Court Opinion

ID: 4143316
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:32:13.348134+00
Date Added: 2024-06-11T14:27:07.435389
License: Public Domain

COPY

Eonorablr maodo   A. Will&m8
Chairmanand beatlta     Dirootor

                           opbllon Ilo.0-6088
                           Ior Are the rrntlonedlmlltldualr
                                   in th8 88@O~t     Ot  th@
                                   Liquidating Dlrislon of the   '
                                   Board of In8urM00, coEl.a-
                                   rionur wIthin th8 m@,caw
                                   of Article LlEitlb-17(g)?
          Your request for an~opinion a8 to whether the in-
diTidual8 tr8at.d in the 1ekt.r oi Hr. Wfll 0, %llOX, Liquida-
tor, to b. I.080. William8 dr8 in thr 8mplOyment Of thm
Llqtidating Diririen or tha Board o? In8uranor 0o1ml88ionerr
rithia the nraning of Artlola 68Llb-17 (6), Vernon’8 Ravimd
Civil 8t6tUt.8 has been roooiy8d. IOU hare attaohul a oopy
of the letter born Er. Knox whioh reads in part a8 follows:
          *The Liquidating Dlri8ion of the Board of Inrrur-
     ariO8&mmi88iOn~8   lra8 orsated and 18 aLaitlthU3dPUr-
     ruent to House Bill 249 of the 40th Legislature, in-
     oorporoted in the Rerieed Stetutee as Article 5060-C.
     The writer Is the Liquidator desfgnzted by the Board
     OS InnsuranoeCommlrolonerrrend la the Receiver OF-
     pointed by the respective District Courts in oonneo-
     tion with the recelvershlps desaribed on the attached
     113t. The Board of Xnsuranoe Commiaeioners employs
     all personnel of the Divi8lon, fix08 salaries snd has
     the right of termination of employment at will. It
     eprroves the salary expenditures along with other
     ex>enaes inoident to the reoeiverahlps.
bnorablr       Olaudr A. lIlllam,                  Pago 8

               -ho       fund8      with    thloh the       omplo~oo8      uo     paid
      lOP U    irOE the 88tfit.8of the r@celrrrrhfpr                            thee
      8elv88. Th8 mplo~err                        work ruio~ly           tm all re-
      08iTU8hip8 U the                   OW881Oll      68Md8,           NO 80~   let84
     UOUTW             lOOWlt          Of th. tiM        8mt         ia 0-08   ? iOn
     with      thi mrk           of the refiqootive             rr.rlrsrrkl~8      i8
     maintained in th8 o?fim  but an approximationi8
     krpt a8 th. buia  O? the prorationoi thr ~Q10~008’
     88lWiU            fra       the   V=iOI.l8     rOO@iV8r8hi>8.
     i8 ub8M    theiirrtaad                        tlfteoatho?thm%%%‘
     Of OOW88  lM ?a tO 2OOOl48                      ~0     kog$ im the offi
     with r.8 08% to the ori&                        of.'tho      fb48    with    whloh
     oaoh 08qPofre               ha8 bean pal(. during th8 lib                   of the
     rooolvor8hlp.                Th. EOtti   mr@tiOll  Of fund8                  OOMO-
     qlmatly         fairly       uour8to           ropsoronU     tho apportloa-
     moat of tlmo o? laoh                                  in tho mspootivo
     ~liqoidatioa8,"
            TOlAXr*qUO8t f\rzthor 8tat88 that %hOn Lh. ]caOX, a8
LIquidatori   taker otor an la8ur~oo    oorpny, ho ofton koopr
on Its   ayroll outaln 0r it8 amp1opoer who are famlllar with
it8 bur % 088 and Who a88i8t him in liquidation proce88. On
those eJ+OyeCI8' rage8 he pay8 booial eoourity taxes to the
fodoral Bcvrrnmont. In nddltlon he pay8 8oolal seourlty tax
On th8 8mOUllt8Oi the W’4@8 Of hi8 Ofii08 for00 uhlah UO
ohargoable e.@in8t the putioulu     in8IUUOO oompany ln QUO8-
tion.  Tha 8OrTiO.8 ~rformad by thue old 8m~loyOe8 Oi the
oommy   a8 wd.l a8 the 8UVioe8   of  thr 8Bi&31OyU18 Of th8
llquldatlng ofiloe ere to be oon8ideredsm
             10 uo further advi8ed that the llquidatlon divirion
a8 oreated by rtatute 18 housed in a dlff8ront offloe from
that of the Ineurance Department of the State of Texas; the:
the employee8 of the Llquldatlng Divialon ~arrorm no duties
in the offioes    o? the Insuranoe Comii88ion; that the work o?
the perrons ~nplogod in the Liquidating Dlrlalon Is solely
that of working on the various lneurance companies that are
in llqulde~ion; that these pars,-nsare under the direct
eupervlalon and oontrol of Mr. Will    0. Knox, Liquidator;
that they are chosen or employed by Mr. Knox subject to the
approval of the Board of Insuranoe Comaissioners.
               Article 5221b, Secdsn 17 (e) read3 :z part a3 follo:vs:
Eonorabla Claudm A. Wllllam8, Page 5

              *(o) *Lmploylng unit' mean8 any lndlrldual or
    typo of organization, including any partnership,
    asrooiation, trust, estate, joint stook oompany,
    ineuraaor     oompany, or corporation, whether domestlo
    or rorelgn, or the raoalvar trU8t.e in bankruptoy,
    trU8t80 or IUoOe88Or thorao# or the legal repro-
    8ontatiVO O? a daOaa8ad p8rs:n whloh ha8 or aubse-
    quent to January 1, 1958 had in It8 employ ona or
    more individual8 performing rorrlcer     for it within
    thil 3tRtO. . ."
          Sootlon 11 (6) (1) provldrr:
             "(6) (1) '-lo-nt'     eubjeot to    the othar
     rOvi8lOn8 Of this #ub8aotion, mean8 8uvic8,inolud-
            8utIoo in intorrtato 00mmo~00,   prforrd     for
    wager or under any oontraot of hlro, writton or oral,
    8xpr.88     Or im lied prorldod that any 8OrViO.8 par-
    tormod by M fndlvfdual for waged rhall be deamsd to
    bo employment rubjoot to thl8 Aot ~11888 and until
    it 18 8hOWIit0 ttl08di8faOtiOn Of thr &52&88iOIl
    that ruoh IndlvIdual ha8 been and will continue to
    bo frar rrom control or direction over the perform-
    anoe of suoh servlaee both under his contract of
    8arv1oe and in fact."
          3eotion 17 (g)   (6). roads:
          "(6)   The tarm 'aployment' shall not inolude:

          *(A) 3ervice performed in the employ of this
     State, or of any polltloal subdivieion thereof, or
     of any lnstrumentallty of this State or its polltloal
     aubdlvialons;n
          The faots related in the letter of the Liquidator
ae well as your letter show that there ere two cleases of
per.xr?sto Je coxldered i: this or~inlor.:  First, there ere
t%ose Fersons timt were in ti-:e
                               ex2lol.l;entof the compmy prior
to the eppolntment of the Liquidator. These l~dlvlduol; con-
tinue their employment for e sufficient period of time to
enable the Liquidator to close out the bujl?es3 in thet
particular office of the company. They are paid by the
Liquidator out of the essets cf fke >or;,~&ny;‘?-e:r:1.5,-e
                                                          of
lionorsbloQlsudr A. WIllIams, Pago 4

employmsnt romlns  the same; the only sss0ntlai dirr8rsnoe in
thslr employment bring that ths Liquidator is their supervisor
rathu than the former ottlou    of the oompsny. Thry wsro In
employment under thm Tsxu Unmmploymsnt Oorpensatlon hot prior
to ths tlms thr Llquldator took oontrol of tho buslnosr.   It
oamot bo dirputsd that undu our statuts   they nould haro boon
in smployment If s reooltrr had boon sppolnted by the oourt.
          8800~4,   thsro   arm other   In4irI4uals   omployo4 in thr
Aurtin  0rri08 of the Llquldator..  ws uo inro~oa that   the80
persons puforr fhoir ssrrioos In snothor and 4if’formt     ottloo
an4 bullally  from that of tho 8tato Insur~o~~~sslon)          that
nono of ths ssrrloss   perform04 by ths parsons in the liquida-
tion 6ItlsIon lrtsln to tho goners1 dutlos of the Boar4 ot
                ssIonors. Thilr 4utios are oonilamd atriot
Insuruloo t3oiaui
to thr lIquI4atIons of the rsrious I~ursnos oompsnlos. Ths
sals.rlosof sll of thsss parsons sro apportione4 upon time
applied and are paid from ths ussts ot the rarlouo lnsuranoo
00mpflI*s. The Btato oi Tsxu pays no put      of their sslsry.
          At ths time ths Liquidator took po8sdsslon of the sssets
of the various oompanles under a oourt ardor the equitable tit18
to the assets 414 not pass to ths State of Toxaa but remelnod
for ultimate dlstrlbutlon to their oreditors an4 polloyholdors.
The Leglslaturo placed the llqul4atlon of tho lnsursnos oomp~Iss
in the control of the Board c$ Inruranob &mmls8lonors an4 ths
Liquidator, not for the benefit of tho State of Texas but to
oonserve the assets of the ruIou8 l8tstsS for the bonofit a?
the oreditors an4 polloyholdors.
          If a reoelver had been appolntod by the oourt to
liquidate the assets of the vsrlous oompanies now in the hands
of the Liquidator sue!,a receiver Would not have been an exempt
employer under the terms of our Aot. Under the statute now in
force relative to the liquidation of lnrursnce oompanios, it
is the duty of the Dlstriot Court to appoint the statutory
Liquidator as receiver of various companies. He is appointed
receiver for each ccmiiyany
                          and act3 as reoelver as well as
Liquidator. Aa do other reoelvers he muat take the oath to
qualify es receiver.
          We do not believe nor intend to infer that persons
in the e,“.yloyment
                  cf the Board of Insurance Cowissioners in
the performnnoe of the general duties of their office are In
employment under the Unemployment Compensation Act. Clearly,
they are not.
      ,
, .

          Eonorablo   Olaub   A. Wllllsms,   Pago 5

                     Tho Unsmploymrnt Oomponsatlon Law ot Toxas was lnastsd
          to prorido soourltiyto psrsons tsmporarily   out or smploymnt;
          the lmploysr oompsnIoa wsrs required   to oontrlbuto to a fund
          00 lnsuro some roller from unsmplomont        to   thrir smployoos,
                      Th0lompanlss being lfquidats4 by our appoint06 orrioor
          are prlvatr sorporatlons    the assets are those of prlvato
          lnelvl4uals  and the Llqu idator acts for private buslnsss and
          not for the Btato of Texas. 9.0 Whlto rs:Boland, 5 I. Y
          sup. (84) 113.
                    Ile hare no doolslons  of tho oour%s of Toxas upon this
          quostlon as tho problom uIses from ths applloatlon of a now17
          lnaate4 aohems of ssalsl   loglslation; IO do havs a deolslon of
          tho Stata of.irr    York sustalnlng    our position.     & Bar Klnnoy,
          14 I. I. gu      (R6) pa 11, tho rourthold tho St&o Iasurruoo
          Liquidator   P’
                        lablo   for the payment of unmsplo~rnt      tax08 u n
          ths puson.    doing ths iiquie4tLry work In I!&* 0rri08. Thr 8
          queatloa was asrtiflsd     to tho Court of A peals of the Stats
          of New York,    an4 la that opinion,    founo & 84 Mi R.     (M)  494  the
          oourt ho14 that tho llquldator       was not an l  xorpt rmpla~or udo~
          the unemployment oompensatlon aot.
                    Tho Federal Government has epeolfioally provldod in
          SS VSCA lE4a that *any receiver, rsfarss, trustee, or other
          offloor or agent appoints4 by sny 0. 8. Court who Is author-
          i804 by said oourt to aoneuat any buslnssa or rho oonduots w
          buslnsss shall, from Md aftrr JWO 18, 1934, be NbJsot to all
          Stato ani looal tax.8 applloablo to suoh busInoss the same as
          If suoh bu?lnass was ccnduated by an individual or oorporatlon.w
                   'In the ease O? Mid-AmerlOa, 31 te4. Sup. 601, the
          trustee WBS held liable for unemployment taxes based upon wages
          paid to persons employed for the liquidation of e bankrupt
          estate.
                     The Le:*islatureof Texas FrGVidOe in Yeotic;n17 (e)
          OS Article 52Elb that en emrlcFlnG unit should include
          “insurance cornpan or corporation, whether domejtio or Foreign,
          or the reaeiver, trustee in benkruptcy, trustee or auooessor
          thereof ,.:. .* Is the llquld-.torin this Instrnoe rerform-
          Ing sns-different functions than those of a receiver    or
          trustee?   We think net.  The Legislature olearly   lctended that
          the yersonq r;sedin the llquidaticz of these estate3 should
          benefit from the uneF,:loymentcompensation act.
Honorable Claude A. Wllllams, Pare 6

          The only direct authority on this point is found in tho
opinion of tho 3uprams Court of 19.T. in In RI Xlnnsy, 14
N. Y. hp. (24) 11. The Hew York Court states that the
psrsons in tho lnsurencr liquidating offloe are Wet smployoos
or the Stat0 or an aganoy thorbof for tha purpose Of othu
atatutss relating to other employees, e. g. thr Clvll Ser-
vloe Law, Soolal Yecurlty Law of tho OnIts States, Federal
Xnooao Tax Law from whloh employsea are normally exempt."
           Ue, thubfors, advise you that all or the psrrons
aployod ln tho 1IquldatIon o't t&a various lnsuranoa oompanlas
as mentlone4 in your request are in the aployment of the
iiquieatlng eivIrlon 0r the Boar4 0r Insurance Commlsslonors
wlthln the msanlng of Article 5221b, 17 (g), Vernon's Revised
Clrll statutss.
                                         Tours very truly
                                    ATI!ORXEY   GlTNFlRAL
                                                        CF TDLAS

                                    m
                                                S/   Norris HoeRen
                                                         h3si~atRnt

APPROVED MY 29, 1941
8/ llrorer Sellers
FXRST A93IsTANT
ATTOFiNZYOlSNFZAL

                        APFROVED - O?lnlon CoaTJttee
                        Bp   BiEl    - Chairman

06 -GEL