
<PAGE>   1
 
                                                                    EXHIBIT 4.2

                                    BY-LAWS
 
                                       OF
 
                    STEWART INFORMATION SERVICES CORPORATION
 
                                   ARTICLE I
 
                                    OFFICES
 
     SECTION 1.1. Registration office. The registered office of the corporation
in the State of Delaware shall be in the City of Wilmington, County of New
Castle, and the name of its registered agent shall be The Corporation Trust
Company.
 
     SECTION 1.2. Other offices. The corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.
 
                                   ARTICLE II
 
                            MEETINGS OF STOCKHOLDERS
 
     SECTION 2.1. Place of Meeting. All meetings of stockholders for the
election of directors shall be held at such place, either within or without the
State of Delaware, as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting.
 
     SECTION 2.2. Annual Meeting. The annual meeting of stockholders shall be
held at such date and time as shall be designated from time to time by the Board
of Directors and stated in the notice of the meeting,
 
     SECTION 2.3. Voting List. The officer who has charge of
 
                                        1
<PAGE>   2
 
stock ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice,
or if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
 
     SECTION 2.4. Special Meeting. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board or by
the President or by the Board of Directors or by written order of a majority of
the directors and shall be called by the President or the Secretary at the
request in writing of stockholders owning a majority in amount of the entire
capital stock of the corporation issued and outstanding and entitled to vote.
Such request shall state the purpose of the proposed meeting. The Chairman of
the Board or the President or directors so calling, or the stockholders so
requesting, any such meeting shall fix the time and any place,
 
                                        2
<PAGE>   3
 
either within or without the State of Delaware, as the place for holding such
meeting.
 
     SECTION 2.5. Notice of Meeting. Written notice of the annual, and each
special meeting of stockholders, stating the time, place and purpose or purposes
thereof, shall be given to each stockholder entitled to vote thereat, not less
than ten nor more than 60 days before the meeting.
 
     SECTION 2.6. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at any meeting of stockholders for the
transaction of business except at each election of directors and as otherwise
provided by statute or by the Certificate of Incorporation. At each meeting of
or the election of directors the holders of a majority of the Common Stock and
the holders of a majority of the Class B Common Stock, issued and outstanding of
each such class, and entitled to vote thereat, present in person or represented
by proxy shall constitute a quorum. Notwithstanding the other provisions of the
Certificate of Incorporation or these by-laws, the holders of a majority of the
shares of capital stock entitled to vote thereat, present in person or
represented by proxy, whether or not a quorum is present, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. If the adjournment
is for more than 30 days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be
 
                                        3
<PAGE>   4
 
given to each stockholder of record entitled to vote at the meeting. At such
adjourned meeting at which a quorum shall be present or represented any business
may be transacted which might have been transacted at the meeting as originally
notified.
 
  SECTION 2.7. Voting.
 
     (a) Unless express provision of applicable statute, of the Certificate of
Incorporation or of these by-laws shall provide to the contrary, at each meeting
of stockholders each holder of capital stock of the Corporation shall be
entitled to cast one vote for each share of capital stock registered in his or
its name on the books of the Corporation on the record date for determination of
stockholders entitled to notice of, and to vote at, such meeting on each matter
properly submitted to stockholders at each meeting. If any stockholder entitled
to vote at any meeting shall be present at such meeting and such stockholder
shall abstain, whether in person or by proxy, from casting the vote or votes
which he or it is entitled to cast at such meeting, such abstention shall not
affect the determination of the presence of a quorum at such meeting. For all
purposes of these by-laws, an abstention from voting on any matter properly
submitted to stockholders at a meeting shall not be considered a vote cast for
or against such matter.
 
     (b) Each stockholder having the right to vote shall be entitled to vote in
person or by proxy appointed by an instrument in writing subscribed by
stockholder, bearing a date not more than three years prior to voting, unless
such instrument provides for a
 
                                        4
<PAGE>   5
 
longer period, and filed with the Secretary of the Corporation before, or at the
time of, the meeting. If such instrument shall designate two or more persons to
act as proxies, unless such instrument shall provide to the contrary, a majority
of such persons present at any meeting at which their powers thereunder are to
be exercised shall have and may exercise all of the powers of voting or giving
consents thereby conferred, or if only one be present, then such powers may be
exercised by that one, or if any even number attend and a majority do not agree
on any particular issue, each proxy so attending shall be entitled to exercise
such powers in respect to the same portion of the shares as he is of the proxies
representing such shares.
 
     (c) When a quorum is present at any meeting of stockholders, a majority of
the shares voted in person or by proxy shall decide any question brought before
such meeting, unless the question is one upon which, by express provision of
applicable statute, of the Certificate of Incorporation or of these by-laws, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
 
     (d) When a quorum is present at any meeting of stockholders at which the
Board of Directors is to be elected, the stockholders shall elect such directors
by a plurality of the shares voted in person or by proxy. All votes for election
of directors that are cast in person shall be cast by written ballot.
 
     SECTION 2.8. Consent of Stockholders. Whenever the vote
 
                                        5
<PAGE>   6
 
of stockholders at a meeting thereof is required or permitted to be taken for or
in connection with any corporate action by any provision of the statutes, the
meeting and vote of stockholders may be dispensed with if all the stockholders
who would have been entitled to vote upon the action if such meeting were held
shall consent in writing to such corporate action being taken; or if the
Certificate of Incorporation authorizes the action to be taken with the written
consent of the holders of less than all the stock who would have been entitled
to vote upon the action if a meeting were held, then on the written consent of
the stockholders having not less than such percentage of the number of votes as
may be authorized in the Certificate of Incorporation; provided that in no case
shall the written consent be by the holders of stock having less than the
minimum percentage of the vote required by statute for the proposed corporate
action, and provided that prompt notice must be given to all stockholders of the
taking of corporate action without a meeting and by less than unanimous consent.
 
     SECTION 2.9. Voting of Stock of Certain Holders. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the by-laws of such corporation may prescribe, or in the
absence of such provision, as the Board of Directors of such corporation may
determine. Shares standing in the name of a deceased person may be voted by the
executor or administrator of such deceased person, either in person or by proxy.
Shares standing in the name of a guardian, conservator or trustee may be voted
by such fiduciary, either in
 
                                        6
<PAGE>   7
 
person or by proxy, but no such fiduciary shall be entitled to vote shares held
in such fiduciary capacity without a transfer of such shares into the name of
such fiduciary. Shares standing in the name of a receiver may be voted by such
receiver. A stockholder whose shares are pledged shall be entitled to vote such
shares, unless in the transfer by the pledgor on the books of the corporation,
he has expressly empowered the pledgee to vote thereon, in which case only the
pledgee, or his proxy, may represent the stock and vote thereon.
 
     SECTION 2.10. Treasury Stock. The corporation shall not vote, directly or
indirectly, shares of its own stock owned by it; and such shares shall not be
counted in determining the total number of outstanding shares.
 
     SECTION 2.11. Fixing Record Date. The Board of Directors may fix in advance
a date, not exceeding 60 days preceding the date of any meeting of stockholders,
or the date for payment of any dividend or distribution, or the date for the
allotment of rights, or the date when any change, or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining a
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend or distribution, or to receive
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent, and in
such care such stockholders and only such
 
                                        7
<PAGE>   8
 
stockholders as shall be stockholders of record on the date so fixed shall be
entitled to such notice of, and to vote at, any such meeting and any adjournment
thereof, or to receive payment of such dividend or distribution, or to receive
such allotment of rights, or to exercise such rights, or to give such consent,
as the case may be, notwithstanding any transfer of any stock an the books of
the corporation after any such record date fixed as aforesaid.
 
                                  ARTICLE III
 
                               BOARD OF DIRECTORS
 
     SECTION 3.1. Powers. The business and affairs of the corporation shall be
managed by its Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
 
     SECTION 3.2. Number, Election and Term. The number of directors which shall
constitute the whole Board shall be NINE. Unless such number if fixed by express
provision of the statutes or the Certificate of Incorporation, in which case
such express provision shall govern and control, the number of directors shall
from time to time be fixed and determined by the directors and shall be set
forth in the notice of any meeting of stockholders held for the purpose of
electing directors. The directors shall be elected at the annual meeting of
stockholders, except as provided in Section 3.3, and each director elected shall
hold office until his successor shall be elected and shall qualify. Directors
need
 
                                        8
<PAGE>   9
 
not be residents of Delaware or stockholders of the corporation.
 
     SECTION 3.3. Vacancies, Additional Directors and Removal From Office. if
any vacancy occurs in the members of the Board of Directors elected by the
holders of Common stock caused by death, resignation, retirement,
disqualification or removal from office of any such director, or otherwise, or
if any new directorship to be elected by the holders of Common stock is created
by an increase in the authorized number of directors, a majority of the
directors then in office elected by the holders of Common stock, though less
than a quorum, or a sole remaining such director, may choose a successor or fill
the newly created directorship; and a director so chosen shall hold office until
the next annual election and until his successor shall be duly elected and shall
qualify, unless sooner displaced, if any vacancy occurs in the members of the
Board of Directors elected by the holders of Class B Common stock caused by
death, resignation, retirement, disqualification or removal from office of any
such director, or otherwise, or if any new directorship to be elected by the
holders of Class B Common stock is created by an increase in the authorized
number of directors, a majority of the directors then in office elected by the
holders of Class B Common stock, though less than a quorum, or a sole remaining
such director, may choose a successor or fill the newly created directorship;
and a director so chosen shall hold office until the next annual election and
until his successor shall be duly elected and shall qualify, unless sooner
displaced. A director may be removed either for or without cause at any special
 
                                        9
<PAGE>   10
 
meeting of stockholders duly called and held for such purpose except that only
the stockholders entitled to vote for any such director may vote for the removal
of such director.
 
     SECTION 3.4. Regular Meeting. A regular meeting of the Board of Directors
shall be held each year, without other notice than this by-law, at the place of,
and immediately following, the annual meeting of stockholders; and other regular
meetings of the Board of Directors shall be held each year, at such time and
place as the Board of Directors may provide, by resolution, either within or
without the State of Delaware, without other notice than such resolution.
 
     SECTION 3.5. Special Meeting. A special meeting of the Board of Directors
may be called by the Chairman of the Board or by the President and shall be
called by the Secretary on the written request of any two directors. The
Chairman or President so calling, or the directors so requesting, any such
meeting shall fix the time and any place, either within or without the State of
Delaware, as the place for holding such meeting.
 
     SECTION 3.6. Notice of Special Meeting. Written notice of special meetings
of the Board of Directors shall be given to each director at least 48 hours
prior to the time of such meeting; provided however, in instances where notice
of such meeting is given orally, by telephone or telegraph, such notice need be
given only 24 hours prior to such meeting. Any director may waive notice of any
meeting. The attendance of a director at any meeting shall constitute a waiver
of notice of such meeting for the purpose of
 
                                       10
<PAGE>   11
 
objecting to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any special meeting of the Board of Directors need be specified in notice or
waiver of notice of such meeting, except that notice shall be given of any
proposed amendment to the by-laws if it is to be adopted at any special meeting
or with respect to any other matter where notice is required by statute.
 
     SECTION 3.7. Quorum and Vote Required. Six of the nine members of the Board
of Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and the act of all of the directors shall be
the act of the Board of Directors, except as may be otherwise specifically
provided by statute, by the Certificate of Incorporation or by these by-laws. If
a quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
 
     SECTION 3.8. Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof as provided in Article IV of these by-laws, may be taken without a
meeting, if a written consent thereto is signed by all members of the Board or
of such committee, as the case may be, and such written consent is filed with
the minutes of proceedings of the Board or committee.
 
                                       11
<PAGE>   12
 
     SECTION 3.9. Compensation. Directors, as such, shall not be entitled to any
stated salary for their services unless voted by the stockholders or the Board
of Directors; but by resolution of the Board of Directors, a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of the Board of Directors or any meeting of a committee of
directors. No provision of these by-laws shall be construed to preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
 
     SECTION 3.10. Nomination of Directors to be Elected by Holders of Common
Stock. Only persons who are nominated in accordance with the following
procedures are eligible for election as directors by the holders of the Common
Stock of the corporation. Nominations of persons for election by the holders of
Common Stock to the Board of Directors of the corporation may be made at a
meeting of stockholders, by or at the direction of the Board of Directors, by
any nominating committee or person appointed to make nominations by the Board of
Directors, or by any holder of Common Stock of the corporation entitled to vote
for the election of directors at the meeting who complies with the notice
procedures set forth in this section, Nominations, if made by a stockholder of
the corporation shall be made pursuant to timely notice in writing addressed to
the secretary of the corporation. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 60 days nor more than 120 days prior to the meeting at
 
                                       12
<PAGE>   13
 
which directors are to be elected by the holders of Common Stock. In the event
that less than 30 days notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be received no later than the close of business on the seventh day
following the day on which notice of the date of the meeting was mailed or
public disclosure was made. A stockholder's notice shall set forth: (a) as to
each person whom the stockholder proposes to nominate for election or reelection
as a director (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of stock of the corporation which are beneficially
owned by the person and (iv) any other information relating to the person that
would be required to be disclosed in solicitations for proxies for election of
Directors pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended, or any successor rule; and (b) as to the stockholder giving the
notice (i) the name and record address of the stockholder and (ii) the class and
number of shares of the corporation which are beneficially owned by the
stockholder. The corporation may require any proposed nominee to furnish
additional information as reasonably required by the corporation to determine
the eligibility of the proposed nominee to serve as a director of the
corporation, No person shall be eligible for election as a director of the
corporation by the holders of Common Stock of the corporation unless nominated
in accordance with the procedures set
 
                                       13
<PAGE>   14
 
forth in this section.
 
     The presiding officer at the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and following such determination, the defective nomination
shall be disregarded.
 
     SECTION 3.11. Advisory Directors. The Board of Directors may elect from one
(1) to nine (9) (as it may decide) Advisory Members of the Board of Directors
who may meet with the Board of Directors at such Board Meeting to which they are
invited by the Chairman of the Board, or the President or Executive Vice
President (it being realized that there may be meetings not deemed important
enough to warrant time and travel expense of all or a part of the Advisory
Members), and give the Board of Directors the benefit of their advice and
counsel. The Advisory Members of the Board of Directors may be elected at any
regular or special meeting of the Board of Directors. The Advisory Members of
the Board of Directors shall receive the same fee for attending a meeting that a
Director receives and shall be paid their travel expenses, if any, incurred in
attending meetings of the Board of Directors. No such payment shall preclude any
Director from serving the corporation in any other capacity and receiving
compensation therefor.
 
                                   ARTICLE IV
 
                             COMMITTEE OF DIRECTORS
 
     SECTION 4.1. Designation, Powers and Name. The Board of Directors may, by
resolution passed by a majority of the whole
 
                                       14
<PAGE>   15
 
Board, designate one or more committees, including, if they shall so determine,
an Executive Committee, each such committee to consist of two or more of the
directors of the corporation. The committee shall have and may exercise such of
the powers of the Board of Directors in the management of the business and
affairs of the corporation as may be provided in such resolution. The committee
may authorize the seal of the corporation to be affixed to all papers which may
require it. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of such committee. In the absence or disqualification of
any member of such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Such committee or committees shall have such name or names and such
limitations of authority as may be determined from time to time by resolution
adopted by the Board of Directors.
 
     SECTION 4.2. Minutes. Each committee of directors shall keep regular 
minutes of its proceedings and report the same to the Board of Directors when 
required.
 
     SECTION 4.3. Compensation. Members of special or standing committees may be
allowed compensation for attending committee meetings, if the Board of Directors
shall so determine.
 
                                   ARTICLE V
 
                                       15
<PAGE>   16
 
                                     NOTICE
 
     SECTION 5.1. Methods of Giving Notice. Whenever under the provisions of the
statutes, the Certificate of Incorporation or these by-laws, notice is required
to be given to any director, member of any committee or stockholder, such notice
shall be in writing and delivered personally or mailed to such director, member
or stockholder; provided that in the case of a director or a member of any
committee such notice may be given orally or by telephone or telegram. If
mailed, notice to a director, member of a committee or stockholder shall be
deemed to be given when deposited in the United States mail first class in a
sealed envelope, with postage thereon prepaid, addressed, in the case of a
stockholder, to the stockholder at the stockholder's address as it appears on
the records of the corporation or, in the case of a director or a member of a
committee, to such person at his business address. If sent by telegraph, notice
to a director or member of a committee shall be deemed to be given when the
telegram, so addressed, is delivered to the telegraph company.
 
     SECTION 5.2. Written Waiver. Whenever any notice is required to be given
under the provisions of the statutes, the Certificate of Incorporation or these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
 
                                   ARTICLE VI

                                    OFFICERS
 
                                       16
<PAGE>   17
 
     SECTION 6.1. Officers. The officers of the corporation are Chairman of the
Board and Co-Chief Executive Officer, a President and Co-Chief Executive
Officer, a Senior Executive Vice President-Assistant Chairman, a Senior
Executive Vice President-Assistant President, one or more Vice Presidents, any
one or more which may be designated an Executive Vice President and/or Senior
Vice President, a Vice President-Finance, a Secretary, a Treasurer and a
Controller. The Board of Directors may by resolution create the office of Vice
Chairman of the Board and define the duties of such office. The Board of
Directors may appoint such other officers and agents including Assistant Vice
Presidents, Assistant Secretaries and Assistant Treasurers, as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined by the Board. Any two or
more offices, other than the offices of President and Secretary, may be held by
the same person. No officer shall execute, acknowledge, verify or countersign
any instrument on behalf of the corporation in more than one capacity, if such
instrument is required by law, by these by-laws or by any act of the corporation
to be executed, acknowledged, verified or countersigned by two or more officers.
The Chairman of the Board and Co-Chief Executive Officer and the President and
Co-Chief Executive Officer shall be elected from among the directors. With the
foregoing exceptions, none of the other officers need be a director, and none
of the officers need be a stockholder of the corporation.
 
                                       17
<PAGE>   18
 
     SECTION 6.2. Election and Term of Office. The officers of the corporation
shall be elected annually by the Board of Directors at its first regular meeting
held after the annual meeting of stockholders or as soon thereafter as
conveniently possible. Each officer shall hold office until his successor shall
have been chosen and shall have qualified or until his death or the effective
date of his resignation or removal, or until he shall cease to be a director in
the case of the Chairman of the Board and Co-Chief Executive Officer and the
President and Co-Chief Executive Officer.
 
     SECTION 6.3. Removal and Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed with cause by the affirmative
vote of the Board of Directors whenever, in its judgment, the best interests of
the corporation shall be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed. Any
officer may resign at any time by giving written notice to the corporation. Any
such resignation shall take effect at the date of the receipt of such notice or
at any later time specified therein, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
 
     SECTION 6.4. Vacancies. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term.
 
                                       18
<PAGE>   19
 
     SECTION 6.5. Salaries. The salaries of all officers and agents of the
corporation shall he fixed by the Board of Directors or pursuant to its
direction; and no officer shall be prevented from receiving such salary by
reason of his also being a director.
 
     SECTION 6.6. Chairman of the Board and Co-Chief Executive Officer. The
Chairman of the Board and Co-Chief Executive Officer shall preside at all
meetings of the Board of Directors or of the stockholders of the corporation. In
the Chairman's absence, or at the election of the President and Co-Chief
Executive Officer and the Chairman of the Board and Co-Chief Executive Officer,
such duties shall be attended to by the President and Co-Chief Executive
Officer. The Chairman of the Board and the President shall formulate and submit
to the Board of Directors or the Executive Committee matters of general policy
for the corporation and shall perform such other duties as usually appertain to
the office or as may be prescribed by the Board of Directors or the Executive
Committee. The Chairman of the Board and Co-Chief Executive Officer shall, with
the President and Co-Chief Executive Officer, be the principal executive officer
of the corporation and, subject to the control of the Board of Directors, shall
in general supervise and control the business and affairs of the corporation.
The Chairman of the Board and Co-Chief Executive Officer, acting with the
President and Co-Chief Executive Officers shall have the power to appoint and
remove subordinate officers, agents and employees, except those elected or
appointed by the Board of Directors. The Chairman of the Board and Co-Chief
Executive
 
                                       19
<PAGE>   20
 
Officer, acting with the President and Co-Chief Executive Officer, shall keep
the Board of Directors and the Executive Committee fully informed and shall
consult them concerning the business of the corporation. Either or both may sign
with the Secretary or any other officer of the corporation thereunto authorized
by the Board of Directors, certificates for shares of the corporation and any
deeds, bonds, mortgages, contracts, checks, notes, drafts or other instruments
which the Board of Directors has authorized to be executed, except in cases
where the signing and execution thereof has been expressly delegated by these
by-laws or by the Board of Directors to some other officer or agent of the
corporation, or shall be required by law to be otherwise executed. Either or
both the Chairman of the Board and the President shall vote, or give a proxy to
any other officer of the corporation to vote, all shares of stock of any other
corporation (except that the Board of Directors shall vote, or give a proxy to
one or more member(s) of the Board to vote, all shares of the stock of Stewart
Title Guaranty Company) standing in the name of the corporation and in general
they shall perform all other duties normally incident to the office of the
Chairman of the Board and Co-Chief Executive Officer and President and Co-Chief
Executive Officer, and such other duties as may be prescribed by the
stockholders, the Board of Directors or the Executive Committee from time to
time. In the absence of the President and Co-Chief Executive Officer, or in the
event such officer is unable or refuses to act, the Chairman of the Board and
Co-Chief Executive Officer shall perform the duties and
 
                                       20
<PAGE>   21
 
exercise the powers of the President and Co-Chief Executive Officer. If the
office of the President is vacant, the Chairman of the Board shall be the Chief
Executive Officer.
 
     SECTION 6.7. President and Co-Chief Executive Officer. The President and
Co-Chief Executive Officer shall, with the Chairman of the Board and Co-Chief
Executive Officer, be the principal executive officer of the corporation and
subject to the control of the Board of Directors, shall in general supervise and
control the business and affairs of the corporation. In the absence of the
Chairman of the Board and Co-Chief Executive Officer, the President and Co-Chief
Executive Officer shall preside at all meetings of the Board of Directors and of
the Stockholders. The President and Co-Chief Executive Officer, acting with the
Chairman of the Board and Co-Chief Executive Officer, shall have the power to
appoint and remove subordinate officers, agents and employees, except those
elected or appointed by the Board of Directors. The President and Co-Chief
Executive Officer, acting with the Chairman of the Board and Co-Chief Executive
Officer, shall keep the Board of Directors and the Executive Committee fully
informed and shall consult them concerning the business of the corporation.
Either or both may sign with the Secretary or any other officer of the
corporation thereunto authorized by the Board of Directors, certificates for
shares of the corporation and any deeds, bonds, mortgages, contracts, checks,
notes, drafts or other instruments which the Board of Directors has authorized
to be executed, except in cases where the signing and execution thereof
 
                                       21
<PAGE>   22
 
has been expressly delegated by these by-laws or by the Board of Directors to
some other officer or agent of the corporation, or shall be required by law to
be otherwise executed. Either or both the Chairman of the Board and the
President shall vote, or give a proxy to any other officer of the corporation to
vote, all shares of stock of any other corporation (except that the Board of
Directors shall vote, or give a proxy to one or more member(s) of the Board to
vote, all shares of the stock of Stewart Title Guaranty Company) standing in the
name of the corporation and in general they shall perform all other duties
normally incident to the office of President and Co-Chief Executive Officer and
Chairman of the Board and Co-Chief Executive Officer and such other duties as
may be prescribed by the stockholders, the Board of Directors or the Executive
Committee from time to time, In the absence of the Chairman of the Board and
Co-Chief Executive Officer, or in the event such officer is unable or refuses to
act, the President and Co-Chief Executive Officer shall perform the duties and
exercise the powers of the Chairman of the Board and Co-Chief Executive Officer.
If the office of the Chairman of the Board is vacant, the President shall be the
Chief Executive Officer.
 
     SECTION 6.8. Vice President. in the absence of the President and Co-Chief
Executive Officer and the Chairman of the Board and Co-Chief Executive Officer,
or in the event both are unable or refuse to act, either or both the Senior
Executive Vice President-Assistant Chairman and the Senior Executive Vice
President-Assistant President (or in the event both such offices
 
                                       22
<PAGE>   23
 
are vacant or both such officers are unable or refuse to act, the Vice
President-Finance) shall perform the duties and exercise the powers of the
President and Co-Chief Executive Officer and the Chairman of the Board and
Co-Chief Executive Officer. In the event the offices of both Chairman and
President are vacant, the Senior Executive Vice President-Assistant Chairman
shall perform the duties and exercise the powers of the Chairman and Co-Chief
Executive Officer and the Senior Executive Vice President-Assistant President
shall perform the duties and exercise the powers of the President and Co-Chief
Executive Officer. Any Vice President may sign, with the Secretary or Assistant
Secretary, certificates for shares of the corporation. The Vice Presidents shall
perform such other duties as from time to time may be assigned to them by the
Chairman, the President, the Board of Directors or the Executive Committee.
 
     SECTION 6.9. Secretary. The Secretary shall (a) keep the minutes of the
meetings of the stockholders, the Board of Directors and committees of
directors; (b) see that all notices are duly given in accordance with the
provisions of these by-laws and as required by law; (c) be custodian of the
corporate records and of the seal of the corporation, and see that the seal of
the corporation or a facsimile thereof is affixed to all certificates for shares
prior to the issue thereof and to all documents, the execution of which on
behalf of the corporation under its seal is duly authorized in accordance with
the provisions of these by-laws; (d) keep or cause to be kept a register of the
post office address
 
                                       23
<PAGE>   24
 
of each stockholder which shall be furnished by such stockholder; (e) sign with
the President, or an Executive Vice President or Vice President, certificates
for shares of the corporation, the issue of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general, perform all duties
normally incident to the office of Secretary and such other duties as from time
to time may be assigned to him by the President, the Board of Directors or the
Executive Committee.
 
     SECTION 6.10. Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine. He
shall have charge and custody of and be responsible for all funds and securities
of the corporation; receive and give receipts for monies due and payable to the
corporation from any source whatsoever and deposit all such monies in the name
of the corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of Section 7.3 of these by-laws,
and in general, perform all duties normally incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the
President, the Board of Directors or the Executive Committee.
 
     SECTION 6.11. Controller. The Controller shall prepare, or cause to be
prepared, for submission at each regular meeting of the Board of Directors, at
each annual meeting of the stockholders,
 
                                       24
<PAGE>   25
 
and at such other times as may be required by the Board of Directors, the
President or the Executive Committee, a statement of financial condition of the
corporation in such detail as may be required; and in general, perform all the
duties incident to the office of Controller and such other duties as from time
to time may be assigned to him by the President, the Board of Directors or the
Executive Committee.
 
     SECTION 6.12. Assistant Secretary or Treasurer. The Assistant Secretaries
and Assistant Treasurers shall, in general, perform such duties as shall be
assigned to them by the Secretary or the Treasurer, respectively, or by the
President, the Board of Directors or the Executive Committee. The Assistant
Secretaries and Assistant Treasurers shall, in the absence of the Secretary or
Treasurer, respectively, perform all functions and duties which such absent
officers may delegate, but such delegation shall not relieve the absent officer
from the responsibilities and liabilities of his office. The Assistant
Secretaries may sign, with the President or a Vice President, certificates for
shares of the corporation, the issue of which shall have been authorized by a
resolution of the Board of Directors. The Assistant Treasurers shall
respectively, if required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the Board of
Directors shall determine.
 
                                  ARTICLE VII
 
                         CONTRACTS, CHECKS AND DEPOSITS
 
     SECTION 7.1. Contracts. Subject to the provisions of
 
                                       25
<PAGE>   26
 
Section 6.1, the Board of Directors may authorize any officer, officers, agent
or agents, to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the corporation, and such authority may be general
or confined to specific instances.
 
     SECTION 7.2. Checks, etc. All checks, demands, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers or such
agent or agents of the corporation, and in such manner, as shall be determined
by the Board of Directors.
 
     SECTION 7.3. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
 
                                  ARTICLE VIII
 
                             CERTIFICATES OF STOCK
 
     SECTION 8.1. Issuance. Each stockholder of this corporation shall be
entitled to a certificate or certificates showing the number of shares of stock
registered in his name on the books of the corporation. The certificates shall
be in such form as may be determined by the Board of Directors, shall be issued
in numerical order and shall be entered in the books of the corporation as they
are issued. They shall exhibit the holder's name and number of shares and shall
be signed by the President or a Vice President and by the Secretary or an
Assistant Secretary.
 
                                       26
<PAGE>   27
 
If any certificate is countersigned (1) by a transfer agent other than the
corporation or any employee of the corporation, or (2) by a registrar other than
the corporation or any employee of the corporation, any other signature on the
certificate may be a facsimile. If the corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the
designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and rights shall be set forth in
full or summarized on the face or back of the certificate which the corporation
shall issue to represent such class of stock; provided that, except as otherwise
provided by statute, in lieu of the foregoing requirements there may be set
forth on the face or back of the certificate which the corporation shall issue
to represent such class or series of stock, a statement that the corporation
will furnish to each stockholder who so requests the designations, preferences
and relative, participating, optional or other special rights of each class of
stock or series thereof and qualifications, limitations or restrictions of such
preferences and rights. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, stolen, destroyed or mutilated
certificate a new one may be issued therefor upon such terms and with such
indemnity, if any, to the corporation as the Board of
 
                                       27
<PAGE>   28
 
Directors may prescribe. Certificates shall not be issued representing
fractional shares of stock.
 
     SECTION 8.2. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate or certificates alleged to have been lost,
stolen or destroyed, or both.
 
     SECTION 8.3. Transfers. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Transfers of shares shall be made only on the books
of the corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of
 
                                       28
<PAGE>   29
 
attorney and filed with the Secretary of the corporation or the Transfer Agent.
 
     SECTION 8.4. Registered Stockholders. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other parson,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of the State of Delaware.
 
                                   ARTICLE IX
 
                                   DIVIDENDS
 
     SECTION 9.1. Declaration. Dividends upon the capital stock of the
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property or in
shares of capital stock, subject to the provisions of the Certificate of
Incorporation.
 
     SECTION 9.2. Reserve. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the Board of Directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the Board of Directors shall think conclusive to the
interest of the corporation, and the
 
                                       29
<PAGE>   30
 
Directors may modify or abolish any such reserve in the manner in which it was
created.
 
                                   ARTICLE X
 
                                INDEMNIFICATION
 
     SECTION 10.1. Third Party Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or
 
                                       30
<PAGE>   31
 
proceeding, had reasonable cause to believe that his conduct was unlawful.
 
     SECTION 10.2. Actions by or in the Right of the Corporation. The
corporation shall indemnity any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for misconduct in the performance of his duty to the corporation unless
and only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem proper.
 
     SECTION 10.3. Determination of Conduct. The
 
                                       31
<PAGE>   32
 
determination that an officer, director, employee or agent, has met the
applicable standard of conduct set forth in Sections 10.1 and 10.2 (unless
indemnification is ordered by a court) shall be made (1) by the Board of
Directors by a majority vote of a quorum consisting of Directors who were not
parties to such action, suit or proceeding, or (2) if such quorum is not
obtainable, or even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
 
     SECTION 10.4. Payment of Expenses in Advance. Expenses incurred in
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Article X.
 
     SECTION 10.5. Indemnity Not Exclusive. The indemnification and advancement
of expenses provided hereunder or granted pursuant hereto shall not be deemed
exclusive of any other rights to which those seeking indemnification or the
advancement of expenses may be entitled under any other by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office. The indemnification and advancement of expenses provided hereunder or
granted pursuant
 
                                       32
<PAGE>   33
 
hereto shall, unless otherwise provided when authorized or ratified, continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
 
                                   ARTICLE XI
 
                                 MISCELLANEOUS
 
     SECTION 11.1. Seal. The corporate seal shall have inscribed thereon the 
name of the corporation, and the words "Corporate Seal, Delaware." The seal 
may be used by causing it or a facsimile thereof to be impressed or affixed or
otherwise reproduced.
 
     SECTION 11.2. Books. The books of the corporation may be kept (subject to
any provision contained in the statutes) outside the State of Delaware at the
offices of the corporation at Houston, Texas, or at such other place or places
as may be designated from time to time by the Board of Directors.
 
                                  ARTICLE XII
 
                                   AMENDMENT
 
     These by-laws may be altered, amended or repealed at any regular or special
meeting of the Board of Directors if (i) notice of such alteration, amendment or
repeal is contained in the notice of such meeting and (ii) such alteration,
amendment or repeal is approved by a majority vote of the directors elected by
the holders of the Common Stock and a majority vote of the directors elected by
the holders of Class B Common Stock; with each such class of directors voting
separately.
 
                                       33
