Untitled Texas Attorney General Opinion

THEA~~ORNEY GENERAL OFTEXAS

Hon. William A. Harrison Opinion Wo. WW-235 Commissioner of Insurance State Board of Insurance Rer Whether the TM-County Wu- Austin 14, Texas tual Insurance Company uas organized and operating as such on Way 22, 1953, and thereby entitled to the in- dustrial exemption contained in Article 17.02 of the In- surance Code. And related Dear Wr. Harrison: question. Your request for an opinion is based upon the follow- ing facts: Article 17.02 of the Insurance Code exempts county mutual insurance companies "organized and operating as a county mutual fire Insurance company on Way 22, 1953, whose business is devoted exclusively to the writing of industrial fire insurance policies. I .' from the provisions of S. B. 107, Acts 53rd Legis- lature, Regular Session 1953, Chapter 196, Page 540 and S.B. 15, Acts 54th Iegislature 1955, Chapter 117, Page 413. On Warch 12, 1953, the Doard of Insurance Commissioners issued a temporary permit to Tri-County Wutual Insurance Company to organize a coun- ty mutual fire insurance company under the provisions of Qapter 17, Insurance Code. This permit granted the company authority to soliclt and receive applications for insurance ana collect premiums thereon and issue receipts tharefor as provided by sta- tutes, but not to issue policies of insurance or pay claims. Thereafter, on June 4, 1953, and based upon affidavits, general interrogatories, policy forms, rates and applications dated and file marked June 2 and June 4, 1953, the Board of Insur- ance Commissioners granted to the Tri-County Mutual Insurance Company a certificate of authority to pursue the business of a county mutual fire Insurance company in accordance with the pro- visions of Chapter 17, Insurance Code. Between the issuance to the company of the temporary permit and permanent certificate of authority, S. B. 107 became effedtive on Way 22, 1953, and made certain financial require- ments of'county mutual insurance companies. However, S. B. 107 contalned the following exemption:

Ron. William A. Harrison, page 2 (WI+235)

'The provisions of this Act shall not apply to any county mutual insurance company now organ- ized and operating as a county mutual fire insur- ance company whose business Is devoted exclusively to thz writing of industrial fire insurance policies. . . . Thereafter, on June 20, 1954, the company was issued a certificate of authority to transact the business of an lndus- trial county mutual fire Insurance company devoted exclusively to the writing of industrial fire insurance policies. However, on July 10, 1955, the company was issued a certificate of authority only to continue the business in force as of December 31, 1954, because of failure to qualify under the provisions of S. B. 107. This certificate of authority of July 10, 1955, was is- sued in compliance with the provisions of S. B. 107 prior to the effective date of S. B. 15. S. B. 15, which became effective September 7, 1955, contained the exemption which is of primary concern to this request and it is as follows: 1, .Provided, however, that neither the provisions of this Act nor the provisions of Senate Bill No. 107, Acts of the 53rd Regular Session, Texas Legislature, 1953, effective Way 22, 1953, shall apply to any county mutual in- surance company organized and operating as a county mutual fire insurance company on Way 22, 1953, whose business is devoted exclusively to the wziting of industrial fire insurance policies. (Now found in Article 17.02 of the Insur- &e'Code). We quote from your opinion request the following: "The Tri-County Wutual Insurance Company was not issued a certificate of authority for the year ending Way 31, 1957. The company has made applica- tion for a certificate of authority under the in- dustrial exemption contained In S.B. 15 for the year ,* ending Way 31, 1958. There appears to be no question .L,, that on September 7, 1955, the effective date of S.B. 15, Tri-County was devoted exclusively to the writing fe of industrial.business. However, there is some ques- tion as to whether the company is entitled to a cer- tificate of authority under the industrial exemption contained in S.B. 15 because it must have been 'organ- ized and operating as a county mutual fire insurance

Hon. William A. Harrison, page 3 (W-235)

company on Way 22, 1953'. The company reoelved its first certificate of authority on June A, 1953, after having received a temporary permit to organize a county mutual fire insurance com- pany on lCarchl2,19%. "We respectfully request your opinion as to whether the Tri-County Wutual Insurance Com- pany was organized and operating as a county mu- tual fire insurance company on Kay 22, 1953, and thereby entitled to the industrial exemption con- tained In S. B. 15, (Article 17.02)? "We further request your opinion as to wheth- er there is any sort of waiver, esto,ppel,or bar against the State Board of Insurance from raisrn,g this question at this time due to the fact that the Board of Insurance Commissioners on June 4, 1953, and July 20, 1954, issued to the company unrestricted certificates of authority after the effective date of S. B. 107, Kay 22, 1953." The scheme of organization of county mutual insurance companies provided in Chapter 17 of the Insurance Code at the time the Tri-County Wutual Insurance Company obtained Its tem- porary permit was as follows: The Board of Insurance Commission- ers issued a temporary permit to the applicant to allow the so- licitation of enough policies of insurance to satisfy the minimum requirements of the Code. When these minimum requirements had been satisfied, then, and not until then, the charter could he granted, the company would be fully organized and could operate as a county mutual insurance company. See Articles 17.02-17.05 of the Insurance Code, before the amendatory act of 1953. The temporary permit issued to Tri-County PlutualInsurance Company on March 12, 1953, was only for this purpose of organization. Its certificate of authority to operate as a county mutual fire insurance company was not issued until June 4, 1953, after the effective date of S. B. 107, Way 22, 1953. Therefore, the com- pany was not organized and operating as a county mutual fire in- surance company on Way 22, 1953. Your second question must also be answered in the nega- tive. The issuance of certificates of authority to the company in such form as those of June 4, 1953, and July 20, 1954, was not authorized by statute due to the fact that apparently the company had not qualified under the provisions of S. B. 107 and, as stated above, was not organized and operating on Way 22, 1953. Normally no estoppel will arise against the StatEfrom the exercise of its regulatory powers, and certainly there would be none as a result of unauthorized actions of a State board. Weatherly v. Jackson, 123 Tex. 213, 71 S. W.2d 259 (1934); Carruthers v. Rogan, 96 Tex. 113, 70 s. w. 18 (1902).

” -

- . Ron. William A. Harrison, page 4 (WW-235)

SuMkARY

The Tri-County Mutual Insurance Company was not organized and operating as a county mutual fire insurance company on Way 22, 1953, so as to be en- titled to the industrial exemption contained in Article 17.02 of the Insurance Code. There is no estoppel against the State Board of Insurance from raising this question at this time. Yours very truly, WILL WILSON Attorney General of Texas

FRANE W, ELLIOTT, JR. Assistant FWE:pc APPROVED: OPINION COMWITTEE: H. Grady Chandler, Chairman Wary Kate Wall W. R. Hemphill Roger Daily REVIEWEIIFOR THE ATTORNEY GENERAL BY: Geo. P. Blackburn