Court Opinion

ID: 8757597
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:52:34.151662+00
Date Added: 2024-06-11T17:01:20.887266
License: Public Domain

GROSSCUP, Circuit Judge
(dissenting). I concur in the opinion of the court to the extent that it holds that the Circuit Court had jurisdiction of the cause. I agree, also, that the stockholders of- the Consumers’ Company have an ultimate interest in the Company’s assets—the trust to the people of Indianapolis first being exhausted—that would entitle them to bring this suit. My dissent is based solely on my view that under the articles of incorporation, and the statute of Indiana, the- Company is not without corporate power to manufacture fuel and illuminating gas.
In interpreting these articles and the statute, some general facts must not be overlooked. One of these is that the’life of natural gas fields is a limited life. Natural gas does not replenish itself. Another is, that gas and oil are so nearly related in origin, that when the natural gas supply fails, oil may be expected to follow. Still another is, that oil is readily converted into gas. And still another, that upon calculations based on these facts, millions of dollars have been invested in distributing systems and pipe lines; which but for oil or other gas producing mineral, available as a substitute when the natural gas supply was exhausted, would not have been invested at all. We must, I think, assume that these well known facts were in the mind of the incorporators of the Consumers’ Company; and that they ought to enter into the interpretation that should be given to the Indiana statute. With this in mind, let us look at the articles of incorporation, and the Indiana statute.
The expressed object of the corporation is “to drill and mine for natural gas, petroleum, and other minerals; ’ and to purchase, lease and otherwise acquire gas and petroleum wells, and the products thereof, and to furnish the same to its patrons for use; and by manufacture to convert the same into gas for fuel and illuminating purposes, and other articles of commerce.” Whether the power to convert “the same,” by manufacture, into gas for fuel and illuminating purposes was intended to go back to the first clause, thus including, as the material out of which the gas should be manufactured, both petroleum and other minerals; or was intended merely to go back to the clause immediately preceding, thus including, as the raw material, petroleum only; is a question we need not now decide. Unquestionably, the statutory power to manufacture out of either or both existing, the articles of incorporation could, in this respect, be amended; for though stockholders have a right to stand upon the contract, they have no right to defeat the paramount purpose of the incorporation, even though to carry out that purpose an .amendment to the articles may be necessary.
*901The paramount purpose—the purpose that moved the subscribers to make an investment of a million dollars in the distributing system in the City of Indianapolis—was not to engage in mining or manufacturing as men engage in a business venture; but to furnish the people of Indianapolis with gas at cost, for fuel and illuminants. Doubtless the proximity of the natural gas fields gave to the enterprise its origin. Doubtless it was believed that for a time, at least, these fields would furnish the supply of gas needed. But the end sought was gas, not a mining or manufacturing venture; and mining or manufacturing was looked to only as a means to that end.
Will any fair reading of these articles disclose, that one means —natural gas—being exhausted, no substitute was to be.accepted? Why, then, the clause “and by manufacture to convert the same into gas for fuel and illuminating- purposes ?” Can any reasonable construction of the articles omit that clause? Can the clause, in view of the general facts stated, be shunted off into some side or incidental meaning, such as that it referred only to the commercial products of petroleum or other minerals? I think not. I think that if this enterprise had been launched as an ordinary corporation for profit, there would be- no doubt of what the promoters contemplated—a substitution of means when that became necessary; and I cannot agree to hold, considering what was plainly written inr to the articles, that the promoters of this public enterprise are to be considered as less far sighted than would have been the promoters of an enterprise strictly for profit.
The opinion of the majority does not expressly, at least, controvert this interpretation of the articles. That opinion turns on the point that under the statute of Indiana, a corporation could not lawfully be organized that would include both the power to mine and the power to manufacture, where neither power is strictly incidental to the other. Generally speaking, the point is perhaps well taken. But applied to this case, it ignores the salient facts of the case. The salient purpose of the incorporation, as already stated, is to furnish the people of the city with a fuel and illuminant. The sole contribution of natural gas to that purpose is that natural gas brings to the consumers’ burner the carbon needful to a fuel or illuminant. But petroleum and coal contain this carbon also. The only difference between natural gas and petroleum or coal, in this respect, is, that in the case of natural gas the carbon comes to the burner in its natural state—-on the back of its own horse—while in the case of coal or petroleum, the carbon must be carried by a gas evolved, by manufacture, out of- the coal or petroleum. But in either case, the carbon is mined, and, in either case, it performs the same function, when the burner of the consumer is reached. Now does the mere fact, that in one case the carbon reaches the burner in almost precisely the state it left the mine, while in the other it must be transferred, in transitu, to a carrier that will bring it up to the burner, make any difference in the incorporability of the enterprise as a whole? Is the mere converting process, pursuant to the ultimate end in view, a thing essentially separate from, and, *902within the meaning of the Indiana decisions, not incidental to, the practical general purpose for which the corporation was organized? I cannot think so. I cannot believe that the people of Indianapolis are to be deprived of an investment, into which a million of dollars have gone, upon a technical distinction carrying so little substantial difference. - The Indiana cases relied upon (Burke v. Mead, 159 Ind. 252, 64 N. E. 880; Williams v. Citizens’ Enterprise Co., 25 Ind. App. 351, 57 N. E. 581) do not seem to me to maintain the position taken. Those decisions were based not on technical, but on substantial distinctions.
Take Williams Company v. Citizens’ Enterprise Company, for illustration. In that case the articles of incorporation stated the purpose of the company to be “to promote and aid the growth of the City of Muncie and vicinity in Delaware County, Indiana; to locate, establish, carry on, maintain and assist all kinds of mining and manufacturing companies, and to furnish power, motive power, machinery, and buildings therefor; to buy, sell and manufacture all kinds of merchandise; to sink, operate, buy and sell gas wells; to take stock in other corporations, loan and donate money, etc.”
It would be supererogation to comment on that case. In those articles it was attempted to consolidate into one corporation the business of mining, the business of manufacturing, the business of erecting buildings, the business of machinery making, the business of merchandising, the business of loaning money, and the business of a holding corporation, that is, a corporation whose function is to hold the stock of other corporations. Of course Indiana has granted no single corporation any such omnibus authority.
The other case—Burke v. Mead—was a case where a corporation organized to manufacture, store, sell, deliver and distribute electricity for light, heat and power, sought power also to manufacture and merchandise all kinds of electrical appliances, apparatus and supplies. Between the power to manufacture and merchandise electrical appliances, apparatus and supplies, and the power to install and operate an electric light, heat and power plant, there is no interdependent or functional connection. Neither power, in any just sense, is essential to the full exercise of the other. They are as separate from each other, functionally, as is the corporation that makes glass lamp chimneys from the corporation that pumps and refines lamp oil; or the corporation that manufactures steel rails, from the corporation that operates a steam railroad. True, they relate to each other, as matters of convenience—as businesses that might' profitably be carried on together—but in no appropriate sense can they be said to be co-operative means to the same end.
I cannot believe that the Supreme Court of Indiana will ever employ these cases as a pre-judgment, that though gas in its natural state, and gas bound up in petroleum, or coal, are to the business of supplying carbon to the burners of the consumers, means pretty nearly the same, to an end exactly the same; and though in financing an enterprise involving an outlay of a million dollars, these means must have been calculated upon interchangeably^ as substitutes for each other; a mining of these means, and the incidental conversion *903by manufacture of one of them to the practical .end in view, may not be undertaken by a single corporation, because it so happens, that in previous applications of a substantial and healthful distinction of the law, a banking institution was refused permission to corporately hitch up with a gas well, and the merchandising of electric bulbs was not regarded as an essential part of the operation of an electric lighting plant.
“We know of no rule or principle,” says Chief Justice Bigelow in Brown v. Winnisimmet Company, 11 Allen, 326, approved by the Supreme Court of the United States; Jacksonville Company v. Hooper, 160 U. S. 525, 16 Sup. Ct. 379, 40 L. Ed. 515, “by which an act creating a particular trade or business, is to be strictly construed as prohibitory of all other dealings or transactions not coming within the exact scope.of those designated. Undoubtedly, the main business of a corporation is to be confined to that class of corporations which properly appertain to the general purposes for which its charter was granted, but it may also enter into, and engage in transactions which are auxiliary or incidental to, its main business, which may become necessary, expedient, or possible, in the care and management of the property which it is authorized to hold under the act by which it is created.”
To the extent of the doctrine thus laid down, we need not go. We need apply only what appears to me to be the most obvious principles of interpretation. The laws of Indiana provide that whenever three or more persons may desire to form a company to carry on any kind of manufacturing, mining, mechanical or chemical business, they may, upon following the formula therein prescribed, become a corporation. Under that authority the Consumers’ Gas Company was incorporated. Its business purpose, as already stated, was to furnish the people of Indianapolis with gas—its corporate purpose, as a means to that end, to mine natural gas, petroleum, and other minerals, and by manufacture to convert them (at least petroleum) into gas. To attain the end in view, the power to manufacture was just as-essential as the power to mine. The manufacture was indeed only a treatment or modification of the product mined—a treatment and modification essential to the purpose for which the product was mined. Without the co-operation of both of these powers—the mining,' and the modification, by manufacture, of one of the products mined—the whole investment would have been precarious. Could there be a case stronger for the unification, in one corporation, of these related powers? Has Indiana said that no' corporation that mines, shall, even incidentally to the purpose for which it is organized, manufacture also? Á prohibition so broad as that is not claimed; that mining and manufacturing may, in related instances go together, in one corporation, is conceded; and any such concession must necessarily include, in my judgment, the case now before us. Not to include it would, I cannot help thinking, be to apply to this corporation, organized to subserve a public trust, less latitude of interpretation than would be given to cases involving in the ordinary way purely vested interests.
*904My judgment is, that the decree of the lower court, enjoining any manufacture of gas, and winding up the corporation, ought to be reversed, with instructions that the Circuit Court give to appellant, the Consumers’ Gas Company, reasonable time in which to elect what it will do, that the company can lawfully do, in accordance with the views herein expressed.
The decree is affirmed.