Honorable 0. P. Lookhart, Chairman 

,Board of Insurance Commissioners 

Austin, Texas 

Dear sir; Opinion No. O-5926 

Re: The Board o?' Insurance 

Commissioneia has no legal 

authority to enter the 

order herein~mentioned. 

Your letter of,Maroh 8, 1944, requesting the opinion of 

this department concerning the legal authbrlty of the Board of Inauranae 

Commissioners to make an order to the effect as mentioned in your 

letter has been received. 'Said letter reads 88 follow&: 

"Mututil Assessment Associationa, other than 

assessment-as-needed or post-mortem oompsniea, oparating under Article 5068-1, levy regular and periodic 

assessments for payment by tha members on the Leval 

Premjum Plan; that is, the amount of each member's 

assessment Js the same each time. The asstiasments 

when collected are divided into two funds as provided" 

in Section 12 on the percentage set out in the Assooietion's by-laws. 

"Occasionally'the Mortuary hund becomes depleted 

through excessive claim payments B&cannot be restored by regtilar assessments alone. ,In suoh oaaea 

a special or emergency assessment is levied against " 

the membership. The purpose and authority for such' 

speaial assessments are replenishment of the Mortuary 

or claim Fund. 

"Please advise me whether the Board of Insurance 

Commissioners has authority to enter'its Order to the 

effect that thereafter,the entire proceeds, of such 

special dr emergenay assessments shall be placed in 

the Mortuary Fund, exoept an amount show to the Roard 

to be neoessary to defray the aotual expense in&dent 

to collection of the',assessment, whioh may lwplaced in 

the Expense Fund.!' 

Section 7 of Artiole 5068-1, Vernon's Annotated Civil Statutes, 

requires each association to keep a oomplete and correct roster of its 
Honorable 0. P. Lookhart, page 2 O-5826 

members with proper statistical reoards for the purpe of determining 

the proper cost of the insurance, by ages or otherwise, and eaoh association shall keep accurate records of groups, classes or olubs or 

other divisiOn6 of mambership, if any; and shall keep reoords to show 

amountspaid in asse66ments by eeoh member in eaah groun) and a6 to 

groups. it must be shonn how the funds are distributed between expense 

and mortuary or relief funds, and show the amounts paid out of the funds 

of the whole membership foreaoh group in death claim6 or other benefits. 

Section 11 of Artiols 5068-1, Vernon's Annotated Civil Statutes, 

providest 

"Eaah assooiation shall levy a wgular'and $ariodLoal 

asseasmentlr by whatever name they may be oalled. These 

assessment8 must be in ~suoh amounts and at such proper 

intervals as will meet the reasonable operating expense 

of the assaoiation, and pay in full the claims arising 

under it6 certificates. hhen or if in the ,cour6e of 

operation it shall be apparent that the claims aannot be 

met in full from ourront asse6sments and fund6 on hand, 

the 6mounb must be inoreaeed until theyare adequate to 

meet suoh olaims, and the Board shall 60,0rc?ar. 

%hen any assooiation shall refuse-to comply with 

the Board's reoomm6ndations or requirem6nts reapeoting 

rates or assessments, it shall be treated a6 insolvent, 

and shall be dealt tith aa hereinafter provided. 

"Each assooiation operating under the provisions of 

this Act shall file its rate sohedule with the Board ofInsurance Connnissioners." 

Motion 12 of Artiole GOSS-1, provides, in effeot, that assessments when collected shall b6 divided into at lsaet two funds. 

One of these shall be the mortuary or relief fund, by whatever name 

it may be oalled in the different associations from which olaims under 

aertifioates shall be paid, and to a limited extent the oost of defending contested claims, and nothing else; and the other fund shall 

be the expense fund from which expenses may be paid. 'ihis section of 

the statute further requires that at least sixty per cent of the seeessmenta collected, exaept the membership fee, must be pleoed in the 

mortuary or relief fund. E:aoh association shall provide in its bylaws for the portion of its assessments to be allotted to the mortuary 

relief fund and may provide for the payment out of said mortuary relief fund of attorneys' fees and neoessary erpsnses arising out of the 

defense, settlement or payment of oontsstsd claims. Any suoh payments 

out of the mortuary relief fund for other than claims shall be subject' 

to approval of ths Roard of Insuranoe Co66sissioners. In connection 

with the foregoing statement, it should be borne in mind that Article 

601X3-4 as enacted by the 48th Legislature, Regular Session, 1943, page 
Honorable 0. F. Lo&hart, page 3 O-5926 

696, Chapter 366, authorizes any oompany or association operating 

under ,ths provisions of S. 9. 135, Aots of the Regular Sessi.on of the 

46th Legis3,ature, Chapter 6, page 401, to pay fr& the mortuary or 

relief funds, by whatever name it may be called, eny taxes that may 

be assessed against or required to ba paid by the company or association 

because of inaome to such funds. 

Under the foregoing provisions of Brtiele 5068-1, when or 

if in the ooursa of operation, It is apparent that the oleIms of any 

assooistion oannot be met in full from asaessmants and funds on hand, 

the amount must be inoreaeed until they ara adequate to meet such 

olaims and the Board of 'Insurance Commissioners shsll so order that an 

increase hn made in the assessments until they ars adequate to meet 

suah claims. Tf my associetion shall becrrme unable to ,pay its rsalid 

clRms withj.,n the time specified in the statute after due proofs are 

received, such association for the purposes of Article 6060-1, must 3o 

rsgsrded as insolvent, and dealt with as is Pully provided in said Act. 

The foregoing statute expressly sets forth the manner in which assessmelts when collected shall be divided and a compliance with this 

statute in rsspect to the divisions of such assessments is all that oan 

he required of such assooiationa. 

Generally speaking, the Board of Insuranoe Commissioners, 

like other regulatory and administrative boards, possess only such 

powsr or authority as is expressly given or necessarily impljed by the 

Constitution and statutes of this State. After a careful search of 

the statutas and various constitutional provisions of this State, we 

f'ajl to find any e,xpresssd or implied authority empowering the Board 

of Insurance Commissioners to make and enforae an order such as the 

one i~nquirsd about, Therefore, it is our opinion that the Board of 

insurance C!!mmissloners has no legal authority to make and enforce an 

ordsr of the ,nature of the order inquired about. 

Yours very truly 

ATTORNEY GMWLAL OF TEXAS 

By *,/Arch313 tiilliams 

,&dell Wlili.ams 

Assistant 

AW:W:wo 

APFROVED MARCY 17, 1944 

s,/Geo. P. Blackburn 

ATTORNEY GkNtiRA!, OF TEXAS