Case Information
*1 GENERAL THEAYTORNEY OF TEXAS AUSTXN~~.T~:XAS
GROVER SELLERS
September Hohorable 0. P^; Lockhart, Chairman
Board of Insurance Commissioners
Austin, Texas
Dear Sir: Opinion Ro.~ o-i6170 '.
Re: Whether's mutual~ assessment health and accFdent'compang operating underchap. Title 78; Vernon's 'Annotated Civil Statutes, can amend its by- Iaws to permit proxy voti.ng at all members' meetings.
Your letter of August 21, 1944, requesting the opini.on of this department on the question stated therein, is as follows:
"Enclosed you will please see copy of-an order of.the Board of Insurance Commissioners dated, July 11, 1939, passed under authorlitg of Section'25 of Article 5068-l. You will observe that-under Sec- tions'I and.22of the above-Article' Is construed-.by the Board to apply to rmitual assessment health and accident companies operated under Chapter Title now repealed.
"Section 18 states: 'Proxy voting will beeper- mltted 'Xf an association"s by-laws"provide for It.' Please'advise'me whether a mutual assesbment heaIth and accident company operating under Chapter'6 may amend its by-laws to' permit proxy voting at all members' meetings,'Article 4789 of Chapter to the contrary notwithstanding."
Chapter 6, Title Vernon's Annotated Civil'Statutes, was 'repealed in 1929~by the 41st Legislature, First Called Ses- sion, page 90, Chapter 40,~ Section as amended by Acts 1929, 41st Legislature, Second Called Session, page 99, Chapter 60, Section 1.
'Article 486Oa-18, Vernon's Annotated Civil Statutes, provides:
"Chapters 5, 6,'9, 12; 13; 14, and~l5, of Title 15, of the Revised Civil Statutes Of 1925, *2 Hon. 0. P. Lockhart, page 2
and all other laws or parts of laws In conflict with the provisions of this Act,"'are hereby re- pealed; provided, that such repeal and the pro- visions of this Act will not apply to or affect any company or association of this State now do- lng business under the laws repealed, and they shall continue to be governed by the regulatory provisions of such laws. Any company organized and transacting business under any' of the laws repealed by this Act, or any general law'~of this State, other than Article 8308; or any other article under Title 130, Revised Civil Statutes, of Texas, 1925, may, however,'by resolution of its Board of Dlrectors;duly approved by the " majority of the members, at a meeting specifically called for that purpose,'and duly certified to by the president and secretary, and filed with the Board of Insurance Commissioners, elect to adopt.
and become subject to the provisions of this Act, in lieu of any act' or acts theretofore governing such company or association.
"Any company or association so electing and fully complying with this Act, may thereafter effect such kinds of insurance as is authorized by this Act, and specified in its articles of association then in force,, or as then or there- after amended,~together with such additional kinds of Insurance as are specified in such reso- lution and authorized by this Act."
Section 1 of Art. 5068-1, V.A.C.S., provides: "This Act shall apply to and embrace all insur- ance companies and associations, whether' incorporated or not, which issue policies or certificates of in- surance on the lives of persons, or provide health and accident benefit, upon the so-called mutual and assessment plan, OP whose funds are derived from the assessments upon Its policy-holders or members, and shall, in fact, apply to all life, health, accident companies or associations which'do notcome within the provisions of Chapter 3, Chapter~5, Chapter 7, Chapter 8;Chapter 9; Chapter 18, Chapter 19, or Chapter 20, Title 58', of the Revised Civil Statutes of Texas. This Act shall include local mutual aid associations; sta,tewide life, or life, health~and' accident associations; mutual assessment life/health and accident associations, burial associations; and similar concerns, for whatsoever name or class *3 . .
Hon. 0. P. Lockhart, page
designated, whether speclfically named herein or not.
"This Act does not enlarge the powers or rights of any of"such associations nor enlarge~~the scope of their legal or corporate existence; or authorize the creation of any association'or'corporation-to do any of the sorts of businesses above indicated, for'such creation is not now specifically permitted by'law.
The laws prohibiting or limiting such creation and exercise of corporate powers are not affected by this Act."
Article 4789, Chapter Title Vernon's Annotated Civil Statutes, provldes:
"Such corporations shall Issue no certificate of stock, shall declare no dividends, shall pay no profits, and the salaries of all officers shall be designated inits by-laws. Such by-laws shall pro- vide for annual members' meetings-, in which each~ member shall be entitled to vote, only in person, the amount of insurance held."
It will be noted that under Article 486Oa-18, thatcom- panies or associations operating under Chapter Per-’ non% Annotated Civil Statutes, the repeal of said Chapter does not affect any company or association that was doing business under said law Ghen it was repealed, and that such companies or associations shall continue to be governed by the regulatory pro-- visions of such laws. Article 4718, V.A.C.S., among other things, provides in effect that each stockholder shall be entitled to one vote for each share of stock fully paid up appearing in his name on the books of the company, whic.h vote may be given in per- son orby written proxy. Article V.A.C.S., among other things, provides ih effect that any policy holder may execute his proxy authorizing and entitling the holder to exercise his voting powers unless such proxy shall be revoked previous to such annual meeting. Articles'4718 and 4803 are not applicable to companies operating under Chapter Title 78, V.A.C.S. However, Article 4789 authorizes members to vote only in person. It will be noted that~ Article 5068-1, V.A.C.S'., expressly provides that the Act (Senate Bill'l35, Acts Regular Sesslon,~ 46th Legis'lature, 1939), does ‘not enlarge the powers or rights of any such association 'or enlarge the'scope of their legal or corporate existence nor authorize the creation of any association, or corporation to do any of the sorts of businessess above indicated, where such crea- tion Is not now specifically created by law. It Is further pro- vided that the laws prohibiting or limiting such creation and the exercise of corporate powers are not affected by the Act.
Hon. 0. P. Lockhart, page 4
Section 25 of Article 5068-1, Vernon's Annotated Civil' Statutes, authorizes the Board of Insurance Commissioners to pro- mulgate ,reasonable rules and regulations to carry out the pur- poses of the'Act. (Senate Bill 135, Supra.)
Section of said Article 5068-1, V.A.C.S., pro- vides:
"The by'-laws of any association may be'amended, by a majority of the members of the association- present when ratified by the Board of Directors, but only at.meetings called for that purpose or at reg- ular~ meetlngs. Amendments to the by-laws shall not be effective until approved'by the Board of Insurance Coinmissloners. 'Notices of all meetings, whether reg- ular or special, at whic'h amendments to by-laws will be considered, must be mailed to all members. Such notices nmstcontain full copies of the proposed changes' in the by-laws and fair explanations of the intent and effect thereof."
Section supra, is a general provision authorizing associations and companies goverhed by Article 5068-1, V.A.C.S., to amend their by-laws in compl.iance with said section. Kow- ever, nelther~ this section, nor ,any other section thereof, au- thorlzescompanies or associations operating under Chapter '6; V.A.C,S'., to amend their by-laws providing that mem- bers of such companies or associations can vote by proxy. As above stated, Art. 4789, Chapter Title 78,"v.~.c.s., which is applicable to companies operating under Chapter expressly authorizes members to vote only in person,
Section of an order of the Board of Insurance Com- missioners, dated July 11, 1939, provides, in part:
,I . D . . Proxy voting will be permitted if the associations' by-1aws"provide for it. If some officer of the association holds proxies of the members, the notice of any'meet.ing where the proxies may be voted"mst clearly remind the policy holder of the proxy and advise him that it will be voted unless rescinded by the member."
'Generally speaking, the Board of Insurance~Commissioners may'exerc'ise only'such authority as is conferred upon it by law in clear and unmistakable terms~and'the same will not be con- strued as being conferred by implication. "(Rumble Oil and Refin- ing Company vs. Railroad Commlssion of Texas'; 128 S.W. 2d, 9; Commercial Standa'rd Insurance Company vs. Board of 'Insurance Com- missioners of Texas, 3-W. 2d, 343; Board of Insurance Commis- *5 . .
Hon. 0. P. Lockhart, page -6170
sloners of Texas vs. Guardian Life Insurance Company of Texas, et al, 180 S.W. 2d, 906).
We fall to find any law authorizing the Board of Insur- ance Commissioners to pass an order permitting members of com- panies or associations operating underchapter Title 78, V.A.C.S., tb vote by proxy. There is no statute that we can find applicable to associations or companies operating under Chapter.6 authorizing the members thereof to vote by pr::~y. However, as heretofore mentioned, Art. 4789, which is applicabls to such associations or companies', expressly authorizes the mem- bers of said associations or companies to vote on1y.M person. Therefore, it Is our opinion that mutual assessment, health and accident companies or associations operating under Chapter 6, Vernon's Annotated Civil Statutes, cannot legally amend their by-laws to permit proxy voting by the members of such com- panies or associations.
Yours very truly ATTORNEY GENERAL OF TEXAS By: s/Ardell Williams Ardell Williams Assi~stant AW:rt:wc
APPROVED SEP 8, 1944
s;/Geo. P. Blackburn
(Acting) ATTORNEY GENERAL OF TEXAS
Approved OplnFon %ommittee By s/BWS Chairman