DEABORN ELECTRIC LIGHT & POWER CO. v. Jones

• Decision Date: 18 August 1925
• Docket Number: No. 6427.,6427.
• Citation: 7 F.2d 806
• Parties: DEABORN ELECTRIC LIGHT & POWER CO. v. JONES.
• Court: U.S. Court of Appeals — Eighth Circuit

7 F.2d 806 (1925)

DEABORN ELECTRIC LIGHT & POWER CO. v. JONES.

No. 6427.

Circuit Court of Appeals, Eighth Circuit.

August 18, 1925.

Charles W. German, of Kansas City, Mo. (Lee C. Hull, of Kansas City, Mo., on the brief), for appellant.

William G. Boatright, of Kansas City, Mo. (I. J. Ringolsky and M. L. Friedman, both of Kansas City, Mo., on the brief), for appellee.

Before STONE and KENYON, Circuit Judges, and PHILLIPS, District Judge.

PER CURIAM.

To a decision by this court (299 F. 432) against it, appellant filed a petition for rehearing, which was granted, and the case was again argued before the same judges who sat in the former hearing.

The petition for rehearing and the oral argument in support thereof mainly challenged the correctness of the construction which our former opinion placed on section 10483, Revised Statutes of Missouri 1919.

That statute declares that a sale by an electrical corporation of property belonging to such corporation, which is necessary or useful in the performance of its duties to the public, shall be void unless such corporation shall have first secured from the commission an order authorizing such sale. The statute applies only to property necessary or useful to the corporation in the performance of its public duties. The section provides: (1) That a sale of such property shall not be made without the selling corporation first securing a consent order from the commission; (2) that a sale of such property made other than in accordance with such a consent order shall be void; (3) that the provisions of the section shall not be construed to prevent the sale of property not necessary or useful to the corporation in the performance of its public duties. The section then contains a provision that "any sale of its property by such corporation * * * shall be conclusively presumed to have been of property which is not useful or necessary in the performance of its duties to the public, as to any purchaser of such property in good faith for value."

The appellant is an electrical company. In order to render a sale by it of its property void under this section two things would have to be shown: (1) That the property was necessary or useful to the corporation in the performance of its public duties; (2) that no consent order was obtained. But such a sale would not necessarily then be void. It would not be if the purchaser was one for value in good faith. The elements which make a purchaser in good faith for value are: An actual sale, a present consideration and an honest, legally justifiable, belief that the vendor has the right to sell. 8 C. J. 1196; Foster v. Winstanley, 39 Mont. 314, 102 P. 574, 579. See, also, Fargason v. Edrington, 49 Ark. 207, 214, 4 S. W. 763.

The appellant contends the sale in the instant case was within the statute and void. The appellee contends the sale is not shown by the record to be within the statute and that it is shown to be within the exception. As to burdens of proof, we believe that a person asserting that a sale was void under the statute would have to show (1) that the sale was of property necessary or useful to the corporation in the performance of its public duties; (2) and that there was no consent order (such a showing would make a prima facie case). A person who defends on the ground he was a good faith purchaser for value would have to show such fact. Ordinarily, the state or a citizen would attack such a sale. It could readily show that the property was necessary or useful and there was no order. But to show the negative — that the purchaser was not a good faith purchaser for value — might be difficult. The facts surrounding the sale would ordinarily be wholly within the knowledge of the parties to the sale. Therefore, if the prima facie case, as above indicated, were made out, it would be incumbent on the purchaser to show he actually purchased the property, paid a present consideration, and honestly and justifiably believed the seller had the right to sell.

The illegality of the sale under the statute was not raised by the pleadings and was not mentioned in the proceeding before the referee. It is not set up in the petition to review the decision of the referee. It is not certified by the referee as one of the questions presented. The first time any question as to the legality of the contract under the statute appears in the record is in the assignments of error on...