                    TEIEAYTORNEY     GENERAL
                            OF TEXAS
                                     AueTlN      11. TExas
  WILL   WILSON
A=-rORNRY  GENERAL                       June 22,     1960

       Hon. J. M. Falkner                                Opinion No. WW-861
       Commissioner
       Department   of Banking                           Re: Whether a company having
       Austin, Texas                                     a certificate  of authority from
                                                         the Secretary   of State under Art.
                                                         3.27 of the Insurance    Code is
                                                         subject to the provisions   of Art.
                                                         1524a V.C.S.

       Dear   Mr.   Falkner:

                Penn Mutual Life Insurance Company, a Pennsylvania       corpor-
       ation, has received a certificate of authority from the Secretary    of State
       to do business in Texas, for the purpose of “the loaning of its funds in
       Texas.”    The issuance of such certificate  was authorized by virtue of
       Article  3.27 of the Insurance Code and was the subject of our Opinion
       No. WW-767.

                Your      request asks whether        or not such company is subject to
       the provisions       of Art. 1524a V.C.S.       The question is answered in the
       affirmative.

                Article   1524a is a regulatory   law embracing   all corporations
       having for their purpose or purposes any or all of the powers author-
       ized in Subdivisions    48, 49 and 50 of Art, 1302 and all corporations
       having in whole or in part any purpose or purposes authorized in Chapter
       275, S.B. #232 of the General and Special Laws of the Regular Session
       of the 40th Legislature     (1303b). In general, these are corporations     whose
       purposes include the accumulation       and lending of money and the selling
       and dealing in notes, bonds, and securities      without banking and discount
       privileges.    Briefly  summarized,   Article   1524a lays down certain re-
       quirements    which these corporations     must meet in conducting their busi-
       ness and provides for their supervision,      examination and inspection
       by the Banking Commissioner.

                Article     3.27   provides   that:

                       “‘Any life insurance company not desiring to
                engage in the business    of writing life insurance in
                this State, but desiring to Iosn its funds in this State,
                may obtain a permit to do so from the Secretary       of
                State by complying with the laws of this State relating
                to foreign corporations    engaged in loaning money in
Hon. J. hf. Falkner,     page 2     (WW-861)




           this State, without being required to secure a certi-
           ficate of authority to write life insurance in this State.”

         Our Opinion WW-767      held that such Article had not been re-
pealed by the Business    Corporation    Act and that a corporation      ad-
mitted to Texas thereunder “can ln no sense be said to be operating
under the insurance laws of this state.”       (Had the company in ques-
tion intended to transact any insurance business         in Texas it, of course,
could not have obtained a certificate     of authority from the Secretary      of
State).  The company’s    business   in Texas is limited by its certificate
of authority to “‘the loaning of its funds in Texas.”        Since subdivision
48 of 1302 authorizes   corporations    whose purpose is to ‘“accumulate
and lend money. . .“, subdivision 49 authorizes         corporations    whose
purpose ls “to accumulate     and loan money,”      it is obvious that Penn
Mutual Life Insurance    Company falls within the regulatory         scope of
Art. 1524a V.C.S.

         Your opinion request indicates that your office has notified
the company that it is subject to some of the requirements   of Art.
1524a and that the company has declined to comply therewith, primar-
ily for the following reasons:

         (1) A so-called   “‘ruling by the Banking Department”   evidenced
by a letter from H. L. Bengston dated Jan. 31, 1947 to M. E. Purnell,
a Dallas attorney,   concerning various insurance companies    other than
Penn Mutual.

           (2) The company does not intend to issue bonds, notes,          certi-
ficates,    debentures and other obligations for sale to the public.

            (3) The company was not created for the purpose of lending
money      but rather was created for the purpose of writing insurance.

         (4) The company did not receive its permit from the Secre-
tary of State under subdivisions 48, 49 and 50 of Article 1302 or 1303b,
but rather received it under Art. 3.27.

           (5)   The purpose   of Article   1524a is to regulate   loan companies.

         Ins0fa.r as the letter from Mr. Bengston is concerned,      it ad-
vises that certain named insurance companies       comparable    in status
to Penn Mutual Life Insurance Company were not covered by Article
1524a.   Even if we assume that this letter constitutes   a departmental
construction,    the conclusion reached therein is in error, the unambiguous
wording of API%. 1,524a being to the contrary.   39 Tex.Jur.Sec.    126.
Hon. J. M. Falkner,      page 3    (WW-861)




         The fact that Penn Mutual does not intend to issue bonds,
notes, etc., for sale to the public has no bearing on the question.
Art. 1524a by its own terms specifically    recognizes  that some cor-
porations under its purview will not engage in such activity.     Much
less stringent requirements    are placed on those which do not. Such
corporations   need only file annually a statement of its condition on
the previous 31st of December together with a filing fee of $25.00.

          The fact that the company was chartered in Pennsylvania             for
the purpose of writing insurance and that it was not granted a permit
under subdivisions      48, 49 and 50 of 1302 or under 1303b is likewise
not decisive of the question.      As pointed out above, if it contemplated
pursuing the insurance business         in Texas, it could not have received
 its certificate   of authority from the Secretary       of State. The certi-
ficate shows that its only “‘purpose”         in Texas is to lend money.      Art-
icle 1524a encompasses        all corporations     whose purpose or purposes
include any or all of the purposes of subdivisions          48, 49 and 50 of 1302,
or in whole or in part any purpose authorized by Art. 1303b.             Among
these purposes,      as pointed out above, the lending of money predom-
inates.    Section 10 of Art. 1524a provides that “‘the provisions         of this
Act shall apply to foreign corporations          who have heretofore    been
granted permission       to do business    in Texas and who may hereafter
be granted permission       to do business     in Texas having as their pur-
pose or purposes any part of the provisions           set out in Sention One of
this Act.“’    It contz     no such limitation as that suggested by the
company.

          The purpose of Art. 1524a can best be garnered fr~om its 4
corners.     Contrary to the company’s       suggestion,   it is nowhere limited
to ““loan companies ” as the term is commonly            understood.      Instead,
it specifically   regulates   all companies    who loan money in Texas.          The
company likewise suggests         that regulation of its activities     is not
necessary     since it is subject to insurance examination         in its home
state.   As pointed out in WW-767        and the authorities    cited therein, an
insurance     company entering Texas by virtue of a certificate            of authority
issued by the Secretary       of State under Art. 3.27 of the Insurance Code
is in no manner under the regulation,         control or supervision       of the
Insurance Department        of this state.  It is reasonable    to assume,
therefore,    that the Legislature    intended that companies       such as Penn
Mutual be under the regulation of some other Texas administrative
body in order to protect the interests of Texas citizens,            and we accor-
dingly hold that it falls within the purview of Art. 1524a.           This conclu-
sion is reenforced by the language of the statute authorizing              its
admittance into Texas, Art. 3.27, which requires that such company
must comply v&th the laws of this State relating to foreign corporations
engaged in loaning money in this State.
                                                                           _...        .




Hon. J. M. Falkner,   page 4   (WW-861)



                               SUMMARY

                A company having a certificate   of
              authority from the Secretary   of State
              under Art. 3.27 of the Insurance Code
              1s subject to the provisions of Article
              1524a V.C.S.


                                          Very   truly yours,

                                          WILL WILSON
                                          Attorney General      of Texas




                                          BY
                                                                                  al

RVL: lmc

APPROVED:

OPINION    COMMITTEE:

W. V. Geppert,  Chairman
W. 0. Shultz
Martin DeStefano
Jack Goodman
Wm. H. PooI. Jr.

REVIEWEDFORTHEATTORNEYGENERAL
BY:  Leonard Passmore
