## TExE~~~~~RNEY GENERAL ~PTEXAS

Hon. Walter C. Woodward. Chairman Board of InsuranceCommissioners Austin, Te'xas
Dear Sir: OpinionNo. 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-McCulloughFuneral 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 TexasHome Life Insurance Company violating the provisions of Article 578 of the Penal Code in issuing certificateswith the Funeral Service Plan included to some members and not issuing it,to others,both of which are 'ofthe 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 theHon. Walter C. Woodward, Chairman,page 2 o-2166

business of providing burial or funeral benefits, which under any circumstancesmay be payable partly or wholly inmerchandise or service,not in excess of One Hundred and Fifty ($150.00)Dollars, or the value thereof, are herebydeclared to be burial companies, associations or societies,and shall organizeunder provisions of.Chapter 274, Act of the Forty-first Legislature, 1929, and amendments thereto; and shall operateunder 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, providesthat: 'If any director, officer, agent, employee or attorney at law or attorney in fact or any associa- 'tlonunder this Act, or any otherperson, shall violate any of the provisions of thisAct, not specifically set out.in Sections 26,;27, 28, and 29 of this, Act, he,shallbe punlshedby fine not to exceed Five Hundred ($500.00)Dollars, or by imprisonment in the county jailnot to exceed six (6)months, or by both such.fineand imprisonment." Article $78,Vernon's Penal Code, reads, in part, as follows:

"No Insurance company doing business In this State shallmake or permit any distinction or discrimination in favor of individualsbetween the insure9 of ,thesame 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 thereofmake,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~cleshall 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 * * "TheSanders-McCulloughFuneral Home of Bryan, Texas, a corporation, is operatinga funeral home and/or undertakingbusiness. In conjunctionwith such business the Sanders-McCulloughFunderal Home has inauguratedand operatedwhat is known as the Sanders-McCulloughFuneral Service Plan in Bryan, Texas and vicinity. This Plan is operatedwith the cooperation of and in conjunctionwith the Texas Home Life InsuranceCompany, a local mutual aid lnsuranceassociation,with home office located at Palestine,Texas. According to the principals, there Is no contract or agreementbetween the funeral home and the Insuranceassociation other than that which springs from a mutually profitable enterprise.' (The insuranceassociationprofits from the Increasedvolume of insurancebusiness and the funeral home profits from an increase in the undertaking business.) Incidentally,the Manager of the Funeral Home is a licensedagent of the InsuranceCompany. qThe Sanders-McCulloughFuneral 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 submittedto individualsby licensed agents of the InsuranceCompany, including the Manager of the FuneralHome, in the form of a standard cash benefitpolicy to which is attached a rider, the contents of which.are:
"'SANDWS-MCCULLOUGH FUNEHAL SERVICE PLAN of the TexasHome Life Insurance Company,

Palestine,Texas
'THIS IS TO CERTIFYTHAT: The SANDERS-MCCULLOUGHFUNERAL HOME of Bryan, Texas (hereinafterdesignated as Servicers) agrees to provide funeral servicesand merchandise, since benefits are payable in cash and additional cost incident. to credit are eliminated, of a reasonable value of for each $ cash benefitsprovided for upon the aeath of any of the persons insured under the policyHon. 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 BENEFITSFOR THE DEATH OF CHILDRENUNDER FIVE YEARS OF AGE ARE REDUCED) SERVICESAND MERCHANDISE TO BE RENDERED, SHALL BE IN PROPORTION TO THE ABOVE. 'TheServices an& Merchandise provided for herein shall consist of a CASKET. OUTSIDE CONTAINER. EMBALMING IFDESIRED, FUNERAL COACH, FAMILY CAR, PRCFFESSIONAL SERVICE, USE OF CHAPEL, PROPER CLOTHING, AND OTHERSERVICES AND ATRICLES NECESSARYAND CUSTOMARILY FURNISHED BY REPUTABLE FUNERALHOMES FOR FUNERALS OF THIS TYPE. 'ThisCertificate is issued for and In consideration of an assignmentby the beneficiary, acceptable to the Services, of the benefits payable under Policy No. of the Texas Home Life InsuranceCompany and is subject to all the benefits,provisionsand conditions of said policy. This Certificate shall not take effect or be bindingupon the Servicersunless all of the Insure& are alive and ingood health at the time of its delivery to theperson designated to receive same. 'Issuedthis the

day of ,19-. 'SANDERS-McCUI&OlJ2H FUNERALHOME Bryan, Texas

'SEAL This ServiceAvailable Only at SANDERS-MCCULLOUGHFUNERALHOME 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 $50.00greater invalue than the cash benefits provided for in the certificate, except as to $100.00policies inwhich event the services and merchandise is aa$25.00 greaterva%ethancash.Atthe time the policy or certificate isHon. Walter C. Woodward, Chairman,page 5 O-2166

issued, the Sanders-McCulloughFuneral Service Plan rider is attached to the policy and is delivered to the member as one Instrument, The plan contemplates that all premiumswill be paid at the funeral home and then transmitted to the Texas Home Life Insurance Company, and that all claims under the certificatewill be filed at the funeral home. The premium rate for the certificate is the same rate that is charged to othermembers of the Texas Home Life InsuranceCompany in other seotions of the State not covered by the Sanders-McCulloughFuneral Service Plan.

The Sanders-McCulloughFuneral Home agrees to provide funeral services and merchandise, sincebenefits are payable in cash and additional costs incident to credit are eliminatedof a reasonable value of for each $ cash benefits urovlded for upon the death of any of the D= sons insuredunder the policy of insurance issuedby theTexasHome Life Insurance Company, to which the abovementioned certificate 1s attached. The servicesand merchandise provided for are described.

Neither the Texas Home Life InsuranceCompany nor the Sanders-MoCulloughFuneralHome is licensedas 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 eitherwholly or in part in funeral services and merchand~ise.Benefits and funeral services and merchandise are $50.00greater in value than cash benefitsunder the sav,e certificateand 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 samewith or without the plan.

The Funeral‘Service Plan Certificate is attached to the insurancepolicy and becomes a part thereof. The above mentioned insurance company and the funeral home are together, contractingand 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 societiesas 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 SandersMcCulloughFuneral Home are operating as a burial association in violation of Section 23 of Senate Bill 135,Acts of the Forty-sixthLegislature.

The provisions of Section 33., Senate Bill 135, Acts of Forty-sixth Legislature are applicable to both the TexasHon. Walter C. Wooaward, Chairman,page 6 O-2166

Home Life InsuranceCompany and the Sanders-McCulloughFuneralHome.

With reference to your third question, you are respectfullyadvised thkt it 1~ our opFnFon that the Texas Rome Life InsuranceCompany 'Isviolating the provision of Article 578, Penal Code, supra, ln issuing certificatewith the Funeral Service Plan to somemembers and not issuing it to others,both of which are "of the same class" and pay the same premium rate. There shouldbe no distinction or discriminationbetween the insured of the same classwhere the payment of premium or rates charged are the sam8. In the above mentioned plan, the certificatewith the Funeral Service Plan Is avgilable to some and not to othemof the same classwho 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/ArdellWillitims AM811 Williams Assistant AW:ob:wc

APPROVED MAY 29, 1940 s/Gerald C. Mann ATTORNEY GENERAL OF TEXAS Approved Opln1on CommitteeBy s/BWB Chairman