Honorable  0. P. Lockhart, Chairman
Board of Insurance  Commissioners
Austin, Texas

Dear   Sir                                      Opinion No. O-4295A
                                                Re:   Under Article    4706, Vernon’s
                                                      Annotated Civil Statutes, and
                                                     other articles    in similar terms
                                                      goveraing    the lawful investment
                                                      of various funds of the different
                                                     types of insurance companies,       do
                                                     investments     lawfully made under
                                                     the provisions    of such articles  as
                                                     they originally    stood, remain law-
                                                      ful after the amendment of such
                                                     articles,   and related questions.

             This   opinion   is in lieu of opinion No. O-4295,   which is hereby    with-
drawn.

          Your letter reques’ting       the opinion   of this department    on the questions
stated therein reads as follows:

            “Article  4706 R. C. S. 1925 was amended by Acts 1939, 46th Leg.,
       p. 394, Sec. 1; and subdivision  (d) thereof was further amended by Acts
       1941, 47th Leg., S.B. 82, Sec. 1. We desire your opinion upon the fol-
       lowing points:

            “1. Under Article       4706 and other articles      in similar terms govern-
       ing the lawful investment of various funds of the different types of insur-
       ance companies,      do investments     lawfully made under the provisions       of
       such articles    as they originally    stood; remain lawful after the amendment
       of such articles;     are such amendments        operative   only prospectively    and
       not retroactively     in the absence of a contrary      intent plainly evidenced in
       the provisions    of the amended articles       themselves;    and, therefore,  is
       this Department     justified   in not requiring   the affected companies to con-
       vert their existing Lawfully made investments           thereafter   into types of in-
       veStments conforming        to the statutbry amendments        ?
Honorable   0.   P..Lockhart,   Page   2. O-4295A




          “2. Under Article  4706, subdivision   (d), as amended in
     1941, in order for an investment in corporate     stock to be legal
     thereunder  must it be in stock of a corporation    which at the
     time of the investment shall have been in existence     for a mini-
     mum period of five years, so as to judge its qualifications     there-
     under by its record for paying dividends and obligations?

          “3. If number 2 is answered        affirmatively, then in judging
     the qualifications    of such corporate    stock must this Department
     find that the corporation    has not defaulted in the payment of any
     legal obligation when due for a minimum period of five yeais im-
     mediately    preceding   the date of investment?

          “4. Under such subdivision     (d) must this department   take
     into consideration   the record of such corporation   for paying divi-
     dends over the entire minimum period of five years immediately
     preceding   such investments 7

           “5. If so, must the corporation    have paid a dividend each
     year during such minimum five year period immediately             preced-
     ing the investment,   or is the corporation   sufficiently   qualified as
     a dividend-paying   corporation   by reason of having paid during such
     minimum five year period immediately        preceding     investment one
     or more, but less than five, dividends ?

          ‘6. Must the dividend-paying    record be based only upon com-
     mon stock or only upon preferred    stock, or upon other types of
     stock, or upon a combination   of one or more or all of its stocks?”

          In connection with the foregoing    request, we are informed that you,
as Chairman    of the Texas State Board of Insurance    Commissioners,    have sug-
gested that the fire and casualty insurance companies      incorporated  under the
laws of this State, express   to the Attorney General   of Texas their view as to
the proper answers    to the questions propounded by you.

           In response to your suggestion,     several  companies  through their at-
torneys have prepared    and submitted briefs to this department      pertaining to
the questions here involved.    A brief by Honorable      W. H. Shook of the firm of
Shook & Shook, Dallas, Texas, signed by the firms of Strasberger,          Price,
Holland, Kelton b Miller;    Lightfoot, Robertson      & Gano; and Terry, Gavin &
Mills; and a brief of the firm of Vincent, Elkins, Weems        & Francis,   Houston,.
Texas, by Honorable    C. E. Bryson. have been presented       for our consideration
in connection with the foregoing    questions.

                      ,
~Honorable   0. P. Lockhart,   Page    3, O-4295A

        We were glad to have the suggestions   contained in these briefs
although we havti been unable to concur in all the positions taken by the
learned counsel iherein.

        Article   4706, Vernon’s      Annotated   Civil   Statutes,   provides:

        “No company, except any writing Life, Health, and Accident
   Insurance,   organized under the provisions of this Chapter shall
   invest its funds over and above its paid-up capital stock in any
   other manner than as follows:

         ‘(a)  In bonds of the United States or of any of the States of
   the United States provided such bonds are, at the time of purc,hase,
   interest-bearing    or not in default.

         “(b) In bonds or first liens on uninctimbered    real estate in
   this State or in any other State, country, or province in which
   such company may~be duly licensed to conduct an insurance busi-
   ness, and providing in each instance such real estate shall be worth
   at least forty (40) per cent more than the amount loaned thereon.
   The value of such real estate shall be determined      by a valuation
   made under oath by two (2) freeholders      of the county where the
   real estate is located, and if the buildings are considered     a part
   of the value of the real estate, they must be insured against loss
   by fire for not less than sixty (60) per cent of the value thereof,
   with loss-payable   clause to such company.

        ‘(c)  In bonds or other interest-bearing      evidence of indebted-
   ness of any county, incorporated      city, town, or school or sanitary
   or navigation district,    such navigation district to contain a popula-
   tion of not less than three hundred and fifty-nine      thousand (359,000)
   according   to the last preceding   Federal   Census, in this or any other
   State in which said company may be duly licensed to conduct an in-
   surance business,     if such evidences   of indebtedness   are issued by
   authority of law and if interest upon them has never been defaulted.

        “(a) In the stocks or bonds or other evidences     of indebtedness
   of any solvent dividend-paying   corporation  incorporated    under the
   laws of this State, or of the United States, or of any State, country,
   or province in which such company may be duly licensed to conduct
   an insurance business.
Honorable         0. P. Lockhart,   Page    4, O-42951\

         “(e) In loans upon the pledge of any mortgage,      stock, or bon.ds,
or. other evidence of indebtedness,   acceptable   as investments.    under the
terms of this la&-if the current value of such mortgage,       stock, bonds~or
other evidence of indebtedness    is at least twenty-five  (25) per cent more
than the amount loaned thereon.

         ‘(f)  That the restrictions  contai.ned in Subsection (b) hereof that
such real estate shall be worth not less than forty (40) per cent of the
amount loaned thereon, and that the value of such real estate shall be
determined    by a valuation made under oath by two (2) freeholders      of the
county where the real estate is located, and if buildings are consi.dered
as a part of the value of such real estate, they must be insu.red for the
benefit of the mortgagee,    shall not apply to loans secured by real estate
in Texas which are insured by the Federal       Housing Administrator.

         ‘(g)  In interest-bearing  notes or bonds of the Universi.ty of
Texas issued under and by virtue of Chapter 40, Acts      of the Forty-
third Legislature,    Second Called Session.”

            Senate Bill No. 82, Acts  1941, 47th Legislatwe,         Regz?ar   Session,
including     the caption, reads as follows:

            ‘S.   B. No. 82

         “An Act to amend Section (d) of Article 4706, Revised Cxv!l Stat-
u,tes of 1925, as amended by House Bill No. 928, Acts of the 46th Legisla-
ture, Reguiar Session, page 394, and declari.ng an emergency.

    ‘BE     IT ENACTED        BY THE       LEGISLATURE     OF THE STATE        OF   TEXAS:

        ‘Section 1. That Section (d)            of Article 4706, Revised Civil Stat-
utes of 1925, as amended, by~House             Bill No. 928, Acts  of the 46th Legisla-
ture, Regular  Session, page 394, be,           and same is hereby changed and
amended so as to hereafter   read as           follows:

          “(d)    In the capital stock, bonds, debentures,   bi.lls of exchange
or other commercial        notes or bills and.securities  of any solvent dividend
paying corporation      which has not defaulted in the payment of any of its
obligations    for a period of five (5) years; provided that no such i.nsurance
company shall invest in its own stock, and provided that no such insurance
company shall invest any of its funds in any stock on account of which the
holders or owners thereof may, in any event, be or become liable to any




                        .
      Honorable       0. ‘P. Lockhart,     Page   5, O-4295A



      assessment     except for taxes, nor in the stock of any oil, manufactur-
      ing or mercantile     corporation   organized    under the laws of thi.s State
      unless such corporation      has a net worth of pot less than Two Hundred
      Fifty Thousand ($250,000.00)       Dollars   provided that such corporation
      i,s solvent, dividend paying, and has not defaulted in the payment of any
      of its obligations   for a period of five (5) years, nor in the stock of any
      oil, manufacturing     or mercantile    corporation    not organized under the
      laws of this State unless such corporation        has a capital stock of not
      less than Five Million ($5,000,000.00)        Dollars,   and unless such corpora-
      tion is solvent, dividend paying, and has not defaulted in the payment
      of any of its obligations    for a period of five (5) years.’

                   ‘Sec. 2. The fact that many solvent dividend paying corpora-
      tions are      incorporated under the laws of States in which certain Texas
      insurance companies    are not licensed to conduct an insurance business;
      and the fact that some question has been raised as to whether or not
      the present law is ambiguous;    and the fact that there should be no dis-
      crimi.nation between Texas companies,      and the further fact that the
      calendar. of both Houses is becoming crowded and it is desired that
      this Act take effect as soon as possible,   creates an emergency     and an
      imperative   public necessity that the Constitutional   Rule requiring
      bills to be read on three several   days in each House be suspended,      .
      and said Rule is hereby suspended,     and this Act shall take effect and
      be in force from and after its passage,    and it is so enacted.”

               With reference      to,your first question, it is the general rule of stat-
 utory construction     that a statute will not be given a retrospective      effect even in
 states where the Legislatures        can pass retroactive    statutes, unless the intention
 that the statute shall have retrospective       effect is clearly evidenced by the words
 of the statute itself.    (Orr v. Rhine, 45 Tex. 353; 59 Corpus Juris. 1169, § 694)

                   It is stated in the case of Texas & N. 0. R. Co. et al. v. Wells-Fargo
Express     Co.,   108 S.W. 172, which was affirmed    by the Supreme Court in 110 S.W.        38:

                   “The general rule in the construction    of legislative acts forbids
          a retroactive  effect being given to an act unless the intention that it shall
          so operate be expressly    stated in the act or is clearly shown by neces~sary
          implication for the I.anguage used in the act.”

                   The Supreme    Court,    in affirming   this case.   used this language:

                  “The case is controlled,   as was held by the court below, by the
       well    established rule of construction   that statutes cannot be held to have
Honorable     0. P. Lockhart,     Page     6, O-4295A




       a retroactive   or’kx    post facto effect   unless     their    language    compels.”

              It is stated   in the case    of Piedmont      Life    Insuran.ce    Co. v. Ray,   50
Tex.   519:

              “It is a well settled rule that statutes are always held to oper-
       ate prospectively    unless contrary construction   is evidently required
       by &heir plain and unequivocal    language.”

               In the case of Mellinger v. City of Houston,             3 S.W.     249, Judge Stayton,
 speaking     for the Supreme Court, said:

               “In the absence of constitutional    restrictions upon the .subject,
       it is almost universally    accepted as a sound wle of construction
       that a statute shall have only a pros’pective operation unless its
       terms show clearly     a legislative  intention that it shall have a retro-
       active effect.”

            After carefully  considering  Article 4706, supra, and the amendment
thereto, we fail, to find any language indicati.ng that the legisl.ative intention was
that the act should have a retroactive   effect.

             Therefore,     in view of the foregoing,      it is our opinion that investments
lawfully made under the provisions          of Article    4706. supra. and similar       articles
as they originally    stood remain lawful after the amendment of such articles.                  It
is our further opinion that the amendment to Subdivision                (d) of said Article   (4706)
  operates prospectively       and not retroactively,     there being a total absence of a
contrary   intent plainly evidenced      in the provisions      of the amended article.       And
the department     is justified   in not requiring    the affected companies        to convert
the existing lawfully made investments          which were acqui.red prior to the amend-
ment of said article into types of investments           conforming       to statutory amend-
ments, for the reason that the Department            of Insurance     is without authority
under the provisions      of the article referred      to, or any other law which we have
been able to find, to make        any such requirements.

            The answers    to your remaining            questions      involve a proper construc-
tion of that portion of the 1941 amendment              to Article      4706 (S. B. 82, Acts of
47th Leg., R. S., p. 564), which reads:

              “Of any solvent dividend paying corporation   which has not defaulted
       in the payment of any of its obligations for a period of five (5) years.”
Honorable     0. P. Lbckhart,    Page   7, O-4295A



            It has been suggested   that the language “for a period of five years”
does not necessarily   refer to any particular   period of time and that a corpora-
tion whose stock or commercial      paper is being considered   for investment by
fire and casualty insurance    companies   would meet this standard if it had not
defaulted in any of its obligations  during the period of its corporate   existence,
even though it may have been in existence            for a period   less   than five years.

              The other interpretation of the 1941 amendment               is that the language
above    quoted should be construed as though it read:

                “Of any solvent dividend-paying    corporation      which has paid
        -all of its obligations for a period of five years.”

           We are of the opinion that the language            mentioned is subject      to the
two constructions but that the latter construction           is the correct one.

               The word ‘for” preceding  the phrase “a period of five years”
        means ‘during” or “throughout”.    Reading it together, the phrase
        “during or throughout a period of five (5) years” means five years
        or more.   Cunningham v. State, Tex. Civ. App., 44 S.W. (2d) 739,
        Finlayson  v. Peterson, 67 N.W. 952, 5 N.D. 587, 33 L.R.A.   532,
        Liverpool  & London & Globe Ins. Co. v. Biggers,   71 OkIa. 47, 175
        Pac. 242. In the latter case, the court said:

               *The preposition  ‘for’ immediately  preceding the clause
        ‘a period of two years,’ as used, means during t&o years from
        the termination  of the agency;  the word ‘for’ means of itself
        duration when it is used in connection with time.”

            It is only by reading the word “for” as meaning within or less than,
that one is able to arrive at an interpretation of the quoted language which sup-
ports the view first mentioned.

             Section 6 of Article 10. Revised   Statutes, 1925, provides  that “In all
interpretations,   the Court shall look diligently for the intention of the Legisla-
ture, keeping in view at all times the old law, the evil, and the remedy.”

            The fundamental rule of construction     to which all others must yield
is stated in Texas Jurisprudence     to be that “the court should first endeavor to
ascertain  the legislative intent, from a general view of the whole enactment.
Such intent having been ascertained,     the Court will then seek to construe the
statutes so as to give effect to the purpose of the Legislature,    as to the whole
Honorable   0. P. Lockhart,      page 8, O-4295A



and each material     pakt of the law,   even though this may irvolve      a departure
from the strict   letter’.of   the law as written   by the Legislature.”    39 Tex.   Jur.
168, 169.

             Looking to the 1941 amendment for evi.dence ,of legi.slative      intent,
we find in the emergency      clause a statement “that many solvent dividend-
paying corporations     are incorporated   under the laws of states ir which cer-
tain Texas insurance companies       are not licensed   to conduct an insurance busi-
ness.*   This would indicate that the only purpose of the 1941 amendment was
to eliminate   from the old law the restriction    against cer?ain Texas insurance
companies    investing in the stock and commercial       paper of corporations    which
were incorporated     in states in which the insu~rance company did not do busi-
ness.

           On investigation,  we find that the 1941 amendment to Article     4706,
as found in the statutes, was offered and adopted in the Senate as a complete
substitute for the body of the bill which was originally  introduced as Senate
Bill No. 82. Senate Journal, Reg. Session,    47th Leg., (1,941) p. 121.4. The
body of Senate Bill No. 82 as originally  offered read as follows:

             “(d) In the stock or bonds or evidences of irrdebtedness of
     any solvent divi.dend-paying    corporation    incorpo:?atsd under the
     laws of this State, or of the United States or of any Slate.”      (See
     original bill on file wi.th Secretary   of State.)

            The emergency     clause was written with reference    to this language
as contained in the original bill, and it was not changed after the amendment
was adopted.    Therefore,  we cannot attach any signifi.cance to the recitations
of fact as contained in the emergency     clause since these recitations   had ref-
erence to~Senate Bill No. 82 as originally     introduced and do not i.ndicate any
legislative intent with reference   to the amendment which was iater enacted
into law.

             Looking for other statutes relating to the same srrbject, we find
that the 1941 amendment to Article     4706 is an adaptation of Paragraph      3 of
the 1939 amendment to Article     4725, which governs investments       of surplus
funds of life insurance companies.     The life insurance   statute must be con-
strued as setting up a standard of five year .corporate     existence by the use
of identical language as is used in the 1941 amendment to Article        4706 be-
cause there is a further provision    in the life insurance  statute that no invest-
ments can be made in oil and manufacturing        companies   of less than five
Honorable    0. P. Lockhart,    Page   9, O-4295A




million capital “unless such corporation       has paid dividends for a period of
five years and has not defaulted In the payment of any of its debts for a per-
iod of five years.”    The underscored    language clearly     requires   a five year
period of dividend payments and when read in connection with the language
 “has not defaulted in the payment of any of its debts for a period of five (5)
years * shows that the last quoted language also requi.res a five year period
of paying its debts.    Since Article  4725 and the 1941 amendment to Article
4706 deal with the same general subject, have the same puipose, and relate
to the same class of things, they are in pari materia and the identical lang-
uage appearing    in each statute must be given the same meaning.            39 Tex. Jur.
 253, 254. The 1941 amendment to Article         4706 therefore    requires    in addition
to solvency and dividend payments a five year period of corporate             existence
 during which the corporation     has paid all of its obligations    before the stock or
 commercial   paper of such corporation      shall be eligible   as a source of invest-
 ment for funds of fire and casualty insurance      companies     over and above their
 paid-up capital stock.

             We also find that Acts of 1929, 41st Legislature,     Regular Session,
page 497, contained the language “for a period of at least five years next
preceding   the date of such investment, * in reference    to investments    of life
insurance   companies.    Actsof 1935, 44th Legislature,    Regular Session, page
28, in reference   to the same subject matter contains the following language,
“the capital stock, bonds, bills of exchange, or other commercial         notes or
bills and securities   of any solvent dividend-paying    corporation  which has not
defaulted i.n the payment of any oi its obligations    for a period of five years.”

            Article 4766, Vernon’s Annotated Civil Statutes in defining, ‘Texas
securities”  under the Robertson  Law contains the language “for a period of
at least five years next preceding the date of such investment.”

            As far as we have been able to ascertain,     those officials who have
been charged with the enforcement     of these several   statutes have interpreted
them as meaning that a corporation     must have had a record of paying its debts
for a period  of five years next preceding   the date of the investment in order
for its stock or commercial   paper to be eligible    as investments    for life insur-
ance companies.     A contemporaneous    construction   by persons charged with the
enforcement   of these laws is entitled to consideration    as an aid to interpreta-
tion. 39 Tex. Jur. 234.

             From a general view of the whole enactment and considering     th”
 old law, the evil and the remedy, we are of the opinion that the 1941 amend-
 ment to Article   4706 is a regulatory measure prescribing  positive standards
Honora~ble   0.   P. Lockhart,    Page     10, O-4295A



to govern the investment of funds of certain insurance compani~es; that the
principal  intent on the part of the Legislature      in enacting the law was to
make investments      of these insurance companies~ conform more nearly to
investments    theretofore   authorized  for life insurance companies,     and that
the act should be liberally    construed in order to accomplish      the purpose
for which it was enacted.      Article  10, paragraph    8, Revised Statutes of
 19,25; 24 Tex. Jur.. 1321; 39 Tex. Jur. 180, 217; Wortham v. Walker,
Land Corn., 133 Tex. 255, 128 S.W. (2d) 1138, Syl. 12.

             We accordingly       answer    your    second,    third and fourth questions
in the affirmative.

           Our answer to your fifth question is that the corporation     whose
stock is on a dividend-paying    basis at the time of the loan or purchase
meets the requirements     of the 1941 amendment to Article    4706.


            Our answer to your sixth question is that the type of stock which
the insurance  company desires   to loan upon or purchase is the one whi.ch
must be on a dividend-paying   basis.

             Trusting     that the foregoing       fully   answers   your inqu,iries.   we are

                                                                 Yours   very truly

                                                           ATTORNEY       GENERAL       OF TEXAS



                                                           BY              Fagan Dickson
                                                                                Assistant




    PROVED        JUL   7, 1942



ATTORNEY          GENERAL     OF TEXAS



 This   opinion   has been considered       and approved        in full conference.
