Untitled Texas Attorney General Opinion ( 1943 )

OFFICE OF THE ATTORNEY ,GENERAL OF TEXAS
AUS7lN
Honorable. 0. P. Loakbart, Chrlrmn
Ijoua or lMuranoe Co8u.m.1onar.
Au8tln, Texa.
Dmr Slrl oprnlon no. o-yxio
R e r An lrirtioq @mUa ruor u.a In
&drutrla;1 uul gvk3up’~llSo ln-
iq .ap 8‘xogul~ly 8aheduled
aLr rdvk Jsatueon daflnlte1.J
UtablU4d alrporta: 1. void
lIksof8.rm.8 it pfm ort8tolmt
the lnsuror'r 11a Iillity after
the axpllutlon of th. amte8t-
puloa 8.t out In ~LrtlOl~8
uid 4764b, Vernon’. An-
not8td Civil Statute8.
8eotloa
5 of Artlolo 4764b, Vernon’8 Annotated Civil
Statutea, doallng rlth indu8trlal llfo Ln8uranao~ read8 In
p.rt a. follov8:
"Ro lnciustrlnl life lnsurnnca policy do-
llvored or 18sUed for dellVery 111 tba StSte 01
Tex&8 @hall OOntain any prOvlsiOn Vhlnhl
(I
. . . .
*(b) axeapt a8 OthUIIl88 provided herein,
proVlde8 l-Or My mod8 Of 8ettlWOtlt at WtlWity
OZ 1088 value th&n the WOUnts 1118~md on th8
faoe of the polity, p1U. dividend 6ddltlOn.
thereto, if &ny, le.8 My iCidebtedne.8 t0 the
in.,Wer 011the pO1lOy, aod 1.88 any prOtiU84 thrt .
may, by the tormr of the policy, be bduotad,
Uid prorlded al.0 th@t thi. F@OVi.iOlI -11
not raved an addltlonal looldental death bow-
r1t L lng llmltrd 80 a8 IlOt to b. pay8ble in
want of doath frw OWt8l.n aause8 Of 8OOldent8."
There i8 a 8lnllar proVl8lon la htlo1e 4733, Vernon's
Anaot8ted Civil Matutor, Vhlch read8 ln put 88 fO11OU8C
"POliOie8 8hau UOt oont8ln Whati Tori-
81OtlS fOl'h-fit &88 Thn Ptil &IWJfit iX3hX'-
taln Cue8 Penltted. BO poli0y 0f iir0 iru~r-
mae 8hll be i88Wd or dellrerod ln thi8 Stata,
or be 188wd by 8 life in8ur8noe oolpany hOOr-
por8t.d UndU th. l8llO Of th18 St&e, If it OOCI-
taln8 any of the foll~vlng prool.lOn8:
I
. . ..
"3. A &WOVi.iOLi for UJ mode Of 8OttltiOIlt
8t meturltr of 1.~8 Vtiw thm the 8mOUnt8 in-
8ur.d On the f8Oe of the polloy, plus dividend
lddltlon., if My, 10s. w lIldebt.dIm.8 to the
ooupuzy on the pollay, and le.8 any promlum ut
nuy by the torma of the polloy bo deduotmd; pro-
vided, however, th8t any ~ooapn~ IUJ 188~ 8
POliOy ~ollli.145 a benefit le.8 than tha fU11
benefit ln oem of the death of the ln8ured by
hI.8 own hand uhlls 8+a or lnranne, or by follou-
iq 8tAt.d haxudow OOOUp~tiOLl., or in the
event the de8th of the lluured 8hould result
from avl&tlon lotlvltle8 under the oonditlonr:
*pelfled in the polloy, to be approved by the
iitin~rt-tbl;
0. P. Lockhart, paw 3
Board of lnswe.uc6 Com.mlsaion*rs, a8 provided in
Chapter 3, Title 7d, of ths Revl8ed Clvll Stat-
Ut.8 Of 4.X438 Of 1925. This proVl81on ahell not
apply to purely 8ooldtnt and health pollofe8.
No forsgolng provl8lon retit- to polloy form6
8h.11 apply t0 pO11Oi.8 188Utd ill l1.U Of, Oc
in exohmge for, any other pO1101.8 188Wd be-
fore July 10, 1909. AOt8 1909, 3l.t bag., p.
1.92, 360. 23; Aot. 19i 1, 47th h&3., K.S., 8.8.
264, t 1.)"
Th. quot.d 8v1etiOn OtiU.6 ltt.mpt. to .X0.&% md
txoldt from the oortrege of th. polloy the r1.k of de.th frm
the 8ptOlfitd 08UI.8. It dot8 not eontbaplrte eg fi8blllty
on the polloy .8 auoh, but, In efftot, provide. th8t the d.8th
of' the ln8ur.d fl'0.i th. 0.U8.8 8.t OUt Win n6v.r Mt’W. the
policy. It 18 not 8 01.U.t rt3O@iZi~ a lleblllty On the
polloy end reducing under 8ptCifitd alroum8tmot8 the amount
~rcml8.d to b. p8ld. For the.6 X'688on. it 18 not l 'prOv181on
for any mods of l.ttl6ment et maturity of leea value thm th.
amount. tneur.d on th. feoe of the p011ay~ 8Ed the 8bOve
QU0t.d 8t8tUtOry ~rOVl.iOM er. not eppl.iC8bl6. &uht v.
Ftdtrrl Llfo Inmuwnct Company, 248 3. V. 3251 Amwlae Uet-
lone1 Inaur~ot Capany v. Idweon, 127> 3. Y. (Bd)
Great Southern Lift In.urenoe Cappanr v. Ulna, 105%+4.
(24) 902; Owrdl8n Idf. In8urenc6 Company T. tiloo8tlen,
155 3. Y. (2d) 396. t%t l~lM8. Of CT.rt8iB O.... illdiO~tt8
the oontruy vim. Athnt8 Ltoe lBllWMO6 Cm-y V. COP-
mltr, 85 9. W. (24) 1045; Cook Q. cOntlMnt81 C88wlty Con-
pe.ny, 160 3. Y. (Pd) 576; Unlvor8el Lift 1n8UF.nO. Co-y
v. Grent, 117 S. Y. (26) 813.
The Court In the 08100.tl.n 08.6, 8UJW8, Vhllt dle-
Cuulng the oplnlon of th.lAV.~n CU., SUpF8, h.ld:
. It 18 81.0 irpliOit in the ~lllion
th8t .i& i...rtlon of non-lleblllty I. not pro-
hlb1t.d by uid Art. 4 3, 8Ubd. 3. l'ha pmhlbl-
tlon dtelerod by Art. P733, lubd. 3, ol.arly oon-
ttRpl8tt. 8 lhbility Upon e policy 88 .UOh, urd
the prohlb1t.d ~OV181OU 18 on. ooduolng th.
eaount prcalotd to b. paid upon ooadition8 end
With OUttin .XO.ptlOn.. In our oplnlon, it can
h& rP . Olp p liO8tiOB to l p r o Vl8lw rhloh Optr~tt8
to lvtild th who16 promlst; provided, of OOUTI~,
8uch prOVl8lOn 18 not 8UbjtCt t0 8OIt oth6r pro-
Nbltory rtetute."
I.uncrebla 0. P. Lockhart, p&a 4
The exoeptlon In subeectlon (b) of Aectlor~ 5 of
Artlola (1764b uhleh leeme to authorire luah a olau~e In con-
ne4ticm with 'an 8dditlonal death baefit" oarrim the UP
plio8tlon t&t luob olau8a 00108 vlthin the rtattimy prohi-
bition dnoe, otharvls~, the exception vould be unneceeeary.
hn lmplio8tlon, hovover, should not be ooxutrued 80 as to
rary cr broulen tba lxpr888 laII@Aage Of the 8tatUte.
Subuotlau (0) of kotion 2 of Artlclo 476kb, Vor-
o~n*a Annoted cwil stmte0, rating t0 iddrutrm iire
ir mur ~o e a nd lubuotioa (1) of 8oetlon 1 of &tlolo 47648,
V8rnOn'B Armotakd civil StatUtU, relatirrg t0 &rOUp iire
i~ur811oe, both roqulre 8 polloy provl8lon 8tatlng IA 8ub8t8me
that tha polloy 8U bo lnooatoatablonot later t&n tvo yo8r8
fra It8 date. The 8titUt.8 LLUI OWt8lI.i eXOeptlI3SI8t0 tbs
lnoonto8t8b]lo reQulromnt but the quoted 8viatlO.U alWISe dom8
not ftil V1tM.n 8UCh .xOeptlOM.
tie 8UOh tnOOnte8trb& iVQkiirOUllt8
QQJLttibla t0
8UOh 818USO? The Oa8.8 OOSl8trUing inOOntr8t~b& Ohi 8Z?O
numerou8. In tha State of Ieu York (Betropollt~ Liio In-
8ll?8llOO c V. convy, 3uperintwulent 0r ~.XUU~MO, n52
m.r. 4494 m.8. 64~) and in other 8tater it i8 held that
UI inoontortable O~NUO i8 no t & “IIM68tO l8 to OOVW~e’ urd
th a tl u r ep o llrO
y& ILl
Uxaoptlng W lxoludlng fra tha
rl8k U8U8d &ah
rra 8~Olflul OaUU8 IS not oontru~
themto. rU8UMd
It that la
the l.nmlror’8 doruuo uncle
8Wh l 018~80 18 ZIOt a OOntO8t Of ths pOllOr bUt Uh effort
to udoroe It8 tera8. %18 reUOllb& 18 UUd in 8UU81 28X88
ouea . r8XU R?U&ilti81 -UP-e c-7 1. liil*r, 80 9.Y.
(2d) m2k sOUthVO8tUII Life h8WII.08 cCUIIDMy V. aOU@tCUi,
Ul S.Y. I 2d) 61gb
On the other hand it tn8 bowa hold th8t 8 eOate8t-
able 018&U. l&UlIq O-trip UOaptlOllW 18 intWld.d t0 8llOU
none not amod,,ud thku a l1W80, no t lhhori~8d by th8 ax-
oeptlons, but lttoa#tlng to llalt oovarag8 md uolude rirk8
18 oontruy to the inaonte8tabh r8qulromnt. *rnler v.
P8OlflO YUtU81 uf0 XMLUMO~ ColpLlv, 173 hr. 1078, 88
X&H. 76 . For 8 oo~eotlon Of 8uthorltl88 8.8 the WOta-
.tiOZl8 8t 33 A.L.R. 394, 8nd 88 A.L.R. 773.
The rO-8 8a8*8 sonatrulng a nd l log tin very
alall8r ltmonta8t8bl8 rWJtireIWit Of title 732, V8rn0n'l
flonorable il. f. Lockhart, p4xc 5
¬ated Civil Statutes, u-e helpful in determlnl~ the lp -
pllaablllty of the 8bOVe nrentloned prorl8lone to the aviation
018U8e. The SU&WeM COUl’t Of 2’0x88, fIl AMrfOPn N8tfOnd In-
lr8110e C~qmny v. Tabor, 230 3. U. 397, 8aldr
*After the lxplratl0n of the period fixed,
the 8UbdiViliOn WliUfMt~8 811 dden8cl8, OXOept
tlloae mpeol8ll~ a8ntlonab."
In barfern Ymtlowl Iauur8noe Company v. UO1.h. 22 3. If. (2dj
1063, the Ccrri8810~ of 49Oa18 nald;
Vh0 ra~iing md lrr00t or there prOVi8iOIA8
VU8 t0 pe80?1be t.UO mlr8 l8 lyli.EU@ p@r- tb
i0d Of lfMit8tiotl, aftOr Vhlah I10 dWfOM0, OXO@pt
no-pant of preaiuw or vlolatlom or oon4l-
tlopl relative to naval or ullltu~ servloe dur-
i0.g the VU, 8houldb libb3dt0 4.hatpapd
Or 8 iu8 pOilOy.. . .’
In Atlanto We Iwursaoo Company v. CoCPIer, 85
3. w. (la) lo45, tb8 Camri8810n 0r &Jp818 (opinion adopted
by the Suprm Court) ha4 far oonsl4errtlon a ola~u provldlng
thlt n0 b&h bWMrit ~88 pay8b& if duth ?88tdtWd ira 0
dL8ea80 OOXktr&OtWd
&Z’iOt t0 - dAt8 Or the POllOy, &hd that
Qeeth Zror
8uoh aW18e Va8 not 8 risk -rumed. On OePtllled
qllO8tlOM lnqalrlrl& vhetber , l.n vier 0r the incantestable re-
quirement, the ln8urer could, 8.fter two year8, dete&koh that
ground, the OOUPt 88id:
" Life fll8IWUWO
8-88 %88uing
pOxOii8’Oi uf0 inrtWUiO8
in thi8 8%,8 ~0 LWt
idt rrute dOtOm rht u0eptioru thy rix.l
vrite into thlor pOuO1.8. %8 8titUtO8 Duy
th e
P Wr r ittd
lXOO~tiW, ud 8 5JrOV28100 d&i-
otherl xoeptlonr 18 ~014. Any other oondruo-
tlon of the ltatutoa uould thwart the evident
ptWpO80 Of their WBUtMIIt. If the t¶X9eptlO3
l ttO4ItWd t0 be h in thi8 -80 8hOkd4 be Up-
held a8 valid, there would be no 1-t to the
number of uoeptlonr that oo~ld be vrltten ln-
to a alloy or life IPmmaaoe, and, by mltlply-
ino tg-, an iluuranoe oompuly could vhittls
doun the rf8k8 It 88eU808 UJ2til ft 8pO11OfeE
would have but little, if any, re81 value. To
prevent thl8 was the purpole far vhlch the Itat-
utem were enacted.
"The queetlon certlfled la 8nsWered 'NO.'"
The Cornusr 0680 has been questioned by JuQo Funder-
burk in tha Oalooetl4n oare, 8rlpra, in 80 fU ar It doe18 Vith
Article 4733, but vc cannot agree thet it h88 been di8oredlted
as to it8 lnterpret~tlon of the lncontestablo atiuSe of &tlcle
4732 + A8 to the letter interpretation it ha8 been folloued in
Ua8hlngton Platlooal Inauranoa CmLpany V. Clay, i% 3. u. (2d)
834, Yhlah ca8c rch.wd, by virtue of &Section 3 of Artlole
4732, to allow the insurer to Cafe&, after two yeer8, OKA a
~18~80 thet cuurot be dlatlng;uLahed in prlnclple from the
cl8ura now in question.
A llre pollo~ provialon that the aontr8ot 8h8ll never
beoom effeotlve unlere it 18 delivered vbl2e ineuro 18 tiiUa
find in 8oun4 he8ltb la V81id. Qre8t PIetlonal Lit8 Iluuramce
CO V. &~Lc, (corai88im Or Appeal8 hai8iOA) 1% 3. u.
(23X2. But the lneurer may not rely upon 8uch olauee 88 l
defame after the expiration of the two-year oonte8t8ble r-
1Od. Reuablr Ufc In8urraoe Coopeny v. Wyatt, 154 S.Y. r26)
24% ?ies4rve Loan ure Insurlace Capany v. Brown, 159 S.Y.
(24 179.
In our oplnlon the aVi8tiOA olau8e violate8 the, tin-
conte8table requirelaent8 of Artlola 4764r and 4764b, Vernon18
Annot8tea Civil St8tUtW8, iololer 88 it purportr to provide a
dsfenu 8fter the expir8tlon of the eonte8t~ble perlo there-
in wt out, and suoh cbu8s 8hotid not be 8pproved by the Board
for that ronson.
Us do not attempt to anover the broad que8tlon u to
uhother Artiole8 4732 a ndk 7 33
lpply to industrial lire and
group US4 pollcle8, but vu ~111, in thl8 oomeotlon, be glad
to give our apinIon on any 44finlte f8Ot 8lturtlon sow berore
your department. Iiowvor, ue oil1 to your 8ttentlOn the fol-
1OUlng pX’OV181Oll of hticle 476'Jbr
"Sad. 7. A88OUiatiOA8 &ZCWptOd. ThL8 AOt
8hd1 IlOt 8p& t0 10081 UUtLld ai4 888OOilbtiOM
or etate-vlde mtrtu81 life, health, uul eeoldent
OapMlW8 and burial ~88Oclation8 Operating un-
der Senate Bill Ao. 135, Act8 of the Regulu S48-
8iOn of the Forty-8lxt.h kgl818tuF8, but thi8 Act
8nd ao other rhell apply to uxd govern the form
8nd oontent 0r lndustrlal lir4 insuranae pollol48,
Eonorabl8 0. P. lAwhut, p8go 7
u they ua bf&md buda, lm8ud by al1 otbu
la8ur~O txmpMl88.’
YOtu# ruy truly