TExE~~~~~RNEY GENERAL 

~PTEXAS 

Hon. Walter C. Woodward. Chairman 

Board of Insurance Commissioners 

Austin, Te'xas 

Dear Sir: Opinion No. o-2166 

Re: Is the Texas Home Life Insurance Company of Palestine, Texas, operating 

a btiial association in violation of 

Sec. 23, S.B. 135? 

And related questions. 

Your request for an opinion of this department on 

the questions as are herein stated, has been recelved. 

We quote the questions submitted Ln your inquiry 

as follows: 

"I . Is the Texas Home Life Insurance Compafiy~'of Palestine, Texas operating a burial association in violation of Sec. 23 of Senate Bill 135? 

(A) Are the provisions of-Section 31, 

Senate Bill 135 applicable to such operation? 

"II. Is the Sanders-McCullough Funeral Home 

operating a burial association Fn violation of Sec. 

tion 23 of Senate Bill 135? 

(A) Are the provisions of Section 31 

of Senate Bill 135, applicable to such operation? 

"III. Is the Texas Home Life Insurance Company violating the provisions of Article 578 of the 

Penal Code in issuing certificates with the Funeral 

Service Plan included to some members and not issuing it,to others, both of which are 'of the same 

class'and pay the same premium rate?" 

Section 23 of Senate Bill 135, Acts Forty-sixth 

Legislature, reads as follows: 

"Any indfvldual, indidduals, firms, co-partnerships, corporations or associations doing the 
Hon. Walter C. Woodward, Chairman, page 2 o-2166 

business of providing burial or funeral benefits, 

which under any circumstances may be payable partly or wholly in merchandise or service, not in 

excess of One Hundred and Fifty ($150.00) Dollars, 

or the value thereof, are hereby declared to be 

burial companies, associations or societies, and 

shall organize under provisions of.Chapter 274, 

Act of the Forty-first Legislature, 1929, and 

amendments thereto; and shall operate under and 

be governed by.Chapter 274, Acts of the Forty-first 

~~;~~s~~ure, 192.9, and amendments thereto, and 

. It shall be unlawful for any individual, 

Individuals., firms, co-partnerships, corporations, 

or associations, other than those defined above, 

to engage in the business of providing burial or 

funeral"benefits~, whiich'under any circumstances 

may be paid wholly or partly in. merchandi:se or 

services." I 

Section 31 of Senate Bill 135, provides that: 

'If any director, officer, agent, employee or 

attorney at law or attorney in fact or any associa- 

'tlon under this Act, or any other person, shall 

violate any of the provisions of this Act, not specifically set out.in Sections 26,;27, 28, and 29 of 

this, Act, he,shall be punlshed by fine not to exceed 

Five Hundred ($500.00) Dollars, or by imprisonment 

in the county jail not to exceed six (6) months, 

or by both such.fine and imprisonment." 

Article $78, Vernon's Penal Code, reads, in part, 

as follows: 

"No Insurance company doing business In this 

State shall make or permit any distinction or discrimination in favor of individuals between the 

insure9 of ,the same class and of equal expectation 

of life in the amount of or payment of premiums or 

rates charged for policies of life or endowment 

insurance or in the dividends or other benefits 

payable.thereon; nor shall any such company or 

agent thereof make,any contraot of insurance or 

agreement as'to such c.ontract other than as expressed in the policy issued thereon, * *any officer, 

agent and such company violating any provision of 

this arti~cle shall be fined not less than one hundred dollars." 

We quote from your letter as follows: 
Eon. Walter C. Woodward, Chairman, page 3 O-2166 

ëI* l l * * 

"The Sanders-McCullough Funeral Home of Bryan, 

Texas, a corporation, is operating a funeral home 

and/or undertaking business. In conjunction with 

such business the Sanders-McCullough Funderal Home 

has inaugurated and operated what is known as the 

Sanders-McCullough Funeral Service Plan in Bryan, 

Texas and vicinity. This Plan is operated with the 

cooperation of and in conjunction with the Texas 

Home Life Insurance Company, a local mutual aid lnsurance association, with home office located at 

Palestine, Texas. According to the principals, 

there Is no contract or agreement between the funeral home and the Insurance association other than 

that which springs from a mutually profitable enterprise.' (The insurance association profits from the 

Increased volume of insurance business and the funeral home profits from an increase in the undertaking 

business.) Incidentally, the Manager of the Funeral 

Home is a licensed agent of the Insurance Company. 

qThe Sanders-McCullough Funeral Service Plan 

is advertised extensively in the Bryan, Texas section through the medium of newspapers, mail, clrcularization in public places, personal solicitation 

and otherwise. All expenses of such advertising 

has been paid for by the Texas Home Life Insurance 

Company with the knowledge and consent of the SandersMcCullough Funeral Home. 

"Then Plan is submitted to individuals by licensed agents of the Insurance Company, including 

the Manager of the Funeral Home, in the form of a 

standard cash benefit policy to which is attached 

a rider, the contents of which.are: 

"'SANDWS-MCCULLOUGH FUNEHAL SERVICE PLAN 

of the 

Texas Home Life Insurance Company, 

Palestine, Texas 

'THIS IS TO CERTIFY THAT: 

The SANDERS-MCCULLOUGH FUNERAL HOME of Bryan, Texas 

(hereinafter designated as Servicers) agrees to provide funeral services and merchandise, since benefits 

are payable in cash and additional cost incident. to 

credit are eliminated, of a reasonable value of 

for each $ cash benefits provided for upon the 

aeath of any of the persons insured under the policy 
Hon. Walter C. Woodward, Chairman, page 4 O-2166 

of insurance Issued by the Texas Home Life Insurance 

Company, Palestine, Texas to which policy this Certificate is attached. SINCE CASH BENEFITS FOR THE DEATH 

OF CHILDREN UNDER FIVE YEARS OF AGE ARE REDUCED) SERVICES AND MERCHANDISE TO BE RENDERED, SHALL BE IN PROPORTION TO THE ABOVE. 

'The Services an& Merchandise provided for herein 

shall consist of a CASKET. OUTSIDE CONTAINER. EMBALMING IF DESIRED, FUNERAL COACH, FAMILY CAR, PRCFFESSIONAL SERVICE, USE OF CHAPEL, PROPER CLOTHING, 

AND OTHERSERVICES AND ATRICLES NECESSARY AND CUSTOMARILY FURNISHED BY REPUTABLE FUNERAL HOMES FOR 

FUNERALS OF THIS TYPE. 

'This Certificate is issued for and In consideration 

of an assignment by the beneficiary, acceptable to 

the Services, of the benefits payable under Policy 

No. of the Texas Home Life Insurance Company 

and is subject to all the benefits, provisions and 

conditions of said policy. This Certificate shall 

not take effect or be bindingupon the Servicers unless all of the Insure& are alive and in good health 

at the time of its delivery to the person designated 

to receive same. 

'Issued this the day of ,19-. 

'SANDERS-McCUI&OlJ2H FUNERAL HOME 

Bryan, Texas 

'SEAL This Service Available Only 

at 

SANDERS-MCCULLOUGH FUNERAL HOME 

502 W. 26th Street 

Bryan, Texas 

IN EVENT OF DEATH 

Phone Bryan 123 Collect 

Day or Night' 

Under the above mentioned facts the funeral service and merc.handise under the~said Funeral Service Plan 

are always $50.00 greater invalue than the cash benefits 

provided for in the certificate, except as to $100.00 policies in which event the services and merchandise is aa$25.00 

greater va%ethancash. Atthe time the policy or certificate is 
Hon. Walter C. Woodward, Chairman, page 5 O-2166 

issued, the Sanders-McCullough Funeral Service Plan rider is 

attached to the policy and is delivered to the member as one 

Instrument, The plan contemplates that all premiums will be 

paid at the funeral home and then transmitted to the Texas 

Home Life Insurance Company, and that all claims under the 

certificate will be filed at the funeral home. The premium 

rate for the certificate is the same rate that is charged to 

other members of the Texas Home Life Insurance Company in 

other seotions of the State not covered by the Sanders-McCullough Funeral Service Plan. 

The Sanders-McCullough Funeral Home agrees to provide funeral services and merchandise, since benefits are 

payable in cash and additional costs incident to credit are 

eliminated of a reasonable value of for each $ 

cash benefits urovlded for upon the death of any of the D= 

sons insured under the policy of insurance issued by theTexas Home Life Insurance Company, to which the above mentioned certificate 1s attached. The services and merchandise 

provided for are described. 

Neither the Texas Home Life Insurance Company nor 

the Sanders-MoCullough Funeral Home is licensed as a burial 

association under the provisions of S.B. 135, Acts of the 

Forty-sixth Legislature. Benefits under the plan may be, or 

are payable either wholly or in part in funeral services and 

merchand~ise. Benefits and funeral services and merchandise 

are $50.00 greater in value than cash benefits under the sav,e 

certificate and benefits under the plan may be Andy are in excess of $150~00, except as.above noted. All members of the 

Texas Home Life funeral service planalthough the premium rates 

for membership are the same with or without the plan. 

The Funeral‘Service Plan Certificate is attached 

to the insurance policy and becomes a part thereof. The 

above mentioned insurance company and the funeral home are 

together, contracting and doing the business of providing 

burial or funeral benefits, which may be payable partly 

or wholly in merchandise or service. 

In view of the foregoing facts and the definition 

of burial companies, associations or societies as defined in 

Section 23, Art. 5068-1, supra, you are respectfully advised 

that it is the opinion of this department that the Texas Life 

Home Insurance Company of Palestine, Texas and the SandersMcCullough Funeral Home are operating as a burial association 

in violation of Section 23 of Senate Bill 135, Acts of the 

Forty-sixth Legislature. 

The provisions of Section 33., Senate Bill 135, Acts 

of Forty-sixth Legislature are applicable to both the Texas 
Hon. Walter C. Wooaward, Chairman, page 6 O-2166 

Home Life Insurance Company and the Sanders-McCullough Funeral Home. 

With reference to your third question, you are respectfully advised thkt it 1~ our opFnFon that the Texas 

Rome Life Insurance Company 'Is violating the provision of 

Article 578, Penal Code, supra, ln issuing certificate with 

the Funeral Service Plan to some members and not issuing 

it to others, both of which are "of the same class" and pay 

the same premium rate. There should be no distinction or 

discrimination between the insured of the same class where 

the payment of premium or rates charged are the sam8. In 

the above mentioned plan, the certificate with the Funeral 

Service Plan Is avgilable to some and not to othemof the 

same class who pay the same premium or rate. 

Trusting that the foregoing fully answers your fnquirg, we are 

Yours very truly 

ATTORNEY GENERAL OF TEXAS 

By s/Ardell Willitims 

AM811 Williams 

Assistant 

AW:ob:wc 

APPROVED MAY 29, 1940 

s/Gerald C. Mann 

ATTORNEY GENERAL OF TEXAS 

Approved Opln1on Committee By s/BWB Chairman