# Untitled Texas Attorney General Opinion > Texas Attorney General Reports · July 2, 1958 URL: https://www.frixlaw.com/law-library/cases/4136623 ## Case - **Court:** Texas Attorney General Reports - **Decided:** July 2, 1958 - **Precedential status:** Published - **Opinion:** Opinion - **Judges:** Will Wilson - **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/4136623 ## Opinion text ‘SHE ATrOEzSEY GESEKAL OiF TEXAS The State Board of Insurance Opinion No. WW -3 56 International Life Building Austin, Texas Re: Does Article 3.50, Texas Insurance Code, authorize the issuance of a group life insurance policy to trustees of a fund established by a labor union to insure thz Gentlemen: members of such union? Your request for an opinion of this department on the questl’ons a: are herein stated has been received, and we quote from your letter as follows: “The trustees of a welfare fund are considering the purchase of a group life policy to cover union members. The welfare fund is administered pursuant to a declara- tion of trust executed between two unions as one of the parties, a contractors’ association as a second party, and a group of trustees as a third party. The trust agree- ment recites that the ‘employers’ (without otherwise de- fining them) and the union have entered into a bargaining agreement requiring periodical payments by the employers to the fund for the purpose of providing and maintaining certain welfare benefits for duly qualified and eligible employees and designated dependents employed by the em- ployers, and such other employees who may desire to par- ticipate.” Your opinion request concerns Article 3.50 of the Texas Insurance Code, the relevant portions of which are quoted as follows: “Section l(1). No policy of group life insurance shall be delivered in this State unless it conforms to one of the following descriptions: . . .” Section 4 of this Article provides in part as follows: “Except as may be provided in this Article, it shall be unlawful to make a contract of life insurance covering a group in this State. . .* Therefore, unless the policy conforms to one of the statutory de- scriptions set out in Article 3.50. it cannot be legally issued. . The State Board of Insurance, page 2 (WW-356) Subsection (2) of Section 1 provides as follows: “A policy issued to a labor union, which shall be deemed the employer and policyholder, to insure the members of such union who are actively engaged in the same occupation and who shall be deemed to be the employees of such union with- in the meaning of this Article.” In the case of Board of Insurance Commissioners Y. Great Southern Life Insurance Company, 239 S. W. 2d 803, the Texas Bankers Associa- tion was attempting to purchase a group life insurance policy from Sou- thern Life Insurance Company to insure the members of ihe assocj.ation pursuant to a trust agreement. The Court stated that, “The real poir.t~ of departure from the requirements of the statute i,s thai wher.:z.:; rhe statute prohibits the writing of group insurance fo; r.rr;p:‘~yers v..;l.h fewer than twenty-five employees, an effort is here made throu,n a trade association to write group insurance for a number of emp:r,:,-rz with fewer than twenty-five employees* and then went on to strike dov.:ii the plan as being violative of the statute. The facts that you havs~. out- lined in your letter are analogous to those in the Great Southern &.ife Insurance Company in that, the plan under consideration would mcXe it possible for an employer with fewer than ten employees to procure group life insurance on such employees in direct violation of Article 3.50. To permit a number of employers to establish a welfare fund Tvith the union and to then permit the trustees of this welfare fund to pu:c!~z~se group life insurance on the lives of the employees of the employers who were parties to the welfare fund, or to allow a number of labor ur~!.ons to establish a welfare fund with a trustee to purchase group life insur-. ante on the lives of the employees of the several unions, wouid be an at- tempt to circumvent the statute and to make it possible for one of the employers or labor unions having less than ten employees or members, to be provided with group life insurance. Any interpretation that would permit such an arrangement would clearly nullify the legislative re- quirement of Article 3.50 that the policy of group life insurance must cover at least ten (10) employees at the date of issue. Subsection (2) of Section 1 is explicit in its requirements tha? the policy may insure “the members of such union who are actively engaged in the same occupation. . *” We hold that this restriction, when read in light of the holding in the Great Southern Life Insurance Company case, supra, prohibits the issuance of a group pohcy where the membership of such group is derived from more than one employer or labor union, except where expressly permitted in the case of affiliated businesses set forth in Subsection (a) of Subsection (1) of Section 1 of Article 3.50. The use of the singular “employer” in the phrase -. . . estabbshed by an employer. . .n is significant. It evidences the intention of the Legislature that a single employer may, under the stated conditions, have a policy of group life insurance issued to it, or the same employer may establish a fund and have a;’@&y of group life insurance issued under The State Board of Insurance, page 3 (WW-356) stated conditions to the trustees of that fund. The only persons eligi- ble for insurance in either event are the employees of the employer, ,that is, a singular employer. SUMh4AR Y Article 3.50 of the Texas Insurance Code does not authorize the issuance of a group life insurance policy to trustees of a fund established pursuant to a trust agreement between the members of two labor unions as one party, a contractors’ assoria- tion as the second party, and a group of trustees as a third party. Yours very truly, WILL WILSON Attorney General of Texas Richard A. Weils Assistant RAW:dac APPROVED: OPINION COMMITTEE George P. Blackburn, Chairman Ralph Rash Jack Goodman J. Mark McLaughlin REVIEWED FOR THE ATTORNEY GENERAL By: W. D. Geppert --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4136623. Public record. Not legal advice.