State Board of Insurance v. Betts , 158 Tex. 612 ( 1958 )

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.

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 liquidator 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 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 dtily 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.”

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 duty to appoint a duly qualified person as Receiver, irrespective of the * * * provisions of Article 21.28 of the Texas Insurance Code. * * * ”

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.

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 Cure-ton 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 application to any particular kind of judgment nor is it peculiar to the judgments of any particular court. Irrespective of the character or dignity of the tribunal pronouncing the decision, whether of inferior, limited or superior general jurisdiction, it must confine its determination within the authority it possesses under the law and the case. If the court is exercising special statutory powers the measure of its authority is the statute itself, and a judgment in excess thereof is null and void and subject to collateral attack, a rule which finds frequent application in the case of probate judgments”

See also Withers v. Patterson, 27 Tex. 491; Johnson v. Hampton, 117 Tex. 580, 8 S.W.2d 640; Easterline v. Bean, 121 Tex. 327, 49 S.W.2d 427; Grant v. Ellis, Tex.Com.App., 50 S.W.2d 1093; 25 Tex.Jur., 822, Judgments § 306.

Both respondents have filed answers herein which contain numerous allegations which are hardly pertinent to the issue before us and were excepted to by relators for that reason. These answers detail at some length the difficulties which the respondent Betts had with the Board of Insurance Commissioners which preceded the present State Board of Insurance. See 1957 amendment to the Insurance Code, Article 1.02. Such answers also allege various failures in proper administration which are charged to liquidators who are no longer employed by the Insurance Commissioner or the Board of Insurance. Reference is likewise made to certain testimony adduced at a hearing held by Judge Betts apparently to determine the existence or extent of rumored friction among employees in the liquidation division of the Insurance Department. We are also referred to accounts of conversations between the Insurance Commissioner and the respondent District Judge. It perhaps can be said that the intent of these allegations is to justify the appointment of Taylor as receiver upon the theory that the Board of Insurance and the Insurance Commissioner has been guilty of nonfeasance or misfeasance which would authorize action on the part of the District Judge.

In our former opinion (308 S.W.2d 846, 855) we upheld the District Judge’s action in appointing Renne Allred, Jr. as attorney for the liquidator-receiver despite the provisions of Article 21.28, § 12(b) of the Insurance Code which places the power to appoint and fix the compensation of the liquidator, special deputy liquidator, coun-. sel, clerks and assistants with the Board of Insurance and the Insurance Commissioner because of a nonperformance on the part of the Board and Commissioner in failing to designate an attorney to succeed Emmett Shelton, who, on January 8, 1957, resigned the position to which Allred was subsequently appointed. We held that in view of the extensive powers vested in the district judge by statute, which were reviewed in some detail, he was authorized to appoint an attorney considering the inaction on the part of the Board and Commissioner. We said:

“In our opinion the Texas statute does not vest the State Board and its Commissioner with the sole and exclusive power to appoint counsel under any and all conditions. Once liquidation has begun, the court is not rendered powerless to carry out its heavy responsibilities by a nonperformance or misperformance on the part of the Board or its Commissioner.”

In this case there has been no nonperformance on the part of the Board or the Commissioner. There has been no vacancy in the office or position of liquidator. Lang-deau became liquidator immediately upon the dismissal of Williamson. Likewise there has been no misperformance on the part of the Board or Commissioner which would justify the District Judge’s action in disregarding the statutory mandate which says that the duly appointed liquidator shall act as receiver. The present Board and Commissioner cannot be charged with the alleged derelictions set out in respondents’ answers which are charged against predecessor boards that no longer exist. The circumstance that the services of prior liquidators serving under the present Board and Commissioner may not have been satisfactory to relators does not deprive them of authority to designate another liquidator nor does it support the District Judge’s refusal to recognize such action. Despite the Insurance Commissioner’s appointment of Langdeau it seems to be asserted that the Commissioner does not consider him competent because in a disputed conversation with the District Judge, the Commissioner is said to have commented upon Langdeau’s supposed lack of executive ability. (It should perhaps be stated that the Commissioner denies that such inference could properly be drawn from the conversation in .question.) However, the statute does not require that the Commissioner appoint that person whom the District Judge should deem the best qualified of all those available for selection. Lang-deau has not yet been tried and found wanting, but if for the sake of argument it could be said that he was not a suitable person and his designation constitutes a mis-performance on the part of the Commissioner, this, in the absence of the Commissioner’s failure to act, could not operate to transfer the appointive power from the Commissioner to the District Judge. We are not concerned here with a simple rejection of the Commissioner’s appointee ■but rather with a rejection coupled with an assertion of a right to designate some person other than the liquidator as receiver despite the provisions of Article 21.28, § 2(a) of the Insurance Code.

This brings us back to the fundamental proposition asserted by the respondents, i. e., that the provisions of the article are directory only. This contention is rejected for the reasons heretofore stated.

The orders of June 10, 1958 insofar as they appoint the respondent Taylor receiver in the insurance company liquidation cases pending in the 98th District Court are void. We assume the respondent District Judge will so treat them and expunge them from the records of said Court. Otherwise the writ of mandamus will issue as prayed for. No motion for rehearing will be entertained. Rule 515, Texas Rules of Civil Procedure.

The writ of mandamus is conditionally granted.