Aus- aa, TF 

November 28, 1955 

Honorable Garland A. Smith, Chairman 

Board of Insurance Commissioners 

Life Division 

Austin, Teqas 

Opinion No. S-182 

Re: Interpretation of 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 

organized under the provisions of 

Article 3.03 of the Insurance Code. 

Dear Mr; Smith: 

You have requested an opinion concerning whether 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 3.03 of the Insurance Code to Increase 

their capital and surplus to comply with the requirements of 

Article 3.02 of the Insurance Code as amended by Senate Sill 

12. 

You state In your letter: 

"Articles of incorporation for four companies 

have been approved by your office under the provlslons of Article 3.03, and the status of.these 

companies is now in question for the reasons hereWafter stated. Two of the companies received approval, and thus became bodies corporate before 

May 15, 1955; the other two companies were incorporated subsequent to that date. Mone of the four 

companies had received a Certificate of Authority 

from the Board of Insurance Commissioners on or 

prior to May 15, 1955." 

Section 5 of Senate Bill 12 provides: 
"That Article 3.03 of the Insurance Code 

be and it is hereby repealed; provided that 

every company heretofore organized and now 

opsl-atlng under Article 3.03 shall, after the 

effec%ive date 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, including the 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 compiy with the requirements of 

Paragraph 5 of Article 3.02 of this Code as 

amerd fd . Ii 

St Is noted that this section 

dALerepeals the provisions of Article 3.03 of the Insurance 

; 

(.2) provides what may be referred:'to as a "grandfather Clause" 

authorizing companies~ organized.drd operating under,ArfXcle, ..~ '~ 

3.03'.6r. the effective date of.Senate Bill 12 to continue operations; 

(3) permits companies falling within'the.."gra~f.fsther"~-iause~ 

to contihus.operation subject to provisions of Section,:2R,'of>.L 

Article 3.02. 9 . 

(4) provides an exception to 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 comply with~the.requSrements 

of Par8graph 5 of Article 3.02 of this Code 8s amended." 

In Trio Independent School Dlstrick v.'i'Sabinal Independent Scboo~District, 192 S.W.2d 899 .(Tex.Civ.App;~lgYb) 

the court stated the rule of statutory construction govern& 

your puestion as follows: w ;i 

"The act itself shows thst it was passed by 

the House on April 17, 1945, by 123 yeas and no 

nays. and was passed by the Senate on May 3??a by 

26 yeas arxl 2 nays, and was ,approved by the 

Governor on May 9, 1945, and it carried~the emerger-cy clause. SsFd act became effective on May 

oth, prior to which the election had been held, 
Eon: .G8rland A. Smith, page.3 ($182) 

its returns canvassed and the order entered by 

the County School Board carrying the result of 

said election which favored annexation into effect... An act does not speck just from the dete 

it was p8ssed by the House.or by the Senate, 

but it speaks from the date it takes effect, 

that is on the date it ~becomes a law, which. In 

this case was on May gth, and It was therefore 

effective on and after' such date and included 

all clesses of school districts that were within the purview of the Validating Act which were 

In being and had been recognized by the state 

or county authorities as school districts 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 effective date 'of a statute, 

said: 

"'We apprehend that no universal rule of 

construction can be adopted when 8 statute, which 

makes 8 distinction between'fu.ture.and pest 

transactions, is passed"upon‘~'one'day‘to take effectupon another; but we thSnk.the general rule 

his that a statute speaks from the time it becomes 

a law, and what has occurred between 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 3 442 B3 Am. 

Dec. 4517; City of D8venport v. Davenport & St. 

Pg Railroad Co., 

60 Wls. 

37 Sowa 624; 

8. 

Gilkey v. Cook, 

13 

t 

B8 N.W.63g; Jackman v. Garland, 64 

Me. 133; 

74 Ind. 

hransville & CJRailroad Co. v. Barbee, 

1 g. This rule should not be applied 

when the language of the act shows a contrery intention. But we find nothing in the statute under 

consideration which evinces an 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.727 

I 

1918 

66 S.W. 447 

; Fischer v. Simon, 95 Tex. 234, 

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

Since Senate Bill 12 Spe8kS from its effective date, 

it Is our opinion that the phrase "every compaFy heretofore 

organized and now operating under Artiolt3 3.03"r9fers to every 

company organized prior to and operating under ArtFcle 3.03 on 

the effeotlve date of Senate Bill 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 Artlole 3.03 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 Senate Bill 12 which 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, Had the 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 Article 3.03 and o eratlng on the.effeotlvs date of Chapter 363 Aots of the 5 i th Legislature, ‘are 

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 Chapter 363, 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 9 ewer 

L. W. Gray 

Special Reviewer 

Davis Grant 

First Assistant