Court Opinion

ID: 4133915
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:43:42.008434+00
Date Added: 2024-06-11T14:08:19.680932
License: Public Domain

Hon. Burton 0. Hackney, Commissioner      Opinion No. M-753
State Department of Public Welfare
John Ii.Reagan Building                   Re,:   Authority of the
Austin. Texas 78701                              Welfare Department
                                                 to purchase fidelity
                                                 bonds and theft, bur-
                                                 glary or robbery in-
                                                 surance, and related
,Dear Commissioner Hackneyg                      questions.

           Your r,ecentletter describes the needs of your De-
partment for protection in the form of fidelity bonds and also
insurance against loss by theft, burglary, or robbery. You are
primarily’ concerned with:,$ratecti@n:. agaii3$..,loea of food stamps    .~.
and cash.

           You advise us that for a number of years you have
secured‘honesty blanket poaition bon‘dcoverage in the base
amount of $2,500 for each and every employee of the Department,
with  additional indemnity on certain positions. as authorized
by Article 6003b. Vernon's Civil Statutes. The additional in-
demnity ranges in amount from 97,500 to $22,500, depending upon
the  position, and the additional indemnity has been approved when
necessary as.required by law.

           You have advised us that expqsion  of the food stamp
program has brought about an increased risk of loss, making it
necea8ary  for the Department,to seek a change in the type of
coverage  from "Honesty'Blanket Position Bond" to a "Faithful
Performance Blanket Position Bond," and to add additional cover-
age for a number of positions.

          You have submitted   for   our opinion the following
questions:

                                -36$7-
commissioner Burton G. Hackney, page 2            (M-753)

          "1. Can the Department legally  purchase a
     Faithful Performance Blanket Position Bond for its
     employeea under the provisions of Article 6003b,
     Vernon's Texas Civil Statutes, or under any other
     General Statutes?

          ”2 . If Question No. 1 is answered affirmatively,
     can the Department obtain a Faithful Performance
     Position Bond for some of its employees and at the
     same time retain the Honesty Blanket Position Bond
     for other positions?

          "3.~ If, under the law, two separate bonds cannot
     be obtained, ia it permissible to obtain the coverage
     by adding a Faithful Performance Rider to the Honesty
     Blanket Poaition Bond? Does the Department, with
     the approval of the State Auditor, have the legal
     authority to obtain specific excess indemnity under
     a Faithful Performance Position Bond?

          "4. Can the Department legally protectitself
     against loss due to theft, burglary or robbery under
     the circumstances described above?

          “5.   If   so,   what
                           kind of protection is available
     and what ia'the statutoxy authority?

          “6.  In the event there,is no law which would
     give the Department this kind of protection, is there
     any Conatitutional or basic impediment which would
     prohibit the Legislature from specifically author-
     izing the Department.to obtain,this kind of protection?"

           To a large extent ,thsanswers to some of your questions
are determined by the construction placed on certain provisions
of Article  6003b, Vernon's Civll Statutes. We have set out
below Sections 3, 4, and 5 of that sta,tute.

                                  -3668-
 i

commissioner Burton G. Hackney, page 3           (M-753)

           "Sac. 3. For the purpose of this Act the termi
           (a) "Bond" means any agreement under which an'
     .ineurance company becomes 0bCgated as surety to pay,
     within certain limits, loss caused by the dishonest
     aats of officers and employees, or to pay for lose
     caused by failure of officers or employees to faith-
     fully pqforrn the duties of the offices or positions
     held.
           (b) "Agency" means any department, commission,
     board, institution, court, institution of higher
     education,..orsoilsconservation district of the State
     of Texas, but ahall not include any other political
     subdivision of the State.
           Cc) "Position Schedule Honesty Bond" means any
     bond covering the honesty of any employee who may
     occupy and perform the duties of the positions listed
     in the,schedule attached to the bond, each position
     being covered for a specific amount,
           (,d)"Honesty Blanket Position Bond" means any
     bond which covers all positions occupied by officers
     or employees of an agency for a uniform specified
     amount applicable to each Position.
           (e) "Faithful Performance Blanket Position B,ona"
     means any bond which covers all positions in an agency,
     conditioned that the officer.s  and employees of such
     agency will faithfully pqform    the duties of such
     officers and employees.
           (f) "Specific Excess IndemnFty",means additional
     bond coverage of specified positions over and above
     the coverage specified on a "Position Schedule Honesty
     Bond" an "Honesty Blanket Position Bond" or a "Faith-
     ful Performance Blanket Position Bond."

          'bee. 4. The head of any agency, except as other-
     wise ptwided for in this Act,,is hereby authorized
     to enter into bonding agreements with an insurance
     company authorized to do business in the State of
     Texas for any of the following types of bonds, but
     no agency or head of any agency shall enter into
     agreements where by more than one type of bond is
     applicable to officers or employees of the agency:
Commissioner Burton G. Hackney, page 4           (M-753)

           [a) A Position Schedule Honeaty Bond may be
     used when not more than a combined total of ten
     (10) officers or employees in any particular agency
     or board are to be bonded.
           (b) Blanket Position Bond may be used when
     three (3) or more officers or employees in a par-
     ticular agency are to be bonded. Specific excess
     indemnity may be carried on certain specified
     positions, prwided the total of the blanket bona
     cwerage   and the specific excess indemnity for any
     particular position does not exceed Ten Thousand
     Dollars ($10,000).

         'Sec. 5. (a) Unless otherwise provided for in
     this Act, the maximum coverage on any State official
     or Stats employee shall not exceed the sum of Ten
     Thousand Dollars ($10,000). The head of each agency,
     unless c&herwise provided for in this Act, shall
    ,determine the coverage need of the agency within
     this limit.
           (b) The Comptroller of Public Accounts and the
     State Treasurer may, in -ddition to enter:;nainto
     agreements for Position Schedule Honesty Bond or
     Blanket Posit,ionNonesty Bond, are each authorized
     to enter into agreements for Specific Excess In-
     demnity Bonds and to enter into agreements for
     Faithful Performance Blank& PositionBonds.
           (c) All bonds for Specific Excess Indemnity
     in excess of the Ten Thousand Dollars ($10,000)
     hereinabove specifiad, shall be entered into only
     upon the recommendation and approval of the State
     Auditor, when, in h:iajudgment, such excess cover-
     age is necessary to adequately protect the State."

          These,sections should be construed in the light of
the following statement; found in 53 Texas Jurisprudence Zd,
Statutes. Section 125. page 18%:

          "When the intent is plainly expressed in the
     language of a statute, it must be given effect with-
     out attempting to construe or interpret the law,

                             -367%.
Commissioner Burton 0. Hackney, page 5            (M-753)

          "On the other hand, when it ie necessary to
     construe an act in order to determine its proper
     meaning, it is settled that the court should first
     endeavor to ascertain the legislative intent, from
     a general view of the whole enactment, and the en-
     actment alone. The intent having been ascertained,
     the court will then seek to construe the statute so
     a8 to give effect to the purpose of the Legislature,
     as to the whole and each material part of the law,
     even though this may involve a departure from the
     strict letter of the law as written by the legi-
     elature. This is the fundamental canon and the
     cardinal,,primary, and paramount rule of construction,
     which should always be closely observed and to which
     all other rules must yield."

                              1.

          In reply to your first question, we are of the opinion
that under the provieions of Section 4(b) the Department may law-
fully purchase a “Faithful Performance Blanket Position Bond"
for its employees. We are of the opinion ,thatthe Legislature
intended by granting authority to purchase a "Blanket Position
Bond"'to authorize either an "Honesty" bond or a "Faithful Per-
formance" bond, as those bonds are defined in Section 3 of the
Act. We think~the legislature used"Blanket" to distinguish
those bonds from "schedule" type bonds, and intended to author-
ize either type of blanket bond defined in Section 3.

                              2.

          ,In reply to your second question, we are of the opinion
that the Department may ,lawfullyobtain a "Faithful Performance
Blanket Position Bona"'for some of its employees and at the
same time retain the "Honeety Blanket Position Bona" for other
positions. We construe the prohibition in Section 4 against an
agency's entering into agreementa whereby,more than one type
of bond is applicable to officers or employee8 of the agency
to prohibit an agency"s purchasing both a schedule type bond
and a blanket type bond, the two distinct types of bonds author-
ized under Section 4.

                              -3671-.
Commissioner Burton 0. Hackney, page 6            (M-753)

                              3.

          The first part of your question number 3 appears to
indicate a wish to have the m    positions under both honesty
and faithful performance bonds. The language of Gion     S(b)
indicates an intention on the part of the legislature that
this should be permitted only for positions in the Comptroller's
or Treasurer"s departments.

           We are of the opinion that the statute does not author-
ize coverage by both honesty and faithful performance bonds for
the szlmeposition in your department. It should be noted when
making your determination as to which position is to be covered
by which bond that the last sentence of Section 6(d) provides
that the bond coverage shall cwer the particular office or
position rather than the person occupying the office or position
at the time the agreement is entered'into.,

          The second part of your question number 3 asks whether
the Department, with the approval of the State Auditor, has the
legal authority to obtain specific excess indemnity under a
Faithful Performance Position Pond.

          We are of the opinion that, without the approval of
the Auditor, the Department has the authority, under Section 4(b)
to obtain specific excess indemnity under a Faithful Performance
Blanket Position Bond, provided the coverage is for certain
specified positions, aad provided the basic coverage and the
specific excess indemnity do no'tin the aggregate exceed $10,000.

           We; are of the opinion that the Department, with the
recommendation s.ndapproval of the State Auditor, has the author-
ity under Section 5(c) to obt,ainspecific excess indemnity under
a Faithful Performance BlanketPosition Bond, for certain speci-
fied positions,   in s,uchamounts as may be recommended and ap-
proved by the Auditor.

                              4.

          In reply to your fourth and fifth questions, it is our
opinion that the Department of Public Welfare may not lawfully

                             -3672-
Commissioner BurtonG. Hackney, page 7            (M-753)

purchase insuran& protection against loss due to theft, bur-
glary, or robbery.

          We direct your attention toSenate Concurrent Reso-
lution No. 3, passed by the 37th Legislature, 2nd called Session,
1921, reading in its relevant part as follows:

          "Resolved by the Senate of the State,of Texas,
     the House of Representatives concurring herein, that
     hereafter it shall be and is the fixed poligy of this
     State and the State shall carry ite own &nsuranoe
     upon State buildings and contents, and that no inswance
    ~poli.biea'shallbe taken out upon any of the public
     buildi.nqsand contents, and that no i,nsurancepolicies
     shall beg taken out upon any of @he public buildings
     of this State, nor upon the contents thereof, and the
     State Board of Control, and all other boaras having
     charge of buildings of the State, and the oontents
     of suah buildings, are hereby instruoted not to have
     such buildings nor property insured, notwithstanding
     there may be items in the appropriation bi$$a~ author-
     izing the expenditures of money for the payment of
     ins.uranqepramiumss

          While thir resolution dqes not haye the,effect of
general law, yet it does have the effect of a $.awupon the par-
ticular subj,ectabout which the resolution is made. 80 long as
that partiaular thing or condition exists or until such reso-
lution is otherwise revoked by the Legislature.

          See also Attorney General.*sOpinions No. G-201 (1939),
O-184 (1939). O-3000 (1941), 0~2045 (1940), and O-1762 (1940).

                             5.

          In reply to your sixth questCon, we do not know of any
Constitutional impediment which would prohibit the Legislature
from specifically authorizing the Department to purchase insur-
ance against loss due to theft, burglary, or robbery, partiou-
larly if the statute described the type of property to be covered
by the policy.
                             -3673-
Commissioner Burton 0. Hackney, page 8           (M-753)

                      SUMMARY

          The Texas State Department of Public Welfare
     under the provisions of Section 4(b), Articles6003b.
     V.C.S. ,,may ~purchasea "Faithful Performance Blanket
     Position Bond."

          The Department may obtain a "Faithful Perfor-
     mance Blanket Position ,Bond"for some of its employees
     and at the,same time rstain the "Honesty Blanket Position
     Bond" for other positions.

          The same positions may not be covered by both an
     honesty bond and a faithful performance bond.

          The Department may, without the approval of the
     State Auditor, obtain specific excess indemnity
     under a Faithful Performance Blanket Position Bond,
     provided the coverage is for certain specified positions
     and does notwith the basic coverage aggregate in ex-
     cess of $10,000.

          The Department, with the reoommendation and
     approval.of the State Auditor,~may obtain specific
     excess indemnity under a Faithful Performance Blanket
     Position Bond for certain specified positions in such
     amounts as may be recommended and approved by the
     Auditor.

          The Department may not lawfully purchase
     insurance protection against loss due to theft,
     burglary, or robbery.

          We know of no Constitutional impediment which
     would prohibit the Legislature from specifically
     authorisin,gthe Department to purchase insurance
     against loss due to theft, burglary, or robbery.,i,

                                -3674.,
-~   ,,-,.,   *   _         __.   __   -.         -..    ..“,

                       _.          _

                      Ccmmissioner Burton G. Hackney, page 9

                      Prepared by James 8. Swearingen
                      Assistant Attorney General

                      APPROVED:
                      OPINION CCMblI~BB

                      Kerns Taylor,,ChaFrman
                      W. E. Allen, Co-Chairman
                      John Banks
                      Pat Bailey
                      Rex White
                      Jack Goodman

                      MEADE F. GRIFFIN
                      Staff Legal Assistant

                      ALFRED WALKBR
                      Executive Assistant

                      NOLA WHITE
                      First Assistent.

                                                        -3675-