  OiiRALDC. MANN             Ausms   ai. TEXAR
 lWXX~XX.XX
A’rr”ws,:X G4CSNCHAL.




     Hon. 0. P. Lockhart
     Chairman, Board of Insurance Commissioners
     Austin, Texas
     Dear Sir:                       Opinion No. O-3695
                                     He: Article 506&c, V.A.C.S., pro-
                                          viding that the court shall
                                          appoint the statutory liquidator
                                          named by the Board of Insurance
                                          Commissioners as receiver of
                                          insolvent insurance corporations
                                          is not mandatory but merely di-
                                          rectory. The statute is not
                                          retroactive.
     Your request for opinion has been received and carefully considered
     by this department. IJequote from your request as follows:
            "Upon assuming my duties as Life Insurance Commissioner, I
            fin? that there are certain insurance companies in receiver-
            s5i.pthat have not neen placed in the hands of the liquidator
            provided for in Article 5obbc, Revised Civil Statutes of
            Texas. The companies referred to were in receivership at
            the time of the enactment of Article 5068~2and were permitted
            to continue in the hands of receivers theretofore appointed.
            "Please advise me if Article 5068c, Revised Civil Statutes of
            Texas does not require that all companies in receivership be
            placed in the hands of the liquidator designated by the Board
            of Insurance Commissioners, whether the companies were in
            receivership prior to the enactment of said Article or not."

      Article   5068~~ Vernon's Annotated Texas Civil Statutes, provides
      for the   liquidation, rehabilitation, reorganieation and conserva-
      tion of   insurance companies. The act provides for the appoint-
      ment of   a liquidator by the Board of Insurance Commissioners.
      Section   2 of the statute declares:
            nbiheneverunder the law of this State a court of competent
            jurisdiction finds.that a receiver should take charge of the
            assets of an insurer:domiciled in this State, the liquidator
            designated by the Board of Insurance Commissioners as here-
            inafter provided for shall be such receiver. The liquidator
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:zon.0. P. Lockhart, Page 2   O-3b95


     so appointed receiver shall forthwith take possession of
     the assets of such insurer and deal with the same in his
     own name as receiver or in the name of the insurer as the
     court may direct...."
Section 3 or the statute declares:
     Whenever under the laws of this State, a receiver is to be
     appointed in delinquency proceedings for an insurer domiciliary
     in another State, a court of competent jurisdiction in this
     State shall, on the petition of the Board of Insurance Com-
     missioners of this State, appoint the liquidator herein
     provided as ancillary receiver in this State of such insurer.."
Article II, Section 1 of our State Constitution provides:
     "The powers of the Government of the State of Texas shall be
     divid~eti
             into three distinct departments, each of which shall
     ue confined to a separate body of magistracy, to-wit; Those
     which are Legislative to one; those which are Executive to
     another, and those which are Judicial to another; and no
     person, or collection of persons, being of one of these de-
     partments, shall exercise any power properly attached to
     either of the others, except in the instances herein ex-
     pressly permitted."
.Jequote from 9 Texas Jurisprudence, pp. 457 and 458, as follows:
     *The cower:-‘
                 which properly belong to one of the departments
     of goirornmeilt
                   are not to be exerted or usurped by another
     department. The constitution (Art. 2, S 1) expressly de-
     clares: *....and no person or collection of persons, being
     one of these departments shall exercise any power properly
     attached to either of the others, except in the instances
     herein expressly permitted.' This is a direct prohibition of
     the aleming of the departments...."
A,;;;;% V, Section 1, of our State Constitution reads in part as
       :
     "The judicial power of this State shall be vested in one
     Supreme Court, in Courts of Civil Appeals, in District
     Courts, in County Courts, in Commissioners' Courts, in Courts
     of Justices of the Peace, and in such other Courts as may
     be provided by law...."
We quote from 9 Texas Jurisprudence, pp. 454 and 455, as follows:
     "The constitution declares that the judicial power of the
     state shall be vested in the courts named in Section 1,
     Article 5, and in such other courts as may be provided by
 ”




     0. P. Lockhart, Page 3
:-fan.                         O-3695


     law. It was the object of the framers of the constitution
     to mark out a complete judicial system, defining generally
     the Frovince of each of the courts, by reference to the
     objects confided to the action of each, and the relation of
     eacn to the others. Such a system cannot be changed by
     action of the legislative department, except when the power
     to make A change is conferred by the constitution-itself.
     The le,gislacuremay not confer judicial power upon any other
     agency of government than courts".....
\Jequote from 11 American Jurisprudence, pp. 904-S and 6, as
follows:
     "As a rule no effort is made in a Constitution accurately to
     define the scope or nature of judicial powers. These matters
     are left to be determined in the light of the common law
     and the history of our institutions as they existed anterior
     to, and at the adoption of, the Constitution..."The judicial
     powers include the important function of preventing departmen-
     tal encroachment, such as marking out the boundaries of each
     department and remedying the invasions by either of the
     territory of the other. The judicial power and-function ex-
     tend to the question as to the true limits of maritime law
     and admiralty jurisdiction,...to the authoritv to select
     nersons whose services may oe required in judicial proceedinps
     or who~mav oe required to act as assistants tc the judges in
     the performance of their judicial functions....."
     TUnderscoring our3
Is the appointment and selection of a person to act as receiver a
judicial act? T!;ecourts have held in the affirmative upon this
question. ;lequote from the opinion of the Supreme Court of In-
diana in the case of State of Indiana ex rel Hovey v. Noble, 4 L.
R. A., pp. 101-111, as follows:
     "*The powers of government,' ordains our constitution, 'are
     divided into three~separate departments, the legislative,
     the executive, including the administrative, and the judicial;
     and no person charged with official duties under one of these
     departments shall exercise any of the functions of another,
     except as in this Constitution expressly provided.1
     *The words employed are clear and strongi There is more than
     a mere theoretical separation, or else words are powerless
     and Constitutions mere empty fulminations. The provisions
     of the Constitution we have quoted, taken in connection with
     those which prescribe , .defineand limit the powers of the
     other departments of government, remove all doubt and make
     it uncontroverti'olyplain that the courts possess the entire
     body of the intrinsic judicial power of the state, and that
     the other departments are prohibited from assuming to exer-
     cise any part of that judicial power.;..
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Hon. 0. P. Lockhart, Page 4    O-3695


     "One of the greatest of American Judges, Gibson, Ch. J.,
     said: 'But the judicial power of the Commonwealth is its
     whole judicial power, and it is so distributed that the
     Legislature cannot exercise any part of it.' Greenough v.
     Greenough, 11 Pa. 189....
     "'II there is any one proposition immutably established,' said
     Sawyer, J., '1 had supposed it to be that the judiciary de-
     parsiilent
              is atisolutelyindependent of the other departments
     of government.'
     “A department without the power to select those to whom it
     must intrust part of its essential duties cannot be indepen-
     dent. lf it must accept as 'ministers and assistants,' as
     Lord Baron calls them, persons selected for them by another
     department, then it is dependent on the department which makes
     the selection. To be independent the power of the judiciary
     must be exclusive, and exclusive it cannot be if the Legisla-
     ture may deprive it of the right to choose those with whom
     it shall share its labors or its confidences....
     ",,,..we affirm that where assistants are necessary to enable
     judges to discharge their duties as judges the court must
     choose those assistants. Since the time of Queen tilizabeth
     have appointed masters in chancery and master commissioners
     now are, and have always been, appointed by the courts.
     v;desuppose no one will deny that the courts from the earliest
     a,.:es
          of the law have?possessed tne power to appoint referees,
     receivers, cormnissiotiers     and all other like ministers and
     assistants. and that they possessed       this power because it was
     ultl;ciaQwer.            If it was not a judicial power it could
     not have -..-residt-~rdin the courts, for courts have no other
          . [ilnoerscoringOUrSI
      "1:;is a mistake to assume that a court possesses merely the
            to hear and decide causes. The power is much more ex-
      ;>o,ler
      eensive.
      %ouvier thus defines judicial power: 'Belonging to or eman-
      ating from a judge as such. The authority vested in a judge'..
      "It is. however, unnecessarv to multiplv authorities: for it
      cannot be doubted that judicial power includes the authoritv
      to select persons whose services may be required in judicial
      uroceedin,zs,cr who mav be required to act as the SssistalltS
      cr the judues in the perfcrmance of their judicial functions,
      whether they be referees. receivers, attorneys, masters or
      commissioners." (Underscoring.ours)
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        Hon. 0. P. Lockhart, Page 5    O-3695



        In the case of State of Texas vs. Teachers Annuity Life Insurance
        Company, 149 S.W. (2nd) 318! (Wril, of Error Refused), the State
        through its Attorney Genera instituted suit against an insurance
        corporation, alleging in its petition among other things that
        the company was hopelessly insolvent and its capital stock was
        ixpaireci100%. The Attorney General requested the 6oard of In-
        surance Comr.iissioners to join in the suit but the Board refused.
        'Pt.2insurance company moved for a dismissal of the cause in the
        trial court on the ground that the Attorney General had no author-
        ity to file the suit without the permission of the Board. The
        trial court sustained the company's motion and dismissed the
        cause. Tne Beaumont Court of Civil Appeals reversed the trial
        court and held that under the Constitution the Attorney General had
        the authority to institute and prosecute such suit, without the
        consent of the Board of Insurance Commissioners. &-it of tirror
        w?1s refused by the Supreme Court. Now in a case like the Teachers
        :lnnuitycase, supra, would it be mandatory upon the trial court to
        appoint as receiver of said company the statutory liquidator of
        the Board of Insurance Commissioners, when the Board did not de-
         sire the appointment of a receiver and the liquidation of said
         company? Surely not. Would it be mandatory upon the court was
        not satisfied with the moral character or ability of the liquida-
         tor? We think not. Would the court be powerless to remove the
         liquidator as receiver if the court thought such removal was to
         the best interest of Che receivership? :Jethink not. The selec-
         tion and appointment of a person to act as receiver by the court
         is a judicial act involvinrldiscretion on the part of the trial
         judge. The court would likely consider tnemoral character and
         aailitj-of the prospective receivers and appoint the person whom
         he ti-!ourntin his sound disrecticn would make the best 'receiverfor
         all concerned. If the statute were a mandatory statute it would
         be unconsitutional in our opinion as an unlawful invasion upon
         the incependence of the judiciary.
        However it is a cardinal rule of construction that where a statute
        could be construed in two manners, one of which would make it
        merely~directory and constitutional, the other which would make
        it mandatory and unconstitutional, the rule of construction making
        the sixtutc directory and constitutional should be adopted.
        It is not within the power of the legislature to change the nature
        of a judicial function (the selection of a receiver) by mere1
        crea,tinganother agency (the Board of Insurance Commissioners'I
        to participate in its performance. See 95 A.L.R., p. 141'7.
        It is a well settled rule of statutory construction that laws are
        not to 'beconstrued retrospectively, or to have a retrospective
        effect, unless it shall clearly appear that it was so intended
        by the enacting body, and unless such construction is absolutely
        necessary to give meaning to the language used. The general rule
        is that statutes will be construed to operate prospectively only,
    Ron. 0. P. Lockhart, Page 6        O-3695



i   unless an intent to the contrary clearly ap ears. (See Lewls-
    Sutherland on Statutory Construction, Vol. !i
                                                I, pp. 1157 and 1158.)
    rle find no expression or clear intent in the statute that the
    Legislature desired that it should have any retrospective effect
    and we hold that the statute has no effect on receiverships
    which were pending prior to the enactment of the act.

    &z also hold that Articie 5068c, V.A.C.S. is not a mandatory
    statute but is merely a directory statute. Doubtless the courts
    will, in many instances, g ive this directory statute some consider-
    ation, but they are not compelled to appoint the statutory liquid-
    ator as receiver of insoivent insurance companies.
    lour question istherefore answered in the negative.
                                   Verv
                                     ~~.trulv vours
                                          ~.,d~~
    APPROVED JUL 7, 1941
       GROVRR SRLLRRS             AT'i'ORNEY
                                           GENERAL OF TEXAS
    FIRST ASSISTANT
    ATTORNEY GEiRRAL,
                                  BY       Wm. J. Fanning
                                           Assistant
    WF:ff;ml
