E CD A 

0 EXAS 

GROVER SELLERS AU~THN II. TEXAS 

-xmxx 

AlTORNlEY G*:NERAr. 

Hon. 0. P. Lockhart, Chairman 

Board of Insurance Commissioners 

Austin, Texas 

Dear Sir: Opinion No. O-5768 

Re: Is the Board of Insurance Commissioners 

directed by Articles 4740 and 4725, R.C.S., 

as amended by S. B. 0 and 9, Acts of 1943, 

48th Leg., R. S., to accept securities which 

are not eligible for reserve investments 

but which are eligible for capital and surplus 

investments 7 

Your request for an opinion on the above matter has been received 

and carefully considered. We quo,te said request as follows: 

“One of our Texas life insurance companies has submitted to 

ma for deposit under the policy registration ArticIes 4740-4743 

an offering of securities eligible for capital and surplus investments but which do not meet the requirements of reserve investments, as provided in Article 4725. Articles 4740 and 4725 were 

amended by Senate Bills 8 and 9 of the 48th Legislature. 

“Before the 1943 amendment the requirement for reserve and 

capital investments under Article 4725 were the same. Such investments were eligible for deposit under the registration articles but 

surplus investments were not. The five articles were in harmony 

with themselves and with the conception of the public generally,.’ I 

think, that the Commissioner’s certificate of registration on a policy meant that he had in hand either the cash representing the reserve on the policy or securities of the kind in which the reserve 

funds might be invested. 

“You will note that Senate Bill 8 lowered the requirements for 

capital investments by fixiri&them equally with surplus investments 

and left reserve requirements substantially as they were. Senate 

Bill 9 amending Article 4740 changed the word “funds” to “capital, 

surplus and/or reserves.” Articles 4741-2-3 were not amended. 

“To accept the securities not eligible for reserve investments 

it is necessary to construe “and/or” in the amendment as “or”, 
Honorable 0. P. Lockhart, Page 2 O-5768 

which seems in conflict with Article 4743 defining what deposits 

may include. Construction of “and/or” as “and” will apparently 

confine the deposits to reserve investments. 

“I have declined to accept the capital and surplus investments 

because of the ambiguity and conflict involved and because of the 

real importance of the issue to the holders of registered policies. 

“Please advise me whether the Board is directed by the above 

articles as amended to accept securities which are not eligible 

for reserve investments but which are eligible for capital and 

surplus investments.” 

Article 4740, Vernon’s Annotated Revised Civil Statutes of Texas 

of 1925, prior to being amended by S. B. No. 8, reads in part as follows: 

“Any life insurance company now or which may hereafter be 

incorporated under the laws of this State may deposit with the 

Commissioner for the common benefit of all the holders of its 

policies and annuity bonds, securities of the kinds in which, by 

the laws of this State, it is permitted to invest or loan its funds, 

equal to the legal reserve on all its outstanding policies in force, 

which securities shall be held by said Commissioner in trust 

for the purpose and objects herein specified. . . .” 

The only change made in said Article 4740 by S. B. No. 8 which 

here needs to be considered is that the word “funds” was omitted from 

said amendment and the words “capital, surplus, and/or reserves” substituted therefor. It is necessary, therefore, to determine what the Legislature intended in adopting said amendment. 

In the case of Yett vs. Cook, 281 S. W. 837, 841, the Supreme Court, 

speaking through Chief Justice Cureton, held: 

u 

. . . . An elementary rule of construction is that, when a 

law is amended, effect must be given to the amended law in a 

manner consistent with the amendment.” 

In the case of American Surety Company of New York v. Axtell Company, 36 S. W. (2d) 715, the Commission of Appeals held: 

41 

. . . . It will be presumed that the Legislature in adopting 

the amendment intended to make some change in the existing law 

and, therefore, the courts will endeavor to give some effect to the 

amendment.” 
. . 

Honorable 0. P. Lockhart, Page 3 O-5768 

In the case of Independent Life Insurance Company of America vs. 

Work, 77 S. W. (2d) 1036, 1039, the Supreme Court, speaking through 

Justice Greenwood, held: 

“The rule is elementary that we must give some effect to 

changes in the words of legislative acts and must also construe 

their words so as to accomplish the legislative intent.“’ 

Applying these rules to the amendment of Article 4740 by S. B. 

No. 8 in the particular hereinabove referred to, it is obvious that the Legislature amended said Article for the purpose of clarification and to make certain the kinds of securities any life insurance company may deposit under 

said Article and to specify that same could include securities of the kinds in 

which, by the laws of this State, it is permitted to invest or loan its capital, 

surplus, and/or reserves. 

Owing to the fact, however, that the use of the phrase “and/or” 

in statutes has been before the courts a number of times and frequently 

has been critized, it is necessary to interpret said phrase as used in order 

to determine the intent of the Legislature in using same, in said amendment. 

This phrase has been referred to as “ambiguous;” “indicating 

ii 

uncertainty and doubt; ” “confusi.ng and misleading;” “unintelligible;” “mean% 

ingless; ” “gibberish;” and “an abominable invention that is as devoid of meaning as it is incapable of classification by the rules of grammar and syntax.” 

Various other epithets have been applied thereto by the courts, several of 

which appear in the Annotations in 118 A. L. R., pp. 1367 et seq., but it is 

our opinion that when said phrase is properly used, as it was in said amendment, its meaning is not uncertain. It is broad, but not indefinite; it is elastic, but within definite bounds and for a definite purpose. A proper interpretation of said phrase depends in each instance upon the circumstances under 

which it is used, and when used in a statute it must be construed so as to express the true int&ntion of the Legislature. When so construed, it does have 

a well-defined meaning recognized in law. 

Webster’s New International Dictionary, Second Edition, defines 

“and/or” as follows: 

“Either and or or.” “‘butter and/or eggs” means “butter and 

- - 

eggs, or butter or eggs.” 

The following statement as to the use of said phrase is made by the 

court in the case of State vs. Dudley, 159 La. 872, 877, 106 So. 364, 365, as 

follows: 
Honorable 0. P. Lockhart, Page 4 O-5768 

i Whheil used 3~1 a contract, the intention is that the one word 

or the other Mayo be take,n accordingly as the one or the other 

will bc:st el:C?c+. +.he purpose of the parties as gathered from the 

contract t,aken as a whole. In other words such an expression 

in a contract amounts in effect to a direction to those charged 

with construing the contract to give it such interpretation as 

will best accord with the equity of the situation, and for that 

purpose to ,~SE either ‘and’ or ‘or’ and be held down to neither.” 

Thr Supreme Cou,rt of California considered the meaning of said 

phrase in the case of Powers Farm, Inc., v. Consolidated Irr. Dist., 119 

P. (2) 717, as same was used in an act relati.ng to the liabi,lity of irrigation 

districts, their officers and employees for damages, which Act reads in part 

as follows: 

“Section 2 provides: ‘Whenever it is claimed that any person or property has been injured or damaged as a result of any 

dangerous or defective condition of any prop&rty owned or operated and under the control of any irrigation district or i~ts offi,- 

cers or employees and/or the negligence or carelessness of 

any officer or employee of an irrigation di,strict, a verified 

claim for damages shall be presented”‘, etc. 

,, ” . I ,As >JYF~ in Section 2 of the act., it. refers to a clai~m 

for damage g;?,,undtd upon any one of the following clauses (1) 

a dangerous 01 defective conditi.on of property of the distri.ct 

and negligence it an officer or employee; or (2) a dangerous or 

defective condition of property of the district, that is a general 

liability withorlt rc~:feren,ce to negligence; or (3) the negligence 

of an officer 0~ ernpl~oyee.” 

The meaning *.~,f said phrase was also considered by the Georgia 

Supreme Court in the c,ase of Davison v. F. W. Woolworth Company, 186 

Ga. 663, 198 S. E. 738, 118A. L. R. 1363, as same was used in the statute 

levying a tax on Electiical Contractors, as follows: 

“Electrical Contractors. Upon all electrical Contractors 

$25.00 for each county. The term ‘electrical contractor‘ used 

in this paragraph shall be held to mean each person, firm, or 

corporation who shall engage in installing, repairing, and/or 

selling electrical wi,ring or equipment.” 
Honorable 0. P. Lockhart, Page 5 O-5768 

The Court made the following holding: 

“We recognize the rule that tax acts, including acts imposing 

taxes on occupations, are to be strictly construed against the government. Mayor, etc., v. Hartridge, 8 Ga.~ 23; Mystyle Hosiery 

Shops v. Harrison, 171 Ga. 430, 155 S. I?. 765. But we must not 

lose sight of another rule which admonishes us that however awkward and unusual the language of a statute may be, the legislative 

intent manifested by it must be ascertained and enforced as the 

law. Torrance v. McDougald, 12 Ga. 526 (3); White v. State, 121 

..:- ~a.. 592, 49 S;;E. 715; Lee v. Tucker, 130 Ga. 43, 60 S. E. 164. If 

the word combination “and/or” has a well-defined meaning recognized in legal parlance, it is the duty of this court to give the statute in which it is used that construction which is in harmony with 

that meaning. If in doing so the authorities lead us to the conclusion that it was the purpose of the General Assembly to tax one in 

the situation of the defendant, the rule of strict construction will 

not have been violated. The expression “and/or” has been before 

the courts a number of times and frequently has been criticized.... 

3 C. J. S. 1069, deals with this word combination, and analyzing 

the holdings of the various courts says in the text that the meaning 

of “and/or” may be clear, supplying the intention either that effect 

shall be given to both the conjunctive “and” and the disjunctive “or”, 

or else that the one word or the other may be taken accordingly as 

the one or the other will best give effect to thepurpose intended as 

gathered from the instrument taken as a whole, and for that purpose 

to use either “and” or “or”, and be;held down to neither; and that on 

the other hand it has also been said that, as sometimes used the 

term is ambiguous. 

“We think that what. the legislature intended was that Paragraph 

50 of Section 2 of the general tax act of @35%s to be read by using 

the word ‘and’ or the ikrwd’or interchangeably between the words 

‘installing,’ ‘repairing,’ and ‘selling,’ so as to impose the tax provided in said act on any person who shall engage in installing, repairing, and selling electrical wiring and equipment, or who shall 

engage in any one of them. To hold otherwise would be to entirely 

ignore the disjunctive “or”. Since there is a construction permissible, under the authorities cited in the note to 3 C. J. S. 1069, which 

will permit us to do so, the rule that we are to give effect, if possible, 

to every word in a statute, requires us to adopt this construction.” 

We think a similar construction should be placed upon said term as 

used by the Legislature in S. B. No. 8, and that what the Legislature intended 
4 . . . 

Honorable 0. P. Lockhart, Page 6 ‘O-S768 

was that the word “and” or the word “or” should be used interchangeably 

between the words “capital,” “surplus”, and “reserves.” When so construed it is apparent that the Legislature intended to authorize any life insurance company seeking to comply with the provisions of S. B. No. 8 to 

deposit with the Board of Insurance Commissioners securities of the kinds 

in which, by the laws of this State, it is permitted to invest its “capital”, 

its “surpl,us”, its “reserves”, i.ts “capital and surplus”, its “capital and 

reserves”, tts “‘surplus and reserves”, or its “capital, surplus and reserves.” 

In other words, any such company can comply with said provision by deposit- 

.ing securities of the kinds in which it is permitted to invest its capital, surplus, and reserves, or any combination thereof, as it may prefer. 

It is our opinion, therefore, that sai~d inquiry should be answered 

i.n the affirmat,ive and that the Board of Insurance Commissioners is directed 

by sai,d Artf~le as amended to accept any securities offered thereunder which 

are eligible for investment as capital, surplus or reserves. 

Trusting that this satisfactorilly answers your inquiry, we are 

Very truly yours 

ATTORNEYGENERALOF TEXAS 

BY 73cLcdttw Jas. W. Bassett 

Assistant 

APPROVED JAN 15, 1944 

ATTORNEY GENERAL OF TEXAS 

JWB:vdc