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 premiuma for 

county clerk's l tatutorily 

required errors and aadaaiona policy. 

Dear Mr. Wader 

You have aaked 

miuma for insurance 

whether 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 performance bonda to the counties 

in which they are elected, and bond their de utiea, the l tatute 

reguirea them to 'obtain an errora and omiaa f on8 inwrance 

'policy, covering the county clerk and [hia] deputier. . . 

against liabilities incurred throu h errors and airaiona in 

the performance of [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 required by 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 compensation for the l ervicz 

of the county clerk and which additional 

compeneation rhall be cumulative of and to 

all other compensation presently or hereafter authorlred for said county clerk. 

(Rmphaaim added). 

An errors and omimaions policy la profearional liability 

(malpractice) inaarance providing a l pecialired and limited type 

p. 4299 
Honorable Benry Wade - Page 2 (~-1042) 

. 

. 

of coverage coqsared to general comprekenaive insurance. It 

is designed to insure m&ra of a puticular professional 

group from liability arising out of the special rick l uch as 

negligence, omiaaiona, mistaker and errors inherent in the 

practice of 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 omiaaiona policy requirement 

was first added to the law, the statute stated merely 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 constituting additional carpaneetion 

for the county clerk, and Attorney General Opinion C-506 

(1965) concluded that 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 prohibiting gifts of public funds. Attorney General Opinion C-607 (1966) followed, deciding on the 

same grounds that a county could not pay the short-rate cancellation premium for a clerk's policy cancelled in reeponae 

to Attorney General Opinion C-506. 

In 1969, the Legislature amended article 1937 to read as 

it does today, but Attorney General Opinion H-441 (1969) ruled 

that new language expressly constituting the payment "additional 

compensation" made no difference, obaeroingt 

This recitation doer not alter the fact 

that public moneys are being used to accomplish an unauthorioed purpoaer that 18, 

to discharge a liability that la not the 

reaponaibility of the county. Thoaii purpores which the Legislature is prohibited 

fr ol m ccompliehing directly may not be 

accomplished indirectly. 

- 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 payment provieion of article 

1937. V.T.C.S., la valid. 

,;p. 429a 
. w ’ ,~ i 

.c 

Uonorable Benxy Wede - ?aGe 3 (B-1042) 

,,rOne of tba questions l ddre8aed in Attorney Genus1 Gpiniotr 

n-989 (1973) wee whether a 8chool dirtrict right purchare with 

public funds an Sll-rirka l utmbile liability insurance 

policy protecting it8 officers and aployers (as distinct from 

the district itself) l g a inrtort t 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 p ur c h a 8l tatingt e, 

[T)heee units of government have the authority to set rrployee pay levels ud . . . 

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 po P 

life and group health end 

iciea, we find no violation of 

Article III, Faction 51, Texas Con8titution. 

c- 

- Id. at 4. 

Unless there la a specific con8titutiorul exception prbvided, it is unconstitutional to make payments of public -nay 

for the benefit of private,indivi&uala except as en incident 

to the direct accomplishment of a proper public purpose or in 

return for aervicea rendered the public. Tex. Conlt. art. 3, 

ss 44, 51, 52. If author,iSed by law, insurance cowrage say 

be provided public servant8 as a form of c~naation. Attorney 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 cmpensate the servant for services which he has-already rendered the 

public., and the use of the insurance IS of no con8titutional 

consequence, just as the use of an amployee'a salary is of no 

constitutional consequence to the state after he receives it. 

However, when the state provides employee benefits for some reason other than compensation , the provision of 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 insurance purchased 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 Attorney GenGl Opinion8 H-742 

(1975); H-602 (197511 iirfOm73). 

Language in Attorney General Opinion B-70 (1973) has been 

brought to our attention which seems to conflict with 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 addressing the proposed purchase of insurance to protect 

independent school district trustees frola coats of litigation 

growing out of the discharge of their official duties. We said8 

School districts are not authorized to purchase insurance coverage for their officara 

and employees 'as an element of 

compenaation~ .

emplo l e 

If purchased at all, 1 naurante must be purchased for the purpose of 

protecting a public interest, not a private 

one -- though private interaata may be incidentally benefited. - 

. 

Id. at 5. In context, the statement was r( correct one, for 

the trustees of independent l chool.diatricta must serve without 

compensation. Education Code 6 23.19. Bowever, the language 

ahould~not be applied to trustees or employees for which the 

law authorizes that form of ccnapenaation, 

This distinction war observed in Attorney General Opinion 

X-958 (1977). Another opinion, Attorney General Opinion H-602 

(19751, applied the distinction but did not articulate it. There, 

an independent school district wished to buy no-fault mperaonal 

injury protection. coverage and Qninaured motorist coverage. 

with public funds -- not as insurance for the employees as part 

of their compenration, but as a part.of an insurance package 

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 Attorney General Cpiniona C-506 and C-607 originally 

ruled against the papent of premirnaa for a county clerk's errors 

and omissions coverage, aside from compensating its servants, no 

public purpose of the district could have been served by such 

expenditures. 

Such aituati~na are to be diatinguiahed from the one 

here. The payment of the premium here is legialatively directed and la authorized specificaLly as additional caplpensation for the county clerk. We’know of no constitutional 

restriction on such legialative action. 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 general Opinion 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 Opinion M-441 (1969) la overruled. 

p. 4292 
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‘! 

('- 

t 

I 

Bonorable Henry Wade - Page 5 (a-1042) 

SUUNARY 

Dallas County must pay the premium for 

the errors and omiaaiona policy 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 

jet 

i.’ 

p. 4293