Court Opinion

ID: 4134963
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:56:47.819348+00
Date Added: 2024-06-11T14:37:41.151838
License: Public Domain

Honorable J. N. Nutt             No. C-498
Commissioner of Insurance
State Board of Insurance         Re:   Interpretation of
Austin, Texas                          H.B. 592, 59th,Leg.,
                                       as to the scope of
                                       the term "non-
                                       profit corporation"
Dear Mr. Nutt:                         as used therein.
     We have your request for our opinion concerning
the construction of H.B. 592, Acts 1955, 59th Leg.,
Ch. 695, p. 1625. Your question arises from Section    1
of H.B. 592 which amends Section la of Article 8309,
V.C.S., to read as follows:
         "Section la. Every executive officer
    elected or appointed and empowered in accor-
    dance with the charter and bylaws of a'corpora-
    tion which is a subsc,riberto this law, other
    than a charitable, religious, educational or
    other non-profit corporation, shall,be an
    employee of such corporation under this law.
    Any such executive officer of a charitable,
    religious, educational or other non-profit
    corporation which is a subscriber to this
    law, other than any such educational corpora-
    tion specified in Articles 830913or g309d, may,
    notwithstanding any other ~provision of this
    law, be brought within the coverage of its
    insurance contract by any such corporation by
    specifically including such executive officer
    in such contract of insurance and the election
    to bring such executive officer within the
    coverage of insurance is in effect, and during
    such period such executive officers thus
    brought within the coverage of the insurance
    contract shall be employees of such corpora-
    tion under this law. Under no circumstance
    shall any executive officer of,any corporation
    be counted in determining whether or not the

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Honorable J. N. Nutt, page 2’:@-498)

    employer has three or ,more employees so as to
    be subject to the provisions of the Work-
    men's Compensation Law as specified in
    Section 2, Part 1, of this Act." (Emphasis
    added)
    You state your problems as follows:
          ItWerespectfully ,requestyour opinion as
     to the scope of the term,'non-profit corporation'
     inthe context of this statute.
          ,"The 'Texas Non-Profit Corporation Act,'
     Chapter Nine, Title 32, V.A.~T.S.,includes
     language under Article 1396-1.02, 'Definitions,'
     Sec. A.(3), as follows:
              '"Non-Profit Corporation" is the
         equivalent of "not for profit corporation"
         and means a corporation no part of the
         income of which is distributable to its
         members, directors, or officers.'
          "Certain corporations are specifically
     excluded from the provisions and application
     of this Non-Profit Corporation Act under
     Sec. B(3) and (41, Article 1396-2.01. These
     exclusions specifically name Mutual Loan
     Corporations, Co-operative Corporations,
     Telephone Co-operative Corporations, banks,
     insurance companies and others. Conversely,
     the 'Co-operative Marketing Act Corporations'
     are subject to Title 93, V.A.T.S., Article 4738,
     the 'Co-operative Marketing Act.' Article 5738
     contains the following definition:
               'Associations organized hereunder
          shall be deemed non-profit, inasmuch
          a,sthey are organized not to make
          profits for themselves as such, or for
          their members, as such, but only for
          their members as producers.'
          "Other provisions of Title 93 seem to
     embrace a considerable number of various types
     of co-operative corporations handling
     agricultural products and related machinery,

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Honorable J. N. ,Nutt, Page 3 (C- 498)

     supplies, financing, etc. 'There are perhaps
     some similar appearing conflicts in other
     sections
        ._    of our laws which would pose this
     problem of interpretation Sor us.
          "Is the term 'non-profit corporation' as
     used in H.B. 592 limited to those non-profit
     corporations which are organized for charitable,
     religious, or educational purposes? Or does
     the definition of the *Non-Profit Corpomtion
     Act' apply? If'so, how is it applied to a
     corporation which is also subject to a specific
     statute such as the 'Co-operative Marketing
     Act'? What is the status of a school which
     is incorporated and run for profit?"
     In our opinion the answer to your first question
is "no." Every word of-a statute is presumed to have
been used for a purpose, and a cardinal rule of
statutory construction requires that each sentence,
clause. ohrase and word be given effect if
reasonably possible. Eddins-Walcher Butane , Comawny
v. Calvert, 156 Tex. 587, 298 S.W.2d 93; 53 -Tex.Jur.2d
229 Sec. 159.   It is clear that the Legislature did
not'intend to limit the term "other non-profit
corporations" to those having aritable,     religious
or educational purpose for the simple reason that there
would have been no point in adding the "other
non-profit corporation" provision.      -
     This gives rise to the next question: What
non-profit corporations, other than charitable, religls
and educational institutions, are to be embraced
within the term "other non-profit corporations"?
To state your second question in a little different
way: Are we to include in such category only those
corporations embraced in the definition of non-profit
corporations contained in the Non-Profit Corporation
Act, or did the Legislature mean to also include any
and all corporations designated as non-profit by
statute?
     We believe that the broad language used by the
Legislature in H.B. 592 evidences an intent to include
all corporations designated as "non-profit" by statute.

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Honorable J. N. ,Nutt, Page 4 (C-498 1

     Therefore, in answer to ,yoursecond question, it
is our opinion that theterm ,?non-profitcorporation!'
as used in H.B. 592 is not to be limited to ~ths
definition of that term,as found in the Non-Profit
Corporation Act, but rather ,is to .includeall non-
profit corporations so designated by the legislature.
     The answer to,your third question,is implicit in
the answer to yoursecond question.
     In answer to your fourth question, a school which
is incorporated for profit is, in our ,opinion,~onthe
same footing as any other corporation organized for
profit. The language "educational or other non-profit
corporation" clearly indicates that the legislature was
speaking ,onlyof educational corporatinns of a non-
profit character. Business and professional schools,
such as beauty and barber colleges and schools of art
and dancing, ~may~be organized for profit and incorpora-
ted as any other business. In our opinion, such a
school would not be a non-profit corporationnor an
educational institution as that term is used in H.B. 592.

                     S UMM
                     --      A R,Y
                         w-e--
          The term "non-profit corporation" as used
     in H.B. 592 is not limited to those non-profit
     corporations which are organized for charitable,
     religious and educational purposes. Said
     term includes those corporations which are
     governed by the Non-Profit Corporation Act and
     those corporations which are organized under
     specific statutes which designate them as
     "non-profit" corporations. Schools incorporated
     and organized for profit would not be an
     "educational corporation" wtthin the meaning
     of H.B. 592.
                            Yours very,truly,
                            WAGGONER CARR
                            Attorney General of Texas

                            Assistant Attorney General
RRR:ss
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    Honorable J. N. Nutt, page 5 tc-49e )

    APPROVED BY:
    OPINION COMMITTEE
    ;au;.p;ult5,    Chairman
    Robert Lemens
    Ivan Williams
    Roger Tyler
    APPROVED FOR THE ATTORNEY GENERAL
    By: T. B. WRIGHT

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