c -
E QENET GENE
OF EXAS
Aus~liw 1% TEXAS
September 11, 1961
Honorable William A. Harrison Opinion No. WW-1128
Commissioner
State Board of Insurance Re: Whether the relationship estab-
International Life Building lished between the fire and casualty
Austin 14, Texas company and the local recording
agent or between the sub-agent and
the general agent by certain con-
tracts would make such local re-
cording agents eligible to be
insured under a group life insur-
ance policy issued to the fire and
casualty company or to the general
Dear Mr. Harrison: agent.
Your opinion request inquiring whether local recording agents of a
company, or the sub-agents of a general agent, may be eligible for group
life insurance under a policy issued to the casualty company or to the general
agent represented by said recording agents involves the interpretation of
Article 3.50, Section 1 (1) (a) of the Insurance Code, which provides, in
part, a* follows:
I,. . . The policy may provide that the term
‘employees’ shall include . . . the employees, indivi-
dual proprietors, and partners of one or more affiliated
. . ., proprietors or partnerships if the business of the
employer and of such affiliated . . . ~proprietors or
partnerships is under common control through . . .
contract, or otherwise. . . .”
It is apparent that by the enactment of this amendatory language in
1947 (Acts 50th Leg., ch. 208, H. B. 420, p. 366), the Legislature sought,
through the expansion of the definition of “efiiployees, ” to enlarge the classi-
fication of groups of persons legitimately entitled to the benefits of group
insurance. It is stated in Volume 39 of Texas Jurisprudence at page 258:
“In enacting an amendment, the Legislature is
presumed to have intended to change the law, and a
Hon. William A. I+rrison, page 2 .(WW-1128)
construction should be adopted that gives effect to
the intended change, rather than one which renders
the amendment useless. ‘I
In construing the language of the statute here considered, we are
to be guided by those settled rules of statutory interpretation providing
that the primary consideration is the ascertainment of the legislative
intent, and that an act should be given a fair, reasonable, and rational
construction.
The Legislature, while expanding the definition of “employees, ”
also incorporated significant limitations upon the groups permitted to be
covered by requiring that the entities set out in the statute be “affiliated, ‘I
and by requiring that the business of the employer and, the affiliated en-
tity be under common control, “through . . . contract or otherwise. ” In
imposing these requirements, the Legislature sought to insure that the
advantages of group insurance would be available only to closely knit
groups of persons, bound together in a common endeavor, whose interest
in securing such insurance would not be the prime motivating factor in
their association.
We are of the opinion that the local recording agents and the com-
pany, or the sub-agents and general agent, are “affiliated” inasmuch as
they are associated for the purpose of placing insurance and work in close
connection to achieve that end. Further, it is apparent from the agency
contracts and bond forms submitted with your request that the business of
the agents and the employer is under common control with regard to the
insurance written for the particular company or under the particular gene-
ral agent. These elements of control are found in the contract provisions
requiring prompt remittances to the carrier or general agent, compliance
with rules and regulations promulgated by the carrier or general agent,
and the filing of certain reports required of the agents by the company or
general agent. Obviously, the expanded definition of “employees” and the
use of the language “through . . . contract or otherwise,” evidences the
intention of the Legislature not to require that degree of control normally
encountered in the ordinary employer-employee relationship.
In view of the foregoing, it is our opinion that your question should
be answered affirmatively.
I -
Hon. William A. Harrison, page 3 (WW-1128)
SUMMARY
The relationship established between the fire and
casualty company and the local recording agent or be-
tween the sub-agent and the general agent by their agency
contracts would make such local recording agents eligible
to be insured under a group life insurance policy issued to
the fire and casualty company or to the general agent.
Yours very truly,
WILL WILSON
Attorney General of Texas
J+J,>hFa
BY
Dudley D. McCalla
DDM/lmc/pe Assistant Attorney General
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
W. Ray Scruggs
Elmer McVey
John Reeves
Ben Harrison
REVIEWED FOR THE ATTORNEY GENERAL
BY: Howard W. Mays