Court Opinion

ID: 8014767
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:03:04.095545+00
Date Added: 2024-06-11T16:35:21.244712
License: Public Domain

OPINION.
FOX, J.
It will be observed that this proceeding has been pending for more than four years, and the Attorney-General, with commendable energy and ability, sought to secure all the testimony pertinent to the issues in this proceeding.
A number of witnesses, who were supposed to know something of the methods of organization, as well as the manner of transacting business by the respondents, were introduced as witnesses and testified in this causé. This testimony has béen preserved and accompanies the report of the commissioner.
We deem it unnecessary to recite in detail the evidence as taken before the commissioner; it will suffice, to say, that it fails to show a combination or trust, created by respondents, as is sought to be prohibited by the *30statute, unless the purchasing by the American Tobacco Company, of all the property, franchises, etc., etc., of the other corporations, and its transfer of all such property rights to the Continental Tobacco Company, in and of itself, constitutes sufficient proof of a combination and trust.
With the report of the commissioner, and the exceptions to.such report before us, we deem it necessary, only, to dispose of two questions involved:
First. Were the findings and legal conclusions reached by the commissioner, as indicated in this part of the report, where he says: “The several purchases hereinbefore referred to, whereby the property of the other respondents became vested in the Continental Tobacco Company, having been for cash, your referee is of the opinion, and so holds as a matter of law, that such sales and .purchases were not unlawful, and that a person may freely do with his own whatsoever he will, provided, he does not use it in derogation of common right and to the detriment of the general welfare,” correct?
Second. Was there a, sufficient showing on the part of the State, to require the commissioner, in the exercise of a proper discretion, to longer continue this proceeding; or does the record before us disclose such a state of facts, in view of the many years that this proceeding has been pending, to warrant this court in setting aside all the findings of the c.ommigsioner, and order and require him to further proceed with the taking of testimony?
In the discussion of these propositions, it is well to consult the statute in force at the time of the filing of this information, and ascertain the limitation upon the powers of corporations.
Section 1 of the Act of 1897, so far as applicable to this controversy, provides:
“Any corporation organized under the laws of this or any other State or country for transacting or con*31ducting any kind of business in this State, or which does transact or conduct any kind of business in this • State, or any partnership or individual, or other association of persons whatsoever, who shall create, enter into, become a member of or a party to any pool, trust, agreement, combination, confederation or understanding with any other corporation, partnership, individual, or any other person or association of persons, to regulate or fix the price of any article of manufacture, mechanism, merchandise, commodity, convenience, repair, any product of mining, or any article or thing whatsoever, or the price or premium to be paid for insuring property against loss or damage by fire, lightning or storm, or to maintain said price when so regulated or fixed, or shall enter into, become a member of or a party to any pool, agreement, contract, combination or confederation to fix or limit the amount or quantity of any article of manufacture, mechanism, merchandise, commodity, convenience, repair, any product of mining, or any article or thing whatsoever, or the price or premium to be paid for insuring property against loss or damage by fire, lightning or storm, shall be deemed and adjudged guilty of a conspiracy to defraud, and be subject to penalties as provided in this act.”
Then follows the proviso, referred to by the commissioner, from which he deduces the legal conclusion that said act is unconstitutional. We will not discuss the constitutionality of this law; it is not necessarily involved in the determination of the questions presented by the record before us. Will say, however, that we do not concur with the legal conclusions of the commissioner, in respect to this statute, and it will suffice to say that this court has held otherwise. [State ex inf. v. Firemen’s Fund Ins. Co., 152 Mo. 1.]
We quote this statute, simply that we may fully comprehend its import and appreciate the evils it is intended to suppress. It will be noted that the prohi*32bitions thereof are applicable to individuals and partnerships, as well as corporations. It prohibits any corporation from creating or entering into any pool, trust, agreement, combination, confederation or understanding with any other corporation, partnership, individual or any other person, or association of persons, to regulate or fix prices or to maintain such prices, when so regulated and fixed, or to fix or limit the amount or quantity of any article of manufacture. This statute contemplates the existence of at least two or more corporations, individuals or partnerships, so as to agree or combine with each other to do the prohibited acts mentioned in the statute. In other words, it is intended to operate upon two or more corporations or individuals, who, so far as the public are concerned, indicate that they are pursuing an independent business, legitimate competitors, when in fact there is a secret agreement by which the very things condemned by the statute are accomplished. The public has rights which the law contemplates shall be respected. Neither corporations', individuals, nor partnerships are permitted to deceive or mislead the public by an apparent competition, when in fact none exists.
On the other hand, the terms of this statute are not broad enough to prohibit one corporation, in good faith,, in the legitimate pursuit of its business, from purchasing the assets of another corporation in a similar business. Its terms are applicable to individuals and partnerships, as well as corporations; its condemnation is as-pronounced against the individual as it is against the corporation; hence it follows, if this statute is to' be-construed as prohibiting corporations from purchasing, in good faith, the assets of another corporation, it must be applied with equal force to the rights and powers of individuals.
It is conceded in this proceeding, that the Continental Tobacco Company was organized under the laws of New Jersey, and that in pursuance of the certificate *33of the Secretary of State, it is authorized to do business in this State. The purposes of their organization are averred in the information; it is alleged: “That the Continental Tobacco Company is a corporation organized under and by virtue of the laws of the State of New Jersey; and that said J. G. Butler Tobacco Company, Brown Tobacco Company, Drummond Tobacco Company and Wright Brothers Tobacco Company, are corporations organized under and by virtue of the laws of the State of Missouri. The plaintiff states that all of said named respondents were so, severally, organized as corporations for the purpose of buying, manufacturing and selling tobacco; and were and áre authorized to own, maintain and operate such plants, machinery, warehouses, etc., as may be necessary to the proper conduct of their several businesses.” Thus we have clearly stated what the respondents were authorized to do under their respective charters.
The Continental Tobacco Company having been organized under the laws of New Jersey, being authorized to do business in this State, it necessarily brought with it the powers of its charter, unless restricted by the laws of this State.
In the case of Relfe v. Rundle, 103 U. S. 222, Mr. Chief Justice Waite says: “No State need allow the corporations of other States to do business within its jurisdiction unless it chooses, with perhaps the exception of commercial corporations; but if it does, without limitation, express or implied, the corporation comes in as it has been created. Every corporation necessarily carries its charter wherever it goes, for that is the law of its existence. It may be restricted in the use of some of its powers while doing business away from its corporate home, but every person who deals with it everywhere is bound to take notice of the provisions which have been made in its charter for the management and control of its affairs both in life and after dissolution.”
*34The authority, to buy, manufacture and sell tobacco, and the additional authority to own, maintain and operate such plants, machinery, warehouses, etc., as may be necessary to the proper conduct of its business, clearly granted the power to purchase any property, plants or machinery necessary to the proper conduct of their business.
We are not aware of' any law, general or special, which restricts or limits a corporation, individual or partnership, as to the contractual powers, in respect to the subject involved in this proceeding.
It is true that the lawmaking power may restrict the freedom of contracts in some directions; but the power and authority exercised by the respondents in this cause, as reported by the commissioner, if done in good faith, seem not to have been restricted. When the authority is clearly granted to the corporation or individual to contract, the principle denouncing the infringement of such rights is equally applicable to both.
This court in the case of Railroad v. Railroad, 135 Mo. l. c. 199, in discussing the power of corporations to contract, speaking through Gantt, J., said: “What corporations may lawfully do is summed up in a few words by Judge Thompson in his recent commentaries on the Law of Corporations, volume 4, section 5645, where he says: ‘In respect of the power of corporations to make contracts, two propositions may be stated: 1. That they have, by mere implication of law and without any affirmative expression to that effect in their charters or governing statutes, and of course in the absence of express prohibitions, the same power to make and take contracts, within the scope of the purposes of their creation, which natural persons have; 2. That this power, on the other hand, is restricted to the purposes for which the corporation has been created, and can not be lawfully exercised by it for other purposes.’ This statement of the law accords with the general current of authority on this subject.”
*35Judge Black, in the case of State v. Loomis, 115 Mo. 307, in the application of the principle of the right to contract, approvingly quotes from Story on the Constitution, where he very appropriately defines liberty, as used in the Constitution, and as applicable to freedom of contract. He says: “The word ‘liberty’ as used in these constitutional declarations means ■ more than freedom of locomotion. It includes and comprehends among other things, freedom of speech, the right to self-defense against unlawful violence, and the right to freely buy and sell as others may.” [2 Story on the Constitution (5 Ed.), sec. 1950.]
Continuing the discussion of the application of this principle, the learned and esteemed judge, in State v. Loomis, supra, says: “Liberty as we have seen, includes the right to contract as others may; and to take that right away from a class of persons following lawful pursuits is simply depriving such persons of a time-honored right which the Constitution undertakes to secure to every citizen. ’ ’
Judge Cooley in treating of this subject, says: “To forbid an individual or a class the right to the acquisition or enjoyment of property in such manner as should be permitted to the community at large, would be to deprive them of their liberty in particulars of primary importance to their ‘pursuit of happiness;’ and those who should claim a right to do so ought to be able to show a specific authority therefor, instead of calling upon others to show how and where the authority is negatived.” [Cooley’s Const. Lim. (6 Ed.), 484.]
Upon the power of corporations to transfer property, the rule is very clearly announced in 7 American and English Encyclopedia of Law (2 Ed.), p. 734. In the text we find the rule thus stated: “And by the weight of authority, both in England-and the United States, a strictly private commercial corporation, owing no peculiar duties to the public, may, with the consent of all the shareholders, and in the absence of express or im*36plied restrictions in its charter, or prejudice to the rights of creditors, transfer all of its property to another corporation or person, if the latter is capable of taking.”
The Supreme Court of Texas, in Gates v. Hooper, 39 S. W. 1079, very clearly interprets the meaning of the terms ‘‘trust and combination;” it says: “In order to constitute a trust, within the meaning of the statute, there must be a ‘ combination of capital, skill or acts by two or more. ’ £ Combination, ’ as here used, means union or association. If there be no union or association by two or more of their £ capital, skill or acts, ’ there can be no ‘combination,’ and hence no ‘trust.’ When we consider the purposes for which the ‘combination’ must be formed, to come within the statute, the essential meaning of the word ‘combination,’ and the fact that a punishment is prescribed for each day that the trust continues in existence, we are led to the conclusion that the union or association of ‘capital, skill or acts’ denounced is where the parties in the particular case designed the united co-operation of such agencies, which might have been otherwise independent and competing, for the accomplishment of one or more of such purposes. In the case stated in the petition there is no ‘ combination. ’ The plaintiff bought defendant’s goods, together with the good-will of his business, both of which were subjects of purchase and sale; and, in order to render the sale of the good-will effectual, the seller agreed that he would not, for one year thereafter, do a like business in that town. This was but a kind of covenant or warranty that the purchaser should have the use and benefit of such good-will during that year; for it is clear that, if the seller had immediately engaged m a like business at the same place, the purchaser would have had no benefit therefrom. By this transaction neither the capital, skill nor acts of the parties were brought into any kind of union, association or co-operative action.”
*37The Continental Tobacco Company simply exercised a legal right, to incorporate and conduct its business, if the purchase of the plants as owned by the American Tobacco Company was made in good faith, in the legitimate conduct and management of its business ; then the conclusion reached by the commissioner in his report, that such transaction was not unlawful, was • correct.
That the respondent had the right to organize a corporation, we think is clear.
The laws of this State are broad enough to reach individuals who undertake to organize a corporation that would create a trust in itself; but where the corporation is alleged to be duly organized, then the condemnation of the statute as applicable to it, is not in the method of its organization; but by its express terms, it denounces and prohibits the unlawful acts, as a legal existing corporation.
It was a legitimate inquiry by the commissioner, as to the integrity and good faith of the transfer by the American Tobacco Company of all its assets to the Continental Tobacco Company, and we have no hesitation in saying, considering the amount involved, the extent and far-reaching scope of the transaction, it was sufficient in itself to arouse in the mind of the Attorney-General a strong suspicion, yes, even a strong probability, that a trust was being created; and warranted his prompt action in the interest of the public, by filing the information herein.
However, it must be remembered that this proceeding partakes of the nature of a criminal prosecution, severe penalties are imposed, hence, it is not sufficient to warrant a finding adverse to respondents, that we may entertain strong suspicions, or even strong probabilities, of their guilt. Such conclusions should only be reached upon a clear showing by the testimony, fully satisfying the minds of the court that they were guilty *38of the violations of the law as charged in the information.
The case of Distilling Co. v. People, 156 Ill. 448. is distinguished from this case by reason of the facts. In that case there was a trust formed by a number of unincorporated associations, and as was shown by the testimony, to evade the condemnation of the statute. This same trust of unincorporated associations, incorporated and conducted the business along the same lines, and with a similar purpose. The court said: “That corporation thus succeeds to the trust, and its operations are to be carried on in the same way, for the same purposes, and by the same agencies, ajs before.”
The commissioner, in the case before us, finds the facts just the reverse of the Illinois Distilling case. The commissioner, who is one of the circuit judges of this State, has heard the testimony, had the witnesses before him, and reports that from the evidence adduced, there was nothing unlawful in the sale and purchase of the assets of the corporations, as detailed in the report. We will not disturb the finding of the commissioner in that respect.
This brings us to the question as to the further continuance of this cause, for the reasons disclosed by the record. Pending the hearing of testimony before the commissioner, the State presented the following application for the production of certain witnesses, books and papers:
“Now comes Edward C. Crow, Attorney-General of the State of Missouri, who prosecutes for the State of Missouri in this behalf, and states and informs that J. B. Duke of 111 Fifth street, New York City, is the president of the Continental Tobacco Company, one of the defendants herein, and that W. H. McAlister of 111 Fifth street, New York City, in the State of New York, is secretary of the said defendant, the Continental Tobacco Company. That the said J. B. Duke and W. H. McAlister are non-residents of the State of Missouri *39and are without the jurisdiction of the court in which said cause is pending, and that they are valuable and material witnesses for plaintiff in said cause and have in their possession certain books and documents which are material and necessary evidence on the part of this plaintiff. That among the books, papers and documents in the care, custody and possession of the said W. H. McAlister, secretary of the aforesaid Continental Tobacco Company, one of the defendants herein, is the stock book of said company containing a list of the stockholders and the number of shares held by each prior to and on the 1st day of February, 1899; the secretary’s minute book containing an account of the actions and transactions of the board of directors and the stockholders of said company prior to and on the 1st day of February, 1899, together with the book, books, paper, papers, document and documents showing a list of the assets and holdings of the said Continental Tobacco Company and the value thereof, prior to and on the 1st day of February, 1899, and the date of acquiring the same; that said books, papers and documents are necessary and material evidence to the issues in said cause. That said Edward C. Crow, AttomeyG-eneral aforesaid, further states that he desires to take the evidence of said J. B. Duke and W. H. McAlister and to introduce in evidence the books, papers and documents aforesaid, at the court room of Division No. 2 of the Supreme Court of Missouri, in the Supreme Court building at the City of Jefferson, county of Cole and State of Missouri, on the 27th day of March, 1901,-between the hours of nine o’clock in the forenoon and 5 o ’clock in the afternoon of said day, and if not completed thereon to be continued from day to day until the same is for the time concluded. And for the purpose of taking said testimony and the introduction of said evidence the said Edward C. Crow desires the appearance and attendance of the said J. B. Duke and W. H. McAlister at the place and time aforesaid. Wherefore, *40the said Edward C. Crow, Attorney-Genreal aforesaid, requests and prays the Hon. J. P. Butler, commissioner as aforesaid, to immediátely issue a notice in writing directed to Messrs. Boyle, Priest & Lehmann, a law firm composed of Henry S. Priest, W. P. Boyle, and P. W. Lehmann, whose office is located in the Laclede Building at St. Louis, Missouri, and that a like notice immediately issue in writing directed to Hon. Martin L. Clardy, an attorney at law of St. Louis, Missouri, who, together with Messrs. Boyle, Priest & Lehmann, are the attorneys of record for the said defendant Continental Tobacco Company, a corporation organized and existing under the laws of the State of New Jersey, and a like notice directed to Pauntleroy & Howe, attorneys of record for the remaining respondents, notifying the said attorneys of record for said Continental Tobacco Company and the remaining respondents herein, that the testimony of the salid J. B. Duke and W. H. McAlister is desired in said cause and require the said attorneys of record in said cause to have said J. B. Duke and W. H. McAlister, president and secretary, respectively, of the aforesaid defendant Continental Tobacco Company, at the place and on the day, date and time above set out, then and there to testify in said cause, and to require the said W. H. McAlister and J. B. Duke to produce in evidence the books, papers and documents above mentioned and described.”
This application is predicated upon section 8983, Revised Statutes 1899, which is as follows:
“Whenever any proceeding shall be commenced in any court of competent jurisdiction in this State by the Attorney-General against any corporation or corporations, individual or individuals or association of individuals, or joint stock associations or copartnership, under the law against the formation and maintenance of pools, trusts of any kind, monopolies in commodities, combinations or organizations in restraint of trade to dissolve the same or to restrain their formation *41or maintenance in this State, then in snch case, if the Attorney-General desires to take the testimony of any officer, director, agent or employee of any corporation or joint stock association proceeded against, or in case of a copartnership, any member of said partnership or any employee thereof, in any court in which said action may he pending or before any person duly authorized by any court to take testimony in any snch action; and the indiyidual or individuals, whose testimony is desired, are without the jurisdiction of the courts of this State, or reside without the State of Missouri, then, in such case, the Attorney-General shall file in said court in term time, or in vacation, or with any person duly authorized to take the testimony in such case, a statement in writing, setting forth the name or names of the persons or individuals whose testimony he desires to take and the time when, and the place in the State where he desires the said persons to appear; and, thereupon, the court in which, or one of the judges thereof, or the person before whom testimony is being taken, shall issue immediately a notice, in writing, directed to the attorney or attorneys of record in said cause, or any agent, officer or employee of any corporation, joint stock association or copartnership which are parties to said action, notifying said attorneys of record, or officer, agent or employee, that the testimony of the person or persons named in the application of the Attorney-General is desired, and requiring said attorney or attorneys of record, or said officer, agent or employee, to whom said notice is delivered or upon whom the same is served, to have said officer, agent, employee or representative of said copartnership or agent thereof whose evidence it is desired to take at the place named in the application of the Attorney-General and at the time fixed in said application, then and there to testify: Provided, however, that the said application shall always allow, in fixing said time, the same number of days for travel to reach the designated point in Missouri that *42would be now allowed by law in case of taking depositions : Provided, also, in addition to the above named time, six days shall be allowed for the attorney or attorneys of record, or the agent, officer or employee on whom notice is served, to notify the person or persons whose testimony is to be taken. Service of said notice and the return thereon, in writing, may be made by any one authorized by law to serve a subpoena.”
There follow sections 8984 and 8985, which provide substantially that upon failure to appear and testify, as ordered, all defenses to such proceeding will be stricken out, and judgment by default rendered, upon the charges in the information.
The commissioner made the order as prayed for in the petition filed; but, subsequently, set it aside. The report of the commissioner assigns as his reason for setting aside the ordfer, that the statute authorizing it is unreasonable, oppressive, void and unconstitutional.
We will not undertake to pass upon the constitutionality of this statute. It is not necessarily involved in this record. The witnesses were not compelled to appear, nor were any questions propounded to them which tended to incriminate them. The statute' is a very strong one and far-reaching in its results; when witnesses are compelled to obey it then will be the appropriate time to determine its validity. Conceding for the purposes of this case, that this statute is constitutional, that it may not be subject to the criticism in the report of the commissioner, in which he says it “is unreasonable and oppressive,” the courts that are called upon to enforce it, must give it a reasonable interpretation. Under the- statute, the application for the production of witnesses may be made to the court, or to the commissioner taking the testimony. We take it that the court before issuing its process, under the provisions of this strong and far-reaching statute, where it requires witnesses, without compensation, to come from the remotest parts of the Government, would, *43at least, require a clear showing in the application, not only of the materiality of the testimony, but as well, the competency of the witnesses.
The statement that the president and secretary of this corporation can furnish valuable and material testimony, is not such a showing as would authorize either the commissioner or the court to put in motion the provisions of this statute. If by merely giving the names of the parties and the statement that their testimony is valuable and material, the court must issue the process, then the terms as applied to this statute that it is “unreasonable and oppressive” are quite appropriate. As to the application for the production of certain books and papers, will say that the commissioner followed the precedent in the case of State ex rel. Attorney-General v. Union Trust Co. and Mississippi Valley Trust Co., at the October term, 1897, of this court. While there was no opinion written denying the motion, yet a similar motion (except it was much more specific as to the materiality of the books and’ papers) was filed by‘the Attorney-General, praying the court to compel the trust companies to produce certain books, as evidence in the causes then pending against them. This court, by the following order, overruled this motion:
“Now at this day the court having fully considered and understood the motion heretofore filed for an order for the production and inspection of certain books and papers, doth order that said motion be, and the same is hereby denied.”
It may be said that the motion filed in these cases was before the enactment of this statute, and not based upon it, but it must be remembered that the Union Trust and Mississippi Valley Trust companies were residentsi of this State, and if it had been deemed proper and appropriate to exercise the power, no statute was required. The only purpose of this statute was to provide a means of securing the witnesses contemplated by it, who were non-residents of the State.
*44With the record before us, the exception to the report of the commissioner in setting aside the order, issuing the process to the attorneys of respondents, and a refusal to issue, stands in the nature of an application for a continuance of this proceeding that other testimony may be taken.
Measured by the well-settled rules as to the essential requirements of applications of this character, it fails to make the clear showing indicating in what respects the testimony is material and relevant to the inquiry before the commissioner.
The Attorney-General has brought before the commissioner a number of witnesses, presumably supposed to know the entire nature of this transaction, and their testimony was taken and failed to disclose a violation of the provisions of the statute or of the common law in force in this State, in relation to combinations and trusts. We therefore see no reason why this proceeding should be further prolonged. The report of the •commissioner, in respect to the finding of the facts and his legal conclusions upon that particular finding, will be confirmed, and the respondents discharged.
All concur.