TExE~~~~~RNEY GENERAL
~PTEXAS
Hon. Walter C. Woodward. Chairman
Board of Insurance Commissioners
Austin, Te'xas
Dear Sir: Opinion No. o-2166
Re: Is the Texas Home Life Insurance Com-
pany of Palestine, Texas, operating
a btiial association in violation of
Sec. 23, S.B. 135?
And related questions.
Your request for an opinion of this department on
the questions as are herein stated, has been recelved.
We quote the questions submitted Ln your inquiry
as follows:
"I . Is the Texas Home Life Insurance Com-
pafiy~'of
Palestine, Texas operating a burial as-
sociation in violation of Sec. 23 of Senate Bill 135?
(A) Are the provisions of-Section 31,
Senate Bill 135 applicable to such operation?
"II. Is the Sanders-McCullough Funeral Home
operating a burial association Fn violation of Sec.
tion 23 of Senate Bill 135?
(A) Are the provisions of Section 31
of Senate Bill 135, applicable to such operation?
"III. Is the Texas Home Life Insurance Com-
pany violating the provisions of Article 578 of the
Penal Code in issuing certificates with the Funeral
Service Plan included to some members and not is-
suing it,to others, both of which are 'of the same
class'and pay the same premium rate?"
Section 23 of Senate Bill 135, Acts Forty-sixth
Legislature, reads as follows:
"Any indfvldual, indidduals, firms, co-part-
nerships, corporations or associations doing the
Hon. Walter C. Woodward, Chairman, page 2 o-2166
business of providing burial or funeral benefits,
which under any circumstances may be payable part-
ly or wholly in merchandise or service, not in
excess of One Hundred and Fifty ($150.00) Dollars,
or the value thereof, are hereby declared to be
burial companies, associations or societies, and
shall organize under provisions of.Chapter 274,
Act of the Forty-first Legislature, 1929, and
amendments thereto; and shall operate under and
be governed by.Chapter 274, Acts of the Forty-first
~~;~~s~~ure, 192.9,and amendments thereto, and
. It shall be unlawful for any individual,
Individuals.,firms, co-partnerships, corporations,
or associations, other than those defined above,
to engage in the business of providing burial or
funeral"benefits~,whiich'underany circumstances
may be paid wholly or partly in.merchandi:seor
services." I
Section 31 of Senate Bill 135, provides that:
'If any director, officer, agent, employee or
attorney at law or attorney in fact or any associa-
'tlon under this Act, or any other person, shall
violate any of the provisions of this Act, not spe-
cifically set out.in Sections 26,;27, 28, and 29 of
this,Act, he,shall be punlshed by fine not to exceed
Five Hundred ($500.00) Dollars, or by imprisonment
in the county jail not to exceed six (6) months,
or by both such.fine and imprisonment."
Article $78, Vernon's Penal Code, reads, in part,
as follows:
"No Insurance company doing business In this
State shall make or permit any distinction or dis-
crimination in favor of individuals between the
insure9 of ,the same class and of equal expectation
of life in the amount of or payment of premiums or
rates charged for policies of life or endowment
insurance or in the dividends or other benefits
payable.thereon; nor shall any such company or
agent thereof make,any contraot of insurance or
agreement as'to such c.ontractother than as ex-
pressed in the policy issued thereon, * *any officer,
agent and such company violating any provision of
this arti~cleshall be fined not less than one hun-
dred dollars."
We quote from your letter as follows:
Eon. Walter C. Woodward, Chairman, page 3 O-2166
‘I* l l * *
"The Sanders-McCullough Funeral Home of Bryan,
Texas, a corporation, is operating a funeral home
and/or undertaking business. In conjunction with
such business the Sanders-McCullough Funderal Home
has inaugurated and operated what is known as the
Sanders-McCullough Funeral Service Plan in Bryan,
Texas and vicinity. This Plan is operated with the
cooperation of and in conjunction with the Texas
Home Life Insurance Company, a local mutual aid ln-
surance association, with home office located at
Palestine, Texas. According to the principals,
there Is no contract or agreement between the fun-
eral home and the Insurance association other than
that which springs from a mutually profitable enter-
prise.' (The insurance association profits from the
Increased volume of insurance business and the funer-
al home profits from an increase in the undertaking
business.) Incidentally, the Manager of the Funeral
Home is a licensed agent of the Insurance Company.
qThe Sanders-McCullough Funeral Service Plan
is advertised extensively in the Bryan, Texas sec-
tion through the medium of newspapers, mail, clrcu-
larization in public places, personal solicitation
and otherwise. All expenses of such advertising
has been paid for by the Texas Home Life Insurance
Company with the knowledge and consent of the Sanders-
McCullough Funeral Home.
"ThenPlan is submitted to individuals by li-
censed agents of the Insurance Company, including
the Manager of the Funeral Home, in the form of a
standard cash benefit policy to which is attached
a rider, the contents of which.are:
"'SANDWS-MCCULLOUGH FUNEHAL SERVICE PLAN
of the
Texas Home Life Insurance Company,
Palestine, Texas
'THIS IS TO CERTIFY THAT:
The SANDERS-MCCULLOUGH FUNERAL HOME of Bryan, Texas
(hereinafter designated as Servicers) agrees to pro-
vide funeral services and merchandise, since benefits
are payable in cash and additional cost incident.to
credit are eliminated, of a reasonable value of
for each $ cash benefits provided for upon the
aeath of any of the persons insured under the policy
Hon. Walter C. Woodward, Chairman, page 4 O-2166
of insurance Issued by the Texas Home Life Insurance
Company, Palestine, Texas to which policy this Certi-
ficate is attached. SINCE CASH BENEFITS FOR THE DEATH
OF CHILDREN UNDER FIVE YEARS OF AGE ARE REDUCED) SERV-
ICES AND MERCHANDISE TO BE RENDERED, SHALL BE IN PRO-
PORTION TO THE ABOVE.
'The Services an& Merchandise provided for herein
shall consist of a CASKET. OUTSIDE CONTAINER. EM-
BALMING IF DESIRED, FUNERAL COACH, FAMILY CAR, PRCF-
FESSIONAL SERVICE, USE OF CHAPEL, PROPER CLOTHING,
AND OTHERSERVICES AND ATRICLES NECESSARY AND CUS-
TOMARILY FURNISHED BY REPUTABLE FUNERAL HOMES FOR
FUNERALS OF THIS TYPE.
'This Certificate is issued for and In consideration
of an assignment by the beneficiary, acceptable to
the Services, of the benefits payable under Policy
No. of the Texas Home Life Insurance Company
and is subject to all the benefits, provisions and
conditions of said policy. This Certificate shall
not take effect or be bindingupon the Servicers un-
less all of the Insure& are alive and in good health
at the time of its delivery to the person designated
to receive same.
'Issued this theday of ,19-.
'SANDERS-McCUI&OlJ2H
FUNERAL HOME
Bryan, Texas
'SEAL This Service Available Only
at
SANDERS-MCCULLOUGH FUNERAL HOME
502 W. 26th Street
Bryan, Texas
IN EVENT OF DEATH
Phone Bryan 123 Collect
Day or Night'
Under the above mentioned facts the funeral serv-
ice and merc.handiseunder the~said Funeral Service Plan
are always $50.00 greater invalue than the cash benefits
provided for in the certificate, except as to $100.00 pol-
icies in which event the services and merchandise is aa$25.00
greater va%ethancash. Atthe time the policy or certificate is
Hon. Walter C. Woodward, Chairman, page 5 O-2166
issued, the Sanders-McCullough Funeral Service Plan rider is
attached to the policy and is delivered to the member as one
Instrument, The plan contemplates that all premiums will be
paid at the funeral home and then transmitted to the Texas
Home Life Insurance Company, and that all claims under the
certificate will be filed at the funeral home. The premium
rate for the certificate is the same rate that is charged to
other members of the Texas Home Life Insurance Company in
other seotions of the State not covered by the Sanders-Mc-
Cullough Funeral Service Plan.
The Sanders-McCullough Funeral Home agrees to pro-
vide funeral services and merchandise, since benefits are
payable in cash and additional costs incident to credit are
eliminated of a reasonable value of for each $
cash benefits urovlded for upon the death of any of the D=
sons insured under the policy of insurance issued by the-
Texas Home Life Insurance Company, to which the above men-
tioned certificate 1s attached. The services and merchandise
provided for are described.
Neither the Texas Home Life Insurance Company nor
the Sanders-MoCullough Funeral Home is licensed as a burial
association under the provisions of S.B. 135, Acts of the
Forty-sixth Legislature. Benefits under the plan may be, or
are payable either wholly or in part in funeral services and
merchand~ise. Benefits and funeral services and merchandise
are $50.00 greater in value than cash benefits under the sav,e
certificate and benefits under the plan may be Andyare in ex-
cess of $150~00, except as.above noted. All members of the
Texas Home Life funeral service planalthough the premium rates
for membership are the same with or without the plan.
The Funeral‘Service Plan Certificate is attached
to the insurance policy and becomes a part thereof. The
above mentioned insurance company and the funeral home are
together, contracting and doing the business of providing
burial or funeral benefits, which may be payable partly
or wholly in merchandise or service.
In view of the foregoing facts and the definition
of burial companies, associations or societies as defined in
Section 23, Art. 5068-1, supra, you are respectfully advised
that it is the opinion of this department that the Texas Life
Home Insurance Company of Palestine, Texas and the Sanders-
McCullough Funeral Home are operating as a burial association
in violation of Section 23 of Senate Bill 135, Acts of the
Forty-sixth Legislature.
The provisions of Section 33.,Senate Bill 135, Acts
of Forty-sixth Legislature are applicable to both the Texas
Hon. Walter C. Wooaward, Chairman, page 6 O-2166
Home Life Insurance Company and the Sanders-McCullough Fun-
eral Home.
With reference to your third question, you are re-
spectfully advised thkt it 1~ our opFnFon that the Texas
Rome Life Insurance Company 'Isviolating the provision of
Article 578, Penal Code, supra, ln issuing certificate with
the Funeral Service Plan to some members and not issuing
it to others, both of which are "of the same class" and pay
the same premium rate. There should be no distinction or
discrimination between the insured of the same class where
the payment of premium or rates charged are the sam8. In
the above mentioned plan, the certificate with the Funeral
Service Plan Is avgilable to some and not to othemof the
same class who pay the same premium or rate.
Trusting that the foregoing fully answers your fn-
quirg, we are
Yours very truly
ATTORNEY GENERAL OF TEXAS
By s/Ardell Willitims
AM811 Williams
Assistant
AW:ob:wc
APPROVED MAY 29, 1940
s/Gerald C. Mann
ATTORNEY GENERAL OF TEXAS
Approved Opln1on Committee By s/BWB Chairman