Moody v. State
| Decision Date | 26 February 1975 |
| Docket Number | No. 12263,12263 |
| Parties | Shearn MOODY, Jr. and James Wohlenhaus, Appellants, v. The STATE of Texas, Appellee. |
| Court | Texas Court of Appeals |
Frank G. Newman, Lawrence G. Newman, Dallas, for appellants.
John L. Hill, Atty. Gen., John W. Odam, Executive Asst. Atty. Gen., Austin, for appellee.
O'QUINN, Justice.
This is an appeal from an order of the 53rd District Court of Travis County granting motion for summary judgment filed by the State of Texas, plaintiff below.
The trial court's order appointed Herbert Crook permanent ancillary receiver for Empire Life Insurance Company of America, a company organized pursuant to charter granted by the State of Alabama, revoked Empire Life's certificate of authority to operate in Texas, and permanently enjoined the company, its officers, directors, stockholders, agents, and representatives from conducting the business of Empire Life in this state.
Shearn Moody, Jr., and James Wohlenhaus, two of the defendants below, have appealed from the trial court's order.
The cause in which the trial court's order was entered (Docket No. 198,374 in District Court) was brought in June of 1972 against Empire Life Insurance Company of America, Credit Factoring, Inc., Shearn Moody, Jr., W. L. Moody and Company, Bankers, Unincorporated, James C. (Jimmy) Day, the Day Trust, and James Wohlenhaus. The trial court consolidated with this case, in October of 1972, Docket No. 196,856, styled The State of Texas v. Credit Factoring, Inc., filed previously by the State in April of 1972.
Earlier phases of this litigation have been considered by this Court. In December of 1972 we sustained in part action of the trial court granting a temporary mandatory injunction against Empire Life and Credit Factoring and continuing the appointment of a temporary receiver and temporary ancillary receiver. (Day v. State, Tex.Civ.App., 489 S.W.2d 368, writ. ref. n.r.e.). In March of 1973 this Court affirmed the trial court's order overruling pleas of privilege filed by Empire State, Credit Factoring, Day and the Day Trust, and James Wohlenhaus. (Empire Life Insurance Company of America, et al. v. State, Tex.Civ.App., 492 S.W.2d 366, no writ). On January 24, 1975, in an original proceeding, we denied the petition of Shearn Moody, Jr., and others for writs of mandamus, prohibition, and injunction to stay proceedings in district court on the issue of reinsurance of all insurance business of Empire Life. (No. 12,281, Shearn Moody, Jr., et al., Relators v. The Honorable Herman Jones, Judge Respondent).
The record in this appeal shows that prior to consolidation of the cases in district court in 1972, the Supreme Court of Texas, in October of 1972, overruled motion for leave to file application for writ of prohibition against the State, Judge Herman Jones, Judge James R. Meyers, and O. T. Martin, district clerk. (No. B--3622, Credit Factoring, Inc., et al. v. State of Texas, Herman Jones, Judge, et al.).
The record discloses that contemporaneously with proceedings in this state the affairs of Empire Life were in litigation in the State of Alabama, in which the insurance company is domiciled. In June of 1972 the circuit court for the Tenth Judicial Circuit of Alabama entered a temporary restraining order appointing a judicial agent over the assets and affairs of Empire Life. (Case No. 171--687, State of Alabama, Ex. Rel. John G. Bookout, Commissioner of Insurance, Plaintiff v. Empire Life Insurance Company of North America, an Alabama Corporation, Defendant, Shearn Moody, Jr., Intervenor). Late in June of 1972 the Alabama court converted its order into a decree for injunction and appointment of a receiver. The latter order remained in effect about two years and until the court on June 14, 1974, entered a decree authorizing the receiver to accept proposal for reinsurance and to proceed with liquidation of the affairs of Empire Life. Thereafter, in August of 1974, the Alabama court denied motions for new trial filed by Shearn Moody, Jr ., intervenor, and others, and overruled motion to fix supersedeas bond filed by Moody.
Subsequent to this action of the Alabama court, the State of Texas in October of 1974 filed its amended motion in the cause now on appeal for hearing on application for permanent ancillary receiver in Texas for Empire Life and for permanent injunction, and followed with a motion for summary judgment. The motion was heard, and the trial court on November 15, 1974, entered its order granting the summary judgment from which Moody and Wohlenhaus have appealed.
Appellants bring three points of error attacking the trial court's order on the grounds that (1) there are genuine issues of material fact which as a matter of due process should be tried; (2) the order of the Alabama court was interlocutory and therefore without 'res judicata effect' for recognition under full faith and credit, and summary judgment enforcement of the Alabama order 'would be contrary to the Texas statutory scheme and public policy;' and (3) for the same reasons, it was error to grant comity to the order of the Alabama court.
The basic and controlling question is whether the judgment of the Alabama court is final and entitled to full faith and credit by Texas courts.
In support of the State's motion for summary judgment there was attached an affidavit of Herbert Crook, permanent ancillary receiver of Empire Life, and attached to the affidavit was a copy of the order of the Alabama Circuit Court in Equity, dated June 14, 1974, authorizing the Alabama receiver to accept a proposal for reinsurance, to proceed with liquidation of Empire Life, and to 'proceed under this order subject to further review of and by this Court.'
Moody filed his opposition to the State's motion, and in support filed the affidavits of his attorney and of Dr. Joseph F. Trosper. The affidavit of Dr. Trosper shows him to be a professor of insurance at Indiana University and a scholar with extensive experience in the field of insurance. The affidavit shows that he made an evaluation of 'the two-fifths interest of the one-eighth life estate interest in the Libbie Shearn Moody Estate' which Shearn Moddy, Jr., had assigned to Empire Life. It appears that this life estate interest in 'the convention statement of Empire as of December 31, 1973' was valued at $4,250,000, but Dr. Trosper estimated the interest's worth at $14,202,800, nearly $10,000,000 more than the value found in the convention statement. In addition, Dr. Trosper in his affidavit found and enumerated extensive faults in the proposed reinsurance agreement.
Appellants contend that 'The basic issue of fact before the District Court upon Plaintiff's Motion for Summary Judgment was the question of whether Empire was insolvent, impaired and incapable of rehabilitation.'
The Alabama court, in its order of June 14, 1974, on the basis of evidence adduced at a hearing, found:
'1. Empire is, and at all times since the filing of this delinquency proceeding has been, both impaired and insolvent. At the time of the hearing, Empire was impaired in excess of $10,000,000 and insolvent in excess of $6,000,000.
'2. John G. Bookout, Commissioner of Insurance, State of Alabama, has duly determined that further efforts to rehabilitate Empire would be useless, and on the basis of the evidence, the Court agrees with said determination.
'3. It is in the best interest of the policyholders of Empire for Empire's business in force to be reinsured by a reputable and solvent insurance company and for its assets to be liquidated; the interests of said policyholders cannot be reasonably secured and protected in the absence of such reinsurance.
The judgment of the Alabama court disposes of the issues 'of whether Empire was solvent, impaired, and incapable of rehabilitation' by its affirmative findings that Empire State was insolvent in excess of $6,000,000 and impaired in excess of $10,000,000, and that on the basis of the evidence further efforts to rehabilitate the company would be useless.
The parties join issue on whether that judgment was final and therefore entitled to full faith and credit in the district court of Travis County.
The principle of full faith and credit is established under the mandate of the Constitution of the United States, Article IV, Section 1:
Pursuant to this authority, Congress provided that properly authenticated records and judicial proceedings shall have the same...
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