State Board of Insurance v. Betts, A-6901

• Decision Date: 16 July 1958
• Docket Number: No. A-6901,A-6901
• Citation: 315 S.W.2d 279,158 Tex. 612
• Parties: STATE BOARD OF INSURANCE et al., Relators, v. Honorable Chas. O. BETTS, Judge of The District Court of Travis County, Texas, 98th Judicial District, and V. F. Taylor, Respondents.
• Court: Texas Supreme Court

Page 279

315 S.W.2d 279

158 Tex. 612

STATE BOARD OF INSURANCE et al., Relators, v. Honorable Chas. O. BETTS, Judge of The District Court of

Travis County, Texas, 98th Judicial District, and

V. F. Taylor, Respondents.

No. A-6901.

Supreme Court of Texas.

July 16, 1958.

Will Wilson, Atty. Gen. of Texas, Fred Werkenthin, and C. K. Richards, Asst. Attys. Gen., for relators.

W. G. Walley, Jr., Beaumont, Rudy Rice, Renne Allred, Jr., Harry S. Pollard, Austin, and Cantey, Hanger, Johnson, Scarborough & Gooch, Ft. Worth, for respondents.

NORVELL, Justice.

This is an original action in mandamus brought by the relators, State Board of Insurance and the Insurance Commissioner, against respondents, Honorable Chas. O. Betts, Judge of the District Court of Travis County, Texas, 98th Judicial District, and V. F. Taylor, having for its purpose the expunging from the records of said District Court those orders entered by respondent Betts on June 10, 1958 in some 21 insurance company receivership cases pending in said court, wherein the respondent V. F. Taylor was appointed as receiver for the insurance companies involved in such liquidation proceedings.

(1) It is the contention of the Attorney General, as the legal representative of the State Board and its Commissioner, that such orders are void because they contravene the expressed will of the Legislature as set forth in a legally adopted constitutional statute. We think this contention must be sustained. It is a generally accepted premise that the failure of a court to observe a mandatory statutory provision conferring a right or forbidding particular action will render its order or judgment void. Cline v. Niblo, 117 Tex. 474, 8 S.W.2d 633, 66 A.L.R. 916; 25 Tex.Jur. 802, Judgments § 306.

The controlling question in this case is whether or not the statutory provision that the iquidator designated by the Insurance Commissioner shall be the receiver in the liquidation proceedings before a court is mandatory or merely directory. A brief statement from the record taken in connection with the wording of the statute will serve to present the issue.

On June 7, 1958 Insurance Commissioner William A. Harrison designated C. H. Langdeau to serve as liquidator in the event a vacancy should occur in that office. On June 9, 1958 Harrison dismissed J. M. Williamson whom he had theretofore designated as liquidator and re-affirmed his previous order designating Langdeau as liquidator. Consequently on June 9, 1958 Langdeau was the legally and duly appointed liquidator under the provisions of Article 21.28, Vernon's Ann. Texas Insurance Code. Section 2(a) of the article mentioned provides that:

'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 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.'

(Under the 1957 amendment to the Code the duty of designating a liquidator devolves upon the Insurance Commissioner. Senate Bill 222, Acts 1957, 55th Leg., ch. 499, p. 1454, Article 1.02(b) Vernon's Ann.Tex.Ins.Code.)

On June 10, 1958 the respondent Betts entered the order now in dispute. While the other district judges in Travis County, upon Williamson's dismissal, designated the new liquidator Langdeau to act as receiver in their respective courts, Judge Betts designated the respondent Taylor to serve in the 98th District Court despite the terms of Article 21.28 of the Insurance Code. This squarely raises the question of whether the provisions of Article 21.28, § 2(a), above set out, are mandatory or merely directory. This was the issue intended to be raised and which was raised by Judge Betts for his order which after removing Williamson as receiver, provided that:

'It appearing to this Court that an urgent and imperative necessity for the continuance of this Receivership exists and for this Court to appoint a proper Receiver to continue to act under this Court's jurisdiction, and it further appearing to the Court that this Court has the exclusive power and duty to appoint a duly qualified person as Receiver, irrespective of the directory provisions of Article 21.28 of the Texas Insurance Code, 1951, as amended, that the Liquidator appointed by the State Board of Insurance be the Receiver; and the Court finds that V. F Taylor, a practicing and duly qualified attorney before the State Bar of Texas and a citizen of this County and State, is duly and properly qualified to be Receiver in this Receivership Estate, and the Court finds that it is to the best interests of this Receivership Estate, its claimants, creditors, policyholders, and stockholders that the said V. F. Taylor should be appointed immediately. * * *.'

In his answer filed herein the respondent Betts states his position as follows:

'It is the specific position of this Respondent that Article 21.28 of the Insurance Code is directory and not mandatory, wherein it provides for the appointment of the liquidator of the State Board of Insurance as Receiver in receivership cases, and it is the specific position of this Respondent that the Court has the power to appoint attorneys and fix their compensation.'

(2, 3) While as pointed out therein the issue of a district judge's authority to appoint someone other than the liquidator as receiver was not squarely before us, the opinion rendered by us in the former case of State Board of Insurance v. Betts, Tex., 308 S.W.2d 846 was to the effect that Article 21.28, § 2(a) was more than a mere directory statute. The argument that the statute is directory rather than mandatory involves a constitutional point. The Legislature used the word 'shall' which has a clear mandatory connotation. It is urged however that unless the word 'shall' be given a permissive rather than a mandatory meaning the statutory section would have to be declared unconstitutional as an unwarranted infringement upon the judicial power and hence contrary to the provisions of Article 2, § 1 of the Texas Constitution, Vernon's Ann.St., relating to the separation of governmental powers. It is concededly a serious matter to strike down duly enacted legislation as being unconstitutional. It is perhaps an equally serious matter to hold that the Legislature did not mean what it said. The problem of statutory construction is to ascertain the intent of the Legislature. When we abandon the plain meaning of words, statutory construction rests upon insecure and obscure foundations at best. It should perhaps be reiterated that Courts have no concern with the wisdom of legislative acts, but it is our plain duty to give effect to the stated purpose or plan of the Legislature, although to us it may seem ill advised or impracticable. Western Public Service Co. v. Meharg, 116 Tex. 193, 288 S.W. 141, on rehearing, 116 Tex. 193, 292 S.W. 168; Easterline v. Bean, 121 Tex. 327, 49 S.W.2d 427; City of San Antonio v. Handley, Tex.Civ.App., 308 S.W.2d 608, wr. ref.; City of Abilene v. Meek, Tex.Civ.App., 311 S.W.2d 654, wr. ref.; 39 Tex.Jur. 162, Statutes, § 89. At the time of our former decision we were of the opinion that the wording of Article 21.28, § 2(a) cannot be construed as being directory only without doing unwarranted violence to the language employed by the Legislature. We hold that this section of the Code (Art. 21.28, § 2(a)) is not directory and that it is not unconstitutional upon the grounds urged against it. State Board of Insurance v. Betts, Tex., 308 S.W.2d 846. It follows that the respondent district judge did not possess 'the exclusive power and duly to appoint a duly qualified person as Receiver, irrespective of the * * * provisions of Article 21.28 of the Texas Insurance Code. * * *'

(4, 5) It is recognized that this Court's power or control over the orders of a district or county court is extremely limited. We have no general supervisory authority over proceedings pending in trial courts. Since our jurisdiction is primarily appellate, the correction of errors made in the course of a trial or other proceedings must, as a general thing, await the entry of a final judgment or concluding decree. A well settled exception to this general rule is that which permits this Court through an exercise of its original jurisdiction to order a trial court to vacate a void order and expunge the same from its records. State v. Ferguson, 133 Tex. 60, 61, 125 S.W.2d 272; State Board of Insurance v. Betts, Tex., 308 S.W.2d 846.

(6) The distinction between a void order and one which is merely voidable or erroneous may often present a question difficult of solution. We have come to the conclusion, however, that the orders of June 10, 1958 insofar as they purport to appoint V. F. Taylor as receiver are void because they are in contravention of a valid statutory enactment.

Most of the Texas cases dealing with an order entered during the course of an administration, but which is either unauthorized by or prohibited by a statutory enactment are those relating to estates of decedents or guardianships. These proceedings are the most common of the type which remain pending in our courts over a considerable period of time and in which orders of various kinds are entered as occasion requires. The analogy between such proceedings and receivership cases is readily apparent.

In Cline v. Niblo, 117 Tex. 474, 8 S.W.2d 633, 638, 66 A.L.R. 916, Chief Justice Cureton writing for the Court quoted with approval the following excerpt from Freeman on Judgments, 5th ed. § 354, with the emphasis indicated by italics, viz.:

'This well-established doctrine, that a judgment beyond the court's power is invalid, is not limited in its...