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                   THE        ATIVKNEY                    GENERAL
                                    OF     -XAS
                               AUSTIN.     TEXAS         78711

                               February     19,    1968

    Honorable   Clay Cotten                        Opinion       No. M-202
    Commissioner    of Insurance
    State Board of Insurance
    1110 San Jacinto    Street
    Austin,   Texas 78701                          Re:      Interpretation      of the
                                                            word “State” as used
                                                            In Articles     4769 and
                                                            7064, Vernon’s      civil
                                                            Statutes,    as applied
                                                            to Investment      of the
                                                            highest    percentage
                                                            of admitted assets          of
                                                            foreign    companies      li-
                                                            censed In Texas, when
                                                            computing    the gross
                                                            premiums tax on ln-
    Dear Mr. Cotten:                                        surance companies.

           You have requested        this office     to Interpret     the word
    “S ta te ” as used In Articles         4769 and 7064, Vernon’s       Civil
    Statutes,     as applied    to investment       of the highest     percentages
    of admitted     assets   of foreign      companies     licensed   in Texas,
    when computing      the gross premiums tax on insurance             companies.
    The above statutes       allow tax reductions          to insurance    companies
    meeting specified       conditions      pertaining     to the ratio     that
    their    investment    in Texas securities         bears to their     invest-
    ment in similar      securities      in the State in which they have
    the highest     percentage      of their admitted assets        invested.

           The pertinent   language,      which     is    used    repeatedly     in both
    of   the above statutes,is:
                  II
                    . . . the amount that It had invested     In
           similar    securities     in the State in which it then
           had the highest       percentage  of its admitted as-
           sets Invested       . . .”

         Attorney     General’s   Opinion No. V-422 (1947)                mentions
    the possibility      of .a tax reduction under Article                4769, V.C.S.,~
    for a Mexican     Insurance   company, but the opinion                does   not



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Honorable      Clay         Cotten,   page 2               M-202



decide      the question     now In issue,   In one Texas case the
court     held that the word “state,”       as used In a federal   statute
 relating      to prohibition    of common carriers’  exemption  from
 liability,      did not include    foreign  nations.   Houston E. & W.T.
Ry. v. Inman Akers and Inman, 134 S.W. 275 (Tex. Clv. App.
‘1911, no wri!?).       At page 2’(‘(, the court stated:

                “The word ‘state,    I as used in the Consti-
         tution   of the United States,      has been uniformly
         construed   to mean a constituent      member or part
         of the federal   Union having an independent       local
         governmental   organization      D 0 *”

     In-Eidman v. Martinez,                184 U.S.     578, 22 S.      Ct. 515, 46 L.
Ed. 697 (1902),- the United               States     Supreme Court      stated at page
591:
                 “It need, only be added that while the words
         ‘State     or Territory’      are used in treaties,       and
         perhaps also in some acts of Congress              regulating
         our International         relations   as including     foreign
         States,     they are used in the Constitution           and in
         ordinary     acts of Congress as applying          only to
         States     or Territories       of the United States.”

       In construing   a state   statute  governing   service of process,
the Supreme Court of New York County held that the word
“state”   did not include    a foreign   nation.    Fair v. Kenny,
171 N.Y.S.    694, 695, 103 Misc. 412 (1918).        At page byb the
court stated:
               I,
                    D the Legislature,
                        *   0             in providing      for
         service by ‘attorneys    and counselors    at law
         in any other state, I evidently     must have had
         In mind the United States     and its territories,
         where such a nomenclature     commonly prevails.”

         The following    pertinent            quotation   is   taken   from 81 C.J.S.
856-857,     States    @ 1:

                “While the word ‘state’      has various     meanings,
         as used In the federal      Constitution,     it has a
         definite,    fixed, certain   legal    or technical     mean-
         ing, which excludes     the signification       attached
         to it by wrlt,ers   on the law of nations.          The term




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Honorable      Clay   Cotten,   page     3                 M-202



         ‘state,   1 in American Governmental   parlance, Is
         used as designating     a member of the Union, in
         contradistinction     to the United States as a
         nation,    and It ordinarily  has such meaning where
         used In the Constitution,     in the acts of Congress,
         and in the statutes of the several      states.”

       In creating    Articles     4769 and 7064, V.C,S.,         the
Texas Legislature       could have easily       Included    foreign    nations
In the tax reduction        provisions     If It had so intended.          There
is no persuasive       Indication     in either    statute    that the Legis-
lature contemplated        giving   a tax reduction       to an Insurance
company having the highest          percentage     of its admitted assets
Invested    in any foreign      nation   or subdivision       thereof.     It
is our opinion      that the Legislature        did not Intend to give a
reduction     in gross premiums tax to any Insurance              company which
does not have the highest          percentage    of its admitted assets
invested   wlthin    one of the states        of the United States.

       We conclude   that the word “State”      in Articles     4769 and
7064, V.C.S.,     as used in the provisions      governing     reduction
in gross premiums tax, refers         only to a state which is a part
of the United States.        Therefore,   an insurance     company having
the highest    percentage    of its admitted    assets   Invested     in a
foreign   nation does not meet the conditions          necessary    to qualify
for any reduction      In gross premiums’tax     under the above statutes.

                                SUMMARY
                                -------
                The word “State” as used In Articles         4769
         and 7064, V.C.S.,       as applied   to investments   of
         the highest     percentages     of admitted  assets  of
         foreign   companies,     licensed   In Texas, when com-
         puting the gross premiums tax on Insurance           com-
         panies,   refers    only to a state which Is a part
         of the United States,

                                             Ve&   truly     yours,




                                                 orney     General    of   Texas

Prepared      by C. Fielding     Early       1
Assistant      Attorney    General



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Honorable   Clay   Cotten,   page 4           M-202



APPROVED:
OPINION COMMITTEE

Hawthorne Phillips,    Chairman
Kerns Taylor,   Co-Chairman
W. V. Geppert
Ralph Rash
Pat Cain
John Grace

A. J. Carubbi,   Jr.
Executive Assistant




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