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                                   AUSTIN     ~~.'!l-~xas
                                  March 29, 1963       !

        Mr. William A. .Xarrieon            qpanion No. c-45
        Cd8miancr      of Insurance
        State Board of Insurance            Re: (1) Whether TIAA ie traneactiog
        Aucrtin, Teral,                         any insurance baasines in this
                                                IState in violation of Art. 3. $7 of
                                                the Texas Insurance Code.
                                                ,(a) whether collegm      tmiversi-
                                                tiea OTmembern     of ahair etaffe
                                                in adminietwing the TIAA pro-
                                                gram, act aa agent6 for the
                                                WY.

        ,Bear Mr. .Xarriron:

               Your letter rsquertlng our opinion am to the ,abwe questioner
        together with the attached exhibita, reflect6 the following relevant
        fEcte:

                Teachers Insurance and Annuity Association of America, a foreign
        life insuranc~e company, does not have and has never bad a Certificate of
        Authority to tramact buniners in this State. The company employu - no
        paid agents, pays no commission in connection with the solicitation of
        irmurance and maintains no branch offices or paid company ,reprerenta-
        tives in this atate. The company’s principal bus,iness is .the issuance
        of life immuaao* policiee and annuity contracts to members, of tha teach-
        ing pmfewion.      Acuity contracta have been issued to citisene of this
        atata in connection with college retirement programs adopted by resolu-
        tion of the trustees or governing body ,of the interested college OJ uativsr-
        tity.   The initial negotiations concerning adoption of the plan are con-
        ducted by an officer of the company a” the officials of the institution
        located in Texas through the use of the mails, by.long distknce call@, and
        ia tmme instances, by,conferances in New York,

              Under the terms of the retirement reeolution, the plan is established
        by,the coIlego for the facalty and dminicrtrative staff.  The resolution de-
        fines such things as eligibility to participate, amount of contribution, and
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B&r. William     A, Xarrioon,    page 2 (G-45)




mandatory retirement      age.    The college agrees to deduct a portion of
the reqcired preaihm      from the ralary of the participant,       urtxally,oa a
monthly baeie, add an additional amount, and remit the total to the
company,ae a premium for the contract.      The individual contract is be-          :
tween the participant and the ieeuing company and euch contracto, are
the property of the indiyidual $articipant.

      The college admiaietera the plan and receives dewed iaatru&
tide from tin compeay as to methods to be used. When a teacher be-
co&r elig&le to paiticipate, an employee of the college explain8 the
plan through .$heuse 46,boqkletr , bulletho I and corr.espondence received
 f?om the cclolparpy. A@icatiau    furnirhed by the company are cornplated,
Aa suoordeace with coplpaar inwtructionr , by the teacher, wually urirti
~by8ome employee d the college       The qiplication ia foryarded to the
 company.by .ybo dlege   and ir acwpted by ,tlps company jn Neir York. The
 company .then ismae the annuity contract and mail0 it to the indivi&8l
participant in Texar .

      Premiuma .are thereafter deducted from the participant9 raiary end
remitted to the company by+a college in the manner required’by the
company,ia accordance with detailed procedurea prercribed by it.. There
pr,ocedurer cwer such coatiageacior aa termination of employment by
$eath retireqent,  or otherwire, a&Won of new palticipantr, allocation
of premiums, Andyadditional contributioae S

      The fallowing i,e an excerpt from your letter:

            ~Ubce the ae~otiatiow leading up to the issuance of
      .3be amku&tycoatracts are conducted with the college or
      uaiverrity md not directly Mtb the perronr who ultimately
      purchue ouch annuity coatmete, P request your official
      opinion,    hued   upoa the above &numerated      facts,   aa ‘to
      ~whether or not Teacher8 Inrurance and Annuity Association
      of wrica      is ttaaractiag aay insurance business in thib
      State. in violation of Article 3.57 of the Texar Inrurance
      code.

           I reguert your further qpanion m to whether or not the
      collegqot   university or member* of it* cltaff, in, adminir-
      m       roch program, .weuld be acting ar an agent for




                                                    :        .     ‘.‘,
Mr. William A. Harrison,      page 3 (c-45)




  .~. Teachers Insur~ance and Annuity Association of America
       if they receive and transmit to members of the faculty
       or staff any .advertieing material or application6 for
       annuity contracte, or receive or tranemit any,annuity
      ,contracte, or collect annuity premium payments from
       faculty or etaff member8 (directly or by payroll deduc-
       tion) and tranemit euch annuitypremium paymente to
       the insurance company. 1’

We will consider your second question first.

      Article   21.02,   Texae Ineureace Code, prwidee in part as followe:

            **Any preon who eolicite ineurance on behalf of any
     ,ineurancs cmnpeny~ . . or who taker or tranamita other
      than for himeelf any application for ineurance or 8D’;;-
      policy of ineurance to or from ouch company, or who
      adverthoe or otherwise given notice that ha will receive
      or tranemit the same. b .or who &all. , . receive, or
      ,collect, or traaamit any premiumrr of ineurance. . .or do
      or perform any other act or thing in the making or con-
      summating of any contract of iaeurancs for or with any
     ,euch ineurance company other than for himself. . .
      whether any of euch e&e ehall be done at.the inetance or
     ‘requeet, or by the employment of euch ineurance company,
      ,or of, or by, any broker or other pereon shall be held to
      be the agent of the company for which the act is done O . . ‘I
       (Emphaeie supplied).

       The employeee of the colleges and univereiti&b explain the retire-
ment plan and the salient feature6 of the annuity contract to the teacher
through the uee of baoklete end brochures furniehad by,tbe coarpony.
Thie ie no less than any insurance agent doee in the daily,couree of hi8
work in the lelicitation cf bueinese.  Such explanationie the medium
by which the company and participant are brought together and ie the
method preecrlbed by the company for the conduct of its bueineee.      The
colleges and univereitiee give notice that they will receive application8
for insurance on behalf of the company and that they will transmit the
applications to the company.    They are given detailed instructions as to
the method of completing and tranemitting the application.    The appli-
cations, are received and tranemitted by the employees of the inetitu-
tion. The institution unqueetionably collecte premiums and tiansmite
                                                                               ,

Mr.     William A. Harriron,    page 4 (C-45)




the premiums so collected in accordance with detailed ins,tructione
 received from the company.      The inetitution is required by.the com-
pany, in the retirement reeolution, .to perform thi6 function. The
 Legislature, in Article 21.02, supra, hae provided that if any pereon
 rrhall perform any of the epecified acte in this state, other than for
himself, ,such person shall ae a matter of law be the agent of the com-
pany for which the act ie performed.      The statute expreeely provides that i:
it makes no difference whether the acta,are done at the instance and request
of the insurance company,or come other person.        The only exception is
when a person performe the act for,himeelf.        The college or employee
who admittedly perfonnm them acts cannot be performing them for
themeelvek      They.are not partier to the contract which ie made exclu-
aivaly between the ineurance company and the ~individual participant.
Therefore, the admitted acts are within the terme of Art, 21.02, which
ae a matter of law create8 the relationehip of principal and agent between
the ineurance company and the permm performing the rtatutory acte of
agency.

       It has been suggeeied that the principle8 announced by,the United
Statee.Supreme Court in Boreman v. Connecticut General Life Ineurance
Cmwny,       301 U.S. 196 (1937) are cbntrolling in regard to yaw r&o&
lpestion.   That cameinvolved a group policy, a contract between the
insurance company end the employer for the benefit of the employeee.
An a party to the contract, the employer acted in his own behalf or for
his employees.     Under the fact8 of the Boseman case, the employer wae
a foreign corporation domiciled in Penneylvania and qo act in regard to
the negotiation, application, or delivery of the policy or payment of pre-
mium was done in Texae.      In our opinion Article 21.02, Texae Insurance
Code, ia controlling.

        Your second queetion is anewsred in the affirmative.

        In regard to your first question, Article 3.57,       Texan Inewance
Code,    reada an followo:

                  “No foreign or domestic insurance company shall
             traneact any incrurance bueineas in this State, other than
             the lending of money, unless it shall first procure from
             the Board of Insurance Commiseioners a certificate of
I.:, . ....I..+jhcrrit$i,.~.g@tiatihg
                                    that the laws of thie State have been
             fully complied with by it, and authorioing it to do busi-
             net3* in this State. **

                                                                       ..
                                     -zoo-

                                                         ”
Mr. William A. Harrison,      page 5 (C-45)



       Your inquiry,.ia limited by thh Article to the ~single i88ue of
*ether   or notthe company i8 transacting ea insurance businem in
t&e rtate. The authoritie8 are ip almo8t uuadmow ,agr,eement that
aegotiatioas of the eharactu c&cted      by the cemp~y.mb the ixwti-
tutions by mail, telepboae and codueacei     h New York’IEbacardng
tke uloprion of the Retiremeat Plan by tke institution would not con-
8Mtute the transaction of auy insurance busin in this rt8te. as the
purpose of those aegoMaMon8im to mecur a&#ioo of the plan by the
institusatio
          dtol
             np p r i*e
                    a eia wmtio
                              ofn ~& h aa dn8p o u ib il-
                                it*
itIe8 under the plan.   Such negotiaticme $0 apt c-t4          in the de
of isuurmce   to the collep   or mkiverdty u   ouch
                                                                           ;
       The courts of tb4 variow dater iave kad pat &ffiaulty in de-
fining the exact degree of activity Mcuauy  for u iuur8ue   Nmpuy
to be trmsacting busiao88 w%tbia a glra &ate. Mmay ,d the o#niou ue
conflicting,  We aud not, kowov0r, rubw ud explain tkoae m&or-
itian in regard to your inqpfryb visor of ktlcla      21.03,   Teus   hmrmce
Code, whic.i~read8 in put u folloae~

           Whoaever eny ponon &all 60 or puform wttlda tkis
      &ate uky of the act8 mmtiomd in tke preceding article
      fororonbehalfdany     inmuaca caapmy th*reia rafured
      to, 8nokcaanpsny8~be~tok~basinu8inn
      &ate. e .”

       ha @wue %ay od the acte meWabed in ths pmcedbg articlen
refers to acte enaameratedin kticlo 21.02, Tuaa Ihrance       Code. a
portion of wkieh is qu0tOd above. Wkea tke college or its employ~n
perform the sot8 lint4 in Article 21.02 they~cuetfor the inmarance com-
paay by the terma ab that statute. Art&lo 21~.03 provides that when rucb
rcto.uemo~rfonoad~c~.~~kbldf9k,doi~~~easin
th islta t&

      Theq uestio    lrniusa sto a dmr r uek  r tstutoprrywi.to buyta o
state’are valid in view ot deciaicm by tbo 8upramo Court af the UnBed
~8tatO8.
Mr.   William A. Harrison;      page 6 (G-45)




             lTn 0dmrn.v.    Odin,.   31O~U,S. 53, 62, 60 S:C. 75&
       761, 84.,L,Xd. 1074, we recognieed.that a.rtate ham a
      ,.legitimate interest. in ,all insurance policiels protecting its
       residents again8t risks P an interest which the ,state can
       pratect, even though the ‘State action’ Mayohave reper-
       cu88ioa8~ beyond state lines. + . I*

A8 part of a ~compreben8ive regulatory act gwdrni~g domestic and
forei@ inaurancs ~CoZIIpanieS,the LegislatpUa, by~&ticle 21.03 of
the Texae Insurance Code, haa rought to prwent foreign insurance
companies who have not qualified to do.burineae in thir state from
achieving their purpose through agents who act ~&Itheir behalf. The
interest of the 8,tate and its right to protek+ that interelrt .is clearly
recogniMd in the 08born caee.

       IIJa related problem0 the TexawSupreme .Cowt in State v.’ State
Mutual L#e Asmraace Company d Americap -        Tex.-v      353 8 . W . z d
412, ,416 (1962), said:

             Vhe~Supr0me     court    of the united Wits6 h8 c0nSiS-
      tently, recognized    the right of the etatetcrto regulate the
      inautmae    industry in its operaMaw affectiq the public
      welfare,   botlvbefore chndsince paeeag+ of the McCarraa
      Act,   15 U.d.C.A.     ) j‘1018-lLO15.”

       Your first question is uuwered in the affirah@tive. thder the sub-
~XIIittd$
        fU%8 lurd applicable Sta$,,teS~it i8 0lU OpinioSrthat T&r8  InSuP-
aace A88ociation ad Amsrica is trarusacting in8urance bu*in***~.in thi8
state in violation of Article 3.57, Texae pnsUrsnce Code.

                              S-Y

            UXldW the f&%8 St&@% th0 elE@Oy9eS ot.CI%kgOS
      and univer+ities act as agentasfor Teacheru. Bum
      hwity,kro.ciation    of America ~whenthey perform the
      acts enumerated in Artiale EL 02, Texas ,Jnsurance,Co&.
      Teachers hmms.mce. Awmity.,&aociation of ,&nerica, ie
      trunaacting, @marance budnesa id this. state in violation
      ad .Article 3.57, Texam lnauranoe Code.

                                           Yours very truly,
                                                                                l
                                           WAGGONER         CARR
                                           Atto r ne y   General   of   Texas
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            Mr.   William & ~Harrison, page 7 .(C-45)




            JBL:lmc

            APPRovEDz

            OPINION COIQQTTBE:

            w. v. ampperk chirmu
            Riley  D. M&alla
            Jaoegk bruowell
            Jwry Week




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