THE ArroxciwEY GENERAL 

OFTEXAS 

Board of Insurance Commissioners 

Austin, Texas 

Gentlemen: Attention: Mr. J. J. Timmins 

opinion No. o-2736 

Re: Burial insurance. 

Your recent request for an opinion of this Department upon 

the questions a8 are herein stated has been received. 

We quote from your letter a8 follows: 

"I am enclosing letter I received today from Rains and 

Talley Funeral Home, together with identification card and 

a certificate entitling me 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 questions Numbers 1, 2 and 3 on the second page of the letter. Please 

advise this office at your earliest convenience if, iq your 

opinion, it would be a violation of the insurance laws of 

this state for this particular funeral home to do the 

thinga inquired about in the three questions enumerated." 

The letter from Rains and Talley Funeral Home above referred 

to reads in part as follows: 

"Enclosed herewith we are sending you one of our nev 

identification cards. You will notice that while you are 

not a member of either Rains & Talley Burial Association 

or Rains-Talley Benefit 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 contingent on your being a member of any burial association or mutual aid association. 

This courtesy will be extended to you whenever you present 

this card. 
- - 

Board of Insurance Commissioners, page .2 (O-2736) 

"We are also sending you, as a complement of the Rains 

& Talley Funeral Home, Inc., a certificate entitling you 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 policy with 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 certificates are distributed and the 

proposed manner in which the discount certificates may be 

issued. We assume that this will answer your question concerning free ambulance service in your letter of September 

4th, 1940, as to identification cards issued to Floyd and 

Versia Russell. These cards should have been issued in the 

name of Rains-Talley Benefit Association, the Burial Association card being issued through error here in the office. 

"If you will notice the identification cards carefully 

you will note that it states that we will give free ambulance service to 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 issued by 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 certificate which 

has ever been issued by 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 contingent on 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 further payments demanded, even though 

sold in conjunction with burial insurance or life insurance, 

is any violation of the law indicated? 

“3. If this certificate is sold for $50.00 in one cash 

payment or installmehts thereon, is any violation of the law 

indicated? 
Board of Insurance Commissioners, page 3 (o-2736) 

"Please understand that the certificate issued to you 

is the only certificate that has ever been issued by this 

company and that none will be issued unless same can be issued without violation of any existing law. These certificates have been prepared to meet a very nasty competitive 

situation that we have here in East Texas, and assure you' 

that they will be issued only as a last resort. We do not 

consider these certificates insurance, but the prepayment 

of part of the funeral bill." 

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 circumstances may 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 shall be 

organized under the provisions of Chapter 274, Acts of the 

4lst Legislature, 1929, and amendments thereto; and shall 

operate under and be governed by Chapter 274, Acts 41st 

Legislature, 1929, and amendments thereto, and this Act. 

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, which under any 

circumstances may 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 association under this Act, or any other person, shall violate any of 

the provisions of this Act, not specifically set out in 

Sections 26, 27, 29 of this Act, he shall be punished by 

fine not exceeding five hundred ($500.00) dollars, or by 

imprisonment in the county jail not 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 contingent on 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 further payment demanded, when sold 

in conjunction with burial insurance or life insurance there would 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 installments thereon and not in connection with 

burial insurance or 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 guaranteed by the Constitutions of both 

the State and Federal governments. The Legislature has no right to prohibit and limit a man in his lawful right to contract, unless such contract or contracts are fraught with fraud, deception and the like, which 

if unbridled and unchecked might lead to much mischief. e . ." We do 

not believe the above mentioned certificate or contract bears any inherent vice upon its face, and to outlaw it would be an invasion and 

infringement upon a person's constitutional right 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 certificate actually pays $50.00 for the same and receives in return a value not exceeding $50.00, there is no contract of 

insurance but merely an installment or advance payment for a casket and 

funeral services, a right of contract which 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 

CONSIDERED AND 

APPROVED IN 

LIMITED 

CONFERENCE