Daniel v. Tyrrell & Garth Inv. Co., 6903.

• Decision Date: 08 April 1936
• Docket Number: No. 6903.,6903.
• Citation: 93 S.W.2d 372
• Parties: DANIEL et al. v. TYRRELL & GARTH INV. CO.
• Court: Texas Supreme Court

Page 372

93 S.W.2d 372

DANIEL et al. v. TYRRELL & GARTH INV. CO.

No. 6903.

Supreme Court of Texas.

April 8, 1936.

Error to Court of Civil Appeals of First Supreme Judicial District.

Suit by the Tyrrell & Garth Investment Company against the American Title Guaranty Company and others. Judgment of the district court for defendants was reversed and judgment was rendered by the Court of Civil Appeals [79 S.W.(2d)

153], and defendants R. L. Daniel and others, members of the board of insurance commissioners, bring error.

Judgment of the Court of Civil Appeals reversed, and judgment of the district court affirmed.

William McCraw, Atty. Gen., and Vernon Coe, Asst. Atty. Gen., and Vinson, Elkins, Sweeton & Weems, John C. Townes, Jr., and H. P. Pressler, Jr., all of Houston, for plaintiff in error.

Franklin & Blankenbecker, of Houston, for defendant in error.

Stewarts and W. Noble Carl, all of Galveston, amici curiæ.

CRITZ, Justice.

This case was tried in the district court of Harris county before the court, without the intervention of a jury, on an agreed statement of facts. The following are the facts pertinent to this opinion:

Tyrrell & Garth Investment Company, hereafter designated Tyrrell & Garth, was a joint stock association, engaged in the business of buying and selling real estate. The American Title Guaranty Company, hereafter designated the title company, was a corporation duly incorporated under the laws of Texas, with the power and authority to carry on and conduct the business of guaranteeing land titles. On November 15, 1928, Tyrrell & Garth and the title company entered into a contract whereby the title company agreed to insure the titles to Tyrrell & Garth land for $2.50 per $1,000 of sale prices. Under the terms of this contract, the title company further agreed to issue certificates of title for $1 each. Such contract was to run until all of a certain tract of land owned and subdivided by Tyrrell & Garth was sold.

At the time the above contract was entered into, there was no law in force in this state regulating or controlling the forms of policies to be issued or rates to be charged by title insurance companies doing business in this state.

Subsequent to the time the above contract was entered into between Tyrrell & Garth and the title company, the Legislature in this state enacted chapter 40, Acts Regular Session, 41st Legislature, 1929. The above act is codified as article 1302a, Vernon's Annotated Revised Civil Statutes of Texas. The act in question is a very comprehensive one, "Relating to Abstract and Title Insurance Corporations." It became effective February 27, 1929, as above stated, after the above contract was entered into. In the case at bar, we are directly concerned with section 3 of such Act (Vernon's Ann.Civ.St. art. 1302a, § 3), which reads as follows:

"Sec. 3. Corporations so formed as well as foreign corporations and those created under Subdivision 57, Article 1302 of the Revised Statutes of 1925, or under Chapter 18, Title 78, Revised Statutes of 1925, or any other law insofar as the business of either may be a title insurance business, shall operate in Texas under the control and supervision and under such uniform rules and regulations as to forms of policies and underwriting contracts and premiums therefor, as may be from time to time prescribed by the Board of Insurance Commissioners of Texas; and no Texas or foreign corporation whether incorporated under this Act or any other law of the State of Texas shall be permitted to issue any title policy or mortgage certificate or underwriting contract on Texas property other than under this Act and under such rules and regulations. No policy of title insurance of guarantee of any character on Texas titles shall be issued or valid unless written by a corporation complying with all provisions of and authorized or qualified under this Act. Before any rate provided for herein shall be fixed or changed, reasonable notice shall issue, and a hearing afforded to the companies affected by this Act. Every company doing business under this Act shall file with the Board of Insurance Commissioners the form of guarantee certificate, mortgage policy or any policy of title insurance before the same shall be issued, and the form must be approved by the Board, and be uniform as to all companies. Under no circumstances may any company use any form until after the same shall have been approved by the Board.

"The Board of Insurance Commissioners shall have the right and it shall be its duty to fix and promulgate the rates to be charged by corporations created or operating hereunder for premiums on policies or certificates and underwriting contracts. The rate fixed by the Board shall be reasonable to the public and nonconfiscatory as to the company. For the purpose of collecting data on which to determine the proper rates to be fixed, the Board shall have the right to require the companies operating in Texas to submit such information in such form as it may deem proper, all information as to loss experience, expense of operation, and other material matter for its consideration.

"Rates when once fixed shall not be charged (changed) until after a public hearing shall be had by the Board, after proper notice sent direct to all companies interested in writing this business, and after public notice in such manner as to give fair publicity thereto for two weeks in advance. The Board must call such hearing to consider rate changes at the request of a company writing title insurance, or if the Board thinks that a change in rates may be proper. Any company or other person interested, feeling injured by any action of the Board with regard to rates, shall have the right to file a suit in the District Court of Travis County, within thirty days after the Board has made such order, to review the action, in which suit the Court may enter a judgment correcting the Board's order and fixing such rates as may be proper, or affirming the action of the Board. Under no circumstances shall any rate of premium be charged for policies or underwriting contracts different from those fixed and promulgated by the Board, or those fixed in a final judgment of the Court as herein provided."

It further appears from the record that after the above act became effective, the board of insurance commissioners of Texas, hereafter designated as the board, duly passed and promulgated rules and regulations prescribing the forms of policies to be issued and rates to be charged by title insurance companies, such as this. These rules and regulations became effective on June 1, 1931. Under such rules and regulations, it was provided that all companies insuring titles in this state should charge a rate of one-half of 1 per cent., with a minimum charge of $7.50 per guaranty certificate.

It further appears that under the rules and regulations passed and promulgated by the board, all title insurance companies were compelled to charge the rates fixed by such board, and this in spite of the fact that such companies may have had outstanding contracts to issue their policies at other and lesser rates. In this connection, it appears that under the rules and regulations so...