Sampson Distributing Co. v. Cherry

• Citation: 143 S.W.2d 307,346 Mo. 885
• Decision Date: 27 September 1940
• Docket Number: 36573
• Parties: Sampson Distributing Company, a Corporation, v. Roy H. Cherry, State Inspector of Oils, Appellant
• Court: United States State Supreme Court of Missouri

143 S.W.2d 307

346 Mo. 885

Sampson Distributing Company, a Corporation, v. Roy H. Cherry, State Inspector of Oils, Appellant

No. 36573

Supreme Court of Missouri

September 27, 1940

Rehearing Denied September 27, 1940.

Appeal from Circuit Court of City of St. Louis; Hon. Eugene J Sartorius, Judge.

Affirmed.

Roy McKittrick, Attorney General, and Lawrence L Bradley, Assistant Attorney General, for appellant.

(1) The judgment of the court is wholly unsupported by any substantial evidence. (a) Courts will look behind and disregard corporate entity where corporation was formed or is used to evade the law. May Department Store Co. v. Union E. P. & L. Co., 341 Mo. 299, 107 S.W.2d 41; State ex rel. Shull v. Liberty Natl. Bank, 331 Mo. 386, 53 S.W.2d 899; Barrie v. United Rys. Co., 138 Mo.App. 557, 119 S.W. 1020; Palmolive Co. v. Conway, 43 F.2d 226; Met. Holding Co. v. Snyder, 79 F.2d 263; 18 C. J. S., p. 378, sec. 6; McCaskill Co. v. United States, 216 U.S. 502, 54 L.Ed. 590; Bryan v. Banks, 277 P. 1075; 18 C. J. S., pp. 376, 380; United States v. Milwaukee Refrigerator Transit Co., 142 F. 247; Pogel Horton Co. v. Harmon Paper Co., 258 N.Y.S. 168; 14 Washington Law Review, p. 285; Secs. 7821, 7824, R. S. 1929. (b) The courts' judgment is that the corporations were not formed or used to evade the law. Bickel v. Argyle Inv. Co., 121 S.W.2d 803; Ilgenfritz v. Mo. P. & L. Co., 340 Mo. 648, 101 S.W.2d 723; Compton Heights Laundry Co. v. Gen. Acci., Fire & Life Assur. Corp., 195 Mo.App. 313, 190 S.W. 382; 34 C. J., p. 505, sec. 800. (c) A person whose license to sell gasoline has been revoked and who owes gasoline taxes is not entitled to receive a new license. Sec. 7820, R. S. 1929. (d) Mandamus will not compel an officer to do what he is not authorized to do. State ex rel. Kent v. Olenhouse, 324 Mo. 49, 23 S.W.2d 83. (e) A judgment is an action at law that is unsupported by any substantial evidence will be reversed. State ex rel. Haeussler v. German Mut. Life Ins. Co., 169 Mo.App. 354, 152 S.W. 618; State ex rel. Holmes v. Kernes, 180 Mo.App. 355, 167 S.W. 1080; State ex rel. Journal Ptg. Co. v. Dreyer, 183 Mo.App. 463, 167 S.W. 1123; State ex rel. Hyde v. Jackson County Medical Society, 295 Mo. 144, 243 S.W. 341. (2) The court erred in finding for and in rendering judgment for plaintiff. (a) Mandamus is an action at law. State ex rel. Horton v. Bourke, 129 S.W.2d 866. (b) Where an action at law is treated as an equity case in the court below, it will be so treated by the appellate court. Roselle v. Beckemeier, 134 Mo. 380, 35 S.W. 1132; Dudley v. McCluer, 65 Mo. 241, 27 Am. Rep. 273; Met. Life Ins. Co. v. Erdwins, 229 Mo.App. 437, 83 S.W.2d 597; Maget v. Bartlett Bros. Land & Loan Co., 226 Mo.App. 416, 41 S.W.2d 849.

Edward A. Farrenbach for respondent.

(1) There is sufficient competent evidence in the record to sustain the judgment of the court nisi. (a) Mandamus is a legal action and the findings of fact made by the trial court are binding on appeal when supported by substantial evidence unless shown to be clearly arbitrary. State ex rel. Holmes v. Kernes, 180 Mo.App. 355, 167 S.W. 1080; State ex rel. First Natl. Bank of Carterville v. Bourne, 151 Mo.App. 104, 131 S.W. 896; State ex rel. Journal Ptg. Co. v. Dreyer, 183 Mo.App. 463, 167 S.W. 1123; State ex rel. Haeussler v. German Mut. Life Ins. Co., 169 Mo.App. 354, 152 S.W. 618; Tuttle v. Iron Natl. Bank, 170 N.Y. 9; State ex rel. Onion v. Supreme Temple Pythian Sisters, 227 Mo.App. 557, 54 S.W.2d 468; 38 C. J., secs. 6, 749, pp. 543, 948. (b) Judgment in mandamus action rests largely within sound discretion of the court. State ex rel. Crow, Atty. Gen. v. Boonville Ry. Bridge Co., 206 Mo. 74, 103 S.W. 1052; State ex rel. Hyde v. Jackson County Medical Soc., 295 Mo. 144, 243 S.W. W. 341; 38 C. J., sec. 752, p. 949; Little Rock v. United States, 103 F. 418; Poe v. Jeroloman, 139 N.Y. 14. (c) Mandamus action in some respects partakes of equity principles but retains its character of an action at law. Merrell on Mandamus, sec. 68; State ex rel. Hyde v. Jackson County Medical Soc., 295 Mo. 144, 243 S.W. 341; State ex rel. Hixon v. Nerry, 105 Mo.App. 458, 79 S.W. 994. (2) The court properly issued its peremptory writ of mandamus because the duty of the inspector of oil under the statute is mandatory, therefore ministerial and not discretionary. Sec. 7820, R. S. 1929; State ex rel. Folkers v. Welsch, 124 S.W.2d 636; State ex rel. C., R. I. & P. Ry. Co. v. Becker, 328 Mo. 541, 41 S.W.2d 188; State ex rel. Hyde v. Jackson County Medical Soc., 295 Mo. 144, 243 S.W. 341. (3) There was insufficient evidence to support the defense of fraudulent conduct in the creation of respondent corporation to evade the law. Twedell v. Treasurer, 44 S.W.2d 216; 27 C. J., pp. 786, 788; Finke v. Boyer, 331 Mo. 1242, 56 S.W.2d 375; Farmers & Merchants Bank of Festus v. Funk, 338 Mo. 508, 92 S.W.2d 587.

Westhues, C. Cooley and Bohling, CC., concur.

OPINION

WESTHUES

Respondent, Sampson Distributing Company, filed this, a mandamus suit, against appellant Cherry, the State Inspector of Oils and Motor Fuels, to compel appellant to issue a license to respondent company as a distributor of motor fuels. The trial court issued the writ as prayed for from which judgment an appeal was taken. A state officer being sued vests this court with appellate jurisdiction.

Appellant insists that the trial court erred in entering a decree compelling him to issue respondent a license, because the evidence showed that the respondent corporation was organized by J. O. Sampson for the purpose of evading the provisions of Section 7820, R. S. Mo. 1929, Mo. Stat. Ann., page 5258, which provides in part:

"After a license shall have been revoked, no new license shall be issued to such licensee unless such person, distributor or dealer shall pay all taxes, penalties and interest in arrears or due the state."

Appellant had revoked the license of the Power Oil Company for failure to pay taxes due the State. J. O. Sampson owned all but one share of the stock in the Power Oil Company. The taxes due the State, for which the license was revoked, had not been paid at the time of the trial. The State contends that the various corporations formed by Sampson were all controlled by him and that the corporate entities should be disregarded. A short history of these corporations will be necessary to understand the position of appellant and also that of respondent. In the year 1919, the Trico Oil Company engaged in business as a partnership and was incorporated in the year 1926. It did a business of about $ 800,000 per year. The financial depression of 1929 came on and in the year 1930 the company was adjudged an involuntary bankrupt. Sampson owned about one-half of the stock at that time. The corporation owed the State an amount of taxes for which a preferred claim was filed by the State, and the taxes were paid in full, including penalties and interest. Sampson had been the principal figure in the Trico Company. After it went "on the rocks" Sampson organized the Power Oil Company which was incorporated in January, 1931. This company was located in the 600 block on Vandeventer Avenue. A Mr. Klump furnished the cash, $ 5,000, and one-half of the stock was issued to him. Sampson executed a note to Klump and pledged to him the shares of stock as security. Later a disagreement arose between Sampson and Klump and Sampson purchased Klump's interest. To obtain the cash for this purchase Sampson pledged all of the stock as security. Financial difficulties arose and the company gave a chattel mortgage to the Socony-Vacuum Oil Company, Incorporated, to secure an indebtedness of about $ 6,000. The Power Oil Company became delinquent in the payment of taxes due the State. The Oil Inspection Department sent notices to the company from month to month to show cause why its license should not be revoked. The company was making payments, and the department gave further time without any hearing pursuant to the notices given. A notice was given the company to show cause for failure to pay taxes due for the month of May, 1936. The company, on June 25, 1936, paid $ 800 to the State; on June 27, $ 700; the following month, July 8, $ 500; and July 28, $ 625.26. There still remained unpaid $ 204.95 for the month of May. The above payments were not all made for taxes for the month of May. Penalties were added to the delinquent taxes, which at times were as much as twenty-five per cent of the amount of the tax. On August 14, 1936, the company's license was revoked. Thereafter the Socony-Vacuum Oil Company foreclosed its chattel mortgage and thus ended the Power Oil Company. It owed the State a balance of about $ 3,346.96. In this amount was included a large sum representing penalties and interest.

The Sampson Oil Company came to life April 24, 1934, and established a place of business in the 6100 block on Olive Street road. Sampson was the owner of all the stock except qualifying shares. In June, 1936, which was about the same time that the Power Oil Company was having financial difficulties, Sampson in a property settlement transferred all of his stock in the Sampson Oil Company to his wife. Mrs Sampson had filed for and secured a divorce. The Sampson Oil Company was still doing business at the time of the trial of this case, but Sampson had no interest therein. The State claimed that the Sampson Oil Company owed the State taxes for the months of July and August, 1936. A suit was pending, at the time of the trial, to collect the taxes alleged to be due. Since Sampson had no interest in that company in the months of July and August, 1936, and has had no interest therein since that time he cannot be charged with the responsibility of the delinquent taxes, if any, of that...