-
TEE ATJTORNEY GENERAL
OF TEXAS
H~Jx. ‘Ralph Brook opinion .NS. :o&@o '.'
Count* ~~ttortiw .&I: UndW’the’Yaote submitted, lb
Lubboeki,Coun3y the Southern, Lloyde Fire I!ialiratlb(l
Lubbock, Texae ” Company oi San ~kitcnlo; ‘Texae; ;,,,ell-
glble to write fire 1nsuranoe”on”~
;,the Lubbock’ Independent Sohool Dla-
Dear. Siri c;~L;~.: ,,i,“1:,:,::triot $uldinga? .‘,
;~..:Y&‘lett~rir:.rof~ &it&r 21,, .,I942 ,,re&&&g the
oplnlon '&:-thlrr~
department on the’ abode &aCed queetlon reads
aa followrt::~~ :.~,,,
-.i : ,.MI;,& ,b&n re~,‘&ated ;by A. 0. Ja&aon ‘&;I-
‘ierr -Manager ,,of:the’: e ubbock,,Independent Sohokl ‘.
Dlatriot)~Lubbock~:.Texaa to~~eeoiare’ en oplnlon aa
to whether~sthe zSouthern, i loyde Fire Inearanoe Com-
pany of,San,Antonio, Texan, 1s ellglbla to write
fire ;inaurBILoe!-on the $ubbook Independent, ,86hool
Mrtriot +ulldlngr ‘the ~~LIlbbook‘Independent ,-Sohool
Dirtrlot - belug~un ‘&dependeiit :~rohool d$rtrIat or-
ganleedX@deri:the lair of’thg.:ftate,. of’j:exae.: ’
,. .,‘L
~3:<Under ;>&t>oie :ii&6be8 ,,,af :,Vimon t II’,,&&at~~
~Cfrll.~~Statuter~.~-lt~~proolde~~;.that::a ‘mutuals,-oompany
ma write lnrurance Ppon::raohilQorporatlanr ;‘a.s,the
Lugbock Independent Sohool Dietrlot however In
,thri reoent oare,:of Lewlr~~Vr~~Inde eident,:Sohiol
Dirtrlot ol:~Aurtln et al .,~61 S -hs2nd ,450 thi
,8 reme ~Uourt:held’that~;~r ‘artiOie~w:r.un~onrtl-
.tu‘4eional:.by 3ea8on:~of Seotiti .52 .of.~.~Artiole 3 ~of.
the Conatltutlon o? the~State,‘:oi Texar.:.
“It la my underrtaudlng thati%he .8outhera
Lloyd8 18 not a mutual compan In a letter rub-
mltted to%&.. Jaokron by the i*outhern’Lloyd8, they
make thle~~rtatement t
“*The pollay~ holderr,~ of auoh Lloyd8 are not
rubjeot to an atmerrment. In no oaaa and under na
oj,*aumePrtanore will a uoliay holdek nf LloOdr ever
be eubjeot’to an aseeeement. The’.flrrrt, lart and
.
oirly oeets to a polloy holder of Lloyd6 organlea-
tion whether It be 8outhern Lloyds or any other
Lloydr, la the advance premium paid.
Hon. Ralph Brock, page 2 (O-4880)
“There are four (4) general types of lnsur-
snae oarrlers; the Stook Company the Lloyds, the
M~t$~g~ompany and the Reolprooai or Inter-Insuranoe
The first two of these oompanlee, the
Stook Cotipanyand the Lloyd8 are privately owned
enterprises owned by their stockholders. The oom-
manly aocep c ed name for owners of the Stock gcpany
1s Stook Holders, and Lloyds Underwriters.
principal dlfferenoe between the two is in the name.
They are both associations of individuals for the
purpose of doing an insurance business. No policy
holder of a stook company or a Lloyds is ever sub-
jeot to an assessment.
Wnder the other two classifications, the Mu-
tual and the Reciprocal, there are no stoCkholders
nor private owners. The entire assets belong to
the policy holders. The policy holders own the
c,ompany and whlle some states make .provlslons for
the waiving of the assessment feature of these two
types of pollcles, it remains a fundamental fact
that the policy holder owns the company and wheth-
er or not he Is legally liable for all debts, It
would seem reasonable that since the policy holders
own the company, he should also owe the debts.
“The Southern Lloyds Is a Texas institution,
organized and operated under the Texas Insurance
laws, which makes it different in operation form
from the Lloyds of London. The fact Is that the
Southern Lloyds has its stock, its surplus fund and
its reserves and these three things are the protec-
tive features that are found in any good and rell-
able insurance organization.
“The principal difference between the Southern
Woyds and a stock company 1s the name- The South-
ern Lloyds could call Itself a stock company if it
wished, but since a Lloyds Is generally known as a
Lloyds and not a stock company, we do not call our-
selves the Southern Lloyds Stock Insurance Company
but simply the Southern Lloyds. I
.-- ~.~
,?* “1 give you the above quotations from a letter
addressed to Mr. A. C. Jackson, Business Manager Lub-
bock Schools, Lubbock, Texas for the purpose to show
you the status of the Southern Lloyd8 as to whether
same IS a mutual or in fact a stock company.
Hon. Ralph Brock, page 3 (O-48801
"1 take the position that Inasmuch as the
Southern Lloyds meet the requirements of a stock
company that they are eligible to write such ln-
surance upon the properties of the Lubbock Inde-
pendent School District, however, I would appre-
ciate It if you would furnish me wlth your oplnlon
on such question,
We have been Informed by a representative of the
State Insurance Department that the Southern Lloyds Fire In-
surance Company of San Antonio, Texas, Is not a mutual ln-
surance company but a LIoyds Insurance company as Indicated
by the name.
The case of Lewis vs. Independent School District
of Austin et al, I61 S.W.2nd 450, among otherthings holds
that the independent School District of Austin Is not author-
ized to have the properties of the School District insured by
a mutual company. As the Southern Lloyds Fire Insurance Com-
pany of San Antbnlo Is not a mutual insurance oompany but a
Lloyds Insurance company the opinion of the Court in the above
mentioned case does not prohibit Independent School Districts
from insuring their properties with a Lloyds insurance company.
We have made a careful search of the statutes and
constitutional provisions of this State and f,all to find any
statutory or constltutlonal provision prohibiting Independent
School Districts from lnsurlng their properties with companies
of the class and kind of company or companies as the Southern
Lloyds Fire Insurance Company of San Antonio. Therefore It Is
the oplnlon of this department that the Southern Lloyds *ire
Insurance Company of San Antonio Is eligible to write fire ln-
surance on the Lubbock Independent School District's buildings.
Trusting that the foregoing fully answers your ln-
qulry, we are
Yours very truly
ATTORNEY GENERALOF TEXAS
By /s/ Ardell Williams
Ardell Williams, Assistant
APPROVED OCT 'j, 1942
/s/ Gerald C. Mann
ATTORNEY GENERALOF TEXAS
APPROVED,(.Kl&IO~ANCM.'lTTER
BYs 9
AWrmprwb