# Untitled Texas Attorney General Opinion > Texas Attorney General Reports · July 2, 1966 URL: https://www.frixlaw.com/law-library/cases/4134871 ## Case - **Court:** Texas Attorney General Reports - **Decided:** July 2, 1966 - **Precedential status:** Published - **Opinion:** Opinion - **Judges:** Waggoner Carr - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4134871 ## Opinion text NEY GENERAL EXAS Honorable Jesse James Opinion No. C-590 Treasurer Treasury Depazhnent Re: Whether Article 10.04 Austin, Texas of the Texas Insurance Code exempts Fraternal Benefit Societies from the statutes of this State which require that property subject to escheat be reported to the Treasury Department and Dear Nr. James : .. related questions. You have requested an opinion of this ofiiue w the follonlng questions: “1. Whether Article 10.04 of the Texar Insurance Code exempts Friternal Benefit Societies from the statutes of this State which require that property subject to esoheat be reported to this office? “2. Whether Article 12.12 of the Texas Insurance Code exempts Burial Associations and Local Mutual Aid Associations from the statutes of this State which require that property subject to escheat be reported to this office? “3 Whether Article 13.09 of the Texas Insurance Code exempts Statewide Local Hutual Assessment Companies from the statutes of this State which require that property subject to escheat be reported to this office? “4. In the event that any .6r all of such organlzatlons are not exempt, should their reports of property subject to eecheat be filed pursuant to Article 272a, Vermont8 Civil Statutes or Article 4.0 , Texas Insurance Code?” -2043- Honorable Jesse James, Page 2 (C-:590) Articles 10.04, 12.12 and 13.09 provide a8 fOllOW6: .“Art. 10.04 Exemptions “Except a8 herein provided, such societies flraternal Benefit Societies/ shall be governed .ijy this chapter and ahall bz exempt from all provisions of the Insurance laws of this State, not only in governmental relations with the State, bu% for every other purpose. No law ,hereafter enacted shall apply to them, unless they be expressly denlejnated therein. Acts 1951, 52nd Leg.9 Ch,. 491. “Art. 12.12. Corporate Existence. /&la1 Associations and heal mtual Aid Assoc’Tatlong “Any aesoclatlon organized under the provisions hereof or which has accepted the provlalons hereof shall for the purpose of operation be and become a~body corporate with authority to sue and be sued In Its own ‘name and to exercise the, other power~s and functions specifically herein granted, but not otherwise. Except as herein provided, such a8aoclatlon ehall~ be governed by tNs chapter and Chapter 14 of this code and shall be exempted from all~other provialons of the Insurance laws of this State. No law hereafter enacted rhall apply to them unless they be expreesly designated therein. Acts 1951, 52nd ,,Leg., Ch. 491.” “Art. 13.09. Exception8 and Exemptions “This .chapter shall in no way affect or apply to companies operating as local mutual aids, as fraternal benefit societies, reciprocal exchangea, or to Soreign alraesament companies operating under any other law In this State, or any other form of insurance other than those corporations carrying on in this State In the statewide business of mutually protecting or Insuring the lives of their members by assessments made upon their members. Except as expressly provided in thle chapter and In Chapter 14 of this code, no insurance law of this State shall to any cbrporation operatlng under this chapter, Aaseasment CompanleZrj7, and -2844- Honorable Jesse James. Page 3 (C- 590) no law hereafter enacted shall apply to th& unless they be expressly designated therein. Acts 1951, 52nd Leg., Ch. 491.” It Is well established that other chapters of the is applicable by Its terms to all Life Insurance Companlea, It Is not applicable to the above groups Canoe they are tual Ben. Association benefit so&e~les, ,burlal asboclatlo&, lo&l mutual aid assoclatlons and mutual asressgent companies are not required to re ort property rubjeet to esoheat pursuant to Article 4. & Texas Insuranoe Code, uhioh Is applicable to life Insurance companies. The remaining question is whether they are required to report property subject to escheat pursuant to Artlole 3272a, Vernon’s Civil Statutes. In our opinion this Is an all-$ncluslve general law of the state, Intended by the Legislature to be of universal application, even though such Article does not expressly designate the organiza- tions above named. It will be noted that the provisions of each of the statutes quoted EtbOQe are basically the same. First, they declare that the respective chapters shall govern the particular type of organization and that, except as provided In such chapters, no other Insurance law shall apply to them. Then, each of these Artlales declares: “No other law hereafter enacted shall aflply,to them unless they’be elcpressly designated therein. In our opinion, the last, as well as the first, provision relates to Insurance rather than to general laws. .. -2845- . Honorable Jesse James, Page 4 (CL590 ) Our~concluslon is that the Legislature did not Intend to attempt to bind all future legislatures, In the enact- ment of general laws, to name each of these types of organlza- tlons In order to bind or benefit them by such general laws. The Intent to relate general laws to all persons and corp- orations, Including these organisations, is evidenced by many laws enacted after the-above quoted statutes were passed. While insuranoe laws are‘tddifled, It does not follow that general laws are lrrelevaxit or inapplicable to any particular class of Insurance organization. Not all of the rights and powers of any insurance organization are contained In the Texas Insuranoe Code. Neither are all of their duties and responslbllltles. In MoIoco~Unde Chaans v. Amerloan Camalty and Life Cosipanx, 2 26 m 313 (T Cl A 1952 1 %he Court h d this ‘about klcle %9fQ*V?i:S. (the predeoissor o e 13 .Og’quoted abovi) : n This provision prevsnts other general or s~e&l insuranoe law from applying to mutual~companles, auoh a8 the one in question, unless suah general or speolrl laws pertainIn& to lnsuranoe expressly designate they are to so apply.” (Emphhslr added) On the the same provision as It relates to Court of Texa6, In Raseell Q. Co., 143 Fex. 353, 184 S . W. 26 917 4) observed: “The provisions of the foregoing se&Ion do not exempt mutual companliss from the law of responde’at superior, or from any of the principles of general law. ..me provisIon rqferrlng to ‘lnsuranoe law”‘do not have the effect to place the subjeot companies beyond the pale of the general law of agency. Calhoun et al. Q. The Haccabees, Tex.Com.App., 241 S.W. 101.” Consider, for Instance, whether a subsequently enacted statute regulating the rights and relatlonsNp8 of a bank and Its depositor must speolfloally deolare that It also applies to fraternal benefit societies., burlal~assoclatlons, -2a46- Honorable Jesse James, Page 5 (C- 590) mutual aid assooiatlons and looal mutual dssessment companiea in order to bind (or benefit) them. Likewise, we might ask whether a statute amending the law of deeds or negotiable instruments must refer ‘to. theee or anitationa in order to govern their transactions, or whet f er amendments to procedures establlahed for the condemnation of property for public purpoeea must epecify theare organizations in order tomeatabllsh valid condemhatlon procedures with respect to their property. We could mention other statutes whloh would affect interest rates, lltitations of actions, public health, and an endless variety of eubjects of general law. Our point is well llluatrated.by expressions from subsequent leglelatures in the provlrlon for the lnvest- ment of surplus funds by these very o,rganizatione. Article 10.17 of the Insurance Code authorizes fraternal benefit societies, and Article 14.26 authorizes mutual aseesgment companiee,to invest surplus f’unde in the name securities a8 are authorized for life ineuranae companlep. From time to time new statutes are enacted and existing statutes are amended to make certain securities lawful lnveet- aents of insurance oompanies. Hone of the statute8 apeciallg designate or in any manner refer to fraternal benefit societies, local mutual aid associations or mutual aaaeeament companies. For instance, Section 7(b) of Article 6795b-1, enacted in 1949, declares that all bonda issued under thle law “are hereby declared to be legal and autho$zed investments for . . . Insurance companies. . . . Fraternal benefit eocletles, local mutual aid societies and mutual asaesament companies are not mentioned. Article 842a, enacted in 1933,declares securities issued by Federal agencies to be lawful inveet- ments of “all insurance companies of every kind and character.” Article 1269k-1, enacted in 1939, reads in part aa follows: %o:twithetanding any restrictions on d-;T-;ztments contained in any laws of this . * . all insurance companies, Insurance associationa and other persona carrying’on an insurance business. . . may legally invest . . . in. . . obligatSons ieaued by a housing authority. . . .” -2847- Honorable Jesse James, Page 6 (C- 590) Similar provisions are found in Section 9 of Article 1187a V.C.S. enacted in 1933. Without further elaboration we will say that there are some twenty similar statutes which we have found with respect to securities issued by Federal and State agencies and various types of municipal corporations, water dlstr1cts and the like. If the clause under consideration were to be construed to render subsequently enacted general laws inapplicable to fraternal benefit societies and the like, then none of the organizations in question could appropriate to themselves the benefits and rights of the subsequently enacted general laws. Such a result, we believe, would defeat the legislative Intent. All of these statutes deal with the same subject (lawful Investments) as that covered by Articles 10.17 and 14.26 mentioned above. In determining the meaning of the "no law hereafter enacted" clause in Articles 10.04, 12.12 and 13.09, all of these statutes should be considered In pari materia. Winterman v. McDonald, 129 Tex. 275, 102 S.W.Pd 167; 53 Tex.Jur. 2d 2110, "Statutes" Sec. 186. The case of State v. The Praetorians, 143 Tex. 565, 186 S.W.2d 973 (1945) does not control the question Pre- sented here and is clearly distinguishable from that question. A careful reading of that case reveals that the Court did not In anv way modlfv what It had oreviousls declared one year earlier in Hasseil v. Cossnonwealth - , quotedabove.oriana 516, Statutes, Sets s under the subhead, "Taxation," Footnote 36 in support of the following proposition: "A special or local act on the subject of taxation is not repealed by a general tax law unless the intent to repeal is clearly apparent." The Supreme Court had before it there a special law (Art. 4858a, V.C.S.) exempting fraternal benefit societies from every form of taxation except taxes on real estate and office equipment when used for other than lodge purposes. The court characterized the Unemployment Compensation Act, Including its tax lmpoaition, as a 'general law" and its tax as in the nature of an "excise tax". It then held -2848- . Honorable Jesse James, Page 7 (C- 590 > that such general law did not ope,rate to amend or repeal the special act expressly exempting fraternal benefit societies from exciee taxes. The question here presented is.materlally different. There is no: special act on the subject of eacheat for the insurance organisations under consideration. No special or general law purports to grant them exemption from escheat; Therefore, there is no law oalling for a construction as to whether it was repealed by the general law governing escheats in Texas* Article 3272a, V.C.S of Texas. Chapters 10, 12, and 13 of the Insurance Code are completely silent on all matters to whlah the esaheat law pertains. The only law passed by the Legislature governing the eubjeot of esaheat insofar as these organizations are ooncerned Is the general law. It thus appears that the Legislature Intended the general law to apply to them. The Court in The Praetoriana aase, supra, was dealing with tso different statutes involving the. subject of taxation. It found that the special law was not repealed by the general law teaause of the special law’s aoncludlng prchision:, No law hereafter enaoted shall apply to them’u&ss they be expressly designated therein.” This sentence was thus construed inits proper bontext to mean no other law dealing with the same subjeat of taxes as applied to the organizations concerned. It is Important, there- fore, to discern that the Supreme Court was neither holding nor implying that,the above quoted p~oviaion in the special insurance act exempts thoaeorganisations from the general laws of the state thereafter enaoted, but merely referred to such provision as being applicable to the particular subject matter before the Court. Opinion No. O-4668 (1942) issued by this office is not to be confused with the questions presented by your letter. In that opinion we held that since Article 577, Vernon’s Annotated Penal Code did not specifically designate fraternal benefit socletles, it did not apply to them or to their officers. As that opinion carefully points out, this penal statute was a part of a comprer henaive bill providing for the incorporation and regula- tion of life, health and acaident lnsurancs companies. It was cle+$y an insursnoe lair in its application. : -2 849-l.. Honorable Jesse James, Page 8 (C-590 ) It IS clear that subsequently enaated insurance laws must specifically refer to fraternal benefit societies ;;dt;;; other organizations named above In order to apply It is altogether fitting that the Legislature should intend for the respective chapters dealing with these forms of Insurance to be the exclusive repositories of’the insurance law applicable to them. But it would not be reasonable or logiaal to assume that the Legisla- ture intended suah organizations to be immune to the general laws. The escheat statute, in Section 1 of Article 3272a, Vernon’s Civil Statutes, Is expressly made applicable to all persons, corporations, and other entitles, which would encompass the Insurance assoclatlons or companies with which we are concerned. Its coverage as to personal property is likewise broadly described so as to compre- hend the type of property Interest involved in such ’ entitles which would be subject to escheat. No special escheat law exempting suah Insurance aompanles or assocla- tlons exists in this state, and no law exists purporting to exem t such aoncerns from the operation of the general law&his state Under well settled canons of construc- tion, exemptlona are not favored and will be strictly construed in favor of the state and against the person or entity claiming the exemption. Sinae Article 3272a has a uniform application upon all persons and entities having in.thsir~posseaslon property aubjeot. to escheat (see Sectional), it must be characterized as a general law. 50 Am;Jur. p. 17, Sea. 6 “Statutes”; 82 C.J.S. 277, Sec. 163 and cases there cited. Purthermore, the ooverage of personal property is likewise broadly described in the statute and would cover the property interests of members of the organizations here Involved. The purpose of such an escheat statute is to provide for the right of the state to such property interests where,there is no one’ in etistence able to make claim thereto. Escheat Is an incident or attribute of sovereignty, based upon the principle of ultimate ownership by the state of all property within Its jurlsdlctlon. 22 Tex.Jur.2d 616 Escheat, Sect. 1; 30A C.J.S. 915, Escheat, Sect. 1. -2850- , . . Honorable Jesse James, Page 9 (C- 590) The Constitution of Coahulla and Texas, 1827; The Constitution of’ The Republic of Texas, 1836; and all subsequent aonstitutions, cxaept those of the reconstrua- tlon period, have declared that eecheats shall accrue to the state. Article 3272 and Article 3272a of Vernon’s Civil Statutes were enacted In furtherance of’ the power which Is expressed in our Constitution and which ie inherent Snthe sovereignty of the state. Artlales 10.04, 12.12 and 13.09 of the Teas Insurance Code pertain to fraternal benefit societies and other special types o!’ insurance assoolat%ons which are but areatures of the sovereign with such tights and parers as are bestowed by the Legislature. Certainly, these provisions were not intended to be so construed as to disparage OF impair the rights of the state under the provlslons ol’ our Constitution and statutes relatdng to escheat. It is well aettled that a aourt will never adopt a construation that will make a statute abauld or ridiculous OP one that will lead to absurd conclusions or consequenaes, if the language of’ the enactment is susceptible of any other meaning. 53 Tex.Jur.2d~ 243., Statutes, Section 165. To construe the Insurance statutes here involved as re- quiring the legislature to name such organlzatlona,in each general law thereafter passed in order that such law shall. apply to them is an unreasonable construction tliat would lead to absuti consequences, as hereinabove illue- trated. Construing the sentence In Articles 10.04, 12.12 and 13.09 of’ the Ineurance’Code, “no .law hereinafter enacted shall apply to them, unless they be expressly designated therein,” in context with the other related provisions in the articles and other statutes, we think the intent of the Legislature was to refer only to laws dealing with the subject OS insurance enacted thereafter and not to refer to all general law8 on all other subjects, such as escheat. It is our opinion that the exemptions contained in Articles 10.04, 12.12 and 13.09 are limited to the subject of insurance and do not negate #e subsequently enacted general lawsrelating to escheats contained in Article 3272a. Therefore, you are her.eby advised that lraternal benefit societies, burial assoa$ations, local mutual aid associations and mutual assessment companies are not -285’1- r ~ . Honorable Jesse James, Page 10 (C-590 ) exempt from the provisions of Article 32’72a and they are required to report to the State Treasurer of Texas all personal property whiah Is in the aondition apeelfied in said Article. SUNMARY -----w- Fraternal benefit societies, burial arrsocla- tions, mutual aid aasoaiationr and local mutual assessment companies are exempt from the opera- tion of general Insurance laws, unless otherwise expredsly provided. However, such societies and associations are not exempt from the general laws of the State of Texas governing escheat and are required to report abandoned property pursuant to the provisions of’ Article 3272a, Vernon’s Civil Statutes of Texas. Very truly yours, WAQQONNR CARR Attorney General of Texas Bs Aaslstant Attorney General RRR:nr APPROVED: OPINION COMMITTEE Ketis B. Taylor, Chairman QortJon Caas Bill Allen Qeorge Gray Brandon Blckett APPROVED FOR TIIE ATTORNJZY 0-L BY: T. B. Wright -2852- --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4134871. Public record. Not legal advice.