State ex rel. Hamilton v. Standard Oil Co. of California

• Decision Date: 22 January 1934
• Docket Number: 24788.
• Citation: 176 Wash. 231,28 P.2d 790
• Parties: STATE ex rel. HAMILTON, Atty. Gen., v. STANDARD OIL CO. OF CALIFORNIA et al.
• Court: Washington Supreme Court

28 P.2d 790

176 Wash. 231

STATE ex rel. HAMILTON, Atty. Gen., v. STANDARD OIL CO. OF CALIFORNIA et al.

No. 24788.

Supreme Court of Washington, En Banc.

January 22, 1934

Appeal from Superior Court, Thurston County; D. F. Wright, Judge.

Proceeding in the nature of quo warranto and bill for restraining order by the State, on the relation of G. W. Hamilton, Attorney General, against the Standard Oil Company of California and others. From an order denying all temporary relief prayed for, plaintiff appeals.

Affirmed.

G. W Hamilton and William H. Pemberton, both of Olympia, for appellant.

Battle Hulbert & Helsell, Bogle, Bogle & Gates, Ray Dumett, Eggerman & Rossling, Meier & Meagher, Grosscup & Morrow, Allen Froude, Hilen & Askren, and Stratton & Kane, all of Seattle, for respondents.

BEALS Chief Justice.

This proceeding, which is in the nature of quo warranto, was instituted by the state of Washington, on the relation of its Attorney General, against a number of corporations, all authorized to engage in business within this state; each of the defendants operating as a refiner of petroleum and a dealer in petroleum products.

The original complaint was filed July 25, 1933, together with an application for the appointment of a temporary receiver, upon which an order to show cause was issued.

September 5 an amended complaint was filed in which it was alleged that defendants comprise all of the major dealers in petroleum products in the state of Washington; that during the year 1932, defendants entered into a pooling or trust agreement or conspiracy for the purpose of regulating and controlling the prices to be paid in the state of Washington by retail dealers and others in petroleum products, and for the purpose of limiting competition in the business of buying and selling such products.

The amended complaint further alleged that a similar agreement or conspiracy had existed between defendants for more than three years prior to 1932, and that pursuant to such combination the prices of gasoline, kerosene, lubricating and other oils had been maintained at an unreasonably high figure, and that competition in the purchase and sale of such products had been prevented because there had been no actual competition between defendants, who had acted in concert although apparently in competition, to the damage and detriment of the people of the state.

It was also alleged that defendants had indulged in false advertising and had at times, in order to stifle competition, sold their products at unreasonably low prices, thereby causing others not within their pooling agreement to withdraw from business. The arbitrary fixing of prices without any regard to supply or demand or the cost of production was also alleged, as was the disregard by defendants of the laws controlling the weighing and measuring of petroleum products.

The amended complaint contained other allegations of similar tenor, and finally alleged that the appointment of a temporary receiver to take charge of all of the properties of defendants was necessary.

The prayer was for a decree forfeiting the corporate franchises of defendants whereby they are authorized to engage in business in the state of Washington, dissolving such of said defendants as are incorporated under the laws of this state, and directing that their properties be sold and that, until the provisions of the decree should be fully accomplished, defendants be operated under a decree of the superior court.

It was further prayed that defendants be enjoined from continuing their pooling or trust agreement or from conspiring to control the price of gasoline and similar products. The appointment of a temporary receiver for each of defendants was demanded, to be followed by the appointment of a permanent receiver upon entry of the decree.

There was filed with the amended complaint an 'amended bill for restraining order,' whereby plaintiff prayed that an order by entered restraining defendants from fixing the price of gasoline sold by them to distributors in the state of Washington at more than certain prices to be specified, and that they be restrained from selling gasoline at retail from service stations controlled by them at over sixteen cents a gallon.

Plaintiff also prayed that, in case the appointment of a temporary receiver and its application for a restraining order be denied, the court impound, pending the entry of final decree herein, a certain proportion of the moneys received by defendants from the public at large for the purchase of gasoline and similar products.

Defendants responded to the bill for a restraining order by motions to quash or motions to dismiss. The matter came on regularly to be heard Before the superior court September 5, and after a hearing which lasted that day and the next, the court denied all temporary relief prayed for by plaintiff, and September 8 entered a formal order to that effect, from which order plaintiff has appealed to this court.

From the statement of facts it appears that a hearing was held August 7 upon the order issued on appellant's motion, requiring respondents to show cause why a temporary receiver should not be appointed to take possession of their properties, and that respondents then applied for a continuance. It also appears that at the close of this hearing the trial court expressed the opinion that the case could and should be heard on the merits within a reasonable time, and that the court doubted its power or jurisdiction to appoint a temporary receiver pending trial. At the close of the arguments, the court indicated that appellant's application for the appointment of a temporary receiver was denied.

The matter again came on for hearing September 5 upon appellant's bill for a restraining order, in support of which appellant had filed a showing by way of affidavits and exhibits. After argument of counsel, the court again expressed the opinion that the matter should proceed to a trial on the merits, and denied appellant any temporary relief by way of the appointment of a receiver, the issuance of a restraining order, or a decree requiring the impounding of any funds pending trial.

The action of the trial court, therefore, now Before us for review concerns only the denial by that court to appellant of any relief pendente lite, and has nothing to do with the merits of the cause.

In waging this action, appellant relies upon section 22 of article 12 of the state Constitution, forbidding monopolies and trusts, and upon Rem. Rev. Stat. §§ 2382 and 2384, the first of the two sections forbidding conspiracies, and the latter reading as follows: 'Every corporation, whether foreign or domestic, which shall violate any provision of section 2382, shall forfeit every right and franchise to do business in this state. The attorney general shall begin and conduct all actions and proceedings necessary to enforce the provisions of this section.' Rem. Rev. Stat. § 2384.

Rem. Rev. Stat. § 741, provides for the appointment of receivers, appellant relying upon the following paragraphs thereof:

'3. In all actions where it is shown that the property, fund, or rents and profits in controversy are in danger of being lost, removed or materially injured; * * *

'5. When a corporation has been dissolved or is insolvent, or is in imminent danger of insolvency, or has forfeited its corporate rights;

'6. And in such other cases as may be provided for by law, or when, in the discretion of the court, it may be necessary to secure ample justice to the parties: Provided, that no party or attorney or other person interested in an action shall be appointed receiver therein.'

Appellant, in applying for a temporary restraining order, relies upon Rem. Rev. Stat. § 718 et seq., particularly upon section 719, which reads as follows: 'When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance of some act the commission or continuance of which during the litigation would produce great injury to the plaintiff; or when, during the litigation, it appears that the defendant is doing, or threatens [threatened], or is about to do, or is procuring, or is suffering some act to be done, in violation of the plaintiff's rights respecting the subject of the action, tending to render the judgment ineffectual; or where such relief, or any part thereof, consists in restraining proceedings upon any final order or judgment,--an injunction may be granted to restrain such act or proceedings until the further order of the court, which may afterwards be dissolved or modified upon motion. * * *'

Section 722 provides for the issuance of a restraining order without notice in cases of emergency, while section 723 provides for the hearing of the application for an injunction upon affidavits.

It is undoubtedly the law that in proper cases a court of general jurisdiction may impound funds and hold them in its registry until the entry of a decree determining the title thereto.

The filing of informations in the nature of quo warranto is provided for in Rem. Rev. Stat. § 1034 et seq., section 1043 providing for the entry of a judgment of ouster or forfeiture when a defendant shall be found guilty of 'usurpation of or intrusion into or unlawfully exercising any office or franchise within this state * * *.' The following section provides for the entry of judgment against a corporation and for the appointment of a receiver therefor.

In his brief appellant concedes that a corporation might be guilty of such unlawful conduct as would subject its franchise to forfeiture, and that, notwithstanding this situation, in a proceeding instituted in the name of the state upon the...