Bill Text: TX HB2408 | 2011-2012 | 82nd Legislature | Enrolled
Bill Title: Relating to title insurance.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2011-06-17 - Effective on 9/1/11 [HB2408 Detail]
Download: Texas-2011-HB2408-Enrolled.html
H.B. No. 2408 |
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relating to title insurance. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Chapter 2501, Insurance Code, is amended by | ||
adding Section 2501.009 to read as follows: | ||
Sec. 2501.009. GIFTS, GRANTS, AND DONATIONS FOR EDUCATIONAL | ||
PURPOSES. (a) The department may accept gifts, grants, and | ||
donations to enable employees of the department to participate in | ||
educational events, and for other educational purposes, related to | ||
title insurance. | ||
(b) The commissioner may adopt rules related to the | ||
acceptance of gifts, grants, and donations described in Subsection | ||
(a). | ||
SECTION 2. Section 2502.055(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) The activities described in this section are not | ||
rebates. Nothing in this subchapter prohibits a title insurance | ||
company or a title insurance agent from: | ||
(1) engaging in [ |
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activities that are not conditioned on the referral of title | ||
insurance business and not prohibited by Subchapter B, Chapter 541; | ||
(2) purchasing advertising promoting the title | ||
insurance company or the title insurance agent at market rates from | ||
any person in any publication, event, or media; | ||
(3) delivering to a party in the transaction or the | ||
party's representative legal documents or funds which are directly | ||
or indirectly related to a transaction closed by the title | ||
insurance company or title insurance agent; [ |
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(4) participating in an association of attorneys, | ||
builders, developers, realtors, or other real estate practitioners | ||
provided that the level of such participation does not exceed | ||
normal participation of a volunteer member of the association and | ||
is not activity that would ordinarily be performed by paid staff of | ||
an association; or | ||
(5) providing continuing education courses at market | ||
rates, regardless of whether participants receive credit hours. | ||
SECTION 3. Section 2651.007, Insurance Code, is amended by | ||
adding Subsections (d), (e), (f), and (g) to read as follows: | ||
(d) Not later than the 20th business day after the date the | ||
department receives a renewal application, the department shall | ||
notify the applicant in writing of any deficiencies in the | ||
application that render the renewal application incomplete. | ||
(e) Not later than the fifth business day after the date the | ||
renewal application is complete, the department shall notify the | ||
applicant in writing of the date that the renewal application is | ||
complete. | ||
(f) A renewal application is automatically approved on the | ||
30th business day after the date the renewal application is | ||
complete, unless on or before that date the department notifies the | ||
applicant in writing of the factual grounds on which the department | ||
proposes to deny the license under Section 2651.301. | ||
(g) The department may provide a notice required under this | ||
section by e-mail. | ||
SECTION 4. Section 2651.009, Insurance Code, is amended by | ||
amending Subsection (c) and adding Subsections (c-1), (c-2), and | ||
(c-3) to read as follows: | ||
(c) Not later than the 20th business day after the date the | ||
department receives a notice under Subsection (b), the department | ||
shall notify the title insurance agent and appointing title | ||
insurance company in writing of any deficiencies in the notice that | ||
render the notice incomplete. A notice under Subsection (b) is | ||
considered complete on the date the department receives the notice, | ||
unless the department provides notice of the deficiencies under | ||
this section. | ||
(c-1) Not later than the fifth business day after the date | ||
the notice under Subsection (b) is complete, the department shall | ||
notify the title insurance agent and appointing title insurance | ||
company in writing of the date that the notice under Subsection (b) | ||
is complete. | ||
(c-2) The appointment is effective on the eighth business | ||
day following the date [ |
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notice of appointment is complete and the department receives the | ||
fee, unless the department proposes to reject [ |
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appointment. If the department proposes to reject [ |
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appointment, the department shall notify the title insurance agent | ||
and the appointing title insurance company [ |
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the factual grounds on which the department proposes to reject the | ||
appointment [ |
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business day after the date on which the [ |
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(c-3) The department may provide a notice required under | ||
this section by e-mail. | ||
SECTION 5. Subchapter G, Chapter 2651, Insurance Code, is | ||
amended by adding Sections 2651.3015 and 2651.303 to read as | ||
follows: | ||
Sec. 2651.3015. PROHIBITED GROUNDS FOR REJECTION, DELAY, OR | ||
DENIAL. (a) Except as provided by Subsection (b) or (c), the | ||
department may not reject, delay, or deny a notice of appointment | ||
under Section 2651.009 based wholly or partly on a pending | ||
department audit or complaint investigation or a pending | ||
disciplinary action against a title insurance agent or appointing | ||
title insurance company that has not been finally closed or | ||
resolved by a final order issued by the commissioner on or before | ||
the date on which the notice is received by the department. | ||
(b) The department may reject a notice of appointment under | ||
Section 2651.009 if the department determines that the appointing | ||
title insurance company or the title insurance agent intentionally | ||
made a material misstatement in the notice of appointment or | ||
attempted to have the appointment approved by fraud or | ||
misrepresentation. | ||
(c) The department may delay approval of a notice of | ||
appointment if: | ||
(1) the title insurance agent or the appointing title | ||
insurance company is the subject of a criminal investigation or | ||
prosecution; or | ||
(2) the deputy commissioner of the title division of | ||
the department makes a good faith determination that there is a | ||
credible suspicion that there are ongoing or continuing acts of | ||
fraud by the title insurance agent or appointing title insurance | ||
company. | ||
(d) Except as provided by Subsection (e) or (f), the | ||
department may not delay or deny a renewal application under | ||
Section 2651.007 based wholly or partly on a department audit or | ||
complaint investigation of, or disciplinary or enforcement action | ||
against, an applicant or license holder that is pending and has not | ||
been finally closed or resolved by a final order issued by the | ||
commissioner on or before the date on which the application is | ||
complete. | ||
(e) The department may deny a renewal application under | ||
Section 2651.007 if the department determines that the applicant or | ||
license holder intentionally made a material misstatement in the | ||
renewal application or attempted to obtain the license renewal by | ||
fraud or misrepresentation. | ||
(f) The department may delay a renewal application if: | ||
(1) the applicant or license holder is the subject of a | ||
criminal investigation or prosecution; or | ||
(2) the deputy commissioner of the title division of | ||
the department makes a good faith determination that there is a | ||
credible suspicion that there are ongoing or continuing acts of | ||
fraud by the applicant or license holder. | ||
Sec. 2651.303. NOTICE OF DISCIPLINARY OR ENFORCEMENT | ||
ACTION; AUTOMATIC DISMISSAL. (a) The department shall notify a | ||
license holder in writing of a disciplinary or enforcement action | ||
against the license holder not later than the 30th business day | ||
after the date the department assigns a file number to the action, | ||
except that this subsection does not apply to a file or action: | ||
(1) that is the subject of a pending criminal | ||
investigation or prosecution; or | ||
(2) about which the deputy commissioner of the title | ||
division of the department makes a good faith determination that | ||
there is a credible suspicion that there are ongoing or continuing | ||
acts of fraud by a person who is the subject of the action. | ||
(b) A notice required by Subsection (a) may be provided by | ||
e-mail and must provide a license holder fair notice of the alleged | ||
facts known by the department on the date of the notice that | ||
constitute grounds for the action. | ||
(c) A disciplinary or enforcement action is automatically | ||
dismissed with prejudice, unless the department serves a notice of | ||
hearing on the license holder not later than the 60th business day | ||
after the date the department receives a hearing request from the | ||
license holder. | ||
(d) The department may provide information about an | ||
enforcement action, including a copy of a notice issued under this | ||
section, to each title insurance company with which a title | ||
insurance agent has, or proposes to obtain, an appointment. | ||
SECTION 6. Subchapter B, Chapter 2652, Insurance Code, is | ||
amended by adding Section 2652.059 to read as follows: | ||
Sec. 2652.059. DENIAL OF LICENSE APPLICATION OR LICENSE | ||
RENEWAL; APPROVAL. (a) Not later than the 20th business day after | ||
the date the department receives a license application or a license | ||
renewal under this chapter, the department shall notify the | ||
applicant or license holder in writing of any deficiencies in the | ||
application that render the application incomplete. | ||
(b) Not later than the fifth business day after the date the | ||
application is complete, the department shall notify the applicant | ||
or license holder in writing of the date that the license | ||
application or license renewal is complete. | ||
(c) An application is automatically approved on the 30th | ||
business day after the date the application is complete, unless on | ||
or before that date the department notifies the applicant or | ||
license holder in writing of the factual grounds on which the | ||
department proposes to deny the application. | ||
(d) The department may provide a notice required under this | ||
section by e-mail. | ||
SECTION 7. Subchapter E, Chapter 2652, Insurance Code, is | ||
amended by adding Sections 2652.2015 and 2652.203 to read as | ||
follows: | ||
Sec. 2652.2015. PROHIBITED GROUNDS FOR DELAY OR DENIAL. | ||
(a) Except as provided by Subsection (b) or (c), the department may | ||
not delay or deny a license application or a license renewal based | ||
wholly or partly on a department audit or complaint investigation | ||
of, or disciplinary or enforcement action against, a license holder | ||
or applicant that is pending and has not been finally closed or | ||
resolved by a final order issued by the commissioner on or before | ||
the date on which the initial or renewal application is complete. | ||
(b) The department may delay a license application or | ||
license renewal if: | ||
(1) the applicant or license holder is the subject of a | ||
criminal investigation or prosecution; or | ||
(2) the deputy commissioner of the title division of | ||
the department makes a good faith determination that there is a | ||
credible suspicion that there are ongoing or continuing acts of | ||
fraud by the applicant or license holder. | ||
(c) The department may deny a license application or license | ||
renewal if the department determines that the applicant or license | ||
holder intentionally made a material misstatement in the license | ||
application or license renewal or the applicant or license holder | ||
attempted to obtain the license or renewal by fraud or | ||
misrepresentation. | ||
Sec. 2652.203. NOTICE OF DISCIPLINARY OR ENFORCEMENT | ||
ACTION; AUTOMATIC DISMISSAL. (a) The department shall notify a | ||
license holder of a disciplinary action or enforcement action | ||
against the license holder not later than the 30th business day | ||
after the date the department assigns a file number to the action, | ||
except that this subsection does not apply to a file or action: | ||
(1) that is the subject of a pending criminal | ||
investigation or prosecution; or | ||
(2) about which the deputy commissioner of the title | ||
division of the department makes a good faith determination that | ||
there is a credible suspicion that there are ongoing or continuing | ||
acts of fraud by a person who is the subject of the action. | ||
(b) A notice required by Subsection (a) must provide a | ||
license holder fair notice of the alleged facts known by the | ||
department on the date of the notice that constitute grounds for the | ||
action. | ||
(c) A disciplinary or enforcement action is automatically | ||
dismissed with prejudice, unless the department serves a notice of | ||
hearing on the license holder not later than the 60th business day | ||
after the date the department receives a hearing request from the | ||
license holder. | ||
(d) The department may provide information about an | ||
enforcement action, including a copy of a notice issued under this | ||
section, to each title insurance agent or direct operation with | ||
which an escrow officer has, or proposes to obtain, employment. | ||
SECTION 8. Subchapter B, Chapter 2703, Insurance Code, is | ||
amended by adding Section 2703.0515 to read as follows: | ||
Sec. 2703.0515. CERTAIN REQUIREMENTS PROHIBITED. (a) A | ||
title insurance company is not required to offer or provide in | ||
connection with a title insurance policy an endorsement insuring a | ||
loss from damage resulting from the use of the surface of the land | ||
for the extraction or development of coal, lignite, oil, gas, or | ||
another mineral if the policy includes a general exception or | ||
exclusion from coverage a loss from damage resulting from the use of | ||
the surface of the land for the extraction or development of coal, | ||
lignite, oil, gas, or another mineral. | ||
(b) In this section, "general exception or exclusion" means | ||
a provision in a title insurance policy or other title insuring form | ||
that provides that title insurance coverage under the policy or | ||
form: | ||
(1) is subject to, and the title insurer does not | ||
insure title to, and excepts from the description of the covered | ||
property, coal, lignite, oil, gas, and other minerals in and under | ||
and that may be produced from the covered property, together with | ||
related rights, privileges, and immunities; or | ||
(2) does not cover a lease, grant, exception, or | ||
reservation of coal, lignite, oil, gas, or other minerals, or | ||
related rights, privileges, and immunities, appearing in the public | ||
records. | ||
(c) An additional premium or other amount may not be charged | ||
for an endorsement to a loan policy of title insurance if the | ||
endorsement: | ||
(1) insures against loss from damage to improvements | ||
or permanent buildings located on land that results from the future | ||
exercise of any right existing on the date of the loan policy to use | ||
the surface of the land for the extraction or development of coal, | ||
lignite, oil, gas, or another mineral; | ||
(2) expressly does not insure against loss resulting | ||
from subsidence; and | ||
(3) was promulgated by the commissioner in calendar | ||
year 2009. | ||
SECTION 9. Subchapter B, Chapter 2703, Insurance Code, is | ||
amended by adding Sections 2703.055 and 2703.056 to read as | ||
follows: | ||
Sec. 2703.055. REQUIREMENT OF CERTAIN PROVISIONS | ||
PROHIBITED. The commissioner may not require by rule, or through | ||
adoption of a title insurance policy or other insuring form, that a | ||
title insurance policy delivered or issued for delivery in this | ||
state: | ||
(1) insure against a loss that a person with an | ||
interest in real property sustains from damage to the property by | ||
reason of severance of minerals from the surface estate; or | ||
(2) provide insurance as to ownership of minerals. | ||
Sec. 2703.056. EXCEPTIONS; MINERAL INTERESTS. (a) Subject | ||
to the underwriting standards of the title insurance company, a | ||
title insurance company may in a commitment for title insurance or a | ||
title insurance policy include a general exception or a special | ||
exception to except from coverage a mineral estate or an instrument | ||
that purports to reserve or transfer all or part of a mineral | ||
estate. | ||
(b) A reduction to, or credit on a premium charge for, a | ||
policy of title insurance or other insuring form may not be directly | ||
or indirectly based on an exclusion of, or general or special | ||
exception to, a mineral estate in the title insurance policy. | ||
(c) The inclusion in a title insurance policy of a general | ||
exception or a special exception described by Subsection (a) does | ||
not create title insurance coverage as to the condition or | ||
ownership of the mineral estate. | ||
SECTION 10. Section 2703.153, Insurance Code, is amended by | ||
amending Subsection (d) and adding Subsections (h) and (i) to read | ||
as follows: | ||
(d) A title insurance company or a title insurance agent | ||
aggrieved by a department requirement concerning the submission of | ||
information may bring a suit in a district court in Travis County | ||
alleging that the request for information: | ||
(1) is unduly burdensome; or | ||
(2) is not a request for information material to | ||
fixing and promulgating premium rates or another matter that may be | ||
the subject of the periodic [ |
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reasonably designed to lead to the discovery of that information. | ||
(h) The contents of the statistical report, including any | ||
amendments to the statistical report, must be established in a | ||
rulemaking hearing under Subchapter B, Chapter 2001, Government | ||
Code. | ||
(i) An amendment to the contents of the statistical report | ||
may not apply retroactively. | ||
SECTION 11. Section 2703.202, Insurance Code, is amended by | ||
amending Subsections (b) and (d) and adding Subsections (g), (h), | ||
(i), (j), (k), (l), (m), (n), and (o) to read as follows: | ||
(b) The commissioner shall order a public hearing to | ||
consider changing a premium rate, including fixing a new premium | ||
rate, in response to a written [ |
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(1) a title insurance company; | ||
(2) an association composed of at least 50 percent of | ||
the number of title insurance agents and title insurance companies | ||
licensed or authorized by the department; | ||
(3) an association composed of at least 20 percent of | ||
the number of title insurance agents licensed or authorized by the | ||
department; or | ||
(4) the office of public insurance counsel[ |
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(d) Notwithstanding Subsection (c), [ |
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hearing held under Subsection (a) or under Section 2703.206 must be | ||
conducted by the commissioner as a contested case hearing under | ||
Subchapters C through H and Subchapter Z, Chapter 2001, Government | ||
Code, at the request of: | ||
(1) a title insurance company; | ||
(2) an association composed of at least 50 percent of | ||
the number of title insurance agents and title insurance companies | ||
licensed or authorized by the department; | ||
(3) an association composed of at least 20 percent of | ||
the number of title insurance agents licensed or authorized by the | ||
department; or | ||
(4) the office of public insurance counsel. | ||
(g) If a hearing held under Subsection (a) is not conducted | ||
as a contested case hearing, the commissioner shall render a | ||
decision and issue a final order not later than the 120th day after | ||
the date the commissioner receives a written request under | ||
Subsection (b). | ||
(h) If a hearing held under Subsection (a) is conducted as a | ||
contested case hearing: | ||
(1) not later than the 30th day after the date the | ||
commissioner receives a request for a public hearing under | ||
Subsection (b), the commissioner shall issue a notice of call for | ||
items to be considered at the hearing; | ||
(2) the commissioner may not require responses to the | ||
notice of call before the 60th day after the date the commissioner | ||
issues the notice of call; | ||
(3) the commissioner shall issue a notice of public | ||
hearing requested under Subsection (d) not later than the 30th day | ||
after the date responses to the notice of call are required under | ||
Subdivision (2); | ||
(4) the commissioner shall commence the public hearing | ||
not earlier than the 120th day after the date the commissioner | ||
issues a notice of hearing under Subdivision (3); | ||
(5) the commissioner shall close the public hearing | ||
not later than the 150th day after the date the commissioner issues | ||
the notice of hearing under Subdivision (3); and | ||
(6) the commissioner shall render a decision and issue | ||
a final order not later than the 60th day after the record made in | ||
the public hearing is closed under Subdivision (5). | ||
(i) A party's presentation of relevant, admissible oral | ||
testimony in a hearing under this section may not be limited. | ||
(j) The commissioner shall consider each matter presented | ||
in a hearing under this section and announce in a public hearing all | ||
decisions on all matters considered. | ||
(k) A party described by Subsection (b) may petition a | ||
district court in Travis County to enter an order requiring the | ||
commissioner to comply with the deadlines described by this section | ||
if the commissioner fails to meet a requirement in Subsection (g) or | ||
(h). | ||
(l) Subject to Subsection (m), if the commissioner fails to | ||
comply with the requirements under Subsection (g) or (h)(6), a | ||
combination of at least three associations, persons, or entities | ||
listed in Subsection (b) may jointly petition a district court of | ||
Travis County to adopt a rate based on the record made in the | ||
hearing before the commissioner under this section. | ||
(m) If the record made in the hearing before the | ||
commissioner is not complete before the request for the court to | ||
adopt a premium rate under Subsection (l), the court shall hold an | ||
evidentiary hearing to establish a record before adopting the | ||
premium rate. | ||
(n) After a petition has been filed under Subsection (l), | ||
the commissioner may not issue findings or an order related to the | ||
subject matter of the petition until after the date the court enters | ||
a final judgment. | ||
(o) A district court may appoint a magistrate to adopt a | ||
rate under this section. | ||
SECTION 12. Section 2703.203, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2703.203. PERIODIC [ |
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commissioner shall hold a [ |
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than July 1 after the fifth anniversary of the closing of a hearing | ||
held under this chapter [ |
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adoption of premium rates and other matters relating to regulating | ||
the business of title insurance that an association, title | ||
insurance company, title insurance agent, or member of the public | ||
admitted as a party under Section 2703.204 requests to be | ||
considered or that the commissioner determines necessary to | ||
consider. | ||
SECTION 13. Section 2703.204, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2703.204. ADMISSION AS PARTY TO PERIODIC [ |
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HEARING. (a) Subject to this section, a trade association whose | ||
membership is composed of at least 20 percent of the members of an | ||
industry or group represented by the trade association, an | ||
association, a person or entity described by Section 2703.202(b), | ||
or department staff [ |
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a party to the periodic [ |
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(b) A party to any portion of the periodic [ |
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that the commissioner remove any other party to that portion of [ |
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does not have a substantial interest in title insurance. A decision | ||
of the commission to deny or grant the request is final and subject | ||
to appeal in accordance with Section 36.202. | ||
SECTION 14. Section 2703.207, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2703.207. NOTICE OF CERTAIN HEARINGS. Not later than | ||
the 60th day before the date of a hearing under Section 2703.202, | ||
2703.203, or 2703.206, notice of the hearing and of each item to be | ||
considered at the hearing shall be: | ||
(1) sent directly to all parties to the previous | ||
hearing conducted under Section 2703.202, 2703.203, or 2703.206, if | ||
the hearing was conducted as a contested case hearing [ |
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(2) published in the Texas Register and on the | ||
department's Internet website [ |
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SECTION 15. Section 2703.205, Insurance Code, is repealed. | ||
SECTION 16. Section 2703.0515, Insurance Code, as added by | ||
this Act, applies only to a title insurance policy that is delivered | ||
or issued for delivery on or after January 1, 2012. A policy | ||
delivered or issued for delivery before January 1, 2012, is | ||
governed by the law as it existed immediately before the effective | ||
date of this Act, and that law is continued in effect for that | ||
purpose. | ||
SECTION 17. Sections 2703.055 and 2703.056, Insurance Code, | ||
as added by this Act, apply only to a title insurance policy that is | ||
delivered or issued for delivery on or after January 1, 2012. A | ||
policy delivered or issued for delivery before January 1, 2012, is | ||
governed by the law as it existed immediately before the effective | ||
date of this Act, and that law is continued in effect for that | ||
purpose. | ||
SECTION 18. This Act takes effect September 1, 2011. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 2408 was passed by the House on May | ||
13, 2011, by the following vote: Yeas 134, Nays 1, 2 present, not | ||
voting; and that the House concurred in Senate amendments to H.B. | ||
No. 2408 on May 25, 2011, by the following vote: Yeas 143, Nays 0, | ||
3 present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 2408 was passed by the Senate, with | ||
amendments, on May 23, 2011, by the following vote: Yeas 30, Nays | ||
0. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |