State ex Inf. Attorney-General v. American Can Co.
| Citation | 4 S.W.2d 448 |
| Decision Date | 17 March 1928 |
| Docket Number | No. 26923.,26923. |
| Parties | THE STATE EX INF. NORTH TODD GENTRY, Attorney-General, v. AMERICAN CAN COMPANY. |
| Court | United States State Supreme Court of Missouri |
North T. Gentry, Attorney-General, and Boyle & Priest for relator.
(1) The attempted justification of non-user or misuser has been shown not only to be a non-user or misuser, but a willful use of a moribund charter for the purpose of excluding competition against its colleague, the Columbia Can Company, a prosperous concern that has advanced in capital from $60,000 to $1,000,000. State ex rel. v. Jockey Club, 200 Mo. 66. (2) The respondent had not resumed business in good faith on December 12, 1925. (3) Non-user alone on the part of a private corporation, where no public interest is involved, will not justify a forfeiture. Jockey Club Case, 200 Mo., supra. (4) The testimony warranted the finding of non-user, and that the respondent was not doing business of the nature contemplated in its charter when this suit was instituted. The respondent, on July 16, 1925, filed with the Secretary of State, under the provisions of our statutes (R.S. 1919, sec. 9809) a statement, in which it said: "This corporation is kept in existence for charter only, not operating." It had made the same report continuously since 1908. State ex inf. v. Light & Dev. Co., 246 Mo. 640.
Ralph & Baxter and Hostetter & Haley for respondent.
(1) Courts are extremely reluctant on general principles to declare forfeiture of corporate charter, and particularly is this true where the grounds on which the forfeiture is asked do not involve moral turpitude, or where no public interest is injuriously affected, and only private rights and interests are involved. 5 Fletcher's Cyclopedia Law, pp. 5036-7; Olathe v. Railroad Co., 78 Kan. 193; State v. York Light Co., 113 Me. 144; State v. Threshing Mfg. Co., 40 Minn. 213; People v. Sugar Refining Co., 121 N.Y. 582; 3 Cook, Corporations (8 Ed.) sec. 634; People v. Gen. Elec. Ry., 172 Ill. 129; Watson v. Le Grand Co., 177 Ill. 203; State v. Dayton Co., 64 Ohio St. 272; 22 R.C.L. 675. (2) A judgment of forfeiture is uniformly denied where it is shown (as in the instant case) that the proceeding to declare same was instigated and prosecuted by a rival concern, and by one which is the real party in interest. Indeed, some courts, bolder than others, and not adverse to calling "a spade a spade," do not hesitate to declare such proceeding "a fraud on the court." State v. Elec. Co., 165 Wis. 467; Standard Oil Co. v. State of Missouri, 224 U.S. 270, Ann. Cas. 1913 D, 936; State v. Standard Oil Co., 218 Mo. 1; 3 Cook, Corporations (8 Ed.) sec. 634; People v. Gen. Elec. Ry., 172 Ill. 129; Watson v. Le Grand Co., 177 Ill. 203; State v. Dayton Co., 64 Ohio St. 272; 22 R.C.L. 694; State v. Railroad Co., 176 Mo. 687; Ferris Ext. Legal Remedies, sec. 122; State ex rel. v. Wood, 13 Mo. App. 144. (3) Conceding that the statute of limitation does not run against the state, yet the long lapse of time, combined with other elements, notably, knowledge by the state officials of the alleged corporate delinquency (mere inactivity in the case at bar), the annual disclosure of such inactivity in the regular reports and affidavits made by the corporation, the reception of the annual fees by the state officials from the corporation without protest or objection, their acquiescence in the status quo, the long delay in instituting proceedings, and none even contemplated until after repeated proddings of a rival concern, creates a condition where the sovereign state itself may not be permitted to proceed to exact the "pound of flesh." 2 Bailey, Habeas Corpus, p. 1371; State ex rel. v. Janesville Water Co., 92 Wis. 504; 14A, C.J. 1127.
This proceeding in quo warranto, begun by the Attorney-General, has for its purpose to oust respondent from its corporate franchises and to declare the same forfeited, the petition alleging non-user.
The petition of relator was lodged with the clerk of this court December 2, 1925, but for some reason was not marked "Filed" until December 11, 1925. The respondent, March 10, 1926, filed return, denying the allegations of the petition, except such as it specifically admitted to be true; alleged compliance with the statute in filing reports; that the State of Missouri is estopped to visit any penalties upon it; that the relator is "being imposed upon and was induced to institute this proceeding by the cunning, sophistry, selfishness and subterranean machinations of a foreign corporation, the American Can Company of New Jersey, whose purpose is to drive out of this State all competitors."
Further, it is alleged in the return that since the American Can Company of New Jersey entered the State and conducted a similar business it has been engaged in a systematic and frantic effort "to secure the ownership of all the capital stock of respondent, with a view to exercising a monopoly of the business which respondent is authorized to conduct under its franchises." The relator filed a reply to the return, putting in issue a number of facts alleged, and averring in detail many facts affecting the situation, including misuser as well as non-user.
The petition, return, and reply are of considerable length, containing many allegations of facts and denials about which finally there was no dispute, and other facts disputed which it is more convenient to consider in connection with the report of the special commissioner.
Hon. Frank Hollingsworth, of Mexico, Missouri, was appointed by this court, March 10, 1926, to take testimony in the case, with full power for that purpose, "and to report such testimony to the court, together with his findings of fact and conclusions of law therein."
The commissioner accordingly took evidence, and August 3, 1927, filed his report, finding in the main the disputed facts in favor of relator; that the respondent by reason of non-user and misuser of its corporate powers had forfeited its rights to them; he recommended that the charter of the American Can Company of Missouri be forfeited. Respondent filed exceptions to the findings of fact and conclusions of law. The matter was argued before Court en Banc and submitted.
The respondent was incorporated in 1889, as a manufacturing company, under the name of The St. Louis Can & Canning Company, with a capital stock of twenty thousand dollars, divided into two hundred shares of one hundred dollars each, and the purpose was to engage in the manufacture and sale of tin cans, tinware and packers' supplies. In April, 1891, the name of the corporation was changed to the American Can Company.
It failed to comply with the statute passed in 1891, which required incorporated companies to report annually to the Secretary of State the location of its principal office, the name of its principal officer, amount of earnings, cash value of its personal property, etc., under penalty of a fine of not less than a hundred nor more than a thousand dollars for a failure.
This act was repealed and an act similar in import passed in 1893. No report under that act was filed by respondent for fourteen years. The last meeting of its board of directors under its then management, was held in 1894. In 1896 the Circuit Attorney of St. Louis, filed suit against the American Can Company to recover the penalties provided by statute for failure to make reports to the Secretary of State, and the sheriff found no one upon whom to make service. It had no plant, no office no assets, no credit.
In 1908, all the stock of that corporation was bought by Frederick L. Westerbeck. At this point the Columbia Can Company comes into the play. It was incorporated in 1902 for the purpose of manufacturing tin cans, packers' supplies, etc., with a capital of sixty thousand dollars, divided into six hundred shares of the par value of one hundred dollars each. Mr. Frederick L. Westerbeck owned five hundred and twenty shares, and his two sons, Emil J. Westerbeck and Frederick H. Westerbeck, owned the remaining eighty shares. The Columbia Can Company was doing a prosperous business when Westerbeck, in 1908, purchased the stock of the American Can Company. The way in which he came to buy the stock was this: Charles B. Emmerich was employed by the Columbia Can Company and working at its plant. He was the last elected president of the American Can Company of Missouri, and owned all the stock. One Mr. Rudolph was vice-president of the American Can Company of New Jersey, a corporation with a capital of a hundred million dollars and doing business in many cities. He came to Mr. Emmerich at the Columbia Can Company plant for the purpose of buying the stock of the American Can Company of Missouri. The New Jersey company, in April, 1908, had applied to the Secretary of State, then John E. Swanger, to obtain license to do business in Missouri under its name, the American Can Company. Mr. Swanger's letter is in the record, in which he said that under the statute he was prohibited from issuing a license because another corporation of the same name appeared, meaning the American Can Company of Missouri. Mr. Swanger further suggested in the letter that if it could be shown by affidavit of the president or secretary of the American Can Company of Missouri that it had ceased to do business and no longer was a corporation, he would admit the American Can Company of New Jersey to do business in the State under its own name. Thereupon Mr. Rudolph sought out Mr. Emmerich for the purpose of buying the stock of the American Can Company of Missouri. What occurred at their conference was related in Mr. Westerbeck's account of what Mr. Emmerich told him, to the effect that Mr. Rudolph offered Emmerich five or perhaps ten dollars for his franchise and stock, and Emmerich got mad about it, threw his hat on the floor, swore he was not a beggar, and offered to give the stock to Westerbeck. Westerbeck declined the...
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