Court Opinion

ID: 4138142
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:33:00.621069+00
Date Added: 2024-06-11T14:36:32.445727
License: Public Domain

THICAT-JYOECNHYGENERAL
                               OF TEXAS
PRICE  DANIEL
ATTORNEYGENERAL

                                     July 10, 1948

Non. Gee. B. Butler                              Opinion No. V-630
Chairman
Board of Insurance  Commissioners                Re:   The sufficiency  of the sub-
Austin; Texas                                          mitted amendment to the
                                                       charter of the Praetorians
                                                       to effect an extension of its
                                                       corporate existence.

Dear    Sir:

               Your   request   for the opinion of this Department   is as fol-
lows:

             “Enclosed   you will please see Original Charter of
        Modern Order of Praetorians      which shows by endorsement
        that it was filed in the Department of State April 1, 1898 and,
        by provision No. 4 that ‘the term for which said corporation
        shall exist shall be Fifty  years from the date of its incorpo-
        ration!.

              *‘Following the enactment of what is now Chapter 8,
        Title 78 of the Revised Statutes  the Modern Order of Prae-
        torians qualified thereunder and has operated under its pro-
        visions continuously.

             “The directors   have submitted to this Department the
        enclosed original instrument~which    has been styled ‘Amend-
        ment Extension and Renewal of Praetorian      Charter’.  You
        will observe that it purports to be the action of the Board of
        Directors   and is duly executed by such directors.

              “Will you please advise me whether the enclosure      last
        above described is sufficient to renew the charter of the
        Praetorian   for the Fifty year period following April 1, 1948.
        If your answer is in the affirmative,    will you please return
        the enclosure   with your usual certificate   of approval so as
        to permit it to be filed here.

              “If your answer is in the negative, will you please ad-
        vise me whether the extension of the charter is controlled
        by the provision of Vernon’s Article 131% and if your adv,ica
        is in the affirmative,will  you please advise me whether it is
        necessary    to require the resolution therein referred to to be
                                                                                                                       .     .

Hon. Geo. B. Butler,     Page   2 (V-630)

       adopted at a regular or special meeting of the entire mem-
       bership of the Praetorians  or whether the expression  of the
       membership    may be obtained by resolution from the respec-
       tive local lodges or from the supreme governing body, which
       is called the Supreme Senate.”

           The Modern Order of Praetorians      was first incorporated
on April 1, 1896, as a benevolent society under the provisions    of Art.
713, Ch. 11, Title.XXI, R.S. 1895, which is as follows:

              ,“RELIGIOUS,    CHARITABLE               AND OTHER                          CORPORATIONS
                                                                                                               Article
              “Powers   and privileges      of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 713

                  “Article    713.(637)   Any religious    society, military
       or fire company,      literary,  social, charitable or benevolent
       association,   other than colleges,      universities,    academies
       or seminaries,      or any grand or subordinate lodge, or other
       order of free and accepted masons,           or of the independent
       order of odd fellows,       may, by the consent of a majority        of
       its members,     become bodies corporate under this title,
       electing directors      or trustees,   and performing      such things
       as are directed in the case of other corporations;            and,
       when so organized,       shall have all the powers and privi-
       leges and be subject to all the restrictions          in this title con-
       tained, for the objects named in the charter, and shall have
       the same power to make by-laws for the regulation of their
       affairs as other corporations.         Such directors     or trustees
       shall not usurp or exercise        the fu.nctions of the officers in
       charge of the spiritual affairs of any society.”

              Article 713, as amended       by the Acts                  of 1899, page 236,                          is
now Article     1396, R.C.S. 1925.

           In 1899, the 26th Legislature  enacted S.B. 166, page 235,
amending Art. 713, as the same is now found in the Revised Statutes,
and adding thereto Art. 713a, which has been carried forward into
the Revised Civil Statutes of ,1925 as Articles  1398, 1399, 1400, 1401,
1402, 1403, 1404, 1405, 1406, and 1407.

              At the time of incorporation,             its purpose                  clause          was as
follows:

              “2. The purposes of said corporation       shall be: Benev-
       olent:    to relieve the necessities   of the membe.rs thereof; to
       promote fraternity      and social intercourse;    to succor and
       assist members       in time of sickness,   death or destitution;
       the relief of orphans and,widows of deceased members;             and
       to 1evyassessment.s       upon the members     thereof for the pur-
    .       .

Hon. Geo.       B. Butler,   Pa8e   3 (V-630)

        pose of providing mutual         indemnity   in case   of accident,
        sickness or death.

             “This Incorporation   is not for profit, but for the mu-
        tual aid of the members   thereof; and funds collected from
        such assessments    shall be devoted exclusively    to the pay-
        ment of indemnity in the case of sickness     or death of, or
        accident to, the members     thereof.

              “The expenses of said Corporation   shall be met from
        assessments    levied for that purpose, which in no case
        shall be greater than may be necessary    to meet such ex-
        penses economically     administered.

              “Believing   that the highest civic wisdom is contained
        in the expressed     policy of the fathers of the common-wealth
        of Texas to foster ard protect its citizens in the acquisition
        of homes, this Corporation       shall also offer to its members
        the means of acquiring homes by mutual aid and co-opera-
        tion, and shall        authority to levy monthly assessments
        upon such of its-embers         as shall desire to avail themselves
        of this aid, the funds so accumulated       to be advanced to its
        members     for the purpose of acquiring,      building, or paying
        for homes.     Members     to whom such advances shall be made
        shall Cwtinue the payment of their, assessments           and legal
        interest upon amounts so advanced until by easy installments
        an investment fund shall be created by which the same shall
        be returned.     Such advances to members         shall be secured by
        liens in favor of this corporation,      for the benefit of its mem-
        bers, executed in compliance        with law. The expenses of this
        home benefit department        shall be provided for by deducting a
        fixed sum from monthly assessments           collected,   which shall
        in no case exceed the necessary        requirements     of the corpora-
        tion economically     administered,     For this purpose only, said
        corporation    shall have authority to accumulate       and loan money
        to its members,     and to erect or repair any building or im-
        provement,     and to accumulate     and loan money for this pur-
        pose.”

           This purpose clause was modified insofar as the indemnity
insurance feature was concerned by the provisions  of Art. 3096, Chap.
3, Title LVIII, R.S. 1895, which is as follows:

              “Art. 3096. Nothing in this title shall be construed to
        affect or in any way apply to mutual relief associations   or-
        ganized and chartered under the general incorporation     laws
        of Texas, or which are organized under the laws of any
        other state, which have no capital stock, and whose relief
        funds are created and sustained by assessments      made upon
                                                                              .   .

Hon. Geo. B. Butler,       Page 4 (V-630)

      the members     of said associations     in accordance   with their
      several by-laws and regulations;        provided, that the princi-
      pal officer of every such benevolent organization         (not con-
      ducted by lodges a quorum of whose members             meet in their
      respective   lodge rooms at least once each month), shall be
      required to make an annual statement under oath to the de-
      partment of agriculture,     insurance,    statistics and history
      on the first day of January of each year, or within sixty
      days thereafter,   showing--

            “1. Name of organization    and where located.
            “2. Name and residence of officers..
            “3. The salary paid each officer.
            “4. The gross amount of money received during the
      year, and from what sources.
            “5. The amount paid to policy holders on assessments
      to pay losses.
            “6. The amount paid out for all other purposes,    stat-
      ing in detail what purpose.
            “7. Surplus in the treasury,   if any.
            “And should any such benevolent organization    refuse or
      neglect to make an annual report as above required,      it shall
      be deemed an insurance company conducted for profit to its
      officers,  and amenable to the laws governing such companies.”

            Chapter 8, Title 78, R.C.S. of Texas, 1925, dealing with fra-
ternal benefit societies    was originally  enacted as Acts 1913, page 220,
and places under the jurisdiction     of the Board of Insurance Commis-
sioners the business of insurance by fraternal benefit societies      as de-
fined therein.   The Board of Insurance Commissioners        is given juris-
diction over these societies    which were incorporated    under its provi-
sions and is given jurisdiction, over any society which was incorporat-
ed prior to the passage of the fraternal benefit act but which engaged
in the business   of writing fraternal benefit insurance policies by the
provisions   of Art. 4839, which is as follows:

           “Art.   4839.     Powers   retained--amendments

           “Any society now engaged in transacting business in
      this State may exercise       all of the rights conferred hereby,
      and all of the rights, powers and privileges        now exercised
      or possessed      by it under its charter or articles of incorpo-
      ration not,inconsistent      with this chapter, if incorporated;
      or if it be a voluntary association,      it may incorporate   here-
      under. But no society already organized shall be required
      to reincorporate      hereunder,   and any such society may amend
      its articles    of incorporation   from time to time in the, manner
      provided therem or in its Constitution and laws, and all such
      amendments       shall be filed with the Commissioner      (Footnote:
      Transfer     of Commissioner’s      powers and duties to Board of
    .       .

Hon. Geo. B. Butler,    Page   5 (V-630)

        Insurance Commissioners,      see ,art. 4682a, ante.) and
        shall become operative upon such filing, unless a later
        time be provided in such amendments        or in its articles
        of incorporation, Constitution or laws. Acts 1913. p. 220,”

            The question therefore arises as to whether or not the orig-
inal charter of the Modern Order of Praetorians,   filed April 1, 1898, as
a benevolent association  was ever changed so that the Modern Order ofi
Praetorians   became a fraternal benefit society under the provisions   of
Chapter 8.

            The sole power given to the Directors   or Supreme Senators
as contained in the articles of incorporation,  dated March 31, 1898, is
as follows:

              “The Directors   or Supreme Senators,    of this Cor-
        poration are authorized to arrange for the adoption of by-
        laws for the government    thereof, and to provide for any
        alterations,   changes or amendments    thereto which may be
        from time to time necessary     to carry out the ends of this
        incorporation.”

             Article 4839 provides that “any such society may amend its
articles   of incorpqration from time to time in the manner provided
therein or in its Constitution and laws.”     If any valid amendments were
made under the provisions      of Chapter 8, such amendments    must be
made by virtue of the above caluse or by virtue of the Constitution and
by-laws adopted by the society.      The above clause only gives authority
for the Supreme Senators or Directors,       which terms seem to be synon-
ymous, to arrange for the adoption of ‘by-laws and to provide for any
alterations,    changes or amendments    in the by-laws.

           The Constitution which had been adopted by the Modern Or-
der of Praetorians  and which was in force June 10, 1923, provides in
Art. XXV, the subject being “Amendments    to This Constitution, * as
follows:

              “Sec. 1. The Constitution of this Order may be amend-
        ed at any session of the Supreme Senate by a majority vote
        of all Supreme Senators present and voting on a resolution
        setting forth the amendment sought to be made, and which
        has been published in the immediately    previous issue of
        the official organ of this Order.

              “Sec. 2. Upon a petition of not less than 10 per cent
        of the members   in good standing, provided that the peti-
        tion from each Council petitioning is signed by a majority
        of its members   in good standing, setting forth the part to
        be amended, the Executive Committee       may order a vote
Hon. Geo.   B. Butler,   Page   6 (V-630)

      to be taken by all Councils in good standing, and shall
      cause such proposed amendments        to be published in the
      official organ thirty days before such vote is to be taken,
      and if the amendments    so submitted shall receive the ap-
      proval of three-fourths   of all the members    present in
      good standing in their respective    Councils,  as reported
      to the Executive Committee     by the several Recorders,
      the same shall be declared adopted.

             “Sec. 3. The Executive Committee     shall have power
       to make land adopt bye-laws not in conflict with this Consti-
       tution, as may be advisable in*carryi.ng out the objects and
       interests   of this Order.

             “Sec. 4. All amendments        to this Constitution shall be
       in force and take effect thirty      days after the adoption there-
       of.”

             By reference    to Sec. 1 it will be noted that the Constitution
can be amended by a majority        vote of all Supreme Senators under the
circumstances     set forth therein.    The Supreme Senate and its powers
,are set forth under Art. V, including the methods of meeting.         The
 Board of Advisors     created under Art. XI, and under Sec. 3 of ,said
Article,   “shall between the meetings of the Supreme Senate, exercise
all its powers, except to change and modify or repeal this Constitu-
tion.” The Executive      Committee    created under Art. mas       no author-
ityo    do anything concenaing the Constitution, but it may under Sec. 3
of Art. XXXV make and adopt by-laws not in conflict with the Consti-
tution.   The Directors    or Trustees    created by Art. XII of the Consti-,
,tution seem to have no powers except to convey or encumber real es-
tate belonging to the corporation      by a vote of 2/3 of the Directors.    It
is provided further that the home office of the Order shall not be con-
veyed or encumbered       except by authority of the Supreme Senate.

           From a resume of the Constitution and by-laws in effect
on May 11, 1927, it would seem that no one except the Supreme Senate
had the power to alter, amend, or repeal the provisions  of the Consti-
tution then in force.

            It~appears that a charter amendment;          a copy of which is at-
tached to the brief of The IWaetorians        in the file, was filed with the
Commissioner       of Insurance on June 14, 1927. It also appears from
the records    of the Secretary    of State that the corporation     attempted to
file this charter amendment with the Secretary           of State, Mrs. Jane Y.
McCallum,     prior to that date,. but that she refused to accept it on the
ground that the Secretary      of State had no authority to file an amend-
ment to the charter of a fraternal insurance society,           since that was
purely under the jurisdiction      of the Board of Insurance Commission-
ers.   Thereaft‘ar,   it was sent to the Board of Insurance Commission-
ers and filed as above stated.       No other amendments       have ever been
Hon. Geo.     B. Butler,   Page   7 ‘(V-630)

filed in the.office    of the Secretary        of State.

           In analyzing this proposed             amendment it is necessary     to
look to the basis of the amendment,w              hich is set forth as follows:

            “BE IT KNOWN that at a regular meeting of the
       Supreme Senate of the Modern Order of Praetorians,      in
       quadrennial session asembled,  held at Dallas, Texas,
       on the 11th day of May7A.D; 1927, the following resolu-
       tion was duly passed and adopted:

                   ‘RESOLVED       that Article I, Section 1 of
              the Constitution    of said Order be amended to
              read as follows:

                   “This organization    shall be known as The
              Praetorians,   Its principal office shall be in the
              City of Dallas, State of Texas.“’

            “I, John W. Payne, Secretary   of The Praetorians,  do here-
       by certify that the foregoing is a true copy of the minutes of
       the meeting of said Supreme Senate of said Order held on
       May llth, A.D. 1927.

            “WITNESS my hand and the seal of said corporation                    this
       the 18th day of May, A.D. 1927.

                                                           “-8 - Jno. W. Payne
                                                                 Secretary

              “Sworn    to and subscribed        before     me this 24th day of May,
       A.D.    1927.

                                                           “-s-   George Lintner
                                                                  Notary Public
                                                                  Dallas County, Texas,”

            From the foregoing it is readily apparent that the only a-
mendment or change in the Constitution which was authorized by the
body authorized to make such amendment or change was to change the
first section of Art. I of the Constitution,   so that the name of the so-
ciety should become “The Praetorians”        instead of “Modern Order of
Praetorians.”

              However, a reference   to the amended charter shows that
 after reciting the meeting of the Supreme Senate as above set forth,
 the Directors   mentioned in Art. XIII, who are the same as the Board
 of Advisors,   which latter, as stated above, has no authority to change,
 modify, or repeal the Constitution,    then proceeded not only to change
Hon. Geo. B. Butler,   Page   8 (v-630)

the name but to change the purpose clause of the corporation      from that
of a benevolent association  to that of a fraternal benefit society under
the provisions  of Chapter 0, Title 78.

             Therefore, insofar as the charter amendment filed in 1927,
with the Board of Insurance Commissioners      attempted to change any-
thing in the charter except the name of the society, it was absolutely
null and void since such change was not authorized either according
to its Constitution or by-laws  or by virtue of any statutory authorities,
the directors   of the Modern Order of Praetorkns    as such having no
power either express or implied to change the purpose clause of the
corporation.

            Since the amendment of 1927 was not legally effective,        ex-
cept to change the name of the corporation      from “The Modern Order
of Praetorians”    to “The Praetorians.”    and did not otherwise change the
articles  of incorporation   or the charter or the purposes for which such
corporation   was originally   chartered,  namely, as a benevolent associa-
tion with the rights and privileges    enumerated    in its articles  of incor-
poration, it is still a benevolent association    incorporated    under the pro-
visions of Art. 1396, R.C.S. 1925, and not under the provisions        of Chap-
ter 8, Title 78, R&C. S. 1925.

            The foregoing factual situation is identical, save for the
corporate names, with the factual situation set forth in Opinion No.
O-4160 by the Hon. Gerald C. Mann, Attorney General,         addressed   to
Hon. W. J. Lawson, Secretary      of State, and approved March 14, 1942,
a copy of which is attached.    In that opinion it was held that the amend-
ment filed by the corporation    extending its period of existence,    having
been filed with the Board of Insurance Commissioners         who had no le-
gal authority to receive and file the amendment for the purpose of ex-
tending the corporate   life of the corporation,  such filing was nugatory
and did not comply with the general laws for extending its corporate
existence  as a charitable   or benevolent association.

            This Department   expressly  approves the reasoning contain-
ed in Opinion o-4160, and therefore holds that the “Amendment     Exten-
sion and Renewal of Praetorian    Charter” forwarded with your request
is not sufficient to renew the charter of the Praetorians  for the fifty-
year period following A;:ril 1, 1948.

           Your second    question   is res’tated   as follows:

           “If your answer is in the negative, will you please ad-
      vise me whether the extension of the charter is controlled
      by the provision of Vernon’s Art. 1315~ and if your advise
      is in the affirmative,   will you please advise me whether it
      is necessary    to require the resolution therein referred to
      to be adopted at a regular or special meeting of the entire
      membership     of the Praetorians   or whether the expression
Hon. Geo.   B. Butler,   Page   9 (V-630)

      of the membership   may be obtained by resolution from
      the respective loca~l lodges or from the supreme gover-
      ning body, which is called the Supreme Senate.”

           The charter of the Praetorians     expired by virtue of its terms
on April 1, 1948, and the only legal method whereby the corporation      may
be revived and its corporate existence may be revived and extended is
under the provisions   of Article 1315, R.C.S. which is as follows:

            “Corporations   created for the support of benevolent,
      charitable,  educational or missionary    undertakings,    the
      support of any literary or scientific undertaking, the main-
      tenance of a library, or the promotion of painting, music
      or other fine arts, whose charter has expired by limitation,
      may revive such charter with all the privileges      and immun-
      ities and rights of property, real and personal,    exercised
      and held by it at the date of tbe expiration of its said char-
      ter, by viling. with the consent of a majority   (~1 its stock-
      holders, a new charter under the provisions      of this chap-
      ter, reciting therein such original privileges    and immuni-
      ties and rights of property, and by filing therewith a cer-
      tified copy of such original expired charter.     Acts 1874,
      p. 120; G.L. vol. 8, p. 122; Acts 1883, p. 98; G.L. vol. 9,
      p. 404; Acts 1907, p. 301; Acts 1909, p. 226; P.D. 5942.”

            That this is the proper method of reviving the charter of
such a corporation    is in accordance  with the rule of law laid down by
the Supreme Court in the case of Flowers v. Pecos River Ry. Co.,
156 S.W. 260. Article 1315~ would be inapplicable     since it applies only
to corporations   chartered under the general law. However, if the cor-
porate existence   of the Praetorians   is revived under the provisions   of
Art.  1315, a copy of such amendment should be furnished to the Board
of Insurance Commissioners       as provided in Art. 4839, R.C.S.   1925.

                                   SUMMARY

           A benevolent society chartered in 1898 under the
      provisions  of Art. 1396, R.C.S. 1925 and whose charter
      has expired by expiration of law may be revived only
      under the provisions   of Art. 1315, R.C.S.  1925, although
      such corporation   was engaged in the business of issuing
      fraternal benefit insurance policies under the provisions
      of Art. 4839, R.C.S. 1925.. The attempted filing with the
      Board of Insurance Commissioners        of a charter amend-
      ment extending the li.fe,of the corporation    under the pro-
      visions of Ch. 8, Title 78, R.C.S. 1925, prior to the ex-
      piration of its charter by operation of law, was without
Hon. Geo.   B. Butler,   Page 10 (V-630)

      legal effect to extend the life of the corporation.   Flow-
      ers v. Pecos River Ry. Co., 156 S.W. 260;;Opinion      No.
      O-4160 to Hon. W. J. Lawson, Secretary      of State, March
      14, 1742.

                                             Very   truly yours

                                     ATTORNEYGENERALOFTEXAS

                                               C. K. Rikhards
                                                 Assistant
CKR~/JCP
ENCL.

                                     ATTORNEYGENERAL