632 S.W.2d 950

The BANK OF WOODSON, Appellant, v. Robert STEWART, State Banking Commissioner, et al., Appellees.

No. 13695.

Court of Appeals of Texas, Austin.

May 12, 1982.

Rehearing Denied June 2, 1982.

*951Thomas W. George, George & George, Austin, for appellant.

Mark White, Atty. Gen., Thomas M. Pol-lan, Asst. Atty. Gen., Austin, for appellees.

POWERS, Justice.

The question for decision is whether the district court of Travis County had jurisdiction of either of two causes of action1 alleged by the Bank of Woodson against the State Commissioner of Banking and the Federal Deposit Insurance Corporation (FDIC). Seeking temporary and permanent injunctions, the Bank alleged that the Commissioner’s summary closing of its banking house and his seizure of the Bank’s property were in deprivation of its constitutional right to due process of law; and alleged that due process required prior notice and hearing before such actions could lawfully be taken. The Bank, as a basis for the same relief, alleged as well a statutory right to such notice and hearing, challenged the statutory finding made by the Commission as a basis for his action in closing the Bank summarily, and urged a statutory ground for requiring the Commissioner to hold the Bank’s assets pendente lite, with a prayer that the assets be restored to the Bank after final hearing. We will hold the Travis County district court had jurisdiction of the Bank’s constitutional cause of action but not the statutory cause of action. The latter amounts in substance to the statutory *952liquidation contest authorized by the provisions of article 342-805, a part of the Texas Banking Code of 1943.2 The Legislature placed exclusive jurisdiction to determine that contest in the district court of the bank’s domicile, that domicile being Throck-morton County, Texas, in this instance.

The Commissioner and the FDIC responded to the Bank’s suit by filing their respec-ti ve motions to dismiss for want of jurisdiction. We find in the transcript no order which determines the FDIC’s motion and we do not consider it. The Commissioner’s motion prayed for dismissal of the Bank’s suit on the theory that the liquidation provisions of the Texas Banking Code of 1943, articles 341-801 through 342-816,3 give the Commissioner authority to close the Bank *953and liquidate its assets under the exclusive supervision and jurisdiction of the district court of Throckmorton County. Articles 342-805 and 342-806 provide that this special jurisdiction includes the power to entertain and determine any contest of the court-supervised liquidation proceedings, and the ancillary power to enter an injunction pendente lite, restraining liquidation of the Bank’s assets before final hearing of the liquidation contest. No statutory liquidation proceeding was pending in the district court of Throckmorton County at the time the Commissioner’s motion was heard in Travis County.

The trial court sustained the Commissioner’s motion and dismissed the Bank’s suit for want of jurisdiction. This Court, on *954March 12, 1982, granted a temporary injunction to preserve our jurisdiction of the Bank’s appeal from the trial court’s order of dismissal. Our temporary injunction restrained the Commissioner and the FDIC (to which the Commissioner had assigned the Bank’s assets immediately on obtaining a dismissal of the cause) from liquidating the Bank’s assets pending appeal, but expressly permitted the Commissioner and the FDIC to conduct the Bank’s affairs in the ordinary course of business. It later appeared that on the same day the application for temporary injunction was submitted to this Court, the FDIC, acting for the Commissioner, initiated in the district court of Throckmorton County the statutory liquidation proceedings by filing an inventory of the Bank’s assets as required by article 342-806.

Resolution of the issue of the trial court’s jurisdiction requires consideration of the various provisions of the Code which deal with the liquidation of State-chartered banks and those constitutional and statutory provisions which assign subject-matter jurisdiction to the district courts of the State, our courts of original jurisdiction, in a distribution of the State's judicial power.

The Bank first alleges that its property has been seized by the Commissioner, acting for the State, without prior notice and hearing, and therefore in violation of the due process guarantee of the 14th Amendment to the United States Constitution and Article I, §§ 17 and 19 of the Constitution of the State of Texas. Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969); Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975).

Pointing to the obviously correct proposition that the Code was intended to provide a comprehensive scheme for the regulation of state-chartered banks, including their closing and liquidation, and to the equally obvious necessity for summary action in closing an unsafe or insolvent bank on some occasions, the Commissioner replies that the circumstances justified his actions in closing the Bank in this instance without prior notice and hearing, and claims that his actions were expressly authorized by the first sentence of article 342-803, which statute is quoted in footnote three. He contends as well that such summary actions, authorized by statute for emergency situations, are constitutional, citing Fahey v. Malionee, 332 U.S. 245, 67 S.Ct. 1552, 91 L.Ed. 2030 (1947).

The Bank rejoins by asserting that article 342-803 should be interpreted as a whole and, therefore, as authorizing the Commissioner to close a State-chartered bank and liquidate its property only after: (a) the bank has consented to such actions or the Commissioner has laid the facts before the bank’s directors; (b) they have failed to cure, within the ten days allowed by the article, the conditions which are claimed by the Commissioner to be unsafe, unlawful, or unauthorized; (c) the circumstances have been certified to the State Banking Board; and (d) after hearing before that body, the Commissioner has obtained an order of the Board requiring that the bank be closed “and its affairs liquidated as provided in [the] Code.” These are, of course, the procedural steps set out in article 342-803, which the bank alleges apply to all bank closings, emergency or otherwise. And, the Bank contends, if this is not the force and effect of article 342-803, as properly interpreted, then its property has been seized, and threatens to be liquidated, without the notice and opportunity for hearing which due process of law requires.

We do not, of course, express an opinion as to the merits of the parties’ respective claims. The sole issue before us at this time is the jurisdiction of the Travis County district court, that is, whether it had power to hear and determine either the statutory or constitutional rights asserted by the Bank as bases of its causes of action.

We believe neither party, in their zeal, has properly recognized the effect of the two different and discrete rights alleged by the Bank. Each party assumes that only one district court in the State may adjudicate both claims, irrespective of the origin of the rights which form the bases of the Bank’s claims. While that may be desirable as a matter of judicial administration, it is not a jurisdictional prerequisite.

*955In our view, the trial court properly dismissed, for want of jurisdiction, those claims made by the Bank which were based solely upon rights granted by the Code. The Legislature has committed these claims to the exclusive jurisdiction of the district court of the Bank’s domicile. That court is the only court which may grant the statutory relief authorized by the Code, that is, an order directing the Commissioner to reopen the Bank for operation by the Bank directors and officers, if the Bank is correct in its claim that article 342-803 gives it a statutory right to prior notice and hearing in the particulars set out in the article, or the Commissioner’s statutory findings were erroneous. Therefore, the Commissioner is quite correct in his contention that the exclusive jurisdiction to determine such matters lies in the district court of Throckmor-ton County, for they concern rights given the Bank solely by the Code, which also assigns their adjudication to the district court of the Bank’s domicile as part of a liquidation contest.

The right to judicial review of such administrative decisions and actions is normally a creature of statute, in this instance articles 342-805, 342-807 and 342-812 particularly. Stone v. Texas Liquor Control Board, 417 S.W.2d 385 (Tex.1967). Having created this right of judicial review, by allowing the Bank to intervene in the court-supervised liquidation proceedings, the Legislature could and did designate the one district court wherein the proceedings should be conducted and the liquidation contest adjudicated. It follows, of course, that by article 342-805 the Legislature could validly empower that one district court to enjoin the Commissioner from liquidating the assets of the Bank pendente lite, which power the court undoubtedly had in any event, whether to protect the special statutory jurisdiction given it by the Code or as a power granted by the injunction statute, Tex.Rev.Civ.Stat.Ann. art. 4642 (1952). That this judicial review is made exclusive in the district court of Throckmor-ton County appears in the express provisions of the Code: “The methods of liquidation of state banks as provided for in this Code shall be exclusive ... [art. 342-801]”; “[promptly after the Commissioner has acquired possession of the assets of a state bank for liquidation, he shall prepare and file in the office of the district court of the county of the bank’s domicile an inventory of such assets . . . [art. 342-806]”; “[t]he assets of the bank shall be deemed to be in the custody of the court in which such proceedings are pending and all suits and orders provided for under this chapter shall be deemed to be in the nature of interventions or orders in said proceedings, of which suits and orders said court shall have exclusive jurisdiction [id]”; and finally, no “state bank which has been closed under the provisions [of the Code which relate to conservatorship, closing and liquidation] shall be reopened unless the contest provided for under [article 342-805] is finally determined adversely to the Commissioner, or unless the Commissioner, acting under orders of the district court, shall authorize such reopening ... [art. 342-807]” (emphasis added).

Consequently, respecting the Bank’s claims which are founded upon rights allegedly given by article 342-803 or other provisions of the Code, we hold the district court of the Bank’s domicile, the district court of Throckmorton County, has exclusive jurisdiction to determine such claims in its supervision of the liquidation proceedings authorized by the Code, including the power to conduct the liquidation contest and to order the bank’s reopening or its liquidation, as given in articles 342-805, 342-806, and 342-807.

Nevertheless, the Bank’s petition averred as well a constitutional right, irrespective of any statute, to be free of governmental seizures of its property except in accordance with due process of law, which the Bank contends required prior notice and hearing in the circumstances. The Bank alleged specifically that the Commissioner seized and threatens to liquidate its property in violation of this constitutional right. Whether this cause of action is meritorious or not, we believe the district court of Travis County had subject-matter jurisdiction to adjudicate it, and to order appropriate relief if the Commissioner’s actions were found to be in violation of the Bank’s constitutional rights.

*956If the trial court determines that the Commissioner acted unconstitutionally, as the Bank alleges, the Bank was not required to await the statutory liquidation proceedings authorized by the Code before resorting to the courts for protection. Glen Oaks Utilities, Inc. v. City of Houston, 161 Tex. 417, 340 S.W.2d 783 (1960). Even without statutory authorization for judicial review of administrative actions, the district courts of the State have the power to hear and determine a claim that an agency acted in violation of the due process clauses of the Constitution of this State and of the United States, and to order appropriate relief. Firemen’s & Policemen’s Civil Service Commission v. Blanchard, 582 S.W.2d 778 (Tex.1979); Brazosport Savings and Loan Association v. American Savings and Loan Association, 161 Tex. 543, 342 S.W.2d 747 (1961). Banking corporations have a vested property right in their charters which these constitutional guarantees protect from contrary administrative action. Chemical Bank & Trust Co. v. Falkner, 369 S.W.2d 427 (Tex.1963). The right of judicial review in such cases is said to be “axiomatic.” City of Houston v. Blackbird, 394 S.W.2d 159 (Tex.1965). Property rights cannot be determined by the orders of an administrative agency without affording a right of judicial review. Schwantz v. Texas Department of Public Safety, 415 S.W.2d 12 (Tex.Civ.App.-Waco 1967, writ ref’d).

The right of judicial review of administrative agency actions may be given by statute but if vested property rights are invaded by such actions, the right exists with or without a statute which confers it. For our purposes, the distinction is important because only in the former case, that is, in legislative grants of judicial review, may the legislature validly confer exclusive jurisdiction upon a single district court.

For example, the right to challenge administrative agency actions, by an original action in district court, on the basis that such actions unconstitutionally deprive the plaintiff of a vested property right, is a right to judicial review distinctly different from the right to such review which is given in the Texas Administrative Procedure and Texas Register Act (APTRA), Tex.Rev.Civ.Stat.Ann. art. 6252-13a, §§ 12, 19.4 This right is equally distinct and dif*957ferent from the right to judicial review conferred in numerous other statutes which delegate portions of the State’s police power to various administrative agencies, prescribe how and on what conditions the delegated power may be exercised, and provide for judicial review of specific instances where the power is exercised, frequently by suit in a district court of Travis County, Texas. See e.g., Tex.Rev.Civ.Stat.Ann. arts. 41a-l (Supp.1982); 135b-6, § 9 (Supp. 1982); 5221a-5, § 5 (Supp.1982). Article 342-805 is such a statute.

Articles 342-805 through 342-807 are the provisions relied upon by the Commissioner in his claim of “exclusive jurisdiction” in the district court for Throckmorton County. These provisions are derived from practically identical provisions in earlier statutes stretching back to 1905. Under such statutes, the Commissioner has consistently been held to occupy the position of a receiver when he liquidates a closed bank under the supervision and orders of the district court in the county of the bank’s domicile. Brand v. San Patricio County, 80 S.W.2d 460 (Tex.Civ.App.—San Antonio 1935, writ ref’d); State Banking Board v. Winters State Bank, 13 S.W.2d 391 (Tex.Civ.App.—Austin 1929, writ ref’d).

But it has never been held that the special jurisdiction conferred upon the district court of the bank’s domicile is “exclusive” to the extent of precluding any suit elsewhere in any matter involving the affairs of a bank which is the subject of liquidation proceedings in the district court of its domicile. For example, in Ogden v. Edwards, 108 S.W.2d 675 (Tex.Civ.App.—Amarillo 1937, no writ), the holder of promissory notes, secured by a vendor’s lien, sued to foreclose the lien. The maker of the notes had conveyed the land to a bank which afterwards was made the subject of liquidation proceedings in the district court for a different county. The Court of Civil Appeals held that the district court in the county where the land lies had jurisdiction of the suit to foreclose the vendor’s lien, rejecting the contention that the lienholder’s suit was required to be brought in the district court where the liquidation proceedings were conducted. Acknowledging the grant of exclusive jurisdiction to that court, the Court of Civil Appeals said:

It does not follow, however, that because the court in which a liquidation is pending has exclusive possession of the property owned by the bank involved in the liquidation, no other court in the state has jurisdiction to litigate any matter connected with it.
* * * * * *
The suit ... was upon vendor’s lien notes and to foreclose the vendor’s lien. The land was located in Yoakum county, and venue unquestionably was properly laid in that county. It involved a matter over which that court had jurisdiction, and, under the statute and holdings of the courts of this state, the pendency of the liquidation and resulting receivership of the properties of the Slaton State Bank, although in another court, did not in any respect interfere with the Yoakum county district court in its jurisdiction of the matters in controversy.

It may be argued, however, that the foregoing case is dissimilar from the present case where the Bank challenges on constitutional grounds the official actions of the Commissioner, a challenge which could easily and logically be made in the context of the liquidation contest authorized by article 342-805. But the difference is immaterial, for it is the nature of the right urged by the plaintiff which determines whether the Throckmorton County district court has exclusive jurisdiction of a claim founded upon that right, and if the right was not or could not validly be assigned to the exclusive jurisdiction of that district court for adjudication, the Bank was free to assert it in any district court where personal jurisdiction of the Commissioner was acquired.

*958There are other statutes5 which confer a special and exclusive statutory jurisdiction upon specific district courts, but Tex.Rev. Civ.Stat.Ann. art. 6049c, § 8 is most valuable for our discussion because it has been most frequently the subject of decision by the Supreme Court of Texas. That statute confers upon the district courts of Travis County a special and exclusive jurisdiction to review the rules, regulations, and orders of the Texas Railroad Commission, a power which no court of the State would otherwise have except under such special statutory authorization or under the power of the regular district courts to hear and determine allegations that the plaintiff’s vested property rights, or other fundamental rights, have been unconstitutionally invaded by official action. City of Amarillo v. Hancock, 150 Tex. 231, 239 S.W.2d 788 (1951).

Article 6049c, § 8 has been construed as conferring upon the district courts of Travis County exclusive jurisdiction only with respect to the statutory right granted by that article for review of the Commission’s rules, regulations, and orders; and such special and exclusive jurisdiction does not encompass common law causes of action, as for breach of contract, trespass, negligence, and so forth. These rights of action have a different origin and are committed to the regular district courts of the State for adjudication as part of their ordinary original jurisdiction. Zimmerman v. Texaco, 413 S.W.2d 387 (Tex.1967); Gregg v. Delhi-Taylor Oil Corp., 162 Tex. 26, 344 S.W.2d 411 (1961); Looney v. Sun Oil Co., 170 S.W.2d 297 (Tex.Civ.App.—Texarkana 1943, writ ref’d). Subject to the ordinary venue and other statutes which regulate the jurisdiction, practice and procedure in all district courts alike, or which create courts of limited jurisdiction, these common law causes of action may be brought in any district court outside Travis County where personal jurisdiction may be acquired over the defendant and where venue is otherwise proper.

These causes of action may be prosecuted to judgment even though the judgment may moot entirely a statutory cause of aetion for judicial review of administrative action which grows out of the same circumstances and lies within the special and exclusive jurisdiction of a district court in Travis County. Looney v. Sun Oil Co., supra.

This distinction between the origin of the rights asserted, and between the ordinary original jurisdiction of a regular district court and the special exclusive jurisdiction of a Travis County district court under Article 6409c, § 8, was described as follows in Alpha Petroleum Co. v. Terrell, 122 Tex. 257, 59 S.W.2d 364 (1933):

What we hold is that, where the suit is to enforce a right which exists only by operation of the statute, and not under the Constitution or the common law, it does lie within the power of the Legislature to designate a particular court as an exclusive tribunal to hear and determine such suit. In such a case where the statute, as this one does, provides that the suit shall be filed in a particular court, it demonstrates a conclusive legislative intent to designate such court as the only tribunal where such matters can be litigated, and, as said by our Supreme Court, speaking through Judge Cureton, in Mingus v. Wadley, 115 Tex. 551, 285 S.W. 1084, 1088: “In special proceedings not within the common-law jurisdiction, the court’s statutory designation of the venue is mandatory and jurisdictional.”

In Mingus v. Wadley, supra, the Supreme Court of Texas expressly held that suits under the Workmen’s Compensation Law (required to be brought to the county where the injury occurred) are in derogation of the common law, and the rights to be enforced in such suits and the remedies provided are purely statutory. Therefore, the Legislature could validly require that such suits be brought in the county where the injury occurred. See also Bullock v. Amoco Production Co., 608 S.W.2d 899 (Tex.1980); City of Strawn v. Board of Water Engineers, 134 S.W.2d 397 (Tex.Civ.App.—Austin 1939, writ ref’d) (wherein the power of the Legislature to delineate and condition *959in a similar way the bringing of other statutory causés of action is affirmed.)

In contrast, the right of action asserted in Looney v. Sun Oil Co., supra, was not a creature of statute but originated in the common law. The court said:

But it is to be observed from an examination of the pleadings and prayer for relief in the instant suit that plaintiff sues for specific performance of an alleged contract; to adjudicate and enforce and alleged contractual right. We know of no statutory provision and are cited to none which vests exclusive jurisdiction in a district court of Travis County to adjudicate such character of action as presented in the instant suit. The fact that the relief here sought, if sustained, may have the effect, indirectly, of destroying the value of defendant’s permit to operate wells Nos. 2, 3 and 4, will not deprive the District Court of Gregg County of jurisdiction to hear and adjudicate this issue of the enforcement of the alleged contractual rights.

The distinction between a right of action given by statute to review governmental conduct, and a right of action to review such conduct which exists independently of statutory authorization, is illustrated in the present case. The right to contest on statutory grounds the closing of the Bank and the liquidation of its property is a statutory right created by article 342-805; it therefore lay within the power of the Legislature to designate the district court of Throck-morton County as the exclusive tribunal for the adjudication of that contest, in judicial review of the Commissioner’s conduct, with the attendant power in that court to order the Bank reopened or liquidated, as the merits determined, and the ancillary power to preserve the matter for adjudication by enjoining the Commissioner pendente lite from liquidating the Bank’s property. Nevertheless, the Bank’s other cause of action to prevent by injunction or other appropriate relief the alleged unconstitutional seizure of its property by the Commissioner is not a suit to enforce a right which exists solely by operation of a statute. Rather, it is a right which existed before the enactment of any statute which regulates the banking business; a right which stands outside and independent of any statute and requires no legislative authorization before it may be asserted and vindicated in the regular district courts of the State. It is a constitutional right which the Travis County district court had power to adjudicate under the Bank’s pleadings.6 Glen Oaks Utilities, Inc. v. City of Houston, supra; Chemical Bank & Trust Co. v. Falkner, supra; Brazosport Savings & Loan Association v. American Savings & Loan Association, supra.

Having concluded that the Bank's constitutional cause of action, founded upon the allegation that the Commissioner’s summary action deprived the Bank of a vested property right without due process of law, was within the subject-matter jurisdiction of the Travis County district court; and that the Bank’s cause of action asserting its statutory rights under the Code was not within such jurisdiction, but in the exclusive jurisdiction of the Throckmorton County district court, the possibility of a conflict is apparent. However, the joinder of two causes of action in one suit, the trial court having jurisdiction of one but not the other, will not deprive the court of the power to hear and determine that cause of action of which it has jurisdiction. Isbell v. Kenyon-Warner Dredging Co., 113 Tex. 528, 261 S.W. 762 (1924).

We are required, nonetheless, in the interests of an orderly system of justice, to harmonize the jurisdictions of the courts of the State so that each will be free to exercise the powers committed to it without conflict with other courts. Tyler v. St. *960Louis Southwestern Railway Co., 405 S.W.2d 330 (Tex.1966). In this instance, the Bank’s claims based upon alleged statutory rights given in the Code must be adjudicated in Throckmorton County to the extent they may be brought at all; and their adjudication must be harmonized with the Travis County adjudication of the Bank’s claim that due process of law required prior notice and hearing before the Commissioner seized the Bank’s property and closed its banking operation; in other words that the Commissioner could not act summarily in the circumstances. We reiterate that we have not attempted in this opinion to comment on the merits of the Bank’s allegations in either respect. It is obvious, however, that the Travis County suit should be finally determined before any liquidation contest brought by the Bank in Throckmor-ton County, for an adjudication in the Bank’s favor would render void the Commissioner’s actions in closing the Bank, seizing its assets and commencing the liquidation proceedings. In the meantime, the Travis County district court may not by its order disturb or invade the custody of the Bank’s property now resting in the Throck-morton County district court by virtue of article 342-806. Prince v. Miller, 123 Tex. 118, 69 S.W.2d 52 (1934); Kull v. Brown, 165 S.W.2d 1011 (Tex.Civ.App.—Texarkana 1942, no writ); Ogden v. Edwards, supra.

Equally obvious is the proposition that the separate adjudications described above are cumbersome, expensive, inefficient and inconvenient to the parties, the courts, and the administration of justice generally. The Travis County district court first acquired jurisdiction of the Bank’s claim based upon a constitutional right and is therefore entitled to adjudicate it free of hindrance by any other court. Repka v. American National Insurance Co., 143 Tex. 542, 186 S.W.2d 977 (1945). The question remains whether it should exercise its jurisdiction. In that connection, we invite the parties’ attention to the provisions of Tex.R.Civ.P. 255. A change of venue to Throck-morton County, with respect to the Bank’s constitutional claim, and a joinder of that claim with the liquidation proceedings, would seem to be in the interest of all concerned.

Accordingly, we reverse and remand to the trial court the Bank’s cause of action alleging that its banking operation was closed and its property seized without the prior notice and hearing which the Bank contends was necessary to satisfy the due process of law requirement of the 14th Amendment to the Constitution of the United States and Article I, §§ 17 and 19 of the Constitution of the State of Texas. In all other respects, the judgment of the trial court is affirmed.

Reversed and remanded in part; and affirmed in part.

Bank of Woodson v. Stewart
632 S.W.2d 950

Case Details

Name
Bank of Woodson v. Stewart
Decision Date
May 12, 1982
Citations

632 S.W.2d 950

Jurisdiction
Texas

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