State Board of Insurance v. Betts

315 S.W.2d 279, 158 Tex. 612, 1 Tex. Sup. Ct. J. 568, 1958 Tex. LEXIS 590
Texas Supreme Court·Decided July 16, 1958·No. No. A-6901·Published·Cited by 51 cases

Opinions

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 [280]*280County, 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. [281]*281Taylor, 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.

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State Board of Insurance v. Betts, 315 S.W.2d 279, 158 Tex. 612, 1 Tex. Sup. Ct. J. 568, 1958 Tex. LEXIS 590 (Tex. 1958).

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