Honorable J. N. Nutt No. C-498 

Commissioner of Insurance 

State Board of Insurance Re: Interpretation of 

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 accordance with 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 corporation under this law. 

Any such executive officer of a charitable, 

religious, educational or other non-profit 

corporation which is a subscriber to this 

law, other than any such educational corporation specified in Articles 830913 or g309d, may, 

notwithstanding any other ~provision of this 

law, be brought within the coverage of its 

insurance contract by any such corporation by 

specifically including such executive officer 

in such contract of insurance and the election 

to bring such executive officer within the 

coverage of insurance is in effect, and during 

such period such executive officers thus 

brought within 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 determining whether or not the 

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Honorable J. N. Nutt, page 2’:@-498) 

employer has three or ,more employees 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-profit corporation' 

inthe context of this statute. 

,"The 'Texas Non-Profit Corporation Act,' 

Chapter Nine, Title 32, V.A.~T.S., includes 

language under Article 1396-1.02, 'Definitions,' 

Sec. A.(3), as follows: 

'"Non-Profit Corporation" is the 

equivalent of "not for profit corporation" 

and means a corporation no part of the 

income of which is distributable to its 

members, directors, or officers.' 

"Certain corporations are specifically 

excluded from the provisions and application 

of this Non-Profit Corporation Act under 

Sec. B(3) and (41, Article 1396-2.01. These 

exclusions specifically name Mutual Loan 

Corporations, Co-operative Corporations, 

Telephone Co-operative Corporations, banks, 

insurance companies and others. Conversely, 

the 'Co-operative Marketing Act Corporations' 

are subject to Title 93, V.A.T.S., Article 4738, 

the 'Co-operative Marketing Act.' Article 5738 

contains the following definition: 

'Associations organized hereunder 

shall be deemed non-profit, inasmuch 

a,s they are organized not to make 

profits for themselves as such, or for 

their members, as such, but only for 

their members as producers.' 

"Other provisions of Title 93 seem to 

embrace a considerable number of various types 

of co-operative corporations handling 

agricultural products and related machinery, 

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Honorable J. N. ,Nutt, Page 3 (C- 498) 

supplies, financing, etc. 'There 

some similar appearing conflicts 

sections of our laws which would . _ 

are perhaps 

in other 

pose this 

problem of interpretation Sor us. 

"Is the term 'non-profit corporation' as 

used in H.B. 592 limited to those non-profit 

corporations which are organized for charitable, 

religious, or educational purposes? Or does 

the definition of the *Non-Profit Corpomtion 

Act' apply? If'so, how is it applied to a 

corporation which is also subject to a specific 

statute such as the 'Co-operative Marketing 

Act'? What is the status of a school which 

is incorporated and run for profit?" 

In our opinion the answer to your first question 

is "no." Every word of-a statute is presumed to have 

been used for a purpose, and a cardinal rule of 

statutory construction requires that each sentence, 

clause. ohrase and word be given effect if 

reasonably possible. Eddins-Walcher Butane , Comawny 

v. Calvert, 156 Tex. 587, 298 S.W.2d 93; 53 -Tex.Jur.2d 

229 Sec. 159. It is clear that the Legislature did 

not'intend to limit the term "other non-profit 

corporations " to those having aritable, religious 

or educational purpose 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 "other non-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 Legislature mean to also include any 

and all corporations designated 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 corporations designated as "non-profit" by statute. 

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Honorable J. N. ,Nutt, Page 4 (C-498 1 

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 ,is to .include all 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 school which 

is incorporated for profit is, in our ,opinion,~on the 

same footing as any other corporation organized for 

profit. The language "educational or other non-profit 

corporation" clearly indicates that the legislature was 

speaking ,only of educational corporatinns of a nonprofit character. Business and professional schools, 

such as beauty and barber colleges and schools of art 

and dancing, ~may~be organized for profit and incorporated as any other business. In our opinion, such a 

school would not be a non-profit corporationnor an 

educational institution as that term is used in H.B. 592. 

-- S UMM w-e-- A R,Y 

The term "non-profit corporation" as used 

in H.B. 592 is not limited to those non-profit 

corporations which are organized for charitable, 

religious and educational purposes. Said 

term includes those corporations which are 

governed by the Non-Profit Corporation Act and 

those corporations which are organized under 

specific statutes which designate them as 

"non-profit" corporations. Schools incorporated 

and organized for profit would 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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Honorable J. N. Nutt, page 5 tc-49e ) 

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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