Untitled Texas Attorney General Opinion

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 : EMc: jmc:jrb ATTORNEY GENERAL