                     -   . .

                                                             R-788


                   T~~EA~~ORNEY               GENERAL
                                QFTEXAS

PRICE   DANIEL
                               AUWI-IN U.WS
ATTORNEY
       OENERAL
                               January 13, 1948

        Hon. George B. Butler
        Chairman ,Boardof InsuranceCommissioners
        Austin 14, Texas        Opinion No. V-474
                                      Rc: The constitutionalityof
                                          Section 2(A), House Bill
                                          85, 50th Legislature,
                                          prohibitinge.nyconncc-
                                          tions between burial as-
                                          sociations.
        Dear Sir:
                 Your request for an opinion regarding the
        above subject is two-fold:
                      1. The constitutionalityof Section
                 2(A), of House Bill No. 85, 50th Lcgisla-
                 turc; and
                      2. Whether this Section of the Act
                 applies to Burial Associationsorganized
                 both before and aftcr the effective/
                                                    date
                 of the Act.
        These questionswill be discussed in the order stated.
                  Section 2(A) of House Bill 85, 50th Leglsla-
        turc, reads as follows:
                      "There shall be no connectiondirectly
                 or Indirectlybetween two (2) or more Burial
                 Associations.No member, director, or offi-
                 cer of one Burial Associationshall be a mem-
                 ber, director, or officer of any other Burial
                 Association. No person whose husband, wife,
                 or employee is an officer or director of
                 one Burial Association shall be an officer
                 or director of.any other Burial Association.
                 No funeral director,undertaker,or funeral
                 home directly or Indirectlyconnectedwith
                 or designatedby one Burial Ass;~clation as
Hon. George B. Butler, Page 2 (V-474)


      Its funeral director,undertaker or fu-
      neral home shall be connectedwith or
      designatedby any other Burial Association
      as Its funeral director,undertaker, or
      funeral home to furnish Its members with
      its services and/or merchandiseor to
      service its policies or to be in any man-
      ner connectedwith Its affairs."
          The caption of the Act oro<;tlng
                                         a Burial As-
sociationRa$c Board contains,among other things, the
following: , . . making it unlawful for there to be
any connectionbetween two (2) or more Burial Associa-
tions; . . .'
         Prior to the passage of this Act, Article
4875-a-4,v.c.s., which prohibited in general terms any
connectionbetween Burial Associations,read as follows:
      "Art. 4875a-4. IndependentAssoclatkons.--
      There shall be no connectionbetween any
      two associationsoperating under this law
      and no one associationshall contributeany-
      thing by way of salary orcompensation to any
      executive officer for the purposes of such
      other associations."
In a former opinion, O-2879, by this Department,the fol-
lowing connectionswere held lawful under this Article:
(a) Where two Burial Associationsdesignatedthe same fu-
neral home in their policies; (b) where there was a family
relationshipbetween the officers of the two associations;
and, (c) where approximately150 persons held policies In
both associations. Later, another opinion, O-6956, rc-
affirmed the legality of almost identical connectionsin
addition to these situations: (a) Where two associatlcns
appoint one agent to write policies In both associations;
and'(b) where two associationsoccupy the same quarters
and share personnel as well as operatingexpenses. In a
third opinion, 0-5018, rendered after O-2879 and before
O-6956; the connectionof,interlockingor common of,f;f;;
and directors for two associationswas condemned.
rulings were each made In the light of Article 50684,
Section 23, v.c.s.,    which limits to $150.00 the value of
benefits allowed by Burial Associations. The two asso-,
oiations involved in O-2879 admitted that their purpose
was to provlde benefits in excess of $150.00. Such were
the views of this Departmentconcerningthe purposes of
Article 4875a-4,    supra, up to the time of the enactment
of House Bill 85 of the 50th Legislature.
Hon. George B. Butler, Page 3 (V-474)


          It has been contended In briefs filed in sup-
port of the propositionthat this Act is unconstltution-
al that this section of House Bill 85 violates Section
35 of Article III of the Constitutionof Texas, which
provides:
         "No bill, . . . shall contain more
    than one subject, which shall be expressed
    In Its title. But If any subject shall be
    embraced in an act, which shall not be cx-
    pressed in the title, such act shall be
    void only as to so much thereof, as shall
    not be so expressed."
          The first sentence of Section 2(A) Is admltted-
ly germane to the caption of the Act. The argument Is
aimed at the last three sentences of Section 2(A), which
declare unlawful the very connectionsheld lawful by
this Departmentunder Article 4875a-4, supra. The crux
of the argument is that the wording of the caption fail-
ed to signal or Inform the members of the Legislature
or the public that such connectionsbctweon burial as-
sociationsheld innocentby the Attorney General in
the former opinions under Article 4875a-4, were on the
threshold of being declared Illegal in the body of the
Act.
          The general rule of constructionharmoniously
applied by all of the courts In these matters Is that
the title or caption of lcglslatlveacts shall be libcr-
ally construed so as not to violate the constitutional
 revisions. Gulf Insurance Company v. James, 143 Tcx.
 24, 185 S.W. (2d) 966; Board of InsuranceCommisslon-
fi
ers v. Sprolcs Motor Freight Lines (Civ. App.), 94 S.W.
(26) 769; 39 Tex. Jur. 95. It is also a common rule In
construingcaptions or titles of legislativeacts that
where the provisions of the act are in any degree rc-
lated or germane to the title or caption, the act will
not be held unconstitutional. City of Beaumont v. Gulf
States Utility Company (Clv. App. ,.163 S.W. (2d) 426;
Phillips v. Daniel (Civ. App.), 91 S.W. (2d) 1193, cr-
ror refused. In the last-citedcase It was stated:
         "The law is settled that under the con-
    stitutionalprovisionsreferred   to any num-
    ber of provisionsmay be contained in the
    same bill or act, however diverse they may
    be; the only requirementbeing that they arc
    conslstcntwith the general object or subject,
Hon. George B. Butler, Page 4 (V-474)


     and have a mutual relation and connec-
     tion, directly or indirectly,with the gcn-
     era1 subject or object of the act or bill."
Many cases were cited to uphold this ruling.
          WC cannot agree that any part of Section 2(A)
ia wholly unrelated or foreign to the caption of the Act.
The connectlonscondemned in this section are not indi-
rectly, but directly, related to the subject of the Act.
The real subject of this Act is the regulation of Burial
Associationsthrough the creation of a Burial Associa-
tion Rate Board. As a part of this subject the Leglsla-
ture has made it unlawful for there to be any connection
between two or more Burial Associations. The first sen-
tence of Section 2(A) is an almost word-for-worddupli-
cation of the related wording in the caption. The last
three sentences of this Section simply specify certain
particular connectionswhich are unlawful. The 50th
Legislaturein so specifyingthese connectionsit dccm-
ed unlawful avoided the dilemma created under the old
Article, 4875-a-4, supra. If the Legislaturehad done
In that Article what the 50th Legislaturehas done In
Section 2(A), there never would have been any necessity
for questioningthe purpose of Article 4875-a-4.   And
simply because the Attorney General In the prior opln-
ions held certain connectionsto be lawful under that
general statute Is no reason for holding unconstitution-
al House Bill 85 of the 50th Legislature,which declares
those same connectionsunlawful. It affords no basis
for holding that Section 2(A) violates Section 35 of
Article III of the Texas Constitution.
          Section 2(A) applies to all Burial Associa-
tions without regard to whether they were organizedbc-
fore or after the effectivedate of the Act. The lan-
guage Is broad, clear and conclusive;no exemptions,cx-
ccptlons, or conditionsare contained therein. But con-
ceivably, it may be urged that Insofar as this Section
applies to assoc,lationsand their contractualrelations
existing prior to the effectivedate of the Act, it vio-
lates Article I, Section 16 of the Texas Constitution,
prohibiting the making of any law impairing the obllga-
tlons of a contract.
          We recognize the limitationsplaced upon the
State in the exercise of Its police power to regulate
an act or contractwhich affects the health, ,goodmorals,
or the public welfare. Lone Star Gas Company v. Kcllcy,
Hon. George B. Butler, Page 5 (V-474)


140 Tex. 15, 165 S.W. (2d) 446; Nichols, Labor Commis-
sioner v. Hart, 119 S.W. (2d) 1068. At the same time
the authoritiesare uniform that if the regulation is
a reasonableone and results in a benefit to the pub-
lic, it does not violate the safeguardsprovided in
the Constitutionas to contracts.
          We think a complete answer to this assertion
is found in the case of Daniel v. Tyrrell and Garth
InvestmentCompany, 127 Tex. 213, 93 S.W. (2d) 372.
There, a title insurance company contractedwith Tyrrell
and Garth to insure titles to its land. Later, the Leg-
islature passed a law granting to the Board of Insurance
Commissionerspower to promulgate rates to be charged
by title companies. Exercising this authority,the
Board fixed a rate which materially changed the rate
contracted for between the title company and Tyrrell
ana Garth, who contended in the suit that the previous
contract could not be affected by such action of the
Board. The Supreme Court's language which disposed of
that contention is deemed'appropriateto a disposition
here. It was said:
           "It is the rule that the contracts,and
     rates to be charged, by those engaged in a
     business affected by public Interests,may
     be regulated. Munn v. Ill., 94 U.S. 113,
     24 L. Ed. 77; Union Dry Goods Company v.
     Georgia T.S. Corporation,248 U.S. 372, 39
     %;i;"me .Court, 117,,63 L. Ed. 309, 9,A.L.R.
          .
          "The business of Insurance generally is
     now recognizedto be one affected by public
     interests. 14 R.C.L. page 857, and authorl-
     ties there cited.
          II
           . . . The police power of the State to
     regulate the business of title insurance,as
     to forms of contractsand rates, cannot be
     contractedaway by the title companies. Shaw
     vs. Lone Star Building and Loan Association,
     supra."
          Moreover,,it Is well establishedthat parties
who make contracts,affectingthe public interests,do so
subject to the State's right to limit~or prohibit the
making of such contracts. See: InternationalBrother-
hood v. Huval, 140 Tex. 21, 166 S.W. (26) 107.
Hon. George B. Butler, Page 6 (V-474)


          From what we have said, we do not wish to be
understoodas ruling that associationsunlawfullycon-
nected should be disposed of without regard to the
vested rights and interests of the lndlvidualpollcy-
holders of such associations. It 18 our understanding
that the Commission will promulgatereasonableregula-
tlons and requirementsthrough th& new Burial Associa-
tlon Rate Board which will give adequate protection to
such policyholders. This can be achieved by permittlng
such association,under proposed rules by the Rate
b3m'f,st;;e ;;;s~r+ice Its deceased members until its
                   ; or (2) to reinsure its business In
some other company (not a burial 'association) for cash
benefits only; or (3) to convert all such associations
wherein the benefits will be cash only. In this manner,
the vested rights of Individualpolicyholdersof such
associationswill not be distrubednor vitiated.
          It is our o inion~,thatthe regulationscon-
tained in Section 2(AP are reasonableand that they
result in a benefit to the public. The Legislature
in the same Act, Section 2(B), specificallydeclared
that such connectionsare against the public policy of
this State as follows:
         "It is against the public policy of
    this State for a Funeral Home or for those
    who own it in whole or in part to be connect-
    ed directly or indirectlyor affiliatedwith
    more than one Burial Associationand the pro-
    visions of this Act shall be liberally con-
    strued and the Board of InsuranceCommission-
    ers shall make such rules and regulationsas
    may be necessary to carry out the spirit and
    purpose of this Section.
Thus it will be.seen that the Legislaturewlsely'declar-
ed the clear purpose of the regulationsand made liberal
provisions for the Board of InsuranceCommissionersto
exercise the authority grantedtherein in a spirit of
high regard for the welfare of the public. We are con-
fident that In the exercise of this authority,the Board
of InsuranceCommissionerswill exercise sound discre-
tion in carrying out the spirit and purpose of this Act.
          It is therefore our opinion that Section 2(A)
of House Bill 85, 50th Legislature,does not violate
any provision of the Texas Constitution,and that such
Section applies to all burial associationswhether or-
ganized before or after the effective date of the Act.
             -   ,
                     ,-

                                                          .,,



hon. George B. Butler, Page 7 (V-474)


                          SUMMARY
          1. House Bill 85, Section 2(A), 50th
     Legislature,does not violate Section 35
     of Article III of the Texas Constitution,
     nor does it unconstitutionallyImpair ex-
     isting contracts.
          2.  Such Act applies to all burial
     associationsorganizedbefore or after the
     effectivedate of the Act. Daniel v.
     Tyrrell and Garth InvestmentCompany, 127
     Tex. 213, 93 S.W. (2d) 372.

                                Very truly yours
                            ATTORNEXGRNERAL OFTEXAS



                                    Charles E. Crenshaw
                                              Assistant
CEC:wb/JCP

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