Background

Stewart Abstract Company and Stewart Title Guaranty Company faced an injunction action brought by the Judicial Commission of Jefferson County and other members of the Jefferson County Bar. The plaintiffs alleged that the corporate defendants were engaging in the unauthorized practice of law through their title examination and document preparation services. Stewart Abstract Company maintained its principal office in Galveston County, while both companies operated offices in Jefferson County where the suit was filed.

The Unauthorized Practice Allegations

Evidence at the plea of privilege hearing established that in connection with FHA loans, the defendants prepared mortgages, mechanics' lien papers, and promissory notes for execution by the parties. The defendants had also advertised their services for examining titles to real estate and had given opinions as to the condition of titles, receiving compensation for these services. The court found that this evidence showed, prima facie at least, that defendants were engaging in the practice of law and established a cause of action.

The Court's Analysis

The Court of Civil Appeals affirmed the trial court's denial of the venue transfer, holding that plaintiffs established a prima facie case for unauthorized practice of law. The court emphasized the broad scope of legal practice, stating:

The "practice of law" is not limited to conducting cases in courts, but includes conveyancing preparation of legal instruments and, in general, all advice to clients and action taken for them in matters connected with the law.

The court rejected the defendants' argument that their activities were authorized by regulations adopted by the state board of insurance commissioners. The court held that the insurance commission had no authority to regulate the practice of law or empower a corporation to engage therein. The court further noted that unauthorized practice of law constitutes contempt of court, and that a district court has the power to enjoin such illegal practice or take other steps within its constitutional power to suppress it.

Significance

The decision established important limitations on corporate provision of legal services in Texas. The court held that a corporation may be restrained by injunction from performing acts constituting the practice of law, and that when requested by attorneys acting for themselves and other affected members of their profession, injunction is the proper remedy to prevent unlawful practice of law.