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

• Decision Date: 31 December 1932
• Citation: 56 S.W.2d 398,331 Mo. 1098
• Parties: State ex rel. City of St. Louis, a Municipal Corporation, Appellant, v. Public Service Commission of Missouri et al. State ex rel. Priest et al., Appellants, v. Public Service Commission of Missouri et al
• Court: Missouri Supreme Court

56 S.W.2d 398

331 Mo. 1098

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

Supreme Court of Missouri

December 31, 1932

Appeal from Cole Circuit Court; Hon. Henry J. Westhues Judge;

Reversed and remanded (with directions.)

Julius T. Muench and Forrest G. Ferris, Jr., for appellants.

(1) The local acts or contracts of a foreign corporation which is unauthorized to do business in this State are illegal, void and unenforceable, and no action arising out of such transactions may be maintained by such corporation in any tribunal within this State. Secs. 9790-9793, R. S. 1919, as amended by Laws 1927, p. 390; Flinn v. Gillen, 10 S.W.2d 926; Tri-State Amusement Co. v. Amusement Co., 192 Mo. 404, 90 S.W. 1020, 4 L. R. A. (N. S.) 688 111 Am. St. Rep. 511, 4 Ann. Cas. 808; Chicago Mill & Lumber Co. v. Sims, 197 Mo. 507, 95 S.W. 344; Amalgamated Zinc & Lead Co. v. Bay State Zinc Mining Co., 221 Mo. 7, 120 S.W. 31, 23 L. R. A. (N. S.) 492; Parke-Davis & Co. v. Mullett, 245 Mo. 168, 149 S.W 461; Booth v. Scott, 276 Mo. 1, 205 S.W. 633; United Shoe Machinery Co. v. Ramlose, 210 Mo. 631, 109 S.W. 567; State ex rel. v. Cox, 306 Mo. 552, 268 S.W. 87, 37 A. L. R. 1456; Ehrhardt v. Robertson Bros., 78 Mo.App. 404; First Natl. Bank v. Leeper, 121 Mo.App. 688, 97 S.W. 636; Wilson-Moline Buggy Co. v. Priebe, 123 Mo.App. 521, 100 S.W. 558; Frazier v. Rockport, 199 Mo.App. 80, 202 S.W. 266; German-American Bank v. Smith, 202 Mo.App. 133, 208 S.W. 878; Pac. Lumber Co. v. Jamison Lumber Co., 213 Mo.App. 111, 247 S.W. 225. (2) This Commission is without jurisdiction to make any order authorizing, promoting or assisting in the performance of an unlawful act. The Commission's orders must be lawful as well as reasonable. Sec. 10522, R. S. 1919; Public Service Commission v. Union Pac. Railroad Co., 271 Mo. 267. (3) Applicant, having failed to obtain a license to do business in this State, exists, if at all, as a partnership composed of stockholders engaged as individuals in a common undertaking, and has no status as a corporation. For this reason the Commission is without jurisdiction to consider any application filed by the applicant, or to make any order with reference to it, in a corporate capacity. Booth v. Scott, 276 Mo. 34. (4) The Public Service Commission Act is intended to supplement the other laws of the State, and does not have the effect of repealing any other law, unless in direct conflict with its provisions. Section 10465 of the Revised Statutes of 1919, requiring the Commission's consent to the acquisition by a holding company of more than ten per cent of the stock of a local street railroad corporation under the Commission's jurisdiction, has application only to such corporations as are legally qualified to make the application, and, in the case of a foreign corporation, this presupposes a license to do business in this State. Secs. 9790, 9792, 10550, R. S. 1919. (5) A foreign corporation cannot transact any business which a domestic corporation of like character cannot transact; and by law the duty to determine whether such contemplated business is lawful is delegated to the Secretary of State, concerning which department the Public Service Commission has no jurisdiction. State ex rel. v. Cook, 171 Mo. 362; Central Life Securities Co. v. Smith, 236 F. 170; Secs. 9790, 9792, 10147, 10148, R. S. 1919. (6) Transaction 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. (7) Where one of the purposes for which a foreign corporation is expressly chartered is to acquire and hold the stock of other corporations, the acquisition and holding by a foreign corporation of stock of a domestic corporation constitutes doing business within this State, within the meaning of the law. People ex rel. Manhattan Silk Co. v. Miller, 109 N.Y.S. 868, 125 A.D. 296; 14a C. J. 1292; Central Life Securities Co. v. Smith, 236 F. 170, 149 C. C. A. 360; Colonial Trust Co. v. Montello Brick Works, 172 F. 310, 97 C. C. A. 144. (8) A corporation cannot purchase, hold or deal in the stocks of other corporations unless expressly authorized to do so by law; and a domestic state may impose such conditions and prohibitions upon a foreign corporation seeking to acquire stock in a domestic corporation as it may see fit. De La Vergne Refrg. M. Co. v. German Savings Instit., 175 U.S. 40, 44 L.Ed. 70; People ex rel. Peabody v. Chicago Gas Trust Co., 130 Ill. 268, 8 L. R. A. 503; Buckeye Marble & Freestone Co. v. Harvey, 18 L. R. A. 252, annotations; Lukens v. Insurance Co., 269 Mo. 587. (9) The declared policy of this State is to protect its citizens from injury at the hands of foreign corporations. Booth v. Scott, 276 Mo. 31. (10) The spirit of the whole Public Service Act is the protection of the public. It was intended to provide a complete system for the regulation and control of public service corporations, and is an exercise of the police power of the State, which shall never be abridged. State ex rel. City of Sedalia v. Pub. Serv. Comm., 275 Mo. 207. (11) Despite the fact that the statutes of other states creating public service commissions and defining their powers may be similar to, and often are identical with, our own, in construing the Missouri Act little aid is afforded by the decisions of such states, since their organic laws are different from ours, and our legislative acts are restricted by plain constitutional provisions. State ex rel. United Rys. Co. v. Pub. Serv. Comm., 270 Mo. 437.

D. D. McDonald and N. W. Simpson for respondent.

(1) Only corporations desiring to do business in the State of Missouri are obligated to secure a license so to do under Sections 4596 and 4590, Revised Statutes 1929. Meir v. Crossley, 305 Mo. 206; Clark v. Kansas Co., 144 Mo.App. 182; First National Bank v. Leeper, 121 Mo.App. 688; Procter & Gamble Co. v. Newton, 289 F. 1015; Shields v. Chatman, 240 S.W. 506; Beach v. Kerr Turbine Co., 243 F. 706. (2) The acquisition of corporate stock or the lending of financial aid to a local corporation by a foreign corporation does not amount to doing business in the local territory. Meir v. Crossley, 305 Mo. 206, 264 S.W. 882; Peterson v. C. R. I. & Pac. Railroad 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. (3) The making of a contract providing for the acquisition of shares of the capital stock of one corporation by another corporation is not void as being contrary to the public policy of the State as Section 5177, R. S. 1929, gives the Commission specific authority to consent to the purchase. 5 Thompson on Corporations, sec. 6627; United States v. Trans-Missouri Freight Assn., 166 U.S. 340, 41 L.Ed. 1027; City of Winona v. Cowdrey, 93 U.S. 612; Doherty v. Rice, 186 F. 212; Sec. 10465, R. S. 1919, now Sec. 5177, R. S. 1929; Electric Public Utilities Co. v. West, 140 A. 840; Toledo Traction, L. & P. Co. v. Smith, 205 F. 673. (4) The Public Service Commission is a legislative body and not a judicial tribunal. State ex rel. v. Pub. Serv. Comm., 270 Mo. 442. (5) Authority is given the Commission to determine the reasonableness of payments made to holding companies for services rendered a subsidiary. Smith v. Illinois Bell Tel. Co., 282 U.S. 133.

Fitzsimmons, C. Cooley, C., concurs; Westhues, C., not sitting.

OPINION

FITZSIMMONS

City Utilities Company, a Delaware corporation, not licensed to do business in Missouri, made application to the Missouri Public Service Commission for an order granting the consent of the Commission to the applicant company to acquire and hold more than ten per cent of the total capital stock of St. Louis Public Service Company, a street railroad corporation, existing under Missouri law and operating as a public utility the street car lines in the city and county of St. Louis. The city of St. Louis, on its own behalf and Henry S. Priest on behalf of certain stockholders of St. Louis Public Service Company, intervened and opposed before the Commission the application of City Utilities Company. The Commission granted the application and overruled the motions of interveners for a rehearing. Interveners then sued out of the Circuit Court of Cole County writs of certiorari, or of review as the statute also calls them. [Sec. 5234, R. S. 1929.] After consolidating the separate review causes of the interveners and after a hearing on the evidence introduced before the Commission and certified up by it, the circuit court entered judgment affirming the order of the Commission. From this judgment the interveners duly appealed. Interveners' motions for rehearing before the Commission "set forth specifically the ground or grounds," as Section 5233, Revised Statutes 1929, requires, on which they considered the order of the Commission "to be unlawful, unjust or unreasonable." The writs of review were "for the purpose of having the reasonableness or lawfulness of the original order of the Commission inquired into and determined." [Sec. 5234, R. S. 1929.] The judgment of the trial court therefore in effect found that the order of the Commission was reasonable, just and lawful. The correctness of this judgment is for our decision. The questions raised are of first impression in the courts of Missouri.

For brevity, the applicant, City Utilities Company, sometimes will be called "Utilities Company" and St. Louis Public Service Company, "Public Service Company." The Utilities Company, in its...