             THE    ArroxciwEY           GENERAL

                          OFTEXAS




Board of Insurance Commissioners
Austin, Texas

Gentlemen:                          Attention: Mr. J. J. Timmins

                                    opinion No. o-2736
                                    Re: Burial insurance.

          Your recent request for an opinion of this Department upon
the questions a8 are herein stated has been received.

          We quote from your letter a8 follows:

         "I am enclosing letter I received today from Rains and
    Talley Funeral Home, together with identification card and
    a certificate entitling me to a $50.00 discount on the pur-
    chase of a casket and burial service from Rains and Talley
    Funeral Home, Marshall or Longview.

         "I direct your particular attention to questions Num-
    bers 1, 2 and 3 on the second page of the letter. Please
    advise this office at your earliest convenience if, iq your
    opinion, it would be a violation of the insurance laws of
    this state for this particular funeral home to do the
    thinga inquired about in the three questions enumerated."

          The letter from Rains and Talley Funeral Home above referred
to reads in part as follows:

         "Enclosed herewith we are sending you one of our nev
    identification cards. You will notice that while you are
    not a member of either Rains & Talley Burial Association
    or Rains-Talley Benefit Association, that we are extending
    to you, as a courtesy from the Rains & Talley Funeral Home,
    Marshall, Texas and Longview, Texas, free ambulance service
    to and'from any hospital in Harrison or Gregg counties.
    This courtesy is extended to you through the courtesy of
    the Funeral Home and is not contingent on your being a mem-
    ber of any burial association or mutual aid association.
    This courtesy will be extended to you whenever you present
    this card.
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Board of Insurance Commissioners, page .2 (O-2736)



          "We are also sending you, as a complement of the Rains
     & Talley Funeral Home, Inc., a certificate entitling you to
     a $50.00 discount on the purchase of casket and funeral serv-
     ices, as stipulated in the body of this certificate. It is
     not necessary that you carry any policy with any burial as-
     sociation or life insurance company in order for you to com-
     ply with the terms of this certificate. We are simply send-
     ing it to you because we like you.

          "The above paragraph described to you in the manner in
     which our ambulance certificates are distributed and the
     proposed manner in which the discount certificates may be
     issued. We assume that this will answer your question con-
     cerning free ambulance service in your letter of September
     4th, 1940, as to identification cards issued to Floyd and
     Versia Russell. These cards should have been issued in the
     name of Rains-Talley Benefit Association, the Burial Asso-
     ciation card being issued through error here in the office.

         "If you will notice the identification cards carefully
    you will note that it states that we will give free ambu-
    lance service to the person (not to the policy-holder)
    whose name and address is listed on the reverse side. For
    your information, we will issue one of these identification
    cards to any person who applies to our office for same, re-
    gardless of whether he is a policyholder or not. We do
    this in order to avoid discrimination.

         "For your information, we are enclosing an ambulance
    card issued by the Welch Funeral Home, of Longview, Texas,
    which is self-explanatory.

          "Also, for your   information, the $50.00 discount certi-
     ficate issued to you   is the first of such certificate which
     has ever been issued   by our company and we are issuing same
     to you in order that   we may obtain an opinion.

          "1. If this certificate is issued to any and all peo-
     ple, free of any charge and not contingent on membership in
     any burial association or life insurance company, is any
     violation of law indicated?

          "2. If this certificate is sold for a stipulated sum
     (say $1.00) and no further payments demanded, even though
     sold in conjunction with burial insurance or life insurance,
     is any violation of the law indicated?

          “3. If this certificate is sold for $50.00 in one cash
    payment or installmehts thereon, is any violation of the law
    indicated?
Board of Insurance Commissioners, page 3 (o-2736)



          "Please understand that the certificate issued to you
     is the only certificate that has ever been issued by this
     company and that none will be issued unless same can be is-
     sued without violation of any existing law. These certifi-
     cates have been prepared to meet a very nasty competitive
     situation that we have here in East Texas, and assure you'
     that they will be issued only as a last resort. We do not
     consider these certificates insurance, but the prepayment
     of part of the funeral bill."

          Section 23 of Senate Bill 135, Acts of the 46th Legislature,
reads as follows:

         "Any individual, individuals, firms, co-partnerships,
    corporations, or associations doing the business of pro-
    viding burial or funeral benefits, which under any circum-
    stances may be payable partly or wholly in merchandise or
    service, not in excess of one hundred and fifty ($150.00)
    dollars, or the value thereof, are hereby declared to be
    burial companies, associations, or societies, and shall be
    organized under the provisions of Chapter 274, Acts of the
    4lst Legislature, 1929, and amendments thereto; and shall
    operate under and be governed by Chapter 274, Acts 41st
    Legislature, 1929, and amendments thereto, and this Act.
    It shall be unlawful for any individual, individuals,
    firms, co-partnerships, corporations, or associations,
    other than those defined above to engage in the business
    of providing burial or funeral benefits, which under any
    circumstances may be paid wholly or partly in merchandise
    or services."

          Section 31 of Senate Bill No. 135, supra, provides that:

         "If any director, officer, agent, employee, or at-
    torney at law or attorney in fact or any association un-
    der this Act, or any other person, shall violate any of
    the provisions of this Act, not specifically set out in
    Sections 26, 27, 29 of this Act, he shall be punished by
    fine not exceeding five hundred ($500.00) dollars, or by
    imprisonment in the county jail not exceeding six (6)
    months, or by both such fine and imprisonment."

          In answer to your first question, you are respectfully advised
that it is the opinion of this Department if the above mentioned $50.00
discount certificate is issued to any and all people, free of any charge
and not contingent on membership in any burial association or life in-
susance company, there is no violation of the law.
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hoard of IWXCUUX     Commissioners, page 4 (o-2736)



          With reference to your second question, it I.6our opinion that
if the above mentioned certificate ia aold for a stipulated sum (say
$1.00) or any other amount and no further payment demanded, when sold
in conjunction with burial insurance or life insurance there would be
an evasion and violation of Senate Bill No. 135, eupra.

          In reply to your third question, you are advised that it is
our opinion that if the above mentioned certificate is aold for $50.00
in one cash payment or installments thereon and not in connection with
burial insurance or life insurance, there is no violation of the law.
As stated in the case of Phillips V. State, 125 S. W. (2d) 585, "free-
dom of liberty of contracts is guaranteed by the Constitutions of both
the State and Federal governments. The Legislature has no right to pro-
hibit and limit a man in his lawful right to contract, unless such con-
tract or contracts are fraught with fraud, deception and the like, which
if unbridled and unchecked might lead to much mischief. e . ." We do
not believe the above mentioned certificate or contract bears any in-
herent vice upon its face, and to outlaw it would be an invasion and
infringement upon a person's constitutional right of liberty of contract.
If the above mentioned certificate is sold for $50.00 regardless of wheth-
er it is paid for in cash or installments is immaterial, provided the
party buying the certificate actually pays $50.00 for the same and re-
ceives in return a value not exceeding $50.00, there is no contract of
insurance but merely an installment or advance payment for a casket and
funeral services, a right of contract which we believe is not prohibited
by law.

            Trusting that the foregoing fully answers your inquiry, we are

                                                   Yours very truly

                                             ATTORNEY GENERAL OF TEXAS



                                              By   /s/ Ax-dellWilliams
                                                       Ardell Williams
                                                             Assistant

AW:BBB:LM

            APPROVED OCT 3, 1940                       THIS OPINION
                                                      CONSIDERED AND
            I.4 Gerald C. Mann                         APPROVED IN
                                                         LIMITED
            ATTORNEY GENERAL OF TEXAS                   CONFERENCE
