A~~JSTIN 11. TCUAS
September

29, 1954

Hon. c. H. CavnePe StateAuditor Anntin, Texae 

### ~opini0n 190. a-141

Re: IU~lbillty'of the llqnidator appointed

uwlor Article 21.28,Tcxaa InBuMnoe Code, and hl8 eraployeee for membership

in the State EmplRyeestbtlrcmtent

sy8te&

Dear Mr. Cavllesrt

Your requert



### ror UI 

### opinion rem in pm u 

### f0umt

"Ara the liquidator (appointed by the Board of Insurance

Commissioners

under the provisions of Article 21.28, Imuranos Code of;Texas) and those operating

under him Stata employees to the extent that they are eligible for membership

and partioipation in the Texas Employees Retirement

System?
"This question

arises in view of the fact that thosepersonsare members of the Employees Retirement System and making contributions to it, while at the
same time they are also participating in the Federal Social Security,Act (making contributions)

and the Unemployment

Compensation

coverage (State

and Federal).

"If thosepersonsare State employees we do not believe they shouldbe under the Sooial Security and Unemployment

Compensation

provisions. If they are not State employees,

then we do not believethey should be covered

by the Employees

Retirement

System." Eligibility

for membership

in the Employees

Retirement

System of Texas Is determined by the definitions of "department"

aud "ea@.oyee" found in Section 1 of Article 62289, Vernon's Civil Statutes. These definitions

are *s follows:
"'Dcpartmant'

shallmean any department, commission, institution,

or agency of the StateGovernment.
"'Employee'

shallmean any regularly appointed

officer
or employee

in a hepar'tment

o? '2netitate

tin0 'is employah

on

zC.H. Cavness, pa@ 2 ,(iS-141)

a basis or in a position normally

req~fring

not iqa thau nine hundred (900)hours per year, but shall ~4~ include

membere of U$State Legislature or any inoumbant

of an officenormallyfilledby vote of the people; nor peraonson piecework basis; nor operators

of equipment

or dPiYel'R

of 3mm whom wages are Ineludedin. rentalrate Raid the ownersof &aid equipment

or team; nor any personwho is covered

by the TeacherRetirementSystem of the State of Texas or,any retirement system slrPport.4

with State funds other than the Texas Employees Hn,tirement

System."

Funds from which retirement benef::s

are paid are made up of contributions

from the employees@ oompenoatiojn

and a matchingoontribution by the State of Texas,which in chargedto the fund "appropriated, allooated,

and providedto pay the salaryor compensation of the employee for whose benefit the oontrib'ation is made." Art. 6228a, sea. 8.

The question

for determination

is uix%her Article 21.28 of the Insurance

Code createsa "department, ?omraission,

Institution,

or agencyof the State Govemmanf." Section 2 of Article21.28provides:

"Whenever

under the law of this S-);ete a court of competentjurisdiction fiuds that a reooiver should take chargeof the assetsof an insurer domiciled

in this State, the liquidator dasignaked

b:-,the Board of Insurance

Commisaiouere

es "heriqafter

prtivided

for shallbe such receiver. ,ilbe l!.<~~~ir’ *a’ b~~ il<j ap~oiuted receiver

&all forthtrith

t%l;u ;*~~>es:~i~~

a;' the assetsof such 1ns~~~e.r and dea? w.,&

+ .- the oaue %n his
own nom as receiver or -In the imme of the Umrer a8 <he courtmay direch.

"TheBoard shall have poower to appointand fix the compensation

of th* 1~rl';idstor

e,nd of such special deputy liquidators, couns?~l,

cLerka,or eseistans, as it may deem ueceasary. 3~3 psyrna>,t. of b~::h.

~mgmsa%ion and all expenses

of liquidstion

shallbe made by the liquidator

out of funds or assets of the insurer on approval

of the Board. An itemized report of such expenees,

sworn to by the liquidator and approved

by the Board, shallbe preflented to the court from time to time,

which accountnhkl.1 be approved

by the Court unlessobJection

is filed thereto

within ten (10) days after the presentation of the aoaount

. . . ."E&l. c. 'H.crYnass, pago 3 (.(&141)

sootion 4 or Artiole 21.28 rerd~ in parts

"The l.iquidatorherein;named ehallbe appplnte6by
a majorityor orid Boerd or lhame commi~sionera, enA ehallbe rubjeotto removal by a majority

of said Roard, and b;efora

entering upon the duties of said offioe,shall file withtheBoardof Ineuranoe Commi~eioners

abond ln theeum of Ten Thousand ($lO,OOO.OO) Rollare,

payableto the Roud of Ineatrance

Com1eslonere,and oond1tloned upon the faithful perfomanoe of his dutiesand the proper aocountlng for a11 moneys and properties received

or admlnlsterod

by him."

The statute

gives the Board of Imurame Coamniseloners oertaln , duties in the liquidation of receivership

estatesand lnveetsit with certain

power and authority over the liquidator alongwith the control exercised

by the variouscourts ln whlah reoeivershlps are pending.

It is our opinionthat the liquidator and the employeee

who are 

### l ppointedbythe Board of Insurance Commlssionera

to servennder him 0~~4 within the definition of "employee"

ln the Trras Rmployeas Retmnt Act. The liquidator funotlons

as a receiver

under appointment

of a cot&~, but hln appolntmentresulte from his designation ae liquidator

by the Roan3 of Itwme Ctmmierionerf~. while Article21.28 

### of the liwvrauce Code doen not expreeely

refer to the liquidator as a subordinate

of the Roud of Inouranoe

Ccaomisdonerra,

the lmportof the etatnteis that tbs Board 1s given
a gemeraleupervlaory responsiblllty

over the llquldatlon of ineuremoe

oapanies vhlch iv oarrledout throughits agent, the liquidator, who Is eelectcd by the Board, is responsible to it for themanner in whloh he parforms his duties,and ls subject to dlsaharge by the ~oerd.1 The liquidator is also responsible to the court,but we are elf the opinionthat he ifd aotlng 88 the agent or repreaentatlve of the Board of Insuranoe&I&Ssionersin dischrrglng his duties. The legislature haa in effeot oreated
a state agency to handle the liquidation of lnsuranae

oompanies

end has placed the agencyunder the supervision of the Board of InsuranceCon&ssioner6 e The motivation

back of the statute undoubtedly

was the belief that the establishment of a state agency to admlnlster all lnsurauoe receiverships,

with a permanent

staff experienced

in such matters,

would result ln greaterefficiency and more satisfactory handling

of the affairs of the companlee

ln receivership.The fact that the lnsuranoe businessin
one aacted with the public interest wcararhts

the establishment

of a go- 

### ~ermwntrlagency to handle the receiverships vhloh the courtsplaoe ln its hands.

1 The title of the originallot providing for the appointment of a liquidator

reads: "An Aot 

### ~0110endng the liquidation, rebabilltation,

reorganization

or conservation

of insurers and placlngmme under the Board of Insursnoe Commissioners; "

. . . (Euphasla supplied) Acte. 46th Leg. R.S. 1939,p. 389.Hon. C. H. Cavness, page 4 \&S-1$1)

The oreaticm

of the ollfice

of liquiaotor

throughlegislative enaotment,

the method 

### or hi61

byopOtihmt,

the ail?~ervlsions

of hia duties by an exeoutive

depmtment of the State Government, and the pezmanenoy of the offle all point to the oonolueion that this Is a state agency ad that ite employess oome within the definition of "employee"

in tha Bmployei~

Retirement

Aat. The one faotorwhlah might cast doubt on thie oonclusion

is the 

### rw2 the liquidator and the employees

under him are paid out of ths assets of the oompanles which are ln receivership. Aesumhg that the SUDIB neceeaeryto meet those expenses could not be lookedupon as assessmczlts' which become state funds (SeeAtt'y.Cm. Op. V. lgl),does the fact that their compensation is paid from a source other than state fund&! prevent thesepersonsfrom being olasslfled as state employees4 The employer-e.m@oyoe relationship

may exist even though the employeeis comPensatea out of funds of a thirdperson. Jones
v. Goodson, l21F. 2d 176 (C.X.A. lOth, 191) and cases cited at page 179. In our opinion,the faot th.%t these persons~8 oompensated from funds of the companies in liquidation

does not negativetheir status
aa state employees. Cf, Gagne v. Brush, 30 F. Supp. 714 (D.C. N. Hemp. 1940); In re Park Brewing Co,, 48 F. Supp. 750 (W.D.Mioh, ,1942).In 80 fw na the State Employees Retirement Act IS concorned,

tha statute does not requirethat members of the Re=lrcme2t Systembe paid out of state funds. It requiresthat the contrlbutton by hhe State shallbe chargedto the fund "sppro?riated, allocc.td, ma 

### p2-0viaaa” to paythe 1 $Uary:i.or

compensation

of ti employee,e

Article 21.28 of the Ineuwe Code makes provision for paper12of the compensation of tha employees 

### ma all expenses of iiqdaats02 out of ma8 or asseta of the insurer. The State's

match- con+zlhution is a proper epense of liquidation and 1s payableout 

### 0r the funaR thus allocated

2nd p-0VidOd.
The holdlagof ,thls opinion 1~ .Xir%teP to employees

who perform services

for the IlqMdator fnol;?ont to hit: z*ocelvership

duties in windingup the 

### affairs of .thr: oomp~~&oa

or in s!?.pervising

their continued

operation,

es the case my be , 

### 3.2 oontrad.lstl~~otlon t0 employeesof a oompany who are rotnined.

to o:>ntlnue

t3e lmsinaasoperatlone of the company. Persons who peti'nrfi

scrv:.cms

for the company ln carrying

on the regularoperations for Mioh it.

~~7s organized

are not state employeea,

alt,:mugh

they zre ~7nder

Xre sup3nision 

### 0r the liquidator during the time the receivernhlp con".inuas.

The holdingthat XAe Iiquldo;tor end. his sti&f C.o?WtitM3 a state agenoy Is lnconaistent with some of the statementa made in Attorney

Gemar8a's opinion

v-191 (1947). This opln!.on overrules

Opinion

V-191 to the extent of such lnoonais.tency.

you hrvs etated that it 1s your belief that these employees ohould not be under the Texas Unemployment Compensation

Aot (Art1010 522lb-1et seq., V.C.S.) and the old-age and survivors inauranoe

provirlom of the Sooirl geourity Aot if they we aoaered by the Texae Bnployeer

Retirement

Aot. Artiale 522Ib-17(g)(T)(0) provldeettit employ;.

Hon. C. E, Cavness, page'i5 (S-141)

mOnt shallnot inolude'"'eervioe 

### pel-fOrMed

in the employ of this State
or any other state,or of any politicrl 0ubdivision

thereof,

or any lnatrumentality



### 0r anyone or 

### more

or the foregOing

whloh is who14 owned by this State or by one or more statesor political rubdivislons." The Federel

Unemployment

Tax Act contains

a similar

provision (26 U.S. C.A. Seo. 1607(o)(7)).Llkewioe, the Sooial Seourity Aot (42 U.S.O.A. Sec. 410 (a) (8)) and the Fedaral Insuranoe Contributions

Aot (26U.S. C.A. Seo 1426(b)(8)) exoludeservice

performedln the employof a State
rmm coverage

under th0se laws.

It should

be noted that the Texas Employees Retirement

Act does not excludefrom membership persons

who are covered

by other retirement

systems,

except systemssupported with state funds. SiELUltaneous

coverage

of thesepersonsunder the Retirement Act and the Social Security Act would not Plolatethe Retirement Aot. Any resulting violation

would be against the Soolal Security Act for having includedetate employees in coverage

under that law.

The question

of ooverage

under the federalstatutesie a matter for federal Interpretation, and a oonsLWdction by e state exeoutiveofficer is not bindingupon federalauthorities. We must conclude that the federaladministrative agencies

are free to place their own interpretation

upon the meaning of "service performed

ln the employof
a State"as used ln the federal statutes. National Campaign

Committee
v. Rogan, 69 F: Supp. 679, 686 (S. D. Cal. 1945).

With reapeotto the meeniq of thie provision in the Texan Unemployment

Compensa%ion

AOt, it ha61

been held that unless a state unemployment

oomgensation

aot dear4 differsfrom the federal law, it must be assumedthat the Legislature intended

that they be interpretedrlike. Arnold collegefor Ryglene and Physical

Raucation

V. Denaher, 3.31

Corm. 503, 41 Atl. 26 89 (1945). It is our oonolusion that in snaoting

the Texas Unemployment C0mpensatlon

Act the Texas L glslat~ure

intended

to adop, + the oonstrootlou

whioh the federal a6tithorities

plaoedupon the oomparable provisiouin the federaletatutes. This oonclusion 1s strengthened

by the faot that the tax would still aOorueunder the federal etatuteeven thoughthe state statute exempted

the employment,

lf the federal law was construed not to exempt it, Federaladmlniatrative auth0rlties

have already

ruled on the question

of unemployment

compensation

ouverage

for these employees. While this offioe

might disagree

with the federal lnterpretrtion, nevertheless

ve oondidbrit beyond our authority to assumethe role Of interpreter

of thisprovisionin the Terra Unemployment C0mpensrtiOn Act when federalauthorities have alreadyconstrued the similar

PmVialon in the federal law. This opinion goes no further than to hold that the liquidator and his employees

are oovered

by the Texas EmplOyees Retirement Aot. A rsoonaideration of the propriety

of their alsO being covered

by the Social Seourlty Act and the state and federalunemployment

ocmpensatian

law61 will have to emanatefmm the appropriate federaltuth0rities.Eon; 0. H. Cavness, page 

### 6 (S-141)

The insurance

liquidator

appointed

by the Board of Insurance Commiseionere

under Article 21.28,Texas Iaeurance Code, anb the employeem working

under hkn are state employees within 

### the tam of the State l5nployeee

Retirement

Aot (Art. 

### 6228a,

v.0.s))an&are eligible for mambership in the mployeee Retirement System of Texas,

Yours very truly,

APPRovm: JOBN BEN SHEPPERD Attorney

General

JOlw DAVBtQORT Reviewer

W. V. GEPPERT Reviewer
ROBERl,S.

TRO'LTI First Aeelatant

JOBNBENSKEPF'ERD Attorney General BY Mary K. Wall Aseistant