Court Opinion

ID: 9706697
Source: CourtListenerOpinion
Date Created: 2023-08-26 01:49:41.885089+00
Date Added: 2024-06-11T15:41:28.478518
License: Public Domain

Mr. Justice; HbrshEy, dissenting: The majority opinion sanctions a far-reaching extension of the remedy of quo warranto, which I believe was not contemplated by the legislature and which is contrary to long-established principles of law. Section 2 of the Quo Warranto Act of 1937 (Ill. Rev. Stat. 1953, chap. 112, par. 10,) provides: “The proceeding shall be brought in the name of the People of the State of Illinois by the Attorney General or State’s Attorney of the proper county, either of his own accord or at the instance of any individual relator; or by any citizen having an interest in the question on his own relation, when he has requested the Attorney General and State’s Attorney to bring the same, and the Attorney General and State’s Attorney have refused or failed so to do, and when, after notice to the Attorney General and State’s Attorney, and to the adverse party, of the intended application, leave has been granted by any court of competent jurisdiction, or any judge thereof.” Since the Attorney General and the State’s Attorney of Cook County refused to file the complaint, the question is whether, within the meaning of the foregoing section, the plaintiff has such an interest as to entitle it to bring the action on its own relation. First, what is the interest of the plaintiff in the charter powers of the defendant, which the plaintiff alleges entitles it to maintain the action on its own relation? The complaint alleges that the plaintiff is engaged in selling grave markers, monuments and other memorials in Chicago, with its principal office in Chicago and across the street from the defendant cemetery; that the defendant sells such memorials to its lot owners for erection on their lots in said cemetery; that by engaging in such activity the defendant takes business away from the plaintiff which it might otherwise obtain for itself; and that such competition by the defendant has caused the plaintiff’s sales to decline and if permitted to continue the plaintiff will be compelled to discontinue its business with resulting financial loss. In short, the plaintiff and defendant are competitors. Therefore, the particular question presented is: does the plaintiff, by reason of its being in competition with the defendant in regard to the activity complained of, have the requisite “interest in the question” as to entitle it to maintain the instant proceeding? In order to better understand our statute regarding the “interest in the question” necessary to sustain the plaintiff’s position, it is helpful to consider briefly the general prevailing law pertaining to one’s right to complain of the ultra vires acts of a competitor. It is stated in 13 American Jurisprudence, Corporations, at page 792: “As a general rule, the mere fact of competition with one’s business, which results from the ultra vires act of a corporation, does not entitle such person to challenge the power of the corporation to engage therein.” Similarly, in 7 Fletcher Cyclopedia of the Law of Private Corporations, section 3451, the author states: “A stranger whose rights have not been infringed by an ultra vires act of a competitor corporation cannot urge ultra vires to prevent the latter from acting beyond its powers, unless the right to do so is given by a statute. In other words, a competitor cannot attack acts of a corporation as ultra vires merely on the ground of injurious competition, it is generally held, where such acts are neither public nuisances nor trespasses.” A leading case is New Orleans, Mobile and Texas Railway Co. v. Ellerman, 105 U.S. 166, wherein the plaintiff sought to enjoin a railroad corporation from building and operating a wharf in the city of New Orleans, contending that such enterprise was not within the powers and privileges conferred upon the railroad by the Louisiana legislature. In holding that plaintiff did not have sufficient legal interest to maintain the suit, the Supreme Court of the United States said at pages 173-4: “The sole remaining question then, is, whether Ellerman, as assignee of the city, has any legal interest which entitles him to enjoin the company from using its wharf as a public wharf beyond the limits of such use, as defined by that construction of the joint resolution. If he has such interest, it can only consist in preventing competition with himself as a wharfinger, which such more extensive use of the railroad property would create. And if the right to assert it exists, it must rest, not upon the claim that the premises are thus used for purposes to which they might not be lawfully devoted if owned and'used by a natural person, but on the allegation merely that such use is beyond the corporate powers of the company. But if the competition in itself, however injurious, is not a wrong of which he could complain against a natural person, being the riparian proprietor, how does it become so merely because the author of it is a corporation acting ultra vires? The damage is attributable to the competition, and to that alone. But the competition is not illegal. It is not unlawful for anyone to compete with the company, although the latter may not be authorized to engage in the same business. The legal interest which qualifies a complainant other than the State itself to sue in such a case is a pecuniary interest in preventing the defendant from doing an act where the injury alleged flows from its quality and character as a breach of some legal or equitable duty. A stockholder of the company has such an interest in restraining it within the limits of the enterprise for which it was formed, because that is to enforce his contract of membership. The State has a legal interest in preventing the usurpation and perversion of its franchises, because it is a trustee of its powers for uses strictly public. In these questions the appellee has no interest, and he cannot raise them in order, under that cover, to create and protect a monopoly which the law does not give him. The only injury of which he can be heard in a judicial tribunal to complain is the invasion of some legal or equitable right. If he asserts that the competition of the railroad company damages him, the answer is, that it does not abridge or impair any such right. If he alleges that the railroad company is acting beyond the warrant of the law, the answer is, that a violation of the charter does not of itself injuriously affect any of his rights. The Company is not shown to owe him any duty which it has not performed.” To the same general effect are the following cases: Burns v. St. Paul Railway Co. 101 Minn. 363; Scott-Stafford Opera House Co. v. Minneapolis Musician’s Ass’n, 118 Minn. 410; New Hartford Water Co. v. Village Water Co. 87 Conn. 183; New England Railroad Co. v. Central Railway and Electric Co. 69 Conn. 47. In Toye Bros. Yellow Cab Co. v. Cooperative Cab Co., Inc. 199 La. 1063, decided in 1942, the plaintiff cab company sought to enjoin the operation of a rival cab company on the ground, among others, that it was acting ultra vires. The court said at page 1070: “Counsel for the plaintiff contends that the defendant cab company, a non-trading corporation, is acting ultra vires and illegally operating a surety or insurance business. Only the State has a legal interest in preventing the usurpation and perversion of its permits, because it is a trustee of its powers, for uses strictly public. The plaintiff is not a stockholder in the defendant Cooperative Cab Company, Inc. The plaintiff has no interest in these questions and cannot raise them in order to create or protect a monopoly which the law does not give it. New Orleans M. & T. Railroad Co. v. Ellerman, 105 U.S. 166.” In accord with the general rule is Golconda Northern Railway v. Gulf Line Railroad, 265 Ill. 194, wherein this court refused to allow a competitor to raise the defense of ultra vires in a suit to enjoin the defendant from constructing its railroad through a certain pass. It was said at pages 205-6: “The appellant has no such interest as entitled it to enjoin the appellee from constructing a railroad in this pass. The only injury of which it can complain in a judicial tribunal is the invasion of some legal or equitable rights. It alleges that the appellee is acting beyond its authority under the law because the conveyance under which it claims was beyond the charter power of its grantor to make. This conveyance, however, did not injuriously affect any right of the appellant, and it has, therefore, no ground to complain. Neither the Toledo, St. Louis and New Orleans Railroad Company nor the appellee owed any duty to the appellant in regard to this land or to the title thereto. A stockholder in the grantor company might have an interest in restraining it within the limits of its corporate powers and the State might have an interest in preventing the usurpation and perversion of its franchises, but the appellant has no interest in these questions and cannot raise them to enable it to seize the property which is the real subject matter of the controversy. New Orleans, Mobile and Texas Railway Co. v. Ellerman, 105 U.S. 166.” Again in Avery v. City of Chicago, 345 Ill. 640, this court cited and subscribed to the holding of the Bllerman case, saying at pages 653-4: “The appellee, upon cross-errors assigned, complains that the circuit court erred in refusing to find, first, that the Midwest Trading and Securities Corporation had no charter or corporate power to enter into the contract with the city, and second, that the company had no right to assign the contract or to permit another to perform it. The question of ultra vires may be raised only by the State or by a party who has suffered the invasion of some right by the transgression of corporate power. The State, from which the powers of a corporation are derived, is interested in preventing the perversion and usurpation of its franchises. A stockholder, to enforce his contract of membership, may restrain the corporation within the limits of the enterprise for which it was organized. The appellee has no interest in the Midwest Trading and Securities Corporation and he is a stranger to the contract which invites his objection. He merely avers that the contract is beyond the corporate powers of the company. A violation of the corporate charter does not of itself injuriously affect any of the appellee’s rights and he has, for that reason, no ground for complaint. New Orleans, Mobile and Texas Railroad Co. v. Ellerman, 105 U.S. 166; Golconda Northern Railway v. Gulf Lines Connecting Railroad, 265 Ill. 194.” While it is true the foregoing cases were suits in equity to enjoin the ultra vires activity, the substance of the inquiry is the same as in the instant quo warranto suit; namely, to determine whether the plaintiff has sufficient interest in the question to attack the acts of a competitor for the sole reason they are ultra vires. The two types of proceedings in this situation differ only as to relief sought, the one seeking to enjoin the ultra vires activity and the other seeking to oust the corporation from the privilege to so act. If the ultra vires acts of a corporation cannot be attacked by a stranger in an injunctive action, then the same rule would seem to prevail in a quo warranto suit, since in our opinion the interest which one must have to maintain the former is no different than the interest necessary to maintain the latter. The majority opinion, in discussing the requisite interest necessary to give an individual the right to maintain a quo warranto suit on his own relation, says it must be “of such a nature that the usurpation of a public grant, franchise- or office has trespassed upon or injured his private, legal or equitable rights as differentiated from the injury to the general public.” However, I cannot ascertain from the opinion precisely wherein it is believed any private, legal or equitable right of this plaintiff has been trespassed upon or injured. Surely it cannot be said that the plaintiff has a right to be free from competition in selling grave markers, monuments and other memorials to lot owners of Rosehill Cemetery. I am sure the plaintiff could not challenge an individual who sought to engage in said business. Moreover, it is not claimed that the plaintiff has an exclusive franchise to engage in the monument business, that the defendant has trespassed on its property, or that it has any rights as a shareholder or otherwise in the cemetery or its property which are being impaired by the defendant’s actions. Whether as between the State of Illinois and the defendant the latter is violating its charter is a matter that affords the plaintiff no justiciable rights. The plaintiff has no more private, legal or equitable right to the patronage of lot owners in Rosehill than it has to the sales any of the other monument companies in Chicago might make to lot owners in Rosehill or to lot owners in any other cemetery. The plaintiff has no standing in court to take advantage of an alleged breach by the defendant of its contract with the State of Illinois for the purpose of securing freedom from competition which the law does not give it. It is significant that the majority opinion does not cite any case holding one is entitled to challenge the ultra vires act of a competitor, either in equity or by quo warranto. In conclusion, under existing law to extend the remedy of quo warranto so as to permit suits by any individual person or corporation against any competitor to whom he is losing business, where such competitor is engaging in a lawful business open to anybody and is carrying on such a business in a lawful way without trespassing upon or infringing any rights or property of the objector, merely because the competitor is a corporation and acting ultra vires, is not warranted. It paves the way for the restraining of competition which is lawful in every way, except it may be ultra vires, a question which heretofore has been considered the responsibility of the State to deal with. The practical consequences of such a doctrine appear obvious, and it is believed such consequences will not promote the common good. In my opinion, leave to the plaintiff to file a complaint in quo warranto should not have been granted, and this being the case, the plaintiff has no right to appeal from an adverse decision. Hence, the motion of the defendant to dismiss the appeal should have been allowed and the appeal dismissed.