      OFFICE   OF THE ATTORNEY     GENERAL   OF. TEXAS

                          AUSTIN




Honorable C. P. Lockhart, Chairnan
Eoard of Insuranm Cox;i.ssion~ers
Austin, Texas
Dear Sir:




                                    of the or;ganiza-
                                           for $3,450.00




                                        Oa Ilovember

   bond until 3ecezber 12, 1941. L?yiers Lloyds
   has nov,tendered the su:lof $2,5CO.OC and
   colltendsthat such is their ;I:R::iflU:2liabil-
   ity under the tao docu.lentsxenticned. Since
   $l,g5O.CC of the loss xs irrcurreddurin.5the
Honorable 0. P. Lockhart, Chairnan, Page 2


   original period (the bond was effective December
   12, 1939, but provides no termination date ex-
   cept by inference in the Endorsement extendins
   the 'expiration date') f'rouDecenber 12, 1939
   to December 12, 1940, and $1,5OO.Oi,was incurred
   during the 'extended' period; this Departnent
   desires to know if Lawyers Lloyds of Texas is
   not liable for the full $3,450.00."
         You also enclosed a photostatic copy of the bond
in question together with the %dorsenent.
         Under the facts stated, there would necessarily
arise for our detemination the sole question of whether
or not the naximm penalty stated in the bond is cumula-
tive for the extended contract period. Viewing the pro-
visions of the bond from the facts submitted, we are un-
able to hold the liability of the surety to be less than
the rull mount of the shortage.
         The identical question is involved in Board of
Insurance Commissioners v. Lawyers Lloyds of Texas, et al,
being No. 65,700, and pending on the docket of the 98th
District Court of Travis County, Texas.
         We call your attention to Article 4875a-7, Ver-
non's Annotated Civil Statutes, providing the procedure
for recovery on such a bond, which statute reads;
        When the Board is informed that any of-
  ficer of any such association has violated the
  terms of either of said bonds it shall demand
  a written explanation of such officer as to such
  charge, and if after such exnlanation the Board
  is not satisfied as to the eksting facts in
  controversy it shall notify such officer to be
  and appear in Travis County with such records,
    . .
  writings, and other correspondence and facts
  as the Board deems proper, not earlier than
  ten days or later than fifteen days from service



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        Honorable 0. P. Lockhart, Chairman, Page 3


          of notice, and it shall there conduct an ex-
          amination into such affairs, and if upon such
          examination the Board shall become satisfied
          that the terms of said bond has been violated
          by said officer the Doard shall prepare a writ-
          ten statement coverin said facts and deli-
          ver same to the Attorney General of Texas,
          whose duty it shall be to investigate said
          charges and if satisfied that the terms of
          said bond have been violated he shall file
          suit on said bond in the name of the Board
          of Insurance Commissioners of Texas for the
          benefit of the beneficiaries thereof against
          said officer as principal and the sureties of
          his bond for the recovery of said amounts due
          by said officer, and all costs of suit in some
          court of competent jurisdiction, in Travis
          County, Texas.n
                 In
                 _~~ view of the foregoing, it is the opinion of
        this Deoartment t'natall evidence and facts pertaining to
        the claim under this bond should be referred to the Attor-
        ney General for disposition.
                                          Yours very truly
                                     ATTORXZ   GENZ?AL OF T-ZS.S
                                     By   (s) Vim. J. R. King
                                                    Assistant
