Court Opinion

ID: 4140143
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:55:37.430199+00
Date Added: 2024-06-11T14:45:23.056601
License: Public Domain

THEAYTORNEY                 GENERAL
                              OF TEXAS
                             AUSTXN~~.T~:XAS
GROVER SELLERS

                                               September 5, 1944

   Hohorable 0. P^;Lockhart, Chairman
   Board of Insurance Commissioners
   Austin, Texas
   Dear Sir:                       Opinion Ro.~o-i6170'.
                                   Re: Whether's mutual~assessment
                                        health and accFdent'compang
                                        operating underchap. 6, Title
                                        78; Vernon's 'Annotated Civil
                                        Statutes, can amend its by-
                                        Iaws to permit proxy voti.ngat
                                        all members' meetings.
           Your letter of August 21, 1944, requesting the opini.on
   of this department on the question stated therein, is as follows:
           "Enclosed you will please see copy of-an order
       of.the Board of Insurance Commissioners dated,July
       11, 1939, passed under authorlitgof Section'25 of
       Article 5068-l. You will observe that-under Sec-
       tions'I and.22of the above-Article'Is construed-.by
       the Board to apply to rmitualassessment health and
       accident companies operated under Chapter 6, Title
       78, now repealed.

           "Section 18 states: 'Proxy voting will beeper-
       mltted 'Xfan association"s by-laws"provide for It.'
       Please'advise'me whether a mutual assesbment heaIth
       and accident company operating under Chapter'6 may
       amend its by-laws to'permit proxy voting at all
       members' meetings,'Article 4789 of Chapter 6 to the
       contrary notwithstanding."
           Chapter 6, Title 78, Vernon's Annotated Civil'Statutes,
   was 'repealed in 1929~by the 41st Legislature, First Called Ses-
   sion, page 90, Chapter 40,~Section 18, as amended by Acts 1929,
   41st Legislature, Second Called Session, page 99, Chapter 60,
   Section 1.
          'Article   486Oa-18, Vernon's Annotated Civil Statutes,
   provides:
           "Chapters 5, 6,'9, 12; 13; 14, and~l5, of
       Title 15, of the Revised Civil Statutes Of 1925,
Hon. 0. P. Lockhart, page 2        0-6170

   and all other laws or parts of laws In conflict
   with the provisions of this Act,"'arehereby re-
   pealed; provided, that such repeal and the pro-
   visions of this Act will not apply to or affect
   any company or association of this State now do-
   lng business under the laws repealed, and they
   shall continue to be governed by the regulatory
   provisions of such laws. Any company organized
   and transacting business under any'of the laws
   repealed by this Act, or any general law'~of
   this State, other than Article 8308; or any other
   article under Title 130, Revised Civil Statutes,
   of Texas, 1925, may, however,'by resolution of
   its Board of Dlrectors;duly approved by the "
   majority of the members, at a meeting specifically
   called for that purpose,'and duly certified to by
   the president and secretary, and filed with the
   Board of Insurance Commissioners, elect to adopt.
   and become subject to the provisions of this Act,
   in lieu of any act'or acts theretofore governing
   such company or association.
       "Any company or association so electing and
   fully complying with this Act, may thereafter
   effect such kinds of insurance as is authorized
   by this Act, and specified in its articles of
   association then in force,,or as then or there-
   after amended,~together with such additional
   kinds of Insurance as are specified in such reso-
   lution and authorized by this Act."
       Section 1 of Art. 5068-1, V.A.C.S., provides:
       "This Act shall apply to and embrace all insur-
   ance companies and associations, whether'incorporated
   or not, which issue policies or certificates of in-
   surance on the lives of persons, or provide health
   and accident benefit, upon the so-called mutual and
   assessment plan, OP whose funds are derived from the
   assessments upon Its policy-holders or members, and
   shall, in fact, apply to all life, health, accident
   companies or associations which'do notcome within
   the provisions of Chapter 3, Chapter~5, Chapter 7,
   Chapter 8;Chapter 9; Chapter 18, Chapter 19, or
   Chapter 20, Title 58', of the Revised Civil Statutes
   of Texas. This Act shall include local mutual aid
   associations; sta,tewidelife, or life, health~and'
   accident associations; mutual assessment life/health
   and accident associations, burial associations; and
   similar concerns, for whatsoever name or class
.   .

        Hon. 0. P. Lockhart, page 3        0-6170

            designated, whether speclfically named herein or
            not.
                "This Act does not enlarge the powers or rights
            of any of"such associations nor enlarge~~thescope of
            their legal or corporate existence; or authorize the
            creation of any association'or'corporation-to do any
            of the sorts of businesses above indicated, for'such
            creation is not now specifically permitted by'law.
            The laws prohibiting or limiting such creation and
            exercise of corporate powers are not affected by
            this Act."
                Article 4789, Chapter 6, Title 78, Vernon's Annotated
        Civil Statutes, provldes:
                "Such corporations shall Issue no certificate
            of stock, shall declare no dividends, shall pay no
            profits, and the salaries of all officers shall be
            designated inits by-laws. Such by-laws shall pro-
            vide for annual members' meetings-,in which each~
            member shall be entitled to vote, only in person, the
            amount of insurance held."
                 It will be noted that under Article 486Oa-18, thatcom-
        panies or associations operating under Chapter 6, Title 78, Per-’
        non% Annotated Civil Statutes, the repeal of said Chapter 6 does
        not affect any company or association that was doing business
        under said law Ghen it was repealed, and that such companies or
        associations shall continue to be governed by the regulatory pro--
        visions of such laws. Article 4718, V.A.C.S., among other things,
        provides in effect that each stockholder shall be entitled to
        one vote for each share of stock fully paid up appearing in his
        name on the books of the company, whic.hvote may be given in per-
        son orby written proxy. Article 4803, V.A.C.S., among other
        things, provides ih effect that any policy holder may execute his
        proxy authorizing and entitling the holder to exercise his voting
        powers unless such proxy shall be revoked previous to such annual
        meeting. Articles'4718 and 4803 are not applicable to companies
        operating under Chapter 6, Title 78, V.A.C.S.    However, Article
        4789 authorizes members to vote only in person. It will be noted
        that~Article 5068-1, V.A.C.S'.,expressly provides that the Act
         (Senate Bill'l35, Acts Regular Sesslon,~46th Legis'lature,1939),
        does ‘not enlarge the powers or rights of any such association
        'orenlarge the'scope of their legal or corporate existence nor
        authorize the creation of any association, or corporation to do
        any of the sorts of businessess above indicated, where such crea-
        tion Is not now specifically created by law. It Is further pro-
        vided that the laws prohibiting or limiting such creation and the
        exercise of corporate powers are not affected by the Act.
Hon. 0. P. Lockhart, page 4          0-6170

        Section 25 of Article 5068-1, Vernon's Annotated Civil'
Statutes, authorizes the Board of Insurance Commissioners to pro-
mulgate ,reasonablerules and regulations to carry out the pur-
poses of the'Act. (Senate Bill 135, Supra.)
         Section 18, of said Article 5068-1, V.A.C.S., pro-
vides:
        "The by'-lawsof any association may be'amended,
    by a majority of the members of the association-
    present when ratified by the Board of Directors, but
    only at.meetings called for that purpose or at reg-
    ular~meetlngs. Amendments to the by-laws shall not
    be effective until approved'by the Board of Insurance
    Coinmissloners.'Notices of all meetings, whether reg-
    ular or special, at whic'hamendments to by-laws will
    be considered, must be mailed to all members. Such
    notices nmstcontain full copies of the proposed
    changes'in the by-laws and fair explanations of the
    intent and effect thereof."
        Section 18, supra, is a general provision authorizing
associations and companies goverhed by Article 5068-1, V.A.C.S.,
to amend their by-laws in compl.iancewith said section. Kow-
ever, nelther~this section, nor ,any other section thereof, au-
thorlzescompanies or associations operating under Chapter '6;
Title 78, V.A.C,S'.,to amend their by-laws providing that mem-
bers of such companies or associations can vote by proxy. As
above stated, Art. 4789, Chapter 6, Title 78,"v.~.c.s., which
is applicable to companies operating under Chapter 6, expressly
authorizes members to vote only in person,
        Section 18, of an order of the Board of Insurance Com-
missioners, dated July 11, 1939, provides, in part:
        ,I
         . D . . Proxy voting will be permitted if the
    associations' by-1aws"provide for it. If some
    officer of the association holds proxies of the
    members, the notice of any'meet.ingwhere the
    proxies may be voted"mst clearly remind the policy
    holder of the proxy and advise him that it will be
    voted unless rescinded by the member."
       'Generally speaking, the Board of Insurance~Commissioners
may'exerc'iseonly'such authority as is conferred upon it by law
in clear and unmistakable terms~and'the same will not be con-
strued as being conferred by implication. "(Rumble Oil and Refin-
ing Company vs. Railroad Commlssion of Texas';128 S.W. 2d, 9;
Commercial Standa'rdInsurance Company vs. Board of 'InsuranceCom-
missioners of Texas, 34 3-W. 2d, 343; Board of Insurance Commis-
.   .

        Hon. 0. P. Lockhart, page 5           0 -6170

        sloners of Texas vs. Guardian Life Insurance Company of Texas,
        et al, 180 S.W. 2d, 906).
                We fall to find any law authorizing the Board of Insur-
        ance Commissioners to pass an order permitting members of com-
        panies or associations operating underchapter 6, Title 78,
        V.A.C.S., tb vote by proxy. There is no statute that we can
        find applicable to associations or companies operating under
        Chapter.6 authorizing the members thereof to vote by pr::~y.
        However, as heretofore mentioned, Art. 4789, which is applicabls
        to such associations or companies',expressly authorizes the mem-
        bers of said associations or companies to vote on1y.M person.
        Therefore, it Is our opinion that mutual assessment, health and
        accident companies or associations operating under Chapter 6,
        Title 78, Vernon's Annotated Civil Statutes, cannot legally amend
        their by-laws to permit proxy voting by the members of such com-
        panies or associations.
                                         Yours very truly
                                      ATTORNEY GENERAL OF TEXAS
                                        By: s/Ardell Williams
                                              Ardell Williams
                                              Assi~stant
        AW:rt:wc
        APPROVED SEP 8, 1944
        s;/Geo.P. Blackburn
        (Acting) ATTORNEY GENERAL OF TEXAS
        Approved OplnFon %ommittee By s/BWS Chairman