State ex rel. Union Electric Light & Power Co. v. Public Service Com'n

• Decision Date: 03 August 1933
• Docket Number: 32782
• Citation: 62 S.W.2d 742,333 Mo. 426
• Parties: State ex rel. Union Electric Light & Power Company, Appellant, v. Public Service Commission of the State of Missouri, Laclede Power & Light Company, a Corporation, and the City of St. Louis
• Court: Missouri Supreme Court

62 S.W.2d 742

333 Mo. 426

State ex rel. Union Electric Light & Power Company, Appellant, v. Public Service Commission of the State of Missouri, Laclede Power & Light Company, a Corporation, and the City of St. Louis

No. 32782

Supreme Court of Missouri

August 3, 1933

Appeal from Cole Circuit Court; Hon. W. S. Stillwell Judge.

Affirmed.

Theodore Rassieur and James P. Aylward for appellant.

(1) If the evidence shows that the relief asked for will not be detrimental to the public interest, and the evidence further shows that in the exercise of a wise discretion the relief ought to be granted, then the denial of relief is arbitrary and unlawful, if denied solely because the evidence does not also affirmatively show that the public will be benefited. Electric Pub. Utilities Co. v. West, 140 A. 844; City v. Pub. Serv. Com., 288 P. 560. (2) This court is not bound by the Commission's conclusions of fact, but may, upon review of the evidence, reach its own conclusions. Sec. 5234, R. S. 1929; Railroad v. Pub. Serv. Com., 266 Mo. 346; Lusk v. Atkinson, 268 Mo. 118; State ex rel. v. Pub. Serv. Com., 277 Mo. 193; State ex rel. v. Pub. Serv. Com., 294 Mo. 369; State ex rel. v. Pub. Serv. Com., 321 Mo. 301; State ex rel. v. Pub. Serv. Com., 324 Mo. 275; State ex rel. v. Pub. Serv. Com., 310 Mo. 333. (3) Under Section 5195 the Public Service Commission is vested with the discretion to determine whether the acquisition of shares of one utility by another should be authorized, but the Commission cannot act arbitrarily; such exercise of discretion must be reasonably supported by the evidence; an order refusing such authority to purchase, when contrary to the evidence in the case, is unlawful. Electric Pub Utilities Co. v. West, 140 A. 843; Sec. 5234, R. S 1929; Laws 1913, sec. 111; State ex rel. Railroad Co. v. Pub. Serv. Com., 271 Mo. 161; State ex rel. Kansas City P. & L. Co. v. Pub. Serv. Com., 310 Mo. 333; State ex rel. S.W. Bell Tel. Co. v. Pub. Serv. Com., 233 S.W. 430; Ry. Co. v. Pub. Serv. Com., 192 S.W. 462. (4) Securities Investing Trust is not a corporation or association, but a pure common-law trust, formed under the laws of Massachusetts. Under the laws of that state, when the declaration of trust provides that all powers are vested in the trustees and none are reserved or vested in the cestuique trust, then it is a pure common-law trust and not a corporation or partnership. District of Columbia v. Seaboard Inv. Trust, 1930 A. P. U. R. p. 417; Frost v. Thompson, 219 Mass. 360, 106 N.E. 1009; Williams v. Milton, 215 Mass. 1, 102 N.E. 359; Bouchard v. First People's Trust, 253 Mass. 351, 148 N.E. 895; Thompson on Corporations (3 Ed.) sec. 6736; Darling v. Buddy, 318 Mo. 802.

Bennett C. Clark, Fordyce, White, Mayne & Williams and Ragland, Otto & Potter for Laclede Power & Light Co.

(1) That the acquisition by it of the Laclede stock would be in the public interest was thus made by appellant the basis of the relief it sought. The burden was therefore upon it to establish the ground it so asserted. In addition to that it was not entitled to the relief it asked, under recent decisions of this court, without affirmatively showing that the acquisition of the stock in question would be in the public interest. State ex rel. v. Public Service Commission, 56 S.W.2d 398; State ex rel. City of St. Louis v. Public Service Commission, No. 31,780, decided at the last term in Division 2, not yet reported. (2) The Public Utility Law of Missouri, under which the applicant in this case has operated for many years, provides: "No such corporation (electrical corporation) shall directly or indirectly acquire the stock or bonds of any other corporation incorporated for, or engaged in, the same or a similar business or proposing to operate or operating under a franchise from the same or any other municipality . . . unless, in either case, authorized so to do by the Commission." Sec. 5195, R. S. 1929. The Union Electric Light and Power Company, which now seeks the benefits of the above provisions, has under the evidence in this case violated both the spirit and the letter of the statute. The Commission has held that it will not by its order authorize that to be done which has already been done in violation of the statutes; that it may authorize something to be done, but that it has no authority to "approve" that which has been done in violation of law. In re Application of Mutual Light & Power Co., 16 Mo. P. S. C. 365; In re United Traction Co., P. U. R. 1930 C, 6.

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

(1) In cases where the evidence reasonably supports a finding that the transfer of the shares to a corporation will be detrimental to the public interest, the Commission is without power, under the statute, to grant the application. State ex rel. v. P. S. C., 56 S.W.2d 398; Sec. 5195, R. S. 1929. (2) Section 5195 forbids an electrical corporation to directly or indirectly acquire the stock or bonds of any other corporation engaged in the same or similar business or operating under a franchise from the same or any other municipality. Sec. 5195, R. S. 1929. (3) The question before this court is whether the order issued was reasonable and the burden is upon the appellant to show that the order is not reasonable. If the order is reasonable on any theory, neither the trial court nor the Supreme Court is authorized to set aside the order of the Commission. Sec. 5247, R. S. 1929; State ex rel. v. Busby, 274 S.W. 1071.

Hyde, C. Ferguson and Sturgis, CC., concur.

OPINION

HYDE

This is an appeal from the judgment of the Circuit Court of Cole County affirming an order of the Public Service Commission. Appellant made application to the Public Service Commission to purchase 3,330 voting trust certificates of the Laclede Power and Light Company at $ 214.06 each, a total of $ 712,817.27, and stated in the application as reasons therefor:

"That the City of St. Louis is now being served with electrical energy by Union Electric Light and Power Company, petitioner herein, and said Laclede Power & Light Company, the only electrical utility corporations operating in said City, and it is in the public interest that petitioner be permitted to acquire said voting trust certificates for the reason that such acquisition will bring about closer cooperation between said utility corporations, and thus make it possible to improve the economic utilization of electrical energy produced and distributed by them in said City."

The owners of the certificates from whom application to purchase was made and the amounts to be paid to each was shown to be as follows:

No. of

Purchase

"Names of Sellers

Certificates

Price

Securities Investing Trust

2440

$ 518,389.57

North American Edison Company

850

180,586.56

Edison Securities Corp

40

13,641.14

Total

3330

$ 712,817.27"

These certificates represented approximately twenty-six per cent of the capital stock of the Laclede Company, its total outstanding shares being 13,183 of which 245 shares were held by individual owners. There remained 9,603 shares (all except five directors' qualifying shares) which were owned by a holding company, the Utilities Power & Light Corporation. The Laclede Company owned an electrical distribution system operating chiefly in the business district of the city of St. Louis. The holding company which controlled it also controlled the Laclede Gas Light Company, which furnishes gas in St. Louis. Appellant is a competitor of the Laclede Company in the distribution of electricity in St. Louis and was also in the gas business. It, also, is controlled by a holding company, all of its common stock being owned by the North American Edison Company. All of the common stock of the North American Edison Company is owned by the North American Company, which likewise controls the Edison Securities Corporation. The Securities Investing Trust, which owns the greater part of the shares of the Laclede Company which appellant seeks permission to purchase, was formed for the express purpose of acquiring these shares by Frank L. Dame, president of the North American Company, chairman of the board of the North American Edison Company, vice-president of the appellant company, and a director in all three companies, together with Edwin Gruhl, vice-president and general manager of the North American Company, president of the North American Edison Company and director in both of these companies, as well as appellant company. While they are the real owners of this trust, it is composed of three trustees acting under declaration of trust made pursuant to the laws of Massachusetts. These various interests were called the "North American family" by Mr. Egan, appellant's president, who was also a director of the North American Edison Company. He testified that the manner of acquisition of the Laclede stock by the prospective sellers was as follows:

"The stock was acquired some four years ago. This stock was held in friendly hands and accumulated with the idea that eventually it might be sold to Union Electric Light and Power Company, I was partly responsible for the purchase of it by the present owners. I suggested that it might be purchased. My suggestion was to the president and to the vice-president and general manager of the North American Company. The suggestion came about the time when they began the purchases. I directed the purchase of part of it. My purchases were for The North American Company. I purchased about 700 shares. It was paid for by checks of Union Electric Light and Power Company, made payable to my order, and endorsed by me to G. H. Walker & Company. Payment was by checks. . . .

"No shares were purchased by Union Electric except as agent. Union...