GERALD C. MANN d BB 

Honorable O.P. Lockhart, Chairman 

Board of Insurance Commissioners 

Austin, Texas 

Dear Sir: Opinion No. O-5207 

Re: Can the Insurance Department 

lawfully continue to license 

the Mutual Benefit Health & 

Accident Association, Omaha, 

Nebraska,, to conduct its businest in Texas under repealed 

Chapter 5, Title 78, of the 

Revised Civil Statutes of Texas 

of 1925, end a related question. 

Your request for an opinion on the above matters 

has been received and carefully noted. We quote from your 

request as follows: 

"Re : Mutual Benefit Health 

& Accident Association, 

Omaha, Nebraska, 

"The Company was originally incorporated under 

the laws of Nebraska on March 5, 1909 for a period 

to expire March 5, 1939. On February 12, 1938 its 

membership adopted charter amendment, which was approved and filed by the Director of Insurance of 

Nebraska March 28, 1938 extending its corporate 

life to March 5, 1989. Enclosed are photostatic 

copies of its old and new charter and of its bglaws as amended and filed with this Department from 

time to time. 

"It was originally admitted to Texas and licensed as a mutual assessment health and accident 

company on March 17, 3920 under the provisions of 

Chapter 4~of Title 71, R. C. 3. 1911, which later 

became Chapter 5 of Title 78, R. C. 3. 1925. Annually thereafter to and including 1942 it was 

licensed in like manner and under the same statutory provisions to continue its operations in 
. . 

Honorable 0. P. Lockhart, Page 2, (o-5207) 

Texas under such Chapter 5, though the latter was 

Acts 1929, 41st Leg., 

as amended by Acts 1929, 

sec. 1. It has not yet 

repealed by Section 16 of 

1st C. Se, p. 90, Ch. 40, 

2nd C. S., p. 99, Ch. 60, 

been lioensed for 1943. 

"Please givb-us your 

ing points: 

opinion upon the follow- 

"1. Can this Department lawfully continue to 

license such Company to conduot its business in 

Texas under such repealed Chapter 5 of Title 781 

“2. Are the present charter and by-laws of 

such oompany such as necessarily to constitute it 

a 'mutual assessment insurance company' fundamsntally incompetible with the plan of operation of a 

'mutual insurance compan 

is 

t of the kind governed by 

new Chapter 9 of Title 7 (Article 48608, sections 

l-19) as added by,the 1929 Aots above cited, and 

thus neoessarily debar it from qualifylag to do 

~JU;USS in Texas under seotion 13 of suoh Article 

" " . . . . 

It is the opinion of this department that the first 

question asked by you should be answered in the affirmative, 

which answer makes it unneosssary to answer the seoond ques- 

;',o& asked by you. Our masons for such holding are as fol- 

: 

Repealed Ghapter.5, Title 78, of the Revised Civil 

Statutes of Texas of 1925, under whloh aaid oompany was originally licensed to do business in Texas was composed of Artioles 4701, 4782 and 4783.~ Article 4782 provlded for certain 

filing fees, Artiole 4783,excepted aoma oompanies from the 

provisions of said Chapter ar&d Artiole 4781 was aa follows: 

"Art. 4781, (4791) Forrign'assessmsnt oom- 

!I?+ 

,--Companies or assooiatlono ollganleed Under 

e aws of any other State of the United States, 

carrying on the business of life or oasualty insurance on the asserrrmeat or natural premium plan, 

having cash assets of a sum notless than one hundred thousand dollars, invested as required by the 

laws of this State regulating other insurance companies, shall be licensed by the Qommissioner to 

do business in this State, an8 be subject only to 
Honorable 0. P. Lockhart, Page 3, (o-5207) 

the provisions of this chapter. S&h company or 

association shall first file with said Commissioner 

a certified copy of its charter, a written agreement appointing said Commissioner and his successor 

in office, to be its attorney, upon whom all lawful process in any action or proceeding against it 

may be served; a certificate under oath of its 

president and secretary that it is paying, and for 

the twelve months next preceding has paid, the maximum amount named in its policies or certificates 

in full; a statement under oath of its president 

and secretary of its business for the year ending 

on the thirty-first day of December preceding; a 

certified copy of its constitution and by-laws, 

and a copy of its policy and application; a certificate from the proper authority in its home State 

that said company or association is lawfully entitled to do business therein, and has at least 

one hundred thousand dollars surplus assets subject to its indebtedness. The Commissioner shall 

issue a license to any company or association complying with the provisions of this chapter. Every 

such company or association shall annually thereafter before such license is renewed, file with 

said Commissioner on or before the first day of 

March, a statement under oath of its president and 

secretary, or like officers, of its business for 

the year ending December 31 preceding." 

Said Chapter 5 was repealed in 1929 by S. B. No. 

37, page 90 of the General and Special Laws of the First 

Called Session of the 41st Legislature, Section 18 of said 

Act being in part as follows: 

"SEC. 18. Chapters 5, 6, 9, 12, 13, 14, and 

15 of Title 78, of the Revised Civil Statutes of 

1925, and all other laws or parts of laws in conflict with the provisions of this Act, are hereby 

repealed; provided that such repeals and the provisions of this Act shall not apply to or affect 

any company or association of this State now doing 

business under the laws repealed, and they shall 

continue to be governed by the regulatory provisions of such laws. . . ." 

The Second Called Session of said 41st Legislature, 

by 3. B. No. 106, page 99 of the General Laws of said Session, 

amended said Section 18 of said original act, but no change 

was made in that part of same hereinabove set forth. 
Honorable 0. P. Lookhart, Page 4, (o-5207) 

There would be no question as to the proper construction of this repealing law as contained in said Section 18 

thereof but for the fact that the Legislature used the words 

"of this State" in describing the companies and associations 

to which such act should not apply, and both domestic and 

foreign companies had been licensed to do business under said 

repealed law. 

A question as to the meaning of this savings clause 

was raised in the case of National Aid Life Association vs. 

Murphy, 78 3. W, (2) 223, writ dismissed, end Judge Looney of 

the Dallas Court of Civil Appeals, on December 1, 1934, construed same as follows: 

"After defendant had been issued a permit to 

carry on its insurance business in this state, under the provisions of chapter 5, title 78 (article 

4781 et seq.), the 41st Legislature repealed chapters 5, 6, 9, 12, 13, 14 end 15 of title 78 (article 4781 et seq.; art. 4860 et seq.; art. 4933 et 

seq.), effective June 19, 1929 (see Acts 1929, 1st 

Called Sess., chapter 40, pp* 90-95 (Vernon's Ann. 

Civ. St. art. 486Oa-1 et se 

section of the sot of 1929 4 

.)). The repealing 

see Vernon's Ann. Civ. 

St. art. 4860a--18) contains a saving clause in 

favor of insur;arg ;;mpanies, then doing business, 

as follows: Chapters 5, 6, 9, 12, 13, 

14, and 15 of Title 76, of the Revised Civil Statutes of 1925, and all other laws or parts of laws 

in conflict with the provisions of this Act, are 

hereby repealed; provided that such repeals end the 

provisions of this Act shall not apply to or affect 

any company or association of this State now doing 

business under the laws repealed, and they shall 

continue to be governed by the regulatory provisions of such laws. * * *I 

"!Phe contention of plaintiff is based on the 

idea that the saving clause does not include foreign insurance companies, such as defendant, but 

applies only to domestic concerns, and that, since 

the effective date of the repealing act, defendant 

has conducted its business in Texas without authority of law. That this is a correct statement of 

plaintiff's position is revealed by the following 

excerpts from the written argument of her attorneys 

on file. They said: 'It is manifest from the repealing act above quoted that the provisions of the 

statute excepting from its application only those 
Honorable 0. P. Lockhart, Page 5, (O-5207) 

companies or associations of this state which were 

then doing business under the laws repealed did not 

apply to foreign insurance companies and that no 

foreign company of the description contained in the 

repealing act could thereafter do business under 

the provisions of articles 4781, 4782 and 4783, the 

act repealed. + * * But appellee contends that, 

in view of the express and unambiguous provisions 

of the statute, withdrawing the right of the appellant company to do business in Texas, no construction of the statute was necessary end the mere 

fact that the insurance commissioner without authority issued a license or permit to appellant 

did not have the effect to emend the statute and 

write an exception therein in favor of appellant 

and associations in like situation.1 

"We cannot accept as correct plaintiff's idea 

as to the meaning of the statute under consideration; on the contrary, believe that all associations 

end companies, domestic or foreign, legally doing 

business in the state when the statutes were repealed, 

were permitted by the saving clause, quoted above, 

to continue and have their permits renewed.' 

The general rule as to the interpretation by the 

Legislature of laws passed by it is set forth in 39 Texas 

Jurisprudence, Section 132, pages 248-251, in the following 

language: 

"Doubtless the Legislature, in enacting, amending or repealing a statute, may be presumed to have 

known facts of common notoriety in the State, as 

well as any circumstances or conditions affecting or 

relating to the particular enactment. And it may 

be presumed that the Legislature Qnew*, 'had in 

mind', or 'Iwas familiar with' the 'law of the land', 

that is, the Constitution, the common law, existing 

statutes and the effect thereof; also pries decisions 

of the courts,--at least those of last resort,--pertaining to the subject-matter. 

"The Legislature is presumed to have understood the meaning of language that it employed, and 

to have known the construction placed upon the same 

or a similar statute by the appellate courts and by 

executive or administrative officers. And it may be 

presumed, in a proper ease , that the Legislature has 

acquiesced in the construction of a particular act, 
Honorable 0. P. Lockhart, Page 6, (o-5207) 

or that if it had not been satisfied with 

such construction it would have changed the 

verbiage of the law so as to show a contrary 

intention. 

n " . . . . 

After the passage of this repealing Act in 1929 

containing the saving clause above referred to, the Legislature has referred thereto as hereinafter shown. 

, 

In 1936, the 44th Legislature, in its Third Called 

Session and by House Bill No. 37, page 2040 of the General 

and Special Laws of such session, which was an omnibus tax 

measure, amended Article 7064 of the Revised Civil Statutes 

of Texas of 1925, which said Article 7064 provided for the 

filing of reports and payment of taxes by every kind of insurance business except life and other than fraternal benefit 

associations, and in said amendment made the following provisions, quoting from page 2075: 

11 . . . however, foreign assessment life and 

casualty companies admitted to do business in Texas, 

under Chapter 5, Title 78, Revised Statutes 1925, 

shall also pay taxes under and in accordance with 

the provisions of this Article." 

The 45th Legislature, at its Regular Session in 

1927 and by House Bill No. 441, page 525 of the General and 

Special Laws of said session, attempted to clarify the law 

in regard to payment of taxes by certain insurance companies. 

The caption of said act was in part as follows: 

11 . . . and further providing for the taxing 

of foreign assessment life and casualty companies 

admitted to do business in Texas under Chapter 5, 

Title 7$!, Revised Civil Statutes of Texas of 1925; 

. . . . 

In the body of said act, page 527 and in amending 

Article 7064, the following provision was made: 

II 0 . . however, foreign assessment life and 

casualty companies admitted to do business in 

Texas, under Chapter 5, Title 78, Revised Civil 

Statutes of Texas of 1925, shall also pay a tax 

of three and twenty-five hundredths (3*25) per 

cent of their gross premium receipts from Texas 

businzss, as such receipts are herein defined. 

. . a 
. . 

Honorable 0. P. Lockhart, Page 7, (o-5207) 

In 1939, the 46th Legislature, during its Regular 

Session, passed S, B. No. 313, page 424 of the General Laws 

of said session, which provided for the payment 

foreign assessment life and casualty companies, 

and Section 1 of said act being as follows: 

of taxes by 

the caption 

'An Act providing for tsxing the premium 

celpts of foreign assessment life and - -..... _ 

recasualty companies now aamlttea to a0 

business in Texas, under Chapter V, Title 

78, Revised Civil Statutes of Texas, 1925, 

as amended by Senate Bill No. 37, Chapter 

40, Acts of 1929, First Called Session, 

Forty-first Legislature, as amended by 

Senate Bill No. 106, Chapter 60, Acts of 

1929, Second Called Session, Forty-first 

Legislature, in the event any such company should hereafter reorganize, amend 

its charter or otherwise change its plan 

of operation so that It shall not be subject to the provisions of said Chapter V, 

Title 78, Revised Civil Statutes of Texas, 

as amended, snd'declaring an emergency. 

"BE IT ENAC~TED BY TILE LEGISLATURE OF THE STATE OF 

TEXAS: 

"SECTION 1. That if any foreign assessment 

life or casualty company now licensed to do business in this State under the provisions of Chapter 

V, Title 78, Revised Civil Statutes of Texas, 1925, 

as amended by Senate Bill Ho. 37, Chapter 40, Acts 

of 1929, First Called Session, Forty-first Legislature, as amended by Senate Bill No. 106, Chapter 

60, Act of 1929, Second Called Session, Forty-first 

Legislature, shall hereafter reorganize, amend its 

chapter or otherwise change its plan of operation 

so that it shall no longer be subject to the provisions of said Chapter and the other laws then applicable to such companies, it shall thereafter, 

as to all policies written before such change, be 

governed and taxed as provided by the particular 

laws under which it operated and was taxed at the 

time of such change, but as to all policies thereafter written it shall be governed and taxed under 

the lawa to which it has then become subject by 

such change." 

The 46th Legislature, at its said Regular Session, 

also passed Rouse Bill No. 556, page 638 of the General Laws 
Honorable 0. P. Lockhart, Page 8, (o-5207) 

of said session, which was an act to further amend Article 

7064 and in which the following provision was made: 

II 

l . . however, foreign assessment casualty 

companies admitted to,do business in Texas under 

Chapter 5 Title 78, Revised Civil Statutes of 

Texas of i925, shall also pa a tax of three and 

twenty-five hundredths (3.25 7 per cent of their 

gross premium receipts from Texas business, as 

such receipts are herein defined. . . ." 

In the Omnibus Tax Law 

$ 

asaed by the 47th Leglslature,at its Regular Session in 19 1, page 269 of the General 

and Special Lavs of said session, said Article 7064 was again 

amended, and In said amendment the following language was 

used, quoting from page 334 of said Session Lavs: 

. however, foreign assessment casualty 

companiei admitted to do business In Texas under 

Chapter 5, Title 78, Revised Civil Statutes of 

Texas of 1925, shall also pay a tsx of four and 

five hundredths (4.05) per cent of their gross 

premium receipts from Texas business, as such receipts are herein defined. . . ." 

Another rule of construction of statutes which we 

think is entitled to considerable weight herein is that pertaining to executive or departmental construction. Your 

statement shows that the Board of Insurance Commissioners 

has consistently construed said repealed Chapter 5, and particularly the savings clause thereof, to permit the continued 

licensing of this company to do business in Texas and this 

has been done over a period of fourteen years. The general 

rule relative to departmental construction is laid down in 

39 Tex. Jur., sec. 126, pp. 235-238, as follows: 

'V&26. Executive or Departmental Constructlon.-- 

The courts will ordinarily adopt and uphold a construction placed upon a statute by an executive officer or department charged with its administration, 

if the statute is ambiguous or uncertain, and the 

construction so given it is reasonable. In other 

words, the judiciary will adhere to an executive or 

departmental construction of an ambiguous statute 

unless it is clearly erroneous or unsound, or unless it will result in serious hardship or injustice, 

although it might otherwise have been inclined to 

place a different construction upon the act. 
Honorable 0. P. Lockhart, Page Y, (o-5207) 

"The rule above stated is particularly applicable to an administrative construction of long 

standing, where valuable interests or rights have 

been acquired or contracts have been made, or where 

a law that has been uniformly construed by those 

charged with its enforcement has been reenacted 

without a change of language. It has been varlously applied to constructions, opinions or rulings of the Governor, the Attorney General, the 

Comptroller, the Secretary of State, the Treasurer, 

the Land Commissioner, the Compensation Claim Board, 

and the State Department of Education. . . .v 

This rule is followed by the court in the case of 

Houston & North Texas Motor Freight Lines, Inc., et al. v. 

Johnson et al., 159 5. W. (2) 905, in dealing with the construction given to an Act by the Railroad Commission, which 

said holding is as follows: 

'The Railroad Commission has, it appears, 

since 1931, been authorizing sales of portions 

of certificates where the certificate is severed 

'horizontally', and is not divided ~lengthwlse'. 

In administering its duties under Section 5, Art. 

Yllb, the Commission is bound to construe the 

meaning thereof. The Legislature, which has 

amended the Act, of which Art. Yllb forms a part, 

several times since 1931, has never seen fit to 

in any way indicate that the Commission has not 

given the true interpretation to Sec. 5, Art. 911b. 

And it is well settled that the construction given 

to an act by one whose duty it is to administer it 

is entitled to great weight. Cumin am v. Cunningham, 120 Tex. 491, 40 S, W. 2d 4 P , 75 A. L. R. 

1305; Harris County v. Crooker, 112 Tex. 450, 248 

s. w. 652. And such construction should be adhered to unless clearly erroneous. Western Public 

Service Co. v. Meharg, 

292 s. w. 168." 

116 Tex. 193, 288 5. W. 141, 

Said Chapter 5, Title 78, though repealed in 1929, 

has been referred to by the Legislature as still being in effeet insofar as companies affected by said saving clause are 

concerned, said references to said law by the Legislature 

having been after the opinion construing same was written 

by Judge Looney in December, 1934. This fact alone should 

be sufficient to authorize you to continue to license this 

company to do business in Texas under said repealed law, but, 
. 

Honorable 0. P. Lockhart, Page 10, (O-5207) 

in addition thereto, Judge Looney has held likewise and your 

department has continuously so construed said law since 1929. 

Therefore, it is our opinion that you have authority to continue to license this company to do business In Texas as 

heretofore. 

Trusting that this satisfactorily ansvers your lnquiry, we are 

Very truly yours 

ATTORNEY GENERAL OF TEXAS 

JWB:mp:eac 

By /s/ Jas. W. Bassett 

Jas. W. Bassett 

Assistant 

APPROVED MAY 4, 1945 

/s/ Gerald C. Mann 

ATTORNEY GENERAL OF TEXAS 

APPROVED 

OPINION 

COMMITTEE 

BY G.C.B. 

Cm-