Springfield Gas & Elec. Co. v. Graves

• Decision Date: 09 May 1949
• Docket Number: 40707
• Parties: Springfield Gas and Electric Company, a Corporation, Appellant, v. Mrs. Anna L. Graves et al., Respondents
• Court: Missouri Supreme Court

221 S.W.2d 197

359 Mo. 182

Springfield Gas and Electric Company, a Corporation, Appellant, v. Mrs. Anna L. Graves et al., Respondents

No. 40707

Supreme Court of Missouri

May 9, 1949

Rehearing Denied June 13, 1949.

Appeal from Greene Circuit Court; Hon. Walter E. Bailey Special Judge.

Reversed and remanded (with directions).

A P. Stone, Jr., and Wm. C. Cockrill for appellant; Stone & Smith of counsel.

(1) Articles of agreement of plaintiff company and pertinent statutes of State of Missouri constitute the contract between plaintiff and its preferred stockholders. Rights of preferred stockholders are fixed and limited by articles of agreement of Springfield Company. Murphy v. Richardson Dry Goods Co., 326 Mo. 1, 31 S.W.2d 72; Powell v. Craddock-Terry Co., 175 Va. 146, 7 S.E.2d 143; 12 Fletcher's "Cyclopedia of Corporations" (Perm. Ed.), sec. 5449, p. 199; 18 C.J.S. 1147, sec. 477. (2) Statutes of Missouri, under whose laws plaintiff was incorporated, are read into, and become a part of, plaintiff's charter. Dorris Motor Car Co. v. Colburn, 307 Mo. 137, 270 S.W. 339; Hohenshell v. Savings & Loan Assn., 140 Mo. 566; Tennant v. Epstein, 356 Ill. 26, 189 N.E. 864; Mercantile Trust Co. v. San Joaquin Agri. Corp., 89 Cal.App. 558, 265 P. 583. (3) Ordinary rules of construction are applicable to contract between plaintiff company and its preferred stockholders; and, said contract is not ambiguous. 7 Fletcher's "Cyclopedia of Corporations," sec. 3640, p. 766. (4) Unequivocal language must be given its plain, ordinary and usual meaning; and, when the language of a contract is clearly unequivocal, there is no room for judicial construction. State ex rel. Prudential Ins. Co. v. Bland, 353 Mo. 956, 185 S.W.2d 654; State ex rel. Natl. Life Ins. Co. v. Allen, 301 Mo. 631, 256 S.W. 737; Chicago, R.I. & P. Ry. Co. v. Maryland Cas. Co., 75 F.2d 596; 17 C.J.S. 683, sec. 294. (5) Contract must be construed as a whole, giving effect to every part, if fairly and reasonably possible. Swinney v. Continental Bldg. Co., 340 Mo. 611, 102 S.W.2d 111; Fancher v. Prock, 337 Mo. 1119, 88 S.W.2d 179; 17 C.J.S. 707, sec. 297. (6) Courts' duty is to interpret and enforce contracts, not to make them. Tant v. Gee, 348 Mo. 633, 154 S.W.2d 745; 17 C.J.S. 695, sec. 296. (7) Incorporators of plaintiff company had right and duty to state, define and fix definitely, as they did in articles of agreement, preferences, priorities, rights, limitations, and restrictions of preferred and common stock of plaintiff company. Sec. 10144, R.S. 1919; Laws 1927, p. 392; Sec. 10163, R.S. 1919; Sec. 12, The Genl. and Bus. Corp. Act of Mo.; Laws 1943, p. 421. (8) Provision for "call" of preferred stock was for benefit of plaintiff company and was exercisable at option of plaintiff's board of directors; and, preferred stockholders could not compel such call. Fox v. Johnson and Wimsatt, Inc., 127 F.2d 734; Hackett v. Northern Pac. Ry. Co., 73 N.Y.S. 1087. (9) Plaintiff company was subject, at all times, to dissolution under Missouri statutes which became part of corporate charter; and, preferred stockholders of plaintiff company were charged with such knowledge. Secs. 9756-9759, R.S. 1919; as amended, Laws 1921, p. 264; Secs. 80-83, The General and Business Corporation Act of Missouri, Laws 1943, pp. 454-456; 16 Fletcher's Cyclopedia on Corporations (Perm. Ed.), sec. 7972, p. 661; sec. 8006, p. 716; and sec. 8022, p. 735; In re Doe Run Lead Co., 283 Mo. 646, 223 S.W. 600; Jersey Boulevard Corp. v. Lerner Stores Corp., 168 Md. 532, 178 A. 707. (10) Springfield Company has never been a utility holding company, no plan for simplification of a holding company system is under consideration in this case, and Public Utility Holding Company Act of 1935 has no relevancy or application to this case. However, even under Holding Company Act, retirement of preferred stock would not constitute a call and preferred stockholders would not be entitled to call premium. Springfield Company has been an operating company and has never been a utility holding company. Par. 11, Stipulation of Facts. (11) Sale of common stock of Springfield Company by Federal to City of Springfield was not submitted to or approved by Securities and Exchange Commission; and, no plan for simplification of holding company system under Holding Company Act is under consideration here. Par. 22, Stipulation of Facts; Rule U-44(b) (3) of General Rules and Regulations of SEC. (12) SEC. simply directed Federal to "sever its relationship" with Springfield Company. Par. 15, Stipulation of Facts. (13) Even under Holding Company Act, retirement of preferred stock would not constitute a call and preferred stockholders would not be entitled to call premium. In re Standard Gas & Electric Co., 151 F.2d 326, certiorari denied 327 U.S. 796, 66 S.Ct. 820, 90 L.Ed. 1022; Massachusetts Mut. Life Ins. Co. v. SEC, 151 F.2d 424, affirming In re Laclede Gas Light Co., 57 F.Supp. 997; certiorari denied 327 U.S. 795, 66 S.Ct. 817, 90 L.Ed. 1022; In re New England Pub. Service Co., 73 F.Supp. 452. (14) In formulating or considering simplification plans for holding companies under Holding Company Act, practice has been to deny premium to preferred stockholders and holders of prior liens. In re Illinois Power Co., 74 F.Supp. 317; In re Electric Bond & Share Co., 73 F.Supp. 426; In re Interstate Power Co., 71 F.Supp. 164; In re Community Gas & Power Co., 71 F.Supp. 171. (15) To confer rights upon alleged third-party beneficiaries, contract must be made for direct benefit of such third-party beneficiaries, as its object and they must be the parties intended to be benefited. Howsmon v. Trenton Water Co., 119 Mo. 304, 24 S.W. 784; Gate City Natl. Bk. v. Chick, 170 Mo.App. 343, 156 S.W. 743; German Alliance Ins. Co. v. Home Water Supply Co., 226 U.S. 220, 57 L.Ed. 195, 33 S.Ct. 32; Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 72 L.Ed. 290, 48 S.Ct. 134; Chicago, R.I. & P. Ry. Co. v. Maryland Cas. Co., 75 F.2d 596; Hicks v. Hamilton, 144 Mo. 495, 46 S.W. 432; Metz v. Cape Girardeau Waterworks & Elec. Light Co., 202 Mo. 324, 100 S.W. 651. (16) That a contract may confer indirect or incidental benefits upon third-party beneficiaries is insufficient to confer any rights or cause of action. Uhrich v. Globe Surety Co., 191 Mo.App. 111, 166 S.W. 845; State v. St. L. & S.F. Ry. Co., 125 Mo. 596, 28 S.W. 1074; Kansas City Life Ins. Co. v. Rainey, 353 Mo. 477, 182 S.W.2d 624; Howsmon v. Trenton Water Co., supra, l.c. 308. (17) To confer benefits on third-party beneficiary, there must be some obligation or duty, legal or equitable, owing to third-party beneficiary. City of St. Louis v. G.H. Wright Contracting Co., 202 Mo. 451, 101 S.W. 6; Uhrich v. Globe Surety Co., supra; Devers v. Howard, 144 Mo. 671, 46 S.W. 625. (18) City of Springfield owed no obligation or duty, legal or equitable, to preferred stockholders of Springfield Company. Powers of municipal corporations are limited and strictly construed. State ex rel. Curators of University of Missouri v. McReynolds, 354 Mo. 1199, 193 S.W.2d 611; Taylor v. Dimmitt, 336 Mo. 330, 78 S.W.2d 841. (19) All persons are charged with knowledge of the limited rights and powers of municipal corporations. Peters v. St. Louis, 226 Mo. 62, 125 S.W. 1134; Lively v. Webb City, 106 S.W.2d 517. (20) City of Springfield would have had no power, either express or implied, to enter into contract purporting to enlarge rights of preferred stockholders of Springfield Company. Sec. 3349, R.S. 1939; Arts. 3, 11, Chapter 38, R.S. 1939; Sec. 6609, R.S. 1939. (21) If City had attempted to enlarge rights of preferred stockholders of Springfield Company, contract would have been, in that respect, ultra vires, void and unenforceable. Donovan v. Kansas City, 352 Mo. 430, 175 S.W.2d 874, as modified and adopted in banc, 352 Mo. 430, 179 S.W.2d 108, appeal dismissed 322 U.S. 707, 88 L.Ed. 1551, 64 S.Ct. 1049; Howsmon v. Trenton Water Co., supra, l.c. 313. (22) It is presumed that parties intended valid contract; and, if contract is fairly and reasonably open to two constructions, construction making it valid must be adopted. Wiggins Ferry Co. v. C. & A. Ry. Co., 128 Mo. 224; Natl. Bank of Commerce v. Flanagan Mills & Elevator Co., 268 Mo. 547, 188 S.W. 117; Rogers v. Union Iron & Foundry Co., 167 Mo.App. 228, 150 S.W. 100; Great Northern Ry. Co. v. Delmar Co., 283 U.S. 686, 75 L.Ed. 1349, 51 S.Ct. 579. (23) Parties asserting rights as third-party beneficiaries must accept contract as made, and are not entitled to benefits by implication or interpolation. Noles v. Terminal Ry. Assn., 154 S.W.2d 606; Kingsland v. Mo. State Life Ins. Co., 228 Mo.App. 198, 66 S.W.2d 959; Chicago, R.I. & P. Ry. Co. v. Maryland Cas. Co., supra, l.c. 599. (24) Interpretation placed upon sale agreement by Federal and City, as evidenced by escrow agreement, should be adopted. Barnes v. Boatmen's Bank of St. Louis, 348 Mo. 1032, 156 S.W.2d 597; Thomson v. Thomson, 156 F.2d 581; First Natl. Bank in St. Louis v. West End Bank, 344 Mo. 834, 129 S.W.2d 879; Zeppenfeld v. Morgan, 168 S.W.2d 971.

Sam M. Wear, Wm. A. Wear, Arch A. Johnson and W. D. Tatlow for respondents.

(1) The city had no power to purchase the stock and could only do so as a mere step in the purchase of the physical properties of the Springfield Gas and Electric Company. Stipulation Par 23-24. City of Springfield v. Monday, 353 Mo. 981, 185 S.W.2d 788. (2) It is not necessary that a party should deliberately or expressly agree to be bound by the terms of a contract to which it is a stranger. If having knowledge of such contract it deliberately adopts and undertakes to and does perform it at least in part, it makes the contract its own with the same legal effect as if it had signed it. Wiggins Ferry Co. v. Ohio & Miss. R. Co.,...