             THE     A-ITORNEYGENERAI.
                        OF YlYExAs




Honorable D.B. Rwro'w
Chief Fxamider.and Chief Clerk
Board of Insurance Commissioners
Travis County
Austin, Texas

bar   Sir:                 Opinion No. O-2988
                         , Re: Seation 12, Senate Bill 136, 46th Legisla-
                                ture - Mortuary or relief funds of mutual
                                assessment life insurance companies may not
                                be used to pay taxes.

Your request for opinion has been received and aarefully considered by
this department. We quote from your request as follows:

      "In your opinion dated February 26, 1938, and written by Honorable
      Riohard Erooks, Assistant Attorney General, it nas held that mutual
      assessment life insurance corporations operating under At-tide  4859f
      (House Bill 303) are subject to taxation under Article 7064a: and it
      was also held that the Mortuary and Expense Fund of such corporations
      are to bear the tax in the seme proportion that they of the last ruling,
      of course,f is that the EOortuaryFund of such corporations may legally
      pay a part of the premium tax.

      Y<our opinion is now requested whether or not the Mortuary or Relief
      %nd of mutual assessment  associations (including mutual assessment
      life insurance corporations operating under Article 4859f) subject to
      Senate Bill 135, Acts of the Forty-sixth Legislature, may pay any part
      of the premium tax imposed by Article 7064a. In this connection,
      piease refer to Section 12 of Senate M,!.',
                                                135 which provides that only
      c&aims and to a limited extent the cost 0:'defending aontested claims
      'and nothing else' may be paid from t'neMortuary or Relief Fund."

Since the rendition of the Brooks' opinion, referred to in your letter, the
48th Legislature of '~erasenacted Senate Ml.1 135, new codified as Article
506&l, Vlomon~s Annotated 33x8s Ci.vilStatutes. ';hisact applies to the
         character of insure!GC companies'nsmsd in the bill and is applicn-
ki::d:liid
ble to mutual assessment life insuranae companies operating under Article
48.59f,V.S.T.C..S.,Section 12 of Article 5068-l reads as follows%
    "Sec. 12. Assessments when colLected shall be divided into at l&t
    two (2) funds. Gne (1) -7of\%?&   shall b-sthe mortuary or relief fund,
    t&whatever nsme it may be calied in the different associations,~from-
    which claims under certificate';shall bs paid, and to a llmited extent,
    the ,costof defending oontestudclaims,m-a%                     the other
    'funds shall be the expense fundsfrom whioh expenses may be ‘paid. At
    least sixty (605)per oent~f,assessments collected, except the member-
    ship fee, must be placed in the mortuary or relief fund. 'Themortuary
    or relief funds may be invested only in such securities as are a legal
    investment for the reserve funds of stock liferInsurance companies.

    "Such association shall provide in its by-lams for the portion of its
    assessments to be allotted to the nort;iaryor relief fund and may provide
    for the payment out of said mortuary or relief fund of attorneys'
    fles and necessary expenses arising out of the defense, settlement, or
    zent    of contested claims. Any such payments out of the;mortuary or
    relief fund for other than claims shall be subject-to approval of the
    Board of Insuranoe Commissioners.

     "A separate record shall be kept of the mortuary or relief funds of
     each group, club, or class, and the mortuary or relief funds of one
     group, olub, or olass shall not be used to pay the claims or obliga-
     tions of any other group, club, or alass."

Ir ~viw of the above quoted statute it his the opinion of this department
that your question should be mswered  in the negative and it is so answered.
That portion of,the Erooks' opinion which holds to the contrary is hereby
expressly overruled.




%JF:aw:ml

A?F'p.OViD
         JAN. 30, 1941
Gerald C. Mann
Attorney General of Texas
       .r
