Untitled Texas Attorney General Opinion ( 1944 )

THEAYTORNEY GENERAL
OF TEXAS
AUSTXN~~.T~:XAS
GROVER SELLERS
September 5, 1944
Hohorable 0. P^;Lockhart, Chairman
Board of Insurance Commissioners
Austin, Texas
Dear Sir: Opinion Ro.~o-i6170'.
Re: Whether's mutual~assessment
health and accFdent'compang
operating underchap. 6, Title
78; Vernon's 'Annotated Civil
Statutes, can amend its by-
Iaws to permit proxy voti.ngat
all members' meetings.
Your letter of August 21, 1944, requesting the opini.on
of this department on the question stated therein, is as follows:
"Enclosed you will please see copy of-an order
of.the Board of Insurance Commissioners dated,July
11, 1939, passed under authorlitgof Section'25 of
Article 5068-l. You will observe that-under Sec-
tions'I and.22of the above-Article'Is construed-.by
the Board to apply to rmitualassessment health and
accident companies operated under Chapter 6, Title
78, now repealed.
"Section 18 states: 'Proxy voting will beeper-
mltted 'Xfan association"s by-laws"provide for It.'
Please'advise'me whether a mutual assesbment heaIth
and accident company operating under Chapter'6 may
amend its by-laws to'permit proxy voting at all
members' meetings,'Article 4789 of Chapter 6 to the
contrary notwithstanding."
Chapter 6, Title 78, Vernon's Annotated Civil'Statutes,
was 'repealed in 1929~by the 41st Legislature, First Called Ses-
sion, page 90, Chapter 40,~Section 18, as amended by Acts 1929,
41st Legislature, Second Called Session, page 99, Chapter 60,
Section 1.
'Article 486Oa-18, Vernon's Annotated Civil Statutes,
provides:
"Chapters 5, 6,'9, 12; 13; 14, and~l5, of
Title 15, of the Revised Civil Statutes Of 1925,
Hon. 0. P. Lockhart, page 2 0-6170
and all other laws or parts of laws In conflict
with the provisions of this Act,"'arehereby re-
pealed; provided, that such repeal and the pro-
visions of this Act will not apply to or affect
any company or association of this State now do-
lng business under the laws repealed, and they
shall continue to be governed by the regulatory
provisions of such laws. Any company organized
and transacting business under any'of the laws
repealed by this Act, or any general law'~of
this State, other than Article 8308; or any other
article under Title 130, Revised Civil Statutes,
of Texas, 1925, may, however,'by resolution of
its Board of Dlrectors;duly approved by the "
majority of the members, at a meeting specifically
called for that purpose,'and duly certified to by
the president and secretary, and filed with the
Board of Insurance Commissioners, elect to adopt.
and become subject to the provisions of this Act,
in lieu of any act'or acts theretofore governing
such company or association.
"Any company or association so electing and
fully complying with this Act, may thereafter
effect such kinds of insurance as is authorized
by this Act, and specified in its articles of
association then in force,,or as then or there-
after amended,~together with such additional
kinds of Insurance as are specified in such reso-
lution and authorized by this Act."
Section 1 of Art. 5068-1, V.A.C.S., provides:
"This Act shall apply to and embrace all insur-
ance companies and associations, whether'incorporated
or not, which issue policies or certificates of in-
surance on the lives of persons, or provide health
and accident benefit, upon the so-called mutual and
assessment plan, OP whose funds are derived from the
assessments upon Its policy-holders or members, and
shall, in fact, apply to all life, health, accident
companies or associations which'do notcome within
the provisions of Chapter 3, Chapter~5, Chapter 7,
Chapter 8;Chapter 9; Chapter 18, Chapter 19, or
Chapter 20, Title 58', of the Revised Civil Statutes
of Texas. This Act shall include local mutual aid
associations; sta,tewidelife, or life, health~and'
accident associations; mutual assessment life/health
and accident associations, burial associations; and
similar concerns, for whatsoever name or class
. .
Hon. 0. P. Lockhart, page 3 0-6170
designated, whether speclfically named herein or
not.
"This Act does not enlarge the powers or rights
of any of"such associations nor enlarge~~thescope of
their legal or corporate existence; or authorize the
creation of any association'or'corporation-to do any
of the sorts of businesses above indicated, for'such
creation is not now specifically permitted by'law.
The laws prohibiting or limiting such creation and
exercise of corporate powers are not affected by
this Act."
Article 4789, Chapter 6, Title 78, Vernon's Annotated
Civil Statutes, provldes:
"Such corporations shall Issue no certificate
of stock, shall declare no dividends, shall pay no
profits, and the salaries of all officers shall be
designated inits by-laws. Such by-laws shall pro-
vide for annual members' meetings-,in which each~
member shall be entitled to vote, only in person, the
amount of insurance held."
It will be noted that under Article 486Oa-18, thatcom-
panies or associations operating under Chapter 6, Title 78, Per-’
non% Annotated Civil Statutes, the repeal of said Chapter 6 does
not affect any company or association that was doing business
under said law Ghen it was repealed, and that such companies or
associations shall continue to be governed by the regulatory pro--
visions of such laws. Article 4718, V.A.C.S., among other things,
provides in effect that each stockholder shall be entitled to
one vote for each share of stock fully paid up appearing in his
name on the books of the company, whic.hvote may be given in per-
son orby written proxy. Article 4803, V.A.C.S., among other
things, provides ih effect that any policy holder may execute his
proxy authorizing and entitling the holder to exercise his voting
powers unless such proxy shall be revoked previous to such annual
meeting. Articles'4718 and 4803 are not applicable to companies
operating under Chapter 6, Title 78, V.A.C.S. However, Article
4789 authorizes members to vote only in person. It will be noted
that~Article 5068-1, V.A.C.S'.,expressly provides that the Act
(Senate Bill'l35, Acts Regular Sesslon,~46th Legis'lature,1939),
does ‘not enlarge the powers or rights of any such association
'orenlarge the'scope of their legal or corporate existence nor
authorize the creation of any association, or corporation to do
any of the sorts of businessess above indicated, where such crea-
tion Is not now specifically created by law. It Is further pro-
vided that the laws prohibiting or limiting such creation and the
exercise of corporate powers are not affected by the Act.
Hon. 0. P. Lockhart, page 4 0-6170
Section 25 of Article 5068-1, Vernon's Annotated Civil'
Statutes, authorizes the Board of Insurance Commissioners to pro-
mulgate ,reasonablerules and regulations to carry out the pur-
poses of the'Act. (Senate Bill 135, Supra.)
Section 18, of said Article 5068-1, V.A.C.S., pro-
vides:
"The by'-lawsof any association may be'amended,
by a majority of the members of the association-
present when ratified by the Board of Directors, but
only at.meetings called for that purpose or at reg-
ular~meetlngs. Amendments to the by-laws shall not
be effective until approved'by the Board of Insurance
Coinmissloners.'Notices of all meetings, whether reg-
ular or special, at whic'hamendments to by-laws will
be considered, must be mailed to all members. Such
notices nmstcontain full copies of the proposed
changes'in the by-laws and fair explanations of the
intent and effect thereof."
Section 18, supra, is a general provision authorizing
associations and companies goverhed by Article 5068-1, V.A.C.S.,
to amend their by-laws in compl.iancewith said section. Kow-
ever, nelther~this section, nor ,any other section thereof, au-
thorlzescompanies or associations operating under Chapter '6;
Title 78, V.A.C,S'.,to amend their by-laws providing that mem-
bers of such companies or associations can vote by proxy. As
above stated, Art. 4789, Chapter 6, Title 78,"v.~.c.s., which
is applicable to companies operating under Chapter 6, expressly
authorizes members to vote only in person,
Section 18, of an order of the Board of Insurance Com-
missioners, dated July 11, 1939, provides, in part:
,I
. D . . Proxy voting will be permitted if the
associations' by-1aws"provide for it. If some
officer of the association holds proxies of the
members, the notice of any'meet.ingwhere the
proxies may be voted"mst clearly remind the policy
holder of the proxy and advise him that it will be
voted unless rescinded by the member."
'Generally speaking, the Board of Insurance~Commissioners
may'exerc'iseonly'such authority as is conferred upon it by law
in clear and unmistakable terms~and'the same will not be con-
strued as being conferred by implication. "(Rumble Oil and Refin-
ing Company vs. Railroad Commlssion of Texas';128 S.W. 2d, 9;
Commercial Standa'rdInsurance Company vs. Board of 'InsuranceCom-
missioners of Texas, 34 3-W. 2d, 343; Board of Insurance Commis-
. .
Hon. 0. P. Lockhart, page 5 0 -6170
sloners of Texas vs. Guardian Life Insurance Company of Texas,
et al, 180 S.W. 2d, 906).
We fall to find any law authorizing the Board of Insur-
ance Commissioners to pass an order permitting members of com-
panies or associations operating underchapter 6, Title 78,
V.A.C.S., tb vote by proxy. There is no statute that we can
find applicable to associations or companies operating under
Chapter.6 authorizing the members thereof to vote by pr::~y.
However, as heretofore mentioned, Art. 4789, which is applicabls
to such associations or companies',expressly authorizes the mem-
bers of said associations or companies to vote on1y.M person.
Therefore, it Is our opinion that mutual assessment, health and
accident companies or associations operating under Chapter 6,
Title 78, Vernon's Annotated Civil Statutes, cannot legally amend
their by-laws to permit proxy voting by the members of such com-
panies or associations.
Yours very truly
ATTORNEY GENERAL OF TEXAS
By: s/Ardell Williams
Ardell Williams
Assi~stant
AW:rt:wc
APPROVED SEP 8, 1944
s;/Geo.P. Blackburn
(Acting) ATTORNEY GENERAL OF TEXAS
Approved OplnFon %ommittee By s/BWS Chairman