          OF’kICZ   OF THE ATTORNEY                GENERAL      OF TEXAS
                                      AUSTIN




                                                                   ,;“\

                                                                   \      \
Dear   air:                                  Opinion no . . 4%55$6
                                             R45: May tb0 00rarlc              a te
                                                       payableXalg_        out b?
                                                       surplus,       in tlie$o
                                                      .gwbposoU be lsgarjy “\
                                                        issued      and sold bi\the
                                                ,/     ‘Jsion ‘~rservve Life In-
                                              /     ./‘8llrml00 $ompany , inoor-
                                           <.’ ‘. poratedxunder              Chapter 3,
                                            ...
                                                       Title      .4e of the Rev ised
                                                   Y Girt.1 etatutes          BP amend-
                                  ...-.              ” e&j x
                               ./       \,
                                                              ‘..
                Your i0tter.a         >Auguet      19,~.l9+3,   requesting         the
opinion   of   this departmnt          on the      abovs/stated    question         is
aa follows:
                        1’‘
                          ~.              ‘,.‘.,

                 “Ih my letter        of August     14, I forwarded
          to ,&u      a‘+py    of ‘correspondence        between Honor-
          abie,$ae~er       Moore aqd ,~the writer         with rererence
        ,‘to a p~opoadd,.rorm         or” oertlfloate        to be rold by
        ilJuion tieserve Lire Insurance             Compsny payable from
         ‘its   surplus:..    Additional      oopiea      lncludlne    the sur-
           plus certifioate        are enclosed       for    your ready re-
           rereooe;..     Mr. ~ItIsore has requested         me to rerer
           the mstter to you.          Copy of the request          and copy
          0r the xmicler          of laoorporatlon         0r the   insurance
           company are enc loscd.

                  “Till.  you pLeaae advise     m wnethsr the
          certificate       payable oqly out of surplus,      in the
          form proposed,       ray be legzlly    issued  md sold by
          Union AeserVe Lif 0 Insurance         CocIpauy, incorpora-
          tad under Chapter 3, Title          78 of the Heviaed
          Civil    statutes    a8 mended7”
                The proporrd     oertliioate     under ooneideratlon
readr   an follow8:


                “THIS CERTIFIES that John Doe, the holder
        hereor,   ha8 pald Into thr 8urplur of UNION RESEW’S
        U.F% I!WiiCE      CONPm,   herelnsrter oallcd 'COmpaayr*
        the mm or                                     Dollarm,#
                      4      ), and the Company agree8 to pa
        intereat   thereon     at tb    rate   o? five   per oent (bj I
        per annum la the manner hereinafter        net forth.   fn-
        terost   la payable on the first     day8 of January an&!
        July or eaoh mar.       The prinoipal    is payable   on the
               day or     -                io          Pallure   to
        Tan7       lnnstallment when due’rha-t        th8 option    of
        the owner or holder hereof,      mature the prlnolpal,      to-
        gether with all intereat     then due.

               *A8 to th8 Compauy, thie Certfiloate 18 payable
        only out or the 8urplur  OS the Company and no other
        asset8  of the Company 8hsll  ever be llabb thereror.

               ‘For value reoelved,    the payment of all prinol-
        pal und Intereat  ln the amount8 and at the tim8      stated
        above i8 hereby guarauteed     unoondltlonally by Charlea
        A. ;doCormiok oi Austin,    Texa8.

                *In oaae or the llquldatlon     or the Company,
        and a8 between th8 stockholder8      and oertlrloate
        holder8,    the right8 oi the Certificate     Holders ahall
        be in all    thing8 wperior  to the right8 of the Stook-
        holder8    or the Company.

              “Thir la one or a ‘number of oertlfioatem.  total-
        ing ii princl2al
        all due a8 to pr lncipal and interest  at the aame time
        a8 i8 this  Certirloate.

                “The iesuanoe ot thl8 Certlricate  ha8 been au-
        thorized   and dlreoted  by the unanimoun vote of all
        the stook ot the Colpany,    and by the uuanlmoue vote
        or the Directors    of the Company.
                                                                                        720
     Zionorablo      0.   P. LookhArt,       pueo   3




                    *IN 1IzN”;Stl ‘XER~OOB, The Union 288ene
              Lite Inruranoe   Company ham oausrd thir Certifi-
             cate to be aigned by It8 duly authorized      oi-
             rioerr and ltm Oorpotate seal to be horaunta
             aftiX8d thl8            day or A                19-0
                     “Oharlom A. UoColalOk oi Auetin,.  Texam,
              hereby  afiixes   him mignature herato am uzkoondi-
              tional  guarantor   o? tha pwmmnt of thir  Certl-
              r*08te, aooordlng to it8 tenor and 8rr46t.*

                 %e thlnlc that the surplus     certirlcate  proposed    by
      the    Union Heaerve Llfo Inruranos   Company oan be dlstinp,ulshed
      rrom the oertirioate     oi the Century Life Inauranoe    Company
      whioh was dimapproved dn.OaT OplniOn No. O-1814.

                     It IS oonorded in our Opinion No. O-1814          that the
      right    to borrow money 18 inherent      in a oorporation,      mubjeot,
      however,     to the limit at ions whioh may be placed      u.pon it the
..    1~~s of the goverment        to which it is responsible.       Ry issuing
      and selling     the above mentioned oertlrloate       the Union Reserve
      Life    Insurance   Company seek8 to exerolsa     it8  premgstlte       am
      a corporation      to borrow .mney,    but meek8 to ooatraot      with
      those rro3 rhom It may borrow mney,          that such money will        be
      paid back at a partioulsr        time,  and bear a particular       rate of
      innreat,      but that it will     be paid baok,only   rroln a apeoial
            .

                          It   Is   stated   by Couoh on Insurance     in Volum8   1,
      page    505r.


                       as * * amag the oorporata        powars enJoyed
              by a oorporatlon      famed   to oarry on insurance
              business     my be meat loned the right      to aoquire
              ad   bold such roal estate       as Is necessary    and
              proper for futurs       use in aarrylng    on it.8 business,
              to borrow money toepay       lossem,   or to protect    its
              asseta.     + * l ” (To the  sa;pb errsot   see Am, Jur.,
              vol.    29, p. 84)


                 The attorney for the Union               iieserve    Life Insurance
      Company lnrorms urn by various letter8                written    to us in oonneo-
    ;ioonorsble 0.        2.        Loolrhrrt,   pdge 4




     tion with the question      under oonsideratlon     that ths proposed
     certificates    are not to bs aolQ to ths pub110 gemsrally            but
    -dl?S to bs aold to a very Lisitad        i?JKCberOi psCSon8,     sad that
     the proposed certificates       are not to be larksted       in such a
    way as to oom within       ths tsrm8 of ths 3aOurltie8          AOt.    In
     oonnsotlm    with the rorsgolng      statmeat    it ir to be understood
     that ws sxprss8    no oplnloa    rhsther    suoh propossd osrtitloats8
     ars srouritles    within the abasing       of ths Saouritler     Aot.   This
     is a utter     to be dsteralned     by the Secretary    of Stat*.
                     It        is    oonosdsd also 10 the Oorrsspondsnos          of ths
    attorney abovs msntloaed                 that “it is not eontsnplated           anf
    Mfloer.   or direotor    of ths               Company will     purchase   any of ths
    propass    osrtif ioates,w

                 In answer to the above stated  question   you am
    respeotiullJ   edrissd that there la no statute   prohibltfng
    an lnsursnos   oompauy suoh as the Union Reaervs Wfe      Snsuranos
    Cospang from borrowing raonsy in ths nanasr propossd by said
    ~ompuny by the iaeuanos of said proposed oertlfloatsr       nhloh
-   ars nsrs evidence of tbo money borrowed by said Company.

                                                                 Yours rsry   truly




                                                           By v-
                                                                        Ardsll    Ullliams
                                                                                 ~sslstaat
