COPY 

Eonorablr maodo A. Will&m8 

Chairman and beatlta Dirootor 

opbllon Ilo. 0-6088 

Ior Are the rrntloned lmlltldualr 

in th8 88@O~t Ot th@ 

Liquidating Dlrislon of the ' 

Board of In8urM00, coEl.arionur wIthin th8 m@,caw 

of Article LlEitlb-17 (g)? 

Your request for an~opinion a8 to whether the indiTidual8 tr8at.d in the 1ekt.r oi Hr. Wfll 0, %llOX, Liquidator, to b. I.08 0. William8 dr8 in thr 8mplOyment Of thm 

Llqtidating Diririen or tha Board o? In8uranor 0o1ml88ionerr 

rithia the nraning of Artlola 68Llb-17 (6) , Vernon’8 Ravimd 

Civil 8t6tUt.8 has been roooiy8d. IOU hare attaohul a oopy 

of the letter born Er. Knox whioh reads in part a8 follows: 

*The Liquidating Dlri8ion of the Board of InrrurariO8 &mmi88iOn~8 lra8 orsated and 18 aLaitlthU3d PUrruent to House Bill 249 of the 40th Legislature, inoorporoted in the Rerieed Stetutee as Article 5060-C. 

The writer Is the Liquidator desfgnzted by the Board 

OS Innsuranoe Commlrolonerrr end la the Receiver OFpointed by the respective District Courts in oonneotion with the recelvershlps desaribed on the attached 

113t. The Board of Xnsuranoe Commiaeioners employs 

all personnel of the Divi8lon, fix08 salaries snd has 

the right of termination of employment at will. It 

eprroves the salary expenditures along with other 

ex>enaes inoident to the reoeiverahlps. 
bnorablr Olaudr A. lIlllam, Pago 8 

-ho fund8 with thloh the omplo~oo8 uo paid 

l OP U irOE the 88tfit.8 of the r@celrrrrhfpr thee 

8elv88. Th8 mplo~err work ruio~ly tm all re08iTU8hip8 U the OW881Oll 68Md8, NO 80~ let84 

UOUTW l OOWlt Of th. tiM 8mt ia 0-08 ? iOn 

with thi mrk of the refiqootive rr.rlrsrrkl~8 i8 

maintained in th8 o?fim but an approximation i8 

krpt a8 th. buia O? the proration oi thr ~Q10~008’ 

88lWiU fra the V=iOI.l8 rOO@iV8r8hi>8. 

i8 ub8M theiirrtaad tlfteoatho? thm%%%‘ 

Of OOW88 l M ?a tO 2OOOl48 ~0 kog$ im the offi 

with r.8 

P 

08% to the ori& of.'tho fb48 with whloh 

oaoh 08q ofre 

rooolvor8hlp. 

ha8 bean pal(. during th8 lib of the 

Th. EOtti mr@tiOll Of fund8 OOMOqlmatly fairly uour8to 

moat of tlmo o? l aoh 

ropsoronU tho apportloa- 

~liqoidatioa8," 

in tho mspootivo 

TOlAX r*qUO8t f\rzthor 8tat88 that %hOn Lh. ]caOX, a8 

LIquidatori taker otor an la8ur~oo oorpny, ho ofton koopr 

on Its ayroll outaln 0r it8 amp1opoer who are famlllar with 

it8 bur % 088 and Who a88i8t him in liquidation proce88. On 

those eJ+OyeCI8' rage8 he pay8 booial eoourity taxes to the 

fodoral Bcvrrnmont. In nddltlon he pay8 8oolal seourlty tax 

On th8 8mOUllt8 Oi the W’4@8 Of hi8 Ofii08 for00 uhlah UO 

ohargoable e.@in8t the putioulu in8IUUOO oompany ln QUO8- 

tion. Tha 8OrTiO.8 ~rformad by thue old 8m~loyOe8 Oi the 

oommy a8 wd.l a8 the 8UVioe8 of thr 8Bi&31OyU18 Of th8 

llquldatlng ofiloe ere to be oon8ideredsm 

10 uo further advi8ed that the llquidatlon divirion 

a8 oreated by rtatute 18 housed in a dlff8ront offloe from 

that of the Ineurance Department of the State of Texas; the: 

the employee8 of the Llquldatlng Divialon ~arrorm no duties 

in the offioes o? the Insuranoe Comii88ion; that the work o? 

the perrons ~nplogod in the Liquidating Dlrlalon Is solely 

that of working on the various lneurance companies that are 

in llqulde~ion; that these pars,-ns are under the direct 

eupervlalon and oontrol of Mr. Will 0. Knox, Liquidator; 

that they are chosen or employed by Mr. Knox subject to the 

approval of the Board of Insuranoe Comaissioners. 

Article 5221b, Secdsn 17 (e) read3 :z part a3 follo:vs: 
Eonorabla Claudm A. Wllllam8, Page 5 

*(o) *Lmploylng unit' mean8 any lndlrldual or 

typo of organization, including any partnership, 

asrooiation, trust, estate, joint stook oompany, 

ineuraaor oompany, or corporation, whether domestlo 

or rorelgn, or the raoalvar 

trU8t80 or IUoOe88Or thorao # 

trU8t.e in bankruptoy, 

8ontatiVO O? a daOaa8ad p8rs:n 

or the legal reprowhloh ha8 or aubsequent to January 1, 1958 had in It8 employ ona or 

more individual8 performing rorrlcer for it within 

thil 3tRtO. . ." 

Sootlon 11 (6) (1) provldrr: 

"(6) (1) '-lo-nt' eubjeot to the othar 

rOvi8lOn8 Of this #ub8aotion, mean8 8uvic8,inolud8utIoo in intorrtato 00mmo~00, prforrd for 

wager or under any oontraot of hlro, writton or oral, 

8xpr.88 Or im lied 

tormod by M f 

prorldod that any 8OrViO.8 parndlvfdual for waged rhall be deamsd to 

bo employment rubjoot to thl8 Aot ~11888 and until 

it 18 8hOWIi t0 ttl0 8di8faOtiOn Of thr &52&88iOIl 

that ruoh IndlvIdual ha8 been and will continue to 

bo frar rrom control or direction over the performanoe of suoh servlaee both under his contract of 

8arv1oe and in fact." 

3eotion 17 (g) (6). roads: 

"(6) The tarm 'aployment' shall not inolude: 

*(A) 3ervice performed in the employ of this 

State, or of any polltloal subdivieion thereof, or 

of any lnstrumentallty of this State or its polltloal 

aubdlvialons;n 

The faots related in the letter of the Liquidator 

ae well as your letter show that there ere two cleases of 

per.xr?s to Je coxldered i: this or~inlor.: First, there ere 

t%ose Fersons timt were in ti-:ex2lol.l;ent of the compmy prior 

to the eppolntment of the Liquidator. These l~dlvlduol; continue their employment for e sufficient period of time to 

enable the Liquidator to close out the bujl?es3 in thet 

particular office of the company. They are paid by the 

Liquidator out of the essets cf fke >or;,~&ny; ‘?-e:r :1.5,-e of 
lionorsblo Qlsudr A. WIllIams, Pago 4 

employmsnt romlns the same; the only sss0ntlai dirr8rsnoe in 

thslr employment bring that ths Liquidator is their supervisor 

rathu than the former ottlou of the oompsny. Thry wsro In 

employment under thm Tsxu Unmmploymsnt Oorpensatlon hot prior 

to ths tlms thr Llquldator took oontrol of tho buslnosr. It 

oamot bo dirputsd that undu our statuts they nould haro boon 

in smployment If s reooltrr had boon sppolnted by the oourt. 

8800~4, thsro arm other In4irI4uals omployo4 in thr 

Aurtin 0rri08 of the Llquldator.. ws uo inro~oa that the80 

persons puforr fhoir ssrrioos In snothor and 4if’formt ottloo 

an4 bullally from that of tho 8tato Insur~o~~~sslon) that 

nono of ths ssrrloss perform04 by ths parsons in the liquidation 6ItlsIon l rtsln to tho goners1 dutlos of the Boar4 ot 

Insuruloo t3oiaui ssIonors. Thilr 4utios are oonilamd atriot 

to thr lIquI4atIons of the rsrious I~ursnos oompsnlos. Ths 

sals.rlos of sll of thsss parsons sro apportione4 upon time 

applied and are paid from ths ussts ot the rarlouo lnsuranoo 

00mpflI*s. The Btato oi Tsxu pays no put of their sslsry. 

At ths time ths Liquidator took po8sdsslon of the sssets 

of the various oompanles under a oourt ardor the equitable tit18 

to the assets 414 not pass to ths State of Toxaa but remelnod 

for ultimate dlstrlbutlon to their oreditors an4 polloyholdors. 

The Leglslaturo placed the llqul4atlon of tho lnsursnos oomp~Iss 

in the control of the Board c$ Inruranob &mmls8lonors an4 ths 

Liquidator, not for the benefit of tho State of Texas but to 

oonserve the assets of the ruIou8 l 8tstsS for the bonofit a? 

the oreditors an4 polloyholdors. 

If a reoelver had been appolntod by the oourt to 

liquidate the assets of the vsrlous oompanies now in the hands 

of the Liquidator sue!, a receiver Would not have been an exempt 

employer under the terms of our Aot. Under the statute now in 

force relative to the liquidation of lnrursnce oompanios, it 

is the duty of the Dlstriot Court to appoint the statutory 

Liquidator as receiver of various companies. He is appointed 

receiver for each ccmiiyany and act3 as reoelver as well as 

Liquidator. Aa do other reoelvers he muat take the oath to 

qualify es receiver. 

We do not believe nor intend to infer that persons 

in the e,“.yloyment cf the Board of Insurance Cowissioners in 

the performnnoe of the general duties of their office are In 

employment under the Unemployment Compensation Act. Clearly, 

they are not. 
, 

, . 

Eonorablo Olaub A. Wllllsms, Pago 5 

to prorido 

Tho Unsmploymrnt Oomponsatlon Law ot Toxas was l nastsd 

soourltiy to psrsons tsmporarily out or smploymnt; 

the l mploysr oompsnIoa wsrs required to oontrlbuto to a fund 

00 lnsuro some roller from unsmplomont to thrir smployoos, 

Th0 l ompanlss being lfquidats4 by our appoint06 orrioor 

are prlvatr sorporatlons the assets are those of prlvato 

lnelvl4uals and the Llqu i dator acts for private buslnsss and 

not for the Btato of Texas. 

sup. (84) 113. 

9.0 Whlto rs:Boland, 5 I. Y 

Ile hare no doolslons of tho oour%s of Toxas upon this 

quostlon as tho problom uIses from ths applloatlon of a now17 

l naate4 aohems of ssalsl loglslation; IO do havs a deolslon of 

tho Stata of.irr York sustalnlng our position. & Bar Klnnoy, 

14 I. I. gu 

P’ 

(R6) pa 11, tho rourt hold tho St&o Iasurruoo 

Liquidator lablo for the payment of unmsplo~rnt tax08 u n 

ths puson. doing ths iiquie4tLry work In I!&* 0rri08. T hr 8 

queatloa was asrtiflsd to tho Court of 

of New York, an4 la that opinion, founo 

A peals of the Stats 

& 84 Mi R. (M) 494 the 

oourt ho14 that tho llquldator was not an l xorpt rmpla~or udo~ 

the unemployment oompensatlon aot. 

Tho Federal Government has epeolfioally provldod in 

SS VSCA lE4a that *any receiver, rsfarss, trustee, or other 

offloor or agent appoints4 by sny 0. 8. Court who Is authori804 by said oourt to aoneuat any buslnssa or rho oonduots w 

buslnsss shall, from Md aftrr JWO 18, 1934, be NbJsot to all 

Stato ani looal tax.8 applloablo to suoh busInoss the same as 

If suoh bu?lnass was ccnduated by an individual or oorporatlon.w 

'In the ease O? Mid-AmerlOa, 31 te4. Sup. 601, the 

trustee WBS held liable for unemployment taxes based upon wages 

paid to persons employed for the liquidation of e bankrupt 

estate. 

The Le:*islature of Texas FrGVidOe in Yeotic;n 17 (e) 

OS Article 52Elb that en emrlcFlnG unit should include 

“insurance cornpan or corporation, whether domejtio or Foreign, 

or the reaeiver, trustee in benkruptcy, trustee or auooessor 

thereof ,.: . .* Is the llquld-.tor in this Instrnoe rerformIng sns- different functions than those of a receiver or 

trustee? We think net. The Legislature olearly lctended that 

the yersonq r;sed in the llquidaticz of these estate3 should 

benefit from the uneF,:loyment compensation act. 
Honorable Claude A. Wllllams, Pare 6 

The only direct authority on this point is found in tho 

opinion of tho 3uprams Court of 19. T. in In RI Xlnnsy, 14 

N. Y. hp. (24) 11. The Hew York Court states that the 

psrsons in tho lnsurencr liquidating offloe are Wet smployoos 

or the Stat0 or an aganoy thorbof for tha purpose Of othu 

atatutss relating to other employees, e. g. thr Clvll Servloe Law, Soolal Yecurlty Law of tho OnIts States, Federal 

Xnooao Tax Law from whloh employsea are normally exempt." 

Ue, thubfors, advise you that all or the psrrons 

aployod ln tho 1IquldatIon o't t&a various lnsuranoa oompanlas 

as mentlone4 in your request are in the aployment of the 

iiquieatlng eivIrlon 0r the Boar4 0r Insurance Commlsslonors 

wlthln the msanlng of Article 5221b, 17 (g), Vernon's Revised 

Clrll statutss. 

Tours very truly 

ATI!ORXEY GlTNFlRAL CF TDLAS 

APPROVED MY 29, 1941 

8/ llrorer Sellers 

FXRST A93IsTANT 

ATTOFiNZYOlSNFZAL 

m S/ Norris HoeRen 

h3si~atRnt 

APFROVED - O?lnlon CoaTJttee 

Bp BiEl - Chairman 

06 -GEL