# THICAT-JYOECNHYGENERAL OF TEXAS

PRICE DANIEL ATTORNEY

GENERAL July 10, 1948

Non. Gee. B. Butler Chairman Board of Insurance Commissioners Austin; Texas Opinion No. V-630 Re: The sufficiency of the submitted amendment tothe charter ofthe Praetorians to effect an extension of its corporate existence.
Dear Sir:

lows: Your request for the opinion ofthis Department is as fol-

“Enclosed you will please see Original Charter of Modern Order of Praetorians which shows by endorsement that itwas filed in the Department ofStateApril 1, 1898 and, by provision No. 4 that ‘the term for which said corporation shall exist shall be Fifty years from the date ofits incorporation!.

*‘Following the enactment ofwhat is now Chapter 8, Title 78 of the Revised Statutes the Modern Order ofPraetorians qualified thereunder andhas operated under its provisions continuously. “The directors have submitted to this Department the enclosed original instrument~which has been styled 

### ‘Amendment Extension and Renewal ofPraetorian Charter’

. You will observe that it purports to be the action of the Board of Directors and is duly executed by such directors. “Will you please advise me whether the enclosure last above described is sufficient to renew the 

### charter ofthe Praetorian for the Fifty year period following April 1, 1948. Ifyour answer is in the affirmative, will you please return the enclosure with your usual certificate ofapproval so as to permit itto be filed here.

“Ifyour answer is inthe negative, will you please advise me whether the extension ofthe charter is controlled by the provision of Vernon’s Article 131% and ifyour adv,ica is in the affirmative,will you please advise me whether it is necessary to require the resolution therein referred to tobe. .

Hon. Geo. B. Butler, Page 2 (V-630)

adopted at a regular or special meeting ofthe entire membership ofthe Praetorians or whether the expression ofthe membership may be obtained by resolution from the respective local lodges or from the supreme governing body, which is called the Supreme Senate.” The Modern Order ofPraetorians was first incorporated onApril 1, 1896, as a benevolent society under the provisions ofArt. 713, Ch. 11,Title.XXI, R.S. 1895, which is as follows:

,“RELIGIOUS, CHARITABLE AND OTHER CORPORATIONS Article “Powers and privileges of

....................................713 “Article 713.(637) Any religious society, military or fire company, literary, social, charitable or benevolent association, other than colleges, universities, academies or seminaries, or any grand or subordinate lodge, or other order offree and accepted masons, or ofthe independent order of oddfellows, may, by the consent ofamajority of its members, become bodies corporate under this title, electing directors or trustees, and performing such things as are directed in the case of other corporations; and, when so organized, shall have all the powers and privileges and be subject to all the restrictions in this title contained, for the objects named in the charter, and shall have the same power to make by-laws for the regulation of their affairs as other corporations. Such directors or trustees shall not usurp or exercise thefu.nctions ofthe officers in charge of the spiritual affairs ofany society.” Article 713, as amended by the Acts of 1899, page 236, is now Article 1396, R.C.S. 1925.

In 1899, the 26th Legislature enacted S.B. 166, page 235, amending Art. 713, as the same is now found in the Revised Statutes, and adding thereto Art. 713a, which has been carried forward into the Revised Civil Statutes of,1925 as Articles 1398, 1399, 1400, 1401, 1402, 1403, 1404, 1405, 1406, and 1407.

At the time of incorporation, its purpose clause was as follows:

“2. The purposes of said corporation shall be: Benevolent: to relieve the necessities of the membe.rs thereof; to promote fraternity and social intercourse; to succor and assist members in time of sickness, death or destitution; the relief of orphans and,widows ofdeceased members; and to 1evyassessment.s upon the members thereof for the pur-. .

Hon. Geo. B. Butler, Pa8e 3 (V-630)

pose of providing mutual indemnity in case ofaccident, sickness or death. “This Incorporation is not for profit, but for the mutual aid of the members thereof; and funds collected from such assessments shall be devoted exclusively to the payment of indemnity in the case of sickness or death of, or accident to, the members thereof. “The expenses of said Corporation shall be met from assessments levied for that purpose, which in no case shall be greater than may be necessary to meet such expenses economically administered. “Believing that the highest civic wisdom is contained in the expressed policy ofthe fathers ofthe common-wealth of Texas to foster ard protect its citizens in the acquisition ofhomes, this Corporation shall also offer to its members the means of acquiring homes by mutual aid and co-operation, and shall authority to levy monthly assessments upon such of its-embers as shall desire to avail themselves ofthis aid, the funds so accumulated tobe advanced to its members for the purpose ofacquiring, building, or paying for homes. Members towhom such advances shall be made shall Cwtinue the payment oftheir, assessments and legal interest upon amounts so advanced until by easy installments an investment fund shall be created by which the same shall be returned. Such advances tomembers shall be secured by liens infavor ofthis corporation, for the benefit ofits members, executed in compliance with law. The expenses ofthis home benefit department shall be provided for by deducting a fixed sum from monthly assessments collected, which shall inno case exceed the necessary requirements of the corporation economically administered, For this purpose only, said corporation shall have authority to accumulate and loan money to its members, and to erect or repair any building or improvement, and to accumulate and loan money for this purpose.” This purpose clause was modified insofar as the indemnity insurance feature was concerned bythe provisions ofArt. 3096, Chap. 3, Title LVIII, R.S. 1895, which is as follows:

“Art. 3096. Nothing inthis title shall be construed to affect or inany way apply tomutual relief associations organized and chartered under the general incorporation laws ofTexas, or which are organized under the laws ofany other state, which have no capital stock, and whose relief funds are created and sustained by assessments made upon. .

Hon. Geo. B. Butler, Page 4 (V-630)

the members of said associations in accordance with their several by-laws and regulations; provided, that the principal officer ofevery such benevolent organization (not conducted by lodges a quorum ofwhose members meet intheir respective lodge rooms at least once each month), shall be required tomake an annual statement under oath to the department ofagriculture, insurance, statistics and history onthe first day ofJanuary of each year, or within sixty days thereafter, showing--

“1. Name of organization andwhere located.

“2. Name and residence of officers..

“3. The salary paid each officer.

“4. The gross amount ofmoney received during the year, and from what sources.

“5. The amount paid to policy holders on assessments to pay losses.

“6. The amount paid outfor all other purposes, stating indetail what purpose.

“7. Surplus in the treasury, ifany. “And should any such benevolent organization refuse or neglect tomake an annual report as above required, it shall be deemed an insurance company conducted for profit to its officers, and amenable to the laws governing such companies.” Chapter 8, Title 78, R.C.S. of Texas, 1925, dealing with fraternal benefit societies was originally enacted as Acts 1913, page 220, and places under thejurisdiction ofthe Board ofInsurance Commissioners the business of insurance by fraternal benefit societies as defined therein. The Board ofInsurance Commissioners is given jurisdiction over these societies which were incorporated under its provisions and is given jurisdiction, over any society which was incorporated prior to the passage ofthe fraternal benefit act butwhich engaged in thebusiness ofwriting fraternal benefit insurance policies by the provisions ofArt. 4839, which is as follows:

“Art. 4839. Powers retained--amendments “Any society now engaged in transacting business in this State may exercise all of the rights conferred hereby, and all ofthe rights, powers and privileges now exercised or possessed by it under its charter or articles ofincorporation not,inconsistent with this chapter, ifincorporated; or ifit be avoluntary association, itmay incorporate hereunder. But no society already organized shall be required to reincorporate hereunder, and any such society may amend its articles ofincorporation from time to time inthe,manner provided therem or in its Constitution and laws, and all such amendments shall be filed with the Commissioner (Footnote: Transfer of Commissioner’s powers and duties to Board of. .

Hon. Geo. B. Butler, Page 5 (V-630)

Insurance Commissioners, see ,art. 4682a, ante.) and shall become operative upon such filing, unless a later time be provided in such amendments or in its articles ofincorporation, Constitution or laws. Acts 1913. p. 220,” The question therefore arises as towhether or not the original charter of the Modern Order of Praetorians, filed April 1, 1898, as a benevolent association was ever changed so that the Modern Order ofi Praetorians became a fraternal benefit society under the provisions of Chapter 8.The sole power given to the Directors or Supreme Senators as contained in the articles ofincorporation, dated March 31, 1898, is as follows: “The Directors or Supreme Senators, ofthis Corporation are authorized toarrange for the adoption ofbylaws for the government thereof, and to provide for any alterations, changes or amendments thereto which may be from time to time necessary to carry out the ends ofthis incorporation.” Article 4839 provides that “any such society may amend its articles of incorpqration from time totime in the manner provided therein or inits Constitution and laws.” Ifany valid amendments were made under the provisions of Chapter 8, such amendments must be made by virtue ofthe above caluse or by virtue ofthe Constitution and by-laws adopted by the society. The above clause only gives authority for the Supreme Senators or Directors, which terms seem tobe synonymous, to arrange for the adoption of‘by-laws and to provide for any alterations, changes or amendments in the by-laws.

The Constitution which had been adopted bythe Modern Order of Praetorians andwhich was inforce June 10, 1923, provides in Art. XXV, the subject being “Amendments to This Constitution, *as follows:

“Sec. 1. The Constitution ofthis Order may be amended at any session ofthe Supreme Senate by amajority vote of all Supreme Senators present and voting ona resolution setting forth the amendment sought to be made, andwhich has been published in the immediately previous issue of the official organ ofthis Order.

“Sec. 2. Upon a petition ofnot less than 10per cent ofthe members in good standing, provided that the petition from each Council petitioning is signed by amajority of its members in good standing, setting forth the part to be amended, the Executive Committee may order avoteHon. Geo. B. Butler, Page 6 (V-630)

to be taken by all Councils in good standing, and shall cause such proposed amendments to be published in the official organ thirty days before such vote is to be taken, and if the amendments so submitted shall receive the approval ofthree-fourths of all the members present in good standing in their respective Councils, as reported to the Executive Committee by the several Recorders, the same shall be declared adopted.

“Sec. 3. The Executive Committee shall have power to make landadopt bye-laws not in conflict with this Constitution, as may be advisable in*carryi.ng out the objects and interests ofthis Order.

“Sec. 4. All amendments tothis Constitution shall be inforce and take effect thirty days after the adoption thereof.” By reference to Sec. 1it will be noted that the Constitution can be amended by amajority vote ofall Supreme Senators under the circumstances set forth therein. The Supreme Senate and its powers ,are set forth under Art. V, including themethods ofmeeting. The Board ofAdvisors created under Art. XI, and under Sec. 3of,said Article, “shall between the meetings ofthe Supreme Senate, exercise all its powers, except to change and modify or repeal this Constitution.” The Executive Committee created under Art. mas no authorityo do anything concenaing the Constitution, but itmay under Sec. 3 ofArt. XXXV make and adopt by-laws not in conflict with the Constitution. The Directors or Trustees created byArt. XII of the Consti-, ,tution seem to have no powers except to convey or encumber real estate belonging to the corporation by avote of 2/3 ofthe Directors. It is provided further that the home office ofthe Order shall not be conveyed or encumbered except by authority of the Supreme Senate.

From a resume ofthe Constitution and by-laws in effect onMay 11, 1927, itwould seem that no one except the Supreme Senate had the power to alter, amend, or repeal the provisions ofthe Constitution then in force.

It~appears that a charter amendment; a copy ofwhich is attached to the brief ofThe IWaetorians in the file, was filed with the Commissioner of Insurance onJune 14, 1927. Italso appears from the records ofthe Secretary ofState that the corporation attempted to file this charter amendment with the Secretary ofState, Mrs. Jane Y. McCallum, prior to that date,. but that she refused to accept it on the ground that the Secretary ofState had no authority tofile an amendment tothe charter ofafraternal insurance society, since that was purely under thejurisdiction of the Board of Insurance Commissioners. Thereaft‘ar, itwas sent tothe Board ofInsurance Commissioners and filed as above stated. No other amendments have ever beenHon. Geo. B. Butler, Page 7‘(V-630)

filed in the.office of the Secretary ofState.

Inanalyzing this proposed amendment itis necessary to look to the basis of the amendment,w hich is set forth as follows:

“BE IT KNOWN that at a regular meeting ofthe Supreme Senate ofthe Modern Order ofPraetorians, in quadrennial session asembled, held at Dallas, Texas, onthe 11thday ofMay7A.D; 1927, the following resolution was duly passed and adopted:

‘RESOLVED that Article I, Section 1of the Constitution of said Order be amended to read as follows: “This organization shall be known as The Praetorians, Its principal office shall be in the City ofDallas, State ofTexas.“’

“I, John W. Payne, Secretary of The Praetorians, do hereby certify that the foregoing is a true copy ofthe minutes of the meeting of said Supreme Senate of said Order held on May llth, A.D. 1927. “WITNESS my hand and the seal of said corporation this the 18thday ofMay, A.D. 1927.

“-8 - Jno. W. Payne Secretary

“Sworn to and subscribed before me this 24th day ofMay, A.D. 1927.

“-s- George Lintner Notary Public Dallas County, Texas,” From the foregoing it is readily apparent that the only amendment or change in the Constitution which was authorized by the body authorized to make such amendment or change was to change the first section ofArt. Iof the Constitution, so that the name ofthe society should become “The Praetorians” instead of “Modern Order of Praetorians.”

However, a reference to the amended charter shows that after reciting the meeting of the Supreme Senate as above set forth, the Directors mentioned inArt. XIII, who are the same as the Board ofAdvisors, which latter, as stated above, has no authority to change, modify, or repeal the Constitution, then proceeded not only to changeHon. Geo. B. Butler, Page 8 (v-630)

the name but to change the purpose clause of the corporation from that ofa benevolent association tothat ofa fraternal benefit society under the provisions of Chapter 0, Title 78.

Therefore, insofar as the charter amendment filed in 1927, with the Board of Insurance Commissioners attempted to change anything in the charter except the name ofthe society, itwas absolutely null and void since such change was not authorized either according to its Constitution or by-laws or by virtue ofany statutory authorities, the directors of the Modern Order of Praetorkns as such having no power either express or implied to change the purpose clause ofthe corporation.Since the amendment of 1927was not legally effective, except to change the name ofthe corporation from “The Modern Order ofPraetorians” to “The Praetorians.” and did not otherwise change the articles of incorporation or the charter or the purposes for which such corporation was originally chartered, namely, as abenevolent association with the rights and privileges enumerated in its articles of incorporation, it is still abenevolent association incorporated under the provisions ofArt. 1396, R.C.S. 1925, and not under the provisions of Chapter 8, Title 78, R&C.S. 1925.

The foregoing factual situation is identical, save for the corporate names, with the factual situation set forth in Opinion No. O-4160 by the Hon. Gerald C. Mann, Attorney General, addressed to Hon. W. J. Lawson, Secretary ofState, and approved March 14, 1942, a copy ofwhich is attached. Inthat opinion itwas held that the amendment filed by the corporation extending its period of existence, having been filed with the Board ofInsurance Commissioners who had no legal authority to receive and file the amendment for the purpose of extending the corporate life ofthe corporation, such filing was nugatory and did not comply with the general laws for extending its corporate existence as a charitable or benevolent association.

This Department expressly approves the reasoning contained in Opinion o-4160, and therefore holds that the “Amendment Extension and Renewal of Praetorian Charter” forwarded with your request is not sufficient to renew the charter of the Praetorians for the fiftyyear period following A;:ril 1, 1948.

Your second question is res’tated as follows:

“If your answer is in the negative, will you please advise me whether the extension of the charter is controlled by the provision ofVernon’s Art. 1315~ and ifyour advise is inthe affirmative, will you please advise me whether it is necessary to require the resolution therein referred to to be adopted at a regular or special meeting ofthe entire membership ofthe Praetorians or whether the expressionHon. Geo. B. Butler, Page 9 (V-630)

ofthe membership may be obtained by resolution from the respective loca~llodges or from the supreme governing body, which is called the Supreme Senate.” The charter of the Praetorians expired by virtue of its terms onApril 1, 1948, and the only legal method whereby the corporation may be revived and its corporate existence may be revived and extended is under the provisions ofArticle 1315, R.C.S. which is as follows:

“Corporations created for the support ofbenevolent, charitable, educational or missionary undertakings, the support ofany literary or scientific undertaking, the maintenance ofa library, or the promotion of painting, music or other fine arts, whose charter has expired by limitation, may revive such charter with all the privileges and immunities and rights of property, real and personal, exercised and held by it at the date oftbe expiration of its said charter, by viling. with the consent ofamajority (~1its stockholders, anew charter under the provisions ofthis chapter, reciting therein such original privileges and immunities and rights ofproperty, and by filing therewith a certified copy of such original expired charter. Acts 1874, p. 120; G.L. vol. 8, p. 122; Acts 1883, p. 98; G.L. vol. 9, p. 404; Acts 1907, p. 301; Acts 1909, p. 226; P.D. 5942.” That this is the proper method of reviving the charter of such acorporation is inaccordance with the rule of law laid down by the Supreme Court inthe case ofFlowers v. Pecos River Ry. Co., 156S.W. 260. Article 1315~would be inapplicable since it applies only to corporations chartered under the general law. However, if the corporate existence ofthe Praetorians is revived under the provisions of Art. 1315, a copy of such amendment should be furnished tothe Board ofInsurance Commissioners as provided inArt. 4839, R.C.S. 1925. SUMMARY A benevolent society chartered in 1898 under the provisions ofArt. 1396, R.C.S. 1925 andwhose charter has expired by expiration of law may be revived only under the provisions ofArt. 1315, R.C.S. 1925, although such corporation was engaged in the business ofissuing fraternal benefit insurance policies under the provisions ofArt. 4839, R.C.S. 1925.. The attempted filing with the Board ofInsurance Commissioners ofa charter amendment extending the li.fe,of the corporation under the provisions of Ch. 8, Title 78, R.C.S. 1925, prior tothe expiration ofits charter by operation of law, was withoutHon. Geo. B. Butler, Page 10 (V-630)

legal effect to extend the life of the corporation. Flowers v. Pecos River Ry. Co., 156S.W. 260;;Opinion No. O-4160 toHon. W. J. Lawson, Secretary ofState, March 14, 1742.
Very truly yours ATTORNEYGENERALOFTEXAS

CKR~/JCP ENCL. C. K. Rikhards Assistant

ATTORNEYGENERAL