             TEEATBXB-Y                      GENERAL
                          OFTEXAS
                          AUSTIN   H;TEXAR
GERALD C. MANN




    Honorable Walter C. Woodward
    Life Insurance Commlsslon
    Board of Insurance Commission
    Austin, Texas
    Dear Sir:                      Opinion No. O-2390
                                   Re: Union Burial Club of Free-
                                        stone County.
              Your request for an opinion of this department has
    been received and considered. We quote from your letter as
    follows:
              "I am enclosing a letter received by this De-
        partment from the Honorable Bowlen Bond of Fairfield,
        Texas, and our reply together with constitution and
        by-laws of the Union Burial Club of Fairfield, Texas.
              "The reason I am referring the matter to you
        Is that Mr. Bond asked that we submit the matter
        to the Attorney General to determine if your De-
        partment takes the same view of having the Union
        Burial Club secure a permit and operate as an in-
        surance organization as Is taken by this Department.
              'In this connection may I call your attention
        to Chapter 8A, mutual assessment life insurance com-
        panies, Article 4859f, Section 6B. This particular
        law compels all organizations issuing Insurance con-
        tracts to secure a permit from the Board of Insurance
        Commissioners. I also direct your attention to
        Senate Bill 135, passed by the Forty-Sixth Legislature,
        which Is now Article 5068-1, section 1 of which tells
        the type and kinds of concerns to which this particular
        act Is applicable. In the opinion of the Department,
        the Union Burial Club would come under the law as an
        insurance organisatlon and should be required to
        secure a permit and operate thereunder.
              "Please study the enclosed constitution and
        by-laws of the Union Burial Club and advise the
        Department If our position is correct Fn requiring
        the said Union Burial Club to secure a permit from
        this Department."
Hon. Walter C. Woodward, page 2        O-2390


          The adopted Constitution and By-Laws of the IJnios
Burial Club reveal that:
          "Article 2. The object of this Club shall
    be to promote Benevolence, Charity, Fellowship
    and Brotherhood among the membership; to help
    sick members and to 'bury the deceased members.
          "Article 4. The officers of this Club shall
    be President, Vice-President, Secretary, Assistant
    Secretary, Treasurer, and other officers as a
    majority of the Club may from time to time desire.
          "Section 3. It shall be the duty of the
    Secretary to keep a fair, full and accurate re-
    cord of the proceedings of each meeting, and
    maintain and keep a permanent record of the same;
    keep a record of all monies received by the
    Treasurer and the amount and purpose and to whom
    each amount paid out is made; report the financial
    condition of the Club when requested by the body;
    and to turn over all minutes and records to his or
    her successor when duly elected.
          "Section 5. The Treasurer shall keep and
    hold all money received by the Club, and shall
    deposit the same in some'bank deslgnated by the
    Club to the credit of Union Burial Club of Free-
    stone County, Texas; to keep a record of the
    money received, by whom donated and the date there-
    of, and a complete record of all money paid out
    and to whom paid and the date and purpose there-
    of; make his or her report when requested by the
    Club; and turn over to his or her successor all
    records, reports, etc., when the same has been
    duly elected by the Club.
          "Article 7. All applications of members
    for sick relief benefits, funeral benefits, and
    any and all requests from members of the Club
    for financial aid or assistance shall be addressed
    to the benevolance of this Club.
          "Article 11. The Club shall donate to dls-
    tressed and sick members upon the recommendation
    of the Sick Commlttee, which Committee shall be
    appointed by the Club. Any member who has not
    donated to the Club in the past three consecutive
    months shall not be entitled to a donation from
    the Club.
,   -


    Hon. Walter   C.   Woodward,   page   3   O-2390


              "Article 12. The President shall appoint
        a Committee which shall be known as the Relief
        Committee whose duty it shall be to visit the
        sick members of the Club, investigate their
        condition, and to report to the Club. It shall
        be the duty of a member when he or she gets
        sick to communicate with the Chairman of the
        Relief Committee, or any member thereof, and
        make application for relief if desired.
              "Article 13.  The President shall appoint
        a Committee of three members which shall be
        known as the Funeral Committee. It shall be the
        duty of the Funeral Committee when notified of the
        death of a member of the Club to investigate the
        books of the Secretary and determine therefrom
        whether said deceased person is a member of the
        Club in good standing. If the deceased member Is
        In good standing and Is entitled to funeral
        benefits, then the Funeral Committee shall make
        its recommendation to the Club, and the Presl-
        dent, Secretary and Treasurer shall draw on the
        funds of the Club such amount as the Funeral
        Committee has found the deceased member deserves.
              "Article 14.  When any member fails to
        make a donation to the Club for three consecu-
        tive months, his or her name shall be dropped
        from the rolls of the Club by the Secretary at
        the end of the third month, and such member
        shall no longer be a member of this Club in good
        standing. Such member may become reinstated by
        complying with the Constitution and By-laws and
        the rules and regulations of this Club.
              "Article 18.  Section 2. The Club may
        adopt any rules or regulations not inconsistent
        with the provisions of the Constitution and By-
        laws l * * and any member who fails or refuses
        to abide by such rules, regulations and orders
        shall automatically be dropped from the member-
        ship roll and shall not thereafter be entitled
        to any of the benefits of this Club unless and
        until he or she Is reinstated under the provi-
        sions of this Constitution and By-laws and the
        rules and regulations of this Club.
              "Article 19. Section 1. Burial benefits
        that may be paid on the funeral of the members
        of this Club shall be as follows: Not more
                                                                .
                                                            -       .


Hon. Walter C. Woo&ward, page 4         O-2390


    than $150.00 when the membership of the Club
    is 70 or more; not more than $75.00 when the
    membership is 50 or above and~not more than
    70; not more than $50.00 when the membership
    is less than 50 in.number.
          "Section 2. Sick benefits may be paid to
    members of the Club when the same has been re-
    commended to the Club by the Relief Committee
    not to exceed $1.50 per week to any member."
          Art. 5068-1, et sep, Vernon's AnnotateKCivll
Statutes governs so called Mutual Assessment Companies.
Section 1 of that article provides:
          "This,-
                Act shall apply to and embrace all
    insurance companies and associations, whether
    Incorporated or not, * * * * * whose funds are
    derived from the assessments unon Its * * *
    members, and shall, in fact, apply to all life,
    health and accident companies or associations
    which do not come within the provisions cf
    Chapter 3, Chapter 5 Chapter 7, Chapter 8,
    Chapter 9, Chapter 18, Chapter 19, or Chapter
    20, Title 78 of the Revised Civil Statutes of
    Texas. This Act shall include local mutual aFd
    associations; statewide 1Lfe; or life, health,
    and accident associations; mutual assessment
    life. health and accident associations: burial
    associations; and similar concerns, by'whatso-
    ever name or class designated. whether snecifically
    named herein or not." (Underscoring ours)
          Section 2 of Article 5068-l gives the following
definitions:
          "'AssocLation' shall refer to and include
    all types of organizations, corporations, firms,
    associations, or grouts * * *' (Underscoring ours)
          I'+* * + *

          "Member' shall include policy holders or
    any persons insured by an association, bv wh:t-
    soever means the Insurance may be effective.
    (Underscoring Ours)
          We find that the Union Burial Club does not come
within any of the exceptions announced in section 1 of Art.
5068-1, supra. Consequently, it is our opinion, and you are
Hon. Walter C. Woodward, page 5           O-2390


advised that the constitution and by-laws, as quoted above,
places the Club and its contemplated activities within the
defined scope of that Act.
          Art. 485gf (6b), Vernon's Annotated Civil Statutes
provides that it shall be the duty of the Life Insurance Corn:
mission to require "any corporation, person, firm, assocla-
tion, local mutual aid association, or any local association,
company, or organization to have a certificate of authority
before being authorized to carry on any insurance business
in this State."
           Trusting that this fully answers your inquiry, we
remain
                                  Yours very truly
                            ATTORNEY GENERAL OF TEXAS


                                  By s,fWm. J. Fanning
                                        Wm. J. Fanning
                                             Assistant
                                  By skGrundy Willlams
                                       Grundy Williams
GW:RW:wc

APPROVES JUNE'll, 1940
s/Gerald C. Mann
ATTORNEYGEWERAL OF TEXAS
Approved Opinion Committee By s/BWB Chairman
