          OFFICE     OF THE ATTORNEY    ,GENERAL            OF TEXAS
                               AUS7lN




Honorable. 0. P. Loakbart, Chrlrmn
Ijoua or lMuranoe Co8u.m.1onar.
Au8tln,        Texa.
Dmr         Slrl                 oprnlon no. o-yxio
                                 R e r An lrirtioq @mUa                       ruor u.a In
                                        &drutrla;1           uul       gvk3up’~llSo   ln-




                                        iq    .ap 8‘xogul~ly                  8aheduled
                                        aLr rdvk            Jsatueon   daflnlte1.J
                                        UtablU4d               alrporta:      1. void
                                        lIksof8.rm.8 it pfm ort8tolmt
                                        the lnsuror'r 11a Iillity after
                                        the    axpllutlon              of   th.       amte8t-
                                             puloa  8.t out In ~LrtlOl~8
                                              uid 4764b, Vernon’. An-
                                        not8td Civil Statute8.




                   8eotloa
                  5 of Artlolo 4764b, Vernon’8 Annotated Civil
Statutea, doallng rlth indu8trlal llfo Ln8uranao~ read8 In
p.rt a. follov8:
            "Ro lnciustrlnl life lnsurnnca policy do-
     llvored   or 18sUed   for dellVery    111 tba StSte 01
     Tex&8   @hall OOntain   any prOvlsiOn    Vhlnhl

              (I
               . . . .

              *(b) axeapt a8 OthUIIl88 provided herein,
     proVlde8 l-Or My  mod8 Of 8ettlWOtlt at WtlWity
     OZ 1088  value th&n the WOUnts 1118~md on th8
    faoe of the polity, p1U.    dividend 6ddltlOn.
    thereto,  if &ny, le.8 My iCidebtedne.8 t0 the
    in.,Wer  011the pO1lOy, aod 1.88 any prOtiU84 thrt                       .
    may, by the tormr of the policy, be bduotad,
    Uid prorlded al.0  th@t  thi.  F@OVi.iOlI -11
    not raved    an addltlonal looldental death bow-
    r1t L lng llmltrd 80 a8 IlOt to b. pay8ble in
    want of doath frw     OWt8l.n aause8 Of 8OOldent8."

          There i8 a 8lnllar proVl8lon la htlo1e  4733, Vernon's
Anaot8ted Civil Matutor, Vhlch read8 ln put   88 fO11OU8C

              "POliOie8 8hau           UOt oont8ln Whati Tori-
     81OtlS   fOl'h-fit          &88     Thn Ptil &IWJfit iX3hX'-
     taln Cue8 Penltted.   BO poli0y 0f iir0 iru~r-
     mae 8hll be i88Wd or dellrerod ln thi8 Stata,
     or be 188wd by 8 life in8ur8noe oolpany hOOr-
    por8t.d        UndU    th.   l8llO   Of th18   St&e,   If   it   OOCI-
     taln8 any of the foll~vlng prool.lOn8:
              I
                  . . ..

              "3. A &WOVi.iOLi          for UJ      mode Of 8OttltiOIlt
    8t    meturltr of 1.~8          Vtiw     thm the 8mOUnt8      in-
    8ur.d On the f8Oe of the polloy, plus dividend
    lddltlon., if My, 10s. w                     lIldebt.dIm.8 to the
    ooupuzy on the pollay, and le.8 any promlum ut
    nuy by the torma of the polloy bo deduotmd; pro-
    vided, however,             th8t any ~ooapn~ IUJ 188~         8
    POliOy        ~ollli.145     a benefit le.8       than tha fU11
    benefit ln oem of the death of the ln8ured by
    hI.8 own hand uhlls 8+a or lnranne, or by follou-
    iq      8tAt.d         haxudow    OOOUp~tiOLl.,     or in the
    event the de8th of the lluured 8hould result
    from avl&tlon lotlvltle8 under the oonditlonr:
    *pelfled             in the polloy, to be approved by the
iitin~rt-tbl;
           0. P. Lockhart, paw          3



      Board of lnswe.uc6 Com.mlsaion*rs, a8 provided in
      Chapter 3, Title 7d, of ths Revl8ed Clvll Stat-
      Ut.8 Of 4.X438 Of 1925. This proVl81on ahell not
      apply to purely 8ooldtnt and health pollofe8.
      No forsgolng provl8lon retit-         to polloy form6
      8h.11  apply t0 pO11Oi.8   188Utd ill l1.U Of, Oc
      in exohmge   for,  any other pO1101.8       188Wd be-
      fore July 10, 1909.      AOt8 1909,    3l.t   bag., p.
      1.92, 360. 23; Aot. 19i 1, 47th h&3., K.S., 8.8.
      264, t 1.)"

             Th.    quot.d    8v1etiOn OtiU.6 ltt.mpt. to .X0.&% md
txoldt    from     the   oortrege     of th. polloy the r1.k of de.th frm
the 8ptOlfitd 08UI.8.             It dot8 not eontbaplrte eg fi8blllty
on the polloy .8 auoh, but,             In efftot, provide. th8t the d.8th
of' the ln8ur.d      fl'0.i th. 0.U8.8       8.t   OUt Win n6v.r Mt’W.        the
policy.     It   18  not 8 01.U.t       rt3O@iZi~       a lleblllty On the
polloy end reducing under 8ptCifitd alroum8tmot8                     the amount
~rcml8.d to b. p8ld. For the.6 X'688on. it 18 not l 'prOv181on
for any mods       of l.ttl6ment et maturity of leea value thm th.
amount. tneur.d on th. feoe of the p011ay~ 8Ed the 8bOve
QU0t.d 8t8tUtOry ~rOVl.iOM              er. not eppl.iC8bl6. &uht           v.
Ftdtrrl Llfo Inmuwnct Company, 248 3. V. 3251 Amwlae                        Uet-
lone1 Inaur~ot         Capany       v. Idweon, 127> 3. Y. (Bd)
Great Southern Lift         In.urenoe       Cappanr v. Ulna,       105%+4.
(24) 902; Owrdl8n          Idf. In8urenc6 Company T. tiloo8tlen,
155 3. Y. (2d) 396. t%t l~lM8.                   Of CT.rt8iB O....    illdiO~tt8
the oontruy        vim.     Athnt8      Ltoe    lBllWMO6   Cm-y       V. COP-
mltr, 85 9. W. (24) 1045; Cook Q. cOntlMnt81                    C88wlty Con-
pe.ny, 160 3. Y. (Pd) 576; Unlvor8el Lift 1n8UF.nO.                   Co-y
v. Grent,      117 S. Y. (26) 813.

            The Court In the 08100.tl.n 08.6, 8UJW8, Vhllt dle-
Cuulng    the oplnlon of th.lAV.~n   CU., SUpF8, h.ld:
             .       It 18 81.0   irpliOit in the ~lllion
      th8t .i& i...rtlon of non-lleblllty I. not pro-
      hlb1t.d by uid Art. 4 3, 8Ubd.          3. l'ha pmhlbl-
      tlon dtelerod   by Art. P733, lubd. 3, ol.arly oon-
      ttRpl8tt. 8 lhbility      Upon e policy 88 .UOh, urd
      the prohlb1t.d ~OV181OU      18   on. ooduolng  th.
      eaount prcalotd to b. paid upon ooadition8 end
      With OUttin    .XO.ptlOn..     In our oplnlon, it can
      h& rP . Olp p liO8tiOB to l p r o Vl8lw   rhloh Optr~tt8
      to lvtild th who16 promlst; provided, of OOUTI~,
      8uch prOVl8lOn 18 not 8UbjtCt t0 8OIt        oth6r pro-
      Nbltory    rtetute."
 I.uncrebla                   0.        P.      Lockhart,             p&a      4




          The exoeptlon In subeectlon (b) of Aectlor~ 5 of
Artlola (1764b uhleh leeme to authorire luah a olau~e In con-
ne4ticm with 'an 8dditlonal death baefit" oarrim      the UP
plio8tlon t&t luob olau8a 00108 vlthin the rtattimy     prohi-
bition dnoe, otharvls~, the exception vould   be unneceeeary.
hn lmplio8tlon, hovover, should not be ooxutrued 80 as to
rary cr broulen tba lxpr888 laII@Aage Of the 8tatUte.

                              Subuotlau                     (0) of kotion                   2 of Artlclo 476kb, Vor-
o~n*a           Annoted                        cwil         stmte0,                rating             t0     iddrutrm                    iire
ir mur ~o e a nd lubuotioa  (1) of 8oetlon 1 of &tlolo        47648,
V8rnOn'B Armotakd     civil StatUtU,    relatirrg t0 &rOUp    iire
i~ur811oe, both roqulre 8 polloy provl8lon 8tatlng IA 8ub8t8me
that tha polloy 8U       bo lnooatoatablonot later t&n tvo yo8r8
fra  It8 date.    The 8titUt.8 LLUI OWt8lI.i eXOeptlI3SI8t0 tbs
lnoonto8t8b]lo reQulromnt    but   the quoted 8viatlO.U  alWISe    dom8
not ftil V1tM.n   8UCh .xOeptlOM.

                          tie                8UOh     tnOOnte8trb&                  iVQkiirOUllt8
                                                                                                QQJLttibla                                      t0
8UOh        818USO?                  The Oa8.8 OOSl8trUing inOOntr8t~b& Ohi    8Z?O
numerou8.                         In tha State of Ieu York (Betropollt~ Liio In-
8ll?8llOO            c                         V.     convy,           3uperintwulent                  0r        ~.XUU~MO,                 n52
m.r.       4494 m.8.                                  64~) and in              other         8tater it i8 held that
UI inoontortable O~NUO                                         i8      no t &       “IIM68tO           l8        to     OOVW~e’                  urd
th a tl              u r ep o llrO
                                 y& ILl
                                      Uxaoptlng                                             W        lxoludlng               fra         tha
rl8k       U8U8d                     &ah
                         rra 8~Olflul OaUU8 IS not oontru~
themto.               rU8UMd
                          It    that    la
                                     the l.nmlror’8 doruuo uncle
8Wh        l 018~80 18 ZIOt a OOntO8t Of ths pOllOr bUt Uh effort
to     udoroe                     It8         tera8.    %18    reUOllb&                         18    UUd         in        8UU81               28X88
ouea        .        r8XU                    R?U&ilti81    -UP-e                        c-7                1.     liil*r,           80 9.Y.
(2d)       m2k                    sOUthVO8tUII                 Life         h8WII.08             cCUIIDMy              V.    aOU@tCUi,
Ul        S.Y.           I 2d)           61gb
           On the other hand it tn8   bowa hold th8t 8 eOate8t-
able 018&U. l&UlIq O-trip UOaptlOllW      18 intWld.d       t0 8llOU
none not amod,,ud     thku a l1W80,   no t lhhori~8d       by th8 ax-
oeptlons, but lttoa#tlng to llalt oovarag8 md uolude rirk8
18 oontruy   to the inaonte8tabh    r8qulromnt.      *rnler       v.
P8OlflO              YUtU81                   uf0      XMLUMO~               ColpLlv,            173       hr.         1078,        88
X&H.             76           .     For 8 oo~eotlon Of 8uthorltl88 8.8 the WOta-
.tiOZl8         8t       33        A.L.R. 394, 8nd 88 A.L.R. 773.

                          The            rO-8          8a8*8          sonatrulng             a nd l               log tin very
alall8r ltmonta8t8bl8 rWJtireIWit                                                      Of title                   732, V8rn0n'l
flonorable il. f. Lockhart,                             p4xc       5




&notated Civil Statutes,        u-e helpful in determlnl~      the lp -
pllaablllty of the 8bOVe nrentloned prorl8lone to the aviation
018U8e. The SU&WeM       COUl’t  Of 2’0x88, fIl AMrfOPn N8tfOnd     In-
lr8110e C~qmny  v. Tabor, 230 3. U. 397, 8aldr

             *After the lxplratl0n of the period fixed,
        the 8UbdiViliOn WliUfMt~8  811 dden8cl8, OXOept
        tlloae mpeol8ll~ a8ntlonab."

In barfern             Ymtlowl            Iauur8noe Company v. UO1.h. 22 3. If. (2dj
1063, the         Ccrri8810~              of 49Oa18                    nald;

                  Vh0 ra~iing md lrr00t or                                      there      prOVi8iOIA8
        VU8       t0 pe80?1be t.UO mlr8 l8   lyli.EU@ p@r-                 tb
        i0d Of lfMit8tiotl, aftOr Vhlah I10 dWfOM0,    OXO@pt
        no-pant      of preaiuw or vlolatlom    or oon4l-
        tlopl relative to naval or ullltu~     servloe  dur-
        i0.g the VU,   8houldb  libb3dt0    4.hatpapd
        Or    8   iu8      pOilOy..            .        .’

                  In    Atlanto           We            Iwursaoo           Company          v.   CoCPIer,      85
3. w. (la) lo45, tb8 Camri8810n 0r &Jp818  (opinion adopted
by the Suprm   Court) ha4 far oonsl4errtlon a ola~u provldlng
thlt n0 b&h   bWMrit ~88 pay8b&   if duth ?88tdtWd ira 0
dL8ea80       OOXktr&OtWd
                       &Z’iOt                      t0        -     dAt8         Or   the    POllOy,      &hd   that
Qeeth     Zror
           8uoh aW18e Va8 not 8 risk -rumed.        On OePtllled
qllO8tlOM lnqalrlrl& vhetber , l.n vier 0r the incantestable   re-
quirement, the ln8urer could, 8.fter two year8, dete&koh      that
ground, the OOUPt 88id:
                  "                Life      fll8IWUWO
                                             8-88             %88uing
        pOxOii8’Oi                uf0      inrtWUiO8
                                           in     thi8    8%,8     ~0    LWt
        idt       rrute   dOtOm       rht u0eptioru             thy    rix.l
        vrite into     thlor  pOuO1.8.       %8      8titUtO8      Duy
        th e
           P Wr r ittd
                    lXOO~tiW,             ud     8 5JrOV28100       d&i-
        otherl   xoeptlonr 18 ~014. Any other oondruo-
        tlon   of the ltatutoa uould       thwart the evident
        ptWpO80    Of their   WBUtMIIt.        If    the   t¶X9eptlO3
        l ttO4ItWd   t0 be h       in thi8    -80        8hOkd4    be Up-
        held a8 valid, there would be no 1-t                    to   the
        number of uoeptlonr        that oo~ld be vrltten ln-
        to a alloy or life IPmmaaoe,         and, by mltlply-
        ino tg-,     an   iluuranoe  oompuly could vhittls
        doun the   rf8k8    It 88eU808  UJ2til ft 8pO11OfeE
        would have    but   little, if any, re81 value.     To
        prevent thl8 was the purpole far vhlch the Itat-
        utem were enacted.
            "The queetlon certlfled la 8nsWered 'NO.'"

              The Cornusr 0680 has been questioned by JuQo Funder-
burk in tha Oalooetl4n oare, 8rlpra, in 80 fU ar It doe18 Vith
Article 4733, but vc cannot agree thet it h88 been di8oredlted
as to it8 lnterpret~tlon       of the lncontestablo atiuSe of &tlcle
4732 + A8 to the letter interpretation it ha8 been folloued in
Ua8hlngton      Platlooal Inauranoa CmLpany V. Clay, i% 3. u. (2d)
834, Yhlah ca8c rch.wd, by virtue of &Section 3 of Artlole
4732,     to allow the insurer to Cafe&, after two yeer8, OKA a
~18~80 thet cuurot be dlatlng;uLahed in prlnclple from the
cl8ura now in question.

            A llre pollo~  provialon that the aontr8ot 8h8ll never
beoom effeotlve unlere it 18 delivered vbl2e ineuro 18 tiiUa
find in 8oun4 he8ltb la V81id. Qre8t PIetlonal Lit8 Iluuramce
CO       V.  &~Lc,   (corai88im  Or Appeal8 hai8iOA) 1% 3. u.
(23X2.       But the lneurer may not rely upon 8uch olauee 88 l
defame after the expiration of the two-year oonte8t8ble       r-
1Od. Reuablr Ufc In8urraoe       Coopeny v. Wyatt, 154 S.Y. r26)
24% ?ies4rve Loan ure Insurlace Capany v. Brown, 159 S.Y.
(24   179.

           In our oplnlon the aVi8tiOA  olau8e violate8 the, tin-
conte8table requirelaent8 of Artlola   4764r and 4764b, Vernon18
Annot8tea Civil St8tUtW8,  iololer 88 it purportr to provide a
dsfenu 8fter the expir8tlon of the eonte8t~ble    perlo   there-
in wt out, and suoh cbu8s 8hotid not be 8pproved by the Board
for that ronson.

          Us do not attempt to anover the broad que8tlon u to
uhother Artiole8 4732 a ndk 7 33
                               lpply to industrial lire and
group US4 pollcle8, but vu ~111, in thl8 oomeotlon, be glad
to give our apinIon on any 44finlte f8Ot 8lturtlon sow berore
your department. Iiowvor, ue oil1 to your 8ttentlOn the fol-
1OUlng pX’OV181Oll of hticle 476'Jbr

          "Sad. 7. A88OUiatiOA8 &ZCWptOd.    ThL8 AOt
     8hd1  IlOt 8p&  t0 10081  UUtLld ai4 888OOilbtiOM
     or etate-vlde mtrtu81 life, health, uul eeoldent
     OapMlW8   and burial ~88Oclation8 Operating un-
     der Senate Bill Ao. 135, Act8 of the Regulu S48-
     8iOn of the Forty-8lxt.h kgl818tuF8,  but thi8 Act
     8nd ao other rhell apply to uxd govern the form
     8nd oontent 0r lndustrlal lir4 insuranae pollol48,
Eonorabl8   0.   P.   lAwhut,   p8go   7


        u they ua bf&md buda,              lm8ud by al1 otbu
        la8ur~O txmpMl88.’
                                                 YOtu# ruy truly
