Court Opinion

ID: 3959703
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:20:17.519374+00
Date Added: 2024-06-11T07:43:44.407810
License: Public Domain

This appeal is from only so much of an interlocutory order of the 61st District Court of Harris County (Hon. Ben F. Wilson, Judge presiding), as — on the application of the appellee, the State of Texas therefor — ex parte and without notice to the appellants, appointed a receiver for certain specifically-described property of the appellants, the material part of which was — in his verbis — as follows: "It is further ordered, adjudged, and decreed, that the plaintiff's prayer for the immediate appointment of a receiver is granted, and Ernest A. Knipp, of the County of Harris, is hereby appointed as such receiver, whose duty it shall be to take possession of all the property of the defendants, above named, wheresoever situated, specifically, such property being all books, papers, vouchers, notes, contracts, applications for loans, cards, statements, collateral or incidental contracts, or stipulations, or agreements, used by said defendants in connection with their business of loaning money; to have, hold, keep, the same in his possession, subject to the orders of this court from time to time, until final disposition thereof has been made, and to employ such help as is necessary therefor."
The quoted order so proceeded out of cause No. 313880, styled The State of Texas v. Pacific Company Loans, et al., then pending unheard on the merits in that district court, which was an action by the State, through its Attorney General and the district attorney of Harris County, acting in its governmental capacity only, against the appellants here as Loan Companies, or parties alleged to be engaged in the lending of money in Harris County, brought solely upon the authority of Article 4646b of Vernon's Texas Annotated Civil Statutes (known as Senate Bill 43, Acts of the Regular Session of the 48th Legislature), for a permanent injunction against them; the gist of its material averments was that they each and all were operating their business in violation of that invoked statute, in that they were "engaged in the business of habitually loaning money, for the use and detention of which usurious interest was being exacted of and collected from the borrowers thereof", hence were committing the specific wrongs against the sovereign State itself it had therein denounced.
Appellants complain here against the order, pursuant to R.S. Article 2250, and No. 385 Texas Rules of Civil Procedure, under which, after having first so limited their notice of appeal to that part of the trial court's decree "granting and appointing a receiver ex parte herein", they next, within five days thereafter, duly prosecuted their appeal directly to this court, as so limited and authorized.
So grounding it, appellants make an over-all two-fold attack upon the court's action, which their brief, in substantial substance, states this way: "Part I, assuming the constitutionality of Article 4646b, of the Revised Texas Civil Statutes, under which this suit was brought, which we do not, the Trial Court erred in rendering an interlocutory ex parte order appointing a receiver, without notice, over the business and business assets of each of these defendants; and Part II, that the aforesaid *Page 87 
Article 4646b, of the Vernon's Revised Texas Civil Statutes, quoted on Page 3 hereof, is unconstitutional under both the State and Federal Constitutions, and hence the Trial Court erred in rendering an interlocutory ex parte order appointing a receiver, without notice, over the business and business assets of each of these defendants."
Full concurrence is here entered in so much of this court's opinion herein as overrules appellants' attack upon the constitutionality of the statute involved, following a like holding by the Austin Court of Civil Appeals. Since this court also quotes the bulk of the Act otherwise, there is here added only these fuller recitations of Section 2 and 2a thereto, to-wit:
"Sec. 2. By the term `habitually' as used in this Act, is meant the making of as many as three (3) loans on which or in connection with which usurious interest is charged or contracted for within a period of six (6) months next preceding the filing of any such suit.
"By the term `usurious interest' as used in this Act, is meant interest at a rate in excess of ten (10%) per centum per annum.
"Sec. 2a. Nothing in this Act shall in any way modify, alter or change any valid provision of Article 8 of Chapter 5 of House Bill No. 79, Acts of the Regular Session, 48th Legislature, nor shall anything in this Act prevent charging of any actual and necessary expense, now or hereafter permitted and authorized by law, and such shall not be considered interest."
It results perforce from the recited state of the record that this court must — in conformity thereto — base its determination as to the authority of the trial court to issue the appealed from order, wholly upon the face of the Act itself, along with the allegations of fact made by the State in its petition against the appellant Loan Companies, which are to be taken as true; this for the reason that, the order having been made at the instance of the State ex parte and without notice to the appellants, they have brought up no showing of any counter measure or response on the facts of the controversy they may have made thereto below, if any at all. Myerscough v. Garrett, Tex. Civ. App.45 S.W.2d 1003; Friedman Oil Corp. v. Brown, Tex. Civ. App.50 S.W.2d 471; Cash v. Ervin, Tex. Civ. App. 62 S.W.2d 242; Curtis v. McKain, Tex. Civ. App. 94 S.W.2d 829.
In other words, appellants are not in the position of claiming on this appeal that they made sworn denials of any of the specific allegations the State presented under oath against them, and upon which the trial court saw fit to so act, ex parte and without notice to them.
Wherefore, in these circumstances, the only question of law presented here is that of whether or not the trial court abused a sound judicial discretion in entering such an order as being in consonance with its powers under the valid provisions of Article 4646b. Cash v. Ervin, Tex. Civ. App. 62 S.W.2d 242; Massey v. Greenwood, Tex. Civ. App.56 S.W.2d 1103; Friedman Oil Corp. v. Brown, Tex. Civ. App.50 S.W.2d 471; Baptist Missionary, etc., Convention v. Knox, Tex. Civ. App. 23 S.W.2d 781; 36 Tex.Jur. pp. 84 and 85.
Under these deductions, many of the collateral matters discussed in the briefs become immaterial, since, from the face of the thus narrowed proceedings before it, this court must measure the legal reaches of the trial court's power in construing and applying that enactment.
Appellants, whether consciously or not, appear to be influenced in all their objections to the trial court's action by an underlying conviction that the statute is inherently violative of their asserted constitutional right to have had their day in court before such an order could be properly entered, in any event; but, as indicated, that claim is considered to have already been authoritatively foreclosed against them.
So that, the statute being valid upon its face, the inquiry is reduced to whether or not the court's order contravened or denied any other right of theirs.
Holding that it did not, this dissent from the judgment here reversing that order and setting aside the receivership proceeds in part upon these further conclusions: (1) That the statute being valid, itself created for the first time in Texas a cause of action in the State, when acting in its sole capacity as a sovereign, for a permanent injunction against any violator of the provisions it denounced in its Section 1 against the habitual loaning of money in this state at usurious interest rates; (2) that the district courts of Texas were vested with the jurisdiction and power to entertain such a suit by it, and, pending the final trial thereof on its merits, were also, by both *Page 88 
implication from the distinctive terms of this law and their inherent authority, left with the right to exercise over the proceeding all the equitable powers and privileges theretofore conferred upon and existing in them; (3) that, under the stated circumstances, and especially the detailed allegations by the State — which have been appended in Exhibit A to this court's opinion herein — as to such usurious practices now and prospectively by the appellants as the Act so denounced, it was not in excess of a lawful discretion for the court to so appoint a receiver ex parte and without notice to the appellants; (4) especially so, since the order did not, in terms or by legitimate inference, encompass the whole business of the appellants, but only the specifically designated items of their properties, whatever actual effect that might have upon their general business as going concerns. This court may not properly assume, it is thought, that the learned trial Judge would have tolerated more onerous execution of the order than its limits described, nor that any complaint thereof by appellants to him would have gone unheard.
(5) It is true this statute did not expressly nor specifically confer upon the district courts the authority to appoint such receivers ex parte and without notice, but it did, by legal presumption and intendment, as already suggested, leave these courts in possession of their pre-existing powers in equity, as well as in the law, so enriched by the addition of Article 4646b, the expressed objective of which was to protect the public generally against the then-prevalent business in Texas of habitually loaning money at usurious interest.
(6) That is, without taking anything from the pre-existing jurisdiction of these courts, the Act directly authorized the State to bring such an injunction suit, when, by prior law, it had no such right, as held in Ex Parte Hughes, 133 Tex. 505, 129 S.W.2d 270.
(7) That the district court, being so left with its pre-existing power to appoint a receiver in a proper case, according to the usages of the courts of equity (Vernon's Texas Civil Statutes, Article 2293, Section 4), the allegations of the State's petition in this suit therefor were in all material respects sufficient — not only to authorize such an appointment, but further to show that it was reasonably necessary as an aid to the court in the enforcement of any judgment that might thereafter be rendered for the State, and that there was imminent danger of an irreparable injury to the public interest at that time, without the existence of other reasonably sufficient or adequate remedy.
The State's allegations, as so copied in Exhibit A, supra, speak for themselves, detailing in plain language the controlling facts relied upon, without needlessly pleading the evidence depended upon for their support.
Paragraph IV directly so avers that every one of the appellants was not only then in fact engaged in the specific business of habitually loaning money at usurious rates in Texas, but each of them was likewise actually threatening to so continue; paragraph V, in like manner, sets out that everyone of them had also in specified ways followed a course of conduct calculated to conceal such real nature of their business both from the general public and their own clients, and that "all notes, books, papers, records and instruments whatsoever, concerning their said unlawful transactions, respectively, are in the exclusive possession of said defendants, respectively, and the State of Texas has no access to such evidence, and no practical means of examining the same, or even of knowing of the actual existence or contents thereof."
Paragraph VII, in the same factual form, alleges that all of the appellants "have entered into numerous and divers contracts, agreements, and the like, in connection with their said loans, and evidencing in part, if not in whole, their said respective contracts with their borrowers, and that said notes, contracts, agreements and the like instruments, are in the possession of the said defendants, respectively, and the same are being used and enforced by the defendants, respectively, in utter contempt for, and in violation of the said laws of Texas forbidding usury."
Paragraph VIII details the factual conditions under which it is charged that no temporary injunctive relief would have been adequate in this instance.
Instead of being merely impotent conclusions or opinions of the pleader, these discriminatingly drawn charges — since none of them were in fact denied by the appellants, as the trial court found in its order of February 12, 1945, designated in the transcript as "Amended Order Granting Temporary Restraining Order", and, regardless of that, must be in this court taken as true — no reason is perceived for *Page 89 
not holding that they thus disclose an analogous state of facts to those held to sufficiently support the appointment of such a receiver in these authorities: Patton v. State, Tex. Civ. App. 62 S.W.2d 381; Klugsburg v. State, Tex. Civ. App. 89 S.W.2d 301; Cash v. Ervin, supra.
(8) None of the authorities cited and relied upon by appellants for their contrary contentions are thought to be decisive of the case at bar, hence it becomes unnecessary to review them here: it may not be amiss, however, to point out the inapplicability of two of their leading ones, that is, Stockwell v. State, 110 Tex. 550. 221 S.W. 932, 12 A.L.R. 1116, and Ex Parte Hughes, 133 Tex. 505, 129 S.W.2d 270.
The Austin Court of Civil Appeals, in Watts v. Mann, 187 S.W.2d 917, 927, writ of error refused, is considered to have, in effect, in the course of its discussion of the constitutionality of Article 4646b, so ably differentiated each of these decisions in general meaning from the rationale of the trial court's holding in this instance that these respective excerpts therefrom are quoted with approval as being adversely dispository of the whole question of supporting authority for appellants' contentions herein, to-wit:
"No analogy between the situation there (Stockwell v. State, 110 Tex. 550,221 S.W. 932, 12 A.L.R. 1116) and that here exists. Here nothing is delegated to the courts or administrative officials. The Act (Article 4646b) specifically denounces the business it defines as habitual practice of money lending usury, expressly declares the public interest in the subject, and provides a specific preventive, injunction against its further practice. It is not essential that the Act should have expressly denominated the practice as a nuisance. The decision in Ex Parte Hughes (133 Tex. 505, 129 S.W.2d 270) is grounded upon the fact that `there is no law, constitutional or statutory, that defines the violation of such laws as an injury to the property or civil rights of the public at large. To the contrary * * * our usury laws very carefully create only private rights.'"
"That decision was handed down in June, 1939. The Loan Act was passed at the next regular session of the legislature (1943), containing the above-quoted reference to the Hughes decision in its emergency clause."
"The application of the Act (Article 4646b) to money lenders and not to other classes of usurers, is predicated upon an express legislative finding of fact in the emergency clause which reads:
"`The fact that the Supreme Court has recently held (Ex Parte Hughes,133 Tex. 505, 129 S.W.2d 270), that there is no provision of law authorizing the State of Texas to institute and maintain such a suit as herein authorized by the State of Texas, and the fact disclosed in the prosecution of the suit wherein such opinion was rendered that the usury laws of Texas are being flagrantly violated and unconscionable charges are being made by money lenders, and the fact that such practice is general in many parts of the state, and that the present Statutes of Texas are inadequate to afford protection to the public generally against such unlawful and unconscionable practices, create an emergency,' etc. It can hardly be gainsaid that the factual situation portrayed in this recital afforded ample justification for the Act as applied to this class of usurers. Even were the facts challenged, the legislative finding could not be overturned by the courts unless it were made to appear by conclusive proof that the finding was `clearly erroneous, arbitrary, or wholly unwarranted.'"
(9) Appellees, on the other hand, frankly conceded that no prior case in Texas has been decided upon the exact equivalent of these facts — that is, in the construction of this new statute; but they rely both upon it and the general power of our courts of equity under our statutes, Article 2293, Section 4, as well as on the usages of the courts of equity elsewhere, such as State v. Bashan, 146 Kan. 181, 70 P.2d 24, by the Supreme Court of Kansas, and these further authorities: 31 Tex.Jur. p. 412; 39 American Jurisprudence, p. 289; Eddy v. Thornton, 205 Ark. 843,170 S.W.2d 995; Beckwith v. Stratford, 129 Conn. 506, 29 A.2d 775; Kelley v. Clark County, 61 Nev. 293, 127 P.2d 221; Asphalt Products Co. v. Marable, 65 Ga. App. 877, 16 S.W.2d 771; Wilson v. Hotel Co., 188 Ga. 498,4 S.E.2d 155, 124 A.L.R. 373; Garraway v. State, 184 Miss. 466,184 So. 628, 185 So. 803.
(10) Appellants still have their remedy and their "day in court", which simply means a notice of the legal visitation against them, with the opportunity to be heard thereon. 11 Words and Phrases, Perm.Ed., page 119, and cited authorities. Indeed, they had and duly utilized it, *Page 90 
pursuant to cited R.S. Article 2250, in the court below, in circumstances thus shown by this record: They had first filed a written motion there to vacate the order appointing the receiver now at this bar on this appeal; that would have enabled them to appeal from a refusal of it upon their own pleadings and such evidence as they might have there presented in support of it, but they at once withdrew that motion, and chose rather to appeal directly from the order appointing the receiver ex parte, which, as before pointed out, could only be heard in this court on the State's pleadings.
Furthermore, they may yet go back into this cause in the trial below upon its merits and prove, if they can on the facts, that their business neither was at the time this writ was issued against them, nor has it since been, tainted with the "habitual usury" the State so charged against them.
They were permitted, through a writ of mandamus, entered by this court in cause 11703, Jesse Wilkenfeld et al., Relators, v. Grover Sellers et al., Respondents, on February 20, of 1945, to supersede the interlocutory order herein protested against; so that, pending the disposition of this appeal, none of the designated property has been taken over by the receiver.
Since the State has thus been held competent to maintain this suit under the invoked statute, when the quoted finding of fact in the emergency clause thereof is especially looked to, no reason is perceived for not further holding that it was also the Legislative intent thereby to make the business of habitually loaning money in Texas at usury a public nuisance per se. When given that construction, the authorities declaring such practice may be permanently enjoined are all one way, as those last cited supra make manifest.
Meanwhile, the courts may also, as an aid to such ultimate objective by injunction, reasonably impound through a receiver the means employed in the carrying on of such nefarious business; 36 Texas Jurisprudence, p. 57, par. 24, and footnote cited authorities; Woodward v. Smith, Tex. Civ. App. 253 S.W. 847; Hunt Production Co. v. Burrage, Tex. Civ. App.104 S.W.2d 84; Griggs v. Brewster, 122 Tex. 588, 62 S.W.2d 980; Henderson v. Stanley, Tex. Civ. App. 150 S.W.2d 152; Stanley v. Henderson,139 Tex. 160, 162 S.W.2d 95; Clark on Receivers, 2d Ed., § 191, and § 240; United States v. American Tobacco Co., 221 U.S. 106, 184-188, 31 S. Ct. 632, 55 L. Ed. 663.
It follows from these conclusions that the judgment should have been affirmed; this protest against the contrary disposition is, with great respect, presented.
 On Appellee's Motion for a Rehearing, and in the Alternative to Certify Questions to the Supreme Court.
Motion denied.