State Board of Insurance v. Betts

315 S.W.2d 286
Texas Supreme Court·Decided July 16, 1958·No. No. A-6870·Published·Cited by 2 cases

Opinions

NORVELL, Justice.

This is an original action of mandamus wherein the State Board of Insurance and the Insurance Commissioner pray that the respondent District Judge he instructed to expunge, set aside, and hold for naught an order entered by him, dated May 1, 1958 which purports to increase the monthly compensation allowed to V. F. Taylor, Horace Wimberly and A. M. Le Croix, attorneys for the liquidator-receiver in insurance company receivership cases pending in the District Court of Travis County, Texas, 98th Judicial District.

Respondents contend that the provisions of Article 21.28, § 12(b) of the Insurance Code V.A.T.S., are directory only despite the mandatory import of the words selected by the Legislature. The particular sub-section involved reads as follows:

“(b) Appointments, Expenses. The Board shall have the power to appoint and fix the compensation of the liquidator and of such special deputy liquidators, counsel, clerks, or assistants, as it may deem necessary. The payment of such compensation and all expenses of liquidation shall be made by the liquidator out of funds or assets of the insurer on approval of the Board. An itemized report of such expenses, sworn to by the liquidator and approved by the Board, shall be presented to the court from time to time, which account shall be approved by the court unless objection is filed thereto within ten (10) days after the presentation of the account. The objection, if any, must be made by a party at interest and shall specify the item or items objected to and the ground of such objection. The court shall set the objection down for hearing, notifying the parties of the setting. The burden of proof shall be upon the party objecting to show that the items objected to are improper, unnecessary or excessive.”

(Under the 1957 amendment to the Code, the power to fix compensation devolved upon the Insurance Commissioner. See, State Board of Insurance v. Betts, Tex., 308 S.W.2d 846, loc. cit. 949; Acts 1957, 55th Leg., ch. 499, p. 1454; Arts. 1.02 to 1.09 inch, Vernon’s Ann.Tex.Ins.Code.)

The challenged order makes no reference to the statute and the District Judge undoubtedly believed that he possessed the authority to raise the salaries, fees or stipends of attorneys serving in his Court without reference to the statutory powers vested in the State Board of Insurance [288]*288and the Insurance Commissioner. This is made abundantly clear by the terms of the order itself which recites, as a basis for the action taken, that there had been no increase in the compensation paid to such attorneys since May 1, 1957, although the work load had increased. It was accordingly ordered “that effective May 1, 1958, V. F. Taylor, Horace Wimberly and A. M. Le Croix, attorneys, be paid additional fees in the sum of $50.00 per month, in addition to all legal fees and expenses heretofore authorized and set by Orders of this Court; * *

Article 21.28, § 12(b) not only provides that the Insurance Commissioner under the supervision of the State Board of Insurance (Article 1.02 of the Insurance Code) shall have the power to appoint and fix the compensation of counsel but also directs the method and means by which payments or compensation may be made. The supervisory authority of the district court in this particular is also set forth in some detail. We are not here concerned with an unsettled or unliquidated claim for services rendered by an attorney for a receiver, but rather with a month to month employment upon a specified salary basis. While in the first Betts case (State Board of Insurance v. Betts, Tex., 308 S.W.2d 846), we recognized that the District Judge was vested with extensive supervisory powers under our statutory plan of insurance company liquidation and rehabilitation, we did not hold that the provisions of Article 21.28 were directory only. The District Judge here has attempted by unilateral action to raise the monthly compensation to be paid lawyers employed on a semi-permanent basis to handle the legal work involved in receivership cases. We do not believe the case of the In re Casualty Company of America, 244 N.Y. 443, 155 N.E. 735, 736, cited in our former opinion, supports this action. That case involved an unliquidated claim for services rendered by an attorney. The applicable statutory provision was that:

“ * * * The compensation of such special deputy superintendents, counsel, clerks and assistants, and all expenses of taking possession of and conducting the business of liquidating any such corporation shall be fixed by the superintendent, subject to the approval of the court, and shall, on certificate of the superintendent, be paid out of the funds or assets of such corporation.” Laws N.Y.1909, c. 300, § 63, subd. 6.

The New York Court of Appeals held that the superintendent of insurance was not an arbitrator clothed with absolute and final authority to settle the claim and thus be a “judge in his own cause.” The opinion, however, makes a distinction between the case where one is employed at an agreed rate of compensation (in which case the court possesses a veto power under the New York statute) and the case wherein no rate of compensation is set but the amount thereof is left to an implication of law. This latter situation gives rise to an unsettled claim and was the one considered by the New York Court in the cited case.

Here,’ we have what amounts to an employment at an agreed or set rate of compensation. A salary scale had been adopted and respondent attorneys have been paid compensation in accordance therewith. On May 1, 1958 the District Judge sought to effect an increase of salaries for the stated reason that in his opinion such salaries were inadequate and unfair to the respondent attorneys. In so doing he encroached upon a field of discretionary power vested in the Insurance Department by statute. The fact that numerous transactions incident to an insurance company receivership are placed under the supervision of the court does not operate to destroy all discretionary powers of the Insurance Department, Matter of People (Title v. Mortgage Guaranty Co.), 264 N.Y. 69, 190 N.E. 153, 96 A.L.R. 297, nor will it justify our overriding the statute in order to support the questioned order. To permit the Insurance Department to set the salaries of those engaged in the liquidation of insurance companies does [289]*289not necessarily interfere with the constitutional authority of the judicial branch of government. As pointed out in the first Betts case, the winding up of a corporation’s affairs is not necessarily a judicial function. (308 S.W.2d 846).

In the present case there is no suggestion of nonaction on the part of the State Board of Insurance or the Insurance Commissioner as was the situation in the former case. We therefore conclude that the disputed order is void. There is no statutory authorization supporting it and hence a writ of mandamus will lie to expunge the void order from the records of the 98th District Court. State Board of Insurance v. Betts, Tex., 315 S.W.2d 279.

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State Board of Insurance v. Betts, 315 S.W.2d 286 (Tex. 1958).

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