State ex inf. Dalton v. Riss & Co.

• Court: Missouri Supreme Court
• Writing for the Court: HOLLINGSWORTH; LEEDY; PER CURIAM
• Citation: State ex inf. Dalton v. Riss & Co., 335 S.W.2d 118 (Mo. 1960)
• Decision Date: 11 April 1960
• Docket Number: No. 45396,45396
• Parties: STATE of Missouri ex Inf. John M. DALTON, Attorney General, Relator, v. RISS AND COMPANY, Inc., a Corporation, and Transport Manufacturing and Equipment Company, a Corporation, Respondents.

Page 118

335 S.W.2d 118

STATE of Missouri ex Inf. John M. DALTON, Attorney General, Relator, v. RISS AND COMPANY, Inc., a Corporation, and Transport Manufacturing and Equipment Company, a Corporation, Respondents.

No. 45396.

Supreme Court of Missouri, En Banc.

April 11, 1960.

Rehearing Denied May 9, 1960.

John M. Dalton, Atty. Gen., of Missouri, Fred L. Howard, Asst. Atty. Gen., Raymond S. Roberts, Special Asst. Atty. Gen., for relator.

John B. Gage, Laird P. Bowman, Kansas City, A. Alvis Layne, Jr., Washington, D C. (Gage, Moore, Park & Kreamer, Kansas City, of counsel), for respondents.

HOLLINGSWORTH, Chief Justice.

This is an original proceeding in the nature of quo warranto filed on January 25, 1956, by the Attorney General on behalf of the State of Missouri, in which he seeks judgment of ouster of respondents from further exercise of the corporate franchises heretofore granted them by the State of Missouri. The information alleges that pursuant to a common plan and conspiracy respondents Riss and Company, Inc., and Transport Manufacturing & Equipment Company, foreign corporations licensed to do business in Missouri, have willfully and continuously misused and abused the privileges so granted them by (1) repeated violations of the criminal laws and rules and regulations of appropriate state agencies; (2) failure and refusal to pay taxes and fees due the state; and (3) deliberate and constant violation of the motor vehicle maximum weight, size and registration laws, by reason whereof the state has been deprived of revenues in an amount exceeding $750,000.

The joint answer of respondents (hereinafter referred to, respectively, as 'Riss' and 'TM&E') denies any willful violation of the laws or regulations of this state or abuse of the corporate franchises granted them by the state; alleges (1) that any violations of regulations have been rate and unintentional, that the charges relating to violations of the motor vehicle registration laws arise out of a dispute as to the reciprocity provisions of the Missouri statutes and that respondents' construction of the meaning of those statutes was in good faith and predicated upon the advice of counsel; and (2) that the interpretation of Section 301.270 RSMo 1949, V.A.M.S., relating to the registration of motor vehicles operated by nonresidents upon the highways of this State, as contended for by relator, is violative of Article I, Secs. 8 and 10, of the Constitutional of the United States.

The Honorable E. C. Curtis, of Springfield, Missouri, was appointed Special Commissioner to take the testimony and to report the same with his finding of facts and conclusions of law. The evidence consists of 1,468 pages of testimony and 722 exhibits, which by diligent effort on the part of the Commissioner, aided by counsel for both parties, has been collated and condensed into a comprehensive final report. In that report, the Commissioner has found that the evidence fell into four separate categories, to wit: (1) nonpayment of personal property taxes; (2) violation of Public Service Commission regulations; (3) violation of laws relating to the size and weight of commercial motor vehicles operated within this State; and (4) violation of motor vehicle registration laws. As to the first three of these, the Commissioner found the evidence insufficient to sustain a finding of any studied plan on the part of respondents to deliberately flout the laws of the State in those respects. Relator, at least tacitly, acquiesces in that portion of the report. Consequently, the evidence on those issues will be omitted from further consideration. (There was also a considerable volume of evidence adduced and contention made with reference to the registration of trailers, as distinguished from the registration of motor tractors, which together comprise the unit by which property is transported by motor carriers. That evidence, however, had only an indirect bearing upon the alleged violation of the registration laws by respondents in the operation of their tractor-trailer units. Consequently, no discussion of the evidence relating to the registration of trailers, as such, is undertaken.)

Following a detailed analysis of the evidence relating to respondents' violation of the motor vehicle registration laws of this State, the Commissioner found respondents equally guilty of willful abuse of the franchises granted to them by the State of Missouri and recommended that a writ of ouster issue as to each respondent, but that ouster be stayed upon condition of the payment of a fine by each respondent in the amount of $25,000 and the costs of these proceedings. Relator excepts to that portion of the report recommending a stay of ouster upon condition of payment of the fines suggested upon grounds that fines in that amount, under the evidence shown, would be grossly inadequate. Respondents except to the portions of the report adverse to their contentions and in their joint brief filed upon final submission contend as follows:

(1) This action should be dismissed because relator has failed to sustain his burden of proving the allegations of the information that respondents and each of them are guilty of a studied, persistent and continuing, willful and contemptuous refusal to abide by the laws of the State of Missouri;

(2) Even if relator's interpretation of the motor vehicle registration and reciprocity statutes of Missouri is correct, a writ of ouster should not issue nor a fine be assessed because respondents acted in good faith and had reasonable grounds to believe that the vehicles owned or operated by them were licensed in accordance with the motor vehicle registration and reciprocity statutes of Missouri; and

(3) Writ of ouster should not be issued nor a fine be assessed against respondents since such an order of ouster or fine would be violative of the federal constitution as imposing a penalty for violations of statutes construed in a manner rendering them unconstitutional.

During the period of time involved in this litigation, Riss was a Colorado corporation; TM&E an Illinois corporation. (In April or May, 1956, subsequent to the filing of the instant action, TM&E reincorporated in the State of Delaware.) Riss is also licensed as a foreign corporation in Illinois, Kentucky, Maryland and Oklahoma; TM&E in Kentucky, Maryland and Oklahoma. Both are owned and controlled by Richard R. Riss and members of his family and are operated under such common ownership and control. Both maintain their principal general office and business headquarters and keep all of their books and corporate records in Kansas City, Missouri.

Riss is a common carrier by motor vehicle operating under authority of the Interstate Commerce Commission over approximately 36,000 miles of highways in 22 states. The general area of its operations extends from Nebraska, Colorado, Oklahoma and Texas on the west and south to numerous points on the East Coast. It maintains offices in 19 states and the District of Columbia and operates, under lease from TM&E and others, 30 terminals and several garages in various states. TM&E owns certain terminal properties and other real estate, all of which it leases to Riss. It also owns and leases to Riss motor vehicle tractors and trailers for use by Riss in its operations as a common carrier.

Prior to 1954, Riss ocnducted its operations by leasing approximately 800 trailers from TM&E and by leasing tractors and some additional trailers from various individuals, referred to in the record as 'owner-operators', who resided in many different states. The owner-operator leases provided that registration licenses should be issued by the state of the owner's residence and paid for by the owner. TM&E also owned and leased to Riss a few tractors and Riss owned a small number of tractors which it operated. All of the company-owned tractors, totaling 45 to 50, were, prior to 1954, licensed in Missouri.

In 1954, material changes were effected in respondents' methods of operation and motor vehicle registration policies. TM&E disposed of the motor vehicle equipment it then owned and purchased approximately 500 new tractors and 1,300 new trailers. All of these units were leased to Riss under long term leases, some of the leases giving Riss the right of purchase. Delivery of these units commenced in May, 1954, and from the time the deliveries were completed Riss has conducted its operations primarily by use of these vehicles. TM&E does not lease to any one other than Riss and does not operate any of the units itself; neither does it make any profit under its leases to Riss. By the terms of these leases, Riss is required to pay all license fees, maintenance costs and personal property taxes on the leased equipment.

This action, to the extent now under consideration, involves the policies and methods pursued by respondents in the licensing of the motor vehicles operated by them upon the highways of this State since mid-1954. However, their policies and methods prior to that time are material in evaluating their actions and conduct during the period of time directly involved.

In the latter part of 1950, the State Highway Patrol began to make arrests of the drivers of Riss vehicles for violations of the motor vehicle registration laws of Missouri, the arrests being made principally in Phelps and Crawford Counties. The testimony was that these were owneroperated vehicles under lease to Riss. At that time, Section 301.010 RSMo 1949, V.A.M.S., (to which revision all statutory references herein are made unless otherwise indicated) defined the 'owner' of a motor vehicle, required to be registered under the provisions of Sec. 301.020, to mean 'any person, firm, corporation or association, owning or renting a motor vehicle * * * for a period greater than ten days successively.' Effective July, 1952, the definition of 'owner' was redefined by statute to read: '[T]he term owner shall include any person, firm,...