                    Aus-    aa, TF


                     November 28, 1955

Honorable Garland A. Smith, Chairman
Board of Insurance Commissioners
Life Division
Austin, Teqas
                      Opinion No. S-182
                     Re:   Interpretation of Sections 3 and
                           5 of Chapter 363, Acts of the 54th
                           Legislature, Regular Session,
                           1955, as to the necessltg of in-
                           creasing capital or surplus of cer-
                           tain limited capital stock companies
                           organized under the provisions of
                           Article 3.03 of the Insurance Code.
Dear Mr; Smith:
          You have requested an opinion concerning whether the
provisions of Senate Bill 12, Acts of the 54th Legislature,
Regular Session, 1955, Chapter 363, page.916, require limited
capital stock companies organized and operated under the pro-
visions of Article 3.03 of the Insurance Code to Increase
their capital and surplus to comply with the requirements of
Article 3.02 of the Insurance Code as amended by Senate Sill
12.
         You state In your letter:
          "Articles of incorporation for four companies
     have been approved by your office under the pro-
     vlslons of Article 3.03, and the status of.these
     companies is now in question for the reasons here-
     Wafter stated. Two of the companies received ap-
     proval, and thus became bodies corporate before
     May 15, 1955; the other two companies were incorpo-
     rated subsequent to that date. Mone of the four
     companies had received a Certificate of Authority
     from the Board of Insurance Commissioners on or
     prior to May 15, 1955."
          Section 5 of Senate Bill 12 provides:
         "That Article 3.03 of the Insurance Code
    be and it is hereby repealed; provided that
    every company heretofore organized and now
    opsl-atlngunder Article 3.03 shall, after the
    effec%ive date of this amendment to the In-
    surance Code, ba permitted to continue to
    operate and write nex business subject to the
    provisions of Chapter 3 of the Insurance Code
    as amerrcled,
                including the provisions of Set-       .I~'
    tion 2 of Article 3.02 of the Insurance Code. ~: ..
    as amended; provided, however, no such company       ~.~~
    shall be required to increase the amount of
    or convert the class or form of its capital or
    surplus to compiy with the requirements of
    Paragraph 5 of Article 3.02 of this Code as
     amerd fd . Ii

            St Is noted that this section
dALerepeals the provisions of Article 3.03 of the Insurance
    ;
(.2)provides what may be referred:'toas a "grandfather Clause"
authorizing companies~organized.drd operating under,ArfXcle,..~
                                                              '~
3.03'.6r.
        the effective date of.Senate Bill 12 to continue opera-
tions;
(3) permits companies falling within'the.."gra~f.fsther"~-iause~
to contihus.operation subject to provisions of Section,:2R,'of>.L
Article 3.02.
            9                                  .

(4) provides an exception to the companies ~fslli~~~'vithifl'the
"graIIdf8therclause" stating that such companies shall not:be
required "to increase the amount of or convert the class or.
form of its cepital or surplus to comply with~the.requSrements
of Par8graph 5 of Article 3.02 of this Code 8s amended."
                                                         Inde-
          In Trio Independent School Dlstrick v.'i'Sabinal
pendent Scboo~District, 192 S.W.2d 899 .(Tex.Civ.App;~lgYb)
the court stated the rule of statutory construction govern&
your puestion as follows:                        w;i
          "The act itself shows thst it was passed by
     the House on April 17, 1945, by 123 yeas and no
     nays. and was passed by the Senate on May 3??aby
     26 yeas arxl2 nays, and was ,approvedby the
     Governor on May 9, 1945, and it carried~the emer-
     ger-cyclause. SsFd act became effective on May
     oth, prior to which the election had been held,
Eon: .G8rland A. Smith, page.3 ($182)


     its returns canvassed and the order entered by
     the County School Board carrying the result of
     said election which favored annexation into ef-
     fect...An act does not speck just from the dete
     it was p8ssed by the House.or by the Senate,
     but it speaks from the date it takes effect,
     that is on the date it ~becomesa law, which. In
     this case was on May gth, and It was therefore
     effective on and after'such date and included
     all clesses of school districts that were with-
     in the purview of the Validating Act which were
     In being and had been recognized by the state
     or county authorities as school districts prior
     to,said times. In support of this view Judge
     Gaiixes, in the case ofGalveston R.'& S.:A. R.
     Co. v. State, 81 Tex. 572, 17 s.w.67, 72, in
     passlngupon'the effective date 'of a statute,
     said:
          "'We apprehend that no universal rule of
     construction can be adopted when 8 statute, which
     makes 8 distinction between'fu.ture.andpest
     transactions, is passed"upon‘~'one'day‘to
                                             take ef-
     fectupon another; but we thSnk.the general rule
    his that a statute speaks from the time it becomes
     a law, and what has occurred between the date of
     its passage and the time it took effect is deemed,
     with respect to the statute, a past transaction.
     This is by analogy to the rule for the construc-
     tion of wLl1.s. Price v. Hopkin 1 Mich. 318;
     Charless v..'Lamberson,1 IOW8   3   442 B3 Am.
     Dec. 4517; City of D8venport v.
                                   8. Davenport & St.
     Pg Railroad Co., 37 Sowa 624; Gilkey v. Cook,
     60 Wls. 13 B8 N.W.63g; Jackman v. Garland, 64
     Me. 133; hransville & CJRailroad    Co. v. Barbee,
     74 Ind. 1t g. This rule should not be applied
     when the language of the act shows a contrery in-
     tention. But we find nothing in the statute under
     consideration which evinces an intention that the
     date of its passage, rather than that on which it
     was to take effect, was to be considered the
     dividina voint between the future and past failures
     contemplated in the proviso.'" For additional au-
     thorities see Scales v. Marshall, 96 Tex. 140, 70
     S.W.945 (1902); Mooreman v. Terrell, 109 Tex. 173,
     202 s.w.727 1918 ; Fischer v. Simon, 95 Tex. 234,
     66 S.W. 447 I1902 .'
Hon. Garland A. Smith, page 4 (s-182)


          Since Senate Bill 12 Spe8kS from its effective date,
it Is our opinion that the phrase "every compaFy heretofore
organized and now operating under Artiolt33.03"r9fers to every
company organized prior to and operating under ArtFcle 3.03 on
the effeotlve date of Senate Bill 12.
            We are supported in this view by the following:
Sinae Article   3.03 has been repealed by Senate Bill 12, it
would be impossible for euch company to operate under the pro-
visions of Artlole 3.03 after the effeotf;ve   date of Senate
Bill 12 without the “yandfather     clause.   Therefore, the
phrase “now operating”cannot    refer to a date subsequent to
the effeotive   date of Senate Bill 12. There Is no provlslon
In Senate Bill 12 which shows an Intention    that the phrase
“now operating” refers to a date prior to the effective    date
of Senate Bill 12 and no date other than the effeotive date
has been epeolfled,    Had the Legislature  Intended any other
date then the effeotlve   date, it would have oOnt8inbd suoh
lanpmge . See Galveston H, & 9. A. R, Co, v. State, m.
            You are therefore advised that oompanles organlmd
under the--provisions   of Article 3.03 and o eratlng on the.ef-
feotlvs   date of Chapter 363 Aots of the 5 i th Legislature,    ‘are
authorlaed under the prodons        of Section 5 to oontlnue opem-
tlons subject to the provlslons     of Seotion 2 of Article   3.02
of the Insuranoe Code as amended without lnoreaslng      the amount )
of or converting    the class or form of their capital   or surplu8
;&p;zlded     ln Paragraph 5, Seotlon 1, of Artl~ole 3.02 as.
         I


            Companles organized under the provisions     of
     Artlole   3.03 of the Insuranoe   Code and operating
     on the effeotlve     date of Chapter 363, Acts of the
     54th Legislature,    1955 are authorleed to ocntlnue
     operations   subject to ihe provlslons  of Section 2
     of Article   3.02 of the Insurance Code,.as amended,
     without lnoreaalng the amount of or oonvertlng the
     class  or form of their capital or surplus, as pro-
     vlded in Paragraph 5, Section 1 of Artiole. 3.02,
     as amended.
APPROVED:                          Yours very truly,
J. C. Davis Jr.                    JOHNBESJSHEPPWD
County Affairs Dlvlslon            Attorney General
Elbert M. Morrow
Reviewer
Mar K. Wall
Rev9 ewer
L. W. Gray
Special Reviewer
Davis Grant
First Assistant
