State ex rel. Anderson v. Becker

• Decision Date: 31 December 1930
• Citation: 34 S.W.2d 27,326 Mo. 1193
• Parties: The State ex rel. John A. Love, Oliver Anderson et al. v. Charles U. Becker, Secretary of State, and F. T. Stockard, Commissioner of Securities
• Court: Missouri Supreme Court

34 S.W.2d 27

326 Mo. 1193

The State ex rel. John A. Love, Oliver Anderson et al. v. Charles U. Becker, Secretary of State, and F. T. Stockard, Commissioner of Securities

Supreme Court of Missouri

December 31, 1930

Preliminary rule made absolute.

Fordyce Holliday & White and Thompson, Mitchell, Thompson & Young for relators.

(1) The proceeding contemplated by the notice of the Commissioner of Corporations is judicial in its nature. State to use v Fry, 4 Mo. 121; State ex rel. Guaranty Co. v Harty, 276 Mo. 597; Merlette v. State, 100 Ala. 44; Grider v. Tally, 77 Ala. 424; State ex rel. Brewen-Clark Syrup Co. v. Missouri Workmen's Compensation Commission, 320 Mo. 893, 8 S.W.2d 897; State ex rel. Gallagher v. Kansas City, 319 Mo. 705, 7 S.W.2d 357. (2) The proceeding contemplated by such order is in excess of the Commissioner's authority, because: (a) It seeks to deprive relators of a valuable property right without due process of law, in violation of relators' constitutional rights: Abrams v. Daugherty, 60 Cal.App. 798, 212 P. 942; In re Rosser, 101 F. 562; In re Wood, 210 U.S. 246; Michigan Trust Co. v. Ferry, 175 F. 667; State ex rel. Shackleford v. McElhinney, 241 Mo. 592; Ex parte Robinson, 19 Wall. 513, 22 L.Ed. 205; State ex rel. Hurwitz v. North, 304 Mo. 607; State v. Schultz, 11 Mont. 429, 28 P. 643; Dyment v. Board of Medical Examiners, 57 Cal.App. 260; Abrams v. Jones, 35 Ida. 532, 207 P. 724; Nothern Cedar Co. v. French, 131 Wash. 394, 230 P. 837; Brecheen v. Riley, 187 Cal. 116, 200 P. 1042; Braucher v. Board of Examiners, 209 Ill.App. 455. (b) It contemplates unreasonable search and seizure, in violation of relators' constitutional rights, and is so broad in its scope as to be beyond the jurisdiction of respondents: Ex parte Brown, 72 Mo. 83; State ex rel. v. Wurdeman, 176 Mo.App. 540; State ex inf. v. Continental Tobacco Co., 177 Mo. 1; State ex inf. v. Standard Oil Co., 194 Mo. 124; State ex rel. v. Trimble, 254 Mo. 542; Dowden v. Walrus Mfg. Co., 199 Mo.App. 657; State ex rel. Railroad v. Wood, 316 Mo. 1032. (3) Prohibition is the proper remedy, because: (a) Prohibition lies whenever any officer or body is attempting to exercise any judicial function in excess of the jurisdiction authorized by law: State ex rel. v. Elkins, 130 Mo. 90; State ex rel. Fidelity & Guaranty Co. v. Harty, 276 Mo. 583; State ex rel. Gallagher v. Kansas City, 319 Mo. 705, 7 S.W.2d 357; State ex rel. Brewen-Clark Syrup Co. v. Missouri Workmen's Compensation Commission, 320 Mo. 893, 8 S.W.2d 897. (b) Relators are without proper or adequate remedy other than by prohibition: State ex rel. v. Elkins, 130 Mo. 90; State ex rel. v. Shelton, 238 Mo. 281; State ex rel. v. Terminal Railroad Assn., 237 Mo. 109; State ex rel. v. Workmen's Compensation Commission, 320 Mo. 893; State ex rel. v. Wood, 316 Mo. 1032.

Stratton Shartel, Attorney-General, and Walter E. Sloat, Assistant Attorney-General, for respondents; L. Cunningham of counsel.

(1) Respondents admit the principle of law as laid down under point one of relators' brief, and further admit that the authorities cited therein sustain the proposition that the proceeding contemplated by the Securities Commissioner is in fact judicial in its nature. (2) The proceeding contemplated however is not in excess of the Commissioner's authority if the law under which he is operating is constitutional. Relators were advised by written notice to appear before the Commissioner for an investigation of their books. The notice set out three reasons for the investigation. If relators could be heard to complain that the first two charges in the notice were uncertain and indefinite the same complaint could not be heard as to the third charge. The notice plainly stated one of the causes of the investigation was to ascertain whether or not the companies were insolvent. This notice complied with the due-process clause of the Constitution. (a) The word "insolvency" has a clear and well defined meaning. Trepp v. Glass Co., 297 S.W. 110; Evans v. Fire Brick Co., 204 S.W. 834; Gill v. Safe Co., 170 Mo.App. 486; Mitchell v. Bradstreet Co., 116 Mo. 240. "Due process" has always been defined as the law of the land. St. Louis v. Mo. Pacific Ry. Co., 211 S.W. 672; McManus v. Burrows, 217 S.W. 514; State v. Broaddus, 289 S.W. 795; Ivie v. Bailey, 5 S.W.2d 54. Due process of law is governed by the various states so long as the Federal Constitution is not involved. Walker v. Sauvinet, 92 U.S. 90. A hearing before a commission after notice has been served is not in violation of the due-process clause. State ex rel. Hurwitz v. North, 264 S.W. 681. (b) Relators' rights are not violated by unreasonable search and seizure when they are ordered to produce their records. A corporation stands in a vastly different position than does an individual. This rule should necessarily apply the same to a company doing business as a co-partnership. State ex inf. Hadley v. Standard Oil Co., 218 Mo. 375; Hammond Packing Co. v. Arkansas, 212 U.S. 347; Consolidated Rendering Co. v. Vermont, 207 U.S. 553; Hale v. Henkel, 201 U.S. 69. The constitutional provision relative to search and seizure relates to search and seizure in houses and among private papers under general and indefinite warrants. In re Conrades, 112 Mo.App. 41. Papers or books material to the issues can always be ordered produced by the questioning body. State ex rel. Railroad Co. v. Wood, 316 Mo. 1039. (3) The Supreme Court will not exercise jurisdiction in prohibition except on a clear showing of lack of jurisdiction in the inferior court or body as a matter of law as distinguished from a matter of fact, and when the ordinary remedies by appeal, writ of error or certiorari are absent. State ex rel. Warde v. McQuillin, 262 Mo. 256. Section 21 of the Securities Act, Laws 1929, p. 406, provides a complete and adequate appeal to the Circuit Court of Cole County, from all orders of the Commissioner of Securities. A writ of prohibition does not lie to restrain legislative, executive, or administrative action. State ex rel. McEntee v. Bright, 224 Mo. 527; State ex rel. v. Goodier, 195 Mo. 561.

OPINION

Gantt, J.

Original proceeding in prohibition. Cause submitted on the pleadings. The Secretary of State, prior to May 10, 1930, directed the Commissioner of Securities to investigate all dealers in securities in St. Louis, to determine if they had been or were violating the Securities Act. They contend that relators refused to cooperate with the Commissioner and his agents in an examination of relators' books and papers.

Relators offered to furnish any material information the Commissioner desired, and offered to permit an examination of books and records material to any question arising under the Securities Act. However, there being no provision requiring them to pay the expense of an investigation, they refused to do so. To this extent they refused to cooperate.

Respondents proceeded by authority of Section 15 of the act, which in part follows:

"Commissioner may make investigations and hold public hearings. -- In carrying out the provisions of this act the commissioner may make such investigations and hold such public hearings at such time and place and upon such reasonable notice as the commissioner may fix, and may appoint agents to make investigations, who shall have power to administer oaths, examine witness and take testimony. It shall be the duty of all officers of the State of Missouri charged with the enforcement of criminal law to render and furnish to the commissioner, when requested, all information and assistance in their possession or within their power. The commissioner may by summons require the attendance and testimony of witnesses and the production of books or papers before him relating to any matter of which he has jurisdiction under this act. Such summons may be issued by the commissioner. They shall be served in the same manner as summonses for witnesses in causes issued on behalf of the State of Missouri, and all provisions of law relative to summonses issued in such cases shall apply to summonses issued under this act, so far as applicable. The commissioner shall have power to administer oaths. In case of disobedience to a subpoena, the commissioner, or any party to a proceeding before the commissioner, may invoke the aid of the circuit court of any county of the state or the city of St. Louis, and such court may thereupon issue an order requiring the attendance, and testimony of witnesses and the production of books, papers, and documents under the provisions of this section. Any failure to obey such order of the court may be punished by such court as a contempt thereof."

Thus it appears that respondents could, by invoking the aid of the circuit court, compel the production of books and records tending to show the business condition and conduct of relators as investment bankers and brokers. Instead of so proceeding, respondents, no doubt for reasons satisfactory, treated relators' alleged refusal to cooperate as a contempt of the State Department, and proceeded to punish relators by attempting a proceeding against them under Section 23 of the act. In so doing, on May 10, 1930, they caused to be served on each of relators a notice, a copy of which follows:

"Whereas it has been charged that you and your agents have violated and are violating the provisions of an act of the 55th General Assembly of Missouri, entitled 'An act to repeal an act of the 52nd General Assembly, 1923, entitled "Finance Department of: Relating to sale or disposition of securities in state and providing penalty for violation of act," approved April 2, 1923, found at pages 200 and 218, inclusive, Laws of Missouri, 1923, as amended by an act of the 53rd General Assembly, 1925, entitled: ...