## THEATITORNEY GENERAL OFTEXAS

WILLWILSON
AlTGRNEYGENERAL June 18, 1957

State Boardof Insurance Aurtin, toxar Opinion No. NW-166 r Ra: Certain question8 concrraing the Commfasionrr ofInauranci naprovided for in 8moto bill Gentleach? 222.

Youhave requested the opinion of this office aa to the rifrct of Ssnots Bill 222? which is an Act aoeading the Toxar Inrurahcr Codelap,creating a State Board of Imsuraace and the sew official.posftlon OSComxlssionsr of Insurance, rhioh law becam effective June 12, 1957. Your request is in port a8 follows:

“Senate Bill 222, as parsed by the 59th Legirlaturo~ oi thr Stab of Texas and which will becomeeffr’ctive today, June 12, 1957, rovides for a‘State Board of Insurance endfor aE orPmissibner of Insurance * Article 1.09 of the Taras Imsurance Codei as axended by 8enate Bill 222, re!uires that the State Board oi Insurance appoint a omissioner of Ihsurance whoshall be the chlrf exectit?rs axid administratlve officer of the Boaxd, andwhoshall be charged with the primary responsibility of administering, enforcing, and carryiag out tbo 9rovisions of the Insurance Code. Beaatr Bill 222provides further that the Couirrioaer rhall hold hi8 position at the pleasure of the Board andmaybe discharged at any time.
Vonate Bill 222 does not appropriatr any funds to pay the ralary or compensatioa for such Cou~~ir~ionrr of Insurahce 0 The A99ropriation Bill passed bythe 55th Legislature provides for the salary,or aCommfrsfonor ot Insurance9 but this Act does not becomeeffective until Scpttmber i, 1957. The-Appropriation Bill nowin effect does not have any appropriation for such Commisslonrr of Insurance, but doe’s9rovidr alump sumappropriation for certain salaries. This ,appropriation in the present Bill has a s,uificient bal,ancs to yay sCommfssfoner of Insurance at amo~i.hly rate of $20,000.00 per year for the balance ofthis biennfum.~:

Stats Board of Insurance, page 2 OIW-166)

“Fromareading of Senate Bill 222, it is QParent that certain specific duties, responsibilities and authorities are placed upon the Commissioner of Insurance andupon the State Board of Insurance, with adefinite line of thority and responsibility drawn between thesuCommissioner and the Board. In visw of all these facts we m39SCtfUllY ask your opinion ontha following questionst

“1. Canthe insurance laws of this 8tate be administered bythis Board without aCommissioner ofInsurance in view ofthe provisions of Senate Bi~ll 2229
“2. Is this Board authorized to pay aCommlssioner of Insurance out of the lump sumappropriation, for salaries in the current Appropriation Bill?

“3. Mayapre88nt employee ofthis Board be appointed and act as Commissioner of Insurance under the provisions of geenateBill 222and draw asalary from one ofttre appropriated items such as actuary or chief clerk in the present 4pprogriation Bill?

“4. Maythe present Board appoint aa acting Commissioner of Insurance, sothat the ‘newState Board ofInsurance that is to be appointed bythe Governor mayhave the right and duty to appoint aCommissioner of Insurance? If your an8wer ir ‘yes, may this acting Coami88iOaSr oi Insurance receive any compensation or salary for his sertices from the Stab of Texas? 85. If the present Board cennot appoint an acting Commissioner ofInsurance and must appoint aCommissioner of Insurance to carry out the funotions designated to him under Senate Bill 222, can the newBoard to be appointed bythe Governor remove him without cause and if not, what will be the term of his office? This westion is asked in view of the provisions of krticle XQX,Sections 38 and30, and because Senate Bill 222requires the Commissioner OI ;;s;L$;y”to be confirmed bythe Senate of the StateState Board of Insurance, page 3 (W-166)

The five questions propounded will be discussed and answered seriatim.

isterrd view 

### or

_’ amended 1. Canthe insurance laws of this 8tate be r&inbythis Board without aCommissioner of Insuraaae in the provisions of Senate Bill 2229 Article 1.02(b) or the Texas Insurarke Code,-a8 b sec. 2, S.B. 222, provides that:



### DOWB~S.

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heretofore vested in and devolving the Board or Insurance Commissioners as heretofore constituted under mahor said Board; the Erlor statutes; theChelrife Insurance Commissiciner; the Fire Insurance Commissioner, an4 the Casualty Insurance Commissioner shall hereafter be vested in the State Board of Insurance as a body, an4 except as provided herein, they &j&l be ex~&sA,

ate an4 the rules an4 reguiations ror unirorm application made bythemBoard and&&jgct to the s-n of t&g 4cl8a The duties of the &ate Board of Insurance shall be primarily in a supervisory capacity an4 the carrying out and administering the details of the Insurance Code shall beprimarily the duty,an4 responsibility of the Commissioner OfInsurance acting un4er tha supervision of the Board.” Article 1.04(b) or the Code, as amended, provides: “The State Board of Insurance shall determine r)ollcy, u, g&gq andw but otherwise it shall execute its duties through the Commissioner of Insurance as herein provide4 ror, in accordance with the laws of this State and the rules and regulations for unirorm application a8madebythe Board.”

that I Article 1.09(a) of the Code, as amended, protides

* Emphases throughout are supplied.,’

State Board of Insurance, page 4 (WW-166)

“TheBoard shall appoint aCommissioner of Insurance by andwith the advice and consent of the Senate ofTexas whoshall be its chief executive and administrative ofrlcer, whoshall be charge4 with the primary responsibility of administering, enforcing and carrying out the provisions ofthe Insurance Codeunder the supervision of the Board.” &ticle 1.09(b) provides that the Commissioner of Insurance shall be the State Fire Marshal and shall function as such subject to the rules and regulations of the Board, and Article 1.09(g) provides that the Commissioner of Insurance shall appoint such deputies, assistants, and other ~personnel as are necessary to carry out the duties and functions devolving upon him andthe State Board of Insurance under the Insurance Codeof this State, subject to authorization bythe Legislature in its appropriation bills or otherwise, andto the rules ofthe Board.

Thewording of the foregoing articles of the Insurance Code, as amended, are clear and unambiguous. They specifically state that the State Board of Insurance shall act on1 in a supervisory capacity. (See Art. 1.02(b) and Art. l.O9(a 1. 7 The legislative intent is clear that all ofthe powers, functions, authorities, prerogatives, duties, obligations, and responsibilities which have heretofore been vested in the Board of Insurance Commissioners and the individual Comdssioner members thereof, are nowvested in the newBoard, but such powers, duties, and responsibilities, etc., when so vested,

“shall be exercised, performed, carried out, an4 administered bythe Commissioner ofInsurance as the chief 6X6CUtiVe and administrative officer of the Board, subject to the superVisiOn of the Board.” The legislative intent is again manifested by the restatement ofthe functions ofthe State Board of Insurance and the Commissioner of Insurance contained in the last sentence of Article 1.02(b) and in the first sentence of Article l.O9(a3. The legislative intent is restated in Article 1.04(b) which restricts the functions of the Board to the determin~ation ofpolicy, the making of rules, rixing of rates, andhearing of appeals from rulings and actions ofthe Commissioner of Insurance as provided in Article look(d). Afterrestricting the primar 1.0c functions ofthe Board to those just enumerated, Article (b) further provides that the Board shall execute its duties through the Commissioner of Insurance.State Board of Insurance, page 5 (W-166)

In summary, S.B. 222provides that all of the powers, duties, obligations, and responsibilities which have been heretofore vested in and exercised bythe State Board of Insurance Commissioners under the authority of Article XVI, Section 38, of the Constitution ofTexas and subsequent legislative acts, are nowvested in the State Board of Insurance, but with the exception of the powers of determining policy, making rules, fixing rates andhearing appeals, the Legislature has specifically delegated to the Commissioner of Insurance the primary power’and authority to exercise, perform, carry out, and administer such’ powers and duties which were formerly exercised andperformed by the Board ofInsurance Commissioners, acting as awhole, or by the individual Commissioner members thereof.

The answer to your Question No. 1is vNo”

. 2. Is the Board authorized to pay aCommissioner of Insurance out of the lump sumappropriation for salaries in the current Appropriation Bill?

Your request states that the Appropriation Bill nowin effect does not have any appropriation for payment of a salary of aCommissioner of Insurance, although such appropriation is provided for in the Appropriation Bill which becomes effective Sepatember 1, 1957. Youadvise that the present Appropriation Bill does provide alump sumappropriation for certain salaries and that this fund has a sufficient balance to pay the salary of aCommissioner of Insurance at the rate of $2O,COO.O0per year If it can beused for this purpose.

Weare advised that the lump sumappropriation referred to in your request is Item No. 67in the present Appropriation Bill (Acts 54th Leg., 1955, Ch. 519, Art. III, p. 1465). This item appropriates from the Insurance Examiners Fund (No. 54) $75,000.00 for the payment of salaries, wages, traveling expenses, and all supplemental expenses connected with the examination of insurance companies in Texas. This is a special fund created out ofthe moneys received from various insurers to reimburse the Board of Insurance Commissioners for the salaries and traveling expenses incurred by the Board’s examiners in the performance of their required duties in the examination of,the affairs of such insurers. (Art. 1.16, Texas Insurance Code).

TheLegislature, in appropriating from this fund the sumof $75,000.00 for each year of the biennium, did so for the purpose of paying the salaries, wages, traveling expenses and all supplementary expenses connected with the examination of the:

‘State Board ofInsurance, page 6 (WW-166)

insurance companies in Texas an4 for noother purpose; and such fund, or anypart thereof, maynot be used for the payment of anymotheritems than those specifically namedtherein. It was the intention OSthe Legislature that the sumso appropriated should be paid only to employees connected with the examination of such insurers andnot to State officers. (Art. 1.16, Texas Insurance Code).

Manifestly, the payment or the salary or aCommissioner of Insurance was not contemplated bythe Legislature when it enacted the Appropriation Bill presently in errect since, at that time, there wasno office of Commissioner of Insurance authorized bylaw. Article 1.09(e) provides that the Compensation to be paid the Commissioner of Insurance shall be such sumas is provided for by the appropriation acts, and there is noprovision for the payment ofthe salary of aCommissioner of Insurance contained in the Appropriation Bill nowin errect. Wedo not pass upon the legality of any future appropriation by any ruture Legislature for the payment for servloes rendered bya Commissioner of Insurance from the date ofhis appointment upto August 31,, 1957.

The answer to your second question is Vo.”
3. hay apresent employee ofthis Boar4 be appointed and act as, Commisslonrr of Insurance under the provisions of Senate Bill 222 and draw a salary rromone of the appropriated items such as actuary or chier clerk in the present Appropriation Bill? Article 1.09(a) provider that the Boar4 shall appoint aCommissioner of Insurance by an4with the advice and consent of the Senate of Texas. Inasmuch as the appointment of the 60~ missioner ofInsurance bythe Board specifically requires confirmation bythe Senate, and in view of the manyresponsibilities and duties placed onhimbyS.B. 222, the office of Commissioner of Insurance is one ofhonor andtrust, although it is not an office of profit or emolument at since no funds have been appropriated bythe Legislature fromwhich his salary can be paid. While the position of achief clerk or actuary presently employed bythe Board whoreceives his salary under the present Appropriation Bill is not that of apublic officer, nevertheless it is aposition of emolument or profit.

Article XVI, Section 33, of the Constitution of Texas provides in part as follows:

“The accounting officers of this State shall neither draw nor pay awarrant upon the Treasury.

State Boar4 of Insurance, page 7 W-166)

in ravor 

### orany person ror salaries or compensation as agent, officer, or appointee whoholds at the sametime any other office or position or honor, trust, or profit, under this State.

. . .I1 The opinions of various Attorneys General have consistently held that where aperson is appointed to an office of honor or trust, with or without emolument or profit, who, at the sametime, holds aposit ion of emolument or profit under the State government, such psrson cannot receive payfor either 

### orrice or position. See OpinionNo, O-1101 byHon. Gerald C.Mannto Hon. Geo. H.Sheppard, State Comptroller, approved July 31,,1939, and Ogin+on No. O-5123 byHon. Gerald C.- Mannto Hon. Gee. H. Sheppard, State Comptroller, approve4 March 17, 1943. The answer to your third question is,eNo.n

4. Maythe present Board appoint an acting Commissioner of Insurance, sothat the newState Board of Insurance that Is to be appointed bythe Governor mayhave the rigtit an4~ duty to appoint aCommissioner of Insurance? If your answer is yes, maythis acting Commissioner of Insurance receive angCompensation or salary for his services from the State ‘of Texas?

5. If the present Board cannot appoint an acting Commissioner of Insurance andmust appoint aCommissioner of Insurance to carry out the functions designated to himunder Senate Bill 222, can the newBoard to be appointed by the Governor removehimwithout cause and if not, what will be the term of his office? This question is asked in view of the provisions of Article XVI Sections 38and 30, andbecause Senate Bill 222 requires the &ommissioner of Insurance to be confirmed bythe Senate of t’heState of Texas.

Article 1.03(a) provides that the members of the State Board of Insurance Commissioners in office immediately prior to the effective date of S.B. 222, shall serve as interim members of the State Board of Insurance until the appointment and qualification of the members ofthe Board under the provisions of Articles 1.02 and 1.03. Since the Legislature has specifIcally designated that all the powers, functions, duties and respoasibilities ofthe present Board have been vested in the newBoar4 by the provisions of Article 1.02(b), the interim Board has the authority to appoint a’Commissioner ofInsurance.

Article 1.09(a) ofthe Code, as amended, provides that the Board shall appoint aCommissioner of Insurance byandwithState Board of Insurance, page 8 W-166)

the advice and consent of the Senate of Texas, whoshall hold his position at the pleasure of the Board andmaybe discharged at any time. Asstated above, the Commissioner of Insurance functions as the State Fire Marshal, an4 his compensation shall be such~6sis provided ror bythe Appropriation Acts. The powers, authority, and duties of the Commissioner of Insurance have been discussed above in answer to Question No. 1, andhe is authorized and empowered to appoint all deputies, assistants, and other personnel necessary to carry onthe duties and functions devolved upon him and the State Board under the Insurance Code, subject to the authorization bythe Legislature in its appropriation bills, and to the rules and supervision ofthe Board. (Art. 1.09(g). I/

Since the Legislature has delegated to the Commissioner of Insurance the right to exercise, with certain exceptions, all of the powers and duties vested in the Board of Insurance under the provisions of Article XVI, Section 38, Constitution ofTexas, above enumerated, and since his appointment bythe Board is subject to confirmation bythe Senate of Texas, he is apublic officer ofthe State of Texas within the meaning of Article XV,Section 7, of the Constitution of Texas, andmust therefore take the oath of office and give bond as required by Article 1.09(d) 

### 0rthe Code, as amended, before entering upon the duties of his office. The interim Board has the power to appoint aCommissioner of Insurance but there is no statutory or constitutional authority orprovision which would permit the interim Board to appoint an acting Commissioner of Insurance. However, since the Board is given the power to appoint aCommissioner of Insurance who shall hold his position at the pleasure of the Board, and in view ofthe provisions of Article XVI, Section 30, Constitution of Texas, which is discussed u, the Board mayappoint aCommissioner of Insurance ror any period of time not to exceed two years rrom the date or the appointment. Stated differently, the interim Board mayappoint aCommissioner of Insurance for the period of time which will elapse from the date of his appointment andthe appointment and qualification of aCotnmisSiOn6r Of Insurance to be appointed bythe newState Board of InSUtanC6 when the members thereof are appointed and qualified under the provisions of Articles 1.02 and 1.03 ofthe Code, as amended. However, the Coxmissioner of Insurance so appointed by the interim Board cannot receive any compensation or salary at this time for his services from the State of Texas during his lncumbency upto September 1, 1957, if his tenure of office should be ror that period.State Board of Insurance, page 9 (M-166)

The Commissioner, if appointed by the interim Board, must satisfy all of the requirements for eligibility and qualification enumerated in Articles 1.06 and 1.09(c) of the Code, as amended, and before entering upon the duties of his o’ffice the appointee must take the oath of office and give the bond required by law. After having so qualified, the Commissioner could immediately assume and execute all the powers, duties, functions and responsibilities which devolve upon the Commissioner of Insurance under the law, during the term of his tenure in such office for the period for which hewas so appointed.

Article XVI, Section 30, of the Constitution of Texas provides that “The duration of all offices not fixed bythis Constitution shall never exceed two yearsr
. . .n The Commissioner

Texas, maynot hold such appointment for aperiod exceeding two years from the date thereof, at which time he mayagain be appointed and the newappointment be subject to confirmation by the Senate.Although Article 1.09(a) of the Code, as amended, provides that the Commissioner of Insurance, after appointment,

“shall hold his position at the pleasure of the Board andmaybe discharged at any time,” nevertheless, since he is aState officer, his removal or discharge from such office nay only be effected in the manner provided bythe Constitution and laws of Texas. Article XV, Section 7, of the Constitution of Texas is as follows:

“The Legislature shall provide bylaw for the trial and removal from office of all officers of this State, the modesfor which have not been provided in this Constitution.” The Constitution of Texas has not provided for the trial or removal from office of the Commissioner of Insurance appointed by the Board of Insurance as provided by S.B. 222. However, Article 5961, R.C.S., provides that all State officers other than those specifically namedtherein, shall be removed from office or position by impeachment in the manner provided bythe Constitution and in Title 100, Revised Civil Statutes of Texas.State Board ofInsurance, page 10 (WW-166)

There are no statutory provisions specifically providing for the removal from office ofthe Commissioner offnsurance other than the proviso in.titicle 1.09(a) ofthe Code, as amended that he shall hold his position at the pleasure of ,the State Board of Insurance and maybe discharged at any time. This provision, however, is in direct conflict with the provisions of Article XV,Section 7of the Constitution which provides for a V,rial~~ of all State officers such as the Commissioner of Insurance, and therefore the constitutional provision must prevail over the provision contained in S.B. 222. Ppranfiald v. State, 123 Tex. 467, 73S.W.2d 83 (1934); m. Johnson, alu?ica*

Should the interim Board appoint aCommissioner of Insurance to hold office for the period from the date ofhis appointment until the date of the appointment and qualification of the newState Board of Insurance andthe appointment by the Board ofhis successor, he maynot be removed from the office during the term of his appointment except bythe process of impeachment

.Answering Questions 4and 5, you are advised that the interim State oard of Insurance cannot appoint an acting Commissioner of I to hold office until his successor is appointed byt newState Board of Insurance. However, the interim Board appoint aCommissioner of Insurance to h&d office until his’ successor is appointed by the newState Board of Insurance upo4the appointment and qualification of the members thereof, and,the appointment bythe newBoard ofhis successor in office. \Such Commissioner cannot receive at this time any salary or pay or his services rendered during his tenure in office upto Septe ber 1 1957. WhenaCommissioner of Insurance is appointed bythe\new &ate Board of Insurance his term of office will expire at ‘the end of two years from the date ofhis ap- $n;;Et if such appointment has been confirmed bythe Senate

ACommissi,oner of Insurance, when appointed, can only be removid from office byimpeachment proceedings as provided by Article 5961, R.C.S., +nthe manner provided in the Constitution of Texas and Title lOOi Revised Civil Statutes> 1325.

Under the provisions of Senate Bill 222, 55th Legislature, the State Board of Insurance has the primary responsiblllty and duty to determine policy, rules, rates, and appeals, but all other powers,‘

....

State Board of Insurance, page 11 (WW-166)

functions, duties, andresponsibilities must be exercised, performed, carried out and administered bythe Commissioner of Insurance. The Commissioner of Insurance maynot bepaid for his services out of Item No. 67ofthe present Appropriation Bill, which is an appropriation for the payment of salaries, wages, travel expense of employees, and all supplemental expenses connected with the examination of insurance companies in Texas, and there is no appropriation available for the payment of a salary to the Commissioner of Insurance under the present Appropriation Bill. If apresent employee of the State Board ofInsurance is appointed to act as Commissioner of Insurance, he cannot draw a salary from any of the appropriated items in the present Appropriation Bill. The interim State Board of Insurance cannot appoint an acting Commissioner of Insurance. The interim Board can appoint aCommissioner of Insurance and limit his term until the time when aCommissioner of Insurance is appointed bythe new State Board of Insurance to be appointed as provided in Articles 1.02 and 1.03 of the Insurance Code, as amended, but such Commissioner of Insurance maynot receive any compensation or salary at this time for his services from the State of Texas from the date ofhis appointment until SePtember 1, 1957. The Commissioner of Insurance is aState officer whose term of office will expire at the end of twoysars from the date ofhis appointment if such appointment is confirmed by the Senate of Texas, andhe can only beremoved by impeachment as provided by Article 5961, R.C.S., in the manner provided bythe Constitution of Texas andthe provisions of Article 100, R.C.S. Very truly yours, WILLWILSON Attorney Gene@ of Texas

CKR:wb -C. K.Richards Assistant. . .

State Board of Insurance, page 12 (WW-166)

APPROVED: OPINIONCOMMITT&Ei 8. Grady Chandler, Chairman John Reeves Houghton Brownlee James Ludlum RWIayED FORTHiiATTORNEY GENEROL BY: Gee. P. Blackburn