OFFICE OF THE ATTORNEY GENERAL OF **TEXAS**

AUSTIN eRumo.yM~

-- lionorabls

J. 

### P. **Olbbr, Comdseioner**  Caaualtf fnruranoo Cd8si0n **Board of**  **fn8lIranor Commirdon~r8**  **h8tin, T8X88** 

**-8r sirs**  **opinion 100.**  O-4593

**88 br**  **lf.ibl8 for**  **a8-**

ty vfth the pmirionr CiYfl StabIt Of

**IPATIOEI** DLADSE WITHOUT 00% Ho **Oontfngent** Lirbillt~, l?o poliayhol&r in this oorrganr ina-8 anr U8bllit 

### Prombun$ othor than the DfJporft Promiu8 or

aidi 

### the ooqanp harlng roo@mulrted,Honorable f. P. Ulbbr, CommI88Ion~r, Paga 

### 2

and n0w hating intaot, 8 rr00 rurplu8 equal to tho 0apital **stoak** r8quIrod of a daaostlo 8tOok ill8IW8llO8

OOlnpaAf

traA8oOtiAgthe 8ame. klxul of lnsurano8. **Thl8** I8 In oooordanoo with the ocmpany'8By-LaW8 and tha prod**8iOA8 Of**  **the MUtUd**  **Ill8UT8UO8** tit **Q88806** by **th0 a3st**  **LO(Ci8latU~.** 1929, 

### Fi'irrt 0811.d&W**810~~.** Pa&8 90, Chapter 40, S0otIon 10.

“‘MtMal. Pal'tiOIpCitIOnt Th8 in8U.P.d

18, by rirta0 of thI8 polloy, a member of the oanpany, 8ubjeOt 

### to the 

### ~f;LaWS, rr?or~noe 

### to rhioh **18** had, and 8 8ll be ontltlod to suoh unabrorbedDeporIt~ 8r8mium 

### or Divlbontl a8 **may be**  deolared **b** or Bxeoutir8 I the Board of DiT8OtOr8

Gonau ttw, **8UbjeOt.** horotor, to approval by thr Board or In8uraAoa &me ai88iOA.r8 Ot the State Or TOXa8 bOiOm bOIn6 paid.9

‘ ml8 brpartmontha8 al80 plW80?1bed th8 rollOwIng 18agurge to bo amd by a r8oIprooal erohangbwhen the 

### l liglbIlltyr~cplrementr are met:
"'80 GCBPl'IRURt?T

I3BIIDYt Lpo

pol1oyhoXi

or in thi8 tiohango 

### inOIl& l Ay liabilityother than the 

### bpo8It pnmlum or pm5Ium paid8 the uohange harlug aaoaruletedand now harIng lntaot a tree surpl08 in the uouut dofined by Artlot 5026 a8 arndod br Ghaptrr 8, **Pam** 4l7, **Aots** 46th b@blatPra 1939, Regular S88810nr **Thlr l8**  **in** aoaorlanoe **dth** 

### the l xohangM &tiOlO# Of 

### &r8Olll8nt 8od th8 ptiviriona~ or the 

### roion’odto ArtIolo (5026).t
W8 are 

### roqoltlng

mmerou8 InquIrI88 .Inoonnoot1cm with there prGV181On8. Wo, thrroiore, i~8peOtit.diy roquort Jrour

opinion on thO iOuO*ing quO8tiOnt
%% the 8vont that a mutual Io8uranao oodapany or a noiprooal or lntor-iMur0n00 0xohan@m i8- 8~08 polioI oontaixhiag tho sppropriatoiorogoing non-oontingentlirbllitrprwIrIon8 pm

### 8orIbedby the department and boron tho oxpiratioa Of 

### PO110188thu8 188UO6, the **mUtU81 iU8Ul-WLOO**  oompany or the no&p&-o oal l rohang0 **88oomo8** in**80lYMt,** r0ul.d

the polio oldor **bo** .lIable iOr P a8ee88ment or for a oont.ngont addltianalpremIum?RIfonorrblo

3. P. bibbr, UoxmI88ioner,Pago 3

Tho lot rofrrrrd to In the **8ooond** pltr lOtt8r a8 

### "YlltUIl -8UanO8 et **p8888d**

_ _ _-_- -_ - __ - - prragraph o? !g th? W8t Loglrlature, 1929, Flr#t **OUlW** Sblllon,page 90, chapter 40, 

### smotlon10". **%8 &rtiCple**  **48&a-10, VeIPI10n**  **’ 8**  **&tIOtatOd** Civil **StatUt08,** jliOh ~tIO1~ I8 88 ?olloW8t

Vho **pOliOi** 8hal.l provide 

### ror a premium or promlum 

### doporltpqabl.0in oarh, and 

### l xoept a8 horeln prorlded tar a oontlngwntpremium at lea86 

### l qttal 60 the pre&mi or prelaium depO8it. St&oh a mutual oompaw may **i8SUS** a polloy wIthout a aontlngontpromlum uhI10, but only while, It ha8 a 8urplu8 equal to the oapltal 

### requirrd 0r
a do3ne8tIo

rtook in8Pr8nOOoompanf tranraotlng the 88M kinds o? inruranti,but anr 8u0h oompan~ my **f88UO** a poliof providing that the hol&r O? anr ruoh polior 8hall be liable ?Or no greater amount thau the premittm 

### or premium dOpO8it expre88rd la the pollay. X? at any tlu thr abtit**ted** l **88et8** are 1088 than tho uaoarnodpremIw4 re**bervo,** other lIabIlit~o8**aad** the required **81arplur~** the oomp8tty ehall Immediatelyoolleot 

### upon poll**Oh8** with a ooatlngontpremium a 8U??iOi@At proportionato part theno? to re8tore aaoh a88rt8, profldod no 

### member 8hall be Uable ?or any part or **suoh** oontlngmt premium 

### in **8x0088** o? the 

### amount demanded

within one par artor the tormlnatlon o? **th8 QOliOr.**  **The** Board **may, by**  **written order,**  **dl Mot**  that QrOO0Oditl~8 60 MUtOM 8uOh a88Ot8 be do?onod durfq the time ifx.6 in 

### ruoh OfbOr.* 

### The ?I?th ~nggh o? pur latter roiorr to Arti**Oh** 5026, **remoil ’**  anotated OIrll Qtatutrr (I8 

### mndod. Tho portiOn **O? 8UOh**  

### &tiOl@ l pplloable **60 thi8**  **qUO8tfOA, tOllOW8t**  **1)**

**. .**  **.** suoh ponr or attorney or 0th~ authority 

### ououtod by the 8ub8orlberr**at** any **ru0h** 

### l xohango 8hall provide that 8a0h 8ubroriben ohau be llablo, In addition to 

### the premium 

### or pnlirrr **depO8it 8peOi?iOd**  **iU the**  **pOiiO3 OOUt?aOt,**  **t0 a**  oontlngentlIabllIty equal in amount to omS~~- tlonal annual premium or premium **dOpO8it.** 8Ub88l'ib@r8

at moh 

### l

xohange rely

pZ'oVi6.

**bf** amOement that the proalan or **premium dWO8it**  **8pOOi?i@d** In the pollor oontraet on all ?om8 a? in8uranoo exoept lI?e 8hall oonstltutetheir ontirr llabllIty **t&o@** 

### the 

### l xehan$e while, but only while,Honorable t. P. Qibb8, Oommi88ion8r, Pag8 4

the free l qua1 

### to pr+d* surplus of the reolprooalexohangcia

Two mtt~a Th0tt8aa Dollar8 ((200,000)~ that I? suoh l

xohange +8 not or tt not applylag to 

### aonangr wormen~8 8ompen8atxon, emplomrrt llabllltf, or sontrsotrproviding IndomnIty agaIn8t leg81 llabilltfto 

### thirdper8on8, exoept l

utoaobllepub110 liabilityand ro 

### rtf **danu3gO**which I8 not **8UbjoOt to**  **the** regu!at~n8 Of the Intrr8tatoOommeror ~O~I8IBIOA,the Rallroad ComnI88lon **0r** TeXa8, or other 8ImIlar bodler In the tarloue Statea, 8uoh exohangemnf proride by agreement that the 

### premiumor premium **60pO8it** 8peOi?I@& In the policy oontraot 8h811 oon8tItute the **8Ub80ribsrt8** OntiM llablllt~ **through the**  **@I** ohange nhlle, but only whllo, It maintain8 a fro@ surplu8 of not lera than Fifty Thousand Dollar8 ($50,0001 **if Otif**  **On@ kina**  **of iII8UNInOO**  **18 0X**  ohanged nIth an addItIOna Ten ThourandDollar8 (#lO,OO6)or **rm** rurplu8

### for eeoh additIonal kind **or** In8uranao l x0hang0a

(InoludIng

**eatomo** bile pub110 liability and property damag8 whloh 18 not 8ubjeat to the 

### regulation8 **0r** 

### tlm Inter 8tate 0oEperoe &NUMi88iOtl, the Railroad aomnI8- 8Ioa O? hXa8, or other 8ImilarboaI@ In the tarIou8 Stats8), but not 

### more than One attar Thousand Dollar8 (#lOO,OOO)surplus 8hnll be ro

### qulred~

provided,

### howrfer, that any dOM8tiO 

### realprooalorganIs 

### prior to the l ffOOtiV8

date of thir Act whioh ha8 born and 18 oxohangingOmtraot8 

### wltlsaut

oontlngrnt liabilityan6 whIoh 6008 

### not hate the 

### ml.nlmmrurplw r*quInd 

### br thlr Sootion 

### to oxohange 8uoh eontraotr, mar oontinuo 

### to exohangr 

### oontraetr without oontlngent lIabIlIty until Dooembor Sl* X943, provided that *(a) On Deoember $1, 1939, Dooomber 31, 194o,.~oe~mbor31, 194l, aad 

### Dosomber 31, 1942, it shell hato inorea8ed it8 rurplus by r88 

### t@ OtiVe WOUAt8 0r twntprite (25) per 

### oentumof he dirferenoe between the 8urplaa l ri8ting on DW@mbW 31. 1938, and the rurplu8 herein required of 8 reoIprooal

### before it i8 p0rPritt04 to 8XOhang@OODtraotr without omtlngent liability;and **m(b)** At no time during eaoh 

### oaleadar mar a? the period above 

### re?errea to 8hall the 8urplu8

. iHonorable J. P. Olbbr, Oollpi88Ioner, Paga 

### 5

be lesr than thlrtr 

### (30)

### per oentum 

### of the pnaIum8 altten 

### during#rob 8uoh year1 

### and '(0) fil othor pXWi8IOn8 Of thi8 Aot 8hall b8 oomplled with; 

### and *(a) xr 8uah 

### reoIprooal rail8 to Inenare **it8 8Pirp1U8**  **in aOOOrd8UOO**  

### with thi8 **8Ub8OOtfOA,** 8uOh r8OfprOOal ehall b 8ttbJeot to the minImum 8urplus a8 above-arntfonod, or dI8oontInueexohanging polio188 without oontlnent UabIlIt~. I)

. . . .(I
The brie? aooompanfing hour letter 8llttao8 to the Df86riOt **hurt Oa88**  **O?** Wrist 2iora-0~ Reoelver, f8. Trinity Portland Cement 00.. 0

### t al, 

### No. 51,& on the 

### docketof the 126th Df8triOt oourt a? TraYi Oounty, 'hxa8. The jml@nent br the **a0m in**  **thi8 OO80**  **WO8** entered **x8r 1,**  

### 1933,and I8 or 

### reoord 

### In the 01~11 **mlnutrr of**  said 

### Court In 

### Volume 50,page 1. Thi8 @a88 oOntaln@d 

### an frrua Involving a 8tatatorTporI8ion 8imilar to those oontainodIn the 8bon uoted 8tatute 8aId provlllon being Sootion 16a of Artlole 

### 8308 of the Work- ’ men'8 Oomp4nratIonL8w Aotr or 

### 1917 a8 amen404 **by** the 42na Legi8latPre in 

### 1939 whioh $8 a8 fOilOwN

4300. 16a. 

### Whonwu the ti8ooIatIon 8hcll halo loeumulated,

at the end of any 

### oalrndar fur, 

### an admitted rurpla8In 8x0088 **or** Inourred 108808, l xpen8e8 and unearned prmtdwm or other liabllltie8 amountin(l

to 

### tho 8UE or Two Hundred Thoaraad **DO11U8** (#ZOO,OOO.OO) or EON* tho lIablllt~of

_ it8 member8 fO~a8808M#~t **tttkd,r** &'tiOlO 

### 8308, **800.** tfon 15 rha11 b8 rurpea(lod, and it 8hall b8 au**thor&d** 

### t0 **188U8 pOliOi**  **UOt 8UbjeOt**  **60 688088.**  

### met&. It 8hall be the **autr** 08 the Board **or Xn8tir**  an00 Qoamiulonus to 6*texain*promptly aftor the riling 

### or tho 

### annual Statementof thr AWooIation, whether or not '8aoh 

### an amount of rurplur l xirtr @Ad if it find8 that it 6008, it rhall 80 8tat0 in
a 

### aertI?Ioate. Suoh oortifioato rhall remain in full for00 and a006 for one (1) fur or until 8uoh the a8 a lator report to or l x88iaatIon **bf** the De rtxmnt of fn8uranro 8hall 8how the~8urplu8 to be 088 than Two HttndMd thourand 

### ($200,000.00) r Doll~r8, whennpon the Board **or** Sn8uranoe Ootdr

### donor8 ahall oattool and nroko iraoh 

### cwtI?loat@Honorable f. P. ~ibb8,'ConmIs8Ioner, Page 6

and requlro the A8soeIatIonto 18~ QOiiOf88 utbjsot to l88088lUWt uttaer Art1010 8308, Seatlon 15, a8 ther 

### were **prior** to the time when 8uoh 8urpla8 of Two mta0a Thousand (r)2OO,OOO.OQ) bollar8 or' more war first aooumUlate4.~

**prOvi8fOA,** Purporting to aot In aoaordanre dth thlr **8tatutorr**

the **hnbexz%ent8** Reolprooal**A88OOiatlon** of Rou8$,ton, Texa8, In 1929 8nd again Ih 1930 l ttaohed an endorsementto oontraot8 **188UOd** during ruoh **year** prwiaing **for ‘** **8U8p@A8iOn Of**  liabilitr t0 I88b8W@tlt, rubrtantially a8 fOllOW8t "By tirtru of thr,aoo~mulatIon bf the Iclroelation at the end of the year iamedIatelypro

### 00aing **the year**  **of i88U8**  **of this**  oontraot **of a**  aa5ittra **8arplae** In 0x0088 or lnourrea 108808, oxpmwr and **unerrnrd** premiums amounting **to** 

### more than #200,000.00in aooordanoewlth Seotlon **1641** of **put** 3 and Sootion **2 of**  part 4 of **Chapter** 179, A&r of 194, Stat8 of Tex88, and/or a4 

### d8mamemtr **thereof,** and **by** virtue of authorityof 

### thb IeruranoeDepartmentof the State of T8z11, 

### the home 0??1oo **8tato** O? thI8 A88OOiatfOA,the llabllitr t0 a88e88WUt oi the 8UbsOribrr**ttW@d** in thin8 oontraot 18 8U8QbAd@d attag the 

### warrant oalendar par 8d for ruoh further period a8 tho A88ooiatlon rhall oontlnue to m8InteIn uaImpaIrod ruoh l rplue 

### of morethan $2OO,OOO.O0. =ROthiA&horeln **ootttain@d 8hl11**  be hold to waive, 

### vary,altar 

### or 8Xhnd any or the term8 l ud 

### oondit3onr **0r** thl8 oaatraat 8xoept 88 art.4 Iboi-8.
WAttaohodto ma,r0rring a 

### part 0r 00ntraot Ho. , f88U8d by the 8UbsOrib8r88t LMkr- **~n~~~rooal** A88oolatIon,Of 80U8tOnt **Teu8, to**  a4 , da;:& at Bowton, Texa8, th18

The Lumbermbnt8 ReolprooalA88ooiation beoame in8olten.t.

the 

### Court’8 detemInatIon or the begin&kg a? In8olrenofbeing July 1, 1929 and **the** 

### noolru **n8** a polated J'u 31, 1930. Whbroupon, &he noeiter **brought** rui i in oau8e No. 51,667mentioned above against the polI8fhold@r 

### mombrr

or the a88ooIation for juagmbntlevying l 8808umnt8 against 8uoh 

### meakr8 to m8k8 Up the **de$iOit** in th8.a8800iatiOZlt8 ?UAdl 

### In order that the debt8 **and ola¶.m8**  l gaIn8t 

### it **miight**.. : 

### 84.3

Honorable J. P. Gibbs, ~OIUU&88IOMr, Page 7



### be paid. Some of the 40rendant8 plenara the above voted l ndor8ement 88 ad@?@A80 l gaIn8t rtoorery or 8,uoh a88088meAt. It w88 found by the Court after hearing the Ql@naiAg8, oridenoe, and arguments, that euoh l ndor8emont we8 no bar to reooruy of l

a8esaments **by** the reoelver In that partioular oaext, a8 rtatea in your brie?. The **Court** aid not a0netrao the 8tatute Or pa88 upon the effeot the endoreemontmay hare had I? It h8d been validly lttaahed to the pollo~ 

### at a time when the 

### re re8entatIon8 **waited** In 8uoh snaoreement rotaa hare re$lso ed

t the true faot8 a8 to the amount or surplu8, but be886 It8 tIndIng that tho endornemontwa8 of no for08 and l ??eot upon **eVid8S4J0** that ruoh endor8ement \W8 r0~40a UpOn ?a188 and~t~anaulentrepresentations made by tho oompanr, the 8UlFplUs olaIined therein 

### being,In **faot,** non-•ri8tont.
Thii ?IudUg, even if we dieregard the faat that a ‘Motrlot Court juaiplsnt alone, (there having been no appeal taken fran thir **ti-ial)** 18 wlthout'foroea8 a preoedent and 18 not bIndIng en any other oourt, renders this oa8e,- 

### and other 0~8~8.arI8In~ out or thi8 oa86, 8u h 8 Southern orilnmental Irh work8 fni sorrow; 

### 101 %W. h!a!. 936 and 

### xorrou ~8. Y&&hq Bkriaett 

### .?brnIttuo Company, 

### Ino.,Sup. at. 

### or. **Ap.** 

### or Virginia, 4 S, 

### Wtr, 

### (26) 399, this **last** montlonrd 8a80 b8- ing One O?,the Oa888 Oft06 %Li your brie? (both Of th.Oe Oa808 having held in eiroat that the queetlon o?,the valIdlty of the lzidorsement

wad re8 aajuaio&*a in the trial oourt) o?' little or no~help~io~o~an8truin **b0OoU80** lt~l@av~8.illlan8we~d ttz -thelaw on your 

### qw8tIon~ e qae8t$ona8 to whet the @?- ,. root or the l

ador8emont**would** hare beon had the **wwmtad** o~mplIaiiso

with the'8tdtutebeen regular ana without **fraad,** ~O&.&eitlo~.a8 we ooneoIre It EJ be 8tdtOd~ a8 ?ollowr~ **If** a .h~taa&~lnruranoo oempanf 

### or a reolprooal or InterIn8aranor'~eroha~~ l88UO8 po1lole8 providing for 

### nona88688ment

or no p0ntI

Y en6 lla'bIllt~,

at a time when 8uOh oaganf, noIprooal- or nto*ln8uranoe l **xohange** ha8 in truth 

### and In fa8t th~~trro,rurplw requirua to meet the QrO~i8fOn8 '. O? 

### the 8t8tU~8~~‘WOU16 the 

### holbr8 Of 8uoh pOsIOi88 be liable 

### for a88088mont Or for *ontIngent addItIonal proaim In the 

### want the oompanf. nofproaal 

### or OXOhWig8,k@~e8 in8Olrent **4rUIAg** 

### 6h0 ii?0 04 8UOh pOiiOi@8?

we 

### deem It 

### tondaqtontal that QIXW%~~OSW often In8urattoe o'ontraot

le a~osltrlot

with rtatutor 

### to 8uoh aontraot l ra lqtalla and munt n POW i8iOA8 aQQlfin&J
r e a to the pr0vl8loa8 Of the **8tatUtb.** xtt thi8 @OAA@OtiOtI pUW at6eAtiOtt 18 direOt@d

### Eonorablr t. P. **Qlbb8,** 

### Ooamiaalonu,Pam 8



### to the following authority:



### Wtipplld4onain a oontraot 

### of inauranoo in oonfllat

with, 

### or re l lona,wh%oh l

o l pp 

### P u&mat ioabloto, l

t~tutory,prorito anal fora a part oi the ooatraot,mat field to the atatuto,

### and arm lmalld, 

### miner oontraotaoaauot ohan@ 

### l datin& rtatutorF lnn,w -Aamrioenlatioaal 

### Inaurmoa Con

### pany fee 

### Tabor,230 S. W, 397; Quoon Iaouranoo Oollgaay

tar Jarter#on foe O-any, 64 **Tox.** 578. Sin60 tho 

### uordlng of Artlol~ 4860a-10 dsallogwith mutual 

### lnauranoa oosupanioa la oubatantlall Artlolr 5026 

### Aoallq with reolprooala 

### and L dlrrrrrnt from tor-lnaurano~ 

### l ohanga a,

auoh Artloleawill be treated aoparatoltla thir oplnlonr Thara 

### are threa possible 

### oonetruotlona of Art1018 486Oa-10 am 

### tar am l amo 

### l pplloa 

### to the oontlaipntllabllltf **0r** **poii0*0ia8r8~** 

### The rb8t or thO80 00n8truotion8 wad hare the l

tatato **meaa** that wh6n Oh& 

### l rplua roaohaa the roqalred amouat aat forth 

### lo the atatoto, no polloyhol~r, 

### whefhor him pollrf k laauod prior 

### to, 

### or after

### tha time l uoh rurplaa lr 

### roaohod, ahall be liable 

### for any tarthrr aa~oramrntajavan **ir** the 

### 2-0pha l ur pfue baoma 

### aired arrriq the tlm 

### ror whioh the polioloa are iraw& 

### iî % oplnioa 

### thla lntm-protatlon la 

### inoomot l



### lnao the itat:: rakoa 

### no pro+lalon.rer roaovl~ the oocflnfpnt1labllitJ 

### l ttaohlngto pollrirr lraued 

### ~rlor to 

### the tiso that tho r6 

### q ralrd l urplu la 

### naohrdi Morootu tha etatuto oontlaqoa l e r0u0r:'
?fr 

### at ray tlmo tha ablttod l 

### aaota are laar than tho~anoarnod

%%o last quoted 

### pretlaion

# l peoiiylmg

polLoloa

with 

### a oontlagentpramlam olouly lndloatea that thora Wy k out

### l tandiry fro olaaaea

### 0r polloleaj oao olaaa 

### boaring a Oontingant llabllitr

### aad one olaaa 

### withouta ~ontlIle~~~~~;~iablllt~; 

### 7,
thit thi pol o

"tr **i00n4 00ti8tru0ti0n**  **+0uld** hm th0 aSmWe man ma laaud without eontin@nt llablkltr

### oarrflfonorabla J. **P.** Gibbs, Oomaiaaloa~r~Pago 

### 9

BUOh 

### l xrmpf~lion



### for o!ilr

ao long am 

### the requlrad atwplua reaialaa Bnlmpalraa,

### thtta making tho 

### l xomptloa

tram ooating0ot l.s.tty dopoad upon 

### the oontlauad l xlateaoo of the roqulrad 

### The atatuta may8 la l iteot that the oaapaay~y 

### la aue l *poJlo*without 

### a oontln4pot **proadum** whllo but onlf **whll8,** W nqulrad aurplua oxlata. It doom not ;a, that the 

### l romptlon irem oontlngoatllablllt~ ehall oantlarrr whllo, **but** odlf whllo, tho nqulrad aurplua 

### oxlata. It 

### doom not apoolry any tlm6 whoa the 

### l xoarptioa from oontlagoat llabllity 

### ahall oaaaa, but apoolrleaonly th& 

### tlaw dIUlIIg whioh the oompany nar laaue pollolea without 

### a oontlageatprenilua. In erdor to ado pt thla l oooad oonatruotloait would 

### be aeoeaaar~ to read into the 

### atatuqd'a

prorlaloa

that the 

### l

xomptloa

rrau oontlagent llabllltf ahould oeaao wba 

### the required l urplua beoomra lapaired. Suoh a oonatruotloawould do rlolenoo to the term 

### o? 

### thr atatutar

The **third** #OtI8t?uOtlOA whloh we bellova to be in a+ oordanoa with the l 

### tatuto mean that

gin haulag polloloa 

### with go oontiiuont 

### .llabilltr or mny kl@d, and that ii at a later data, it beoame nooraiart 

### to make fia l 

### aaeaamont, auoh ~aaraaaoat oould not,ba mad6 on thoao polXolo8 

### sly raaohod tho 

### roqulrwl Jnlma l



### urplua on that 

### auoh pollof la ~~O?oo aubjeot 

### to Or 

### oouraa, the 

### oompaa~~a rl6ht to laauo auoh 

### pollolra oeaaoa, at tha momat 

### it8 l 

### arploa’~~falla below the 

### mpoir0a rinimr.

Ii I&, ,thoiororo our oplnloa 

### thaf &fs 

### pxwlslona tprnirhaa by 

### JOO ior 

### prlnt~ latem&ual pollof ooatnotr should%a l

moadod in 

### part am tallon that’ 

### .pmtlon of the rovlalon 

### P ma4ingmao pollo~olaor 

### in thla l 

### ompaq laoura 

### qr lablllty other lib&n tho 4opoalt proaium or proniua **Raid ”**  ahoula road l

**ubatantiall~** a8 tollowal atho holder of thla polioy 

### l,aeura no llablllty other **than** the **dapO8it** g?OnirU or premium paid.*

**It** 

### la not anoommon 

### ror a rutma oaapanr to urlta inauranao on the 

### oaab plan 

### am wall amon tha lraoaamoatplm. oooloy@a &lore on Xaauraaoo, 2nd M.,Vol. 2, PO 

### 1576reaA* la part am r0siorrt

@mmra 

### a oorpany la l uthorlud **to do**  **buainoaa** 0p1 the oa& plan 

### am roll 

### am on the mutual plaHonorable 

### J. P. 

### Qlbba,Ooamlaaloaer, Page 10 

### 846

promlum notea siren by mmbora laaurlng on the latter plan aaf be l a aea aed

to 

### pay loaaea 

### muatalaed on polloleawritten.oa tho eaah plan.’
The thlra oonatruotioi 

### above adopted la rupported 

### by the oaae of Lewis 

### we. IndepeqdeatSohool Dlatrlot of Auatla 

### deoldedby the 

### Oourt of Old1 bp&ala at Beaumont and reported in 147 S. W. (26) 298, s&loh oaae warn revereed b 

### tho Supreme Oourtor Pexaa by 

### oplnloareported 

### in 161 8. W.:.2d) 450. The I Lewla oaae 

### warna taxpa~r'a *ait 

### to enJoin 

### thr roh(ro1 

### dlatrlot m 

### buyln6a pollor la the 

### Hlller*mutual Xnrurasoo Gompany OLL tho grountl

t&t tho prorlaloa la Artlola 486Oa~~:~@itlae the l ohool dlatriot l

xpreaa authorltf to 

### do 80 warn la 

### ~i~olatlan ot Seotlon 3, ArtloleXI of the Texas Oonatltution

### roatllng am foll-1 (avo

oountJ, olty, or 

### othrrmualolpal 

### oat-poqtlon 

### ahall hereafter broom* a l ubaorlberto the oapltal 0r aaf prltate 0orpoMtloa or aaaoottloa, or make any a miprlatlonor donatloa’to’the8am, 

### ~0~ln 

### l nywlae PE oan lta’oredlt~ bat thla ahall not 

### be ocaatrued to in l 

### 4way afieot any 

### obll(Wloa heretoforeauidortakea pursueat to law."
And la violation or S+otlon 52 ot A&isle IfI of auoh Oonatltutlon reading 

### am follow81

Vho kglalature &all hare no war to 

### authorlao

any oouty, olt oorporatloa

### or aubdlrir , f tom or ot er polltloal

r on of tho State to Iend 

### lta oredlt or to grant pub110 rone~ or thing et value in **aid** ~of,or to 

### ray 

### lndlrlaual, aaioolatlen or oorporatfon whtaoevor’l or 

### to kooue a atookholder & auoh o.orporatlon, raaoolatloa

### or oompaay.w The Court or 01~11 Appn r&a held ‘that

### the purohaaa of the polloy 

### war not 

### a leadlag of the l oQo1 alatrlot~aorodlt and the?&- by, nsooaaarll~,hold that, the poUoy involved warn 

### ioroter non-•ar*a*abl*. 'TheOourt 

### l xpreaal~ adopted the tellowlILg 

### l tateae~t 

### fr om

l ppell*o*a brlett
WThla polloy 

### of laauraaoe la 

### non-a8aeaaabla. lie rurtlxm pa-& oan ba 

### l xaoted.*Honorable J. P. 

### Olbba,Oommiaaloner, Paem 11

**And** tho Oourt tamthe? l 

### aldt

“In the pollo)r

at laaui **betorb** am

### both on the law and on the 

### taota, tho aohool dlatrlot oould aevu hare been oalled on to? say additional pa-at *a
The ,Supreme

Oourt rev*raed the Lowla *am* on the ground that tho polloyholdor waa la l

rtoqt a atookholderbut the court erld*atl~ agreed with tho Oourt 

### 0r 01~11 Appaala am to the non-•aaoaaablllt~ of the pallor involved alnoe .the 

### Oourt l 

### Ipnaal~ #al&~
*It la true that the By-iawa provide that the llablllt~ o? eaoh pollo~older la 

### limited00 ad detem.laed to be the armouat of depoalt QPOmlpr apoolrled in tho pollor laaued to auoh polloy holdarr.~
It la our oplnioa, themtore, thet 

### tho holder or a polloy la a mutual inauranoeoompaaywhioh polloy pro-f1468 that lt ahall bear no ooatlaigeut liability and diloh warnlasued at a time whoa the oompaay had in truth and la iaot the ?ree aurplua 

### reqalrod**by** 

### the l tatuta,

la not llablo ror aareaaaont or to? oontlngeataddltloaalprerahm, even thotlgh the 

### mutual oompaay beoomea laaolreat**durlag** 

### tha life of t;Be QOllO~. Suoh **an** laterpretatloa mafaeem at firat bluah to ba tmfdlr to thorn. pollo~ldera whore pollolea

### were laaued prior to the attalmeat~o? the mqulred 

### a= lo8 and whoao polleloa thonroro bear a ooatlageatllabll~t~. On tho other hand, tho mtrU1 oompaay’a l blllty to aell lnapraaoewithout oontinpgntllablllt~might gtsatly aid 

### la the 8816 o? l$a olleiea 1 end the growth ot the oanpanf and thus benetlt the oldera of l

aaoraable pollolea by reduoiagth~ ohaaoea that their mntlnpnt lleblllt~would over be bA?O?OO&

Artlola 5026, 

### aupra, dealing with later-laauraaoe 

### exohaagaa and reolprooala l peolrloa the length ot flue durl.4 whloh the l

xemptloa troxn

ooatlngentllablllty th*reln provi464 ior 

### ahall oxlat. The statute ram la eiioot that the p ra a+m

or p ram&tam

depoalt MJ **by** l **@-aeamt,** be

made the

oa- tlra llabilltq o? the aubaorlkr, while, but only w&ile, the free aurplua of the roolprooalor 

### inter-lnauramel xohaa@e 18

# . ‘*

Hoaorablo S. P. Olbba, Oommlial~aer, Page 12 

### f-348

0 aal 

### to 4200,000.OO. 1e **Thus** the exemption**rrom** oontlageat 

### l blllty 1. 

### l

xpreaal~ arde to 

### depeadupon the 

### l oatlauan** 

### or the required

aurplum.
The 

### olause met out in ~our.letter whloh la preaorlbod br Jour departmentfor use in tho poll*lea or reolprooal ad inter-laaunnoo exohangea ahould thare?*re be altered 

### or supplementedto ahow that the 

### l xerptlon from eontln@nt liabilityoeaaea whoa the re irpalrad. r lrea marplum beoomea

We au&&eat that auoh pror aloa would be more aab

### l taatlall~ la 

### l

ooordaaoe with the atatuto 

### li a olauae to the tallowing

### offootbe added 

### thereto:

9ut tho exe8ptlon ?rom oontlngratllablllt~ heroin proridod for ahall oontlauoonly lo lon( am 

### tbia exohaagemaint*lna **the** 

### rreo **awplua re**  **quired** br the maid Artlola 5026.*


### Xt ad&it 

### be Bald that aaoh a oonatruotlonor Artl016 5026 leatea the exemption from *aatlagat llablllty or no praotloal kaeilt to the polloyholderalnoe the 

### l remptlon ooatlau*a only 80 loag am a 

### r-0 aurplue 

### 0r $200,000.00la melntalaod end aIaoe am 

### a praotloalmatter no~~oooealoa oould 

### l rl.. during 

### auoh tlma whloh wuld require the la+ r” got . an aaseaamentagain& the ~enbera o? the reolprooL,?or laterlaauranoeexohaw, and thus ths 

### l xemptloa la la ioroe only
Purlng a t&e when it la not aooded b tho t la true that Arti*l* 11 o? the Rev I Polloyholdera. aed 0 rlt Statubea may8
***A** trmapoaltlon **0r** worde and olauae*mar be peaortea 

### to tien the l 

### enteaoeor olaiae la ulthout meanlng, ar

it l taad&w
Art1010 11 la a ~neral rule ot atatutorr oonatruotloa lald.dam la the geaoralprotlaloaa of the Roti..& 01~11 

### Statuter.

**We** are unable to 

### mar that the wordlag o? Art1010 5028 18 without meaalang beoawo th0 WOrdbu8bd ooaver a dbfl

### alto idea or latentloao? the Legislature,even thbugh auoh oxpnaaod intention or rule ham little or no Q~O8iOel of-. root. We do not foal authorlredto resort 

### to a traa8poaiti~a of word8 la order to give tho statutemore praofloal l??eo8.

Iul ooordaaoe with thla 

### holdlngpu are ulrleed am ?ollowt 1. The **owner** oj n polloy lasued **by** a @ml oompanf providing 

### ror ma 

### exemptimfkan oontlngeatliability and properlyEoaorable J. P, Gibbs, Uoxmlaaloaer , Pa,ge lj

Iaaued under t&e term&i ot brtlol@ 486Oa-10 note? booomer liable ?or the ooatiageatpromiua eet out in auoh Artlola.

2, Tho holder o? any polloy in a roolprooal

### or later-laeuraaoe



### l xohang ta liable 

### for the oontlngent 

### preQ~~EI provided in drtlole 5026 at any **time** tho au-plum or auoh reolprooal or laterlaaunnoe oxohaap dorm not moot the rrinlmum

requlrementaam met out la auoh Artiole.
3. The prorlalona of aw polloy governed by Artlale 5026 ar+ArtIole 4860a-10 that are In oon?Uot with **and** repwaat,to auoh ArtIoloa are Iawlld ad not blqlng da otther perty to the Iasuraao* oontraot.

**We** trust this opinion la a aurrloleat**anewer** to 

### hourproblem.
Your8 very tmly

**A ’** **lTORWRX** (BoQ1LRAL orT5AB

Asalatant