State v. Robinson

• Decision Date: 03 July 1931
• Docket Number: No. 11033.,11033.
• Citation: 42 S.W.2d 457
• Parties: STATE v. ROBINSON et al.
• Court: Texas Court of Appeals

Page 457

42 S.W.2d 457

STATE v. ROBINSON et al.

No. 11033.

Court of Civil Appeals of Texas. Dallas.

July 3, 1931.

Rehearing Denied October 10, 1931.

Appeal from District Court, Dallas County; Claude M. McCallum, Judge.

Suit by W. E. Robinson and others against Bankers' Lloyds and others, in which a receiver was appointed, and the State, through the attorney general, was granted leave to intervene for purpose of moving court to vacate receivership and dismiss receivership proceedings. The court overruled the motion to vacate, and the State appeals.

Reversed and rendered on main contention, and remanded, with instructions.

Jas. V. Allred, Atty. Gen., and Grady Sturgeon and Everett L. Looney, Asst. Attys. Gen., for the State.

D. A. Frank, Crate Dalton, and E. G. Senter, all of Dallas, for appellee.

LOONEY, J.

W. E. Robinson, J. E. Hambrick, and Sherwood H. Avery, underwriters of Bankers' Lloyds of Dallas, and Johnnie Johnson and Dr. John F. Ford, creditors, brought this suit for the appointment of a receiver to wind up the affairs of the association. Bankers' Lloyds, Stephen Reele, attorney in fact, Guardian Securities Corporation, holder of certain powers of attorney, and John Touchstone, custodian, were made defendants. The suit was brought for the benefit of all other creditors and underwriters who desired to join in the proceedings. Plaintiffs alleged that the association was in an insolvent condition; that its affairs were being mismanaged and its assets squandered and dissipated, and as the result thereof, they were threatened with irreparable loss of property. The petition concluded with a prayer for the appointment of a receiver to wind up the affairs of the association under orders of the court. The prayer was granted, and Charles W. A'Brams was appointed receiver on March 4, 1931; he immediately qualified and became active in the discharge of the duties of the position. At this juncture, the state of Texas, through the Attorney General, was granted leave to intervene for the purpose of moving the court to vacate the receivership and dismiss the receivership proceedings. On March 31, 1931, after a hearing, the court overruled the motion to vacate and the State appealed.

The material question for decision is presented in the brief for the state as follows: "The remedy given by Article 5022, R. C. S., as amended by Acts 1929, 41st Leg., 1st Called Sess. p. 32, c. 11, § 1 which provides that when the minimum assets of underwriters at Lloyds becomes impaired the Board of Insurance Commissioners shall immediately give to the attorney-in-fact for such Lloyds notice to make good the impairment, and if within thirty days from the giving of such notice the impairment or insolvency shall not be made good by such underwriters, or their attorney, then the Board shall take charge of the assets of such underwriters and effect a reinsurance of all business outstanding in Texas and make provision for payment of outstanding claims and losses, and, in case reinsurance cannot be effected by said Board, then the affairs of such underwriters at Lloyds shall be wound up through receivership proceedings instituted by the Attorney General at the request of the Board, is exclusive, and the court cannot appoint a receiver to wind up the affairs of the association on the petition of three stockholders and two creditors."

As an approach to our subject it may, we believe, be correctly said that the business of insurance, however conducted, is quasi public in nature, and subject to regulation and control by the state (14 R. C. L. 857 and authorities), and this doctrine is equally applicable to insurance conducted under the Lloyds plan (38 C. J. 160 § 12, and authorities cited). The policy in this state with reference to the dissolution and winding up of the affairs of its legal entities, as manifested by acts of the Legislature, is that the right to bring about such results belongs exclusively to the state, and that courts, unless authorized by statute, have no power to dissolve or wind up their affairs at the instance of individuals. See provisions for quo warranto proceedings, articles 6253 to 6258, R. C. S.; also provisions for the dissolution and winding up of the affairs of insolvent corporations, articles 1379 to 1386, R. C. S.; and especially the provision for winding up the affairs of insurance corporations, article 4691, subd. 5, R. C. S., as follows: "* * * 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." Also see special provisions for the dissolution of local mutual aid associations at the suit of the Attorney General (Vernon's Ann. Civ. St. Art. 4875a—27, Acts 41st Leg., p. 563, c. 274, § 27).

The exceptions contained in article 1383 giving stockholders owning 25 per cent. of the stock and creditors owning 25 per cent. of the indebtedness the right to institute proceedings for the dissolution of an insolvent corporation show that the cases excepted would otherwise be within the general words of the statute, and, in effect, is an affirmation of the application of the general rule to all other cases.

The wisdom underlying legisaltion protecting corporations generally and associations conducting insurance from winding up proceedings at the suit of individual creditors or stockholders would certainly justify provisions similarly protecting the affairs of a Lloyds insurance association, for it is evident that a receivership would practically end its business activities, discredit it as a business concern in the estimation of the public, effectually prevent or at least...