State v. Mapel

• Decision Date: 11 May 1933
• Docket Number: No. 2878.,2878.
• Parties: STATE et al. v. MAPEL.
• Court: Texas Court of Appeals

61 S.W.2d 149

STATE et al. v. MAPEL.

No. 2878.

Court of Civil Appeals of Texas, El Paso.

May 11, 1933.

Rehearing Denied June 8, 1933.

Appeal from District Court, El Paso County; Ballard Coldwell, Judge.

Application for receiver for the Globe & Rutgers Insurance Company by Dexter R. Mapel, wherein the State of Texas and others intervened. From an order appointing receiver, the State of Texas and others appeal.

Affirmed.

James V. Allred, Atty. Gen., John B. McCraw and Sidney Benbow, Asst. Attys. Gen., and Geo. S. Wright and Thompson, Knight, Baker & Harris, all of Dallas, and J. W. Morrow, of El Paso, for appellants.

Paul D. Thomas and Wm. Flournoy, both of El Paso, for appellee.

PELPHREY, Chief Justice.

This is an appeal from an order of the Sixty-Fifth district court appointing a receiver for the Globe & Rutgers Insurance Company.

The application for the appointment of such receiver was filed by appellee, as a creditor of the insurance company, on March 31, 1933.

On April 7, 1933, the Attorney General filed a petition of intervention on behalf of the state of Texas, the board of insurance commissioners of Texas, and the insurance commissioner of the state of New York.

It appears that the insurance company is a New York corporation authorized to transact business in Texas.

The interveners questioned the jurisdiction of the court to appoint a receiver of the insurance company, and pleaded in support of their contention that under the laws of this state no one had a right to bring any suit for the purpose of winding up the affairs or to enjoin, restrain, or interfere with the prosecution of the business of fire insurance by a company doing a fire insurance business in this state other than the board of insurance commissioners and the Attorney General.

The first contention advanced by appellants is that the court was without jurisdiction to appoint a receiver in this case because of the provisions of article 4691, Revised Statutes, and particularly subdivision 5 thereof.

The subdivision in question reads: "He shall also have power to institute suits and prosecutions, either by the Attorney General or such other attorneys as the Attorney General may designate, for any violation of the laws of this State relating to insurance. No action shall be brought or maintained by any person other than the Commissioner for closing up the affairs or to enjoin, restrain or interfere with the prosecution of the business of any such insurance company organized under the laws of this State."

At the time of the enactment of the above statute the state had a single insurance commissioner, but later an insurance commission was created which now exercises the powers originally conferred on the commissioner.

While the above-quoted subdivision expressly confers the sole power upon the commission in cases of insurance companies organized under the laws of Texas, appellants contend that such powers apply to all insurance companies, both foreign and domestic, by reason of the following provision of article 5068, Revised Statutes: " The provisions of this title are conditions upon which foreign insurance corporations shall be permitted to do business within this State, and any such foreign corporation engaged in issuing contracts or policies within this State shall be held to have assented thereto as a condition precedent to its right to engage in such business within this State."

We cannot agree with such contention. Article 4691 specially limiting the exclusive right of the commission to insurance companies organized in this state would, we think, control over a general provision such as is found in article 5068, even if we admit that the provision in the latter article would otherwise apply. However, we do not believe that article 5068 was intended to include the provisions which were expressly made to apply only to domestic companies.

Appellants also contend that the Attorney General has the exclusive right to bring a suit for winding up the affairs of an insolvent corporation, by virtue of articles 1379 and 1380, Revised Statutes. These articles read:

"Art. 1379. It shall be unlawful for any insolvent corporation, domestic or foreign, to do business in this State, or to exercise or retain any franchise or permit or charter granted from or by this State.

"Art. 1380. The Attorney General, when convinced that any corporation is insolvent, shall institute quo warranto or other appropriate proceedings to forfeit its charter or cancel its permit."

It is further provided by article 1381 that the court trying such a cause, after the corporation has been shown to be insolvent, may, in its discretion, appoint a receiver for the corporation and all its properties, with full power to settle its affairs, collect its outstanding debts and divide the moneys and other properties of the corporation among its stockholders, after paying the debts due and owing by the corporation and all expenses. It cannot be disputed, of course, that the state would be the proper party to bring a suit to forfeit the charter of a domestic corporation or cancel the permit of a foreign one, and that such an action could not and should not be brought by an individual. It will be observed, however, that these statutes contain no express authority for the Attorney General to bring an action to have a receiver appointed, but merely provides that the court in which an action is brought to forfeit a charter or cancel a permit may, in its discretion, appoint a receiver and wind up the affairs of the corporation.

Appellant's third proposition that the action of the court in appointing a receiver was a usurpation of the powers conferred upon the insurance commission, is also untenable. Article 4925, providing for the contracting with other insurance companies for the assumption and reinsurance of the outstanding risks in the insolvent company, authorizes notice to the officers of the company or the receiver in charge of its property and affairs. It follows, therefore, that the insurance company would not be impeded for carrying out its duty as to reinsurance by the fact that a receiver had been appointed.

In the case of State v. Robinson, 42 S.W.(2d) 457 (writ refused), the Dallas Court of Civil Appeals, in construing article 5022, R. C. S., as amended by the 1st Called Session of the 41st Legislature, c. 11, § 1 (Vernon's Ann. Civ. St. art. 5022), held that the right to institute a suit for the winding up of the affairs of underwriters at Lloyds was vested in the Attorney General exclusively. The court based its decision in that case upon what it termed the policy of the state with reference to the dissolution and winding up of the affairs of its legal entities. It is not entirely clear whether the insurance company affected was a local or a foreign Lloyds, but from the language used we have concluded that it was a domestic one. Be that as it may, the statute there under consideration contained no such limiting words as are found in article 4691.

In Fire Protection Company of America v. State (Tex. Civ. App.) 59 S.W.(2d) 888, the right of the state through its Attorney General was being questioned; the argument being made that the receivership should have been vacated because the suit was not instituted by a creditor of appellant.

Therefore the court was not called upon to decide whether the Attorney General had the exclusive right to bring the suit.

We have concluded that those cases should not control the...