State ex rel. Major v. Missouri Pacific Railway Co.

BROWN, J.

Information in the nature of quo warranto filed in this court on May 4, 1909, whereby the' State of Missouri seeks to revoke the franchises heretofore granted by it to sixteen railroad companies, on the alleged grounds that said railroad companies' have abused and perverted their corporate powers, or_ to impose a fine on said respondents in lieu of said revocation.

*43 After reciting that seven of the respondent railroad companies were chartered by the State of Missouri, and the remaining nine dnly licensed to transact business in this State as foreign corporations, the information charges:

‘ ‘ That respondents have formed and entered into an unlawful agreement, confederation, combination and conspiracy wherein and whereby they have agreed, confederated and combined and conspired among themselves and with each other, to fix, regulate and maintain passenger rates within this State, and to determine, regulate and fix the rates to be charged by the several competing lines for the transportation of passengers between the various cities, towns, points, centers and communities located in this State, and on and along the lines of railway owned and operated by respondents, and for the unlawful purpose of limiting and destroying competition in the transportation of passengers over their' several lines in this State, and. for the unlawful purpose of depriving the public and people of this State of the benefits of full and wholesome competition, and for .the unlawful purpose of destroying, limiting and restraining open and independent action on the part of each of the respondents in the matter of passenger rates to be charged the people of this State.

“That by means of the said unlawful agreement, confederation, combination and conspiracy, the trade, traffic and commerce in this State has been hindered, injured and retarded, and that full and free competition in the transportation of passengers and the traveling public in this State has been limited and restrained, to the great damage and detriment of the public.

“That by reason of the acts and things done by respondents, as hereinabove set out, said respondents have been guilty of a willful, wrongful, illegal and malicious perversion and abuse of the franchises, li *44 censes and authority severally granted to them by the State of Missouri, and of illegal and unlawful usurpations of privileges, franchises and powers not granted them, all of which is to the great detriment of the public and in violation of the laws and Constitution of the State of Missouri.

“That respondents have formed and created, entered into and become members of and participated in an unlawful agreement, combination, confederation, understanding and conspiracy wherein and whereby they have agreed, confederated, combined and conspired among themselves and with each other to fix, regulate and'maintain freight rates within this State, and to determine, regulate and fix the rates to be charged by said several competing lines for the transportation of products, commodities, articles and other freight between the various cities, towns, points, centers and communities located on and along their said lines in this State, and with a view and for the unlawful purpose of limiting, lessening, and destroying full and free competition in the transportation of products, commodities, articles and other freight over and along their several lines in this State, and with a view and for the unlawful purpose of depriving the people of this State of the benefit of full, free and wholesome competition in such transportation, and with a view and for the unlawful purpose of destroying, restricting and limiting free, open and independent action on the part of each of the respondents in the matter of freight rates to be charged the people of this State.

‘ ‘ That said, respondents by means of said unlawful agreement, confederation, combination and conspiracy have fixed, determined and regulated the rates now charged and the rates to be charged hereafter for the transportation of products, commodities, articles and other freight over and along their several lines in this State, and are now- unlawfully maintaining the *45 rates so fixed and determined by the unlawful means aforesaid, and have limited and lessened and are now restraining full and free competition in the transportation of products,. commodities and other articles of freight, and are hindering, injuring and retarding the trade, traffic and commerce in this State, to the great damage and detriment of the people.

“That by reasons of the acts and things done by respondents, as hereinabove set out, said respondents have been guilty of a willful, wrongful, illegal and malicious perversion and abuse of the franchises, licenses and authority severally granted to them by the State of Missouri, and of illegal and unlawful usurpations of privileges, franchises and powers not granted them, all of which is to the great detriment of the public, and in violation of the laws and Constitution of Missouri. ’ ’

Concluding with the prayer: “That respondent corporations, each and all of them, severally, be excluded from all corporate rights, privileges and franchises enjoyed or exercised by them under the laws of the State of Missouri, and that their rights, authority, licenses, franchises and certificates to do business in the State of Missouri be declared forfeited, or in lieu thereof a fine be imposed upon them in punishment of the offense, as above set out.”

To the foregoing information respondents filed separate demurrers,' the substance of which is covered by one which reads as follows:

“The information does not state facts sufficient to constitute a cause of action against this respondent.

“An agreement between railroad companies, such as is charged in the information, is not an unlawful agreement.

“The information does not state facts which show that respondent has committed any acts which are not authorized by its charter; or that it has violated the *46 Constitution, the laws or the public policy of the State of Missouri, but such information affirmatively shows that respondent has exercised only such powers as it might lawfully exercise under the laws of this State.

“The information shows on its face that respondent has not been guilty of any abuse, misuse or perversion of its franchises granted to it by the State of Missouri, or of any illegal or unlawful usurpations .of privileges, franchises and powers granted it.”

It will be observed that-the alleged wrongful acts of respondents are charged to-be “in. violation of the laws and Constitution of Missouri ;”• but the learned ■Attorney-General contends that if the information states a cause of action against the respondents under either the Constitution, statutes or.- common law in force in this State, the demurrers must be overruled.

In this contention he is correct. A petition to recover a statutory penalty, though insufficient under the statute which the pleader seeks to invoke, may still be sufficient to authorize a recovery at common law. [Tackett v. Huesman, 19 Mo. 525 ; Mishler Lumber Co. v. Craig, 112 Mo. App. 454 .]

The Attorney-General asserts that the alleged wrongful acts of the respondents are prohibited by section 17, article 12, Constitution of Missouri, as follows:

“No railroad or- other corporation, or the lessees, purchasers or managers of any. railroad corporation, shall consolidate the stock, property or franchises of such corporation with, or lease or purchase the works or franchises of, or in any way control, any railroad corporation owning or having under its control a parallel or competing line;.nor shall any officer of such railroad corporation act as an officer of any other railroad corporation owning or having the control of a parallel or competing line. The question whether railroads are parallel or competing-lines shall, when demanded, be decided by a.jury, as in other civil issues.”

*47 In his brief the Attorney-General further contends that his information herein states a cause of action ag’ainst respondents under sections 10298 and 10301, Revised Statutes 1909, prohibiting persons and corporations from “creating or entering into combinations in restraint of trade or competition in the importation or transportation of any product or commodity in this State or any article or thing bought or sold whatsoever,” and declaring all such combinations ■criminal conspiracies in restraint of trade. He further asserts that his information states a cause of action against respondents under section 3081, Revised Statutes 1909, which reads as follows:

“It shall be unlawful for any railroad company, corporation or individual owning, operating or managing any railroad in the State of Missouri, to enter .into any contract, combination or association, or by any manner of means whatever consolidate the stock, property or franchises of such company, corporation or individual, or to lease or purchase the works or franchises of, or in any way whatever, to any degree exercise control over, any railroad company, corporation or individual owning or having under Ms or their control or management a parallel or competing line in this State, but each and every such railroad, whether owned, operated or managed by a company, corporation or individual, shall be run, operated and managed separately by its own officers and agents, and be dependent for its support on its own earnings from its local and through business in connection with other roads, and the facilities and accommodations it shall afford the public for travel and transportation under fair and open competition.”

For violating, the section last above quoted, the .law (Sec. 3085, R. S. 1909) prescribes a penalty of from $1000 to $5000 for the first offense; for the second offense, $5000 to $10,000, and for conviction of the third offense, a forfeiture of franchise. So that *48 as the State prays a forfeiture of franchises in this action and does not charge a former offense or a former conviction, it would appear that the information was not based on said section 3081, Revised Statutes 1909.

However, as the prayer of the information may be disregarded in determining whether it states a cause of action [Smith v. Sims, 77 Mo. l. c. 275), if a cause of action is stated under any of the laws above noted, or under the common law, the information is good against the demurrers interposed by respondents.

Since the well considered decision of this court in the case of State ex rel. v. Grimm, 220 Mo. 483 , it has become the settled law of Missouri that in proceedings in. the nature of quo warranto to revoke the franchise, of a corporation duly chartered or licensed to transact business in this State, the pleadings shall conform to our general Code of Civil Procedure.

In the Grimm case, supra, this court, in Banc, speaking through Gantt, J., said: “The decisions of this court have recognized the right of a defendant or respondent to demur to the information in the nature of quo warranto, and this doctrine is the prevalent one in other States, and is approved by the text-writers on the ground that it brings the pleadings and practice in these quo warranto cases in harmony with the practice in other civil cases. . . . Whenever the information in quo warranto avers that the- respondent has a corporate existence and the evident purpose of the proceedings is to have its charter forfeited for non-user, misuser or usurpation of powers, then the pleader must plead specifically the acts of the non-user, the acts of misuser or of usurpation relied upon for grounds of forfeiture, so that the corporation may know what it is called upon to meet and defend.”

Our Code of Civil Procedure simply requires that all petitions shall contain “a plain and concise state *49 ment of the facts constituting a cause of action.” [Sec. 1794, R. S. 1909.]

In addition to these general rules, we have the following section which throws some additional light upon what is required in a pleading of the character now under consideration:

“In any suit that is now pending, or which may hereafter be brought, in which it is charged that any person, corporation, partnership or association of persons has created, entered into, become a member of or participated in any pool, trust, agreement, combination, confederation or understanding in restraint of trade or competition with any other person, corporation, partnership or association of persons, it shall not be necessary to allege or plead the manner in which, or when or where such pool, trust, agreement, combination, confederation or understanding was made or effected.” [Sec. 10310, R. S. 1909.]

Under the foregoing rules, is the information filed by our Attorney-G-eneral sufficient to state a misuser, abuse or perversion of corporate powers by respondents? Upon diligent consideration of the facts stated in the information, we find that it is not.

It charg’es the creation and entering into by respondents of an agreement for the purpose of lessening and destroying free competition in the transportation of passengers, freight, etc.; that by said agreement respondents have fixed and regulated the rates for the transportation of both passengers and freight; but the information nowhere purports to designate any of the rates agreed upon by respondents, and alleged to have been fixed or maintained, or the length of time which said rates, if fixed, shall continue. The information also wholly fails to set out or describe the substance of the alleged wrongful agreement entered into between respondents. [Sidway v. Live Stock Company, 163 Mo. 342 ; Shohoney v. Railroad, 223 Mo. 649 ; *50 Lackawanna Coal and Iron Co. v. Long. 231 Mo. 605 ; Mallinckrodt Chemical Works v. Nemnich, 169 Mo. 388 .]

In. Shohoney v. Railroad, supra, Valliant, C. J., in construing the law of pleading, l. c. 671, said: “It is the duty of a plaintiff to state his case with such clearness and definiteness that his adversary may know exactly what the complaint against him is. Our statute, says the petition must contain ‘a plain and concise statement of the facts constituting a cause of ac.tion, .without unnecessary repetition’ [Sec. 592, R. S. 1899; Ann. Stat. 1906, p. 612.] That duty devolves the plaintiff, and it is one that appeals to our,sense of justice and fair play. There are no words in the Code of Civil Procedure more significant of the spirit which actuated its.authors than the words just quoted. The requirement is that the facts be stated, not mere conclusions of law.”

The allegation by the Attorney-G-eneral that the agreement or combination entered into by respondents is an illegal usurpation and an abuse and perversion' l of corporate power, is merely a conclusion or presumption of law on the part of the pleader, and. not being predicated upon facts set forth in the informa- ■ tion, does not supply the lack of such definite facts . as should have been specifically pleaded. [Schiffman v. Schmidt, 154 Mo. 204 ; Mallinckrodt Chemical Works v. Nemnich, 169 Mo. 388 ; Gribson v. Railroad, 225 Mo. 478 ; Lackawanna Coal & Iron Co. v. Long, 231 Mo. 605 .]

If the law prohibited ev.ery kind of contract or traffic arrangements between respondents concerning . the carrying of passengers or transportation . of ■freight, then the information would be sufficient to charge a conspiracy in restraint of trade; but as a . matter of fact the respondents may enter in .many .-kinds, of contracts, with each other without violating *51 any statute, the common law or public policy of this State.

Our laws fully recognize the power and right of railroad companies to contract with each other concerning the transportation of passengers and freight.. By •sections 3083 and 3084, Revised Statutes 1909', it is made the duty of the officers of said companies to furnish the railroad and warehouse commissioners. true copies of all contracts made by them with other railroad companies; and under those sections the railroad and warehouse commissioners are required to deliver those copies to the Attorney-General, who, upon inspection thereof may, if he finds that they contravene the law, proceed against such companies for the penalties prescribed in section 3085, Revised Statutes 1909.

The Attorney-General is not confined to the information which he may receive under the provisions of said sections 3083 and 3084, Revised Statutes 1909, but may proceed against any transportation company on information obtained from any other source.

Article 4, chapter 98, Revised Statutes 1909, empowers the Attorney-General to take testimony without bringing suit to ascertain whether any corporation in this State has exceeded or perverted its corporate powers or entered into any kind of trust or other illegal combination.

With these facilities at hand, there is no call for the Attorney-General to inform against any corporation until he is possessed of the necessary information to prefer a correct and specific charge.

By section 1831, Revised Statutes 1909, we are required to construe the laws of pleading liberally so as to promote the substantial justice between the parties; but we do not think the ends of justice will be.promoted by permitting the State or any other litigant to call a defendant into court to answer for alleged wrongdoing without specifically, charging and inform *52 ing him of the matters and things against which he must defend.

Informations charging conspiracies, frauds and similar offenses always call for a wide range of evidence, and in that class of cases courts should for their own protection compel litigants to present the issues upon which they rely in a clear, definite and concise manner, to the end that the courts may not be overwhelmed with irrelevant testimony. [20 Cyc., p. 97.]

In the instant case, no doubt a large number of contracts exist and are in force between respondents affecting and regulating the transportation of freight and passengers; and if we were to appoint a commissioner to take testimony under the information as filed, it would necessitate the investigation of all contracts which the sixteen respondents have entered into between themselves, and the taking of testimony concerning all such contracts as the Attorney-General may believe contravene the laws regarding trusts and conspiracies. Such an undertaking would probably consume years of time; and the redress which the State is entitled to if the respondents have violated the law, would thereby be delayed indefinitely.

We have examined all the cases cited by the learned Attorney-General in support of the sufficiency of his information. He cites the language used by this court in the case of State ex inf. v. Standard Oil Company, 218 Mo. l. c. 364, wherein we said: “It is also contended by counsel fof respondents that the allegations of the information of the existence of the combination complained of are not sufficient to constitute a cause of action against them. If we correctly understand counsel, their contention is that the information in this case should be drawn with the same rules of strictness which are applicable to criminal indictments and informations. In other words, they contend that the information should state the facts which constitute the pool, trust or combination, and not *53 make the charge in general terms. It is the formation of and entering into the pool, trust or combination that constitutes the usurpation of corporate powers; and in such eases, according to the text-writers and adjudications, all that is necessary to be stated in the information is a general allegation of the facts constituting the misuser, non-user, or usurpation.”

Upon examining the information in the Standard Oil case, supra, we find that it contains allegations specifically reciting the substance of a contract between the Standard Oil and two other companies whereby they conspired to monopolize the business of selling oils in Missouri by dividing the territory between two- of the conspirators so as to prevent competition, and by acting through a third party which pretended to be independent of the other two, but which in fact was working with them,, to destroy the trade of all competitors in the sale of oils.

The language used in the Standard Oil case, supra, might upon first impression convey' the idea that an information of this nature need not point out any of the terms of the alleged illegal contract or combination; but what was there said applied to the facts in that case, and furnishes no ground for upholding, an insufficient information in this case.

It is a well-settled rule of law that the reasons or discussions of an appellate court in deciding a case are not precedents in other cases in which a different state of facts is at issue. [Koerner v. St. Louis Car Co., 209 Mo. 141 .]

The case of State v. Dreany, 65 Kan. 292 , 69 Pac. 182 , is not in point here, because in that case the information recited the terms of the unlawful contract or combination, to-wit, a division of the net earnings between the conspirators.

Neither is the case of State v. Straw, 42 N. H. 393, in any wise like the one at bar, for in the Straw case, the information pointed out the unlawful acts *54 which the conspirators agreed to perform, to-wit, “to put up and maintain flash boards on a dam,” so as to cause the overflow of complainant’s lands.

The case of United States v. Gardner, 42 Fed. 829 , is not in point, because there the alleged conspiracy was to commit a theft, which was a crime malum in se, and not a crime malum prohibitum, as in the case at bar.

The same is true of the case of Hazen v. Commonwealth, 23 Penn. 355 , cited and relied on by the State.

The State also cites the case of State ex inf. v. Missouri Pacific Railway Company, 206 Mo. 40 , wherein the doctrine was announced that in actions in the nature of quo warranto the pleadings are not governed by our general Code of Civil Procedure; but that doctrine is expressly repudiated in the more recent, case of State ex rel. v. Grimm, 220 Mo. 483 , l. c. 493 and 494. We think the Grimm case is fully sustained by authority and sound reason. It was concurred in by all the judges who participated in the opinion found at 206 Mo. 40 , except the chief justice_, who was then absent; and the Grimm case should be allowed to stand as the law of this State.

The case of Eel River Railroad Company v. State, 155 Ind. 433 , likewise fails to support the contention of the State, for there the particular act of non-user, to-wit, the execution of a ninety-nine year lease with the right of perpetual renewal, was expressly charged in the information. [ 155 Ind. 1 . c. 457.]

The case of Chicago, Wilmington and Vermilion Coal Company v. The People, 214 Ill. 421 , appears on its face to fully and directly support the sufficiency of the information now under consideration. In that case the charge of conspiracy was couched in the same general terms as in the ease at bar, with no effort to set out the substance or particulars of the unlawful combination. However, the pleading in that case was *55 an indictment by a grand jury for violating a criminal statute of Illinois, and the laws of that State then in force, Revised Statutes of Illinois 1908, page 783. contained the following provisions:

“Every indictment or accusation of the grand jury shall be deemed sufficiently technical and correct which states the offense in the terms and language of the statutes creating the offense.”

It will thus be seen that the sufficiency of the indictment in the case last cited was measured by an entirely different rule of law than the one which governs pleadings in quo ivarranto in this State.

Rules of pleading announced by the appellate courts of other States are not a safe guide for measuring the sufficiency of pleadings in this State, for the obvious reason that every State has its own code which may be wholly unlike our own.

Prom what has been said it follows that the demurrers interposed by respondents to the information of the Attorney General in this case, must be sustained. It is so ordered.

Valliant, G. J., and Ferriss, Graves and Lamm, JJ., concur; Kennish, J., concurs in result only; Woodson, J., in separate opinion also concurs in result.