Bank of Woodson v. Stewart

• Decision Date: 12 May 1982
• Docket Number: No. 13695,13695
• Citation: 632 S.W.2d 950
• Parties: The BANK OF WOODSON, Appellant, v. Robert STEWART, State Banking Commissioner, et al., Appellees.
• Court: Texas Court of Appeals

Page 950

632 S.W.2d 950

The BANK OF WOODSON, Appellant, v. Robert STEWART, State Banking Commissioner, et al., Appellees.

No. 13695.

Court of Appeals of Texas, Austin.

May 12, 1982.

Rehearing Denied June 2, 1982.

Thomas W. George, George & George, Austin, for appellant.

Mark White, Atty. Gen., Thomas M. Pollan, Asst. Atty. Gen., Austin, for appellees.

POWERS, Justice.

The question for decision is whether the district court of Travis County had jurisdiction of either of two causes of action ¹ alleged by the Bank of Woodson against the State Commissioner of Banking and the Federal Deposit Insurance Corporation (FDIC). Seeking temporary and permanent injunctions, the Bank alleged that the Commissioner's summary closing of its banking house and his seizure of the Bank's property were in deprivation of its constitutional right to due process of law; and alleged that due process required prior notice and hearing before such actions could lawfully be taken. The Bank, as a basis for the same relief, alleged as well a statutory right to such notice and hearing, challenged the statutory finding made by the Commission as a basis for his action in closing the Bank summarily, and urged a statutory ground for requiring the Commissioner to hold the Bank's assets pendente lite, with a prayer that the assets be restored to the Bank after final hearing. We will hold the Travis County district court had jurisdiction of the Bank's constitutional cause of action but not the statutory cause of action. The latter amounts in substance to the statutory liquidation contest authorized by the provisions of article 342-805, a part of the Texas Banking Code of 1943. ² The legislature placed exclusive jurisdiction to determine that contest in the district court of the bank's domicile, that domicile being Throckmorton County, Texas, in this instance.

The Commissioner and the FDIC responded to the Bank's suit by filing their respective motions to dismiss for want of jurisdiction. We find in the transcript no order which determines the FDIC's motion and we do not consider it. The Commissioner's motion prayed for dismissal of the Bank's suit on the theory that the liquidation provisions of the Texas Banking Code of 1943, articles 341-801 through 342-816, ³ give the Commissioner authority to close the Bank and liquidate its assets under the exclusive supervision and jurisdiction of the district court of Throckmorton County. Articles 342-805 and 342-806 provide that this special jurisdiction includes the power to entertain and determine any contest of the court-supervised liquidation proceedings, and the ancillary power to enter an injunction pendente lite, restraining liquidation of the Bank's assets before final hearing of the liquidation contest. No statutory liquidation proceeding was pending in the district court of Throckmorton County at the time the Commissioner's motion was heard in Travis County.

The trial court sustained the Commissioner's motion and dismissed the Bank's suit for want of jurisdiction. This Court, on March 12, 1982, granted a temporary injunction to preserve our jurisdiction of the Bank's appeal from the trial court's order of dismissal. Our temporary injunction restrained the Commissioner and the FDIC (to which the Commissioner had assigned the Bank's assets immediately on obtaining a dismissal of the cause) from liquidating the Bank's assets pending appeal, but expressly permitted the Commissioner and the FDIC to conduct the Bank's affairs in the ordinary course of business. It later appeared that on the same day the application for temporary injunction was submitted to this Court, the FDIC, acting for the Commissioner, initiated in the district court of Throckmorton County the statutory liquidation proceedings by filing an inventory of the Bank's assets as required by article 342-806.

Resolution of the issue of the trial court's jurisdiction requires consideration of the various provisions of the Code which deal with the liquidation of State-chartered banks and those constitutional and statutory provisions which assign subject-matter jurisdiction to the district courts of the State, our courts of original jurisdiction, in a distribution of the State's judicial power.

The Bank first alleges that its property has been seized by the Commissioner, acting for the State, without prior notice and hearing, and therefore in violation of the due process guarantee of the 14th Amendment to the United States Constitution and Article I, §§ 17 and 19 of the Constitution of the State of Texas. Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969); Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975).

Pointing to the obviously correct proposition that the Code was intended to provide a comprehensive scheme for the regulation of state-chartered banks, including their closing and liquidation, and to the equally obvious necessity for summary action in closing an unsafe or insolvent bank on some occasions, the Commissioner replies that the circumstances justified his actions in closing the Bank in this instance without prior notice and hearing, and claims that his actions were expressly authorized by the first sentence of article 342-803, which statute is quoted in footnote three. He contends as well that such summary actions, authorized by statute for emergency situations, are constitutional, citing Fahey v. Mallonee, 332 U.S. 245, 67 S.Ct. 1552, 91 L.Ed. 2030 (1947).

The Bank rejoins by asserting that article 342-803 should be interpreted as a whole and, therefore, as authorizing the Commissioner to close a State-chartered bank and liquidate its property only after : (a) the bank has consented to such actions or the Commissioner has laid the facts before the bank's directors; (b) they have failed to cure, within the ten days allowed by the article, the conditions which are claimed by the Commissioner to be unsafe, unlawful, or unauthorized; (c) the circumstances have been certified to the State Banking Board; and (d) after hearing before that body, the Commissioner has obtained an order of the Board requiring that the bank be closed "and its affairs liquidated as provided in (the) Code." These are, of course, the procedural steps set out in article 342-803, which the bank alleges apply to all bank closings, emergency or otherwise. And, the Bank contends, if this is not the force and effect of article 342-803, as properly interpreted, then its property has been seized, and threatens to be liquidated, without the notice and opportunity for hearing which due process of law requires.

We do not, of course, express an opinion as to the merits of the parties' respective claims. The sole issue before us at this time is the jurisdiction of the Travis County district court, that is, whether it had power to hear and determine either the statutory or constitutional rights asserted by the Bank as bases of its causes of action.

We believe neither party, in their zeal, has properly recognized the effect of the two different and discrete rights alleged by the Bank. Each party assumes that only one district court in the State may adjudicate both claims, irrespective of the origin of the rights which form the bases of the Bank's claims. While that may be desirable as a matter of judicial administration, it is not a jurisdictional prerequisite.

In our view, the trial court properly dismissed, for want of jurisdiction, those claims made by the Bank which were based solely upon rights granted by the Code. The Legislature has committed these claims to the exclusive jurisdiction of the district court of the Bank's domicile. That court is the only court which may grant the statutory relief authorized by the Code, that is, an order directing the Commissioner to reopen the Bank for operation by the Bank directors and officers, if the Bank is correct in its claim that article 342-803 gives it a statutory right to prior notice and hearing in the particulars set out in the article, or the Commissioner's statutory findings were erroneous. Therefore, the Commissioner is quite correct in his contention that the exclusive jurisdiction to determine such matters lies in the district court of Throckmorton County, for they concern rights given the Bank solely by the Code, which also assigns their adjudication to the district court of the Bank's domicile as part of a liquidation contest.

The right to judicial review of such administrative decisions and actions is normally a creature of statute, in this instance articles 342-805, 342-807 and 342-812 particularly. Stone v. Texas Liquor Control Board, 417 S.W.2d 385 (Tex.1967). Having created this right of judicial review, by allowing the Bank to intervene in the court-supervised liquidation proceedings, the Legislature could and did designate the one district court wherein the proceedings should be conducted and the liquidation contest adjudicated. It follows, of course, that by article 342-805 the Legislature could validly empower that one district court to enjoin the Commissioner from liquidating the assets of the Bank pendente lite, which power the court undoubtedly had in any event, whether to protect the special statutory jurisdiction given it by the Code or as a power granted by the injunction statute, Tex.Rev.Civ.Stat.Ann. art. 4642 (1952). That this judicial review is made exclusive in the district court of Throckmorton County appears in the express provisions of the Code: "The methods of liquidation of state banks as provided for in this Code shall be exclusive ... (art. 342-801)"; "(p)romptly after the Commissioner has acquired possession of the assets of a state bank for liquidation, he shall prepare and file in the office of the district court of the county of the bank's domicile an inventory of such assets ... (art. 342-806)"; "(t)he assets of...