+, Allen Melton                      opinion No. ww - 551
Ekecutive Secretary
State Board of Morticians            RP:   The authority of the State
Rio Grade National Bldg.                   Board of Morticians to
Dall.as,Texas                              promulgate rules governing
                                           solicitation, and related
Dear Mr. Melton:                           questions.
                                          f
          You have submitted to this office various questions concerning
the authority of the State Board of Morticians to promulgate rules govern-
ing solicitation.

          Regulation of funeral directors and embalmers, provisions for
the State Board of Morticians, and authority for promulgating rules and
regulations governing the said activities are provided for in Article
4582b, Vernon's Civil Statutes.

          Section 2 of said Article provides:

              -"The State Board of Morticians shall have the power
          and it shall be its duty:

                "(1) To adopt and promulgate such rules and regula-
          tions for the transaction of its business and for the
          betterment and promotion of the standards of education,
          service and practice to be followed in the profession of
          funeral directing and of embalming In the State of Texas
          within its discretion. such beina consistent with the
          laws of this State or'for the public good. No Zule or
          regulation promulgated by the Board may be adopted,
          amended or rejected without due notice and hearing there-
          gI& II (Emphasis ours).

          Acting under the authority conferred by the above Article, the
State Board of Morticians, on January 16, 1958,proposed the:follovlng
amendment to Rule 3, Section 6-B (3) of the Rules and Regulations of the
State Board of Morticians of Texas:

               "(c) Solicitation.
               "No licensee, apprentice, or any other person, whether
          employee, agent or representative, or one in any manner
          associated with a funeral establishment, shall solicit busi-
          ness or offer any inducement, pecuniary or otherwise, for the
Mr.   Allen Melton, Page 2   (w-551)



            purpose of securing or attempting to secure business for
            such funeral establishment; such persons shall not Issue any
            gift certificate, or discount certificate, or offer, or
            give, any discount for the purpose of obtaining funeral
            business; and such persons shall not use donations, gifts,
            bonuses or acts of service designed, or calculated to
            place the recipient, or his or her family, or relatives,
            in a position of obligation or indebtedness to the tinor,
            or the funeral establishment to which such persons are
            related, and such persons shall not transfer, or offer to
            transfer, any property or service as payment or as token
            consideration, for business secured or influenced, or
            otherwise provided such funeral establishment, or in pro-
            mise thereof."

               A public hearing on such proposed amendment was called for
February 11, 1958, and notice given to the funeral directors and embalmers
of Texas by mail under date of January 25, 1958. A hearing was held as
scheduled, well attended, and certain clarification was requested. On
that day, without changing any of the wording in the Subsection proposed
January 16, 1958,the Board added a definitive paragraph to that Sub-
section as follows:

                 "Included in the above paragraph and prohibited
            are free ambulance service, free hospital beds, free,
            wheelchairs, free oxygen and/or oxygen equipment, or
            charges made therefor at discount, but not to the
            exclusion of any other acts, services or specific items
            of value which otherwise are included therein, by the
            provision thereof."

                 The rule as changed was to be effective as of February 11,
 1958,and would have been in effect with the change, at that time, bad
 the definitive paragraph not been added thereto on that date, but notice
 of the additional portion was not given to the funeral directors and
 embalmers of Texas until February 11, 1958.

                The obvious intent of the Nle is to control solicitation
 conduct on the part of licensees in the State of Texas.

                After January 25, 1958,and both before and after February
 11, 1958,various funeral establishments issued through the mail various
 certificates to numerous boxholders. These certificates were of four
 classifications:

                Type 1 authorized the holder of the certificate, ambulance
 service within the city limits of a Texas city at a sliding scale and the
 certificate further provided to furnish the holder of the certificate and
 his immediate family and dependents funerals at "cost plus approximately
 ten per cent".
Mr. Allen Melton, page 3 (kh+%l)



               Type 2 authorized a lO$ discount to holders of the certlfi-
cate and an additional lO$ discount upon the full payment of'the cost of
such funeral, in cash, at the time of the funeral of such person.

               Type 3 authorized a 20$ discount on any funeral SeNiCe
selected, and a 25s discount on ambulance and invalid coach service. I

               Type 4 entitles the named individual to a complete funeral
"at cost plus approximately ten per cent". It also provided a discount on
casket. However, before the holder 1s entitled to any of these SeNiCeS
he must agree to pay to the funeral,home the sum of $10.00.

               Another practice used by funeral homes is the issuance of an
insurance policy. Insurance policies are sold through the organization and
people who purchase sn insurance policy become members of the funeral
home's Family Security Plan. As a member of the Family Security Plan, the
member is entitled to certain discounts and privileges in connection with
the funeral expenses.

               You have submitted to us three questions phfhh are in sub-
stance as follows:

               1. Is the Board acting within the limits of Its
          authority to revoke or suspend a license i'fit finds
          that the funeral directors in charge and/or the owner
          of one funeral home, which Issued certificates referred to
          as certificates 1, 2, j',are In violation of the new
          rule governing solicitation by issuing and giving a
          discount for the purpose of obtaining funeral business, or
          is the Board limited in the enforcement of the new rule
          governing solicitation to acts which occur from and
          after the date of February 13, 1958, at which time all liceacZ.-
          sees in Texas were notified of the final action of the Board
          in promulgating the new rule governing solicitation?

               2. Is the State Board of Morticians  in any way res-
          tricted in the application of the new rule promulgated by
          it governing solicitation to the funeral establishment which
          is Identified as certificate 4 in the event that funeral
          establishments give a discount under the service contract?

              “3. Is solicitation through newspaper advertising, radio
          or television, wherein a discount is offered for business,
          a violation of the rule passed by the State Board of Morticians
          on February 11, 19581”

               4. Is the State Board of Morticians In any way res-
          tricted in the application of the new rule promulgated by it
          governing solicitation to the funeral establishment which
          carries the insurance policy plan?
                                                                               .   .
Mr. Allen Melton; page 4 (W-551)



              .The Legislature pmy delegate the regulation of-funeral
directing and embalming to anadministrative agency, and authorize it to
provide rules and regulation6 governing such profession. PrcitaUnder-
taking Co. vs. State Board,.182 A. 808; Gulf C.~& S. F; Ry. Co. ,vs. State,
l20 8..W. 1028 (error ref.); ~ilax+is~vs. Municipa1 Gas 4
                                                        ComPq,   59 s. w.
2d 355 (error kiis9L); 42 Am.Jnr. 301 5 ,12;9 Tea&r.     97, l.Ter; Jur.
10 Yr. Supp. 101, Administrat$ve z&w & Procedure. Where thenstatute ex-
pressly authoriees the agency to regulate an industry, it implies'authority
to adopt regulations to that @d.   Rail&&d Commission ve; Shell Oil Co.,
139 Tex. 66, 161 S.'U. 2d 1022. 'And the agency may make,all reasonable
rules and regulations proper and necessary in the exercise of its powers.
Texas Liquor Control Board vs. ,Super Savings Stamp Co., 303 S.W. 26 536
 error ref., n.r.e. ; 4,A~.L.R.2d 667.

                The state may establish boards of undertaking and embalming
 for the purpose of 6mkIng rules for the control and regulation of the
 business;and the acts of such board6 will,be sustained unless there is an
 unlawful delegation of legislat~ivepower or the boards act in an arbitrary,
 capricious or unreasonable manner. Gholson VS. Engle, 138 N.B. 2d 5G8;
 Louisiana Undertakers v6:La. State Board of MaImin&     58 So. 2d 303;
.Trinka Services vs. State Board of Mortuary Science, I.22A. '26 6%;
.Quesenberry, et al VS. Estep, supra; 104 A.L.R. 402.

              ~The power to ~regulateini&des the authority to prohibit
advertising of a character tending to influence the more gullible or sus-
ceptible person or to proclaim the superiority of the advertising practi- :
tioner. Sherman'v. State Board of Dental~Examlners, ~6 S.W.2d 843. Those
engaged in such professions are subject to legislative regulation, and the
vocation itself being subject to regulation, 60 are all its incidents. Kee
v. Baber, 303 S.U+d 376 (Tex. Sup. Ct.).

               Prom the foregoing authorities, there can be little question
of authority of the State Board'of Morticians, acting under Article 4582b,
to adopt, promulgate and enforce rules and regulations governing solicits;
tlon of business.

               A&cle'4582b, Vernon’s Civil Statutes, governs the activi-
ties of the Board, and it is clearly provided in that Statute that no rule
or regulation promulgated by the Board may be adopted, amended or rejected
without due notice and hearing thereon. In Greer v. Railroad Commission of
TE,    ll7 S.W.2d 142 (writdism.), the Court stated:                     .."

               "Where the dtatute requires notice and hearing, such
          prerequisite is jurisdictional, and its omission renders
          the order void."

The notice and hearing as set out in'the Statute are without question
mandatory requirements; therefore, since the definitive paragraph was
added without'any notice, that part of the rule would be vold.,'Alse, since
                                      ,,   I   ..,




.



    Mr. Allen Melton, page 5   (WW-551)



    the xe4Lin.gof the certificates was prior to the time the rule was to go
    into effect, then certainly the Board cannot assert that the rule is
    retroactive. Therefore, the Board ha6 no authority to revoke or suspend
    a license for an act committed prior to the time the rule became effective.

                   'The Board has authority under the Statute to prohibit soli-
    citation after proper notice and hearing. However, in order to interpret
    the applicability of the rule against "solicitation", it is necessary, In
    our opinion, to define the term.

                   "Solicit" Is defined as: "TO ask'for with earnestness; to
    make petition to; to endeavor to obtain; to awake or excite to action; to
    appeal to; or to invite." Black's Law Dictionary, 3rd Ed., p. 1639.

                   Therefore, it is our opinion that the sending by'mail, or
    perSOna circulation by employees or representatives of the funeral home
    of any certificates entitling the holder to certain designed 'discountsor
    free services is prohibited by ths rule as promulgated by the State Board
    of Morticians.  The purpose of the rule is to prohibit solicitation and
    not to impose restrictions upon the rights of individuals to enter into
    contracts. Phillips v. State, 136 Tex.Cr.Rep. 430, 125 S.W. 2d 585~(1939).
    Therefore, the portion of the rule which reads as follows must be construed
    as an invasion and infringement upon a person's constitutional right of
    libert% to contract:
                   "'
                    . . . such persons shall not issue any gift certifi-
              cate, or discount certificate, or offer, or give, any dis-
              count for the purpose of obtaining funeral business; and
              such persons shall not use donations, gifts, bonuses or
              acts of service designed, or calculated,to place the re-
              cipient, or his or her family, or relatives, in a position
              of obligation or indebtedness to the donor, or the funeral
              establishment to which such persons are related, and such
              persons shall not transfer, or offer to transfer, any
              property or service as payment or as token consideration,
              for business secured, or influenced, or otherwise provided
              such funeral establishment, or in promise thereof.,;':I.

                   "Included in the above'paragraph and prohibited are
              free ambulance service, free hospital beds, free wheelchairs,
              free oxygen and/or oxygen equipment, or charges made there-
              for at discount, but not to the axclusion of any other acts,
              services or specific items of value which otherwise are in-
              cluded therein, by the~'provisionsthereof."

    If the above quoted language is an attempt by the Board to regulate prices,
    then the Board has gone beyond its authority. However, the above quoted
    language is really surplusage, for the Board has ample authority to govern
    solicitation under the rule which reads as follows:
Mr.   Allen   Melton, page 6, (w-551)



                   ”                                              .
                       . . .

                    "Ho'licensee, apprentice, or any other person, whether,
               &ioyee,~ag&     ,orrepresentative, or one in any manner '
               associated,$th a funeral~e6tabliehment, shall~eolicit
              .bueineee,or offer any inducement, pecuniary or otherwiee,
               for,the purpose of securing or attempting to Becure business
               for such funeral eatabliehment; . . ."

               The ansver to the second question muet be governed by
contract law. Any party who had received an offer, termed a "service
contract" by the funeral home, prlor,to the effective date of the new rule,
may accept such offer and then form a valid and binding contract with the
funeral home. Certainly, the Board cannot contend that sending out such
offer was prohibited prior to the effective date of the rule. The rule in
question is one prohibiting solicitation and solicitation only. If the
service contract was solicitation it occured prior to the time the rule
became effective. This point has been discussed in answer to question one,
so, there is no need to go into it further. The honoring of the certifi-
cate has nothing whatsoever to do with solicitation, and it is only the
honoring of a valid contract. However, in the event this practice of send-
ing out certificates or service contracts is continued in the future, then
the Board does have the authority under the rule,to restrict the activity
of the funeral home.
                                  i                             t
               .In reply to your third que6tion, this office is of the
opinion that newspaper, radio or television advertising, wherein a dis-
count is offered, Is a form of solicitation that is prohibited by the rule
promulgated by the State Board of Morticiaias. A general'solicitation
which offers a "discount" to prospective patrons as a pecuniary induce-
ment to secure business for a funeral establishment violates Section c of
such rule.

               The fourth question presented to this office has many
ramifications and it is difficult for us to answer the question since the
regulation of an insurance policy falls within the purview of the Insu-
rance Commission. However, if this Family Security Plan is only a sub-
terfuge by which the funeral home solicits customers, then the Board can
regulate such activities.  In otherwords, if the benefits derived from
being a member of the Family Plan are limited by the funeral home to only
those policy holders that deal-with them, then, since the funeral home is
deriving a benefit by virtue of a solicitation by an insurance company
owned in part or by the funeral home, then this activity falls within
the rule promulgated by the Board of Morticians governing solicitation.
Mr. Allen Melton, page 7 (W-551)



                                    SUMMARY

                    The notice and hearing before promulgation
               of rules by the Board of Mort.iciau6is msnda-
               tory, and any act committed prior to the effect-
               ive date of the rules does not come within the
               sanction imposed thereby. The Board does not
               have the authority to impose restrictions upon
               rights of individuals to contract, however the
               Board does have the right to prohibit SOliCi-
               tatlon as that term is defined in this opinion.
               Further, the State Board of Morticians may ap-
               ply the rule promulgated by it governing soli-
               citation to a funeral home offering discounts
               and benefits so long as the benefits and dis-
               counts are not an integral part of a life in-
               surance policy sold by an insurance company.

                                              Yours very tNly,

                                              WILL WILSON
                                              Attorney General of Texas




IS:aw
                                              B&dw
                                                 Assistant


APPROVED:

OPINION COMMITPEE



Wallace P. Finfrock
Tom I. McFarling
Marietta McGregor Payne

RRVIRURDFORTHZATIO~       GENERAL
BY:
     Morgan Nesbitt
