    -




                      TEE         ATJTORNEY               GENERAL
                                        OF      TEXAS




        H~Jx. ‘Ralph Brook                  opinion   .NS. :o&@o          '.'
        Count*    ~~ttortiw                 .&I: UndW’the’Yaote       submitted, lb
        Lubboeki,Coun3y                      the Southern, Lloyde Fire I!ialiratlb(l
        Lubbock, Texae                    ” Company oi San ~kitcnlo; ‘Texae; ;,,,ell-
                                             glble to write fire 1nsuranoe”on”~
                                           ;,the Lubbock’ Independent    Sohool Dla-
        Dear. Siri c;~L;~.:       ,,i,“1:,:,::triot $uldinga?                   .‘,
                   ;~..:Y&‘lett~rir:.rof~      &it&r      21,, .,I942 ,,re&&&g            the
        oplnlon '&:-thlrr~
                         department on the’ abode &aCed                    queetlon       reads
        aa followrt::~~               :.~,,,

                  -.i : ,.MI;,&   ,b&n re~,‘&ated       ;by A. 0. Ja&aon        ‘&;I-
              ‘ierr -Manager ,,of:the’: e ubbock,,Independent             Sohokl ‘.
               Dlatriot)~Lubbock~:.Texaa              to~~eeoiare’ en oplnlon aa
               to whether~sthe zSouthern, i loyde Fire Inearanoe                   Com-
              pany of,San,Antonio, Texan, 1s ellglbla to write
              fire ;inaurBILoe!-on the $ubbook Independent, ,86hool
              Mrtriot       +ulldlngr        ‘the ~~LIlbbook‘Independent ,-Sohool
               Dirtrlot     - belug~un ‘&dependeiit :~rohool d$rtrIat              or-
               ganleedX@deri:the          lair of’thg.:ftate,.      of’j:exae.:       ’
                                            ,. .,‘L
                   ~3:&ltUnder ;>&t>oie :ii&6be8 ,,,af :,Vimon t II’,,&&at~~
              ~Cfrll.~~Statuter~.~-lt~~proolde~~;.that::a         ‘mutuals,-oompany
              ma     write     lnrurance      Ppon::raohilQorporatlanr       ;‘a.s,the
               Lugbock Independent            Sohool Dietrlot        however       In
              ,thri reoent oare,:of Lewlr~~Vr~~Inde eident,:Sohiol
              Dirtrlot        ol:~Aurtln      et al .,~61 S -hs2nd ,450 thi
              ,8 reme ~Uourt:held’that~;~r               ‘artiOie~w:r.un~onrtl-
              .tu‘4eional:.by 3ea8on:~of Seotiti           .52 .of.~.~Artiole 3 ~of.
              the Conatltutlon           o? the~State,‘:oi      Texar.:.
                       “It la my underrtaudlng thati%he .8outhera
                 Lloyd8 18 not a mutual compan       In a letter  rub-
                 mltted to%&.. Jaokron by the i*outhern’Lloyd8,    they
                 make thle~~rtatement t

                       “*The pollay~ holderr,~ of auoh Lloyd8 are not
                 rubjeot to an atmerrment.       In no oaaa and under na
                 oj,*aumePrtanore will a uoliay holdek nf LloOdr ever
                 be eubjeot’to    an aseeeement.    The’.flrrrt, lart and
.
                 oirly oeets to a polloy holder of Lloyd6 organlea-
                 tion    whether It be 8outhern    Lloyds or any other
                 Lloydr,   la the advance premium paid.
Hon. Ralph Brock,   page 2   (O-4880)

            “There are four (4) general types of lnsur-
      snae oarrlers;     the Stook Company the Lloyds, the
      M~t$~g~ompany and the Reolprooai       or Inter-Insuranoe
                   The first two of these oompanlee, the
      Stook Cotipanyand the Lloyd8 are privately         owned
      enterprises     owned by their stockholders.      The oom-
      manly aocep c ed name for owners of the Stock gcpany
      1s Stook Holders, and Lloyds Underwriters.
      principal   dlfferenoe   between the two is in the name.
      They are both associations     of individuals    for the
      purpose of doing an insurance business.        No policy
      holder of a stook company or a Lloyds is ever sub-
      jeot to an assessment.
           Wnder the other two classifications,      the Mu-
      tual and the Reciprocal,    there are no stoCkholders
      nor private owners.    The entire assets belong to
      the policy holders.    The policy holders own the
      c,ompany and whlle some states make .provlslons   for
      the waiving of the assessment feature of these two
      types of pollcles,  it remains a fundamental fact
      that the policy holder owns the company and wheth-
      er or not he Is legally   liable  for all debts, It
      would seem reasonable that since the policy holders
      own the company, he should also owe the debts.
            “The Southern Lloyds Is a Texas institution,
      organized and operated under the Texas Insurance
      laws, which makes it different    in operation  form
      from the Lloyds of London.     The fact Is that the
      Southern Lloyds has its stock, its surplus fund and
      its reserves and these three things are the protec-
      tive features that are found in any good and rell-
      able insurance organization.
            “The principal difference   between the Southern
      Woyds and a stock company 1s the name- The South-
      ern Lloyds could call Itself    a stock company if it
      wished, but since a Lloyds Is generally    known as a
      Lloyds and not a stock company, we do not call our-
      selves the Southern Lloyds Stock Insurance Company
      but simply the Southern Lloyds. I
.--   ~.~
       ,?* “1 give you the above quotations  from a letter
      addressed to Mr. A. C. Jackson, Business Manager Lub-
      bock Schools, Lubbock, Texas for the purpose to show
      you the status of the Southern Lloyd8 as to whether
      same IS a mutual or in fact a stock company.
Hon. Ralph Brock,      page 3     (O-48801


           "1 take the position   that Inasmuch as the
     Southern Lloyds meet the requirements of a stock
     company that they are eligible    to write such ln-
      surance upon the properties   of the Lubbock Inde-
     pendent School District,    however, I would appre-
     ciate It if you would furnish me wlth your oplnlon
     on such question,
          We have been Informed by a representative of the
State Insurance Department that the Southern Lloyds Fire In-
surance Company of San Antonio, Texas, Is not a mutual ln-
surance company but a LIoyds Insurance company as Indicated
by the name.
           The case of Lewis vs. Independent School District
of Austin et al, I61 S.W.2nd 450, among otherthings       holds
that the independent School District    of Austin Is not author-
ized to have the properties   of the School District  insured by
a mutual company. As the Southern Lloyds Fire Insurance Com-
pany of San Antbnlo Is not a mutual insurance oompany but a
Lloyds Insurance company the opinion of the Court in the above
mentioned case does not prohibit   Independent School Districts
from insuring their properties   with a Lloyds insurance company.
            We have made a careful      search of the statutes and
constitutional    provisions   of this State and f,all to find any
statutory    or constltutlonal   provision    prohibiting     Independent
School Districts     from lnsurlng their properties        with companies
of the class and kind of company or companies as the Southern
Lloyds Fire Insurance Company of San Antonio.             Therefore    It Is
the oplnlon of this department that the Southern Lloyds *ire
Insurance Company of San Antonio Is eligible           to write fire ln-
surance on the Lubbock Independent School District's             buildings.
            Trusting    that    the foregoing   fully   answers your ln-
qulry,   we are
                                       Yours very truly
                                       ATTORNEY GENERALOF TEXAS
                                       By /s/ Ardell Williams
                                       Ardell Williams,  Assistant
APPROVED  OCT 'j, 1942
/s/ Gerald C. Mann
ATTORNEY  GENERALOF TEXAS
APPROVED,(.Kl&IO~ANCM.'lTTER
BYs          9
AWrmprwb
