THEAITORNEY GENERAL 

OFTEXAS 

Honorable George B. Butler, Chairman 

Board of Insurance Commissioners 

Austin, Texas 

Dear Sir: Opinion NO. o-6642 

R0: Construing Article 4764a, V.A.C.S., 

as to whether a group insurance 

policy issued to a flnanclal~lnstltution is permitted to cover 

the lives of any number of borrowers from a flnancl~al institution 

less than all of them and more 

than 100 entrants annually. 

We have carefully considered your letter of June 5, 

requesting this department to render an opinion answerln 

1945, 

7 

certain questions presented by~gou relative to.~Subdivislon 3) 

Section 1 of Article 4764a, Vernon's Annotated Civil Statuies 

of Texas. 

lows: 

Your questions substantially restated are as fol1. 

2. 

May a group oplicg be issued covering the 

lives of any number of borrowers from a 

financial Institution, less than all of 

them and more than fifty, and if so, what 

are the restrictions or regulations as to 

classification of such groups? 

Should the premiums on such group policy 

be paid by the financial Institution out 

of its own funds, or may It collect premiums from the debtors for the purpose of 

paying such premiums? 

Your first question necessarily calls for an interpretation or construction of Subdivision (3) of Section 1 of the 

foregoing statute, particularly the underscored portion of 

said subdivision worded as follows: 

"Sec. 1. The following forms of life insurance are hereby declared to be group ll,fe lnsurante within the meaning of this Act: 
Honorable George B. Butler, page 2 0 -6642 

“(3) Life Insurance covering only the lives of 

all members of a group of persons numbering not less 

than fifty (50) at all times, who become borrowers 

from one financial institution, or who become~purchasers of securities, merchandise, or other property 

from one vendor under agreement to repay the sum borrowed, or to pay the balance of the price of the 

securities, merchandise, or other property purchased, 

to the extent of their indebtedness to said financial 

institution or vendor, but not to-exceed Ten Thousand 

Dollars ($10,000) on any one life, written under a 

policy which may be issued upon the application of 

and made payable to the financial institution or 

vendor or other creditor to whom such vendor may 

have~transferred title to the indebtedness as beneficiary, the premium on such policy to be payable by 

the financial institution, vendor, OP other creditor. 

Provided, that group life insurance Issued under 

this classification shall not include annuities or 

endowment insurance, The requirements set out in 

Subsection 4 of Section 2 of this Act shall not 

apply to this Subsection." 

It Is noted that the foregoing Subdivision (3). of Section 1 of the statute ls,taken from House Bill No. 326;Chapter 

349; of the General Laws, 48th Legislature, Act of 1943, p. 

604, the caption of which amendatory act provides: 

"AN ACT amending Section 1 of Chapter 101, 

Senate Bill No. 41, Acts of the Regualr Session 

of the Forty-second Legislature, as amended by 

Section 1 of Chapter 610, Acts of the Regular 

Session of the Forty-seventh Legislature, so as 

to make available group life Insurance to employees of school districts in the State of Texas; 

and declaring an emergency." 

Article 3, Section 35 of the Constitution, provides: 

"No bill, (except general appropriation bills, 

*.......) shall contain more than one subject, which 

shall be expressed in its title. But if any subject 

shall be embraced in an act, which shall not be expressed in the title, such act shall be void only 

as to so much thereof, as shall not be so expressed." 

It will be seen from the caption of the foregoing.~House 

Bill No. 326 that same amended Section 1 of Article 4764a; 

V.A.C.S., but in doing so expressed the sole purpose of making available group life insurance to employees of school dis- 
Honorable George B. Butler, page 3 o-6642 

tricts in the State of Texas, A paragraph authorizing such insurance is found added to Subdivision 1 of Section 1. Section 

2 of the Act, being the emergency clause, expresses the fact 

that there Is no provision under the present law for school 

teachers and employees of the public school system to obtain 

group insurance, and the fact that the enactment of this act 

would make possible such group Insurance, and the fact that 

such insurance would be for the Interest of the public school 

system and the teaching profession of this State creates an 

emergency, etc. 

The authorities are numerous to the effect that a caption of an act is deceptive and misleading which expresses a 

purpose to amend the statute in a certain partlcuiar when the 

body of the act goes beyond and purports to amend the prior 

law In other particulars. New substantive matter contalned 

In an amendment which Is not germane or pertinent to that 

contained in the provision amended, is invalid as legislation 

upon a matter not expressed In the title of the amendatory act. 

39 Tex. Jur. para. 48, pp. 102-4, and cases cited therein. 

Where a statute operates as an amendment of an earlier 

law, the effect of holding it to be unconstitutional is to 

leave the original enactment in full force'and effect. 'Culberson vs. Ashford, 118 Tex. 491, 18 S.W. 585; 16 C.J,S. para, 

101, pq 102, N. 61. 

Prior to the foregoing1943 amendment, Subdivision (3), 

Section 1 of said statue, as corkained InHouse Bill 1061, ". 

Chap. 610, Genera1 Laws, 47th Legislature, Acts 1941, p. 1346, 

provided: 

"(3) Life insurance covering only the lives of 

all members of a group of persons for not more than 

Ten Thousand Dollars ($10,000) on any one life, numbering not less than one hundred (100) new entrants 

to the group yearly, who become borrowers from one 

financial Institution, OP who become purchasers of 

securities, merchandise, or other property from one 

vendor under agreement to repay the sum borrowed, or 

to pay the balance of the price of the securities, 

merchandise, or other property purchased in Installments over a period of not more than ten (10) years 

to the extent of their Indebtedness to said financial 

institution or vendor, but not to exceed Ten Thousand 

Dollars ($10,000) on any one life, written under a 
Honorable George B. Butler, page 4 O-6642 

policy which may be Issued upon the application of 

and made payable to the financial Institution or 

vendor OP other creditor to whom such vendor may 

have transferred title to the indebtedness as beneficiary, the premium on such policy to be payable 

by the financial Institution, vendor, or other 

creditor. Provided, that group life Insurance 

Issued under this classification shall not include 

annuities or endowment insurance. The requirements 

set out in Subsection 4 of Section 2 of this Act 

shall not apply to this subsection." 

It is apparent from the foregoing authorltles and we so 

hold that Subdivision (3) of Section lof the statute as lncorporated In the foregoing 1943 act and appearing in Vernon's 

Annotated Civil Statutes, Supplemental Pocket Parts, 1944, is 

invalid, thereby relegating us in this opinion to consider your 

questions solely with reference to the original enactment of' 

Subdivision (3) as found in the earlier amendatory Act of 1941, 

H. B. 1061, 47th Legislature, last above quoted. 

By Section 1, Subdivision (3) of the 1941 Act applicable 

to borrowers of a financial institution, permissible group insurance is defined as life insurance covering only the lives 

of all borrowing members of a 

7 

roup of persons . D . numbering 

not less than one hundred (100 new entrants to the group early. 

The only restriction OP limitation found in Subdivision (3 7 is 

that such insurance shall not be issued for more than $lO,OOO.OO 

on any one life; there must be 100 new entrants to the group 

yearly; the insured indebtedness of a member, If payable In 

installments, shall not exceed $lO,OOO.OO over a period not 

to exceed ten years and such group policy be issued upon application of and made payable to the financial institution 

or other creditor, transferee of the debt by the institution, 

as beneficiary. It is further provided that the premi~um on 

such group policy shall be payable by the financial institution or creditor transferee as beneficiary and that such 

group life insurance shall not include annuities or endowment 

insurance. 

We find no language in Art. 4764a as enacted by the 

42nd Legislature, Acts 1931, and as amended by Acts of 1941, or 

any valid provisions of the 1943 Act, requiring or restricting 

a group life Insurance policy issued under Subdivision (3) to 

cover all of the borrowers of a particular financial institution. Tither do we find In the Act any regulatory power 

given the Life Insurance Commissioner expressly doc7'rn with 

such contractual relationships between the borrover oaf a 

financial institution and the institution itself with reference to the applicant for a loan paying to such institution 
Honorable George B. Butler, page 5 o-6642 

a portion or all of the cost of such group policy Insurance 

as applied to applicant's loan. 

In view of our holding invalid Subdivision (3) of Section 1 of Article 4764a, V.A.C.S., as Incorporated In Chapter 349, Acts 1943, 48t.b Legislature, and answering your question with reference to the prior law unrepealed by said amendment, Chap. 610, Acts 1941, 47th Legislature, General Laws, 

p. 1346, It is our opinion that a group policy issued under 

said Act 1s not required to cover the lives of all borrowers 

of a financial Institution exceeding 100 new entrants yearly, 

More than one group policy ma-7 be issued upon separate appllcation by a financial Institution, setting forth a class bearing reasonable relation to and distinguishable from other 

policy groups, inclusive to members of such class or group of 

not less than 100 new entrants yearly. The premium on any 

such group policy is payable by the financial Institution 

OP beneficiary. Such financial institution 1s not prohibited 

from collecting from an applicant for a loan cost of such insurance as applied to and charged in making the particular loan 

to the borrower. 

Yours very truly, 

ATTORNEY GENERAL OF TEXAS 

By s/Wm. J. R. King 

Wm. J.-R. King 

Assistant 

wmK:LJ:wc 

APPROVED AUG 9, 1945 

s/Carlos C. Ashley 

FIRST ASSISTANT 

ATTORNEY GENERAL 

This Opinion Considered And Approved In Limited Conference