Untitled Texas Attorney General Opinion ( 1965 )

Honorable J. N. Nutt No. C-498
Commissioner of Insurance
State Board of Insurance Re: Interpretation of
Austin, Texas H.B. 592, 59th,Leg.,
as to the scope of
the term "non-
profit corporation"
Dear Mr. Nutt: as used therein.
We have your request for our opinion concerning
the construction of H.B. 592, Acts 1955, 59th Leg.,
Ch. 695, p. 1625. Your question arises from Section 1
of H.B. 592 which amends Section la of Article 8309,
V.C.S., to read as follows:
"Section la. Every executive officer
elected or appointed and empowered in accor-
dance with the charter and bylaws of a'corpora-
tion which is a subsc,riberto this law, other
than a charitable, religious, educational or
other non-profit corporation, shall,be an
employee of such corporation under this law.
Any such executive officer of a charitable,
religious, educational or other non-profit
corporation which is a subscriber to this
law, other than any such educational corpora-
tion specified in Articles 830913or g309d, may,
notwithstanding any other ~provision of this
law, be brought within the coverage of its
insurance contract by any such corporation by
specifically including such executive officer
in such contract of insurance and the election
to bring such executive officer within the
coverage of insurance is in effect, and during
such period such executive officers thus
brought within the coverage of the insurance
contract shall be employees of such corpora-
tion under this law. Under no circumstance
shall any executive officer of,any corporation
be counted in determining whether or not the
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Honorable J. N. Nutt, page 2’:@-498)
employer has three or ,more employees so as to
be subject to the provisions of the Work-
men's Compensation Law as specified in
Section 2, Part 1, of this Act." (Emphasis
added)
You state your problems as follows:
ItWerespectfully ,requestyour opinion as
to the scope of the term,'non-profit corporation'
inthe context of this statute.
,"The 'Texas Non-Profit Corporation Act,'
Chapter Nine, Title 32, V.A.~T.S.,includes
language under Article 1396-1.02, 'Definitions,'
Sec. A.(3), as follows:
'"Non-Profit Corporation" is the
equivalent of "not for profit corporation"
and means a corporation no part of the
income of which is distributable to its
members, directors, or officers.'
"Certain corporations are specifically
excluded from the provisions and application
of this Non-Profit Corporation Act under
Sec. B(3) and (41, Article 1396-2.01. These
exclusions specifically name Mutual Loan
Corporations, Co-operative Corporations,
Telephone Co-operative Corporations, banks,
insurance companies and others. Conversely,
the 'Co-operative Marketing Act Corporations'
are subject to Title 93, V.A.T.S., Article 4738,
the 'Co-operative Marketing Act.' Article 5738
contains the following definition:
'Associations organized hereunder
shall be deemed non-profit, inasmuch
a,sthey are organized not to make
profits for themselves as such, or for
their members, as such, but only for
their members as producers.'
"Other provisions of Title 93 seem to
embrace a considerable number of various types
of co-operative corporations handling
agricultural products and related machinery,
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Honorable J. N. ,Nutt, Page 3 (C- 498)
supplies, financing, etc. 'There are perhaps
some similar appearing conflicts in other
sections
._ of our laws which would pose this
problem of interpretation Sor us.
"Is the term 'non-profit corporation' as
used in H.B. 592 limited to those non-profit
corporations which are organized for charitable,
religious, or educational purposes? Or does
the definition of the *Non-Profit Corpomtion
Act' apply? If'so, how is it applied to a
corporation which is also subject to a specific
statute such as the 'Co-operative Marketing
Act'? What is the status of a school which
is incorporated and run for profit?"
In our opinion the answer to your first question
is "no." Every word of-a statute is presumed to have
been used for a purpose, and a cardinal rule of
statutory construction requires that each sentence,
clause. ohrase and word be given effect if
reasonably possible. Eddins-Walcher Butane , Comawny
v. Calvert, 156 Tex. 587, 298 S.W.2d 93; 53 -Tex.Jur.2d
229 Sec. 159. It is clear that the Legislature did
not'intend to limit the term "other non-profit
corporations" to those having aritable, religious
or educational purpose for the simple reason that there
would have been no point in adding the "other
non-profit corporation" provision. -
This gives rise to the next question: What
non-profit corporations, other than charitable, religls
and educational institutions, are to be embraced
within the term "other non-profit corporations"?
To state your second question in a little different
way: Are we to include in such category only those
corporations embraced in the definition of non-profit
corporations contained in the Non-Profit Corporation
Act, or did the Legislature mean to also include any
and all corporations designated as non-profit by
statute?
We believe that the broad language used by the
Legislature in H.B. 592 evidences an intent to include
all corporations designated as "non-profit" by statute.
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Honorable J. N. ,Nutt, Page 4 (C-498 1
Therefore, in answer to ,yoursecond question, it
is our opinion that theterm ,?non-profitcorporation!'
as used in H.B. 592 is not to be limited to ~ths
definition of that term,as found in the Non-Profit
Corporation Act, but rather ,is to .includeall non-
profit corporations so designated by the legislature.
The answer to,your third question,is implicit in
the answer to yoursecond question.
In answer to your fourth question, a school which
is incorporated for profit is, in our ,opinion,~onthe
same footing as any other corporation organized for
profit. The language "educational or other non-profit
corporation" clearly indicates that the legislature was
speaking ,onlyof educational corporatinns of a non-
profit character. Business and professional schools,
such as beauty and barber colleges and schools of art
and dancing, ~may~be organized for profit and incorpora-
ted as any other business. In our opinion, such a
school would not be a non-profit corporationnor an
educational institution as that term is used in H.B. 592.
S UMM
-- A R,Y
w-e--
The term "non-profit corporation" as used
in H.B. 592 is not limited to those non-profit
corporations which are organized for charitable,
religious and educational purposes. Said
term includes those corporations which are
governed by the Non-Profit Corporation Act and
those corporations which are organized under
specific statutes which designate them as
"non-profit" corporations. Schools incorporated
and organized for profit would not be an
"educational corporation" wtthin the meaning
of H.B. 592.
Yours very,truly,
WAGGONER CARR
Attorney General of Texas
Assistant Attorney General
RRR:ss
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Honorable J. N. Nutt, page 5 tc-49e )
APPROVED BY:
OPINION COMMITTEE
;au;.p;ult5, Chairman
Robert Lemens
Ivan Williams
Roger Tyler
APPROVED FOR THE ATTORNEY GENERAL
By: T. B. WRIGHT
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