Moody v. State ex rel. Payne

• Decision Date: 27 February 1976
• Citation: 295 Ala. 299,329 So.2d 73
• Parties: Shearn MOODY, Jr. v. STATE of Alabama ex rel. Charles H. PAYNE, Commissioner of Insurance, etc. SC 1269.
• Court: Alabama Supreme Court

Page 73

329 So.2d 73

295 Ala. 299

Shearn MOODY, Jr. v. STATE of Alabama ex rel. Charles H. PAYNE, Commissioner of Insurance, etc.

SC 1269.

Supreme Court of Alabama.

Feb. 27, 1976.

Mark B. Polson, Birmingham, for appellant, Shearn Moody, Jr.

Drayton Nabers, Jr., and William A. Robinson, Birmingham, for appellee, Protective Life Ins. Co.

James W. Webb, Montgomery, for appellee, Charles H. Payne, Commissioner of Insurance for the State of Ala. and Receiver of Empire Life Ins. Co. of America.

MERRILL, Justice.

This case is concerned with the propriety of the issuance of an injunction whereby Shearn Moody, Jr. was enjoined from interfering with the receivership proceedings of Empire Life Insurance Company of America (hereinafter Empire), an Alabama corporation. Some background information is necessary to place the instant case in proper perspective.

Our records reveal that the State of Alabama, in April, 1972, filed a complaint in the Circuit Court of Jefferson County against Empire requesting that the company be placed in receivership because it was impaired and insolvent. Thereafter, following a hearing before Judge William C. Barber, Empire was placed in receivership by an order dated June 29, 1972, and John G. Bookout, the Commissioner of Insurance for the State of Alabama, was named receiver. Bookout was succeeded as commissioner by Charles H. Payne on January 20, 1975. Empire was also placed in receivership in the States of Arkansas, Montana and Texas with ancillary receivers appointed in those states. No appeal was taken by Empire or any of its officers from the decision placing it in receivership.

In May, 1973, the receiver petitioned the receivership court for instructions on seeking approval of the various federal and state regulatory agencies for possible advertisement for bids for complete reinsurance of the business of Empire to protect the policyholders. This order was granted. Following the approval of the Federal Trade Commission, the Securities Exchange Commission and state regulatory agencies, the receiver, on request of commissioners and receivers of other interested states, filed a petition for instructions regarding reinsurance, asking the circuit court to enter an order permitting the receiver to advertise for and secure bids for the complete reinsurance of all of the business of Empire. This order was granted.

Following advertisement in various media, bids were taken in compliance with orders of the court. Bids were submitted by Protective Life Insurance Company (hereinafter Protective) and two other life insurance companies in addition to a bid submitted by Shearn Moody, Jr., of Texas, President, Chairman of the Board and principal stockholder of Empire. Another bid was submitted by an individual. Following a hearing of all bidders before the interested commissioners and receivers of the various states, the bid of Protective was recommended to the court in a petition filed in January, 1974, for liquidation and reinsurance without dissolution under provisions of the Alabama Insurance Code, Act No. 407, § 624, Acts of Alabama 1971, p. 996, listed in the Recompilation as Tit. 28A, § 624(2), on the grounds that further efforts to rehabilitate the company would be useless.

Moody objected to the reinsurance and liquidation of Empire and was granted the right to intervene.

During the course of the three-week hearing, Protective was also made a party for intervention. Following extensive hearing and briefing by all parties, the trial court, on June 14, 1974, entered an order granting the receiver's petition to liquidate and reinsure the business of Empire into Protective. The trial court found, Inter alia, that Empire was impaired in excess of ten million dollars, insolvent in excess of six million dollars and that the financial condition of Empire was 'rapidly deteriorating.'

Intervenor Moody gave notice of appeal, filed a motion for supersedeas bond and motion for new trial. These motions were overruled. The appeal was taken on July 25, 1974; the certificate of appeal was received in this court on August 6, 1974, but the transcript of the record has not yet been received. We avert to this later in the opinion.

I. The Injunction.

On December 27, 1974, John G. Bookout, the Commissioner of Insurance for the State of Alabama, applied for and received a temporary restraining order against Moody and others. The order prevented the filing, sponsoring or aiding of any lawsuit or legal claim relating to the affairs of Empire, the treaty of assumption and bulk reinsurance or the decree approving the treaty. To supplement his application, Bookout attached affidavits concerning the multiplicity of litigation instituted by Moody, threats by him to institute further litigation, and the deposition of one Willie Allmon. The hearing was set for January 6, 1975.

Commissioner Bookout testified at the hearing; there was no objection to his testimony, and there was no cross-examination. His testimony is, therefore, uncontroverted and undisputed. He testified that he has been subjected (both as receiver of Empire and individually) to numerous lawsuits and proceedings filed by Moody or Moody lawyers, all of which related to the Empire receivership and all of which were filed subsequent to the plenary hearing conducted by the receivership court in April, 1974, which culminated in the June 14, 1974 order determining that Empire was insolvent and that reinsurance of the Empire policies was necessary to protect the interests of policyholders. he also testified as to the following separate lawsuits or proceedings filed by Moody or Moody's lawyers and, as to each of them, Bookout testified that said litigation substantially depleted the assets of the receivership estate and, further, resulted in irreparable loss to the receivership in terms of seriously interfering with implementation of the receivership court's orders and supervision of the receivership by Bookout:

A. Moody v. Empire, No. 112,034, a suit filed in state court, Galveston County, Texas, in which Moody sought to prevent the transfer of the principal asset of Empire to Protective.

B. Meyers v. Moody, C.A. 3--5678--D, a suit pending in federal court, Northern District of Texas, in which Moody filed a cross action against Bookout as receiver of Empire and individually. Moody's cross action alleged mismanagement of the receivership estate by Bookout and alleged that Bookout put Empire in receivership for political reasons. (The issues raised by Moody's cross action has been fully litigated and decided adversely to Moody in the April, 1974 hearing before the Alabama Receivership Court.)

C. Extraordinary proceedings in this court and one federal suit:

(1) In Ex parte Moody, S.C. 962, Moody sought that this court approve a supersedeas bond pending his appeal from the June 14 decree; in the alternative, Moody sought the issuance of a writ of mandamus to compel the receivership court to permit supersedeas. All relief sought by Moody was denied.

(2) Moody then filed Moody v. Bookout, Civ. No. 74--328--N, in which Moody sought federal district court review of the foregoing decisions of this court, ostensibly on constitutional grounds. The Federal District Court for the Middle District of Alabama summarily dismissed said action on the grounds that Moody was pursuing the matter in the state courts of Alabama.

(3) Moody nevertheless filed Moody v. Bookout, S.C. 1032, in which Moody attempted, for the fourth time, to relitigate the denial of supersedeas in connection with his appeal from the June 14, 1974 decree. This attempt was also rejected by this court.

D. Allmon v. Bookout, Civ. No. 74--377--N, was filed in the name of Willie Allmon, an Arkansas policyholder of Empire. This suit alleged that Bookout and Protective caused Allmon to lose 35% Of the cash value of his policy. Bookout testified that the records of Empire affirmatively show that the cash-value position of the Allmon policy was unaffected by the receivership of Empire or by the reinsurance of Empire's policies by Protective.

The deposition of Willie Allmon was introduced into evidence at the January 6 hearing upon which this appeal is based, without objection from Moody's counsel. It establishes unequivocally that the Allmon lawsuit was solicited by Moody's agents. The deposition of Allmon, a farmer from Star City, Arkansas, who has only a sixth-grade education, is replete with his sworn testimony that Allmon thought Empire Life Insurance Company was representing him in the federal suit; that Allmon mistakenly believed he was represented by Empire lawyers; that maintenance of the suit was not costing Allmon any money; and that neither Bookout nor Protective had ever done anything to damage or injure Allmon.

The deposition of Ernest Cross, the insurance agent who sold Willie Allmon his Empire policy, was received into evidence, over the objection of Moody's lawyer. Cross's deposition establishes that Cross believed that Dale Major, an out-of-state Moody attorney named in the January 6 injunction, was an attorney with and legal adviser for Empire; that Major procured from Cross the name and residence of Allmon; and that Major represented himself to Allmon as an Empire attorney.

E. State of Texas v. Empire, No. 198,374, is the ancillary receivership proceeding pending in the District Court of Travis County, Texas, in which Empire's ancillary receiver for the State of Texas sought the approval of the Texas ancillary receivership court to consummate the re-insurance agreement whereby Protective assumed the polices of Empire.

After listing the various suits, Bookout testified to Moody's threats. He said:

'(Shearn Moody) said to me, in words to this effect, that Mr. Bookout, we are just getting started on you.

'I intend to sue you personally. My actions will be of a personal nature against you to carry over after you have left the office (of Commissioner of Insurance). * * * we ki...