     -         -.




                           THE     ATTORNEY          GENERAL
                                     OF TEXAS
  GlmAm   c.        MANN             AUSTIN   1% TEXAR


ATFGRNRY            GENERAL




    HonorableR. C. Waters
    CasualtyInsuranceConmissioner
    Austin,Texas

    Dear Sir:                                 Attention: Mr. T. Jay Foster

                                              OpinionNo. O-1307
                                              Re: Is a motor companyor its employees
                                                   subjectto prosecutionunder Art.
                                                  570, 571 or 572 of Vernon'sPenal
                                                  Code, under facts stated?

                 We are pleasedto reply to your letter of November8, .1939.
    We    quote from parts of your letter:

                "Mr. Blank made arrangementswith X Motor Company
           to buy a new car. He then called his personalinsurance
           agent who handledall his insuranceand asked him to write
           policiesto cover fire, theft, bodily injury,property
           damage,etc., lncuranceon it and went by with his agent
           to get the motor number and other data for the agent and
           vat3told that hi6 automobileinsurancepolicieswould have
           to be writtenby X Motor Company'sagent or companyor the
           whole deal wlllbe called off.
                      n. . *

                 "Article5055 (R. C. S.) declaresthat, 'It shall be
            unlawfulfor any person to act within this State, as agent
            or otherwise,in solicitingor receiving   applicationsfor
           .lssuranceof any kind whatever,or in any manner.to aid in
           the transaction6f the business of any insurancecompany
            incorporatedip'thlsState, or out of it, without first
            procuringa oWtificate of authorityfrom the Commissioner'.
           The followi&garticle,5056, declaree,'Who are Agents', and
            it is clear that the action6 of X Motor Company'semployees
            come within the definitionthere laid down.

                       .   .   .

                 "I have examinedthe penal code and find that there is
           no penalty set out specificallyapplicableto a violationof
           Article 5055, unless Article 572, P. C. was meant to apply
Hoa. R. 0. Waterr, pag8 2 (O-1307)




    by rayingthat,    'Whoeverfor direct or IndirecteompeQ8atlou
    rolicltrlnnlrsncrin b&elf     of anj inmramce cw        of w
    kind or chamctrr, or trmnmitr    for a perron otbr tha m-
    8elf an applicatiolr for a po&iey of inrur&ncr to or from luch
    company, or almmed to act la aqotlatlnn     of bruxwm    wlbh-
    out a certlflc8teof suthor$ty to 8ct 8a age& or rolieltor
    for ruch co@pauy,or af'trr ruch certificateof authority@hall
    haw be- cancelledor revoked, l    kelZ be fined not gore than
    OM huudreddolkrr.' However,l care wo+ld be very bard to
    make under that article for the rearon'that it YO&( be 8ec-
    kary   to prove that the Motor Companynr ro~lcItingfor Idi-
    rect or indirectcompenratlou,  I and if at al& porrlble,prore-
    cutlonr rhoyldbe rtarted,underrome othar article.
          ". . .

          “Artlele 570, P. C. rayr thst, Whoerer #ha&J do or per-
    fory any of the actr or thlngr mentioned In th8 flrrt &tic&e
    of this chapterfor 8ny inrurancccom~aayreferredto in aald
    articlewithout such companyhay&g firti complied with the
    requirementsof the lawn of thlr State, rh8;& bsftied 8ot
    lem t& five hundveduov more thau one thourandd@.lav8.1
    .Article568, the 'firstartlc4     of this chapter'referred     to
     in Article 570, declaren Who Are Inmrance.Agent~,~      and lt
    la quite clear-frolp  this descrlptioqthat X Motor Compauyor
    ita employeeaare acting am agents or ro~lcltorn. But Arti-
    cl8 570 says, 'Withoutmuch companyhavlug first coqrplled
    rith the require?pentr  of the IawE of thi8 State' 10 it ap-
    pears th8t thil articlewas meant t0 cover 8 case where au
    agent had startedrollcLUng o? wrltisg lurumnqe before the
    company he purportedto repremnt had 'fir8tcomplledwith
    the requirement8of the law8 of thir State' and not to 8 came
    like the presentwhere the companyhas colllplled     with thq Jaw8
    of the State but the Motor Company or its employeesare roXlcit-
    lng Insurancewithout a Jlcense from the Cos&rQlomr.

          "There la a poeslbillty,however,that ArtlcJe 570, P. C.
    may apply to ths present caee even though it was Spp8rentb in-
    ten&d for anot@erfipurpore.   section 7 of 'Regul8tiorla ior the
    LicaneLngof Agentr' (Article 5062a, R. C#S.) provi#er that,
    'Whenany Loca@ecordlug Agent who has been appointedby an
    Iamuancg Car$er having a permft to do burinere In thf* State
    lkal& desireto employ a Sollcltor in the operation of hi8
    burlmss, he and 8 comp8uyjoidLy      r&all lpakeapplicationfor
    8 llcenre-foreuch Solicitorto the Board of Innvance Coqle-
    alomrm....~ Ia the.prerentcase the Local RecordingASeat and
    8 colpa&y have not $oint4   nude 8ppliC8tiOn iOr 8 liceMe   iOr
    the X Rotor Campsayor any of itr egp&oyecrand it say be raid
    that X Motor CaqpP8uy or~lte rOprQscutative8  arQ 8CtiQg 81
                        i
Hon. R. 0. W&err, pap 3 (04307)



     8ollcltorrfor Iany lnmmm CI company referred to In raid
     articlewithout 8uch c-any h8vl8g conpliedwith the n-
     qulrementrof th8 law8 of thlr State'88&r Article 570.

         "If the lnrurancecomp8nyfor which X Motor C!@tp8ny
    18 8ollcltlng18 a foreigncorporation,it ha8 not 'corn-
    plied with the requirenentrof the law8 of thlr State'be-
    cause Article 5065 (R. C. S.) providesth8t each foreign
    ineurancecompany shall deslgu8teem officeror agent
    who ir ompoueredto employ it8 agents or rolicltorsln
    thin State, end ruch officeror agent rha&l promptlyno-
    tify the Cosmtlsslonerin writingof the n8me, title, and
    addreer of each person so appointedor employed. Xo of-
    ficer or agent har 'promptlynotifiedthe Cos&rrioner ln
    writing of the name, title, and addresaof any employeeor
    representativeof X Motor Cor~anya6 8 solicitoror agent.
         I. . .

         "I would appreciateyour opinionas to whetherX Motor
    Colqpany,under the fact8 an stated,lo subjectto prorecu-
    tion apecifica&lyunder Article 570 or under 572 as affix-
    ing the penalty for violationof Article 5055 or if neither
    apply and prosecutionlrhould be under the Article 571."

          At the outset,we call attentionto the fact that you refer
to the "X.Motor Capany." By mch reference,we aso- that the a&or
company 10 a flrm or a corpor8tica. The great weight of authoritytoday
is that a corporationmay be criminallyliablewhere the punlshnentfor
the offense committed1~ 8 fine and not lmprlsonrpent. 13 Tex. I&a Rev.
252; 272 R. c. L. 765~ 33 A. L. R. 1211. Thin line of authority18 not
followed,however,by the Court of CriminalAppeals of Texas as is shown
by the case of Judge Lynch InternationalBook 8 PublishingCo. VP. State,
(Ct. Crlm. App. lglg), 208 S. W. 526.

          In this case, the companywa8 indictedtwig Actr, 35th Leglr-
lature (Third Called Session),c. 36, Sec. 6, appearingon page To8 of
the.printedlarrsof said Called Session,which provided in substancethat
"any person" engaged in the businessof emigrantagent without first hav-
ing obtaineda llcense~ shall be guilty of a mieden&ano,r
                                                       and upon convlc-
tlon shall be fined not &era than $100.00. In holdingthat the indict-
ment was bad, the C,purtsaid, throughJudge Lattlmorer

         "No mqtion to quash upon any proper ground erasmade,
    but, 8s etatedby the A8sirtantAttorney General,there Is
    no provirionof law in this &ate under which 8 firm or
    corporationten be indictedor tried under the cris!lnal
    lawr, 86 menu tdhare been the effort here.
Hea.   R. Q.   Waterr,   pago   4 (0-m)
Eon. Il. 0. Watorr, page 5 (04307)




          The motor companyand its ~loyeor are agent*, so you stata,
within the deflnltfoaof Article 566, and they ham ao llceqrer,there-
fore they are mbject to prorecutlolr t@er Article 572.

           AE regarda Article 572;&   point out that   it would bc diffl-
cu&t to prove that colapanrtlop1s balng racelw4    fo rth elrvicra    ran-
derkld.  & order for the employeea of the motor companyto be held guilty
for rollcltlnglqrurtmce tithont a lieeuro,rnder this Mlcle,        It would
be necereary that compenratlonwe recolred for euch rollciting.       However,
it lr our opinion that the prorlrlon, “for ~lreat or indirect conpeneation,*
ar wed in Article 572, only relater to roliclting    inmranor.   In other
wordr, it in our oplhlohthat, under thlr rtatyte,    anyam who “tranrgltr
for .aperron other thah hlmaelf,an applicationfor a policy of fnrurance
to or eom such conpany ... without a certificateof authorityto act
4s agent or solicitorfor ruch company,”or anyone *a0 “amume4 to act
dn negotiationof insurancewithout a certificateof authorityto act
as agentor sollcltorfor such company,”lr rubjeet to prosecutionunder
Article 572, supra,regardleraof whether he did or did not so act “far
  irect or indlmct compematlon.” It lr our aplnlenthat thlr conclu8lon
4s correctunder the rulea of statutoryconstructlonjhowever,by virtue
of the decisionin the case of Jones vs. State, (Ct. Crlm. App., 19231,
265 S. W. 577, it is not neceesaryto rest our opinionon construction.

           In that case, prosecutionwas based upon Section49, Chapter
1138,Acts, Thirty-firstLegislature,which 1s substantially    the sane as
Article 572, supra. The only dffference lathe Act6 am: iirrt,      the words
“of any kind and character" were ealttea $n Sectloa 49, Chapter 108, Actr,
Thirty-flrmtLeglrlatum; ~ecomlly,the flnr Jmw ken c@gad from “not
lerrt~     oue hundreddollarr”to “not nom than one hundreddollarr.”
The lnformatlonin this case, 88 1s shown oa pags 3 of ths tranecrik$,
mtated ln part that the defendant“did then and there u@awfully for di-
rect and~indirectcompensationsolicitinrrurance    la belralfof Protective
Life InsuranceCompany,a@ did then and them tmsnlt for a person other
than himself,to wit, for Sam Kruger,an applicationfor a policy of in-
suranceto said ProtectiveLife Inmrance Compmy, and did then and there
assume to act in negotiationof insurancewithout a certificateef 4uthority
to act as agent and solicitorfor said ProtectiveLife InsuranceConp4nyj
said ProtectiveLife InsuranceCompanythen and there being aa inEUI’B~C0
kompanyagainstthe peace and dignityof the State.”

          The defenvt requestedthe followingcharge,as is shown on
page 8 of the transuript:

          “You 4re chargedat the requestof the defendantthat
     before you can find the defendantguilty ia this case you
     must find and believe from the evidencebeyond a reasonable
     doubt that said Xmmet A. Jones, the defend& herein, re-
     ceived directlyor indirectlyeompensstion for such appli-
     cation of the insurancepolicy.”
Hon. R. 0. vaterr, page 6 (0-407)




          The lower courtr&pad thlr charge. The defendmt arrlgaed
euch refuralaa error. In holdlagthe refuul of the requertedcharge
proper, the court,throughJudgaRawkim, (*cbredr

          “Appellant   requested tb   court te   lnrtruct   the jury
     that, unlerr appellant biroetly or inUmctly    received
     com~nratien for hlr awvlcrr,    thy wmd.1 acquit him.
     Thir char&b vaa properly refured becqrre it l@uwed on-
     tlrelythat  part of thr imfomatlonuhlch allegedthat
     he had trammftted for a perron other them hlmaelfan
     appllcatienfor a policy ef inrurum,     md had arrumed
     to act in negotlatlanfor inruraacrwithout   the cartl-
     flcate of authorityto a0 do.*

          In vlev of our above oplnloa, to the effect that the employeon
of the X Motor Company are eubject to prorecutlon  rpaclflcallyunder Artl-
cle 572, lupra, we deem it unnecerraryto conrlderArtlcler570 or 571,
Vemmn~s Penal Code, 19251 however,we direct your attention to reveral
matterr ln connectionwlth the lart two mentionedArtlcler  of the Pena
code.

          Article 570, VernontrPenal Code, 1925, pro~ldem

         Whoever lhall do or perfom eny of the acta or
    thlnge mentionedin the firrt article of thir chapter
    for any lnrurancecompanyreferred  to ln aaid article
    without mch companyhaving fir& eml$ed vlth the
    requirementaof the 14~1 of this State, rhaJ1 be fined
    not lens than five hundrednor more than one thoumud
    dollam.*

          ArtJcle 568, lupra, im the “flrrt article”which ie referred
to in Article 570, eupra,and lr an fol&owe:

         “Whoevernolicltrlnmrance on behalf of any in-
    aurancecompany,whether incorporatedunder the lawn
    of’thirr or any other State, or foreigngoveNt,     or
    who take* or traacrmltr other then for hlaeelf,any ap-
    plicationfor lnoul;ance,  or any policy of inrurance,
    to or from such company,or who advertisesor other-
    wise given not+ t&at he will receiveor tranemitthe
    a-1 or ri@l.,.+eceive   or delivera policy of inour-
    ance of any a&h company,or who ahall examineor ln-
    spect any Sink, or receiveor collector tranmit any
    premium of lnrurance, or -kc or forward any diagram
    of any buildingor do any other act in the making  or
    coneummatlngof any contractof lneuraacefor or with
    any such inqrance companyother than for hl@seJ.f,  or
    who rhall examine into, or adjurt or aid in edjuetlng
Eon. R. 0. Watera, page 7 (O-1307)



     any lorr for or on brhrlf of any ruch inrurace company,
     whether any of such rctr rhallbr don. et the Lnnrtancr,
     or by tha employment of #uch krrurum cs,        or of or
     by say brokar or othw! perron, rhll be held to be tha
     agant of the company for which tha act lr done or the
     rlrk in taken, an far an relaterto all the requlre+entr
     and penaltlcrherein ret forth. Actr C. 8. 1879, p. 32."

            In your letteryou lt8tb that there 18 Bome doubt 86 to whether
the inrurancecompanyhas compliedwith the l.aw#of this State aa required
by Article 5062a, Vernon'8Civil Statutes,1925, or Article 5065, Vemon'e
Civil statUte6,   1925. In thir connectionwe direct your attentionto
Article 5062 which providen:

          "Wheneverthe Commiraioner&all have or receive no-
    tice or informetionof any violationof any provlnionof
    thla law, he Ohall immediatelyinvertlgate,or came to
    be invertlgated,   ouch violation,and if a fire, fire and
    marine, marine;tornado,rent, accident,casualty,lla-
    bility, health,elevator,diaablllty,plate glara,bur-
    glary, bondlng,title, Burety or fidelityinsurancecom-
    psny hea violatedany of rruchprovieiona,he rhall tie-
    diate3.y revoke fta licenrefor not lens than three months .a
    nor more than 6ix month6 for the first offenre,and, for
    each offensethereafter,for not leea than one year; and,
    if any person,agent, firm or corporationlicensedby eucb
    Commlasioner81-a fire, fire a+marlne, marine,tornado,
    rent, accident,casualty,liability,health,elevator,
    dirabllity,plate glare, burglary,bonding,title, nurety
    or fidelityinruraqceagent &al& violate or caue.0    to be
    violatedany provl&n of thin law, he,ehall,for the
    fir8t offenre,have hlr licenre revokedfor all campanics
    for which he ham been licensed,for not leas than three
    months, and for the secondoffensehe &all have hi6 li-
    Con60  revoked for all companiesfor which he il llcenred
    and ahall not thereafterbe licennedfor any companyfor
    one year from date of ruch revocation."

          With referencpto Article 571, Vernon'8Penal Code, 1925, pro-
vidlnu. 'Whoevervlolateranv urovirlonof the lawn of thin State reps.-
latinzthe buslneno f life,.fireor marine inmurence,nhal&,where the
punirhmentla not o$4?erwine providedfor, be fined not lerr than five
hundred,not(nor).tiore than one thousanddollara,"(italicsours), we
call attentionto that portionwhich 8ay8, "where the punishment16 not
otherwireprovadedfor." In accord with our above rtated opinion,the
penaltyfor unlawfuUy nolicitinginrurance,tranrmittingpoliciee,or
acting in negotiationof lnrurancei6 6pecificall.y providedfor fn Arti-
cle 572, wma.




                                                                i-
Eon. R. 0. Watern, page 8 (o-1307)



          It 16 our opinionthat the X Motor Company,88 nuch, would not
be eubJectto peqal prosecution,but, the indivldunlwho did the prohibited
act 18 eubjectto proeecutlonunder Article 572, eupra. It la=our further
oplnlonthat the phraee "for direct or lndlmct compeneatlon," in Article
572, relate6 only to the act of rollcltlnglnrurence.

                                                   Toum very truly

                                            Nl’ORXEXQElVEMLOFTEXM


                                            By   /I/   Walter R. Koch
                                                       Ualter R. Koch
                                                           Aeelrtnnt


                                            By /a/ Ran-y Bhuford
                                                   Iarry dhuford

EB:pbp:.lm



         APPROVEDDEC 23, 1939

         /a;/ Gerald C. Mann

         A!rroRNRY(IERERAL
                         OF TEXAg




                                     APPROVED
                                     OPINION
                                     C-RE
                                     BY /a/ BUB
                                       CBAIFMAIi
