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### T~~EA~~ORNEY GENERAL

QFTEXAS R-788

PRICE DANIEL ATTORNEY OENERAL AUWI-IN U.WS

January 

### 13, 1948

Hon. George B. Butler Chairman ,Boardof InsuranceCommissioners Austin 14, Texas Opinion

### No.V-474
Rc: The constitutionality of Section 2(A), House Bill 

### 85, 50th Legislature, prohibitinge.ny

conncctions betweenburial associations.
Dear Sir:
Your request for an opinionregardingthe above subject is two-fold:

1. The constitutionality of Section 2(A), of House Bill No. 

### 85, 50th Lcgislaturc; and 2. Whether this Section of the Act applies to Burial Associationsorganized both before and aftcr the effective/ date of the Act. These questions

will be discussed in the order stated. Section 2(A) of House Bill 

### 85, turc, reads as follows: 50th Leglsla-

"There shall be no connectiondirectly or Indirectly

between two (2) or more Burial Associations.

No member, director,or officer of one Burial Associationshall be a member, director,or officer of any other Burial Association. No person whose husband,wife, or employee is an officer or director of one Burial Associationshall be an officer or director of.any other Burial Association. No funeraldirector,undertaker,or funeral home directlyor Indirectlyconnected with or designated

by one Burial Ass;~clation asHon. George B. Butler, Page 2 

### (V-474)

Its funeral director,undertakeror funeral home shall be connectedwith or designatedby any other Burial Association as Its funeral director,undertaker,or funeralhome to furnish Its members with its servicesand/ormerchandiseor to service its policies or to be in any manner connectedwith Its affairs." The caption of the Act oro<;tlng a Burial AssociationRa$c Board contains,among other things, the following: , . . making it unlawful for there to be any connection

between two (2) or more Burial Associations;

. . .'

Prior to the passage of this Act, Article 4875-a-4, v.c.s., which prohibitedin general terms any connection

between Burial Associations, read as follows:
"Art. 4875a-4. Independent Assoclatkons.-- There shall be no connection between any two associations

operatingunder this law and no one associationshall contributeanything by way of salary orcompensation to any executiveofficer for the purposes of such other associations."
In a former opinion,O-2879,by this Department,the following connections were held lawful under this Article: (a) Where two Burial Associations designatedthe same funeral home in their policies; (b) where there was a family relationship

between the officersof the two associations; and, (c) where approximately 150 persons held policies In both associations. Later, another opinion,O-6956, rcaffirmed the legality of almost identicalconnectionsin addition to these situations: (a) Where two associatlcns appoint one agent to write policies In both associations; and'(b)where two associations occupy the same quarters and share personnelas well as operatingexpenses. In a third opinion,

### 0-5018, rendered after O-2879 and before O-6956; the connectionof, interlocking

or common of,f;f;; and directors for two associations was condemned. rulings were each made In the light of Article 

### 50684, Section 

### 23, v.c.s., which limits to $150.00 the value of benefits allowedby Burial Associations. The two asso-, oiations involved in O-2879 admitted that theirpurpose was to provlde benefits in excess of $150.00. Such were the views of this Departmentconcerningthe purposes of Article 4875a-4, supra,up to the time of the enactment of House Bill 85 of the 50th Legislature.Hon. George B. Butler, Page 

### 3 (V-474)

It has been contendedIn briefs filed in support of the propositionthat this Act is unconstltutional that this section of House Bill 

### 85 violates Section 

### 35 of Article III of the Constitution of Texas, which provides:
"No bill,

. . . shall containmore than one subject,which shall be expressed In Its title. But If any subject shall be embraced in an act, which shall not be cxpressed in the title, such act shall be void only as to so much thereof,as shall not be so expressed." The first sentenceof Section 2(A) Is admlttedly germane to the caption of the Act. The argument Is aimed at the last three sentencesof Section 2(A), which declare unlawful the very connections held lawfulby this Department

under Article 4875a-4, supra. The crux of the argument is that the wording of the caption failed to signal or Inform the members of the Legislature or the public that such connections bctweon burial associations

held innocentby the Attorney General in the former opinionsunder Article 4875a-4,were on the threshold of being declared Illegal in the body of the Act. The general rule of construction harmoniously appliedby all of the courts In these matters Is that the title or caption of lcglslatlve acts shall be libcrally construedso as not to violate the constitutional fi revisions. 24, Gulf InsuranceCompanyv. James, 143 Tcx. 

### 185 S.W. (2d) 966; Board of InsuranceCommissloners v. SprolcsMotor Freight Lines (Civ.App.), 94 S.W. (26) 769; 39 Tex. Jur. 95. It is also a common rule In construingcaptionsor titles of legislative acts that where the provisionsof the act are in any degree rclated or germane to the title or caption, the act will not be held unconstitutional. City of Beaumont v. Gulf States Utility Company (Clv.App. ,.163 S.W. (2d) 426; Phillipsv. Daniel (Civ.App.), 91 S.W. (2d) 1193, crror refused. In the last-citedcase It was stated:

"The law is settled that under the constitutional

provisions

referred to any number of provisions

may be containedin the same bill or act, however diverse they may be; the only requirement being that they arc conslstcnt

with the general object or subject,Hon. George B. Butler, Page 4 (V-474)

and have a mutual relation and connection, directlyor indirectly, with the gcnera1 subject or object of the act or bill." Many cases were cited to uphold this ruling.

WC cannot agree that any part of Section 2(A) ia wholly unrelatedor foreign to the caption of the Act. The connectlonscondemnedin this sectionare not indirectly, but directly,related to the subject of the Act. The real subject of this Act is the regulationof Burial Associationsthrough the creationof a Burial Association Rate Board. As a part of this subject the Leglslature has made it unlawful for there to be any connection between two or more Burial Associations. The first sentence of Section 2(A) is an almost word-for-wordduplication of the relatedwording in the caption. The last three sentencesof this Section simply specify certain particularconnections which are unlawful. The 50th Legislaturein so specifyingthese connectionsit dccmed unlawful avoided the dilemma createdunder the old Article, 4875-a-4,supra. If the Legislature had done In that Articlewhat the 50th Legislature has done In Section 2(A), there never would have been any necessity for questioningthe purpose of Article 4875-a-4. And simplybecause the Attorney General In the prior oplnions held certain connectionsto be lawful under that general statute Is no reason for holding unconstitutional House Bill 85 of the 50th Legislature, which declares those same connections unlawful. It affordsno basis for holding that Section 2(A) violates Section 35 of Article III of the Texas Constitution.

Section 2(A) applies to all Burial Associations without regard to whether they were organizedbcfore or after the effectivedate of the Act. The language Is broad, clear and conclusive; no exemptions,

cxccptlons,or conditionsare containedtherein. But conceivably,it may be urged that Insofaras this Section applies to assoc,lations and their contractual relations existingprior to the effectivedate of the Act, it violates Article I, Section 16 of the Texas Constitution, prohibitingthe making of any law impairingthe obllgatlons of a contract.

We recognizethe limitations placed upon the State in the exercise of Its police power to regulate an act or contractwhich affects the health, ,good morals, or the public welfare. Lone Star Gas Companyv. Kcllcy,Hon. George B. Butler, Page 

### 5 (V-474)

140 Tex. 

### 15, 165 S.W. (2d) 

### 446; Nichols, Labor Commissioner v. Hart, 119 S.W. (2d) 

### 1068. At the same time the authorities

are uniform that if the regulationis a reasonableone and results in a benefit to the public, it does not violate the safeguards provided in the Constitution

as to contracts.
We think a completeanswer to this assertion is found in the case of Daniel v. Tyrrell and Garth InvestmentCompany, 127 Tex. 213, 93 S.W. (2d) 372. There, a title insurancecompany contracted with Tyrrell and Garth to insure titles to its land. Later, the Legislaturepassed a law granting to the Board of Insurance Commissioners

power to promulgaterates to be charged by title companies. Exercisingthis authority,the Board fixed a rate which materially changed the rate contractedfor between the title company and Tyrrell ana Garth, who contendedin the suit that the previous contract could not be affectedby such action of the Board. The Supreme Court's languagewhich disposed of that contentionis deemed'appropriate to a disposition here. It was said:

"It is the rule that the contracts,and rates to be charged,by those engaged in a business affectedby public Interests, may be regulated. Munn v. Ill., 94 U.S. 113, 24 L. Ed. 

### 77; Union Dry Goods Company v. Georgia T.S. Corporation,248 U.S. 372, 39 %;i;"me .Court,117,,63 L. Ed. 309, 9,A.L.R.

."Thebusiness of Insurancegenerallyis now recognizedto be one affectedby public interests. 14 R.C.L. page 857, and authorlties there cited. II

. . . The police power of the State to regulate the business of title insurance,as to forms of contractsand rates, cannot be contractedaway by the title companies. Shaw vs. Lone Star Building and Loan Association, supra." Moreover,,

it Is well establishedthat parties who make contracts,affecting the public interests, do so subject to the State's right to limit~orprohibit the making of such contracts. See: InternationalBrotherhood v. Huval, 140 Tex. 21, 

### 166 S.W. (26) 107.Hon. George B. Butler, Page 6 (V-474)

From what we have said, we do not wish to be understoodas ruling that associations unlawfullyconnected shouldbe disposed of without regard to the vested rights and interestsof the lndlvidualpollcyholders of such associations. It 18 our understanding that the Commission will promulgatereasonableregulatlons and requirementsthrough th& new Burial Associatlon Rate Board which will give adequateprotectionto such policyholders. This can be achievedby permittlng such association,

under proposed rules by the Rate b3m'f,st;;e ;;;s~r+ice Its deceasedmembers until its ; or (2) to reinsure its business In some other company (not a burial 'association) for cash benefits only; or (3) to convert all such associations wherein the benefitswill be cash only. In this manner, the vested rights of Individual policyholders

of such associations

will not be distrubednor vitiated.
It is our o inion~,that he regulationscontained in Section 2(A P are reasonableand that they result in a benefit to the public. The Legislature in the same Act, Section 2(B), specifically declared that such connections are against the public policy of this State as follows:

"It is against the public policy of this State for a Funeral Home or for those who own it in whole or in part to be connected directly or indirectlyor affiliated with more than one Burial Associationand the provisions of this Act shall be liberallyconstrued and the Board of InsuranceCommissioners shallmake such rules and regulations as may be necessary to carry out the spirit and purpose of this Section. Thus it will be.seen that the Legislaturewlsely'declared the clear purpose of the regulations and made liberal provisions for the Board of InsuranceCommissioners to exercise the authoritygrantedtherein in a spirit of high regard for the welfare of the public. We are confident that In the exercise of this authority,the Board of InsuranceCommissioners will exercise sound discretion in carryingout the spirit and purpose of this Act.

It is thereforeour opinion that Section 2(A) of House Bill 85, 50th Legislature, does not violate any provisionof the Texas Constitution, and that such Section applies to all burial associations whether organizedbefore or after the effectivedate of the Act.- , ,-

.,,

hon. George B. Butler, Page 7 (V-474)

SUMMARY 1. House Bill 85, Section 2(A), 50th Legislature,

does not violate Section 35 of Article III of the Texas Constitution, nor does it unconstitutionally Impair existing contracts.
2. Such Act applies to all burial associationsorganized before or after the effectivedate of the Act. Daniel v. Tyrrell and Garth InvestmentCompany, 127 Tex. 213, 93 S.W. (2d) 372.

Very truly yours ATTORNEXGRNERAL OFTEXAS

CEC:wb/JCP Charles E. Crenshaw Assistant

APPROVED: