         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
