aollw L nltt A-- a- August 16, 1977

Honorable **Henry** Wade Opinion Uo. R-1042 Dallas County District Attorney Sixth Floor, Records Building Dallaa, Texas 75202 Re: Payment of premiumafor county clerk's 

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tatutorily required errors and aadaaiona policy.
Dear Mr. Wader
You have aaked miuma for insurancewhether Dallaa County may legally pay preDallaa County Clerk which article 1937,V.T.C.S., reguirea the to obtain. In addition to reguiring that county clerka give faithful performancebonda to the counties in which they are elected, and bond their de utiea, the l tatute reguirea them to 'obtain an errora and omiaa on8 f inwrance 'policy, covering the county clerk and [hia] deputier.

. . against liabilities incurred **throu** h errors and airaiona in the performanceof [their] **officia** f duties.

. . .. Sec. 4. The minimum amount of the insurance coverage 18 made dependent upon the fee-collecting history of the office. Section 5 of article 1931 atates:

The premiuma for the bonda and the errora and omissions policies requiredby thia Act to be given, or to be obtained,by the county clerk of each county shall be paid by tbe Coaxni88ionerr Court of the county **out** of the general fund of the county aa additional compensationfor the 

### l ervicz of the county clerk and which additional compeneation rhall be cumulativeof and to all other compensationpresentlyor hereafter authorlred for said county clerk. (Rmphaaimadded).
An errors and omimaions policy la profearional liability (malpractice)inaarance providing a 

### l pecialired and limited type

p. 4299HonorableBenry Wade - Page 2 (~-1042) .

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of coverage coqsared to general comprekenaiveinsurance. It is designed to insurem&ra of a puticular professional group from liabilityarising out of the special rick l uch as negligence,omiaaiona,mistaker and errors inherent in the practiceof the profession. Grieb v. Citirena Ceaualty Co. of Uew York, 148 #.W.Zd 103 (f&a. 1967) 13 Co 2d S 49:16

1 at 605, Errors and Omiaaion~. uch on Insurance

In 1965 when the errors and omiaaionapolicy requirement was first added to the law, the statute statedmerely that '[tlbe premiums **for** said insurance shall be paid out of the funds of the county by **the** Connniaaionera Court.

. . .. It did not characterize the payment as constitutingadditionalcarpaneetion for the county clerk, and **Attorney** General Opinion C-506 (1965)concludedthat payment **of** the premium could not benefit the county inaemuch as governmental.irnaunity applied to the official acts of **the clerk**  and his deputies. Tbe provision war said to violate sections 51 and 52 of article 3 of the Texas constitution prohibitinggifts of public funds. Attorney General Opinion C-607 (1966) followed,deciding **on the**  **same**grounds **that a**  **county** could **not pay**  the short-rate cancellationpremium for a clerk's policy cancelled in reeponae to Attorney General Opinion C-506.
In 1969, the Legislatureamended article 1937 to read as it does today, but Attorney General Opinion H-441 (1969) ruled that new languageexpressly constitutingthe payment "additional compensation"

made no difference,obaeroingt This recitation doer not alter the fact that public moneys are being used to accomplish an unauthorioed purpoaerthat 18, to discharge **a** liability that la not the reaponaibilityof the county. **Thoaii** purpores which the Legislatureis prohibited 

### fr om l ccompliehingdirectlymay not be accomplishedindirectly. Id. at 3. - We do not agree with **Attorney** General Opinion l4-441 that the 'additional

compensation"language maker no difference. In our view, the present premium paymentprovieion of article 1937. V.T.C.S., la valid.

,;p. 429a

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.c Uonorable Benxy Wede - ?aGe 3 (B-1042)
,,rOne of tba questions l ddre8aed in AttorneyGenus1 Gpiniotr n-989 (1973)wee whether a 8chool dirtrictright purchare with public funds an Sll-rirka l utmbile liabilityinsurance policy protecting it8 officers and aployers (as distinct from the district itself) l gain rt tort claims uiaing from their official dutie8, even though the 9wumeatal imunity of the district protected them from liability for mo8t of the risk8 insured against. The opinion **approved** tba pur cha8e, l tatingt [T)heeeunits of **government have**  **the autho**  rity to set rrployee pay levelsud

. . . **the** purchame of inarrranca covuage by mployerr 18 a univeraallyyaccepted l lament of employee l

alarie8. Viewing the purchase of inauranoe as an elment of rployee campenaation, on the same baa18 a8 pea8ion plane, 9rou accident poP life and group health end

iciea, we find no violationof Article III, Faction 51, Texas Con8titution.



# c- Id. at 4.

- Unless there la a specific con8titutiorul exception prbvided, it is unconstitutionalto **make**paymentsof public -nay for the benefit of private,indivi&uala **except** as en incident to the direct accomplishment**of** a properpublic purpose or in return for aervicea rendered the public. Tex. Conlt. art. 3, ss 44, 51, 52. If author,iSed by law, insurancecowrage say be provided public **servant8 as**  **a** form of c~naation. Attor**ney** General Gpini?n MI-731 (19S9). When that 18 **done,** the conatitu~ionality of the purchase **does** not +pend upon the breadth **of** the coverage extended. ft la purchSaed to **cmpen** sate the servant **for** services which he has-alreadyrendered the public.,

and the use of the insurance IS of no con8titutional consequence, just as the use of an amployee'asalary is **of** no constitutionalconsequence to the **state** after he receives it. However, when the state provides employeebenefits **for** some rea**son** other than compensation , the provisionof henefitr **must** be for a public purpose to escape articla 3, section 51 **and** section 52 condemnation. Then, the benefioiary (in **the broad**  sense) of insurancepurchased by tha state or one of its subdiviaiona la all-important**because** if public interest8 are **not** being protected, the purcha8e 18 illegal. &e Attorney General Opinion E-950 (1977)s see l L8o AttorneyGenGl Opinion8 H-742 (1975);H-602 (197511iirfOm73). Language in Attorney General OpinionB-70 (1973)has **been** brought to our attentionwhich **seems**to conflictwith the conclueion of Attorney General Opinion M-999 (1971). In H-70 we

p. 4291. **Xonorabae** Benry **We&8 -**  Page **4** (B-1042)

w&e addressingthe proposed **purchase of**  **insurance to**  **protect** independentschooldistrict trustees frola coats of litigation growing out of the discharge of their officialduties. **We** said8

Schooldistricts are not authorizedto purchase insurancecoverage for their officara and employees 'as an element of compenaation~

. emplo le If **purchased at**  **all, 1** naur**ante must**  be purchased for the purpose of protectinga public interest,not a private one -- though private interaatamay be incidentally

benefited. -

. Id. at 5. In context,the statementwas r( correct **one,** for the trusteesof independentl chool.diatricta **must** serve without compensation. EducationCode 6 23.19. **Bowever, the**  language ahould~notbe applied to trustees or **employees** for which the law authorizesthat form of ccnapenaation, This distinction

war observed in Attorney General Opinion X-958 (1977). Another opinion, Attorney General Opinion H-602 (19751, applied the distinctionbut did not articulate it. There, an independentschool district wished to buy no-fault mperaonal injury protection. **coverage** and Qninaured motorist coverage. with public funds -- not as insurance for the employeesas part of their compenration, but as a part.of an insurancepackage protecting the district itself. Legally, a school district could not have been held liable for the claims the insurance would have covered. The opinion ruled against tbc plan on the

. same grounds AttorneyGeneral Cpiniona C-506 and C-607 originally ruled against the papent of premirnaa for a county clerk's **errors** and omissions **coverage,** aside from compensatingits servants,no public purpose of the district could have been served **by** such expenditures. Such aituati~naare to be diatinguiahedfrom the one here. The paymentof the premium here is legialativelydirected and la authorized specificaLly**as** additionalcaplpensation for the county clerk. **We ’** **know** of no constitutional restrictionon such legialativeaction. Tex. Conat. art. 3, 9 44~ art. 5, 9 201 art. 16, S 61. See Byrd v. City of Dallas, 6 S.W.ld 738 (Tex. Coaat*n App. m8, opinion adopted)8 wey generalOpinion WW-1101 (19611;see also Wichita County v. Robinson, 276 S.W.2d 509 (Tex.m4r.n our opinion, Dallas County may legally pay, and la repuired to pay, the premlum **for** the errors and omissions policy which article 1937, V.T.C.S., requires the Dallas county clerk to obtain. Attorney General OpinionM-441 (1969) la overruled.

p. 4292. .

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BonorableHenry Wade - Page 5 (a-1042)

**SUUNARY** Dallas County **must pay**  the premium for the errors and omiaaionapolicy which article 1937, V.T.C.S., requires the Dallas county **clerk** to obtain. Very truly yours,

P - .x q&l OXU L. BILL Attorney General of Texas -J4PPROVRD:

DAVID &l$plDN.L, ?irat Aaaiatant

e RORBRT HEATH, Chairman &inion Committee 

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