Aus- aa, TF

November 28, 1955

Honorable Garland A. Smith, Chairman Board of Insurance Commissioners Life Division Austin, Teqas OpinionNo. S-182

Re: Interpretationof Sections 

### 3 and 5 of Chapter 

### 363,Acts of the 54th Legislature,Regular Session, 1955, as to the necessltg of increasing capital or surplus of certain limited capital stock companies organizedunder the provisionsof Article 

### 3.03of the InsuranceCode.

Dear Mr; Smith:

You have requested an opinion concerningwhether the provisions of Senate Bill 12, Acts of the 54th Legislature, Regular Session, 1955, Chapter 

### 363,page.916,require limited capital stock companies organized and operated under the provisions of Article 

### 3.03of the InsuranceCode to Increase their capital and surplus to complywith the requirements of Article 3.02 of the InsuranceCode as amended by SenateSill 12.

You state In your letter:

"Articlesof incorporationfor four companies have been approved by your officeunder the provlslons of Article 3.03, and the status of.these companies is now in question for the reasons hereWafter stated. Two of the companiesreceived approval, and thus became bodies corporatebefore May 15, 1955; the other two companieswere incorporated subsequent to that date. Mone of the four companies had received a Certificateof Authority from the Board of InsuranceCommissionerson or prior to May 15, 1955."
Section 5 of Senate Bill 12 provides:"ThatArticle 

### 3.03of the Insurance Code be and it is hereby repealed;provided that every company heretoforeorganized and now opsl-atlng

underArticle 

### 3.03shall, after the effec%ivedate of this amendment to the Insurance Code, ba permitted to continue to operate and write nex business subject to the provisions of Chapter 

### 3 of the Insurance Code
as amerrcled,

includingthe provisions of Settion 2 of Article 3.02 of the Insurance Code. ~:

...I~'

as amended; provided,however,no such company ~.~~ shall be required to increase the amount of
or convert the class or form of its capital or surplus to compiywith the requirements of Paragraph 

### 5 of Article 3.02 of this Code as amerd fd

. Ii

St Is noted that this section
dALerepeals the provisionsof Article 

### 3.03 of the Insurance
; (.2) provideswhat may be referred:'to as a "grandfatherClause" authorizing companies~ organized.drdoperating under,ArfXcle,..~ '~ 

### 3.03'.6r.

the effectivedate of.SenateBill 12 to continue operations;


### (3)permits companies fallingwithin'the.."gra~f.fsther"~-iause~ to contihus.operationsubject to provisions of Section,:2R,'of>.L Article 

### 3.02.

9 . (4)provides an exceptionto the companies~fslli~~~'vithifl'the "graIIdf8ther

clause" stating that such companies shall not:be required "to increase the amount of or convert the class or. form of its cepital or surplus to complywith~the.requSrements of Par8graph 

### 5 of Article 3.02 of this Code 8s amended."

In Trio Independent SchoolDlstrick v.'i'SabinalIndependent Scboo~District, 192 S.W.2d 899 .(Tex.Civ.App;~lgYb) the court stated the rule of statutory constructiongovern& your puestion as follows: w;i

"Theact itself shows thst it was passed by the House on April 

### 17, 1945, by 123 yeas and no nays. and was passedby the Senate on May 

### 3??a by 26 yeas arxl2 nays, and was ,approved by the Governor on May 9, 1945, and it carried~the emerger-cyclause. SsFd act became effective on May oth, prior to which the electionhad been held,Eon: .G8rlandA. Smith, page.3 ($182)

its returns canvassed and the order entered by the County SchoolBoard carrying the result of said electionwhich favored annexation into effect... An act does not speck just from the dete it was p8ssed by theHouse.or by the Senate, but it speaks from the date it takes effect, that is on the date it~becomesa law, which.In this case was on May gth, and Itwas therefore effective on and after'such date and included all clesses of school districts that were within the purview of the ValidatingAct which were In being and had been recognizedby the state or county authorities as schooldistricts prior to,said times. In support of this view Judge Gaiixes,in the **case** ofGalveston R.'& S.:A. R. Co. v. State, 81 Tex. 572, 

### 17 s.w.67,72, in passlngupon'the effectivedate 'ofa statute, said:

"'We apprehend that no universal rule of construction can be adoptedwhen 8 statute,which makes 8 distinction between'fu.ture.and pest transactions, is passed"upon‘~'one'day‘to take effectupon another; but we thSnk.thegeneral rule his that a statute speaks from the time it becomes
a law, and what has occurredbetween the date of its passage and the time it took effect is deemed, with respect to the statute,a past transaction. This is by analogy to the rule for the construction of wLl1.s. Price v. Hopkin 1 Mich. 

### 318; Charless v..'Lamberson, 1 IOW8 3 

### 442B3 Am. Dec. 

### 4517;City of D8venportv. Davenport & St. Pg Railroad Co., 

### 60Wls. 

### 37 Sowa 

### 624; 8. Gilkey v. Cook, 

### 13

t B8 N.W.63g; Jackmanv. Garland, 

### 64 Me. 

### 133; 74 Ind. hransville & CJRailroad Co. v. Barbee,

1 g. This rule shouldnot be applied when the language of the act shows a contrery intention. But we find nothing in the statute under considerationwhich evincesan intention that the date of its passage, rather than that on which it
was to take effect,was to be considered the dividina voint between the future and past failures contemplated in the proviso.'" For additional authorities see Scales v. Marshall, 96 Tex. 140, 

### 70 S.W.945 (1902);Mooreman v. Terrell, 109 Tex. 

### 173, 202 s.w.727I

1918 66 S.W. 447 ;Fischer v. Simon, 95 Tex. 234,

1902 .'Hon. Garland A. Smith, page 4 (s-182)

Since SenateBill 12 Spe8kS from its effectivedate, it Is our opinion that the phrase "every compaFy heretofore organized and now operating

### underArtiolt3 3.03"r9fers to every company organized prior to and operating under ArtFcle 3.03 on the effeotlvedate of SenateBill 12.

We are supported in this view by the following: Sinae Article 3.03 has been repealed by Senate Bill 12, it would be impossible for euch company to operate under the provisions of 

### Artlole3.03 after the effeotf;ve date of Senate Bill 12 without the “yandfather clause. Therefore, the phrase “now operating”cannot refer to a date subsequent to the effeotive date of Senate Bill 12. There Is no provlslon In SenateBill 12which shows an Intention that the phrase

“now operating” refers to a date prior to the effective date of Senate Bill 12 and no 

### date other than the effeotive date has been epeolfled, Hadthe Legislature Intended any other 

### date then the effeotlve 

### date, it would have oOnt8inbd suoh lanpmge

. See Galveston H, & 9. 

### A. R, Co, v. State, m.

You are therefore advised that oompanles 

### organlmd under the--provisions of 

### Article3.03 and o eratlng on the.effeotlvs date of Chapter 363 Aots of the 5 th Legislature, ‘are i authorlaed under the prodons of Section 5 to oontlnue opemtlons subject to the provlslons of Seotion 2 of Article 3.02 of the Insuranoe Code as amended

### without lnoreaslng the amount ) of or converting the class or form of their capital or 

### surplu8 ;&p;zlded ln Paragraph 5, Seotlon 1, of Artl~ole 3.02 as.

I

Companles organized under 

### the provisions of Artlole 3.03 

### of the Insuranoe Code and operating
on the effeotlve date of 

### Chapter363, Acts of the 54th Legislature, 1955 are authorleed to ocntlnue operations subject to ihe provlslons of Section 2 of Article 3.02 of the Insurance Code,.as amended, without lnoreaalng the amount of or oonvertlng the class or form of their capital or surplus, as provlded in Paragraph 5, Section 1 of Artiole. 3.02, as amended.

APPROVED: Yours very truly, J. C. Davis Jr. County Affairs Dlvlslon Elbert M. Morrow Reviewer JOHN BESJ SHEPPWD Attorney General

Mar K. Wall Rev ewer 9

L. W. Gray Special Reviewer Davis Grant First Assistant