ~80. Ts Oall tb. pSm8ot Of GoW7 t0 s:?OthaZ, who 18 to ?o Oein en6P WIa nM tl~ r +k ia is l8 hle Ovn, in OOIi8ld``tiO~ ?OP Ut MLIIUi b4n8fls 02 3ZW?lt, 8 lOM, would Saw to be l P18h d8P8@ Of hn- 6uW.. men 18 SO 8Uoh thw kfIOW t0 8W?OO or trraMOtion# in WOO87 l8 M 1rrwIwmable 10~ in the 8SnoS bera 1nvolVed. @o+wnfMnf8 bale 18WIed Obl~&itiOzl8 WitbOUt $rOVi@lOnof 8ti&&a- tlon for c(l~ym& of the grlnaripalborrouedg but euoh Obl@tiUIe are r*detmable at plwuure. Rumlng, howwe?, for aa lnd~flc1t.otiae, vlth no pziwerin the holder to oxaot prymeat, the bare oor& to bo Peg&r&ad Se lrredewaable usan lnreataent in them 18, themtore, traetei and deeOrlb,sd, not 08 a loa0, but a8 the pUI%hW Of ain ooiImsrul0l tremea0t1on*. App171Iq thlr tort to th. DrODO8- ition here uador tocsfderatlon, It b4om8 plain that tba treomotlon oo:~tes>lsted 18 not a lo-. *.*" fUn&arsocrlryours) Purther, frooit&e not0 to tb0 *bore Oa se,lt pa 39s we quote: l m * 6 In tk e oa a e of Eo c t T. ~ulokellror ;aln.Co. 70 X.Y. 139, 0.6 ooc;5n7 being ia nS86 of fu&de, the rtoolcholder~ adopted 4 bplav pro- tldlzq that rtookholdorrwho 8hOdd 8tUPa%d8? t&dim Oel%ffiO¶t88 an4 38~ five do115?8 00 each sm. of etoak ahouldbo lntltlad$0 the l-e nuabor a? 8hSr@8 of >rOfm-~d rt.:~ &culd be entitled to 3 :er oat tk:::~ to be I&IA.Prank D. ?har, Pa&O HO. T paid out 0s the gmfite 0s the o~;any, any 8w- plru tbaraafter to bo dlrld~dpro rata eaoq ooraon Md sr0fmro4 StoOkholder8. Yhe oawt bald tC8t it 414 not fSl1 nlthia the ?ovartO~- borrow aono7, and W&Bultra rlree. lolpr a., 8SJ8: 'It *aa not 8 borrovlag. ?'h.idea t$ bar- r078b.g i8 nof fiihd 00s tmiOS8 tbOm 18 in th@ 8& ?ea r uOth f undorrtandiry t 8t%?OEl jGOUIf8cO, that what 18 borrowed ~111 b8 npd.4 0s roturn- ti th8M t~n8aOtiOn8 1% 1, :%,pii!i:tl:!h it 18 oslled, but nbai, la ?eeB4 ~,ty8aotlon 10, that the oourtr eon- . . 3%. SSIO Of SJMOtt 1. OOEtbfitO~O 06tWiihtd Jllnsm00.‘ ut al, 808 ?ed. Rep. 881, l~voln6 bond8 18. rued by a oomoratlon by wElsh It aersed to pal thou ?a843rrlue with interest tit 0s aortafn ?uud8 areated ?rOn the IL& 8ur3h8 0~cifi4p Of the OOIS3a~ ~6 in th0 event of liquidation or 6188O'iutiw, tha ob~igstloo 8bCBl:d attaob to a 1 the run&S as& 4SSSt8 Of the O-y, tiT@ather with Other :ZOViSlOll8 8fSil8l’ t0 th8 8UPJdW ooawfloate boa48 under tonslderstion horeln. ¶%a oaurt held that the in8tntariStStrrcurotion Wr8 ad provable tQSili8tth4 08tSt.SO? the batkrupt OOrpUl’StiOn, for th roawn that they oreatrdEO ilxed llabllltiy agalnet it. It ir, therefore, 0``~op1ixfon that the graoral lwllod authority 0r tto century Life Inrorsaar co-,any to borrow nonq? roil4 not lSgsllz8 it8 gropoarlt ospedi- lt rw ralrl ItLOWy,J thb fSSURn0~ ~6 8Sh XUUEiiJ~J, Of luP?lUs Oetti? 7 oat0 bonUa ruoh 88 the 8US&Ih whloh lO- ocm~anled your letter. A8 obsaned in the beglnnb Of tttl8crpliiioa, tha .. 8pOOlfiO 8tatUte8 rolatlng to insurance oorgor- 0s t,xae atlow ad petloularly to thos8 ormtod under Obapter 3, Title 78, ibvl~ed Civil stetUb8 O? Tax&o, 1928, a# 8madSd, do not SxprSSely authorit 8uob insuranos Scm- 3snlae to borrow mocby, nor do tksy prohlblt the eXerOlee or 8-h ?ower. It 18 8fgCifiM5t, althoe UOt &iVelk OOUttrOiing?OIW ih thi8 OphiOn, that the lb&htW ia emSting Chapter 1, Tltlo 08, Rarlssd Civil St8tutae Of %S8, 1928, lr tr lnl~ to mutual lii0 lnsurano8Oaa- P~nlbe, &lb s?eof floallt authorlab ldVanOO%Ont8to Suoh 73 la sur eno@ * 009 3sD bleo yM y p o r o o la a a ILmnullDll4 .T to the pursh.40 oi tha pmporod surplus oertliloato bodr to b, ~M OU& by th* Centu?r Lit8 hat&r-* Collgu~. t?h bluth Or iutio 1n 0 fo undiB Ar ti 48lb, r up r a , m0 ra0t tbd the hgi014tun d*Oti lt ~00r8rarl, t0 OS- pn44ly 4ubhorlx• rueh Cb4pter t ooap4ni.o to rueln l4vuiewmnto in thlo mumo~, definitrly lntlloateo that it oonoeltedmok pew? to bo ma-alatent la lnour~oo eorporrtlono oreateduader rnd by authorlt~ of t&a otat- utro thorotofara anaot.4 by it. Chaptar t of (IOWTOO, mo ori(%n4lly lno o te4la 1909. fhlr 00n0fd**t10* oar- tdnlf 1rw aspha to t&o poaftlonrr hare t&m la thlo opf nlan; nuwll, t&t, oonood~ the powu la m lnou~0ao4 oorpor8tian ln Tax40 to borrow monq, the tur- tbrr gowar to lm``m rurploro4rSltlo4to bonda, a8 ecm- tenplated b tW&nttq IAS. fnmiranoa WJI~, oaonot bo 14g4ll7 L . You 41-0, themfora, r4opootf~11~ 4dvlsoa that lt lo tha oplaiooof thlo dogrrttaaat thab the CoaturyLife Imetwanoe Compaayof fort Worth Toras, lo not autcorti- 06 under the 14wa of T41141, to I 4ou4 ruqilar osrtlrloato boadr with th4 term an4 oondltloao and la tbr mncrr oontuplated, u l4t out la tziio opinloa aad in your lettw. WAtob