            TExE~~~~~RNEY GENERAL
                   ~PTEXAS




Hon. Walter C. Woodward. Chairman
Board of Insurance Commissioners
Austin, Te'xas
Dear Sir:          Opinion No. o-2166
                   Re: Is the Texas Home Life Insurance Com-
                        pany of Palestine, Texas, operating
                        a btiial association in violation of
                        Sec. 23, S.B. 135?
                        And related questions.
          Your request for an opinion of this department on
the questions as are herein stated, has been recelved.
          We quote the questions submitted Ln your inquiry
as follows:
          "I . Is the Texas Home Life Insurance Com-
    pafiy~'of
            Palestine, Texas operating a burial as-
    sociation in violation of Sec. 23 of Senate Bill 135?
               (A) Are the provisions of-Section 31,
       Senate Bill 135 applicable to such operation?
          "II. Is the Sanders-McCullough Funeral Home
    operating a burial association Fn violation of Sec.
    tion 23 of Senate Bill 135?
               (A) Are the provisions of Section 31
       of Senate Bill 135, applicable to such operation?
          "III. Is the Texas Home Life Insurance Com-
    pany violating the provisions of Article 578 of the
    Penal Code in issuing certificates with the Funeral
    Service Plan included to some members and not is-
    suing it,to others, both of which are 'of the same
    class'and pay the same premium rate?"
          Section 23 of Senate Bill 135, Acts Forty-sixth
Legislature, reads as follows:
          "Any indfvldual, indidduals, firms, co-part-
    nerships, corporations or associations doing the
Hon. Walter C. Woodward, Chairman, page 2            o-2166


   business of providing burial or funeral benefits,
   which under any circumstances may be payable part-
   ly 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 organize under provisions of.Chapter 274,
   Act of the Forty-first Legislature, 1929, and
   amendments thereto; and shall operate under and
   be governed by.Chapter 274, Acts of the Forty-first
   ~~;~~s~~ure, 192.9,and amendments thereto, and
           . 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~,whiich'underany circumstances
   may be paid wholly or partly in.merchandi:seor
   services." I
          Section 31 of Senate Bill 135, provides that:
          'If any director, officer, agent, employee or
    attorney at law or attorney in fact or any associa-
   'tlon under this Act, or any other person, shall
    violate any of the provisions of this Act, not spe-
    cifically set out.in Sections 26,;27, 28, and 29 of
    this,Act, he,shall be punlshed by fine not to exceed
   Five Hundred ($500.00) Dollars, or by imprisonment
    in the county jail not to exceed six (6) months,
    or by both such.fine and imprisonment."
          Article $78, Vernon's Penal Code, reads, in part,
as follows:
         "No Insurance company doing business In this
   State shall make or permit any distinction or dis-
   crimination in favor of individuals between the
   insure9 of ,the same class and of equal expectation
   of life in the amount of or payment of premiums or
   rates charged for policies of life or endowment
   insurance or in the dividends or other benefits
   payable.thereon; nor shall any such company or
   agent thereof make,any contraot of insurance or
   agreement as'to such c.ontractother than as ex-
   pressed in the policy issued thereon, * *any officer,
   agent and such company violating any provision of
   this arti~cleshall be fined not less than one hun-
   dred dollars."
         We quote from   your   letter as follows:
Eon. Walter C. Woodward, Chairman, page 3         O-2166


          ‘I* l   l   *   *



          "The Sanders-McCullough Funeral Home of Bryan,
   Texas, a corporation, is operating a funeral home
   and/or undertaking business. In conjunction with
   such business the Sanders-McCullough Funderal Home
   has inaugurated and operated what is known as the
   Sanders-McCullough Funeral Service Plan in Bryan,
   Texas and vicinity. This Plan is operated with the
   cooperation of and in conjunction with the Texas
   Home Life Insurance Company, a local mutual aid ln-
   surance association, with home office located at
   Palestine, Texas. According to the principals,
   there Is no contract or agreement between the fun-
   eral home and the Insurance association other than
   that which springs from a mutually profitable enter-
   prise.' (The insurance association profits from the
   Increased volume of insurance business and the funer-
   al home profits from an increase in the undertaking
   business.) Incidentally, the Manager of the Funeral
   Home is a licensed agent of the Insurance Company.
         qThe Sanders-McCullough Funeral Service Plan
   is advertised extensively in the Bryan, Texas sec-
   tion through the medium of newspapers, mail, clrcu-
   larization in public places, personal solicitation
   and otherwise. All expenses of such advertising
   has been paid for by the Texas Home Life Insurance
   Company with the knowledge and consent of the Sanders-
   McCullough Funeral Home.
         "ThenPlan is submitted to individuals by li-
   censed agents of the Insurance Company, including
   the Manager of the Funeral Home, in the form of a
   standard cash benefit policy to which is attached
   a rider, the contents of which.are:
       "'SANDWS-MCCULLOUGH FUNEHAL SERVICE PLAN
                         of the
           Texas Home Life Insurance Company,
                   Palestine, Texas
    'THIS IS TO CERTIFY THAT:
     The SANDERS-MCCULLOUGH FUNERAL HOME of Bryan, Texas
     (hereinafter designated as Servicers) agrees to pro-
     vide funeral services and merchandise, since benefits
     are payable in cash and additional cost incident.to
     credit are eliminated, of a reasonable value of
     for each $     cash benefits provided for upon the
     aeath of any of the persons insured under the policy
Hon. Walter C. Woodward, Chairman, page 4          O-2166


     of insurance Issued by the Texas Home Life Insurance
     Company, Palestine, Texas to which policy this Certi-
     ficate is attached. SINCE CASH BENEFITS FOR THE DEATH
     OF CHILDREN UNDER FIVE YEARS OF AGE ARE REDUCED) SERV-
     ICES AND MERCHANDISE TO BE RENDERED, SHALL BE IN PRO-
     PORTION TO THE ABOVE.
    'The Services an& Merchandise provided for herein
     shall consist of a CASKET. OUTSIDE CONTAINER. EM-
     BALMING IF DESIRED, FUNERAL COACH, FAMILY CAR, PRCF-
    FESSIONAL SERVICE, USE OF CHAPEL, PROPER CLOTHING,
     AND OTHERSERVICES AND ATRICLES NECESSARY AND CUS-
     TOMARILY FURNISHED BY REPUTABLE FUNERAL HOMES FOR
    FUNERALS OF THIS TYPE.
    'This Certificate is issued for and In consideration
     of an assignment by the beneficiary, acceptable to
     the Services, of the benefits payable under Policy
    No.         of the Texas Home Life Insurance Company
     and is subject to all the benefits, provisions and
     conditions of said policy. This Certificate shall
     not take effect or be bindingupon the Servicers un-
     less all of the Insure& are alive and in good health
     at the time of its delivery to the person designated
     to receive same.
    'Issued this theday     of                  ,19-.
                          'SANDERS-McCUI&OlJ2H
                                             FUNERAL HOME
                                       Bryan, Texas

    'SEAL         This Service Available Only
                              at
                SANDERS-MCCULLOUGH FUNERAL HOME
                      502 W. 26th Street
                           Bryan, Texas
                        IN EVENT OF DEATH
                    Phone Bryan 123 Collect
                        Day   or   Night'


          Under the above mentioned facts the funeral serv-
ice and merc.handiseunder the~said Funeral Service Plan
are always $50.00 greater invalue than the cash benefits
provided for in the certificate, except as to $100.00 pol-
icies in which event the services and merchandise is aa$25.00
greater va%ethancash. Atthe time the policy or certificate is
Hon. Walter C. Woodward, Chairman, page 5         O-2166


issued, the Sanders-McCullough Funeral Service Plan rider is
attached to the policy and is delivered to the member as one
Instrument, The plan contemplates that all premiums will be
paid at the funeral home and then transmitted to the Texas
Home Life Insurance Company, and that all claims under the
certificate will be filed at the funeral home. The premium
rate for the certificate is the same rate that is charged to
other members of the Texas Home Life Insurance Company in
other seotions of the State not covered by the Sanders-Mc-
Cullough Funeral Service Plan.
          The Sanders-McCullough Funeral Home agrees to pro-
vide funeral services and merchandise, since benefits are
payable in cash and additional costs incident to credit are
eliminated of a reasonable value of            for each $
cash benefits urovlded for upon the death of any of the D=
sons insured under the policy of insurance issued by the-
Texas Home Life Insurance Company, to which the above men-
tioned certificate 1s attached. The services and merchandise
provided for are described.
          Neither the Texas Home Life Insurance Company nor
the Sanders-MoCullough Funeral Home is licensed as a burial
association under the provisions of S.B. 135, Acts of the
Forty-sixth Legislature. Benefits under the plan may be, or
are payable either wholly or in part in funeral services and
merchand~ise. Benefits and funeral services and merchandise
are $50.00 greater in value than cash benefits under the sav,e
certificate and benefits under the plan may be Andyare in ex-
cess of $150~00, except as.above noted. All members of the
Texas Home Life funeral service planalthough the premium rates
for membership are the same with or without the plan.
          The Funeral‘Service Plan Certificate is attached
to the insurance policy and becomes a part thereof. The
above mentioned insurance company and the funeral home are
together, contracting and doing the business of providing
burial or funeral benefits, which may be payable partly
or wholly in merchandise or service.
          In view of the foregoing facts and the definition
of burial companies, associations or societies as defined in
Section 23, Art. 5068-1, supra, you are respectfully advised
that it is the opinion of this department that the Texas Life
Home Insurance Company of Palestine, Texas and the Sanders-
McCullough Funeral Home are operating as a burial association
in violation of Section 23 of Senate Bill 135, Acts of the
Forty-sixth Legislature.
          The provisions of Section 33.,Senate Bill 135, Acts
of Forty-sixth Legislature are applicable to both the Texas
Hon. Walter C. Wooaward, Chairman, page 6         O-2166


Home Life Insurance Company and the Sanders-McCullough Fun-
eral Home.
          With reference to your third question, you are re-
spectfully advised thkt it 1~ our opFnFon that the Texas
Rome Life Insurance Company 'Isviolating the provision of
Article 578, Penal Code, supra, ln issuing certificate with
the Funeral Service Plan to some members and not issuing
it to others, both of which are "of the same class" and pay
the same premium rate. There should be no distinction or
discrimination between the insured of the same class where
the payment of premium or rates charged are the sam8. In
the above mentioned plan, the certificate with the Funeral
Service Plan Is avgilable to some and not to othemof the
same class who pay the same premium or rate.
          Trusting that the foregoing fully answers your fn-
quirg, we are
                               Yours very truly
                            ATTORNEY GENERAL OF TEXAS


                               By s/Ardell Willitims
                                    AM811 Williams
                                          Assistant
AW:ob:wc

APPROVED MAY 29, 1940
s/Gerald C. Mann
ATTORNEY GENERAL OF TEXAS
Approved Opln1on Committee By s/BWB Chairman
