 aollw L nltt
A--     a-                  August 16, 1977




      Honorable Henry Wade              Opinion Uo. R-1042
      Dallas County District Attorney
      Sixth Floor, Records Building     Re: Payment of premiuma for
      Dallaa, Texas 75202               county clerk's ltatutorily
                                        required errors and aada-
                                        aiona policy.
      Dear Mr. Wader
            You have aaked whether Dallaa County may legally pay pre-
      miuma for insurance which article 1937, V.T.C.S., reguirea the
      Dallaa County Clerk to obtain. In addition to reguiring that
      county clerka give faithful performancebonda to the counties
      in which they are elected, and bond their de utiea, the ltatute
      reguirea them to 'obtain an errora and omiaafon8 inwrance
     'policy, covering the county clerk and [hia] deputier. . .
      against liabilities incurred throu h errors and airaiona in
      the performance of [their] officia f duties. . . .. Sec. 4. The
      minimum amount of the insurance coverage 18 made dependent upon
      the fee-collectinghistory of the office. Section    5 of article
      1931 atates:
                The premiuma for the bonda and the errora
                and omissions policies required by thia Act
                to be given, or to be obtained, by the
                county clerk of each county shall be paid
                by tbe Coaxni88ionerrCourt of the county
                out of the general fund of the county aa
                additional compensation for the lervicz
                of the county clerk and which additional
                compeneation rhall be cumulative of and to
                all other compensation presently or here-
                after authorlred for said county clerk.
      (Rmphaaimadded).
          An errors and omimaions policy la profearional liability
      (malpractice)inaarance providing a lpecialired and limited type




                                   p. 4299
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Honorable Benry Wade - Page 2 (~-1042)              .


of coverage coqsared to general comprekenaiveinsurance. It
is designed to insure m&ra    of a puticular professional
group from liability arising out of the special rick luch as
negligence,omiaaiona, mistaker and errors inherent in the
practice of the profession. Grieb v. Citirena Ceaualty Co.
of Uew York, 148 #.W.Zd 103 (f&a. 1967) 13 Couch on Insurance
2d S 49:161 at 605, Errors and Omiaaion~.
     In 1965 when the errors and omiaaiona policy requirement
was first added to the law, the statute stated merely that '[tlbe
premiums for said insurance shall be paid out of the funds of
the county by the ConnniaaioneraCourt. . . .. It did not charac-
terize the payment as constituting additionalcarpaneetion
for the county clerk, and Attorney General Opinion C-506
(1965) concluded that payment of the premium could not bene-
fit the county inaemuch as governmental.irnaunityapplied to
the official acts of the clerk and his deputies. Tbe provision
war said to violate sections 51 and 52 of article 3 of the
Texas constitutionprohibiting gifts of public funds.   Attor-
ney General Opinion C-607 (1966) followed,deciding on the
same grounds that a county could not pay the short-rate can-
cellation premium for a clerk's policy cancelled in reeponae
to Attorney General Opinion C-506.
     In 1969, the Legislature amended article 1937 to read as
it does today, but Attorney General Opinion H-441 (1969) ruled
that new language expressly constitutingthe payment "additional
compensation"made no difference, obaeroingt
            This recitation doer not alter the fact
            that public moneys are being used to ac-
            complish an unauthorioed purpoaer that 18,
            to discharge  a liability that la not the
            reaponaibilityof the county. Thoaii pur-
            pores which the Legislature is prohibited
            fr ol  m
                   ccompliehing directly may not be
            accomplished indirectly.
Id. at 3.
-
     We do not agree with Attorney General Opinion l4-441that
the 'additionalcompensation" language maker no difference.
In our view, the present premium payment provieion of article
1937. V.T.C.S., la valid.



                           ,;p. 429a
     .   w    ’                              ,~ i
.c
             Uonorable Benxy Wede - ?aGe 3 (B-1042)
,,r-
                  One of tba questions lddre8aed in Attorney Genus1 Gpiniotr
             n-989 (1973) wee whether a 8chool dirtrictright purchare with
             public funds an Sll-rirka lutmbile liabilityinsurance
             policy protecting it8 officers and aployers (as distinct from
             the district itself) lg a inrtort
                                           t   claims uiaing from their
             official dutie8, even though the 9wumeatal    imunity of the
             district protected them from liability for mo8t of the risk8
             insured against. The opinion approved tba p ur c h a 8e,
                                                                  ltatingt

                         [T)heee units of government have the autho-
                         rity to set rrployee pay levels ud . . .
                         the purchame of inarrrancacovuage by m-
                         ployerr 18 a univeraallyyacceptedllament
                         of employee lalarie8. Viewing the purchase
                         of inauranoe as an elment of rployee cam-
                         penaation, on the same baa18 a8 pea8ion
                         plane, 9rou life and group health end
                         accident poP iciea, we find no violation of
                         Article III, Faction 51, Texas Con8titution.
             Id. at 4.
             -
                  Unless there la a specific con8titutiorulexception prb-
             vided, it is unconstitutional to make payments of public -nay
c-           for the benefit of private,indivi&ualaexcept as en incident
             to the direct accomplishmentof a proper public purpose or in
             return for aervicea rendered the public. Tex. Conlt. art. 3,
             ss 44, 51, 52. If author,iSedby law, insurancecowrage say
             be provided public servant8 as a form of c~naation.       Attor-
             ney General Gpini?n MI-731 (19S9). When that 18 done, the
             conatitu~ionalityof the purchase does not +pend upon the
             breadth of the coverage extended. ft la purchSaed to cmpen-
             sate the servant for services which he has-alreadyrendered the
             public.,and the use of the insurance IS of no con8titutional
             consequence, just as the use of an amployee'asalary is of no
             constitutionalconsequence to the state after he receives it.
             However, when the state provides employee benefits for some rea-
             son other than compensation, the provision of henefitr must
             be for a public purpose to escape articla 3, section 51 and
             section 52 condemnation. Then, the benefioiary (in the broad
             sense) of insurance purchased by tha state or one of its   sub-
             diviaiona la all-importantbecause if public interest8    are not
             being protected, the purcha8e 18 illegal. &e Attorney General
             Opinion E-950 (1977)s see lL8o Attorney GenGl Opinion8 H-742
              (1975); H-602 (197511 iirfOm73).
                  Language in Attorney General Opinion B-70 (1973) has been
             brought to our attention which seems to conflict with the con-
             clueion of Attorney General Opinion M-999 (1971). In H-70 we


                                           p. 4291
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    Xonorabae Benry We&8- Page 4   (B-1042)


    w&e addressing the proposed purchase of insurance to protect
    independent school district trustees frola coats of litigation
    growing out of the discharge of their official duties. We said8
                School districts are not authorized to pur-
              chase insurancecoverage for their officara
             and employees 'as an element of emplo le
             compenaation~ . If purchased at all, 1naur-
             ante must be purchased for the purpose of
             protectinga public interest, not a private
             one -- though private interaatamay be - in-
              cidentallybenefited.
                                  .
    Id. at 5. In context, the statement was r(correct one, for
    the trustees of independentlchool.diatrictamust serve without
    compensation. Education Code 6 23.19. Bowever, the language
    ahould~not be applied to trustees or employees for which the
    law authorizes that form of ccnapenaation,
         This distinctionwar observed in Attorney General Opinion
    X-958 (1977). Another opinion, Attorney General Opinion H-602
    (19751, applied the distinction but did not articulate it. There,
    an independentschool district wished to buy no-fault mperaonal
    injury protection.coverage and Qninaured motorist coverage.
    with public funds -- not as insurance for the employees as part
    of their compenration,but as a part.of an insurance package
    protecting the district itself. Legally, a school district
    could not have been held liable for the claims the insurance
    would have covered. The opinion ruled against tbc plan on the .
    same grounds Attorney General Cpiniona C-506 and C-607 originally
    ruled against the papent of premirnaafor a county clerk's errors
    and omissions coverage, aside from compensatingits servants, no
    public purpose of the district could have been served by such
    expenditures.
         Such aituati~naare to be diatinguiahedfrom the one
    here. The payment of the premium here is legialativelydi-
    rected and la authorized specificaLly as additionalcaplpen-
    sation for the county clerk.  We’know of no constitutional
    restriction on such legialative action. Tex. Conat. art.
    3, 9 44~ art. 5, 9 201 art. 16, S 61. See Byrd v. City of
    Dallas, 6 S.W.ld 738 (Tex. Coaat*nApp. m8, opinion adopted)8
    wey      general Opinion WW-1101 (19611; see also Wichita
    County v. Robinson, 276 S.W.2d 509 (Tex. m4r.n      our opinion,
    Dallas County may legally pay, and la repuired to pay, the pre-
    mlum for the errors and omissions policy which article 1937,
    V.T.C.S., requires the Dallas county clerk to obtain. Attorney
    General Opinion M-441 (1969) la overruled.




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                                                    I
 ‘!
                 Bonorable Henry Wade - Page 5 (a-1042)
  ('-
   t
                                         SUUNARY

                            Dallas County must pay the premium for
                            the errors and omiaaiona policy which
                            article 1937, V.T.C.S., requires the Dallas
                            county clerk to obtain.
                                                   Very truly yours,

                                                           -   .x   q&l
                                               P OXU L. BILL
                                                   Attorney General of Texas
              -J4PPROVRD:



                 DAVID &l$plDN.L, ?irat Aaaiatant



                 e RORBRT HEATH, Chairman
                 &inion Committee

                 jet




i.’

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