State ex rel. City of St. Louis v. Public Service Com'n of Missouri

• Citation: 73 S.W.2d 393,335 Mo. 448
• Decision Date: 15 June 1934
• Docket Number: 31780
• Parties: State ex rel. City of St. Louis, a Municipal Corporation, Appellant, v. Public Service Commission et al
• Court: United States State Supreme Court of Missouri

73 S.W.2d 393

335 Mo. 448

State ex rel. City of St. Louis, a Municipal Corporation, Appellant, v. Public Service Commission et al

No. 31780

Supreme Court of Missouri

June 15, 1934

Motion for Rehearing Overruled June 15, 1934.

Appeal from Cole Circuit Court; Hon. Henry J. Westhues Judge; Opinion filed at September Term, 1933, April 18, 1934 motion for rehearing filed; motion overruled at May Term 1934, June 15, 1934.

Affirmed.

Julius T. Muench, Charles M. Hay and Forrest G. Ferris, Jr., for appellant.

(1) The local acts or contracts of a foreign corporation which is unauthorized to do business in this State are illegal, null, void and unenforceable. State ex rel. St. Louis v. Pub. Serv. Comm., 331 Mo. 1098; Secs. 4596, 4599, R. S. 1929; Flinn v. Gillen, 10 S.W.2d 923; Chicago Mill & Lumber Co. v. Sims, 197 Mo. 507, 95 S.W. 344; Parke-Davis & Co. v. Mullett, 245 Mo. 168, 149 S.W. 461; United Shoe Machinery Co. v. Ramlose, 210 Mo. 631, 109 S.W. 567; Tri-State Amusement Co. v. Forrest Park Highlands Amusement Co., 192 Mo. 404, 90 S.W. 1020. (2) The Public Service Commission of Missouri is without jurisdiction to make any order authorizing, promoting, encouraging or assisting the performance of an unlawful act. The commission's orders must be lawful as well as reasonable. State ex rel. St. Louis v. Pub. Serv. Comm., 331 Mo. 1098; Public Serv. Comm. v. Railroad Co., 271 Mo. 258. (3) Transactions in this State by a foreign corporation of any business for which it was expressly incorporated, constitutes the doing of business within this State. Shields v. Chapman, 240 S.W. 506. (4) The acquisition of the stock prayed for by applicant, and granted in the order here appealed from, and the performance, by applicant, of various financial, managerial, engineering and other services, when viewed in the light of its intercorporate relationships, and other related facts, constitutes the doing of business in this State within the meaning of, and contrary to, the laws of the State of Missouri, and contrary to the public policy of this State; and for this reason the commission's order, which authorizes and furthers such acts, is null and void. State ex rel. St. Louis v. Pub. Serv. Comm., 331 Mo. 1098; Secs. 4596, 4597, 4598, R. S. 1929. (5) The acquisition, by an unlicensed foreign corporation, of more than ten per cent of the stock of a domestic operating utility, is against the public policy of this State unless there is an affirmative finding by the Public Service Commission that such acquisition is in the public interest. State ex rel. St. Louis v. Pub. Serv. Comm., 331 Mo. 1098; Sec. 5177, R. S. 1929.

D. D. McDonald, General Counsel, and G. C. Murrell, Assistant Counsel, for Public Service Commission.

Ragland Otto & Potter for Utilities Light & Power Company.

(1) The acquisition of corporate stock by a foreign corporation does not constitute doing business in the local territory. Meir v. Crossley, 305 Mo. 206, 264 S.W. 882; Peterson v. C., R. I. & P. Ry. Co., 205 U.S. 364, 51 L.Ed. 841; People's Tobacco Co. v. Am. Tobacco Co., 246 U.S. 79, 62 L.Ed. 547; Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 69 L.Ed. 634; Butterick Co. v. United States, 240 F. 539. (2) The acquisition of shares of capital stock of a public utility corporation by a holding corporation with the consent of the commission is not void as being contrary to the public policy of the State, as Section 5195, Revised Statutes 1929, gives the commission specific authority to consent to the purchase. (3) Section 5195, Revised Statutes 1929, does not restrict the commission in granting its consent to foreign corporations licensed to do business in Missouri. Sec. 5195, R. S. 1929.

Tipton, J. All concur, except Ellison and Hays, JJ., absent.

OPINION

TIPTON

This case was argued before this court, both in division and en banc. We adopt the statement of facts of the divisional opinion as it fairly and correctly states the facts as found in the record. It is as follows:

"This is an appeal from the judgment of the Circuit Court of Cole County, affirming, on certiorari, the orders of respondent commission in two cases, being commission cases Nos. 6722 and 6723, in which the commission granted the applications of Utilities Power and Light Corporation for authority to purchase, acquire and hold more than ten per cent of the shares of stock 'at any time outstanding' of two Missouri public utility corporations. The city of St. Louis was permitted to and did intervene, objecting to the granting of the applications, and is the appellant herein. The following facts quoted from appellant's brief are conceded.

"'Said applications were brought under Section 5195, R. S. Mo. 1929 and involve the right of a foreign corporation, unlicensed to do business in this State, to acquire and hold, under the particular facts in this case, more than 10 per cent of the stock of two domestic utilities operating in St. Louis.

"'Specifically, the commission, in the order here complained of, authorized the Utilities Power and Light Corporation, a Virginia corporation, to purchase, acquire, take and hold more than ten per cent of the 13,200 shares of the issued and outstanding capital stock of Laclede Power and Light Company, represented by voting trust certificates of said company, and more than 10 per cent of the 107,000 shares of common stock and 25,000 shares of preferred stock of Laclede Gas Light Company. Actually, at the time the applications were filed, the Laclede Gas and Electric Company (a whole owned subsidiary of Utilities Power and Light Company) owned approximately 9,450 shares of common stock of Laclede Power and Light Company, and 65,500 shares of common and 703 shares of preferred stock, of Laclede Gas Light Company.

"'The Laclede Gas Light Company is a Missouri corporation, and renders a general gas service in the city of St. Louis, as a public utility. . . . The Laclede Power and Light Company is a Missouri Corporation, and renders a general electric business in the city of St. Louis, as a public utility, pursuant to franchise. This corporation was formed for the purpose of taking over the electric business formerly conducted by the Laclede Gas Light Company. . . .

"'The Laclede Gas and Electric Company was organized in 1922 or 1923, by Charles A. Munroe, about the time he acquired control of the Laclede Gas Light Company. This company is a Delaware corporation and has never been licensed to do business in Missouri.

"'Pursuant to respondent commission's order of May 7, 1924, in case No. 3970, Laclede Gas and Electric Company is now the owner of more than 10 per cent of the capital stock, issued and outstanding, of Laclede Gas Light Company, to-wit, 65,513 shares of common and 703 shares of preferred stock. The actual holdings at the date of hearing in this cause were 65,517 shares of common and 873 shares of preferred, the difference being accounted for because of the difference in dates between the filing of the application and the hearing.

"'Pursuant to respondent commission's order of December 23, 1926, in Case No. 5041, Laclede Gas and Electric Company is now the owner of more than 10 per cent of the capital stock, issued and outstanding, of Laclede Power and Light Company, to-wit, 9452 shares of common stock, represented by voting trust certificates. Actually, at the date of hearing in this cause appealed from, the holding was 9,206 shares.

"'The above holdings of Laclede Gas and Electric Company represent the controlling interest in both the Laclede Gas Light Company and Laclede Power and Light Company. Said Laclede Gas and Electric Company may, for convenience, be considered the first holding company.

"'The Utilities Power and Light Corporation, a Virginia corporation, was organized in 1915, and its Certificate of Incorporation was amended on May 29, 1929. It is not licensed to do business in Missouri. In 1927 this corporation, which may be referred to as the second holding company, acquired full control (100% of the common stock) of Laclede Gas and Electric Company and therefore, control of Laclede Gas Light Company and Laclede Power and Light Company.

"'The net effect of the applications which were granted in the consolidated cause here appealed from, is to transfer to Utilities Power and Light Corporation (the second holding company), the controlling interest of Laclede Gas and Electric Company (the first holding company) in both Laclede Gas Light Company and Laclede Power and Light Company, the two domestic operating utilities. As expressed by company witness, Mr. E. L. White: "The petitioner is simply asking the commission for authority to transfer the present authority granted to the Laclede Gas and Electric Company to the Utilities Power and Light Corporation, with the intent of dissolving the Laclede Gas and Electric Company, as it is no longer needed as a holding company in connection with these cases."

"'Further, with reference to the Laclede Gas and Electric Company, company witness White testified:

"'. . . The purpose in wiping out this company is because it is not needed, and to get away from paying the federal corporation tax; it is a worthless corporation in the present setup.'

"Mr. E. L. White, the 'company witness' referred to above, is comptroller of the Laclede Gas Light Company. He was called by the applicant and was the only witness who testified at the hearing.

"The applicant, Utilities Power and Light Corporation, does not now directly own any stock of the Laclede Gas Light Company nor, so far as the evidence shows, of the Laclede Power and Light Company. It has numerous subsidiary corporations and corporations which it controls through stock ownership throughout the country. Its charter powers are very broad. The...