Court Opinion

ID: 9682742
Source: CourtListenerOpinion
Date Created: 2023-08-24 13:15:50.561533+00
Date Added: 2024-06-11T18:17:41.163654
License: Public Domain

Mr. Justice Norvell
delivered the opinion of the Court.
This is an original action of mandamus wherein the State Board of Insurance and the Insurance Commissioner pray that the respondent District Judge be 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. La Croix, attorneys for the liquidator-receiver in insurance company receivership cases pending in the District Court of Travis County, Texas, 98th Judicial District.
*625Respondents contend that the provisions of Article 21.28, Sec. 12(b) of the Insurance Code 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, this volume 83, (Cause No. A-6540) 308 S.W. 2d 846, 1.c. 949. Acts 1957, 55th Leg. Ch. 499, p. 1454; Arts 1.02 to 1.09 incl., Vernon’s Anno. Texas Ins. Code)
The challenge 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 and 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. LeCroix, 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, Sec. 12(b) not only provides that the Insurance Commissioner under the supervision of the State Board of In*626surance (Artcile 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 cuort 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, No. A-6540, this volume 83, 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 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.”
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 th 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 *627effect 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, Re 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 not 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. (This volume 83, 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, Texas Sup. Ct. (Cause No. A-6901) this volume 612, 315 S.W. 2d 279.
Some contention is made on behalf of respondents Wimberly and Le Croix that their fifty dollar per month pay raise was permitted by a budget order of the Board of Insurance and that the liquidator-receiver consented to the District Judge’s action of May 1, 1958.
It appears from the exhibits before us that some time prior to the filing of this action, the respondent District Judge, rather than the Insurance Department had in effect set the amount of salary or fees to be paid to attorneys representing the liquidator-receiver in the 98th District Court.
On May 1, 1957 the respondent Betts, acting as Judge of the 98th District Court, entered certain orders setting and allowing the following legal fees to the respondents, namely, V. F. Taylor — $900.00 per month ($10,800.00 per year), Horace Wimberly — $650.00 per month ($7,800.00 per year), and A. M. Le Croix — $600.00 per month ($7,200.00 per year).
At the time this action was taken there was in effect an *628order of the Board of Insurance Commissioners dated January 25, 1957 which specified the following maximum salaries for attorneys in the Legal Section of the Liquidation Division of the Insurance Department:
1 Chief Attorney — to be a person licensed to practice in the State and Federal Courts, $9,600.
2 Attorneys — to be persons licensed to practice in the State and Federal Courts, $7,500.
3 Attorneys — to be persons licensed to practice in the State Courts of Texas, $6,900.
On May 29, 1957 (prior to the effective date of the 1957 amendments to the Insurance Code) the Board of Insurance Commissioners, composed of John Osorio, J. P. Gibbs and Mark Wentz took cognizance of Judge Betts’ order of May 1, 1957 and recognized a conflict between the orders of the District Judge and the salary scale set by the Board, but nevertheless adopted an order which recited and provided that:
“The salary scale established by Order of this Board dated January 25, 1957, for the attorneys of the Liquidation Division is in line with the salary scale authorized by the Legislature for the Attorney General’s Department of this State. This Board can find no reason for a higher pay scale for the attorneys of the Liquidation Division of the Board than that authorized to be paid to the members of the Attorney General’s Department. However, the Liquidator employed by this Board must issue salary checks at the end of this month to these employees, and he is in a conflicting position between the Orders of this Board and the Orders of this said Court. Therefore, pending further legal study and research by this Board and by the Attorney General’s Department of the conflict between the Orders of this Board and the said District Court, the Board hereby authorizes its Liquidator, J. D. Wheeler, to issue salary checks in line with the said Orders of the said District Court for the month of May, 1957 only, and future salary payments will be subject to further Orders of this Board, or its successor.”
On June 28,1957, after the effective date of the 1957 amendments to the Insurance Code, William A. Harrison, Commissioner of Insurance, re-affirmed the position taken by the predecessor authority in words practically identical with those hereinabove set out, but authorized the liquidator “to issue salary *629checks in line with the said orders of the District Court for the month of June, 1957, only.” Similar orders were entered thereafter by Harrison in subsequent months pending the completion of the legal study and research being conducted by the Insurance Department and the Attorney General.
On October 15, 1957 the Commissioner of Insurance adopted a budget order which contained the following items relating to the maximum salaries for attorneys in the Legal Department of the Liquidation Division:
1 General Attorney, $10,800.00.
3 Attorneys, $8,400.00
3 Attorneys, $7,500.00
While the $50.00 per month pay raise awarded to Taylor by the District Judge on May 1, 1958 would be a $600.00 per year increase over the $10,800.00 annual salary provided by the order of May 1, 1957 and thus exceed the maximum budget allowance by $600.0, Wimberly and Le Croix say that their $50.00 per month increase ($600 plus $7800 and $600 plus $7200) would not exceed the $8,400.00 figure set as the budget maximum for three attorneys in the October 15, 1957 budget order. They also say that sometime prior to the entry of the order of May 1, 1958 the liquidator-receiver James M. Williamson had said orally that the proposed $50.00 raises were “okeh” with him.
Whatever problem may be suggested by these various orders and actions is obviated by the fact that prior to the order of May 1, 1958 Wimberly and Le Croix were being actually paid annual salaries of $7,800.00 and $7,200.00, respectively; that these salaries had not been raised by action of the Board of Insurance or the Insurance Commissioner, but on the contrary said Board and Commissioner refused to go along with the District Judge (or to approve the okeh of the liquidator-receiver, if we assume that his okeh was actually given) and by an official order dated May 14, 1958 directly challenged the District Judge’s action in raising the salaries of the attorneys mentioned. This order states that:
“It has come to the attention of the State Board of Insurance and the Commissioner of Insurance that on May 1, 1958 * * * the 98th District Court entered an order increasing the com*630pensation paid to Messrs. Taylor, Wimberly and Le Croix by the sum of Fifty ($50.00) Dollars per month. This increase to such attorneys has not been authorized or approved by the State Board of Insurance and Commissioner of Insurance under the authority of Article 21.28, Texas Insurance Code, and the need, necessity and propriety for the increase has not been made known to the State Board of Insurance or the Commissioner of Insurance by anyone. It is the opinion of the State Board of Insurance and Commissioner of Insurance that such Order of the 98th District Court is not in accordance with law, and in particular, Article 21.28, Section 12, Texas Insurance Code.”
We are thus again confronted with the question of whether or not the provisions of Article 21.28, Sec. 12(b) of the Insurance Code are merely directory. We see no substantial difference between the position of Wimberly and Le Croix on the one hand and that of Taylor on the other. The order purporting to raise the salary of all three respondents is void and we assume the District Judge will so treat them. Otherwise the writ of mandamus will issue as prayed for.
The writ of mandamus is conditionally granted. No motion for rehearing will be entertained. Rule 515, Texas Rules of Civil Procedure.
Opinion delivered July 16, 1958.