### THE ArroxciwEY GENERAL OFTEXAS

Board of Insurance Commissioners Austin, Texas Gentlemen: Attention: Mr. J. J. Timmins opinionNo. 

### o-2736 Re: Burial insurance.
Your recent request for an opinion of this Department upon the questions a8 are herein statedhas been received.

We quote from your letter a8 follows:
"I am enclosing letter I received today from Rains and Talley Funeral Home, togetherwith identificationcard and a certificateentitlingme to a $50.00 discount on the purchase of a casket and burial service from Rains and Talley Funeral Home, Marshall or Longview.
"I direct your particular attention to questionsNumbers 1, 2 and 3 on the secondpage of the letter. Please advise this office at your earliest convenience if, iq your opinion, itwould be a violation of the insurance laws of this state for this particular funeralhome to do the thinga inquiredabout in the three questionsenumerated." The letter from Rains and Talley Funeral Home above referred to reads in part as follows:

"Enclosedherewithwe are sendingyou one of our nev identificationcards. You will notice that while you are not a member of either Rains & Talley Burial Association or Rains-TalleyBenefit Association, that we are extending to you, as a courtesy from the Rains & Talley Funeral Home, Marshall, Texas and Longview,Texas, free ambulance service to and'from any hospital in Harrison or Gregg counties. This courtesy is extended to you through the courtesy of the Funeral Home and is not contingenton your being a member of any burial association or mutual aid association. This courtesywill be extended to you whenever you present this card.- -

Board of InsuranceCommissioners,page .2(O-2736)

"We are also sendingyou, as a complementof the Rains & Talley Funeral Home, Inc., a certificateentitlingyou to a $50.00 discount on the purchase of casket and funeral services, as stipulated in the body of this certificate. It is not necessary that you carry any policywith any burial association or life insurance company in order for you to comply with the terms of this certificate. We are simply sending it to you because we like you. "The above paragraph described to you in the manner in which our ambulance certificatesare distributedand the proposed manner in which the discount certificatesmay be issued. We assume that this will answer your question concerning free ambulance service in your letter of September 4th, 1940, as to identificationcards issued to Floyd and Versia Russell. These cards shouldhave been issued in the name of Rains-TalleyBenefit Association, the Burial Association cardbeing issued through error here in the office. "If you will notice the identificationcards carefully you will note that it states that we will give free ambulance serviceto the person (not to the policy-holder) whose name and address is listed on the reverse side. For your information,we will issue one of these identification cards to any person who applies to our office for same, regardless of whether he is a policyholder or not. We do this in order to avoid discrimination.
"For your information,we are enclosing an ambulance card issuedby the Welch Funeral Home, of Longview,Texas, which is self-explanatory. "Also, for your information,the $50.00 discount certificate issued to you is the first of such certificatewhich has everbeen issuedby our company and we are issuing same to you in order that we may obtain an opinion. "1. If this certificate is issued to any and all people, free of any charge and not contingenton membership in any burial association or life insurance company, is any violation of law indicated? "2. If this certificate is sold for a stipulated sum (say $1.00) and no furtherpayments demanded, even though sold in conjunctionwith burial insuranceor life insurance, is any violation of the law indicated?
“3. If this certificate is sold for $50.00 in one cash payment or installmehtsthereon, is any violation of the law indicated?Board of InsuranceCommissioners,page 3 (o-2736)

"Pleaseunderstand that the certificate issued to you is the only certificatethat has ever been issuedby this company and that none will be issuedunless same canbe issuedwithout violation of any existing law. These certificateshave been prepared to meet a very nasty competitive situationthat we have here in East Texas, and assure you' that they will be issued only as a last resort. We do not considerthese certificates insurance,but the prepayment of part of the funeralbill." Section 23 of Senate Bill 135, Acts of the 46th Legislature, reads as follows:

"Any individual, individuals,firms, co-partnerships, corporations,or associations doing the business of providing burial or funeral benefits,which under any circumstancesmay be payable partly 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 shallbe organizedunder the provisions of Chapter 274, Acts of the 4lst Legislature, 1929, and amendments thereto; and shall operate under and be governedby Chapter 274,Acts 41st Legislature, 1929, and amendments thereto, and this Act. It shallbe unlawful for any individual, individuals, firms, co-partnerships,corporations,or associations, other than those defined above to engage in the business of providingburial or funeral benefits,which under any circumstancesmay be paid wholly or partly in merchandise or services." Section 31 of Senate Bill No. 135, supra,provides that: "If any director, officer, agent, employee, or attorney at law or attorney in fact or any associationunder this Act, or any other person, shallviolate any of the provisions of this Act, not specificallyset out in Sections 26, 27, 29 of this Act, he shallbe punished by fine not exceeding five hundred ($500.00)dollars, orby imprisonment in the county jailnot exceeding six (6) months, or by both such fine and imprisonment."
In answer to your first question,you are respectfully advised that it is the opinion of this Department if the above mentioned $50.00 discount certificate is issued to any and all people, free of any charge and not contingenton membership in any burial association or life insusance company, there is no violation of the law.- -

hoard of IWXCUUX Commissioners,page 4 (o-2736)

With reference to your second question, it I.6 our opinion that if the above mentioned certificate ia aold for a stipulated sum (say $1.00) or any other amount and no furtherpayment demanded,when sold in conjunctionwith burial insuranceor life insurancetherewould be an evasion and violation of Senate Bill No. 135, eupra.

In reply to your third question,you are advised that it is our opinion that if the above mentioned certificate is aold for $50.00 in one cash payment or installmentsthereon and not in connectionwith burial insuranceor life insurance,there is no violation of the law. As stated in the case of Phillips V. State, 125 S. W. (2d) 585, "freedom of liberty of contracts is guaranteedby the Constitutionsof both the State and Federal governments. The Legislaturehas no right to prohibit and limit a man in his lawful right to contract,unless such contract or contracts are fraughtwith fraud, deceptionand the like, which if unbridled and uncheckedmight lead to much mischief. e . ." We do not believe the above mentioned certificateor contractbears any inherent vice upon its face, and to outlaw it would be an invasionand infringementupon a person's constitutionalright of liberty of contract. If the above mentioned certificate is sold for $50.00 regardless of whether it is paid for in cash or installments is immaterial,provided the party buying the certificateactuallypays $50.00 for the same and receives in return a value not exceeding $50.00, there is no contract of insurancebut merely an installmentor advancepayment for a casket and funeral services,a right of contractwhich we believe is not prohibited by law. Trusting that the foregoing fully answers your inquiry,we are
Yours very truly
ATTORNEY GENERAL OF TEXAS

By /s/Ax-dell

Williams Ardell Williams Assistant
AW:BBB:LM APPROVED OCT 3, 1940

I.4 Gerald C. Mann ATTORNEY GENERAL OF TEXAS THIS OPINION CONSIDEREDAND APPROVED IN LIMITED CONFERENCE