                                           The Attorney         General of Texas
                                                            August 31, 1982
MARK WHITE
Attorney General


                                         Mr. Sam Kelley                        Opinion No.m-511
Supreme      Court Building              Consumer Credit commissioner
P. 0. BOX 12546
Austin.    TX. 76711. 2546
                                         P. 0. Box 2107                        Re:   Construction of article
5121475-2501                             Austin, Texas   78768                 3.53,   section   8B   of   the
Telex    9101674-1367                                                          Insurance Code regarding refund
Telecopier     5121475.0266                                                    of unearned insurance premiums
                                                                               on terminated policies
1607 Main St., Suite 1400
Dallas,   TX. 75201.4709                 Dear Mr. Kelley:
2141742.6944
                                              You ask what position the Office of Consumer Credit should take
                                         in enforcing the minimum refund provisions in the consumer c-red:-it
4624 Alberta       Ave., Suite     160
El Paso, TX.       79905-2793
                                         chapters of the Texas Credit Code which exempt refunds of unearned
9151533.3464                             credit insurance premiums of less than one dollar. V.T.C.S. arts.
                                         5069-3.18((j), 5069-4.02(6), 5069-5.03(6), 5069-6.04(9), 5069-6A.08
                                         (lo), and 5069-7.06(8).
1220 Dallas Ave., Suite           202
Houstcm,     TX. 77002-6966
7131650-0666
                                              As described in your inquiry, confusion has arisen as a result of
                                         two 1981 enactments by the Sixty-seventh Legislature amending the
                                         provision in the Texas Insurance Code which also governs refunds of
806 Broadway.         Suite 312          credit insurance premiums. Ins. Code art. 3.53,     §B(B). While not
Lubbock,     TX.    79401.3479
                                         identical in scope there is substantial overlap of credit insurance
606,747.5238
                                         covered by consumer credit chapters of the Credit Code and the
                                         Insurance Code.     Compare V.T.C.S. arts. 5069-3.01, 5069-4.01,
4309 N. Tenth, Suite B                   5069-5.01, 5069-6.01, 5069-6A.02, 5069-7.01 with Ins. Code art. 3.53,
McAllen,     TX. 78501-1665              52(A)(2).
5121682.4547

                                              Until the 1981 amendments, article 3.53, section 8(B) of the
200 Main Plaza, Suite 400                Insurance Code, was in complete harmony with the Credit Code in
San Antonio.  TX. 78205.2797             requiring refunds of all unearned credit insurance premiums of one
5121225-4191                             dollar and more.      In the last regular session, however, the
                                         legislature passed and the governor approved two amendments to section
An Equal      Opportunity1               8(B) of article 3.53 which raised the minimum refund requirement.
Affirmative     Action    Employer       House Bill No. 2198,   Acts 1981, Sixty-seventh Legislature, chapter
                                         849, at 3227,  exempts refund of unearned premiums of less than three
                                         dollars. House Bill No. 2388, Acts 1981, Sixty-seventh Legislature,
                                         chapter 493, at 2109, raised the exemption to less than five dollars.
                                         We are    therefore presented with      three facially inconsistent
                                         requirements for unearned credit insurance premium refunds:        the
                                         provisions of the Texas Credit Code, House Bill No. 2198, and House
                                         Bill No. 2388.




                                                                   p.   1844
Mr. Sam Kelley - Page 2       (MW-511)




     We need not decide whether House Bill No. 2198 or House Bill NO.
2388 controls article 3.53 of the Insurance Code, since we believe the
Credit Code provision prevails in any event.

     In 1963, article 3.53 of the Insurance Code was x-written and
enacted in its present form. That enactment contained a saving clause
which stated, in part:

                 The provisions of this Act shall be cumulative
              of, supplemental and in addition to the provisions
              of Senate Bill 15, as passed by the Fifty-eighth
              Legislature, Regular Session, 1963, entitled
              'Texas Regulatory Loan Act,' and the provisions of
              this Act shall not in any manner repeal, amend or
              modify said Senate Bill 15, nor shall it be so
              construed, but to the contrary, this Act shall be
              SO  construed as to be consistent with the
              provisions of said Senate Bill 15.

Acts 1963, 58th Leg., ch. 405, at 986. Senate Bill 15, the Texas
Regulatory Loan Act, referred to above, was also enacted in 1963.
Acts 1963, 58th Leg., ch. 205, at 550. Clearly article 3.53 of the
Insurance Code was made subordinate to the provisions of the
Regulatory Loan Act.

     In 1967, the Regulatory Loan Act was expressly reenacted as part
of the Texas Credit Code. Acts 1967, 67th Leg., ch. 274, at 608.
Generally, the Regulatory Loan Act is codified as chapter 3 of the
Credit Code. V.T.C.S. art. 5069-3.01, et seq. The question becomes
whether the subordination of article 3.53 of the Insurance Code
continues and carries over to the Credit Code.

     In enacting the Credit Code, the legislature expanded regulation
of credit transactions beyond the loans covered by the Regulatory Loan
Act. In doing so, however, similar stated intent and purpose were
used.   Both enactments were explicitly intended to establish a
regulatory system to remedy the abuses which have occurred in many
consumer credit transactions. See Acts 1963, 58th Leg., ch. 205, at
551; Acts 1967, 60th Leg., ch.        274, at 608, (Declaration of
Legislative Intent contained in both Acts). The main extension of the
Credit Code was the further classification of lender and regulated
loans into a needed comprehensive code. Acts 1967, 60th Leg., ch.
274,   at   609.

     Due to the similar purposes of the Regulatory Loan Act and the
Credit Code, it appears that the legislature's intent to subordinate
article 3.53 of the Insurance Code continues. Moreover, the continued
subordination is necessary  to maintain the comprehensiveness of the
Credit Code. If the 1981 amendment to article 3.53, section 8(B) is




                                 p. 1845
Mr. Sam Kelley - Page 3   (Mw-511)




allowed to override the minimum refund provisions of the Credit Code,
its purpose in being the self-contained system of consumer credit
regulation will be eroded.

     The types of credit transactions covered by article 3.53 are
different from those covered by the several chapters of the Credit
Code. Article 3.53 applies generally to accident and health insurance
sold in connection with credit transactions of less than five years
duration, regardless of amount. Ins. Code art. 3.53, §2(2). In
distinction, the several chapters of the Credit Code apply to specific
types of consumer credit transactions and cover credit insurance
involved in them. Chapter 3, for example, is limited in application
to loans of $2,500.00 or less. While there is overlap, there clearly
are certain loan transactions which are covered by article 3.53 of the
Insurance Code and not by chapter 3 of the Credit Code.

     Similarly, there are different areas of coverage contained in
other Credit Code chapters. Chapter 4 applies to installment loans
repayable in substantially equal monthly payments. Art. 5069-4.01,
V.T.C.S. Chapter 5 is limited to secondary mortgage loans on real
property improved by a dwelling designed for occupancy by four
families or less and which are repaid in more than 90 days. Art.
5069-5.01, V.T.C.S. Chapter 6 applies to certain consumer installment
sales.   Art. 5069-6.01, V.T.C.S.     Chapter 6A applies to retail
installment sales of manufactured homes. Art. 5069-6A.01, V.T.C.S.
Chapter 7 applies to retail installment sales of motor vehicles. Art.
5069-7.01, V.T.C.S. Again there will be loan transactions which will
fall under the more general article 3.53 and not be covered by the
Credit Code.

     In addition to applying only to the stated loan transactions, the
minimum refund provisions of the Credit Code are limited to the
situations when the credit insurance premium is received by the person
extending   credit.    Articles    5069-3.18(6),   5069-4.02(6),   and
5069-5.03(6) of the Credit Code require refund of unearned premiums
"received by the seller or holder."        Articles 5069-6.04(9) and
5069-7.06(B) require refund of unearned premiums "received by the
seller or holder." Article 5069-6A.8(10) requires refund of unearned
premiums "received by the creditor."

     Article 3.53 of the Insurance Code is not limited to situations
when the insurance premium is integrated into a credit transaction.
As set out in both amendments to section B(B) of that article, it
applies generally to "an amount paid by or charged to the debtor for
insurance." Comparatively, the refund provisions of the Credit Code
are much more specific and defined in their application.

     If the legislature had intended to change the minimum refunded
provision of the Credit Code, we believe it would have done so




                             p. 1846
Mr. Sam Kelley   -   Page 4 (MW-511)




directly. Substantial changes in the Credit Code were enacted by the
legislature in 1981. Acts 1981, 67th Leg., ch. 99, at 221; ch. 111,
at 273; ch. 496, at 2126; ch. 682, at 2555; ch. 707, at 2627. Since
none of these amendments and new provisions changed the minimum refund
provisions of the Credit Code, it is proper to conclude that no change
was intended.

     Sam Bassett Lumber Company v. City of Houston, 198 S.W.2d 879
(Tex. 1947), sets out the established rule for reconciling a specific
statute which conflicts with a more general one:

                The general rule is that when the law makes a
           general provision, apparently for all cases, and a
           special provision for a particular class, the
           general must yield to the special in so far as the
           particular class is concerned. Perez v. Perez, 59
           Tex. 322. This rule is based upon the principle
           that all acts and parts thereof must stand, if
           possible, each occupying its proper place. and
           that the intention of the Legislature is more
           clearly   reflected by a particular statute than by
           a general one. Accordingly a specific act is
           properly regarded as sn exception to, or
           qualification of, a general law on the same
           subject previously enacted. In such a case both
           statutes are permitted to stand, the general one
           being applicable to all         cases except the
           particular one embraced in the specific act.
           Townsend v. Terrell, 118 Tex. 463, 16 S.W.2d 1063.

198 S.W.2d at 881.

     The minimum refund provisions in the consumer credit chapters of
the Credit Code are more specific in coverage than article 3.53 of the
Insurance Code. The Credit Code's object of comprehensive regulation
of consumer credit transactions is also more specific in the context
of its coverage. Consequently, article 3.53, being more general in
object and in application, must yield to the Credit Code when a credit
transaction falls under the specific coverage of a consumer credit
chapter.     This conclusion that the Credit Code minimum refund
provisions prevail is consistent with the statements of legislative
intent discussed above. This oninion should not be construed as
abridging in any way regulation of other aspects of credit insurance
by the State   Board of Insurance. See, e.g., State Board of Insurance
v. Deffebach. 631 S.W.2d 794 (Tex. Civ. App. - Austin 1982, writ
filed).




                                 p. 1847
.   -


        Mr. Sam Kelley - Page 5      (MW-511)




                                       SUMMARY

                       For credit transactions covered by the consumer
                  credit chapters, subtitle two of the Texas Credit
                  Code, all unearned credit insurance premiums must
                  be refunded except for amounts totalling less than
                  one dollar. V.T.C.S. arts. 5069-3.18(6), 5069-4.02
                  (6)s    5069-5.03(6), 5069-6.04.(9), 5069-68.8(10),
                  5069-7.06(B). These requirements are unaffected by
                  the 1981 amendment to article 3.53, section 8(B) of
                  the Texas Insurance Code.




                                                 MAR<      WHITE
                                                 Attorney General of Texas

        JOHN W. FAINTER, JR.
        First Assistant Attorney General

        RICHARD E. GRAY III
        Executive Assistant Attorney General

        Prepared by Jeff Hart
        Assistant Attorney General

        APPROVED:
        OPINION COMMITTEE

        Susan L. Garrison, Chairman
        Jon Bible
        Rick Gilpin
        Jeff Hart
        Patricia Hinojosa
        Jim Moellinger
        Bruce Youngblood




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