# State Board of Insurance v. Professional & Business Men's Insurance Co.

> Court of Appeals of Texas · July 11, 1962 · 359 S.W.2d 312

URL: https://www.frixlaw.com/law-library/cases/9772677

## Case

- **Full name:** STATE BOARD OF INSURANCE of the State of Texas Et Al., Appellants, v. PROFESSIONAL AND BUSINESS MEN’S INSURANCE COMPANY, Appellee
- **Court:** Court of Appeals of Texas
- **Decided:** July 11, 1962
- **Citations:** 359 S.W.2d 312; 1962 Tex. App. LEXIS 2654
- **Precedential status:** Published
- **Opinion:** Dissent by Hughes
- **Judges:** Richards, Hughes
- **Cited by:** 16 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9772677

## How later opinions describe it (automated extraction)

- explaining that in a temporary injunction hearing, the trial court judges the credibility of witnesses and the weight that should be assigned to their testimony
- explaining that, at a temporary-injunction hearing, the trial court is the judge of the credibility of testimony and the weight to be given thereto
- explaining that at a temporary injunction hearing, the trial court is the judge of the credibility of testimony and weight to be given thereto
- noting that it was not within the province of the appeals court to determine whether the evidence from the temporary injunction hearing would support a judgment in either parties’ favor
- noting that at temporary injunction hearing, trial court is judge of credibility of testimony and weight to be given thereto

## Opinion text

HUGHES, Justice
(dissenting).
The suit in which this temporary injunction was issued was a suit for a permanent injunction enjoining the State Board of Insurance “from approving any charter or issuing any license to Professional Investors Insurance Company or Allied Investors Insurance Company to transact business or taking any action whatsoever which would have the effect of permitting or authorizing said company to transact a life insurance business in this State.”
Appellee pleaded a cause of action when it alleged:
“(a) The name of Professional Investors Insurance Company is so similar to that of Professional and Business Men’s Insurance Company as to be likely to mislead the public, in view of the circumstances of the persons to be associated with Professional Investors Insurance Company and their previous association with Professional and Business Men’s Insurance Company.
“(b) The applicants for the charter of Professional Investors Insurance Company are not acting in good faith.
“(c) The minimum capital and surplus, as required by law, of Professional Investors Insurance Company is not the bona fide, unconditional and unencumbered property of Professional Investors Insurance Company.
“(d) The proposed officers, directors and managing executive do not have sufficient insurance experience, ability and standing to render success of the proposed company probable.”
In my opinion, however, the evidence does not tend to sustain the cause of action pleaded, and the temporary injunction should not have issued. Transport Co. of Texas v. Robertson, 152 Tex. 551 , 261 S.W.2d 549 . I, therefore, respectfully dissent.
As to ground (a), appellant has filed an application to amend its charter by changing its name to Allied Investors Insurance Company. This amendment, when effected, will completely eliminate this basis for in- *325 junctive relief. I do not understand ap-pellee to contend to the contrary.
As to ground (c), there is no evidence in this record that the $255,000.00 on deposit in the Fannin State Bank of Houston, as capital and surplus for this corporation is not the bona fide, unconditional and unencumbered funds of the corporation. The Vice President and Cashier of such Bank, Mr. George Gentry, as well as incorpora-tors, Harold E. Riley, Paul E. Martin and William W. Blackburn, swore, the last three unconditionally, Mr. Gentry insofar as the Bank had knowledge, that such funds were the bona fide, unconditional and unencumbered property of the new corporation.
Appellee pleaded that:
“On January 29, 1962 plaintiff instituted Cause No. 23965-C in the 153 Judicial District Court, Tarrant County, Texas, against Professional Investors Insurance Company and all of its stock subscribers, and others, and in such action plaintiff requested that the Court impress a trust upon all of the stock and all of the assets of Professional Investors Insurance Company, for the use and benefit of plaintiff. Fannin State Bank, as the depository of all of the capital and surplus of Professional Investors Insurance Company, was made a party to said action on February 12, 1962. On January 31, 1962 the State Board of Insurance was advised of such action and on February 15, 1962 it was advised that Fannin State Bank was made a party to such action.”
The majority does not dignify this allegation by mentioning it. As this record now stands, this suit is fictitious, self-serving and an obvious attempt by appellee to bolster its position in this case. If it has any influence at all on the conscience of a chancellor, it would seem to me that it should be adverse to appellee.
As to ground (d), the proposed officers and directors of the new corporation are Herman Hare Everitt, Harold Eugene Wiley, William Whitford Blackburn, Raymond Lloyd Graham, Leland L. Martin, John Baily Ferguson, Dr. Charles Harris Howard, M. D., Harvie Allen Parker, Roland Arthur Lipscomb, Hubert Ellis Morris and James Tullís Shahan. Briefly, I will state the undisputed biographical data as to each of these persons as shown by the record.
Mr. Everitt: Resides in Odessa, Texas. Born 1892. Education, Goldthwaite High School, Howard Payne College. Has been in own cattle business since he was 21 years old. Is now in cattle and oil business.
Mr. Riley: Born 1928. Resides in Houston, Education, Paschal High School, Fort Worth, Baylor University where he received degree in Business Administration. He has worked in automobile sales. For three years he was teacher-coach in Crane and Plainview. Since 1955 he has been in the life insurance business. He is a member of several civic, church and school organizations, including Chairman Fellowship of Christian Athletes, Who’s Who in American Colleges and Universities, Athletic Committee, Baylor, Decon Willow Meadows Baptist Church. Further, regarding, Mr. Riley who was to be President and Chairman of the Board of Directors of the new corporation, Mr. Harmon Walters, a former agent for appellee, testified :
“Q. I asked you why you resigned, and you said because Mr. Riley was not going to be further connected with the company, and you didn’t want to be. Why was that?
“A. Being associated with Oil Industries Life, I was associated with a group of people that I personally thought an awful lot of — people you could trust what they had to say; and he, and Bill Blackburn, and a number of the other people in the managers’ position in the company, were always persons that you could ask, or if you wanted something, you could go talk to them, and I like to be with those people, *326 and when I knew that Harold (Riley) was leaving, then I didn’t desire to be associated with the company any longer.”
It was stipulated that nineteen other former agents of appellee would, if called, testify similarly.
Mr. Blackburn: Born 1923. Resides in Houston. Education, Stephen F. Austin High School, Houston, Schreiner Junior College, Rice University, Loyola University, Southwestern Louisiana Institute. He was a Captain in the United States Marine Corps., a professional football player, was for four years self employed in the food business. Since 1956 he has been in the life insurance business. He has these self explanatory affiliations:
“Life Associates — Investment Club —member of investment committee
“Football United National-Charter Director-Nonprofit corp. — Youth activities Riverside Methodist Church-Steward-Director-Finance Committee-Teacher Park Place Masonic Lodge, No. 1172 A. F. & A. M. — member
“ ‘R’ Association-Rice University-member
“Owl Club-Rice University-President-Five Years and at present
“Fellowship of Christian Athletes, Inc. Houston Chapter — President
“Rice Alumni Association — Rice University-member
“Houston Turn Verein-Social Club— member”
Mr. Graham: Born 1911. Resides in Houston. Education, Providence High School, Jacksonville Baptist College. He has worked for J. C. Penney Company 28 years, finally serving as district manager. He is member of the Board of Directors of the Meyerland State Bank, Houston, and is Past President of the Rotary Club of Houston.
Mr. Martin: Born 1895. Residence Marble Falls, Texas. Education, Tye High School, Texas Technological College, Lubbock, 1927-39, receiving Bachelor and Master of Science degrees. He has been in public school work for 35 years and since 1952 he has been in the life insurance business. He has Rotary, Masonic Lodge, Scottish Rite and Shrine affiliations, and also served on the Education Committee of the Odessa Chamber of Commerce and as teacher of Men’s Bible Class in Marble Falls.
Mr. Ferguson: Born 1907. Resides in Wharton, Texas. Education, Montgomery High School. He is director of First State Bank of Louise, Texas, a director of Gulf Coast Medical Foundation, Wharton, Texas, President of Wharton Independent School Board, Director of Houston Fat Stock Show, and is a member of various social organizations.
Mr. Howard: Born 1924. Resides in Richardson, Texas. Education, Moody High School, University of Texas, Southwestern Medical School. Dr. Howard was in the Army Air Corps and is a member of many medical societies and a member of the Episcopal Church.
Mr. Parker: Born 1910. Resides in Port Arthur, Texas. Education, Oak Grove High School, Loganport, Louisiana. He has been in the life insurance business for an unstated period. He is executive secretary, President O.C.A.W. Local 4-23, Director Port Arthur Evening Lions, Director Eagles — Arvia 228, Mayor City of Port Arthur, Past Chairman United Fund, Civil Defense Director, member executive committee, Jefferson County Democrats, Director Family Council, member River & Harbors.
Mr. Lipscomb: Born 1907. Resides in Odessa. Education, Denton High School, North Texas University, Bachelor of Science Degree. Graduate study U.S.C. and Texas Tech. Mr. Lipscomb was Superintendent of Schools in Wink, Texas, for 24 *327 years. He was in the life insurance business 1954-1958, and was President of Texas Western Development Corporation, 1960-62. He is Chairman of the Board of Wink-ler County State Bank, partner H & S Clothing, Andrews, Texas, President National Planning Service, Odessa. He is a member of Masonic Lodge, 32nd degree Scottish Rite, Shriner, Suez Temple, is International Counsellor, Lions Club Past Chairman Education Committee, Chamber of Commerce, Silver Beaver member, Boy Scouts, member Finance Committee Texas Lions League for Crippled Children, and a member of the Baptist Church.
Mr. Morris: Born 1910. Resides in Lubbock, Education, Speer High School, Dan-forth School of Pharmacy, Fort Worth, degree in pharmacy. Was for 25 years self employed pharmacist in Wink and Mona-hans. He has been in the life insurance business for six years. Member Board of Directors of Trans-Western Developers and Trans-Western Associates, Lubbock. Past President Lions Club, Lubbock. City Commissioner, Wink, Board member Chamber of Commerce, Board Member Winkler County Hospital, 10 years Board Member Wink Independent School District, Director Winkler County State Bank, member Board of Deacons, Finance Committee, Missions Committee, First Baptist Church, Lubbock.
Mr. Shahan: Born 1915. Resides in Brackettville, Texas. Education, White-house High School, Baylor University, B. A. Degree. Mr. Shahan is President of Shaker Feed & Lumber Co., Alamo Village Inc., and owner of Shahan Angus Ranch, Brackettville. He is Past President of the Kinney County Chamber of Commerce, Director of South Texas Chamber of Commerce, Vice President of Texas-Mexico Holiday Council, Past President of Baylor B Association, Past President of the Texas Angus Association, Past President of the Texas Feed Manufacturing Association, Past Mayor of Brackettville, present member of Brackettville School Board.
There is a total of at least 31 years of insurance experience represented by these directors of the corporation. In my opinion, it would be most difficult to find a better cross section of representative, reputable, successful Texas business men than this directorate reflects. They are outstanding men. Mostly, they are shown to be public spirited, civic minded men dedicated to the welfare of their communities and their fellow men. If a group of this character does not qualify so as to assure the probable success of this corporation, there would be few corporations formed.
Each of these directors does not have insurance experience. If this is the requirement of the statute, then the board does not qualify. It is my opinion that the statute contemplates an aggregate sufficiency of insurance experience from the board as a whole.
There is a lack of evidence here, in my opinion, tending to support appellee’s contention that these directors (directorate) do not have sufficient insurance experience, ability and standing to render success of this company probable. If appellee was reasonably sure of its contention in this respect, I doubt that it would expend the time and money required to bring and prosecute this suit.
The only remaining ground (b), is based upon the statutory requirement that the applicants for the charter “are acting in good faith.” Appellee contends that they, incorporators, were not so acting here. This contention is based upon the evidence treated extensively by the majority that the incorporators had acted in bad faith towards appellee.
Conceding the factual soundness of this contention, it is my opinion that bad faith or breach of fiduciary relations between the incorporators of this corporation and ap-pellee, while it may give rise to their civil liability to appellee for damages caused thereby, does not bring the incorporators within the ban of the statute. The statute *328 does not say that such incorporators must never have acted in bad faith. It only requires that they be presently acting- in good faith. To what or to whom does “acting in good faith” refer? Appellee would direct the test in its direction. Appellant contends that it means only that the organization of the proposed corporation is being conducted in good faith. There is only one case to be found upon the subject. It is cited in the majority opinion and, in my judgment, it fully and soundly supports the position taken by appellant. The case is Speer, Banking Comm. v. Dossey, 177 Ky. 761 , 198 S.W. 19 , by the Kentucky Court of Appeals. Since the majority quotes from this case enough to indicate its applicability here, I do not further quote from it. I do suggest that it should be read in its entirety. This case, so far as I can ascertain, has never been questioned. The majority attempts to distinguish it on the ground that whereas in Kentucky the free enterprise system is untrammeled, “ * * * it is not against the public policy of this State to discourage competition between insurance companies * * *authorities have been cited to sustain this statement. I suggest that to discourage competition is to encourage monopolies. Our Constitution and our antitrust statutes establish a public- policy exactly contrary to the public policy enunciated by the majority. See Monopolies and Combinations, 29 Tex.Jur. p. 739' et seq. 1
Furthermore, the relief sought here would not merely discourage competition; it would strangle it.
I would dissolve the temporary injunction.
. We have many laws regulating business. They are designed, however, not to discourage competition, but to prevent unfair, ruinous competition, and to protect the interest of the public.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9772677. Public record. Not legal advice.