The State ex inf. Hadley v. Standard Oil Co.

• Decision Date: 09 March 1909
• Parties: THE STATE ex inf. HADLEY, Attorney-General, v. STANDARD OIL COMPANY, of Indiana, WATERS-PIERCE OIL COMPANY and REPUBLIC OIL COMPANY, Corporations
• Court: Missouri Supreme Court

116 S.W. 902

218 Mo. 1

THE STATE ex inf. HADLEY, Attorney-General, v. STANDARD OIL COMPANY, of Indiana, WATERS-PIERCE OIL COMPANY and REPUBLIC OIL COMPANY, Corporations

Supreme Court of Missouri

March 9, 1909

Writ of ouster awarded.

Herbert S. Hadley, Attorney-General, John Kennish and Rush C. Lake Assistant Attorneys-General, and Elliott W. Major Attorney-General, substituted for Herbert S. Hadley, for informant.

(1) The ownership by the Standard Oil Company of New Jersey of the stock of the Republic Oil Company and the Standard Oil Company of Indiana, and over two-thirds of the stock of the Waters-Pierce Oil Company, tends to show the existence of a trust, combination, understanding and agreement among respondents, and also shows the method or form in which such a trust, combination, understanding and agreement was accomplished and by which it was made effective. State ex inf. v. Oil Co., 194 Mo. 124; State ex inf. v. Insurance Co. 152 Mo. 1; State ex inf. v. Packing Co., 173 Mo. 356; State ex inf. v. Tobacco Co., 177 Mo. 13; Finck v. Granite Co., 187 Mo. 244; Brewing Co. v. Belinder, 97 Mo.App. 64; Walsh v. Assn. of Plumbers, 97 Mo.App 280; Lead Co. v. Paint Co., 80 Mo.App. 247; Froelich v. Benefit Assn., 93 Mo. 383; Northern Securities Co. v. U.S. 193 U.S. 197; Pipe and Steel Co. v. U.S. 85 F. 764; Railroad v. Searles, 37 So. 939; State v. Oil Co., 49 Ohio St. 137; People v. Gas Trust, 130 Ill. 268; People v Distilling Co., 156 Ill. 448; Harding v. Glucose Co., 182 Ill. 551; Richardson v. Buhl, 77 Mich. 632; Nebraska v. Distilling Co., 29 Neb. 700; People v. Refining Co., 54 Hun 354, 2 L. R. A. 1; Texas v. Oil Co., 15 L. R. A. 598; Coal Co. v. People, 214 Ill. 421; Bishop v. Preserves Co., 48 Am. St. Rep. 317; 2 Cook on Corporations, sec. 503; 20 Am. and Eng. Ency. Law, 846; Noyes' Intercorporate Relations, sec. 294; Eddy on Combinations, secs. 620, 621 and 622; Beach on Trusts, chapters 158 and 167. (2) It is not necessary to show the existence of a trust, combination or agreement in restraint of trade and competition by direct evidence. It may be shown by facts, circumstances and conditions which indicate the existence of a combination, trust and agreement in restraint of trade and competition. State ex inf. v. Oil Co., 194 Mo. 124; State ex inf. v. Insurance Co., 152 Mo. 1; State ex inf. v. Packing Co., 173 Mo. 356; State ex inf. v. Tobacco Co., 177 Mo. 13; Lead Co. v. Paint Co., 80 Mo.App. 247; Pipe and Steel Co. v. U.S. 85 F. 764; Coal Co. v. People, 214 Ill. 421. (3) The existence of a trust, combination or agreement by which trade and competition may be limited and restricted is unlawful. To entitle the State to a judgment in this case, it is not necessary to show that trade and competition were in fact limited or restrained by the existence of the combination, trust and agreement among respondents. It is the power, by reason of such combination, to restrict trade and competition which the law prohibits and condemns. State ex inf. v. Oil Co., 194 Mo. 124; State ex inf. v. Insurance Co., 152 Mo. 1; State ex inf. v. Packing Co., 173 Mo. 356; State ex inf. v. Tobacco Co., 177 Mo. 13; Brewing Co. v. Belinder, 97 Mo.App. 64; Walsh v. Assn. of Master Plumbers, 93 Mo.App. 280; Lead Co. v. Paint Co., 80 Mo.App. 247; Northern Securities Co. v. U.S. 193 U.S. 197; Pipe and Steel Co. v. U.S. 85 F. 764; Oil Co. v. State, 19 Tex. Civ. App. 1; Coal Co. v. People, 214 Ill. 421; Nebraska v. Distilling Co., 29 Neb. 700; Richardson v. Buhl, 77 Mich. 632; Nestor v. Brewing Co., 161 Pa. St. 473; Ellis v. Inman Co., 131 F. 182; Builders' Assn. v. Niezwoski, 95 Wis. 129; Coal Co. v. Coal Co., 68 Pa. St. 173; United States v. Freight Assn., 166 U.S. 290; Railroad v. Searles, 37 So. 939; Beach on Trusts, ch. 167. (4) The agreement for the division of trade territory and the division of trade territory between the Waters-Pierce Oil Company and the Standard Oil Company was itself unlawful, because in restraint of trade and competition. It is also a fact and condition which tends to establish the existence of the combination and trust. State ex inf. v. Oil Co., 194 Mo. 124; State ex inf. v. Insurance Co., 152 Mo. 1; Brewing Co. v. Belinder, 97 Mo.App. 64, Northern Securities Co. v. U.S. 193 U.S. 197; Pipe and Steel Co. v. U.S. 85 F. 764; Oil Co. v. Adoue, 15 L. R. A. 598; Oil Co. v. Nanemaker, 142 Ind. 560; Coal Co. v. Coal Co., 68 Pa. St. 173. (5) The existence and operation of the Republic Oil Company deceived and misled the public into the belief that it was an independent and competing company of each of the other respondents; this was unlawful and had the effect of limiting and restraining trade and competition. Its existence and operation also tended to establish the existence of the combination and trust. Pipe and Steel Co. v. U.S. 85 F. 764; Craft v. McConnoughy, 79 Ill. 346; More v. Bennet, 15 L. R. A. 361; State ex inf. v. Tobacco Co., 177 Mo. 13. (6) The acts, plans and purposes of the members and officers of a corporation in its organization and the management of its business are in law the acts, plans and purposes of the corporation itself, and if such acts, plans and purposes are in violation of the law against combinations and trusts, the corporation thereby becomes guilty and subject to its penalties. State ex inf. v. Tobacco Co., 177 Mo. 13; Lead Co. v. Paint Co., 80 Mo.App. 247; Northern Securities Co. v. U.S. 193 U.S. 197; Pipe and Steel Co. v. U.S. 85 F. 764; Nebraska v. Distilling Co., 29 Neb. 700; Richardson v. Buhl, 77 Mich. 632; People v. Refining Co., 54 Hun 354, 2 L. R. A. 1; Railroad v. Searles, 37 So. 939; Noyes' Intercorporate Relation, sec. 294; Eddy on Combinations, secs. 620, 621, 622. (7) Under the provisions of our Anti-Trust Statute, all combinations, contracts, agreements or understandings in restraint of trade and competition are unlawful. A contract or agreement in restraint of trade made prior to the enactment of this law, but not in violation of the principles of the common law, became illegal upon the enactment of our Anti-Trust Statute. After the enactment of this law, those participating in such contract or agreement, would occupy the same position as if the contract had been created after the enactment of the Anti-Trust Statute. Finck v. Granite Co., 187 Mo. 244; Pipe & Steel Co. v. U.S. 85 F. 764; U. S. v. Freight Assn., 166 U.S. 290; U. S. v. Traffic Assn., 171 U.S. 505.

H. S. Priest and J. D. Johnson for respondent Waters-Pierce Oil Company; Charles Nagel of counsel.

(1) There is no evidence to sustain the charge that the Waters-Pierce Oil Company combined or confederated with the Standard Oil Company of Indiana or the Republic Oil Company or any other company, to fix and maintain the prices or limit the products of petroleum in the State of Missouri. (2) The Waters-Pierce Oil Company, being sued as a corporation, is only answerable for what it has done as a corporation. It is in no wise responsible for the ownership of its stock, nor answerable for the conduct of its shareholders, provided that conduct is not so expressed as to become in fact or in law its corporate act. Com. v. Water Co., 47 A. 843, 119 Pa. St. 569; People v. Refining Co., 18 Am. St. Rep. 843, 121 N.Y. 582. (3) The Supreme Court has no jurisdiction of this case by quo warranto. (a) It is a criminal prosecution; (b) The statutes under which it is instituted provides the mode of procedure and appoints the forum in which it is to be conducted, and this is exclusive of all other modes. Quo warranto cannot be used as a criminal procedure. To so use it would violate the constitutional provisions relating to the mode of instituting and trying criminal charges. State v. Hardin, 1 Ired. (N. C.) 49; State v. Jockey Club, 98 S.W. 539. This is a proceeding to ascertain, first, whether an offense has been committed under the Anti-Trust Statute, and, if so, to inflict the forfeiture imposed by section 8971. This section inflicts forfeiture of corporate rights and franchises upon domestic corporations and banishment upon foreign corporations doing business in this State under license. The forfeiture or banishment depends entirely upon the innocence or guilt of the respondents. The forfeiture or banishment is only a punishment prescribed for guilt. One domestic and two foreign corporations are joined as respondents. The former derives all its corporate franchises from this State; the two latter derive none whatever. The only community of interest which justifies a joinder of the domestic with the foreign corporations must lie in the agreement and combination charged in the information, otherwise there is a clear misjoinder of defendants, because neither has or can have any interest whatever in the charter of the other. They are only joined because they are alleged to be joint malefactors under the Anti-Trust law. No corporation can be joined with another corporation when charged by common law proceeding in quo warranto for an abuse or usurpation of corporate rights, because such a charge relates entirely to the individual contract between it and the State. People v. DeNiel, 15 Mich. 164; Vance v. Gaylor, 25 Ark. 32; Com. v. Turnpike Co., 5 Cush. (Mass.) 509. Whatever name may be given to the character of the proceeding, it is essentially criminal in all the definitions of criminal prosecution. Cancemi v. People, 18 N.Y. 136; Harger v. Thomas, 44 Pa. St. 136; Ely v. Thompson, 10 Ky. 74; Pardee v. Smith, 27 Mich. 43; Com. v. Certain Intox. Liquors, 127 Mass. 452; Com. v. Certain Intox. Liquors, 80 Mass. 375; Rex v. Lawrence, 43 U. C. Q. B. 164; Com. v. Jones, 10 Bush (Ky.) 725; Reg. v. Richardson, 1 Burr. 517; 3 Dill., Mun. Corp. sec. 251; 23 Am. and Eng. Ency. Law, 632. Again, the right to determine the innocence or guilt of persons charged with the...