Honor~able 0. F. Lockhart, Chairman
Board of Insurance Commissioners
Austin. Texas
Dear Sir: Opinion No. O-5913
Re: Whether the Vice-President of
the American National Insurance
Company is entitled to continue
to draw his renewal commissions
on the business he wrote prior to
December 31, 1943. when he was a
branch manager, in view of Article
4745, Vernon’s Annotated Civil
Statutes.
Your letter of March 4. 1944, requesting the opinion of
this department on the question stated therein, reads, in part, as follows:
w * * * At this time I have this question to de-
cide: The American National Insurance Company of Gal-
,veston. Texas, had an agent employed by them as a Branch
h4anager in Salt Lake City, Utah. This ,man was paid a sal-
ary and, also received commissions and renewal commissions.
“On January 1, 1944, he was called into the home of-
fice and made a Vice President because of the outstanding
work he had done as a Branch Manager and the Management
of the company as a reward promoted him to the status of a
full Vice President. The question we wish you to answer is
this: Is this man entitled to continue to draw his renewal
commissions on the business that he wrote prior to December
31, 1943 under his agent’s contract and, before that either he or
the company had thought he would become an executive officer
~of the company?”
Article 4745, Vernon’s Annotated Civil Statutes, provides,
in part:
“No life’insurance company transacting business
in this State shall pay,,or contract to pay, directly or in-
directly, to its 0 * * vice-president, * * * any commission
or other compensation contingent upon the writing or pro-
curing of any policy of insurance in such company, or pro-
curing an application therefor by any ‘person whomsoever,
Honorable 0. P. Lockhart, page 2 (O-5913)
or contingent upon the payment of any renewal premium,
or upon the assumption of any life insurance risk by such
company. Should any company violate any provision of
this article, it shall be the duty of the Commissioner of
Insurance to revoke its certificate of authority to trans-
act business in this State.”
We have failed to find any case by our appellate courts
where the foregoing statute has been interpreted or construed.
We do not have before us the contract between the man
in question and the insurance company. However, for the purposes of
this opinion, we assume that such contract was the general contract or-
‘dinarily :executed by life insurance companies and their respective agents.
Generally speaking, the utmost freedom to enter into any
~‘.’
contract, permitted by existing law, is the inherent right of every citizen,
‘~ ‘and when he exercises that right in a lawful way, no Legislature has the
“p$wer to disturb the purpose or effect, or in any manner re-write any of
the provisions of that contract, or make a new contract for him. and the
right to comply with and enforce its provisions as written is fixed and
vested. The degree in which the offending statute may impair the obliga-
tion of contract is immaterial. The only question is: has the obligation
‘been encroached upon in any respect? (See Chappin v. Frank, (Civ.App.)
236 S.W. 1006, 1011, reversed, Frank v. State Bank & Trust Company,
(Com.App.) 10 S.W. (2d) 704)
In view of the foregoing, it is our opinion that the man in
question is entitled to continue to draw his renewal commissions on busi-
ness which he wrote prior to December 31, 1943, under his agent’s con-
tract. although he is now Vice-president of his company. In view of Ar-
ticle 4745, supra, it is our further opinion that the Vice-president would
not be entitled to any commissions or other compensation contingent upon
the writing or procuring~of any polrcy of insurance in such company or
procuring nnapplicrtiantherefor ,by’any person whomsoever ,OZ contin-
gent upon the payment of any renewal premium, or upon the assumption
of any life insurance risk by such company after December 31. 1943.
Stated another way, the Vice-president would not be entitled to any com-
mission on the payment of any renewal premium, etc., on any business
of the company after he became vice-president, except such commissions
as he was entitled to under his contract on business that he wrote prior to
December 31. 1943.
APPROVED 3-14-44 Yours very truly
/s/ Geo. Blackburn
Acting Attorney General ATTORNEYGENERALOF TEXAS
of Texas
By /s/ Ardell Williams
Ardell Williams
AW:EP/cm Assistant
Approved Opinion Committee
By /s/ BWB
Charman