author: VALLIANT, C. J.

text:
    THE STATE ex inf. HERBERT S. HADLEY, Attorney-General, v. MISSOURI PACIFIC RAILWAY COMPANY, WESTERN COAL & MINING COMPANY, RICH HILL COAL MINING COMPANY and KANSAS-MISSOURI ELEVATOR COMPANY.
    In Banc,
    November 27, 1911.
    1. QUO WARRANTO: Motion for Judgment on Pleadings: Admissions. For the purposes of a motion for judgment on the pleadings, made by the Attorney-General in quo warranto, the statements of facts in the answer (or return) of respondents must be taken as true; and the statements in the information admitted by the answer will also be taken as true. The conclusions that either party draws from those facts are for determination by the court.
    2. -: -: Railroad Company: Operating Coal Mines and Elevator: Statements Taken as True: Qualification. Where it is stated in the information in quo warranto that two of the respondents were incorporated as. coal mining companies and another as an elevator company and that the respondent railroad company has acquired the capital stock of the other three and is engaged in conducting the business for which they were incorporated, and those allegations are admitted in the answer except that it is stated that all the stock of the three companies except four shares in each is held by a trustee for the railroad company and those four shares are held by individuals to enable them to qualify as directors, statements in the answer that the purpose of the railroad company in acquiring the stock of the coal companies was to secure to itself a supply of coal to be used as fuel in operating its trains, and that the purpose in acquiring the stock of the elevator company was to facilitate the handling and shipping of grain over its road, and statements that the railroad company does not operate or control the operation of those companies, but on the contrary that each is controlled and operated by its own board of directors, and a statement that each company is performing the duties required by its charter and is serving the public impartially as the law requires, must, upon a motion by informant for judgment on the pleadings, be taken as true, with only the one qualification that the law presumes that the railroad company has exerted its power as a stockholder in electing the directors and to that extent influences the policy of each company.

      ' 3. -: Railroad Company: Owning Stock in Mining Company and Elevator. It is lawful for a railroad company to own the majority of stock in a coal company adjoining or near its line of road, and in an elevator company offering a convenient means of aiding it in the handling and shipping of grain, where there has been no abuse of its power and the businesses of those corporations are being conducted in the usual way of such concerns.
    4. -: --: -Constitution. The words of the Constitution (Sec. 7, art. 12) reading, “No corporation shall engage in business other than that expressly authorized in its charter or the law under which it may have been or hereafter may be organized,” do not refer to the ownership of stock by one corporation in another company; nor do they forbid a railroad company to own a coal mine and operate it for the sole purpose, if necessary, of obtaining fuel for its own use, or to own and operate an elevator to facilitate the handling and shipping of grain over its railroad; nor do they prohibit a railroad company to secure itself in the matter of obtaining coal for fuel, or in the convenience of handling and shipping grain, by acquiring stock in a coal or elevator company, if such course would be more convenient in the carrying on of its legitimate business as a carrier and shipper, and if the public is not injured thereby. Nor will the bare fact that the railroad company owns all or all but a few shares iof the stock of the mining and elevator companies be held to be an abuse of the power which such ownership implies.
    Quo Warranto.
    Writ of ouster denied.

      Herbert S. Hadley, Attorney-General, Elliott W. Major, Attorney-General, and John Kennish, Assistant Attorney-General, for informant; F. W. Lehmann of counsel.
    (1) The respondent, the Missouri Pacific Railway Company, has violated the provisions of . its charter, the Constitution, laws and public policy of the State of Missouri, and has been guilty of a usurpation of franchise by becoming the owner of all of the stock in said coal companies and elevator company, and bycondueting, controlling and operating the business and affairs of each of these companies. Said Missouri Pacific Railway Company was not authorized by its charter, the laws or Constitution of the State to hold the stock or to engage in the operation of the business of coal mining companies or elevator companies, as the ownership of such stock and the conduct and operation of the business of said companies are alleged and admitted not to have been necessary or incident to the construction, maintenance or operation of said railway as a public highway and common carrier. (2) By reason of the ownership of the stock of the coal mining companies and the elevator company, and the conduct of the business of each of these companies by the Missouri Pacific Railway Company, the autonomy, integrity, independence and individuality of each of said companies was thereby destroyed; they thereby ceased to be a corporation in that they were no longer an aggregation of individuals; they were thereby rendered incapable of discharging their duties to the public and the State; all contrary to the Constitution, laws and public policy of the State. A corporation, and particularly a railroad corporation, has no right to own the stock of another corporation, unless that right is specially conferred by statute. 1 Morawetz on Corporations, par. 227; Taylor on Corporations, par. 49; Matthews v. Skinker, 62 Mo. 329; State ex inf. v. Trust Co., 144 Mo. 562; Railroad v. Canal Commissioners, 21 Pa. St. 589. (3) The railway company was guilty of a usurpation of a franchise not conferred upon it by the State in owning the stock and carrying on the business of the other three respondents. Noyes on Incorporate Relations, par. 294; Jessup v. Railroad, 76 Fed. 741; Hirsehel on Corporations, 'p. 86; Stone v. Rottman, 183 Mo. 552; Newland Hotel Co. v. Lowe, 73 Mo. App. 135; City of Goodland v. Bank, 74 Mo. App. 367; Ollesheimer v. Thompson Mfg. Co., 44 Mo. App. 185; State ex rel. v. People’s United States Bank, 197 Mo. 600. (4) The right to own stock in another corporation does not confer a right to control its business. Spelling on Corporations, see. 172; Taylor on Corporations, sec. 267; Brice on Ultra Vires, 133; Pearson v. Convord R. R. Corp. 62 N. H. 537; Railroad v. Iron Co., 46 Ohio St. 44; Railroad v. Railroad, 31 N. J. Eq. 475; Denny Hotel Co. v. Sehram, 6 Wash. 134; Hazelhurst v. Savahhan R. R. Co., 43 Ga. 57; People v. Chicago Gas Co., 130 111. 268; Franklin Co., v. Lewiston Inst, for Savings, 68 Me. 43; Insurance' Co. v. Harbor Protection Co., 37 La. Ann. 233; Lagrone v. Zimmerman, 46 S. C. 372; Pauly v. Coronado Beach Co., 56 Fed. 428; Lumber Co. v. Rees, 103 Ala. 627. (5) The ownership of the stock and the conduct of the business of the elevator company by the railway company was also a usurpation. Memphis Grain & Elevator Co. v. Railroad, 85 Tenn. 703; In re New York Central R. R. Co., 77 N. Y. 248; Railroad v. Warren, 16 111. 502. The coal companies and the elevator company have, by reason of the ownership of their stock and the doing of their business by the railroad company, ceased to have the power to maintain a legal existence as a corporation, and no longer conduct, or are able to conduct, the business . that they were authorized by the State to transact. People v. North River Refining Company, 121 N. Y. 696; State ex rel. v. Equitable Loan and Investment Co., 142 Mo. 320.

      Alexander G. Cochran, Martin L. Clardy and R. T. Railey for respondents.
    (1) Corporations have not only the powers ex-. pressly granted to them, but those which are necessarily implied. While it is true they derive all their power from the Legislature which creates them, it is also true that what is fairly implied is as certainly granted as what is expressed. In o'ther words, no corporation can be invested with, the right to go into the business for which it has been incorporated without carrying with it an implied right to do things, and perform acts in connection with its carrying out of the purposes for which it is incorporated; that, unless restrained by their charters or the law of the State, they have the power to deal precisely, in carrying out their corporate purposes, as individuals seeking to accomplish the same ends; that they may resort to any means that would be necessary and proper for an individual in executing the same, unless they be prohibited by the terms of their charters or some public law from so doing; that while in regard to their express powers, the grants are construed most liberally in favor of the State, and most strictly against the corporation, yet, in regard to incidental powers, neither strict nor liberal, but only reasonable rules of construction are applied; that corporations may even so far develop and extend their operations as to engage in matters not primarily contemplated by their founders, provided such matters be fairly within their scope, and that, in so developing and extending their undertakings they employ direct, and not indirect means; that “necessary”, when used in defining the powers of corporations, does not mean simply what is indispensable, but also what is useful, convenient and proper to carry into effect the franchises granted. Greene’s Bryce on Ultra Vires, pp. 66-91; Ellerman v. Stock Yards Co., 49 N. J. Eq. 217; 2 Cook Stock, and Corp. Law, see. 681; Malone v. Lancaster Gas Light & Fuel Co., 37 Atl. 932; 23 Am. and Eng. Ency. Law, 680; Jacksonville Ry. & Nav. Co. v. Hooper, 160 U. S. 514; Railroad v. Union Co., 107 U. S. 98; Todd v. Union Land Co., 57 Fed. 47; 2 Purdy’s Beach on Priv. Corp., pp. 12-28-29; Endlich on Interpretation of Statutes, sec. 418; Ft. Worth City Co. v. Smith Bridge Co., 151 U: S. 294; Pennsylvania Co. v. Bridge Co., 131 U. ,S. 371; Brewing Co. v. Fraatz, 123 111. App. 26; 1 Elliott on Railroads, sec. 38; 1 Wood’s .Railway Law, sec. 169; 1 Spellman on Priv. Corp., secs. 68, 73 and 75; Western Boatman’s Benev. Ass’n v. Kribben, 48 Mo. 37. (2) Thus, a railroad company may own elevators, or stock in elevator companies, or acquire coal mines or stock therein, as incidental to the operation of its lines of road, and to enable it to serve the public the better. Railroad v. Nebraska, 164 U. S. 403; Railroad v. Wathem, 17 111. App. 582; In re Application New York Central, 77 N. Y. 248; Railroad v. Kipp, 46 N. Y. 546; Railroad v. Mckissock, 140 U. S. 304.
   VALLIANT, C. J.

The information is in quo warranto. The respondents are Missouri corporations; the business for which each was incorporated is indicated by its corporate name, a railroad company, two coal mining companies, and an elevator company.

The charge in the information is that the railroad company has acquired the capital stock- of the three other corporations and is engaged in conducting the business for which they were incorporated. More specifically stated, the charge is that the Western Coal & Mining Company was organized under the laws of this State in 1879, with a capital stock of $500,000, for the purpose of carrying on a general coal and mining business in Missouri, Kansas and elsewhere, with power to purchase, lease or otherwise acquire mineral and other lands for the purpose of •mrniug coal and other minerals, buying and selling coal, etc., and owning and operating machinery and appurtenances necessary to carry on that business; and that after its organization the corporation entered upon the business for which it was chartered and continued to conduct the same until the acquisition of its capital stock by the Missouri Pacific Railway Company, whereupon it ceased to perform its functions and the business has since and is still being conducted alone by the railroad company, to the injury of the interests and welfare of the people of the State.

Like specifications are made in relation to the Rich Hill Coal Mining Company, and, varying only in reference to the character of the business, relating also to the Kansas-Missouri Elevator Company. The conclusion from those facts drawn in the information is that the two coal companies and the elevator company have lost their integrity and individuality and are rendered incapable of exercising the franchises granted by their respective charters, that each had become a mere cover for the unlawful exercise of power by the railroad company, and their further existence is of injury to the people of the State.

The prayer is that the two coal companies and the elevator company be ousted of their charters, that the railroad company be ordered to cease operating the business of those three companies, and failing to heed such order, that it be ousted of the corporate rights granted by its charter.

The respondents filed a joint answer to the following effect: They admit the origination of each of the corporations as stated in the information and the purpose for which it was organized, and they admit that a majority of the capital, stock of the three other companies is owned by a trustee who holds the legal title thereto for the use and benefit of the railroad company, but aver that there are four other persons who each own at least one share of the stock. Referring to the averment in the information to the effect that the railroad company holds its charter from the State and has only the powers granted to it as a railroad company by the laws of the State, which are only such powers as are necessary, convenient and incident to the construction, maintenance and operation of a railroad as a public highway, and that under the Constitution it can engage in no business other than- that expressly authorized -by the charter or the law under which it may have been organized, the answer avers that the railroad company has offended in no respect the provisions of the law referred to and has not gone beyond the lawful power conferred by its charter; that the acquiring of the stock in the coal companies was for the purpose only of securing for its use in operating its railroad the necessary supply of coal for fuel, and the acquiring of the stock in the elevator was to facilitate the shipping and transportation of grain over the railroad. They deny that since the acquisition of the stock by the railroad company the coal companies and the elevator company have ceased to do business under their respective charters or that such business is or has been conducted by the railroad company; on the contrary, they aver that since the acquisition of the stock, as before, the business of the coal companies and the elevator company have been conducted exclusively by their respective boards of directors duly elected by the stockholders. They deny that there has been any abuse of their charter powers or any conduct on the part of the directors injurious to the interest or welfare of the people of the State, or that the interests or welfare of the people would be promoted by a dissolution of the corporations named or a forfeiture by the railroad company of its beneficial interest in the stock of the other compames.

To that answer the Attorney-General filed a reply in which, after denying that any persons other than the trustee for the railroad company owned any of the stock and denying that the stock was acquired for the purposes stated in the answer, went on to aver that, since the acquisition of the stock in the coal companies, the railroad company “through the management, conduct and control of the said coal companies, engaged in the business of selling coal to the general public and did sell large amounts through and under the name of said coal and mining companies to the general public in Missouri and elsewhere.” An averment of like character was made in reference to the business of the elevator company. These averments differ from those in the information in this, to wit: in the information it was stated that the railroad company itself was, under cover of the charters of these other companies, carrying on the business of mining and marketing coal and a general warehouse and elevator business, whereas the averments in the reply are that the railroad company was doing those acts through the management of the coal and elevator companies, by virtue of its ownership of the stock in those companies. On motion of the respondents the court struck out those averments in the reply, construing them to be the pleader’s inference from the fact of the ownership of the stock, and since the ownership of the stock was admitted in the answer, or return, the inference to be drawn was but a legal conclusion.

The State then moved for judgment on the pleadings and that is the form in which the cause is now submitted for final judgment.

For the purposes of this motion the statements in the answer (or return) of respondents must be taken as true, and the statements in the information admitted by the answer will also be taken as true; the legal conclusions that either party draws from those facts are open for discussion.

The organization of the corporations as stated in the information, and the several purposes for which they were respectively organized, are admitted, and it is also admitted that the majority of the stock in the coai companies and in the elevator company is held by a trustee for the railroad company.

The language of the answer perhaps justifies the inference also that all the stock in those companies except four shares in each is held by a trustee for the railroad company, and that those four shares are held by individuals to enable them to qualify as directors as the law requires. Against those admissions we have the statements in the answer that the purpose of the railroad company in acquiring the stock in the coal companies was to secure to itself a supply of coal to be used as fuel in running its trains, and the purpose in acquiring the stock in the elevator company was to facilitate the handling and shipping of grain to be carried over its road; also the statements that the railroad company does not operate or control the operation of either of the coal companies or the elevator company, but on the contrary each is controlled and operated by its own board of directors and officers appointed by the board, and that each company is performing the duties required by its charter and serving the public impartially as the law requires. Those, statements must be taken as true with only this qualification, to-wit, the law presumes that the railroad company has exerted its power as a stockholder in electing the directors and to that extent influences the policy of each company.

Under the state of facts above mentioned the only question of law in this case is, may a railroad company own the majority of stock in a coal company adjoining or near its fine of road, or in an elevator company offering a convenient means to aid it in the handling and shipping of grain? The question is not, can a railroad company be held to account in a proceeding in quo warranto for an abuse of the power which the ownership of a majority of such stock gives? for perhaps no one would doubt that it would be amenable to such an inquiry, but where there has been no abuse of power, where the business of the corporation is being conducted in the usual way of such 'business concerns, is it unlawful for the railroad company to own the stock?

The only written law to which we are referred as sustaining the contention tha't it is unlawful for a railroad company to own stock under such conditions is section 7 of article 12 of the Constitution, in which is the following: “No corporation shall engage in business other than that expressly authorized in its charter or the law under which it may have been or hereafter may be organized.” That clause in the Constitution does not refer to the ownership of stock in another company; the thing forbidden is the engaging in business not authorized by its charter. It would doubtless be a violation of that clause of the Constitution if a railroad corporation should acquire and use the stock of another corporation in whose business a railroad company could not lawfully engage, as a cover behind which to. carry on such business, that is, as a mere means of evading the letter of the law, still, in such case, the offense would be the carrying on of the business, not the owning of the stock.

It would perhaps not be contended that a railroad company could not lawfully own a coal mine and operate it if necessary for the sole purpose of obtaining fuel for its' own use, or that it could not own and operate an elevator in the handling of grain to be transported over its railroad. The business therefore of mining coal or operating an elevator is not business of such a character as the clause in the Constitution above quoted forbids. If the railroad company could do that business with its own means, why could it not secure itself in the matter of obtaining, coal for fuel or a convenience in handling grain by acquiring stock in a coal or elevator company, if it would be more convenient, and if the public was not injured thereby? The more stock a corporation owns' in another concern the more power it has in the election of directors and through, them in influencing the policy of the other corporations, but that is not in fact taking the management of the business in its own hands. We are not overlooking the fact that where a corporation owns practically all the stock in another concern it may, if so minded, dictate through the board of directors the method of the business, which would be equivalent to indirectly conducting the business; but that consequence does not necessarily follow; the directors may be chosen with an eye to their ability and honesty and left to conduct the business according to their best judgment, and the law will presume that such is the case until the contrary is shown; if it should be shown that directors áre conducting the business in the interest alone of a stockholder who elected them and to the injury of the other stockholders or to that of the public in general, a case of fraudulent mismanagement would appear, calling for the arm of a court of equity; but such is not this case. We therefore conclude that section 7 of article 12 of the Constitution does not forbid a railroad company to own stock in a coal company or an elevator company, and we hold that the mere fact that the railroad company does own a majority or all but a few shares of the stock in those companies, does not authorize a judgment of dissolution of the corporations and ouster of their franchises.

It is charged in the information that the charters of the coal companies and the elevator company have become a mere cover for the railroad company under which to hide its unlawful usurpation of the corporate franchises, that those companies by such unlawful usurpation by the railroad company have been rendered incapable of conducting their business, and that their businesses are being conducted by the railroad company. But those statements are denied in the answer of respondents. It is there stated that the business of each of those companies is and has been from the beginning conducted under the direction and control of its own board of directors. Those statements are to be taken as true and, taking them as true it leaves the State’s case nothing to rest on but the bare fact that the railroad company owns the majority of stock in those other companies.

There is no use for us to go further and decide whether or not a railroad company may lawfully acquire and hold any or all the capital stock of another corporation whose business has no influence in aiding it in operating its railroad, because there is no such question before us. ■ The court will take judicial knowledge of the fact that coal for fuel is a necessity in the operation of a steam railroad and that an elevator, although not an absolute necessity, is an assistance in the handling and shipping 'of grain, and we hold that a railroad company may acquire stock in coal and elevator companies when the purpose is, as in this case it is, to facilitate the business for which it was chartered.

Our judgment is that the ouster demanded in the information should be denied and the respondents discharged. It is so ordered.

All concur, except Kennish, /., not sitting, having been of counsel.


source: Caselaw Access Project

author: LAMM, J.

license: Public Domain

text:
    MAPLEGREEN REALTY COMPANY v. MISSISSIPPI VALLEY TRUST COMPANY, Appellant.
    In Banc,
    November 27, 1911.
    1. APPEAL: Matters Reviewable: Overruling Exception to Referee’s Report: Not Ground for New Trial. Error of the chancellor in overruling defendant’s exceptions to' the referee’s report is not for review on apeal where there is no ground in the motion for a new trial directed to error in overruling such exceptions.

      2. -: -: Findings of Referee: Evidence Not Preserved. Where the appellant omits the evidence taken before the referee from its. bill of exceptions, the court cannot review the findings of the referee based thereon, even though appellant accepts the referee’s findings of facts. [VALLIANT, C. J., and WOODSON, J., dissenting.]
    3. -: -: Equity: Deference to Chancellor. Appellate courts approach the facts in an equity case by allowing to the trial chancellor (in this case his referee) the primary advantage of the use of eye and ear in discovering the truth in the testimony of witnesses and in stamping that testimony with its earned and deserved percentage of weight and credit. Subject to that deference, an equity case is to be heard de novo on appeal. But to be heard de novo the evidence must be preserved in a bill of exceptions, and if not so preserved the referee’s conclusions, although the facts found be accepted by the appellant as true, cannot be reviewed. [VALLIANT, C. J., and WOODSON, J., dissenting.]
    4. -: -: Motion for New Trial: No Assignment Therein. The motion for a new trial fills a substantial and useful office in administering justice. Primarily it is designed to give the trial court an opportunity to correct errors committed in the course of the trial. But it also has come to be the office of that motion to preserve, fix and designate errors to be reviewed on appeal. . Where there is no assignment in the motion of an error complained of on appeal, that error cannot be reviewed. The motion must be held to mark out the matters to be reviewed. Where there is no assignment in the motion that the court erred in overruling appellant’s exceptions to the referee’s report, whether or not the court’s ruling on those exceptions was error cannot .be reviewed or determined; and assignments directed only to the “verdict,” the “declarations of law,” the “damages,” the “demurrer to the evidence” cannot be held to refer to exceptions to the referee’s report.
    5. -: -: Motion in Arrest: Exceptions. The office of a motion in arrest is not to strike at matters of mere exception. That is the office of a motion for a new trial. An assignment in the motion in arrest that “upon the record said judgment is erroneous” is not sufficient to preserve for review errors of the chancellor in ruling on appellant’s exceptions to the referee’s report.
    Appeal from St. Louis City Circuit Court. — Hon. Daniel G. Taylor, Judge.
    Affirmed.

      E. M. Grossman and Jones, Jones, Hocher & Davis for appellant.

      Kinealy & Kinealy for respondent.
    (1) The action of the,circuit court in overruling defendant’s exceptions to the report of the referee is not open for review by this court because defendant did not in its motion for a new trial complain of that action of the trial court. State ex rel. v. Hurlstone, 92 Mo. 327; Arkansas Land Co. v. Ladd, 103 Mo. App. 83; Bosley v. Cook, 85 Mo. App. 422. (2) Exceptions to a referee’s report, and necessarily therefore a motion for a new trial in such cases, must specifically and definitely point out the alleged error or matter complained of. Wiggins Ferry Co. v. Railroad, 73 Mo. 389; Singer Mfg. Co. v. Givens, 35 Mo. App. 602; Dallas v. Brown, 60 Mo. App. 493; Cahill v. McCormish, 74 Mo. App. 609; State v. Scott, 214 Mo. 257. (3) As defendant has not undertaken to abstract the evidence before the. referee, no exception to the referee’s report or ground for a new trial, based upon the evidence, can be reviewed by this court. Reed v. Peck, 163 Mo. 336; Plumbing Co. v. Brewing Co., 126 Mo. App/ 270; Furstenfeld v. Furstenfeld, 131 S. W. 361.

      H. S. Priest for appellant in reply.
    Inasmuch as we do not challenge the correctness of the referee’s report as to facts, the testimony taken before him is of no importance and would be an useless encumbrance upon the record. The office of a motion for new trial is to call the attention to supposed errors during the progress of the trial, that is, the investigation of the facts in issue. Crossland v. Admire, 118 Mo. 87; Ewald v. Young, 119 Mo. App. 485; R. S. 1909, sec. 2022. Is there of the quoted assignments of cause in the motion for new trial sufficient to call to the attention of the court below the errors here complained of in the referee’s report? We repeat them: “The verdict is for the wrong party”; and “The referee erred in his declaration of law.” Closely coupled with these two assignments of error are two others which, in association, draw the attention of the court to the position of the appellant in this court on the merits of the controversy. They are these: “The court erred in overruling the demurrer to the evidence offered at the close of plaintiff’s case”; and “The referee erred in overruling the demurrer to the evidence at the close of plaintiff’s ease.” Words take color and meaning by textual association and in the presence of things discussed. A verdict technically means the pronouncement of a jury upon the facts of a case. In a generic and more common meaning, it means the expression, of an opinion upon a submission. There was no trial by jury in this case. The court, of its own motion and against the exception of the defendant, referred the case for the ascertainment of both law and fact. The report of the' referee was a verdict upon facts and a declaration of his views of the law, which the court confirmed upon a cpnsi deration of exceptions to the report. The court below could not have understood the verdict mentioned in the assignments of the motion for a new trial as referring to anything except the report of the referee. He could not have understood “declaration of law” to have reference to anything except the conclusions of law ascertained by the referee as applicable to the. facts which the referee found. Hence the court below could not have been misled or deceived or uninformed as to the propositions which these assignments were meant to cover and did cover. MeCullagh v. Allen, 10 Kan. 150; Morgan v. Keller, 194 Mo. 677. There is very good authority for calling the report of the referee a verdict. It has time and again been likened to a special verdict by this court (Howard County v. Baker, 119 Mo. 397), and is given by express legislative enactment the same force and effect as a “special verdict.” R. S. 1909, sec. 2013. (2) But if no exceptions had been filed and no motion for new trial had been' filed; if the undisputed facts as found by the referee were not sufficient in law to support the judgment, appellant is entitled to a reversal: The “record proper” consists of the pleadings, the verdict and the judgment. Nicol v. Hyre, 58 Mo. App. 134; Railroad v. Carlisle, 94 Mo. 166. The verdict and judgment are a part of the “record proper,” and this court may consider without motion for new trial errors that there appear. The statute says (See. 2013) if the report of a referee be confirmed “judgment shall be rendered thereon in the same manner and with like effect as upon a special verdict.” It is thus adopted as a special verdict and must support the judgment as would the verdict of a jury. It is a part of the record proper, and if like the petition, does not support the judgment, or, like the major or minor premise of a syllogism does not support the conclusion, it is erroneous and fallacious and cannot stand. The judgment is “rendered in the same maimer” and “with like effect” as upon a special verdict. In both form and effect under this law, it must be treated as a special verdict. A special verdict is one where all the facts, as the jury finds them to be proved, are reported and the jury pray the advice of the court thereon conditionally, that if, upon the facts reported as a matter of law, the court should be of the opinion the plaintiff had a cause of action, then they find for the plaintiff; if otherwise, for the defendant. Statler v. United States, 157 U. S. 277. Our statute concerning references does not seem to contemplate that the referee shall do more than find the facts, thus meeting entirely the definition of special verdicts. The court has time and again held that the report of the referee appointed by consent has the standing of a. special verdict. Wiggins v. Railroad, 73 Mo. 389; Yogt v. Butler, 105 Mo. 479. While the referee’s findings of facts are conclusive, where there is substantial evidence to support them, his conclusions of law may be rejected and the law properly applied to the found or conceded facts. Wiggins Ferry Co. v. Railroad, 73 Mo. 389; Gamble v. Gibson, 83 Mo. 290; Lingenfelder v. Brewing Co., 103 Mo. 578. So that it must be conceded in a suit at law or in equity that the referee’s report under our statutes stands as a special verdict and constitutes a part of a record, and if the conclusions of law applicable to the findings of fact are incorrectly applied in the report that' this error would be corrected on appeal, because the report is a part of the record proper, and is subject to review as would a petition which failed to state a cause of action. This rule has been applied by this court in a variety of ways from a very early date. Shore v. Coons, 24 Mo. 556; Land Co. v. Bretz, 125 Mo. 422; Bower v. Daniel, 198 Mo. 318. In the case at bar, in passing we observe that both parties have agreed, by statements made in their briefs and abstracts, that the referee’s finding of facts is correct, and such agreement gives the report the force and effect of an agreed statement. Land Co. v. Bretz, 125 Mo. 418; Bower v. Daniel, supra. Fitzpatrick v. Weber, 168 Mo. 572; Daggs v. Smith, 193 Mo. 501. It seems to us a work of supererogation to continue the citation of authorities upon this proposition. The following authorities support the proposition that the referee’s report which is erroneous on its face will be reversed upon appeal, although no exception thereto or motion for new trial was filed by the aggrieved party, and this upon the theory that the report of the referee stands as a" special verdict under the statute and constitutes a part of the record proper. Land Co. v. Bretz, 125 Mo.-418; Blount v. Spratt, 113 Mo. 54; Shore v. Coons, 24 Mo. 556; Daggs v. Smith, 193 Mo. 500; Fitzpatrick v. Weber, 168 Mo. 572; Leavitt v. Taylor, 163 Mo. 169;'Hughes v. Ewing, 162 Mo. 294; Bower v. Daniels, 198 Mo. 318; Gillett v. Trust Co., 82 1ST. E. 908; Bank v. Nickell, 49 S. E. 1003, 1005; In re Garrison v. Trust Co., 77 Mo. App. 337; Poster v. Mackey, 4 Mo. App. 590; Wade v. Peacock, 49 S. E. 826. Daggs v. Smith, 193 Mo. 501.
   LAMM, J.

Suit in equity for accounting; issues joined by answer and reply; a reference below; a report by the referee; exceptions by defendant overruled; and judgment for plaintiff for $8,494.86. Defendant appeals.

There is a cross-appeal by plaintiff from a judgment in favor of defendant on certain items. Such cross-appeal has been briefed, as a separate appeal. It will be convenient to preserve that method of consideration here. Accordingly, it will be determined in a separate opinion.

The bill runs on the theory that plaintiff owned “a subdivision,” known as Greenwood, part in the city and part in the county of St. Louis; that defendant had a real estate department and plaintiff, desirous to sell its lots, in April, 1904, appointed defendant its agent to sell and receive payment; that defendant accepted such appointment and thereunder sold many lots and collected much money, which it had refused on demand to account for. Relief was prayed that defendant be required to furnish a statement and account of all such money, etc.; that an account be taken between plaintiff and defendant; that plaintiff have judgment for the amount so found due; and for such further relief as may be equitable and just.

An amended answer was accompanied by exhibits purporting to be an account between defendant and plaintiff on lot sales, receipts, expenses, expenditures and payments. The accounts are intricate and long, they would but cumber the opinion if set forth.

Shortly stated, the amended answer runs on the theory that defendant, by contract between it and one Syrett, who acted for plaintiff, for a compensation of five per cent on sales made by itself (or anyone else) of lots in said Greenwood,, agreed to permit the use of its name and facilities to advertise and actively aid said Syrett (he being the sale and collecting agent and manager of plaintiff and sole active officer in charge of its affairs), to sell said lots, he, Syrett, to retain management and control of such sales as plaintiff’s agent — - said arrangement to last for one year. Collections were made by Syrett and by defendant on sales during that period, and expenses incurred by defendant; that defendant either turned over to Syrett as agent for plaintiff or permitted him to retain the proceeds of lots, it thereby accounting to him as plaintiff’s secretary, treasurer and agent and relieving itself from liability; that Syrett (acting with the approval and authority of plaintiff) had access to defendant’s books, knew the state of the accounts by daily inspection and knew the correctness thereof and was the only officer of plaintiff with whom defendant came in contact; that' Syrett departed from St. Lords about February, 1905, and that plaintiff is estopped from requiring of defendant any further accounting of disbursements and receipts down to date (said account being appended in two exhibits); that afterwards defendant received from various purchasers of lots payments down to April 4, 1905, (shown( by another exhibit); that certain commissions were due and expenditures had been made, for which defendant was entitled to credit (the items of which appear in another exhibit), leaving a balance due defendant of $930.36.

A reply, in the nature of surcharging and falsifying said accounts, came in, which also denied new matter.

It seems Syrett was at all times secretary and treasurer of plaintiff; that he was at one time lot sales agent of plaintiff and was actively in control of its business affairs. While things were in this fix defendant also employed him in that branch of its real estate department having charge of sales of lots in certain subdivisions. It seems that at the time of that employment, through a contract made by him, defendant became the agent of plaintiff in and about the sale of lots in Greenwood and in making collection on lot sales — the scope of the agency being in dispute and the scope of Syrett’s agency for both his principals being also in dispute. .On mutual contentions arising from these complicated, overlapping and dual relations, the suit is prosecuted and defended. Syrett received certain moneys. There" is a disagreement whether he received them as plaintiff’s agent or as defendant’s agent. Defendant received other moneys and asks an acquittance therefor because it claims they came actually or potentially into Syrett’s hands as secretary and treasurer of plaintiff. Syrett kept or supervised defendant’s books of account concerning its transactions in Greenwood lots. He also kept plaintiff’s books. Apparently he served two masters, was unfaithful to both and became an absconding defaulter.

The question is: Where shall the loss fall?

The referee submitted to the chancellor the evidence taken .(we infer in great volume) together with his report — a document of 128 pages of print, which includes his findings of fact and conclusions predicated thereon, covering a multitude of detail, viz.: Each lot sale, the purchaser thereof, the earnest money and subsequent payments thereon, the expenditures of defendant, a resume of the pleadings, the referee’s view of the relationship of the parties litigant to each Other and to Syrett during the life of the agency, an outline of the plan adopted in lot sales for receiving payments, making deeds and bookkeeping on all sides. The fullness and perspicuity of his report bespeak for him the praise due to industry, pains and learning.

To that report when filed many written exceptions were made in due time. It was withdrawn on the same day and refiled on the next. To it as refiled, an array of exceptions were made, first and last, over a hundred. Those exceptions were heard by the chancellor and overruled, and judgment went in accordance with the recommendation and finding of the referee. Defendant duly excepted to overruling its exceptions.

The bill of exceptions contained the following:

“(Inasmuch as appellant accepts the referee’s findings of fact, it feels there is no occasion for abstracting any evidence excepting that which pertains to the reason for amending its answer and for asking for the return to it of the tender theretofore made and for a judgment against plaintiff.)”

(Nota bene: The testimony pertaining to the amendment of the answer and reasons for asking return of a $200 tender made by defendant to cover costs accrued and $77 admitted to be due on the state of accounts shown by the exhibits to the first answer, is not pertinent to the merits or tq any cqntrolhng issue in the case, hence will be omitted.)

The motions for a new trial and in arrest are reproduced ipsissimis verbis.

The first reads:

“Now comes the above-named defendant and moves the court to set aside the verdict rendered and the judgment and decree entered thereon in this case, and to grant it a new trial therein for the following reasons:
“1st. The verdict is against the evidence.
“2nd. The verdict is against the weight of evidence.
“3rd. The verdict is against the law under the evidence.
“4th. The verdict is against the law as declared in the declarations of law given by the referee.
“5th. The verdict is against the law as declared in the declarations of law given by the court.
“6th. The verdict is for the wrong party.
“7th. The court erred in admitting incompetent, irrelevant and immaterial evidence offered by the plaintiff.
“8th. The referee erred in admitting incompetent, irrelevant and immaterial evidence offered by the plaintiff.
“9th. The court erred in excluding' competent, relevant and material evidence offered by defendant.
“10th. The referee erred in excluding competent, relevant and material evidence offered by defendant.
“11th. The court erred in overruling the demurrer to the evidence offered at the close of the plaintiff’s case.
“12th. The referee erred in overruling the demurrer to the evidence offered at the close of the plaintiff’s case.
“13th. The court erred in its declarations of law.
“14th. The referee erred in his declarations of law.
“15th. The damages assessed by the court are excessive. •
“16th. The damages assessed by the referee, ■are excessive.”

The second reads:

“Now comes the defendant herein and moves the court to arrest the judgment in this cause for the reasons:
“1st. That upon the record said judgment is erroneous.
“2nd. That' the petition does not state facts sufficient to constitute a cause of action against defendant.
“3rd. The verdict is not responsive to the issues made by the pleadings.”

Learned counsel for defendant argue that the conclusions of the referee were wrong on the facts found by him; that the court erred in overruling the exceptions to his report and in entering a decree in accordance with the referee’s recommendation.*

But, even at first glance, it is apparent there is a serious question confronting us, in limine, viz.:

On the record here, are we at liberty to review the findings of the referee or the rulings of the court on the exceptions to those findings? More precisely put, if the chancellor erred in overruling defendant’s ex-, ceptions to the referee’s report, is that error (according to accepted rules of practice) here for review, absent a ground in the motion for a new trial directed to error in overruling such exceptions?

To that question, we address ourselves.

(a). The rule is that appellate courts approach the facts in an equity case by allowing to the trial chancellor (in this case his referee) the primary advantage of a personal factor, or equation, viz., the actual use of eye and ear in discerning the truth .of witnesses (eye and ear filling a prime office in that regard) and in stamping testimony with its earned and deserved percentage of weight and credit. The uppei; may well defer to the lower court in that particular. Subject to that modification, an equity ease is heard de novo on appeal. Therefore, if it can not be heard de novo in all that term implies — i. e., in very deed and truth — it should not be heard at all on appeal. Peradventure, to do nothing is wiser than to do something and not have the information, the wherewithal, to do right. A clock that stands still is right at least twice a day. A* clock that runs but lamely, may never tell the truth.

Assuming such premises, the accepted doctrine has come to be in this jurisdiction that we will not reverse a decree merely because the conclusion of the chancellor on facts found by him in his decree seems to be a non sequitur. Our duty on review in such case is to seek equity in the light of all the evidence and do it by rendering to every man his due. To that end the evidence must be brought here if a litigant seeks *to disturb the decree below on any question short of jurisdiction. [Pitts v. Pitts, 201 Mo. l. c. 359, et seq., and cases cited; among them, Patterson v. Patterson, 200 Mo. 335, which deals satisfactorily with the philosophy of the thing.] The mere facts found by a chancellor, absent the testimony on which those findings stand or fall, are in the nature of advice to this court. So, the findings of fact by a jury are advisory to the under court in an equity suit. So, tbe findings of a referee are of the same character and fill the same office below and here. None of them, in the absence of the testimony (which latter is essential matter in discerning the justice of a cause.) would warrant our interference with the decree so long as the court had jurisdiction of the person and subject-matter. A court of conscience may indeed speak and act but it. must hear before it does either. Now to “hear” and decide the merits of a case in equity, without the testimony, is a solecism.

Accordingly, in this case, when defendant elected to omit the testimony taken by the referee from its' bill of exceptions, it did more than its learned counsel intended to do, for it also elected by that same token to make it improper for us to review the findings of the referee or suspend, reverse or alter the decree based on such findings.

(b). A motion for a new trial, in the system now in vogue, fills a substantial and useful office in administering justice through the courts. Questions are suddenly sprung on a trial judge by versatile and ingenious counsel during the hotfoot of a trial, which he perforce must decide without taking time to consider. No mortal judge is allowed to be so incomparably recondite and ready as to know all the law all the time. If he know all the law some of the time, or some of the law all the time, or some of the law some of the time (thereby putting himself outside of the class of those who know none of the law none of the time), he rises to a permissible high-water mark of excellence. Accordingly, the office of a motion for a new trial is to gather together those rulings complained of as erroneous and solemnly and formally present .them, one by one, in black and white, to the judge, in order that he have a last chance to correct his own errors without the delay, expense or other hardships of an appeal. This, on the theory that even a judge is entitled to a last chance — a locus poenitentiae.

Furthermore, the office of that motion has come to be to preserve and fix errors to be reviewed in the record, to mark them for review, by another ruling on the motion itself, on which, when exception is taken and preserved, the whole matter is brought up for correction. We are not saying this is the best plan that might be devised. What we say is that it is the only plan now known to the law, and to which all litigants must conform, until the law is changed and its learning on that head is consigned to the dustheap. Accordingly, it is the settled doctrine of the law that a litigant heading up to a court of review, on matter of mere exception, might as well take no step at all as to omit to take the last and vital step of filing a motion for a new trial, or, if he file one, not to file a good one.

In framing issues here or below the law delighteth in reasonable precision. Accordingly, it applies the maxims: To speak insufficiently is the same as to say nothing. (Idem est nihil dicere, etc.) Not to exist and not to appear are the same thing. (Idem est non esse et non apparere.)

That the record should appear upon which the determination of the appeal might proceed understandingly, we have set forth the motions in arrest and for a new trial. The office of a motion in arrest is not to strike at matter of mere exception. That is the office of a motion for a new trial. In the present case that line of de nareation is preserved by the movent, and, as the matter in hand pertains to exceptions, we may pnt to one side the motion in arrest.

Attending to the motion for a new trial, it would be a most strained and unnatural construction on its language to find therein any reference whatever to exceptions to the report of the referee or any complaint based on error in overruling those exceptions. The language of that motion fell from learned attorneys. They must be held to use words with precision and mean what they say-" — not what they do not say. When they use words well known to jurisprudence and well understood as filling certain offices, we are not permitted to give those words a loose, colloquial meaning, but define them secundum artem. In that motion they deal with “verdicts,” the admission and exclusion of “evidence,” “demurrers,” “declarations of law” and “damages” — each of these terms have a well defined meaning in law. They complain therein of the rulings of the court and referee with regard to those matters, but nowhere do they complain of the ruling of the court upon the exceptions to the referee’s report. It matters not that there are no “verdicts” or “declarations of law” in equity suits, and there are none here that we can find. Nor are there any “demurrers” in this record. The argument runs this way: As there is nothing to which those complaints can apply, therefore, they should be given some vitality and held to apply to the exceptions to the referee’s report and to the action of the court in overruling them. But we decline to follow the lead of that argument. It would lead to dangerous and unheard of results, and play havoc with all certainty and precision of construction.

In this condition of things, although counsel may not have intended to waive those exceptions or waive their complaint of the court in overruling them, yet they do that very thing by pretermitting all reference thereto in the motion for a new trial.

We have so lately been over this matter in State ex rel. v. Woods, 234 Mo. 16, that further exposition is out of place. Other authorities will appear in plaintiff’s brief, which the inquiring mind may consult.

On the authority of the Woods case, we affirm the judgment on defendant’s appeal.

This case coming into Banc and being reheard the divisional opinion of Lamm, J., is adopted.

All concur, except Valliant, C. J., who dissents in a separate opinion filed, in which Woodson, J., concurs in result.


author: LAMM, J. VALLIANT, C. J.

text:
    MAPLEGREEN REALTY COMPANY, Appellant, v. MISSISSIPPI VALLEY TRUST COMPANY.
    In Banc,
    November 27, 1911.
    APPEAL: Matters Reviewable: Evidence Not Preserved. Where the testimony taken before the referee is not preserved by a bill of exceptions, the court cannot review the findings of facts made by the referee, although such finding is accepted by the appellant as a correct statement of the facts; and where there is no material questions raised by appellant’s exceptions to the referee’s report that do not turn on the probative force of the testimony, the appellate court’s only duty is to affirm the judgment.

      Held, by VALLIANT, C. J., dissenting, that, as the facts, as found by the referee, are admitted by both parties to be true, and as those findings of facts are before the court, there remains only a question of law for consideration, which is whether or not the right judgment. has been applied to those facts, and that question the court ought to consider.

      Appeal from- St. Louis City Circuit Court. — Hon. Daniel G. -Taylor, Judge.
    Affirmed.

      Kinealy & Kinealy for appellant.

      H. S. Priest, E. M. Grossman and Jones, Jones, Hocher & Davis for respondent.
   LAMM, J.

This is a cross-appeal by plaintiff in a ease between the same parties just decided and reported at page 350 of this report. Quod vide. The pleadings, issues and incidents are the same, with this exception: When the referee’s report eame in accompanied by the evidence his finding was in favor of defendant on sundry items, viz., on the Williamson lot purchase, $360.; on Dwyer’s, $490; on Hobb’s, $300; on Ward’s, $390; on Zorn’s, $221; on Morris’, $300; on Ketterer’s, $55; on Zorn’s, $62; on Anderson’s, $100; on McDonald’s, $294; on Berry’s, $270; on Weigman's, $350; aggregating between three and four thousand dollars.

Plaintiff filed forty-four exceptions to the referee’s report and findings, — among others, the finding pertaining to the lot sales just mentioned. Its exceptions were overruled and it saved an exception to that action of the chancellor. The report of the referee was then confirmed and judgment followed accordingly.

Thereat plaintiff filed its motion for a new trial, wherein it called attention to its claim of error in overruling its exceptions to the referee’s report. Its motion for a new trial was overruled and on due steps this appeal followed.

Its bill of exceptions contained the following recital: “The evidence taken before the referee is omitted, because the plaintiff, for the purposes of this appeal, accepts the referee’s finding as to the facts.”

The report of the referee is sufficiently indicated in the opinion in the former case. In that ease we ruled we would not consider the merits of a case in equity where the testimony is not brought up. There is no testimony here and that' fact precludes our rehearing of the merits. [Maplegreen Realty Co. v. Mississippi Valley Trust Co., ante, p. 350; Pitts v. Pitts, 201 Mo. 356; Guinan v. Donnell, 201 Mo. 173; Patterson v. Patterson, 200 Mo. 335; State ex rel. v. Jarrott, 183 Mo. 204; Rule 7 of this court.]

There are no material questions raised by plaintiff’s exceptions to the referee’s report which do not turn on the probative force of the testimony. The findings or conclusions of fact by the referee are here, but the testimony, as said, upon which he based those findings is not. Therefore there is nothing here— but a duty to affirm. That duty we perform by ordering affirmance. Let the judgment be affirmed on appellant’s appeal.

Coming into Banc, the divisional opinion of Lamm, J., is adopted on a rehearing therein.

All concur, except Valliant, C. J., who dissents in a separate opinion filed, in which Woodson, J., concurs in result.

DISSENTING OPINION.

VALLIANT, C. J.

This case and its companion case have been disposed of on the theory that the merits could not be inquired into because the evidence taken before the referee is not preserved in’ the record before us, and because it is not assigned for error in the motions for new trials that the court erred in overruling the exceptions to the referee’s report. In so ruling this court, in my opinion, has overlooked a very important fact; that is, that on the face of the record before us the facts, as found by the referee, are admitted by both parties to be true, and therefore, it is only a question of law whether the right judgment has been applied to those facts.

This is not like the cases referred to in the majority opinion which holds that in an equity case, where the appellant complains that the facts found by the chancellor do not justify the judgment rendered, it is incumbent on the appellant to bring up all the evidence in the case, because although the facts found by the chancellor might not justify the judgment, yet there may be other facts in the case, which the evidence would disclose, that would justify it; therefore the respondent is entitled to have all the evidence brought up and considered by this court before the judgment of the trial court is reversed.

But here we have a case in which both sides agree that the findings of facts by the referee are correct and that the only question is as to his conclusions of the law applicable to those facts. It is the same in effect as if the case were submitted for judgment on an agreed statement of facts, or on a special verdict. The referee’s report is before us containing all the facts and there is an affirmative admission in both eases that the findings aré correct and the only complaint is that the law has been misapplied. The case was referred to the referee to try all the issues and find the facts and report his findings to the court together with the evidence. It is necessary that the evidence should be submitted to the trial court along with the report to enable it to judge as to the correctness of the findings, and if either party is dissatisfied with the rulings of the trial court as to those findings, he may appeal, and if it is an equity ease he may bring up the evidence and let the appellate court decide whether the evidence justifies the findings, but when both sides agree that the findings are correct, it leaves nothing for the appellate court to decide except a question of law.

It is argued for the Maplegreen Company that the admission of the correctness of the findings of the referee is applicable to the appeal of that, party, but not to the appeal of the other. That, in my judgment, is a very slender technicality, even if it were correct in fact, but I do not think it is correct in fact. We are not dealing with two cases, but with cross-appeals in one case, and to apply the admission to one and refuse to apply it to the other, and so refuse to look into the merits' of the case, seems to me to be a sacrifice of the merits to a mere technicality.