Court Opinion

ID: 9766533
Source: CourtListenerOpinion
Date Created: 2023-08-29 04:52:20.657887+00
Date Added: 2024-06-11T07:30:23.635108
License: Public Domain

EARL W. SMITH and CARROLL, Justices,
concurring.
We concur with the result reached by the majority opinion, with the following comments. Although we agree that the record does not contain proof showing strict compliance with the conditions laid down in any statute authorizing substitute service, we are not prepared to agree that Fish’s pleading was inadequate, for the reasons hereinafter stated.
INADEQUACY OF SERVICE
The record must affirmatively show on its face strict compliance with any statute by which the court may acquire personal jurisdiction through substitute service. Whitney v. L & L Realty Corp., 500 S.W.2d 94 (Tex.1983); McKanna v. Edgar, 388 S.W.2d 927 (Tex.1965). The record must contain proof showing compliance with any conditions set out in the statute authorizing substitute service. Whitney v. L & L Realty Corp., supra. The record in this case fails to demonstrate compliance with the conditions set out in any of the sections of the Insurance Code that could possibly apply: Tex.Ins.Code Ann. arts. 1.14-1 (the section specified in Fish’s pleadings), 3.65, or 21.21-1 (1981).
The record shows one citation to Academy. The citation was issued July 18, received by the constable’s office July 20, executed July 23 (by delivery to the Commissioner of Insurance), and filed July 25. *656Article 1.14-1, Tex.Ins.Code Ann., supra, requires that the plaintiffs attorney must, in addition to serving process by leaving two copies “in the hands or office of the Commissioner,” mail notice of service and a copy of the process to the defendant within 10 days of service on the Commissioner. The affidavit of service on Academy that appears on the record recites service on August 23, not July 23, with Fish’s attorney performing the required mailing within 10 days of August 23.
Nothing appears on the record which demonstrates that Fish’s attorney performed the mailing required by art. 1.14-1 within 10 days of the July 23 service on the Commissioner, the only service of citation on Academy shown in the record. The record shows that Fish’s attorney did not comply with the conditions of service under art. 1.14-1 as to the July 23 service. No citation showing service on Academy on August 23 appears in the record. The citation must appear among the papers of the case. Texas Inspection Services, Inc. v. Melville, 616 S.W.2d 253 (Tex.Civ.App.1981, no writ). The only forwarding of “process” (assuming that process means the citation) performed by Fish’s attorney was performed in regard to a citation. If an August 23 citation was in fact served on Academy, the service does not appear on the record.
The record reveals other common defects in service as to both Academy and Bollinger under other possibly applicable sections of the Insurance Code. The affidavits of service on both Academy and Bollinger recite service on the Commissioner, with notice of service and a copy of the process served mailed to Academy and Bollinger at their “last known address.” Articles 1.14-1 and 21.21-1 require mailing to a defendant at its last known “principal place of business.” The recitation in the affidavit does not comply with the statutory language and will not satisfy its requirement. See Verges v. Lomas & Nettleton, 642 S.W.2d 820, 821-22 (Tex.App.1982, no writ) (under a similar requirement of the general long-arm statute, Tex.Rev.Civ.Stat.Ann. art. 2031b (1964), the term “last known address” may not be construed as the equivalent of “home or home office address” as used in the statute).
The non-compliance is even more pronounced with regard to service on the Commissioner under art. 3.66. Article 3.66 requires the Commissioner to mail the process to the home office of a company that does not have a general manager or general agent in the state. “Last known address” cannot be construed to be the equivalent of “home office.” See Verges v. Lomas & Nettleton, supra.
ADEQUACY OF FISH’S PLEADING
We do not agree that Fish’s petition needed to allege any more than it did: Academy and Bollinger were foreign insurance companies doing business in Texas. His petition satisfied the requirement that facts be pleaded that make the defendant amenable to service under the Insurance Code. The majority opinion says that Fish’s pleadings were deficient in two aspects: failing to plead whether Academy and Bollinger were authorized to do business in Texas and failing to plead whether the Commissioner was in fact or in law an authorized agent for service of process. Following this pleading requirement to its logical end would result in the conclusion that a category of insurers must exist as to which one could plead that the company was “authorized” to do business in Texas but would then be unable to show that the Commissioner was in fact or in law their agent for service. He could not be their agent in law because, as the majority opinion points out, the Insurance Code provision concerning authorized insurers does not designate the Commissioner their agent. Nor does the Insurance Code have the explicit language used in the Texas Business Corporation Act that makes the Secretary of State a foreign corporation’s agent if that corporation has failed to appoint the Secretary. Tex.Bus.Corp.Act Ann. art. 8.10B (1980).
For the Commissioner to be a company’s agent in fact, the company would have to *657exercise its power of appointment. If a company failed to exercise this power of appointment, the Commissioner could not be their agent in fact. Therefore, the company would be an “authorized” insurer who could not be served under the Insurance Code. The provisions covering unauthorized insurers would not apply because the company is authorized. The provisions covering authorized insurers could not apply because the Commissioner would not be the company’s agent in fact.
The Insurance Code does not contain the explicit provision that the Texas Business Corporation Act contains, making the Secretary of State the agent of a foreign corporation that has failed to exercise its power of appointment. Tex.Bus.Corp.Act Ann. art. 8.10B (1980). It does not seem reasonable, or within the intent of the Legislature, however, to create a situation where a company cannot be served under the Insurance Code. The Insurance Code requires a foreign corporation to have a certificate of authority to do business in Texas, stating that the laws of Texas have been fully complied with. Tex.Ins.Code Ann. art. 3.57 (1981).
Section 21.43(c) of the Code states that the provisions of the Code are conditions on which foreign insurance corporations are permitted to do business in Texas. Article 3.24-1, concerning the issuance of a certificate of authority to a foreign insurance company, says that “[w]hen a foreign or alien company has complied with the requirements of this Subchapter and all other requirements imposed on such company by law ... the Commissioner shall file in the office the documents delivered to him and shall issue to the company a certificate of authority to transact in this State the kind or kinds of business specified therein.” Although the statutory language could be more explicit about the requirements for, and effect of, obtaining a certificate of authority, it is not clear at all that the statute requires a finding that it is possible to obtain a certificate of authority without first having appointed the Commissioner agent for service, one of the laws with which a company must comply.
The Texas Business Corporation Act anticipates the possibility of a foreign corporation obtaining a certificate of authority without exercising its power of appointment because the Act explicitly makes the Secretary of State such a corporation’s agent by default. The absence of a similar provision in the Insurance Code could be interpreted as implying that it is not, or should not be, possible to obtain a certificate of authority without appointing the Commissioner agent for service. If it were in fact possible to obtain the certificate without such appointment, the provisions could be interpreted as meaning that the company was nevertheless ⅛⅞ authorized because it had not complied with all of the laws of Texas.
The Insurance Code does not seem to prohibit a collateral attack on a company’s certificate of authority based on failure to comply with some requirement of the statute. The Texas Business Corporation Act, for example, contains such a provision. Article 8.07A provides that a certificate of authority issued by the Secretary of State shall be conclusive evidence of the right of the corporation to transact business except in a proceeding by the state to revoke the certificate. The comment to the statute indicates that it was designed to prevent a collateral attack, usually attempting to impose personal liability on the members of the corporation’s board, based on a ground that failure to comply with some requirement in securing the certificate has the effect of relegating the foreign corporation to the status of a partnership in regard to its transactions in Texas.
The Insurance Code can and should be read to provide that the Commissioner is the agent for process of any foreign insurance company doing business in Texas: if a company is authorized it will have appointed the Commissioner its agent for service and the Commissioner will be its agent in fact; if a company has not appointed the Commissioner its agent, then it cannot be authorized and the Commissioner is the company’s agent for service as a matter of *658law under the provisions controlling unauthorized insurers. Therefore, an allegation that a foreign insurance company is doing business in Texas should be sufficient to make the company amenable to service under the Insurance Code.