Untitled Texas Attorney General Opinion ( 1943 )

GERALD C. MANN
d BB
Honorable O.P. Lockhart, Chairman
Board of Insurance Commissioners
Austin, Texas
Dear Sir: Opinion No. O-5207
Re: Can the Insurance Department
lawfully continue to license
the Mutual Benefit Health &
Accident Association, Omaha,
Nebraska,,to conduct its busi-
nest in Texas under repealed
Chapter 5, Title 78, of the
Revised Civil Statutes of Texas
of 1925, end a related question.
Your request for an opinion on the above matters
has been received and carefully noted. We quote from your
request as follows:
"Re: Mutual Benefit Health
& Accident Association,
Omaha, Nebraska,
"The Company was originally incorporated under
the laws of Nebraska on March 5, 1909 for a period
to expire March 5, 1939. On February 12, 1938 its
membership adopted charter amendment, which was ap-
proved and filed by the Director of Insurance of
Nebraska March 28, 1938 extending its corporate
life to March 5, 1989. Enclosed are photostatic
copies of its old and new charter and of its bg-
laws as amended and filed with this Department from
time to time.
"It was originally admitted to Texas and li-
censed as a mutual assessment health and accident
company on March 17, 3920 under the provisions of
Chapter 4~of Title 71, R. C. 3. 1911, which later
became Chapter 5 of Title 78, R. C. 3. 1925. An-
nually thereafter to and including 1942 it was
licensed in like manner and under the same statu-
tory provisions to continue its operations in
. .
Honorable 0. P. Lockhart, Page 2, (o-5207)
Texas under such Chapter 5, though the latter was
repealed by Section 16 of Acts 1929, 41st Leg.,
1st C. Se, p. 90, Ch. 40, as amended by Acts 1929,
2nd C. S., p. 99, Ch. 60, sec. 1. It has not yet
been lioensed for 1943.
"Please givb-us your opinion upon the follow-
ing points:
"1. Can this Department lawfully continue to
license such Company to conduot its business in
Texas under such repealed Chapter 5 of Title 781
“2. Are the present charter and by-laws of
such oompany such as necessarily to constitute it
a 'mutual assessment insurance company' fundamsntal-
ly incompetible with the plan of operation of a
'mutual insurance compan t of the kind governed by
new Chapter 9 of Title 7is (Article 48608, sections
l-19) as added by,the 1929 Aots above cited, and
thus neoessarily debar it from qualifylag to do
~JU;USS in Texas under seotion 13 of suoh Article
" . . . ."
It is the opinion of this department that the first
question asked by you should be answered in the affirmative,
which answer makes it unneosssary to answer the seoond ques-
;',o&asked by you. Our masons for such holding are as fol-
:
Repealed Ghapter.5, Title 78, of the Revised Civil
Statutes of Texas of 1925, under whloh aaid oompany was orig-
inally licensed to do business in Texas was composed of Art-
ioles 4701, 4782 and 4783.~ Article 4782 provlded for certain
filing fees, Artiole 4783,excepted aoma oompanies from the
provisions of said Chapter ar&dArtiole 4781 was aa follows:
"Art. 4781, (4791) Forrign'assessmsnt oom-
,--Companies or assooiatlono ollganleedUnder
e aws of any other State of the United States,
!I?+
carrying on the business of life or oasualty in-
surance on the asserrrmeat or natural premium plan,
having cash assets of a sum notless than one hun-
dred thousand dollars, invested as required by the
laws of this State regulating other insurance com-
panies, shall be licensed by the Qommissioner to
do business in this State, an8 be subject only to
Honorable 0. P. Lockhart, Page 3, (o-5207)
the provisions of this chapter. S&h company or
association shall first file with said Commissioner
a certified copy of its charter, a written agree-
ment appointing said Commissioner and his successor
in office, to be its attorney, upon whom all law-
ful process in any action or proceeding against it
may be served; a certificate under oath of its
president and secretary that it is paying, and for
the twelve months next preceding has paid, the max-
imum amount named in its policies or certificates
in full; a statement under oath of its president
and secretary of its business for the year ending
on the thirty-first day of December preceding; a
certified copy of its constitution and by-laws,
and a copy of its policy and application; a certi-
ficate from the proper authority in its home State
that said company or association is lawfully en-
titled to do business therein, and has at least
one hundred thousand dollars surplus assets sub-
ject to its indebtedness. The Commissioner shall
issue a license to any company or association com-
plying with the provisions of this chapter. Every
such company or association shall annually there-
after before such license is renewed, file with
said Commissioner on or before the first day of
March, a statement under oath of its president and
secretary, or like officers, of its business for
the year ending December 31 preceding."
Said Chapter 5 was repealed in 1929 by S. B. No.
37, page 90 of the General and Special Laws of the First
Called Session of the 41st Legislature, Section 18 of said
Act being in part as follows:
"SEC. 18. Chapters 5, 6, 9, 12, 13, 14, and
15 of Title 78, of the Revised Civil Statutes of
1925, and all other laws or parts of laws in con-
flict with the provisions of this Act, are hereby
repealed; provided that such repeals and the pro-
visions of this Act shall not apply to or affect
any company or association of this State now doing
business under the laws repealed, and they shall
continue to be governed by the regulatory provi-
sions of such laws. . . ."
The Second Called Session of said 41st Legislature,
by 3. B. No. 106, page 99 of the General Laws of said Session,
amended said Section 18 of said original act, but no change
was made in that part of same hereinabove set forth.
Honorable 0. P. Lookhart, Page 4, (o-5207)
There would be no question as to the proper construc-
tion of this repealing law as contained in said Section 18
thereof but for the fact that the Legislature used the words
"of this State" in describing the companies and associations
to which such act should not apply, and both domestic and
foreign companies had been licensed to do business under said
repealed law.
A question as to the meaning of this savings clause
was raised in the case of National Aid Life Association vs.
Murphy, 78 3. W, (2) 223, writ dismissed, end Judge Looney of
the Dallas Court of Civil Appeals, on December 1, 1934, con-
strued same as follows:
"After defendant had been issued a permit to
carry on its insurance business in this state, un-
der the provisions of chapter 5, title 78 (article
4781 et seq.), the 41st Legislature repealed chap-
ters 5, 6, 9, 12, 13, 14 end 15 of title 78 (art-
icle 4781 et seq.; art. 4860 et seq.; art. 4933 et
seq.), effective June 19, 1929 (see Acts 1929, 1st
Called Sess., chapter 40, pp* 90-95 (Vernon's Ann.
Civ. St. art. 486Oa-1 et se .)). The repealing
section of the sot of 1929 4see Vernon's Ann. Civ.
St. art. 4860a--18) contains a saving clause in
favor of insur;arg ;;mpanies, then doing business,
as follows: Chapters 5, 6, 9, 12, 13,
14, and 15 of Title 76, of the Revised Civil Stat-
utes of 1925, and all other laws or parts of laws
in conflict with the provisions of this Act, are
hereby repealed; provided that such repeals end the
provisions of this Act shall not apply to or affect
any company or association of this State now doing
business under the laws repealed, and they shall
continue to be governed by the regulatory provi-
sions of such laws. * * *I
"!Phecontention of plaintiff is based on the
idea that the saving clause does not include for-
eign insurance companies, such as defendant, but
applies only to domestic concerns, and that, since
the effective date of the repealing act, defendant
has conducted its business in Texas without author-
ity of law. That this is a correct statement of
plaintiff's position is revealed by the following
excerpts from the written argument of her attorneys
on file. They said: 'It is manifest from the re-
pealing act above quoted that the provisions of the
statute excepting from its application only those
Honorable 0. P. Lockhart, Page 5, (O-5207)
companies or associations of this state which were
then doing business under the laws repealed did not
apply to foreign insurance companies and that no
foreign company of the description contained in the
repealing act could thereafter do business under
the provisions of articles 4781, 4782 and 4783, the
act repealed. + * * But appellee contends that,
in view of the express and unambiguous provisions
of the statute, withdrawing the right of the ap-
pellant company to do business in Texas, no con-
struction of the statute was necessary end the mere
fact that the insurance commissioner without au-
thority issued a license or permit to appellant
did not have the effect to emend the statute and
write an exception therein in favor of appellant
and associations in like situation.1
"We cannot accept as correct plaintiff's idea
as to the meaning of the statute under considera-
tion; on the contrary, believe that all associations
end companies, domestic or foreign, legally doing
business in the state when the statutes were repealed,
were permitted by the saving clause, quoted above,
to continue and have their permits renewed.'
The general rule as to the interpretation by the
Legislature of laws passed by it is set forth in 39 Texas
Jurisprudence, Section 132, pages 248-251, in the following
language:
"Doubtless the Legislature, in enacting, amend-
ing or repealing a statute, may be presumed to have
known facts of common notoriety in the State, as
well as any circumstances or conditions affecting or
relating to the particular enactment. And it may
be presumed that the Legislature Qnew*, 'had in
mind', or 'Iwas familiar with' the 'law of the land',
that is, the Constitution, the common law, existing
statutes and the effect thereof; also pries decisions
of the courts,--at least those of last resort,--per-
taining to the subject-matter.
"The Legislature is presumed to have under-
stood the meaning of language that it employed, and
to have known the construction placed upon the same
or a similar statute by the appellate courts and by
executive or administrative officers. And it may be
presumed, in a proper ease, that the Legislature has
acquiesced in the construction of a particular act,
Honorable 0. P. Lockhart, Page 6, (o-5207)
or that if it had not been satisfied with
such construction it would have changed the
verbiage of the law so as to show a contrary
intention.
n . . . ."
After the passage of this repealing Act in 1929
containing the saving clause above referred to, the Legis-
lature has referred thereto as hereinafter shown.
,
In 1936, the 44th Legislature, in its Third Called
Session and by House Bill No. 37, page 2040 of the General
and Special Laws of such session, which was an omnibus tax
measure, amended Article 7064 of the Revised Civil Statutes
of Texas of 1925, which said Article 7064 provided for the
filing of reports and payment of taxes by every kind of in-
surance business except life and other than fraternal benefit
associations, and in said amendment made the following pro-
visions, quoting from page 2075:
11
. . . however, foreign assessment life and
casualty companies admitted to do business in Texas,
under Chapter 5, Title 78, Revised Statutes 1925,
shall also pay taxes under and in accordance with
the provisions of this Article."
The 45th Legislature, at its Regular Session in
1927 and by House Bill No. 441, page 525 of the General and
Special Laws of said session, attempted to clarify the law
in regard to payment of taxes by certain insurance companies.
The caption of said act was in part as follows:
11
. . . and further providing for the taxing
of foreign assessment life and casualty companies
admitted to do business in Texas under Chapter 5,
Title 7$!,Revised Civil Statutes of Texas of 1925;
. . . .
In the body of said act, page 527 and in amending
Article 7064, the following provision was made:
II
0 . . however, foreign assessment life and
casualty companies admitted to do business in
Texas, under Chapter 5, Title 78, Revised Civil
Statutes of Texas of 1925, shall also pay a tax
of three and twenty-five hundredths (3*25) per
cent of their gross premium receipts from Texas
businzss, as such receipts are herein defined.
. . a
. .
Honorable 0. P. Lockhart, Page 7, (o-5207)
In 1939, the 46th Legislature, during its Regular
Session, passed S, B. No. 313, page 424 of the General Laws
of said session, which provided for the payment of taxes by
foreign assessment life and casualty companies, the caption
and Section 1 of said act being as follows:
'An Act providing for tsxing the premium re-
celpts
- of foreign assessment life and
-..... _
casualty companies now aamlttea to a0
business in Texas, under Chapter V, Title
78, Revised Civil Statutes of Texas, 1925,
as amended by Senate Bill No. 37, Chapter
40, Acts of 1929, First Called Session,
Forty-first Legislature, as amended by
Senate Bill No. 106, Chapter 60, Acts of
1929, Second Called Session, Forty-first
Legislature, in the event any such com-
pany should hereafter reorganize, amend
its charter or otherwise change its plan
of operation so that It shall not be sub-
ject to the provisions of said Chapter V,
Title 78, Revised Civil Statutes of Texas,
as amended, snd'declaring an emergency.
"BE IT ENAC~TEDBY TILELEGISLATURE OF THE STATE OF
TEXAS:
"SECTION 1. That if any foreign assessment
life or casualty company now licensed to do busi-
ness in this State under the provisions of Chapter
V, Title 78, Revised Civil Statutes of Texas, 1925,
as amended by Senate Bill Ho. 37, Chapter 40, Acts
of 1929, First Called Session, Forty-first Legis-
lature, as amended by Senate Bill No. 106, Chapter
60, Act of 1929, Second Called Session, Forty-first
Legislature, shall hereafter reorganize, amend its
chapter or otherwise change its plan of operation
so that it shall no longer be subject to the provi-
sions of said Chapter and the other laws then ap-
plicable to such companies, it shall thereafter,
as to all policies written before such change, be
governed and taxed as provided by the particular
laws under which it operated and was taxed at the
time of such change, but as to all policies there-
after written it shall be governed and taxed under
the lawa to which it has then become subject by
such change."
The 46th Legislature, at its said Regular Session,
also passed Rouse Bill No. 556, page 638 of the General Laws
Honorable 0. P. Lockhart, Page 8, (o-5207)
of said session, which was an act to further amend Article
7064 and in which the following provision was made:
II
. however, foreign assessment casualty
l .
companies admitted to,do business in Texas under
Chapter 5 Title 78, Revised Civil Statutes of
Texas of i925, shall also pa a tax of three and
twenty-five hundredths (3.257 per cent of their
gross premium receipts from Texas business, as
such receipts are herein defined. . . ."
In the Omnibus Tax Law asaed by the 47th Leglsla-
ture,at its Regular Session in 19$1, page 269 of the General
and Special Lavs of said session, said Article 7064 was again
amended, and In said amendment the following language was
used, quoting from page 334 of said Session Lavs:
. however, foreign assessment casualty
companiei admitted to do business In Texas under
Chapter 5, Title 78, Revised Civil Statutes of
Texas of 1925, shall also pay a tsx of four and
five hundredths (4.05) per cent of their gross
premium receipts from Texas business, as such re-
ceipts are herein defined. . . ."
Another rule of construction of statutes which we
think is entitled to considerable weight herein is that per-
taining to executive or departmental construction. Your
statement shows that the Board of Insurance Commissioners
has consistently construed said repealed Chapter 5, and par-
ticularly the savings clause thereof, to permit the continued
licensing of this company to do business in Texas and this
has been done over a period of fourteen years. The general
rule relative to departmental construction is laid down in
39 Tex. Jur., sec. 126, pp. 235-238, as follows:
'V&26. Executive or Departmental Constructlon.--
The courts will ordinarily adopt and uphold a con-
struction placed upon a statute by an executive of-
ficer or department charged with its administration,
if the statute is ambiguous or uncertain, and the
construction so given it is reasonable. In other
words, the judiciary will adhere to an executive or
departmental construction of an ambiguous statute
unless it is clearly erroneous or unsound, or un-
less it will result in serious hardship or injustice,
although it might otherwise have been inclined to
place a different construction upon the act.
Honorable 0. P. Lockhart, Page Y, (o-5207)
"The rule above stated is particularly appli-
cable to an administrative construction of long
standing, where valuable interests or rights have
been acquired or contracts have been made, or where
a law that has been uniformly construed by those
charged with its enforcement has been reenacted
without a change of language. It has been varl-
ously applied to constructions, opinions or rul-
ings of the Governor, the Attorney General, the
Comptroller, the Secretary of State, the Treasurer,
the Land Commissioner, the Compensation Claim Board,
and the State Department of Education. . . .v
This rule is followed by the court in the case of
Houston & North Texas Motor Freight Lines, Inc., et al. v.
Johnson et al., 159 5. W. (2) 905, in dealing with the con-
struction given to an Act by the Railroad Commission, which
said holding is as follows:
'The Railroad Commission has, it appears,
since 1931, been authorizing sales of portions
of certificates where the certificate is severed
'horizontally', and is not divided ~lengthwlse'.
In administering its duties under Section 5, Art.
Yllb, the Commission is bound to construe the
meaning thereof. The Legislature, which has
amended the Act, of which Art. Yllb forms a part,
several times since 1931, has never seen fit to
in any way indicate that the Commission has not
given the true interpretation to Sec. 5, Art. 911b.
And it is well settled that the construction given
to an act by one whose duty it is to administer it
is entitled to great weight. Cumin am v. Cun-
ningham, 120 Tex. 491, 40 S, W. 2d 4P , 75 A. L. R.
1305; Harris County v. Crooker, 112 Tex. 450, 248
s. w. 652. And such construction should be ad-
hered to unless clearly erroneous. Western Public
Service Co. v. Meharg, 116 Tex. 193, 288 5. W. 141,
292 s. w. 168."
Said Chapter 5, Title 78, though repealed in 1929,
has been referred to by the Legislature as still being in ef-
feet insofar as companies affected by said saving clause are
concerned, said references to said law by the Legislature
having been after the opinion construing same was written
by Judge Looney in December, 1934. This fact alone should
be sufficient to authorize you to continue to license this
company to do business in Texas under said repealed law, but,
.
Honorable 0. P. Lockhart, Page 10, (O-5207)
in addition thereto, Judge Looney has held likewise and your
department has continuously so construed said law since 1929.
Therefore, it is our opinion that you have authority to con-
tinue to license this company to do business In Texas as
heretofore.
Trusting that this satisfactorily ansvers your ln-
quiry, we are
Very truly yours
ATTORNEY GENERAL OF TEXAS
By /s/ Jas. W. Bassett
Jas. W. Bassett
JWB:mp:eac Assistant
APPROVED MAY 4, 1945
APPROVED
/s/ Gerald C. Mann OPINION
COMMITTEE
ATTORNEY GENERAL OF TEXAS
BY G.C.B.
Cm-