Han; Walter C. Woodward               Opinion No. -0-1788
Chairman of the aboard               .Rer    Is Article     1302a of the
Hon. R.G. Waters                      “Title   Guaranty Law” applicable     to
Casualty Ins. Commissioner            an extension      agreement with regard
Board of Insurance  Com-              to a policy    which had been issued
missioners                            before   the enactment of the said
Austin,    Texas                      “Title   Guaranty Act”.

Dear Sirs:

            Your letter  requesting  an opinion         has been    received
and considered   by this department.

               As a necessary    preliminary  to a correct   understanding
of   the   question  presented    we quote’ as follows   from your request:
              11 * * *

              “The’~Pioneer    Abstract     and Guarantee Title    Company is
       a corporation     organized      in’ 1919 under Sec. 57 of Article
       1302, Revised Civil        Statutes,    1925, and has neverbeen      au-
       thorized    to write title       insurance   under Article   1302a.
       Prior to the passage of the title            act, mortgagee policies
       were issued     containing     the following     provision:

             “I* * * Payment, discharge       or satisfaction    of the
       said indebtedness      secured by the said instruments,       except
       by foreclosure      or the extension   of said indebtedness       or any
       part thereof     without   the consent  of the company shall fully
       terminate,     avoid and annul this policy      and all liability     of
       the company hereunder. ’

              IWe request   your   opinion   on the   following    questions:

              “1.    Is the Pioneer     Abstract   and Guarantee Title      Com-
       pany acting      in violation    of Article    1302a, Section    3, in
       offering     to extend policy     Re:2871,   issued prior to the pass-
       age of the title        act to cover refinancing      of loan,   (a) if
       period     of extension    does not exceed the original        maturity
       of the pOliCyj       (b) if policy    is extended for period extend-
       ing beyond the original        maturity    date?

              "2. If the Pioneer     Abstract   and Guarantee Title      Com-
       pany is within   its rights.in     extending    policy   to cover re-
       financing,   is company acting     in violation      of Section  3,
       Hon. Walter C.- Woodward
       Ron. R. G. Waters, page 2          (O-1788)


       Article     1302a   in charging   a fee?

              “3. Is it required    that fee for such extension  be
       calculated   on schedule  of premiums promulgated   by the Board
       of Insurance   Commissioners   now in effect?

              “4. Does the Board of Insurance            Commissioners    have au-
       thority    under Section     24, Article     1302a, to prohibit     such
       practice,     and what procedure      should be followed?”
                                                                     .
              The kct under consideration         is commonly known as the
Texas “Title       Guaranty Law”,      being Chaptes 40, p. 77, Acts 1929,
Forty-first      Legislature    (R.S.)    and codified    as Article .1302a
in Vernon’s      tinotated   Revised- Civil    Statutes.     The Act, after
making provision        for incorporation     under the terms thereof,       pro-
vides,    insofar    as applicable     here,  in Section    3 as follows:

              “Corporations       so formed as well as foreign       Corpora-
       tions.and     those created      under Subdivision     57, aticle     1302
       of the Revised       Statutes    of 1925, or under Chapter 18, Title
       78, Revised Statutes of 1925, or any other law insofar                  as
       the business      of either    may be a title     insurance   business!
       shall ooerate       in Texas under the control        and supervision
       and under such uniform rules          and regulations      as to forms
       of policies      and underwriting     contracts     and premiums there-
       for,   as may be from time to time prescribed            by the Board
       of Insurance      Commissioners     of Texas;    and no Texas or for-
       eign corporation       whether incorporated       under this Act or
       any other law of the State of Texas shall be permitted                  to
       issue any title       policy    or mortgage certificate      or under-
       writing    contract     on Texas property     other than under this
       Act and under such rules and regulations.               No policy   of
       title   insurance     or guarantee    of any character      on Texas
       titles    shall be issued or valid unless written            by a corpor-
       ation complying with all provisions             of and authorized     or
       qualified     under this Act. ***

             “The Board of Insuranck~~Commissioners     shall have the
       right- and it shall be its duty to fix and promulgate        the
       rates to be charged by corporations     created   or operating
       hereunder  for premiums on policies   or certificates     and un-
       derwriting   contracts. ***II

              The pertinent     port&     of   Section   20 of   said   Act is   as
follows:

              “If any corporation.      domestic   or foreign,    while hold-
       ing a-certificate       of authority    to transact   business   in
       this State,     shall   fail  or refuse   to comply with any of the
       provisions     or requirements     of this Act, the Board of
Hon.    Walter C. Woodward
Hon.    R. G. Waters, page 3         (O-1788)


        Insurance    Commissioners,      upon ascertaining      this fact,     shall
        notify   such company .by actual notice          in writing    delivered
        to an executive     officer    of such company, of his intention
        to revoke Its certificate         of authority      to transact    business
        in this State at the expiration            of thirty   days af-;er the
        mailing   of such registered       letter,    or the date upon whi,ch
        such actual notice       is served.      If such provisions       or require-
        ments are not fully        complied with upon the expiration           of
        said thirty’days,      it shall beg then duty of said Board to re-
        voke the certificate        of authority     of such com*)any. ***‘I

              Further,    Section   24 of the        Act provides      that:

                liThe terms and provisions        of this    kct are cond:tions
        upon which corporations          doin g the business     provided   fcr
        herein may continue        to exist,    and failure     to comply with
        any of them or a violation           of any of the terms of this Act
        shall be proper cause for revocation              of the permit and for-
        feiture     of charter    of a domestic     corporation     or the permit
        of a foreign      corporation.tl

              The rules and regulations             announced    by thi.s      Act became
effective     on June 1, 1931.

               We also consider  the ~follow~ing constitutional                  and stat-
utory     provisions   germane to a proper consideration       of              your ques-
tion.
               Art.‘l2, Sec. 1.    “No private          corporations        shsll     be
created     except by general   laws.”

            ,Art. 12, section     2.   “General  laws shall be enacted pro-
viding  forthe     creation    of private  corporations,   and shall therein
provide  fully   for the ad.equate protection       of the public,  and of
the individual     stockholders.”

              As necessary     to his    opinion,      we also    quote     Article        1318,
R.C.S., 1925:
               “1111 charters   or amendments to charters   under the                  pro-
        visions    of this chapter,    shall  be subject to the power                  of
        the Legislature      to alter,  reform or amend the same.”

            The rule of law applicable    to            the situation   now con-
fronting   us,. in our opinion, is correctly               stated  in 17 R.C.L.  476,
477, section    5 as follows:
               n . . ..Following    -the general   principle   that a license    is
        not a-contract,         it is clear   that it does not in itself      cre-
        ate zany vested right,         or permanent right,     and that free
        latitude       is reserved    by’the  Legislature    to impose new or
Hon. Walter C. Woodward
Hon. R. G. Waters, page 4          (O-1788)


      additional      burdens on the licensee,      OCRto alter the li-
      cerise, or to revoke and annul it.           And this is the general
      rule . . ..regardless     of whether the term for which the li-
      cense was given has expired. .~. .I’ To the same effect,          see
      also Daniel v. Tyrrell          & Garth Investment   Company, 127 Tex.
      213, 93 SW 2nd 372, Jefferson          County Title   Guaranty Co. v.
      Tar ver , 119 Tex. 410 29 SW 2nd 316, Shaw v. Lone Star Bldg.
      & Loan Association         123 Tex. 373 71 SW 2nd 863, Lloyds of
      Texas v. Bobbitt       (6.C.A.)    40 SW &d 897.

            The Supreme Court of Texas speaking      in the case of
Daniel   v. Tyrrell   & Garth Investment   Company, supra, which in-
volved   the construction   of .Article  1302a (supra)  said:

             “Every corporate     charter   issued by this State is issued
      with the power reserved         in the state to ‘alter,   reform or
      amend I it.     Citing    Article   1318, supra,~and commenting that
      the power reserved      in the state to ‘alter,     reform or amend’
      charters    cannot be contracted      away by the corporation.”

             Continuing    with   its   decision,   the   court   said:

             “It is contended      by (the plaintiff)       that the rules     and
      regulations     promulgated     by the board,      by authority   of a law
      which became effective         after   the contract    between it and the
      title    company was entered       into,   cannot be applied     so as to
      affect     such previous    contract.      We overrule    this contention.
      The police     power of the state to regulate          the business    of
      title    insurance,    as to forms of contracts        and rates,   cannot
      be contracted       away by the title      company.ll    Citing Shaw v.
      Lone Star Bldg. & Loan Association,              123 Tex, 373, 71 SW 2nd
      863. (Parenthetical         insertion     ours).

            An extension    of an interest    bearing    agreement is a valid
contract.    .See 1 Williston   on Contracts,     Section    122 (Revised Edi-
tion).    Also, the case of Benson v. Phipps,         87 Texas 578, by
Gaines,   C. J.

             Here, you are respectfully          advised that under the au-
thorities    cited   above, it is our’opinion,         that all private      corpor-
ations,    chartered    by this State,     assuming to write       title  insurance
must comply with the provisions          of Article      1302a, V.A.C.S.      In
entering    into all title     insurance    contracts,     a corporation    must
take cognizance      of, and act according        to, all those rules and
regulations     which are, and may be, prescribed           by the Board of In-
surance Commissioners       pursuant to that authority          vested in them
by the terms of the Act.         Such compliance       is in the nature of a
condition    precedent    to the validity      of any title     insurance    agree-
ment which said corporation         might enter into.        This is applicable
Hon. Walter C. wooaward
Hon. R. G. Waters. oage     5     (O-1788)

to all contracts,   pertaining  to title insurance,  bearing  a
date subsequent   to that date which marked the effectiveness
of the “Title   Guaranty Act”.   The mere fact that a contract.
is an extension   agreement will not afford   grounds for any pos-
sible exemption from the plain    and unambiguous provisions    of
that Act.

            We believe    that the answers to your Nos. 1, 2 and 3
questions   are apparent from the foregoing      and require   no fur-
ther elucidation.      In  reply  to your fourth  question,   we direct
your attention    to sections    20 and 24 of Article   1302a, which,
for your convenience,      are set out herein,

             Trusting  that the   foregoing     satisfactorily   answers
your   questions,   we remain

                                    Yours     very   truly

                                    4TTORNEYGENERALOF TEXAS

                                    By /s/ Wm. J. Fanning
                                    Wm. J. Fanning, Assistant

                                    By /s/ Grundy Wiiliams
                                    Grundy Williams

GW:AW:wb

APPROVEDFEB 2, 1940
/s/ Gerald C. Mann
ATTORNEYGEZURAL OF TEXAS

APPROVED: ;zNIO$$OM$TEE
BY:           9
