Untitled Texas Attorney General Opinion ( 1947 )

I _ R-875
T``EAI%ORNEY GENERAL
OPTEXAS
Auclnlv11.TEXAS
PRICE DANIEL
..YcTcmNEY GENERAI.
December 4, 1947
Hon. George 8. Butler, Chairman
Board,of Insurance Commissioners
Austin, Texas Opinion No. V-450
Re: Authority to organize
certain non-profit in-
surance associations
writing policies on em-
ployees of a single em-
player .
Dear Sir:
Your letter of October 16, 1947, reads aa
follows:
*Please advise me whether ‘asso-
ciations which limit their membership
to the employees and the families of
employees of any particular designated
firm, corporation, or individual, and
which are not operated for profit and
which pay no commissions to anyone and
whose operating expenses do not exce6d
One Hundred Dollars($lOO) per month’
may now be organized and, upon making.
the report required by Vernon’s Arti-
cle 48591, Section 6, be given an an-
nual permit to operate axempt from the
other insuranoe laws of this State.*
We will first exanine the lpplioatien of Art-
icle 4859f, V. C. S., upon the type of ,assoolation des-
cribed in your letter.
Said Article Is Vernon’s codification of H.B.
303; General Laws, 43rd Legislature, 1933, Regular Ses-
sion, Chapter 245, Page 856, as amended by subsequent
Legislatures 0
That Act was designed to .regulateonly those
organizations already in existence prior to January 1,
1933, It applied solely to Wcorporations carrying on
Hon. George B. Butler, Page 2, V-450
in this State the statewide business of mutually pro-
tecting or insuring the lives of their members by as-
sessments made upon their members." Section 19.
By H. B. 373, General Laws, 44th Legislature,
1935, Regular Session, Chapter 264, Page 651, Section
6, dealing with examinations of such asso,ciationsby
the Board of Insurance Commissioners, the original Act
was amended by adding the following'provisions:
"It shall be the duty of the Commia-
sioner to require any corporation, person,
firm, association, local mutual ,aid assoc-
iation or any local association, company,
or organization, to have a certificate of
authority before being authorixed to carr
on any insurance business in this 4.
S ate.
, in any event, any such comoanv, oerson,
firm, association,,or local organiiation, .
local aid association, or local organiza-
tion is writing xform of insurance what-
soever without a permit, or certificate of
authority~issued by the Department of Insur-
ance of Texas, it shall be the duty of the
Commissioner to make known said fact to the
Attorney General of the State of Texas, who
is hereby required to institute proceedings
in the District Court of Travis County to
restrain such corporation, person, firm,
association, company, local aid association
or organization from writing any insurance
of any kind or character without a permit."
(Emphasis supplied throughout this opinion)
While the original Act of 1933 was limited In
its operation, as above noted, the Act of 1935 by its
terms applied to all forms ,of insurance and to all types,
of insurance enterprises theretofore or thereafter organ-
ized in requiring a permit as a condition to doing busi-
ness. In other respects, however, the Actremained ap-
plicable solely to the statewide mutual assessment type
of association in existence prior to 1933.
By H. B. 893, General Laws, 45th Legislature,
1937, Regular Session, Chapter 257, Page 522, the orlg-
inal Act was again amended and for the first time spec-
ifically mentioned the type of organization to which
you refer. By the 1937 amendment, they were exemptsfrom
the provisions of Section 6 which as noted had thereto-
fore required them to have a permit or certificate of
authority to do business.
Hon.,George,B. Butler, Pag,e3, V-450
The Amendment of ~1937 added to the provisions
of Section 6, above quoted, the following:
“‘Provided no ,provisions of this
Act shall be construed to apply to ahy
corporation, association, or partner-
ship, individual; or joint stock com-
pany, engaged in the,u&ertaking busl-
ness, or to any advertfslng corpora-
tlon, assoclatloh, and/or pa,rtnerahip,
individual, or joint stock company
tions ‘shall make annual report to the
Department of Insurance on blanks fur-
nished for that purpose showing their
financial condition, receipts and ex-
pendituxes, and such other facts as
the Board of Insurance Commissioners may re-
quire. No such association shall be permlt-
ted to operate, however, without mak,ingre-
port to the Insurance,Department ‘andgetting
a permit to do so. Such permit shall be for
the current year or fractional part thereof
and shall expire on the 1st day of Yarch
thereafter and shall be r~enewedannually up-
on the approval of the financial statement
of the organization by the Board of Insur-
ance Commissioners. All such organizations
shall have six (6) months after the time that
this Act goes into effect within which tc
comply with its conditions. If any organi-
zation fails to qualify under this Act or
fails to comply with its requirements in any
manner it shall be the duty of the Board of
Insurance Commissioners to report the same
to the Attorney General who shall at the re-
quest of said Board file such ‘suitas may
be necessary to wind up the affairs of such
Hon. George B. Butler, Page 4, V-450
arsoaiation and, if necessary, have a Receiv-
e,rappointed for that purpose. The venue of
such suits shall be laid in the District court
of Travis County, Texas. . .I
Vet. 2. All laws or parts of laws re-
quiring permits or certificates of authority
for associations which limit their member-
ship to the employes and the famil$es of em-
plcyes of any particular designate& firm,
corpotatfon, or individual and whiah are not
SoO$
Y=+“’ 0 L,o:,ro2 i;:s:hE%t3$%%i
t exceed One Hundred Dollars ($1
month are hereby expressly repealed.
It will be noted that the ad.dedportion might
be construed to require annual reperta on the part of the
organizations to which you refer. However, the caption
mentions no such requirements of such organizations, but
on the contrary, s$ates the purpose of the 1937 Act to be
‘*toamend Section 6 of” the original Act as amended “to
exempt from the provisions thereof* assooiations of the
type to which you refer, and “mpealing all laws or parts
of laws requiring pennits or certificate8 ef authority”
to such associations. We, therefore, conclude that such
associations were,by the 1937 amendment, entirely exclud-
ed from the operation of the Aot, since up to that time
no such association was affected by any provisions
of the Act other than those of Section 6 requiring
a permit or certificate of authority to do business,
and the amendment is construed, consistent with the
caption, to exclude such an association fmm the op-
eration of Section 6.
The further provision of the 1937 Amend-
ment repealing all laws or parts of laws requiring
permits or aertificatea of authority for associations
referred to by you, left them free to organize with-
out such permit or certificate, subject only to such
other laws as might apply to them.
Subsequent amendments by H. B. 626, Gen-
eral Laws, 46th Legislature, 1939, Regular Session,
Chapter 7, Page 414, and H. B. 996, Aots 47th Legls-
lature, 1941, Regular Session, Chapter 535, Page
860, retained the same language in so far as perti-
nent with minor changes in sentenoe structure and
punctuation, and is construed by us as affecting no
change in the effect of this law.
Hon. George B. Butler, Page 5, V-450
The Article is not then authority for the
organization of an association of the type mentioned.
Since, so far as we can determine, the characteristics
mentioned are recognized in our insurance laws only
for the purpose of exempting them from the operation
of Article 4859f, for the purpose of repealing all laws
in existen,ceprior to the effective.date of the Act of
1937 requiring permits or,certificates,of authority to
do business, and, in Artiale 4857; V. C. S., for the pur-
pose of excluding them from the provisions of Chapter
8, Title 78, of the Revised Civil Statutes of 1925,
dealing with,~.Fraternal
Benefit Societies, we are un-
able to determine from that description alone whether
an association wlth.such characteristics may be organ-
ized under any other particular law.
SUMMARY,
Article 4859f, v. C. s., by its terms
has no application to vassociations whioh
limit their membership to the employees
and the families of employees of any parti-
cular designated firm, corporation, or in-
dividual, and whldh are not operated for
profit and which pay no commissions to any-
one and whose operating ,ex enses,donnot ex-
ceed One Hundred ,Dollars tg 100) ,per mont’hv
except to repeal all laws or pa’rtsof laws
in forc’eprior to August.21,’1937,’the et-
fective date of B. B . ,893, Gen & Spea. Laws,
45th Leg. ) 1937, Reg.‘seSS;, Chapter 257,
Page 522, which required them to obtain
permits or certificates of authority.
Yours very truly
ATTORNEY GENERAL OF TEXAS
By m %&“\’
Ned McDaniel
Assistant
APPROVED :
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ATTORNEY GENERAL