Honorable J. N. Nutt No. C-498

Commissioner of Insurance State Board of Insurance Re: Interpretationof Austin, Texas H.B. 592, 59th, Leg., as to the scope of the term "nonprofit corporation" Dear Mr. Nutt: as used therein.

We have your request for our opinion concerning the construction of H.B. 592, Acts 1955, 59th Leg., Ch. 695, p. 1625. Your question arises from Section 1 of H.B. 592 which amends Section la of Article 8309, V.C.S., to read as follows:

"Section la. Every executive officer elected or appointed and empowered in accordancewith the charter and bylaws of a'corporation which is a subsc,riber to this law, other than a charitable, religious, educational or other non-profit corporation, shall, be an employee of such corporationunder this law. Any such executive officer of a charitable, religious, educational or other non-profit corporationwhich is a subscriber to this law, other than any such educational corporation specified in Articles 830913 or g309d, may, notwithstandingany other~provisionof this law, be brought within the coverage of its insurance contract by any such corporationby specifically including such executive officer in such contract of insurance and the election to bring such executive officerwithin the coverage of insurance is in effect, and during such period such executive officers thus broughtwithin the coverage of the insurance contract shall be employees of such corporation under this law. Under no circumstance shall any executive officer of,any corporation be counted in determiningwhether or not the

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employer has three or ,moreemployees so as to be subject to the provisions of the Workmen's Compensation Law as specified in Section 2, Part 1, of this Act." added) (Emphasis

You state your problems as follows:

ItWe respectfully ,request your opinion as to the scope of the term,'non-profitcorporation' inthe context of this statute. ,"The 'TexasNon-Profit CorporationAct,' Chapter Nine, Title 32, V.A.~T.S., includes language under Article 1396-1.02, 'Definitions,' Sec. A.(3), as follows:

'"Non-ProfitCorporation" is the equivalent of "not for profit corporation" and means a corporationno part of the income of which is distributable to its members, directors, or officers.'
"Certain corporationsare specifically excluded from the provisions and application of this Non-Profit CorporationAct under Sec. B(3) and (41,Article 1396-2.01. These exclusions specificallyname Mutual Loan Corporations,Co-operative Corporations, Telephone Co-operative Corporations,banks, insurance companies and others. Conversely, the 'Co-operativeMarketing Act Corporations' are subject to Title 93, V.A.T.S., Article 4738, the 'Co-operativeMarketing Act.' Article 5738 contains the following definition:

'Associationsorganizedhereunder shall be deemed non-profit, inasmuch a,sthey are organizednot to make profits for themselves as such, or for theirmembers, as such, but only for their members as producers.'
"Otherprovisions of Title 93 seem to embrace a considerablenumber of various types of co-operative corporationshandling agriculturalproducts and relatedmachinery,

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supplies, financing, etc. 'There some similar appearing conflicts sections of our lawswhich would

._ are perhaps in other pose this problem of interpretationSor us.
"Is the term 'non-profitcorporation'as used in H.B. 592 limited to those non-profit corporationswhich are organized for charitable, religious, or educationalpurposes? Or does the definition of the *Non-ProfitCorpomtion Act' apply? If'so, how is it applied to a corporationwhich is also subject to a specific statute such as the 'Co-operativeMarketing Act'? What is the status of a schoolwhich is incorporatedand run for profit?"

In our opinion the answer to your first question is "no." Everyword of-a statute is presumed to have been used for a purpose, and a cardinal rule of statutory constructionrequires that each sentence, clause. ohrase and word be given effect if reasonably possible. Eddins-WalcherButane,Comawny v. Calvert, 156 Tex. 587, 298 S.W.2d 93; 53 -Tex.Jur.2d 229 Sec. 159. It is clear that the Legislaturedid not'intend to limit the term "othernon-profit corporations" to those having aritable, religious or educationalpurpose for the simple reason that there would have been no point in adding the "other non-profit corporation"provision. - This gives rise to the next question: What non-profit corporations, other than charitable,religls and educational institutions,are to be embraced within the term "othernon-profit corporations"? To state your second question in a little different way: Are we to include in such category only those corporations embraced in the definition of non-profit corporations contained in the Non-Profit Corporation Act, or did the Legislaturemean to also include any and all corporationsdesignated as non-profit by statute?

We believe that the broad language used by the Legislature in H.B. 592 evidences an intent to include all corporationsdesignated as "non-profit"by statute.

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Therefore, in answer to ,yoursecond question, it is our opinion that theterm ,?non-profit corporation!' as used in H.B. 592 is not to be limited to ~ths definition of that term,as found in the Non-Profit Corporation Act, but rather ,isto .includeall nonprofit corporations so designated by the legislature.
The answer to,your third question,is implicit in the answer to yoursecond question.

In answer to your fourth question, a schoolwhich is incorporated for profit is, in **our** ,opinion,~onthe same footing as any other corporation organized for profit. The language "educationalor other non-profit corporation" clearly indicates that the legislaturewas speaking ,onlyof educational corporatinnsof a nonprofit character. Business and professional schools, such as beauty and barber colleges and schools of art and dancing,~may~beorganized for profit and incorporated as any other business. In our opinion, such a schoolwould not be a non-profit corporationnor an educational institutionas that term is used in H.B. 592.

S UMM A R,Y -- w-e-- The term "non-profitcorporation"as used in H.B. 592 is not limited to those non-profit corporationswhich are organized for charitable, religious and educationalpurposes. Said term includes those corporationswhich are governed by the Non-Profit CorporationAct and those corporationswhich are organizedunder specific statuteswhich designate them as "non-profit" corporations. Schools incorporated and organized for profitwould not be an "educational corporation"wtthin the meaning of H.B. 592.

Yours very,truly,

WAGGONER CARR Attorney General of Texas

RRR:ss Assistant Attorney General

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APPROVED BY: OPINION COMMITTEE ;au;.p;ult5, Chairman
Robert Lemens Ivan Williams Roger Tyler

APPROVED FOR THE ATTORNEY GENERAL By: T. B. WRIGHT

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