Background and Parties

The Grievance Committee of the State Bar of Texas for the Fifth Congressional District brought suit against Hexter Title and Abstract Company, Inc., seeking to enjoin the defendant from engaging in activities alleged to constitute the unauthorized practice of law in violation of Texas statutes. The trial court granted partial relief, but the Court of Civil Appeals reversed and granted the full relief requested by the plaintiff. Hexter Title and Abstract Company appealed to the Texas Supreme Court.

The Unauthorized Practice Dispute

The central issue was whether Hexter Title's activities—drawing deeds, notes, mortgages and releases relating to property rights of others, furnishing opinions on titles to real estate, and advising interested persons on the legal effect of such instruments—constituted the unauthorized practice of law under Article 430a of the Texas Penal Code. The company argued that these services were performed to induce contracts for abstracts of title or title insurance, that no direct charge was made for the legal services, that it acted as agent for a title insurance company merely looking after "its own business," and that it employed licensed attorneys to perform the work.

The Court's Holding

The Supreme Court affirmed the Court of Civil Appeals, holding that Hexter Title's activities constituted the practice of law. The Court held that where the title and abstract company drew deeds, notes, mortgages and releases relating to property rights of others, furnished opinions on titles to real estate, and advised interested persons on legal effect of such instruments to induce contracts for abstracts of title or title insurance, the company received a consideration for such legal services and the performance of them constituted "practice of law," though no direct charge was made therefor.

The Court rejected the company's defense that it acted as agent for a title insurance company, holding that this agency relationship did not make the drawing of deeds, notes, mortgages and releases relating to property rights of others, the furnishing of opinions on title to real estate, and the advising of interested persons on legal effect of such instruments lawful on the ground that either company was thereby looking after "its own business."

Standing of the Grievance Committee

The Court addressed the threshold issue of whether the Grievance Committee had standing to bring the suit. While one cannot maintain a suit to enjoin criminal acts unless one is damaged by them in a peculiar manner not common to the public in general, the Court held that the Grievance Committee had a peculiar interest not common to the public in general in the subject matter of the suit to enjoin the title and abstract company from illegally practicing law, which enabled the committee to bring the suit under the applicable statutes.

Implications for Title Companies

This decision established that title and abstract companies engage in the unauthorized practice of law when they draw legal instruments relating to property rights of others, furnish opinions on titles to real estate, and advise interested persons on the legal effect of such instruments, even when performed to induce other business, when no direct charge is made, or when done through an agency relationship with a title insurance company. The holding remains relevant for oil and gas transactions where title work is integral to upstream conveyancing.