Untitled Texas Attorney General Opinion ( 1942 )

OFFICE OF THE ATTORNEY GENERAL OF. TEXAS AUSTIN Honorable C. P. Lockhart, Chairnan Eoard of Insuranm Cox;i.ssion~ers Austin, Texas Dear Sir: of the or;ganiza- for $3,450.00 Oa Ilovember bond until 3ecezber 12, 1941. L?yiers Lloyds has nov,tendered the su:lof $2,5CO.OC and colltendsthat such is their ;I:R::iflU:2liabil- ity under the tao docu.lentsxenticned. Since $l,g5O.CC of the loss xs irrcurreddurin.5the Honorable 0. P. Lockhart, Chairnan, Page 2 original period (the bond was effective December 12, 1939, but provides no termination date ex- cept by inference in the Endorsement extendins the 'expiration date') f'rouDecenber 12, 1939 to December 12, 1940, and $1,5OO.Oi,was incurred during the 'extended' period; this Departnent desires to know if Lawyers Lloyds of Texas is not liable for the full $3,450.00." You also enclosed a photostatic copy of the bond in question together with the %dorsenent. Under the facts stated, there would necessarily arise for our detemination the sole question of whether or not the naximm penalty stated in the bond is cumula- tive for the extended contract period. Viewing the pro- visions of the bond from the facts submitted, we are un- able to hold the liability of the surety to be less than the rull mount of the shortage. The identical question is involved in Board of Insurance Commissioners v. Lawyers Lloyds of Texas, et al, being No. 65,700, and pending on the docket of the 98th District Court of Travis County, Texas. We call your attention to Article 4875a-7, Ver- non's Annotated Civil Statutes, providing the procedure for recovery on such a bond, which statute reads; When the Board is informed that any of- ficer of any such association has violated the terms of either of said bonds it shall demand a written explanation of such officer as to such charge, and if after such exnlanation the Board is not satisfied as to the eksting facts in controversy it shall notify such officer to be and appear in Travis County with such records, . . writings, and other correspondence and facts as the Board deems proper, not earlier than ten days or later than fifteen days from service , . - Honorable 0. P. Lockhart, Chairman, Page 3 of notice, and it shall there conduct an ex- amination into such affairs, and if upon such examination the Board shall become satisfied that the terms of said bond has been violated by said officer the Doard shall prepare a writ- ten statement coverin said facts and deli- ver same to the Attorney General of Texas, whose duty it shall be to investigate said charges and if satisfied that the terms of said bond have been violated he shall file suit on said bond in the name of the Board of Insurance Commissioners of Texas for the benefit of the beneficiaries thereof against said officer as principal and the sureties of his bond for the recovery of said amounts due by said officer, and all costs of suit in some court of competent jurisdiction, in Travis County, Texas.n In _`` view of the foregoing, it is the opinion of this Deoartment t'natall evidence and facts pertaining to the claim under this bond should be referred to the Attor- ney General for disposition. Yours very truly ATTORXZ GENZ?AL OF T-ZS.S By (s) Vim. J. R. King Assistant