The Attorney General of Texas 

August 31, 1982 

MARK WHITE 

Attorney General 

Supreme Court Building 

P. 0. BOX 12546 

Austin. TX. 76711. 2546 

5121475-2501 

Telex 9101674-1367 

Telecopier 5121475.0266 

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Dallas, TX. 75201.4709 

2141742.6944 

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El Paso, TX. 79905-2793 

9151533.3464 

1220 Dallas Ave., Suite 202 

Houstcm, TX. 77002-6966 

7131650-0666 

806 Broadway. Suite 312 

Lubbock, TX. 79401.3479 

606,747.5238 

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McAllen, TX. 78501-1665 

5121682.4547 

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San Antonio. TX. 78205.2797 

5121225-4191 

An Equal Opportunity1 

Affirmative Action Employer 

Mr. Sam Kelley 

Consumer Credit 

P. 0. Box 2107 

Austin, Texas 

commissioner 

78768 

Opinion No.m-511 

Re: Construction of article 

3.53, section 8B of the 

Insurance Code regarding refund 

of unearned insurance premiums 

on terminated policies 

Dear Mr. Kelley: 

You ask what position the Office of Consumer Credit should take 

in enforcing the minimum refund provisions in the consumer c-red:- it 

chapters of the Texas Credit Code which exempt refunds of unearned 

credit insurance premiums of less than one dollar. V.T.C.S. arts. 

5069-3.18((j), 5069-4.02(6), 5069-5.03(6), 5069-6.04(9), 5069-6A.08 

(lo), and 5069-7.06(8). 

As described in your inquiry, confusion has arisen as a result of 

two 1981 enactments by the Sixty-seventh Legislature amending the 

provision in the Texas Insurance Code which also governs refunds of 

credit insurance premiums. Ins. Code art. 3.53, §B(B). While not 

identical in scope there is substantial overlap of credit insurance 

covered by consumer credit chapters of the Credit Code and the 

Insurance Code. Compare V.T.C.S. arts. 5069-3.01, 5069-4.01, 

5069-5.01, 5069-6.01, 5069-6A.02, 5069-7.01 with Ins. Code art. 3.53, 

52(A)(2). 

Until the 1981 amendments, article 3.53, section 8(B) of the 

Insurance Code, was in complete harmony with the Credit Code in 

requiring refunds of all unearned credit insurance premiums of one 

dollar and more. In the last regular session, however, the 

legislature passed and the governor approved two amendments to section 

8(B) of article 3.53 which raised the minimum refund requirement. 

House Bill No. 2198, Acts 1981, Sixty-seventh Legislature, chapter 

849, at 3227, exempts refund of unearned premiums of less than three 

dollars. House Bill No. 2388, Acts 1981, Sixty-seventh Legislature, 

chapter 493, at 2109, raised the exemption to less than five dollars. 

We are therefore presented with three facially inconsistent 

requirements for unearned credit insurance premium refunds: the 

provisions of the Texas Credit Code, House Bill No. 2198, and House 

Bill No. 2388. 

p. 1844 
Mr. Sam Kelley - Page 2 (MW-511) 

We need not decide whether House Bill No. 2198 or House Bill NO. 

2388 controls article 3.53 of the Insurance Code, since we believe the 

Credit Code provision prevails in any event. 

In 1963, article 3.53 of the Insurance Code was x-written and 

enacted in its present form. That enactment contained a saving clause 

which stated, in part: 

The provisions of this Act shall be cumulative 

of, supplemental and in addition to the provisions 

of Senate Bill 15, as passed by the Fifty-eighth 

Legislature, Regular Session, 1963, entitled 

'Texas Regulatory Loan Act,' and the provisions of 

this Act shall not in any manner repeal, amend or 

modify said Senate Bill 15, nor shall it be so 

construed, but to the contrary, this Act shall be 

SO construed as to be consistent with the 

provisions of said Senate Bill 15. 

Acts 1963, 58th Leg., ch. 405, at 986. Senate Bill 15, the Texas 

Regulatory Loan Act, referred to above, was also enacted in 1963. 

Acts 1963, 58th Leg., ch. 205, at 550. Clearly article 3.53 of the 

Insurance Code was made subordinate to the provisions of the 

Regulatory Loan Act. 

In 1967, the Regulatory Loan Act was expressly reenacted as part 

of the Texas Credit Code. Acts 1967, 67th Leg., ch. 274, at 608. 

Generally, the Regulatory Loan Act is codified as chapter 3 of the 

Credit Code. V.T.C.S. art. 5069-3.01, et seq. The question becomes 

whether the subordination of article 3.53 of the Insurance Code 

continues and carries over to the Credit Code. 

In enacting the Credit Code, the legislature expanded regulation 

of credit transactions beyond the loans covered by the Regulatory Loan 

Act. In doing so, however, similar stated intent and purpose were 

used. Both enactments were explicitly intended to establish a 

regulatory system to remedy the abuses which have occurred in many 

consumer credit transactions. See Acts 1963, 58th Leg., ch. 205, at 

551; Acts 1967, 60th Leg., ch. 274, at 608, (Declaration of 

Legislative Intent contained in both Acts). The main extension of the 

Credit Code was the further classification of lender and regulated 

loans into a needed comprehensive code. Acts 1967, 60th Leg., ch. 

274, at 609. 

Due to the similar purposes of the Regulatory Loan Act and the 

Credit Code, it appears that the legislature's intent to subordinate 

article 3.53 of the Insurance Code continues. Moreover, the continued 

subordination is necessary to maintain the comprehensiveness of the 

Credit Code. If the 1981 amendment to article 3.53, section 8(B) is 

p. 1845 
Mr. Sam Kelley - Page 3 (Mw-511) 

allowed to override the minimum refund provisions of the Credit Code, 

its purpose in being the self-contained system of consumer credit 

regulation will be eroded. 

The types of credit transactions covered by article 3.53 are 

different from those covered by the several chapters of the Credit 

Code. Article 3.53 applies generally to accident and health insurance 

sold in connection with credit transactions of less than five years 

duration, regardless of amount. Ins. Code art. 3.53, §2(2). In 

distinction, the several chapters of the Credit Code apply to specific 

types of consumer credit transactions and cover credit insurance 

involved in them. Chapter 3, for example, is limited in application 

to loans of $2,500.00 or less. While there is overlap, there clearly 

are certain loan transactions which are covered by article 3.53 of the 

Insurance Code and not by chapter 3 of the Credit Code. 

Similarly, there are different areas of coverage contained in 

other Credit Code chapters. Chapter 4 applies to installment loans 

repayable in substantially equal monthly payments. Art. 5069-4.01, 

V.T.C.S. Chapter 5 is limited to secondary mortgage loans on real 

property improved by a dwelling designed for occupancy by four 

families or less and which are repaid in more than 90 days. Art. 

5069-5.01, V.T.C.S. Chapter 6 applies to certain consumer installment 

sales. Art. 5069-6.01, V.T.C.S. Chapter 6A applies to retail 

installment sales of manufactured homes. Art. 5069-6A.01, V.T.C.S. 

Chapter 7 applies to retail installment sales of motor vehicles. Art. 

5069-7.01, V.T.C.S. Again there will be loan transactions which will 

fall under the more general article 3.53 and not be covered by the 

Credit Code. 

In addition to applying only to the stated loan transactions, the 

minimum refund provisions of the Credit Code are limited to the 

situations when the credit insurance premium is received by the person 

extending credit. Articles 5069-3.18(6), 5069-4.02(6), and 

5069-5.03(6) of the Credit Code require refund of unearned premiums 

"received by the seller or holder." Articles 5069-6.04(9) and 

5069-7.06(B) require refund of unearned premiums "received by the 

seller or holder." Article 5069-6A.8(10) requires refund of unearned 

premiums "received by the creditor." 

Article 3.53 of the Insurance Code is not limited to situations 

when the insurance premium is integrated into a credit transaction. 

As set out in both amendments to section B(B) of that article, it 

applies generally to "an amount paid by or charged to the debtor for 

insurance." Comparatively, the refund provisions of the Credit Code 

are much more specific and defined in their application. 

If the legislature had intended to change the minimum refunded 

provision of the Credit Code, we believe it would have done so 

p. 1846 
Mr. Sam Kelley - Page 4 (MW-511) 

directly. Substantial changes in the Credit Code were enacted by the 

legislature in 1981. Acts 1981, 67th Leg., ch. 99, at 221; ch. 111, 

at 273; ch. 496, at 2126; ch. 682, at 2555; ch. 707, at 2627. Since 

none of these amendments and new provisions changed the minimum refund 

provisions of the Credit Code, it is proper to conclude that no change 

was intended. 

Sam Bassett Lumber Company v. City of Houston, 198 S.W.2d 879 

(Tex. 1947), sets out the established rule for reconciling a specific 

statute which conflicts with a more general one: 

The general rule is that when the law makes a 

general provision, apparently for all cases, and a 

special provision for a particular class, the 

general must yield to the special in so far as the 

particular class is concerned. Perez v. Perez, 59 

Tex. 322. This rule is based upon the principle 

that all acts and parts thereof must stand, if 

possible, each occupying its proper place. and 

that the intention of the Legislature is more 

clearly reflected by a particular statute than by 

a general one. Accordingly a specific act is 

properly regarded as sn exception to, or 

qualification of, a general law on the same 

subject previously enacted. In such a case both 

statutes are permitted to stand, the general one 

being applicable to all cases except the 

particular one embraced in the specific act. 

Townsend v. Terrell, 118 Tex. 463, 16 S.W.2d 1063. 

198 S.W.2d at 881. 

The minimum refund provisions in the consumer credit chapters of 

the Credit Code are more specific in coverage than article 3.53 of the 

Insurance Code. The Credit Code's object of comprehensive regulation 

of consumer credit transactions is also more specific in the context 

of its coverage. Consequently, article 3.53, being more general in 

object and in application, must yield to the Credit Code when a credit 

transaction falls under the specific coverage of a consumer credit 

chapter. This conclusion that the Credit Code minimum refund 

provisions prevail is consistent with the statements of legislative 

intent discussed above. This oninion should not be construed as 

abridging in any way regulation of other aspects of credit insurance 

by the State Board of Insurance. See, e.g., State Board of Insurance 

v. Deffebach. 631 S.W.2d 794 (Tex. Civ. App. - Austin 1982, writ 

filed). 

p. 1847 
. - 

Mr. Sam Kelley - Page 5 (MW-511) 

SUMMARY 

For credit transactions covered by the consumer 

credit chapters, subtitle two of the Texas Credit 

Code, all unearned credit insurance premiums must 

be refunded except for amounts totalling less than 

one dollar. V.T.C.S. arts. 5069-3.18(6), 5069-4.02 

(6)s 5069-5.03(6), 5069-6.04.(9), 5069-68.8(10), 

5069-7.06(B). These requirements are unaffected by 

the 1981 amendment to article 3.53, section 8(B) of 

the Texas Insurance Code. 

MAR< WHITE 

Attorney General of Texas 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

RICHARD E. GRAY III 

Executive Assistant Attorney General 

Prepared by Jeff Hart 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Susan L. Garrison, Chairman 

Jon Bible 

Rick Gilpin 

Jeff Hart 

Patricia Hinojosa 

Jim Moellinger 

Bruce Youngblood 

p. 1848