A-wsIT\’ <Ir^ylfY.\,* February 11, 1966

Honorable Herbert Middleton Opinion No. C-607 County Audltor Taylor County Courthouse Re: Whether Taylor County Abllene, Texas can legally pay a short-rate cancellation premium on an "error' and omissions" insurance policy procuredand cancelledunder the Dear Mr. Mlddleton: stated conditions.

Your recent letter to this office contained the following statementof facts:

"After the passage of Section 4 of Article 1937 as provled for by Section 1 of House Hz;,;;5, Acts 59th Le islature, 1965 Regular

Ch. 456 p. $1 an 'errorsand omlsslo~s~ insurincepolicy was issued to ?$$r County for the benefit of the Cotinty

On receipt of a copy of Attorney General'sOpinion #c-536 the policy on which the premiumhad not been pald,'was returnedby the County Auditor to the Insuranceagent for cancellation.

"In a lett$r (copy of which is enclosed) to the Hon. County Judge the agent requested the County to pay a short-rate cancellation premium.

. . ."

You have asked the opinion of this office as to whether Taylor County may legallypay the short-rate cancellationpremium submittedby the agent who issued the policy.

The policy in question was procuredpursuant to the provlsions.ofSection 4 of Article 1937 as enacted by Section 1 of House Bill No. 125 Acts 59th Legislature Session, Ch. 456, P. 441, 1965, Regular which reads as follows:

-294-2-Hon. Herbert Middleton,page 2 (c-607)

“Each county clerk shall obtain an errors and omissions Insurancepolicy, If the same be available, coveringthe county clerk and the deputy or deputiesof the county clerk against llabllltlesIncurredthrough errors and omissions In the performanceof the official duties of said county clerk and the deputy or deputies of said county clerk; with the amount of the policy being in an amount equal to a maximum amount of fees collected In any year during the previous term of office immediatelyprecedingthe term of office for which said Insurancepolicy Is to be obtained, but In no event shall the amount of the policy be for less than Ten ThousandDollars ($10 000). The premiums for said insuranceshall be paid out of the funds of the countyby the CommissionersCourt of said county."

The clear and unambiguous languageof this Section 1s devoid of any expressionwhich would make the respective countle of this State responsibleIn damages for the errors or omissions of county clerks or their deputies. The procuringof a policy of public llablllty Insurancecannot create a llabllltywhere I
there Is none. Texas PrisonBoard v. Cabeen, 159 S.W.2d 523 i
dE;a;~.App. 1942,b error ref.); Jones v. Texas Gulf S5ulphur < p y, Houston Court of Civil Appeals (Dec. lb, 196 ).
Section 52 of Article III of the Texas Constltutlo. provides In part as follows:

"The Legislatureshall have no power to authorize any county, city, town or other politicalcorporationor subdivisionof the State to lend Its credit or to grant public money or thing of value in aid of, or to any Individual.

. . ."

In Attorney General'sOpinion c-506 (1965) we helc Section 1 of House Bill No. 125 invalid because of this provision of our Constitution. We stated In said opinion that:

"As It would be In violation of Section 51 and Section 52 of Article III of the Constitution of Texas for a county to pay a claim of a person for a loss sufferedby such person for some act of the County Clerk or his deputies In the performanceof their official duties, It would likewisebe a violationof the same constitutional provisionsfor a county to pay the premiumson an

-2943-Hon. HerbertMiddleton, page 3 (c-607)

Insurancepolicy which had as .lts purpose the paying of a claim predicatedon facts which generatedno county llablllty. In this same connectionIt was stated In AttorneyGeneral's Opinion No. O-1922 (1940) that:
11 t

. . . It'is fundamental that the county would have no authority to Insure against a non-existentllabillty.~n

In this context the languageof.the Court In Clotigh V. Worsham 354 74 S.W. 350 ($ex.Clv.App.1903, error ref.) at page Is most appropriate:

11
,

. . . /T7he government Itself is not responsiblefor the misfeasancesor wrongs or negllgencesor omissions of duty of the subordinateofficersor agents employed In the public service, for It does not undertake to guarantee to any persons the fidelity of any of the officers
or agents whom it employs.

. . .I"

Statuteswhich are contra to the provisionsof our organic law are void. They are no laws at all and therefore no rights may be acquiredunder them. Neithermay acts or powers performedunder an unconstitutional statute be justified or sanctionedupon the baals of Its provisions. 16 Am.Jur.2d 403-404 Constitutional Law B 177; 9 Tex.Jur. 467, ConstltGtlona Law B 51; 39 Tex.Jur. 21, Statutes 6 8.

"The foregoingrule has been deviated from by this court where It was shown that partieshad obtained judgments In causes and the Legislaturehad enacted what was called Stay Laws, prohibitingthe issuanceof executionsthereon for a certain periodof time and where it was also shown that the partieshad obeyed the law before it was declared Invalid;and such rights acquired In such judgmentsare not destroyedby the period of limitationprescribed In such laws. Phillipsv. Lesser, 32 Tex. 741; Sessums v. Botts 34 Tex. Wilson 35 Tex. $2; Id I3 35; Cravansv. 4 Tex. 324; Townsend
v. Q&an, 36 Tex. 548i'Delesplnev. Campbell, 52 Tex. 4.
II

. . .

-2944-Hon. Herbert Middleton,page 4 (c-607)

"We think there exists a sound distinction between a decisionwhich holds that rights acquired under a judgmentwill be protected from limitation,where the partiesobey a law before It Is declaredvoid, and a decisionwhich holdsa sale made under a void statute conveys no title to the land. In the first Instance the legal rights of partiesalready acquired are protected In spite of a void statute;while In the second Instance, If the sale of land under a void statute were sustained,the partles would not only have their rightsalready acquired protected, but would also gain rights under a void s,tatute. This court has held, and still holds, that original rightsobtainedunder a judgment will be protectedin spite of a void statute, but It will not extend the rule to protect rights acqulred.undersuch void statute." Sharber v. Florence 131 Tex. 341 115 S.W.2d 604 (1938)
i&k, 66f7

of 115 S W 2a* see also Sessums v. 34 Tex. 335'(i8$).

In the case before us, the sole authority for the procurementof the policy of Insuranceand the paymentof the premium by the county Is the statute which we have heretofore held unconstitutional. The fact that the policy ln question procuredand remained In force for a period of time prior to our holding cannot supplant the absence of authority to pay premium. We can find no valid basis to support the payment the premium apart from the unconstitutionalstatute, therefo the exception to the general rule stated above has no applic

Where the statutewhich authorized the procurement the policy and the paymentof the premium Is unconstltutiona'
we are without power to raise an Implied contract to pay the premium for the period the policy was In force; the Implied contractwould run afoul of the same constitutionalprohlplt: Edwards County v. Jennings,89 Tex. 618 35 S.W. 1053 (1896) Noel v. City of San Antonio, 33 S.W. 263 (Tex.Civ.App.1895,
error ref.).

In City of Tyler v. Texas Employer's InsuranceAssc 288 S.W. 409 (Tex.Comm.App. 1926) the Insurance corporation brought a suit to recoverunpaid bremiums on a policy of work compensationinsuranceIssued to the City of Tyler covering certain employeesof the city. The Court held that the Workn CompensationAct did not apply to cities; that Section 52 of Article III of the Texas Constitutiondenied to the Leglslatt the power to include cities within the scope of the Act or ac

-2945-Hon. Herbert Mlddleton, page 5 (C-607)

the payment of premiums for a policy of compensationInsurance. The language from page 412 of that opinion Is conclusiveupon the question before us:

"Viewed from another standpoint the Legislaturewould have no authority to include cities and towns In the act for the plan necessarilypermits such cities and towns becoming subscribers to grant publicmoney or thing of value In violation of the section of the Constitutionalready quoted. The purpose of this wholesome provision is to prevent the gratuitous appropriationof public money or property. The purposes for which

. publicmoney may be expended are clearly defined by law, and a grant In aid of or to any Individual,assoclatlon, or corporation whatsoeverIs not one of these purposes,but Is expressly forbidden. When the Workmen's CompensationLaw Is analyzed and fully understood,It Is clear that to permita munlclpal corporationto become a subscriberto the Insuranceassociation therein providedauthorizes It to grant public money by way of premiums for Insurance In aid of Its employes to whom It is under no legal llablllty to pay. As already pointedout, the act contemplates compensation In the absence of any legal llabllltyother than the acceptanceof the plan. Cities and towns have no power to appropriate the tax money of Its citizensto such a purpose. It Is at best
a gratuity,a bonus to the employe. The city might as well pay his doctor's fee, his grocer's bill, or grant him a pension.

"It may be conceded that those employesof
a city engaged In industrial work of a proprietary nature are as much entitled to the compensation providedby the act as are the employesof strictly privatecorporations. This is not the question. The question Is, Has the Legislaturepower, In view of our constitutional provisionsand limitations,to authorize cities and towns to make such insurance for their employes? Wehave, with much hesitancy but after due deliberation concludedthat the Legislature has no such powei, and that, if It had attempted to exercise such

-2946-Hon. HerbertMiddleton, page 6 (c-607)

power, Its act would have been void. The wldsom of the ConstitutionIs for the people. Expediency will not justify a violationof Its provisions."

In our opinion, Taylor County may not pay the shortterm cancellationpremium for the policyof Insurance procured by the County Clerk. The policy insuredagainst a llablllty for which the county was not responsible;the premium would purchasenothing for county purposes. Under such circumstances the paymentof the premium would be an unauthorizedgrant of public money proscribedby Section 52 of Article III of the Texas Constitution. See also Georgia CasualtyCo. v. Lackey, 294 S.W. 276 (Tex.Clv.App.1927, no writ history).

SUMMARY
Section 52 of Article III of the Texas Constitutionprohibits the paymentof a shortterm cancellationpremium for a policy of insuranceprocured by the County Clerk of Taylor County pursuant to Section 4 of Article 1937, Vernon'sCivil Statutes.
Very truly yours,

WAGGONER CARR Attorney General

WGS:ml

APPROVED: OPINION COMMITTEE

W. V. Geppert,Chairman Paul Phy Kerns Taylor John Reeves John Banks Malcolm Quick

APPROVED FOR THE ATTORNEY GENERAL By: T. B. Wright

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