C.W. Bollinger Ins. Co. v. Fish

• Decision Date: 23 October 1985
• Docket Number: No. 14425,14425
• Citation: 699 S.W.2d 645
• Parties: C.W. BOLLINGER INSURANCE COMPANY, et al., Petitioners, v. Joseph W. FISH, Respondent.
• Court: Texas Court of Appeals

Page 645

699 S.W.2d 645

C.W. BOLLINGER INSURANCE COMPANY, et al., Petitioners, v. Joseph W. FISH, Respondent.

No. 14425.

Court of Appeals of Texas Austin.

Oct. 23, 1985.

David M. Ward, Wilson, Grosenheider & Burns, Austin, for petitioners.

Karl O. Bayer, Pluymen & Bayer, Austin, for respondent.

Before POWERS, EARL W. SMITH and CARROLL, JJ.

POWERS, Justice.

The defendants, C.W. Bollinger Insurance Company and Academy Life Insurance Company, failed to appear and answer in a suit brought against them by the plaintiff, Joseph W. Fish. On the defendants' default, the trial court rendered a money judgment against them and in favor of the plaintiff. The defendants petition now for writ of error, contending the trial court lacked in personam jurisdiction owing to deficiencies in the substitute service upon which the judgment rests. We will grant the writ, reverse the judgment, and remand the cause to the trial court.

THE CONTROVERSY

In Fish's original petition, he alleged against the defendants several statutory causes of action and a single common-law cause of action. The actions were all founded upon allegations that the defendants were insurers under a contract that obligated them to pay Fish's medical expenses, incurred in an injury to which such insurance coverage applied.

In addition, Fish alleged that each defendant was a "foreign company" incorporated under the laws of another state but "doing business" in the State of Texas. Moreover, Fish averred that each defendant "may be served with process in this case by serving Tom Bond, Commissioner of Insurance, 1110 San Jacinto, Austin, Travis County, Texas 77785." But Fish's petition is silent in two key respects: (1) It does not state whether either defendant is authorized to do business in Texas; and (2) it does not state whether the Commission is in fact or law an authorized agent for service of process. Nevertheless, Fish's petition alleges acts by the defendants which, under three statutes found in the Texas Insurance Code, might possibly empower the Commissioner to accept service of citation so as to bind the defendants to appear and answer in the cause. Before discussing these statutes, however, we shall set forth the general legal rules applicable to the case.

GENERAL RULES APPLICABLE TO THE CASE

The Texas Rules of Civil Procedure prohibit rendition of judgment against a defendant unless: (1) he appears generally in the cause; (2) he accepts or waives service of citation; or (3) he receives service of citation "as prescribed in these rules, except where otherwise expressly provided by law." Tex.R.Civ.P.Ann. 124 (Supp.1985). Neither of the first two circumstances is applicable to the case. Nor do we deal with personal service under the rules. Instead, the service relied upon in the present case is substitute service, said to be "expressly provided by law" in the three provisions of the Insurance Code discussed below.

Because Bollinger and Academy seek appellate review by writ of error, claiming a want of personal jurisdiction owing to defects in citation and service by which such jurisdiction was ostensibly acquired, the ultimate question before us is whether the record affirmatively shows on its face a strict compliance with any statute by which such jurisdiction may be acquired through substitute service. Whitney v. L & L Realty Corporation, 500 S.W.2d 94 (Tex.1973); McKanna v. Edgar, 388 S.W.2d 927 (Tex.1965); Flynt v. City of Kingsville, 125 Tex. 510, 82 S.W.2d 934 (1935). In this form of direct attack upon the judgment, no presumptions may be indulged in favor of that judgment. McKanna v. Edgar, supra. Moreover, we may not infer from a pleaded conclusion of law any fact necessary to sustain that conclusion. Campdera v. Reed, 131 S.W.2d 297 For the record to show affirmatively the establishment of personal jurisdiction through substitute service, there are two basic requirements and the record must show that both were met:

(Tex.Civ.App.1939, writ ref'd). We may not, for example, assume any fact necessary to support Fish's pleaded conclusion that the defendants "may be served with process ... by serving" the Commissioner of Insurance.

1. Fish's allegations, taken as true, must be such as to bring the defendants within the terms of a statute which authorizes substitute service by delivery of citation to the Commissioner of Insurance. McKanna v. Edgar, supra. The nature and import of these allegations are specified in Whitney v. L. & L. Realty Corp., supra: The plaintiff must allege facts which, if true, would place the defendant under a legal duty to answer in the suit; that is to say, the allegations must be such as to make the defendant "amenable to process" through the procedure specified in a statute which authorizes substitute service in the circumstances alleged.

2. The record must contain proof showing compliance with any conditions laid down in the statute which authorizes substitute service in the circumstances alleged. Whitney v. L & L Realty Corp., supra.

In the present case, Fish contends his allegations make the defendants amenable to process under any one of three articles of the Insurance Code, all of which expressly permit substitute service on the Commissioner. See Tex.Ins.Code Ann. arts. 1.14-1, 3.65, 21.21-1 (1981). We find both Fish's allegations and his proof insufficient under these three statutes.

HOLDINGS AND DISCUSSION

We shall discuss Fish's pleading and proof under each of the three statutes. As we shall see, arts. 1.14-1 and 21.21-1 are basically the same in their operation insofar as they permit substitute service on the Commissioner; and, they are distinctly different from art. 3.65.

Article 1.14-1

Article 1.14-1 of the Code is entitled "Unauthorized Insurance." Its purpose is to provide a means by which the Board of Insurance and the courts of Texas may acquire personal jurisdiction over an insurer doing business in the State without having a certificate of authority issued by the Board. Several classifications of possible acts by an insurer, amounting to "doing business" in the State, are listed in § 2 of the statute. When an insurer engages in any such act, without holding a certificate of authority issued by the Board, the very act itself "is equivalent to and shall constitute an irrevocable appointment by such person or insurer ... of the Commissioner of Insurance ... to be the true and lawful attorney of such person or insurer upon whom may be served all legal process in an action, suit or proceeding in any court ..." (§ 4(a) ). ¹

A specific manner of service of process is prescribed by the statute in the cases to which it applies. Two copies of the process shall be left "in the hands of the office of the Commissioner of Insurance" and the Commissioner's certificate "showing such service and attached to the original or third copy of such process presented to him for that purpose shall be sufficient evidence thereof." (§ 4(b) ). The Commissioner is Such service of process is sufficient, provided notice of such service and a copy of the process are sent within 10 days thereafter by registered mail by plaintiff or plaintiff's attorney to the defendant at the last known principal place of business of the defendant and the defendant's receipt, or receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person or insurer to whom the letter is addressed, and the affidavit of the plaintiff or plaintiff's attorney showing compliance herewith are filed with the clerk of the court in which such action is pending on or before the date the defendant is required to appear, or within such further time as the court may allow.

directed to mail a copy of the process to the defendant. In addition, the plaintiff's attorney, to make the service effective, must comply with the following procedure:

(§ 4(c) ).

We assume the truth and sufficiency of Fish's allegations that the defendants committed in Texas one or more acts which amounted to "doing business" in the State, as defined in art. 1.14-1, § 2. But Fish failed to allege that the defendants were not authorized to do business in the State. He therefore failed to allege the essential condition under which those acts were equivalent to an appointment of the Commissioner as defendants' agent for service of process. Moreover, the record fails to show that service of process was in fact effectuated in the manner required by art. 1.14-1, as we shall now see.

In purported compliance with art. 1.14-1, Fish's attorney executed and filed in the case the affidavit required in § 4(c). In reference to Academy, the affidavit reads as follows in its substantive parts:

* * *

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In accordance with Texas Insurance Code art. 1.14-1 § 4(c), the undersigned hereby certifies as follows:

1. On August 23, 1984, service of process in this case was served on Tom Bond, Commissioner of Insurance, 1110 San Jacinto, Austin, Texas 78786 as the statutory agent for Academy Life Insurance Company.

2. On August 24, 1984, within ten (10) days after such service of process, notice of such service along with a copy of the Process was mailed to defendant, Academy Life Insurance Company, at its last know [sic] address by registered mail, return receipt requested.

3. On August 27, 1984, the return receipt on the notice described above was received by plaintiff and is attached hereto and filed herewith.

Executed this the 31st day of August, 1984.

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* * *

Another affidavit, identical in terms and dates, refers to Bollinger where Academy is named above. Each affidavit was filed in the cause on September 4, 1984. The cause was heard on November 2, 1984 and the judgment signed that same day, reciting default by the defendants after due service of citation.

We hold the record insufficient to show strict compliance with the manner of service authorized by art. 1.14-1. We point out the following...