State Bd. of Ins. v. Betts
| Decision Date | 15 January 1958 |
| Docket Number | No. A-6540,A-6540 |
| Citation | 158 Tex. 83,308 S.W.2d 846 |
| Parties | STATE BOARD OF INSURANCE et al., Petitioners, v. Honorable Chas. O. BETTS, District Judge, et al., Respondents. |
| Court | Texas Supreme Court |
Will Wilson, Atty. Gen. of Texas, James N. Ludlum, First Asst. Atty. Gen., C. K Richards and Fred B. Werkenthin, Assts. Atty. Gen., for petitioners.
Cantey, Hanger, Johnson, Scarborough & Gooch, Ft. Worth, Harry S. Pollard, Austin, Eskridge, Groce & Hebdon, Rudy G. Rice, San Antonio, for respondents.
This is an original action in mandamus seeking an order requiring the Honorable Chas. O. Betts, Judge of the District Court of Travis County, Texas, 98th Judicial District, to expunge from the records of his court all orders entered in certain insurance receivership cases which designate Renne Allred, Jr., Esq., as attorney for the statutory receiver, J. D. Wheeler, and fix his compensation. 1
This Court is not vested with general supervisory power over the district courts but its original jurisdiction is limited to that conferred by definite constitutional provisions and statutes enacted thereunder. Article 5, § 3 of the Constitution of Texas, Vernon's Ann.St., Article 1733, Vernon's Tex.Stats.; Yett v. Cook, 115 Tex. 175, 268 S.W. 715, 281 S.W. 843; State v. Ferguson, 133 Tex. 60, 125 S.W.2d 272; Lowe and Archer, Texas Practice § 480. Before the relief prayed for may be granted by this Court it must definitely appear that the questioned orders of the district court are wholly void. If an exercise of discretion by the district judge be involved this Court may not assert its original jurisdiction to enforce its own judgment, even though the actions of the district judge may have been improvident or otherwise erroneous. Seagraves v. Green, 116 Tex. 220, 288 S.W. 417. 'The writ (of mandamus) will not lie to correct a merely erroneous or voidable order of the trial judge, but will lie to correct one which he had no power to enter, and which was, therefore, void.' State v. Ferguson, 133 Tex. 60, 125 S.W.2d 272, 274.
The briefs of the parties discuss a number of questions relating to constitutional law and statutory construction, but the controlling circumstance which precludes the issuance of the writ in this case is that the respondent, district judge, was exercising a discretionary authority vested in him by the statutory provisions relating to the liquidation of insurance companies and such action cannot be considered void. This situation remains unchanged, although the district judge, in entering the disputed orders, may have stated an erroneous or legally invalid reason for the entry thereof.
It is the position of the Attorney General, representing the State Board of Insurance and the Insurance Commissioner, that under the provisions of the 1955 Act Article 21.28 of the Texas Insurance Code of 1951, relating to the 'Liquidation, Rehabilitation, Reorganization or Conservation of Insurers' the sole and exclusive authority to appoint an attorney for the receiver of an insurance company is vested in the Insurance Commissioner and the State Board. Acts 1955, 54th Leg., Ch. 267, p. 737 (Article 21.28, Vernon's Ann.Texas Insurance Code), particularly §§ 2(a) and 12(b) thereof.
The respondent, district judge, in his answer to the application for the writ takes the somewhat extreme position (which is supported by respectable authority) that the liquidation proceedings pending in his court are essentially judicial receiverships and consequently he and he alone is legally authorized to appoint a receiver and to determine who shall represent the receiver as an attorney.
The answer of respondent Allred contains factual allegations as to the circumstances preceding and surrounding his appointment which will be hereinafter noticed in some detail.
The statutory provisions bearing upon the present controversy are largely contained in Article 21.28 of the Insurance Code, as amended in 1955. Certain changes in the Code were also enacted in 1957 by the 55th Legislature which reorganized the agency charged with the administration of the insurance laws of the state.
The 1957 Act created a State Board of Insurance composed of three members who were required to operate and function as a body or unit. Such Board is authorized to appoint an Insurance Commissioner who in turn is empowered to 'appoint such deputies, assistants, and other personnel as are necessary to carry out the duties and functions devolving upon him and the State Board of Insurance under the Insurance Code of this state, subject to the authorization by the Legislature in its appropriation bills or otherwise, and to the rules of the Board.' (Art. 1.09(g)) All powers and duties formerly vested in or devolving upon the Board of Insurance Commissioners, its chairman, the Life Insurance Commissioner, the Fire Insurance Commissioner or the Casualty Insurance Commissioner are vested in the State Board of Insurance as a body to be administered by the Commissioner of Insurance as the chief administrative officer of the Board, it being specifically provided that 'The duties of the State Board of Insurance shall be primarily in a supervisory capacity and the carrying out and administering the details of the Insurance Code shall be primarily the duty and responsibility of the Commissioner of Insurance acting under the supervision of the Board.' (Art. 1.02(b)) Senate Bill 222, Acts 1957, 55th Leg., ch. 499, p. 1454, Articles 1.02, 1.03, 1.04, 1.05, 1.06, 1.07, 1.08 and 1.09 of the Texas Insurance Code and adding Articles 1.09-1, 1.09-2 and 1.09-3 thereto. Vernon's Ann.Tex.Ins.Code, Arts. 1.02 to 1.09-3, incl.
This Act become effective on June 12, 1957 and shortly thereafter the Governor appointed Judge Penn J. Jackson, Joe P. Gibbs and David B. Irons as members of the State Board of Insurance and designated Judge Jackson to act as Chairman. The Board in turn selected William A. Harrison as Commissioner of Insurance and such named parties appear as relators herein.
The pertinent sections of the 1955 amendment to Article 21.28 of the Insurance Code as amended in 1955 are as follows:
'Section 1. Definitions. For the purposes of this article:
'(d) 'Liquidator' means the person designated by the Board of Insurance Commissioners as receiver, liquidator rehabilitator, or conservator of all insurers as defined herein.
'Section 2. General Procedures.
'(a) Receiver Taking Charge. Whenever under the law of this State a court of competent jurisdiction finds that a receiver should take charge of the assets of an insurer domiciled in this State, the liquidator designated by the Board of Insurance Commissioners as hereinafter provided for shall be such receiver. The liquidator so appointed receiver shall forthwith take possession of the assets of such insurer and deal with the same in his own name as receiver or in the name of the insurer as the court may direct.
'Section 12. Liquidator, Assistants, Expense Accounts.
'(a) Liquidator, Bond. The liquidator herein named shall be appointed by a majority of the Board of Insurance Commissioners, and shall be subject to removal by a majority of said Board, and before entering upon the duties of said office, shall file with the Board of Insurance Commissioners a bond in the sum of Ten Thousand Dollars ($10,000), payable to the Board of Insurance Commissioners for the benefit of injured parties, and conditioned upon the faithful performance of his duties and the proper accounting for all moneys and properties received or administered by him.
A statutory liquidator operating under rather extensive judicial control is provided for and such plan of delinquency proceedings is not new to American jurisprudence. It has been adopted and placed in force by a number of the American states, notably New York, Illinois and Michigan. The New York courts have said that the purpose of these acts, providing for a central statutory liquidating authority, 'was to provide for an economical liquidation of insolvent insurance companies through the agency of a state department, and to prevent the waste of assets which theretofore had been occasioned through (judicial) receiverships.' In re Knickerbocker Life Ins. Co., 199 App.Div. 503, 191 N.Y.S. 780, 781. In the case of In re Casualty Co. of America, 244 N.Y. 443, 155 N.E. 735, the Court of Appeals said that,
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