Board of Inmlranoe CQPaissioaer8
AImtan, Texas
&teaticmryn. J. J. T&i&
&tlemear OpinionHo. O-2780
Be: Whether the proposedoontraof
of Barvesoa and Cole, Fbrt lkmth,
Texa6, is ome of iamrsmoe.
Relativeto the subjeotmatter of your oerrespondenoo under date of
September24th, there ir sulaxltteda proposed "burialserviaecontract"de-
sired to be issuedby Earvwon and Cole, a FuneralHome, ooaoerniagwhiab
you requestan opinionof *in departmentar to whethermoh proposedeon-
traut my issue ia Texas. From other eorretpondemeaddreas*$to yam and
attaahedto the request,me may safelyamtae that the “iheral home* OT
ooatraotorhas not oomplied'with the provisioa~~ of Senate Bill 136, 4Sth
Legislatswe,Se&ion 23 thereof. The question'10are sonfrontedwith,
therefore,ia whether or not the issuan00of a 0wtifioate mob as'the pro-
posed oontrmt, wherebythe "funeralhors" agrees to f'nmirhas provided ia
the oontrqat,a "mtmtdardfuneralrenioe.acbordiag to orirrentlirts of
prioes thoreforoa file in the ofiloe of Earresoaand Cele at the time of
death,"i8 within the prtiaiom of Seoticm23 of S-ate Bill 136, 46th
Legirlaturo,as being a aoatraotof issurmae.
In view of the statedpurpoete of the proporedImrial somioe owtraot
presented,m deem 5% Wmepw~sary to oopy or rootateherciq fts varims pre-
visioas. Tke do& @m forth suMtaxrtlally an und~img wb1-6~ tka
funeralhome, in 0oaeidsratioar of being desfgmhd tv wf8b (L %taaUa~
Amoral sorvioe"and whiah it agree6to do so omtiageat upon the daath of
the payer or members of the faucllysmed thereia,the payor agreesto assign
over the prooeedsof the life iamranoe peliay ia mob amountas designated
im *o fa0e of the oertifioate. It is to be noted that the funeralhome
who isauesthe artifiaate is designatedtrusteebenefioiary. The funeral
hame olainm00 insura%le~ interestuntil death oo0ura,and the effeot of
this eertifloateaa an assignmentis dependentspq sot only the effwtuat-
lag of the pollmy of inmmanoe whereinthe f'ua*yUhemm is nude fke truetee
beaefioiary,lmt alrrothe ooatbuatioa ef aaoh policy in ions. Iu this
ooaaeotiom,the prapomedoolltixot prmides that the lapse of the polioy of
iasuraaoefor mm-pegnent of the premiumta the inmraaoe mm@, wids the
contraatand reinstatementof the poliay reixtmtatea the ooatraate It i6
furtherstated thereinthat in the wmzt death oomre under oireumstaaoes
or ooaditioaaexpre6sedin the policy, wah aa euioido,reliscring the ia-
euranoecxmpmy fro01liabilityfor paymSnt,~w funeral semi- is $0 be
rendered. Se0tion 23 of Senate Bill 136, nupra,iaoorporatedin Vernon's
Board of IasurauoeCormnissioasrs,
pago 2 (O-2780)
Civil Statutes,uudsr Artiolo 5068-1,provides:
'Sec. 23. w individual,individuals,firms, eo-partasrehips, oorpora-
tious or assooiatioaedoing the ksiuese of providingburial 0r funeral
benefits,uhioh under any oirGlmatsncss may bs payablepartly er uholly
in morohaudissor wrvieos, sot in exosss of One aadrsd snd Fifty #150&O)
I)ollaks, or the value thereof,am hereby deolaredto bs lmrial oonpanies,
assooiatioasor sooisties,and shall organlaounder pro@.sioasof Chapter
274, Aote of the Forty-FirstLegislature,1929, and snsadnsntsthereto)
and shall opsratsunder and bs governedby Chapter274, aate of the For+
fir8t Lsjciatlatme, 1829, and amendmantathereto,and this A&. It shall
bs unlanfulfor any individual,individuals,firms, co-partnerships, oor-
poratione,or associatiolie, other than those definedabops, to mgags in
the ?au?iaees of providiagburial or funeralbenefits,which under lrnyair-
sumstsnoeemap bs paid wholly or partly in merchandiseor servioos.0
Santioa1 of said law, providesin part:
"ThisA& &ml1 apply to and arbraoeall insuranaeoaspaniesand associations,
whether ia0Qyporatsdor not, which issus polioiesor oertifioates0f insur-
anos on the lives of persons,or providehealth and aeoidsmtmef$tp, upon
the s0-oallodmutual assessmentplan, or whose funds are derlwd fran ths
aeeesssmnteupoa its polisyholdsre or membcre, and shall,in faat, apply to
all life, health md aooideato0s1psnios or aseoolati0nsuhish do not oome
within the prmisions of Chapter 3, Chapter5, Chapter 7, Chapter8, Chap
tor 9, Chapter18, Chapter 19, or Chapter20, Title 78 of the Revised
Civil Statutesof Tsxas. This Aot shall includelocal matual aid aseooia-
tioae; state-nidslife; or life, hsalth and aooidentassooiatioas; mutual
aeeeesm~t life, health and aooidentaseooiatione; burial assooiatioas9
and similaroonoof~~s, by uhatsoewr H(LBOor class desigaatsd,nhethsr
speoifical4 aamsd herein or not.*
The,nordsoertifioatss a8 used ia the abov% esotionis definedin
Seotion2 as *shall inoludeany insuranoo policy or contractof ineurmoe,
oertifioateof membershipor other documentthroughwhich insuranoeis
effsotedor svideaoed."
Section24 of the lar provides:
spolisieeor oertifioatoeissued bg burialassociation8shall providefor
paymentof the benefitin osrtainstipulatednsrohaudiseand burial sersioo,
rhish shall bs sohedubd in the poli0y or oortifioateand approwd by the
Board of InsuranceComsissi0xmre aa being of the reasoaablsvalue as 8tatsd
in the Paoo of the p0Iioy,unless the insuredshall at the time said polisy
it issuedslest to haw smue paid in oash. Ths pslla~r shall shw in nit-
iag the eleotionmade. If the aseooiationissuingsaid poli0y shallfail
0r refuseto furnishths merohsndieeand serui0ssprovidedfor in the pol-
icrg,same shall bs p&d in Oashh.
Board of InsuraaoeComnissioaers,
page 3 (o-2780)
Section31 of the law providesr
"If axr~r
director,offiaer,ageut, employeeor attorneyat law
or attorneyin fact of any aseeoiationunder this'Aot,~or&y other
person,shallviolate q of the prtiisiomsof this Aot not s$boifio-
ally oet out in Seotioas26, 27, 28 aud 29'of this *st, he shallhe
punishedhy fine not to exoeed Fire Eundred(#500.00 DollUs, or by
imprieomeat in the ooustyjail net to exoeod six (61 months, or by
both fine and imprisoztmont.s
*%rial iasuraaoeis a oentraotksod upon a legal ooasidera-
tion whereby the obligerundertakeste furnishthe obligeo,or all of
the lattertsmere relativeo,at death,a burialrea8ouablyworth a
fixed sum. It is a valid ooatraotand oonstituteslife iasuranoe~s
Joy00 on Imurauoe, Par. 701 Sissoa61 rel. 3ardolilloV. Prata Uader-
t&lag Co., 49 B. I. 132, 131 At. 76.
"3urialet funeralbenefitsiasuraaoe16 valid,and being dekr-
miuabloupon cessationof human lires.and dependentupoa their aontin-
w-Y* oonetituteslife 1asurauoe.s Couch on Imuraaoo, Vol. 1, See. 32,
p. 47; Stats 7. Tillott,171 Ind. 296, 23 L. Be A. (3.S.)197, 86 2, B.
68; State ex rol. FiehbaokV. Globe C. & UndertakingCo.. 82 Wash. 124, 143
pao. 878; Hkes V. State, 87 Hire. 261, 30 So. 783; State ox rol. Colenrn
V. WiohitaY. 3urialAssooiation,79 Xan. 179, 84 Pao. 757.
The oases generallyhold that ooatraotsby nhioh one par%, for a
oon,sideration,promisesto make a oertain paymentof money upon the death
of the other,whatevermey be the terms of payment of the ooneideration of
the assured,er the mode of estlmtiag or seourin3paymat of ths insur-
anoe money, it is still a ooatraotof iasurauoe,no matter by what name
it may be oalled. Cemsonwalth V. Ilethsrbee,106 l&es. 149; Stat.v.
BenevolentAssociation,18 Beb. 261, 26 Ii.1. 813 Fvaer V. State, 69 Ten.
276, 7 8.X 220.
mether or not a oontraotis oae of insuranoeis to be determined
by its purpose,effeat,eonteat and kpoz%s, and ziot nooowarily by tiha
terminologyused, and ewn though it containsdeolarationsto ths oontrary.s
FationalAuto ServioeCorporationV. 8tete, 56 S.U. (2) 209.
The lsnguageof ths provisionsof Artiole 6068-1,abow quoted, is
couohedin geaoraltorms suffioiw&ly broad in scope to iaoludeany ad all
kinds of oautraots,oertifieatoeor ether dooumeata of similarnature w
the oae presentedhere, whioh evidmoes, importsand is desi@ed to effeot-
uate insuranoe. There is a promiseto performa valuable ~orrioeoaatin-
gent on the dsatk of the party or parties. The eoaeidoratioa
is the
assignedproceedsof the iasaruroepelieynhieh ir sought te b effootuated
by the oortifieateand kept alive by paymentsmad0 to the oompany. Tko
faot that no weekly,monthly or anuualpaymentis paid direotto the
.- ,- . -
Board 04 Insurance Commissioners, page 4 (O-2780)
funeralhome is not materialin oonsideringwhoiiheror mot the 4ontraot
in questionis on4 of insuranoewithin the provIsionsof Artiole 5068-1,
SUpr8.
It is thereforethe opinionof this departmmt that the oontraot
pr484nt4dd,proposedto b8 issuedby &rvoson and Cole, of Fortilorth,
Texat,ia a oontraetof infIurUie0. We are not to be undemt4od a8 apprcrr-
ing the isruanosai this type 4f propsscld'aontraatas m4 oomplyimgwith
the pr4vlsion8of &tiole 6066-1,Vernon'8AnnotatedCivil Btatutss.
Yours very truly
ATTORHEYGEEERALOF TEKA6
I)Jr
/s/ Ilbp.
J. I4.King
BI. J.B.King
Assistant
APFWVKD DEC 4, 1940
/S/ tirald C.Mann
ATKIRIBYGEEERU OFTEUS