OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

4-G- 

-- 

Honorable Charley Lockhart 

State Treasurer 

Austin, Texas _ 

Dear' Sir: 

t 

eo 

opinion HO. O-2956 

Your recent requ 

on the above stated questi 

ion of tl*o depaptsl=nt 

0tter addr8sS8d 

ter C. Wooclward, 

Comissionors, 

n regard to deposits 

under provisions of 

orty-sixth Legislature. 

ou note carefully the condvise us a3 to whether : 

the State Traasurer vould be 

ittod under Senate Bill 135 to ac-~, 

dei7ycorlng ours) 

ter of Jlonorab% Ifalter C. Woodrrard, chair;acm 

n3urenc8 C~mdssionors attached to your letter 

read3 as follow31 

"In prormlgatln~ rule3 and reEul.ntlous for tho 

purpone of carrying out t!le purpooc3 of Scnate Bill 

155, the E3oa.rcl of Iilvurance Comisoloners, by authority delegated to it ti&?i- Sectiozi 25, i3sued en 

0ffPcla1 order T?hich read3 in part a3 follows~ 
, 

/“- 

- 

Honorable Charley Lockhart, Pago 2 

@'The first annual premium paid 

'by a new member, or assessments paid 

in the first year by such new member, 

msy be considered as a membershIp fee, 

but in such case the association is 

required to pay out of the Expense 

-Fund all claims occurring on policies 

Sn their first year,' 

'It now becomes necessary for the purpose of 

safeguardins the interest of first year policyholders to require such associations to make a 

deposit to be held as a guaranty fund to insure 

payment of claims arising in the first policy 

y8ar. (It should be remembered that a small per 

cent of mutual associations elected to adopt the 

annual membership plan,) 

"The laws prohibit the payment of claims 

arising in one group or class from funds belonging to another'group or class, The deposits 

now held by the State Treasurer in accordance 

with Section 6 of Senate Bill 135, vere made 

vith funds belonging to other thsn first year 

policyholders and could, therefore, be used for 

their benefit only. 

'In reqdiring such associations to make 

deposits to be held in trust for the purpose of 

guaranteeing the payment of claims that may not 

be paid from Mortuary Funds in which first year 

. policyholders have no Interest, the Board is 

confronted with the necessity of providing an 

authorized depository. 

"Inasmuch as first year pol.lcyholders of 

s&h associations have no lawful interest in the 

deposit now maintained, and in the light of the 

lav which requires that a deposit for the protcction of policyholders1 benefits be made with the 

State'Treaourer, you are respectfully requested 

to give consideration to the acceptance of such 

deposits for the benefit of policyholder: whose 

interests are not otherwise safeguarded. 

FOP the purposes of this opinion we do not think it 

necessany to pass upon the conclusions as stated in the letter 
. 

. 

. .: 

._ 

i 

,0Y . 

Honorable Charley Lockhart, Page 3 

last quoted above; 

Article 4374, Vernon's Annotated Civil Statutes 

SpeCiiiCally provides: 

" 

. . ..The treasurer shall not keep or receive Into the buildings, safes or vaults of 

the Treasury any money, or the representation 

of money, belonging to any individual except 

In cases expressly provided for by law..., 

After carefully considering Sen*t&:Bill No. 135, 

Acts of the 46th Legislature, lgjg, ve find no provisions 

therein authorizing the Board of Insurance Comnmiss.'.oners to 

require the deposit mentioned above. Neither do we find any 

providion in said Act authorizing the State Treasurer to acC8pt and hold as custodian ths additional deposit ~abovc referred to. 

/-- Therefore, your question is respectfully ansuorcd 

In the negative. . 

Trusting that the foregolng fully answers your ln- 

. . quiry, ue are 

. Very truly yours 

ATTORNEY GEIE3RAL OF !LTXAS 

BY a14.h-cu& 

Ardell Wlllams 

: Assistant 

All : Ali 

: 

-APPROVEDDX 14, 1940 

U%d c 

ATTORNEY GEBRRAI, OR TEAS