author: BLAIR, J.

text:
    THE STATE ex rel. AMERICAN AUTOMOBILE INSURANCE COMPANY v. FRANK W. SCHRAMM, as President of Board of Assessors of City of St. Louis, and EDMOND KOELN, as Collector City of St. Louis.
    In Banc,
    June 1, 1917.
    1. TAXATION: Reserve of' Automobile Insurance Company. An automobile company, organized under Sec. 6995, R. S. 1909, to write “all kinds of insurance on automobiles,” which includes fire policies, is required to maintain a reserve, and must pay taxes on so much thereof and of other taxable assets as is “in excess of the legally required reserve necessary to reinsure its outstanding risks and of any unpaid policy claims.”
    2. -: Deduction for Debts: Exemption. The statute permits an automobile insurance company to deduct from its property to be taxed the legally required reserve necessary to reinsure its outstanding risks and any unpaid policy claims; but the deduction is not in any proper sense an exemption, but is made by way of reaching the just amount of taxable property; and United States bonds and other non-taxable properties cannot be included in this reserve as an exemption, but the inclusion of them in the exemption reserve and deducting the whole from the gross assets, by way of arriving at the net assets, amounts to a taxation of them.
    3. -: Inclusion of Non-Taxable Bonds as Gross Assets. The inclusion in the gross assets of non-taxable bonds, under a system of taxing net assets, constitutes a taxation of such securities, and is illegal. Where the securities of an automobile insurance company aggregated $376,085.87, and its reinsurance reserve amounted to $337,773.38 and unpaid losses to $70,000, the said reserve and unpaid losses being by statute non-taxable and together exceeded the assets by $31,687.21, the assessment board was not authorized to add $200,000 of United States bonds and $18,000 of railroad bonds to the gross assets, deduct.from the total the reserve and unpaid losses, and assess the company with the difference, $186, 311.69, for that in effect is to tax the United States bonds, under the guise of taxing the net assets.
    4. -:-: Railroad Bonds. And since the United States bonds exceed the whole surplus assessed and their exclusion leaves nothing assessible, it is unnecessary to decide whether the $18,000 of railroad bonds were non-taxable.

      Certiorari.
    Record quashed.

      Bryan & Williams and Alroy S. Phillips for relator.
    (1) The relator was a domestic corporation engaged in writing insurance other than life, and under the Act of April 5, 1911, taxes are required to be assessed and taxed against it in its corporate name. Laws 1911, p. 417. Relator was required by law to make return first, of its real estate; second, of the net value of all its other assets or values in excess of the legally required reserve necessary to reinsure its outstanding risks and of any unpaid policy claims, which net values shall be assessed and taxed as property of other individuals. R. S. 1909, see. 7098. (2) United States bonds are not subject to taxation by the State. Sec. 3701, R. S. United States (6 Fed. Stat. Ann. 143); Bank v. Des Moines, 205 U. S. 503; Bank v. Minnesota, 232 U. S. 516; State ex rel. v. Brinkop, 238 Mo. 300. (3) Shares of stock in the Pennsylvania Railroad Company (which is a foreign corporation) are not subject to taxation under the laws of Missouri. State ex rel. v. Lesser, 237 Mo. 310; State ex rel. v. Brinkop, 238 Mo. 298. (4) Where property of a corporation is in itself of such a nature that it cannot be subjected to taxation, it cannot be included as part of the gross assets of a corporation in ascertaining its net values for purposes of taxation. Bank v. Minnesota, 232 U. S. 516; Hall v. Bain, 18 R. I. 413; Campbell v. Centerville, 69 la. 439; Bank v. Assessor,' 30 N. J. L. 16; Bank v. Newark, 63 N. J. L. 547.

      Charles PL. Danes and Truman P. Young for respondents.
    (1) The statutes in creating an exemption from taxation on account of the re-insurance reserve of insurance companies, provide that the return for taxation made by such companies shall include all assets, whether taxable or non-taxable, and from these assets shall be deducted the reserve. Thus the non-taxable assets are treated as an investment of reserve funds. R. S. 1909, secs. 6995, 7013, 7098. (2) The placing of Government bonds and nontaxable assets in the exempt reserve does not violate any principle of Federal law. We are not here dealing with a question .of appraisement, such as is presented by a statute allowing the deduction of debts and other obligations in order to arrive at net worth. We are here dealing with an exemption of a tangible fund, a tangible part of the assets of the company. The State has- the right in providing that such reserve shall be exempt to also provide that Government bonds or other exempt securities owned -by the company shall be treated as a part of the reserve. This in no way conflicts with the cases relied upon by the relator, to-wit: Bank v. Des Moines, 205 U. S. 503_; Bank v. Minnesota, 232 U. S. 516.
   BLAIR, J.

Relator is a corporation, organized under the insurance laws of this State and engaged in writing insurance on automobiles. This is a proceeding by writ of certiorari to quash the record of the assessment of certain of relator’s property by the Board of Equalization of the city of St. Louis. In making its return to the assessor, relator listed securities aggregating $376,085.87. It reported its reinsurance.reserve as $337,-773.38 and unpaid losses aggregating $70,000. The total of the reserve and unpaid losses therefore exceeded the assets listed in the sum of $31,687.21. The Board of Equalization, after notice, added $200,000 in United States bonds and $18,000 in stock of the Pennsylvania Railroad Company, to the gross assets, deducted from this total the reserve and losses mentioned, and assessed relator with the difference, $186,311.69.

Relator contends the effect of this is to tax the United States bonds and the railroad stock and that this is unlawful. Respondents concede the bonds cannot be taxed, but insist they are not subjected to taxation by the assessment made; and that there is no legal obstacle in the way of taxing the stock.

Section 11357, Revised Statutes 1909, has been amended (Laws 1911, p. 417) and insurance companies organized under the laws of this State are now assessable and taxable as such companies in their corporate names. Under Section 7098, Revised Statutes 1909, “ every such company . . shall make returns • . . . ; First, of all the real estate held or controlled by it ; second, of the net value of all its other assets or values in excess of the legally- required reserve necessary to reinsure its outstanding risks and of any unpaid policy claims, which net values shall be assessed and taxed as the property of individuals.” By Section 7013, Revised Statutes 1909, such companies must report to the Superintendent of Insurance, among other things: £ the liabilities of the company,” as follows: first “the amount due or to become due to banks or other creditors; second,” losses of all kinds, and “ fifth, premiums reserved or amount required to safely reinsure all outstanding’ risks.” The section then prescribes the method of estimating such reserve in certain cases.

I. The contention that relator was not required to maintain a reserve is not tenable. Its organization under Section 6995 to write “all kinds of insurance on automobiles” is the only description of its powers with which we are provided. If, as suggested, the only reserves required are those mentioned in Section 7013, Revised Statutes 1909, yet these include fire policies, and relator was authorized to write such insurance on automobiles. The Board of Equalization had the facts before it and found the amount of the reserve to be the sum deducted by relator as such. The record does not warrant us in questioning that conclusion of the board.

II. The statute (Sec. 7098) prescribes a system of taxation of net assets. Section 7013 designates the reserve as a liability, and Section 7098 requires this liability, and those for unpaid losses, to he deducted from the net assets in order to arrive at the taxable property of the company, and requires such net assets to be assessed and taxed as the property of individuals. Respondents contend the reserve is an exemption and that the State is empowered to require and has required that non-taxable assets shall be considered as part of this exemption, and that, so viewed, the inclusion of the United States bonds and railroad stock (assuming the latter to be untaxable) in the exemption reserve and deducting the whole from the gross assets does not amount to taxation of. them. Ye do not agree that the reserve and the unpaid losses deductible under the terms of the statute constitute an exemption in the sense-in which respondents use the word. In a general sense this is true (State ex rel. v. Board of Equalization, 256 Mo. l. c. 463), but not, in the circumstances of this ease, in the sense in which respondents employ the term. " Revenue laws sometimes permit taxpayers to deduct from the property to be taxed the debts owing by them. The allowance is not in any proper sense an exemption, but is made by way of reaching the just amount of taxable property.” [Cooley on Taxation (3 Ed.), pp. 269, 270.]

III. The remaining question is whether, under a system of taxing net assets, the inclusion in the gross assets of non-taxable securities constitutes taxation of such securities. This question has been answered in the affirmative by the Supreme Court of the United States. In Farmers’ Bank v. Minnegsota 232 U. S. l. c. 520 et seq., the facts were that plaintiff in error was a savings bank, having no capital stock, and was taxable under a Minnesota statute which provided for ascertaining the surplus remaining after deducting from its assets (other than real estate, separately assessed) the amount of the deposits and of all other accounts payable; the surplus to be taxed as “credits.” Among the assets of the bank were bonds in the- amount of $700,000, protected from taxation by Federal law. The total assets were $12,000,000. The liabilities were deducted from the whole aggregate of the assets including the non-taxable bonds, and this surplus assessed and taxed, and this action was upheld by the State court. On the question involved in this case, the Supreme Court of the United States said (1. c. 528): “It is, however, further suggested that the judgment under review does npt sustain a tax upon the bonds as property, but only a tax upon the surplus of the Savings Bank, computed by taking into the account all of its assets, amounting to about $12,-000,000, of which the bonds were only about $700,000, and deducting therefrom its liabilities. But as the surplus is treated as property and taxed as such, it is obvious that some portion of the burden is attributable to the ownership of the municipal bonds. ... It results that the inclusion of the bonds now in question in the' list of the assets of plaintiff in. error, in ascertaining its surplus for the purpose of imposing a State property tax thereon, was repugnant to the Constitution of the United States.”

In this case, as in that, the tax is a State property tax imposed upon a “surplus” or net assets after deducting certain liabilities. The situation is the same, and the conclusion must be .the same. Since the United States bonds involved exceed the whole surplus assessed and their exclusion leaves nothing assessable, it is unnecessary to consider the taxability of the railroad stock. The record of the Board of Equalization is quashed.

All concur, except Bond, J., who dissents.


source: Caselaw Access Project

author: GRAVES, C. J. PER CURIAM. BOND, J.

license: Public Domain

text:
    CITY OF ST. LOUIS to use of CARROLL-PORTER BOILER & TANK COMPANY, Appellant, v. PARKER-WASHINGTON COMPANY and TITLE GUARANTY & SURETY COMPANY, Appellants.
    In Banc,
    June 30, 1917.
    1. REFERENCE: Findings: Review by Court. If by reason of the extended account involved the case is one in which the trial court could compel a reference, the trial court may review the evidence and findings of the referee and make its own findings of fact, notwithstanding the parties consented to the appointment of a referee.
    2. FINDINGS OF TRIAL COURT: Review on Appeal. Where the pleadings evidence an action at law rather than a suit in equity, the findings of fact by the trial court, if supported by substantial evidence,' are binding upon the appellate court, and the weight of the conflicting evidence will not be determined; and'that is the rule where the trial court has set aside the findings of the referee, and substituted findings of its own — the presumption of correct decision lying with the action - of the court, rather than with the action of the referee.

      Held,, by BOND, J., dissenting, that cases falling within the terms of the statute providing for compulsory reference are reviewable on appeal, like suits in equity.
    3. -: Equivalent to Special Verdict. Where by reason of an extended account involved the court could under the statute have compelled a reference in an action at law, the findings of the referee, if approved by the trial court, have on appeal the status of a special verdict, and cannot be reviewed if there is substantial evidence to support them. [BOND, J., dissenting.]
    4. FOREIGN CORPORATION: Doing Business in Missouri Without . License. A foreign corporation which agreed with a Missouri company to manufacture and deliver water pipe, free’ on board of cars at a designated point in this State, at a designated price per linear foot, to be placed in the flow line, not oy it, but by the purchaser, was hot doing business in the sense of the statute which forbids such a corporation to do business in this State without a license.
    5. PARTIES TO ACTION: Suit by City to Use of Contractor. A suit by a corporation which furnishes pipe to a private company to be used in the construction of a city water plant, should be brought in the name of the city to the use of such corporation, where the bond sued on provided that suit may be entered upon the bond by the city at the" instance of any materialman and shall be instituted to the use of such materialman.
    6. PURCHASE OF PIPE: Acceptance: Counterclaim. Where the contract between a foreign corporation to furnish water pipe to be used in a city water plant and the contractor, made the contract between the city and said contractor a part of said contract, and the contract with the citji provided that the pipe should stand every requirement and test of the city’s water commission and be fully in accordance with the contract between the city and said contractor and that the final pressure-test should be made after the pipes were placed in the flow line, it cannot be held that the pipe was inspected and accepted by the city at the factory in the foreign State, although the city had an inspector at the factory to watch the manufacture of the steel going into the pipes and the contract provided for such an inspection and also a test of strength. The pipe was not accepted by the city until accepted by the city water commissioner and the final pressure-test made after the pipes were in-place; and consequently the counter-claim of the contractor for a reduction from the purchase price on the ground that at the pressure-test some -of the pipes proved defective, was not foreclosed.
    7. -: Liquidated Damages: Penalty: Delay in Completing Contract. A provision in a contract for the purchase and delivery of water pipe providing for a deduction of $25 per day as liquidated damages for delay in completing the delivery within a deéignated time, may, under all the facts and "circumstances, be intended by the parties to provide a penalty to the amount of actual damages due to the delay, and not for liquidated damages in a definite amount; and if the contract itself contemplates delays over which the contractor was to have no control, the provision should be held to be a mere penalty, and not to intend liquidated damages.
    Appeal from St. Louis City Circuit Court. — Hon. Hugo Muench, Judge.
    Affirmed.

      Judson, Green $ Henry for plaintiff.
    (1) Under the contract and specifications in this case plaintiff’s responsibility ceased, so far as the quality and condition of the pipe was concerned, when it had been duly inspected and accepted by the representative of the city of St. Louis. There is no evidence of any particular or substantial injury received by the pipe in the course of transportation. Therefore, the acceptance of the pipe by the city’s representative, after he had duly inspected and tested it, as specified in the contract, terminated all liability or responsibility on the part of plaintiff, as between plaintiff and these defendants. Schaffer v. Gildea, 3 Colo. 15. Where a contract provides that the architect shall pass upon all materials used in construction and condemn defective materials, which shall be promptly removed by the contractor, the failure of the architect to object as the work progressed constitutes a waiver. Siebert v. Roth, 118 Wis. 250; Laycock v. Moon, 97 Wis. 59; Lime Co. v. Shores, 105 Wis. 122; Electric Co. v. Iron Works, 116 Mich. 293; McConnell v. Water Co., 149 Cal. 60. (2) The evidence shows that each and every delay for which damages are claimed by the defendant, was caused either by the City of St. Louis and its agents, or by the Parker-Washington Company. In no instance was the Carroll-Porter Company to blame for any delay. The referee was correct in reporting that this action is in proper form. St. Louis to use v. Von Phul, 133 Mo. 561; Kansas City ex rel. v. Surety Co., 186 Mo. 281. While the Carroll-Porter Company is a foreign corporation, the delivery of the pipe sued for to the Parker-Washington Company, in the city of St. Louis, under the contract offered in evidence, was not such a transaction of business in the State of Missouri as would be in violation of our statutes. R. S. 1899, sec. 1025. Heating Co. v. Fixture Co., 60 Mo. App. 155; Woolen Mills v. Evans, 84 Mo. App. 450; Frick v. Marshall, 86 Mo. App. 472; Bruner v. Plow Co., 168 Fed. 218. The Carroll-Porter Company at no time had or maintained any office in tins State or employed any local agent in connection with the contract in question. The contract was signed by the Carroll-Porter Company’s president in St. Louis, Missouri, and by its secretary, and the corporate seal attached in the State of Pennsylvania; and the pipe was manufactured in the State of Ohio, and plaintiff’s duties under the contract terminated immediately upon the arrival of the pipe in St. Louis on cars of the carrier companies. This did not constitute the transaction of business within the State of Missouri; and if our statute should be so construed, it would be unconstitutional as an unlawful interference with interstate commerce. Shoe Co. v. Rubber Co., 156 Fed. 1; Bruner v. Plow Co., 168 Fed. 218. (4) The Parker-Washington Company received and accepted this pipe, used it on the construction of its flow line, and collected from the city the full contract price therefor. It is therefore bound, when sued on the contract for the contract price, to pay the amount agreed upon, less such sums, if any, as it was compelled to expend in remedying defects in plaintiff’s shop work. The fact that the shop work was defective, if it was defective, does not prevent plaintiff from suing on the contract for the contract price, under the facts we have here. Brown v. Weldon, 99 Mo. 565; Triplett v. Montgomery, 81 Mo. App. 141. The defendant cannot recover any damages at $25 per day for ‘£ delays'’ ’ because the city extended the time for the performance of the work, and the Parker-Washington Company did not suffer any damage from such delays. That clause of the contract is a penalty clause and not a liquidated damage clause. Connelly v. Priest, 72 Mo. App. 673; Parlin v. Bank, 84 Mo. 67; Zimmermann v. Conrad, 74 S. W. 139.

      8. Mayner Wallace, Wm. B. Orthwein and Shepard Barclay for defendants.
    (1) The relator is a foreign corporation and did not have a license as such to do the business it agreed to do as sub-contractor for the construction of the flow line in Missouri, and hence cannot recover. R. S. 1909, secs. 3037-40. (2) The construction of the flow line for the city of St. Louis, under its contract with the P.-W. Co., required the steel pipe to be furnished 'by relator in certain definite forms to be installed in fit condition for the use required. The pipe was to be made to conform to city inspection ££complete in place” and to be delivered by relator to the purchaser in Missouri. The business was‘in this State, and was not interstate commerce. Bacon v. Illinois. 227 U. S. 504; Glue Co. v. Glue Co., 187 L[. S. 611; Anglo-Am. Pro. Co. v. Davis Co., 191 U. S. 373; Shoe Co. v. Ramlose, 210 Mo. 631; Tomson v. Assn., 129 N. "W. 529; Railroad v. Const. Co., 162 Ala. 396; Oil Co. v. Com., 52 S. E. (Ya.) 390; Parke-Davis v. Mullett, 245 Mo. 168; Zinc Co. v. Mining Co., 221 Mo. 7; Chicago Co. v. Simms, 197 Mo. 507; Buffalo Co. v. Penn. Co., 178 Fed. 696; Banker v. Pennsylvania, 222 U. S. 210; Tilden v. Blair, 21 Wall. 241. (3) The relator pleads full compliance with the contract and the testimony shows there was no such compliance. A recovery in this State of reasonable value for work or materials done or furnished is not recoverable on an allegation of performance of the contract under which, the same were done or furnished. Everman v. Association, 61 Mo. 489; Hayes v. Bunch, 91 Mo. App. 467; Wade v. Nelson, 119 Mo. App. 289; Huston v. Tyler, 140 Mo. 252; Skinner v. Young, 106 Mo. App. 617;' EeifSchneider v. Beck, 148 Mo. App. 725 ; Earning v. Eailway, 157 Mo. 506; Brown Co. v. MacArthur, 236 Mo. 51. (4) The amount agreed to be paid by the relator (at rate of $25 per day) after default as liquidated damages was properly so estimated, as the uncertain nature and extent of the injury to the general construction work of the entire flow line made such agreement proper and appropriate. Tompson v. St. Charles County, 227 Mo. 237; Malone v. City, 147 Pa. St. 416; Clark v. Barnard, 108 U. S. 461; Kemp v. Ice Co., 69 N. Y. 45; May v. Crawford, 150 Mo. 504. (5) Where the nature of the damage is uncertain, such a provision as is here shown is valid and enforceable. Parker-Washington Co. v. Chicago (unreported), 111. App. (March 5, 1914.)
   GRAVES, C. J.

In the lower court this case' was first heard by a referee. This referee made a complete finding of facts, and stated .his conclusions of law. Such referee recommended judgment for relator in the sum of $27,513.85, and to his report both parties filed exceptions. Relator’s exceptions were, by the court, sustained in part and overruled in part. Defendants’ exceptions were overruled in toto. Both sides have appealed.

The court 'gave judgment for relator in the sum of $38,441.28. The record recites that the reference was by consent, the order therefor reading:

“Tuesday, January 5, 1909.
“Now at this day come the parties, plaintiff and defendants, by their respective attorneys, and consent and agree that this cause may be referred to Francis J. McMaster, Esq., whereupon it is ordered by the court that this cause be, and the same is hereby referred to Francis J. McMaster, Esq., to try all the issues involved therein, and to report his findings and proceedings to the court with all convenient speed.”

The referee has, with great care, outlined the case and the pleadings therein, and this we borrow from him ;

“This suit was instituted by plaintiffs to recover from defendants the unpaid balance of the contract price for certain materials furnished defendants, the Parker ~ Washington Company, under a contract with it, to be used by it in constructing' what is known as a ‘flow line,’ for the city of St. Louis, from the Chain of Rocks to the Baden Pumping Station, under and in pursuance of a contract between said city and said defendants, and in pursuance of Ordinance No. 21807 of said city, approved March 24,1905.
“Plaintiff’s petition shows that this suit was instituted in the name of the city of St. Louis to the use of Carroll-Porter Boiler & Tank Company against the Parker-Washington Company, and the Title Guaranty & Surety Company of Scranton, Pennsylvania, the latter company being the company that executed the bond, required by the city of St. Louis from the Parker-Washington Company, for the faithful performance of its contract with the city.
“The petition further alleges that the Carroll-Porter Company was incorporated under the laws of the State of Pennsylvania, and that the Surety Company was incorporated under the laws of the State of Pennsylvania, and further alleges, by an amendment, that the Surety Company ‘has been duly authorized to do business in this State under the statutes relating to Foreign Insurance Companies. ’
“That on May 2,1905, the Parker-Washington Company made a contract with the city of St. Louis, hereinafter called ‘the City,’ under its charter and ordinance, to construct and lay certain piping, complete in place, from Chain of Rocks to Baden Pumping Station. That the work was to be done under the direction and subject to the inspection of the Water Department of the city, the consideration being $478,000, which was to be paid on monthly estimates, less fifteen per cent on the contract price, which latter was to be paid after final acceptance by the city.
“That the Parker-Washington Company made and delivered to the city its bond signed by said Surety Company in the sum of $126,660.62 for the faithful performance of its contract, and would, when the work was completed, pay the proper parties all amounts due for material and labor used.
“And the bond further provided that it could be sued on in the name of the city of St. Louis to the use of any material-man.
“ That after the contract was awarded the Parker-Washington Company, the latter on the 22nd day of May, 1905, made a contract with the Carroll-Porter Company to furnish and deliver the pipe and appurtenances called for by the contract between the Parker-Washington Company and the city, in such quantities as and when called for by the Parker-Washington Company. That this contract referred to the contract between the Parker-Washington Company and the city, and provided that the Carroll-Porter Company should complete the delivery of the entire requirement of the ‘ said pipe and appurtenances. ’ That it' was to be paid by the Parker-Washington Company, monthly, the sum of $14.25 per linear foot of pipe delivered, free on board cars at waterworks in Baden, the payments to be made on the 10th of the month, for pipe delivered the previous month, save fifteen per cent of the amount, which latter was to be retained until fifteen days after final acceptance of the pipe in place by the city, when this fifteen per cent was to be paid.
‘ ‘ That plaintiff has fully complied with all the terms and conditions of its contract. That the construction of the pipe and appurtenances was superintended at its factory by inspectors of the Water Department of the city, and that the same had been constructed, delivered and accepted by the Parker-Washington Company (hereinafter designated as defendant) and the city, as in full compliance with the plans and specifications of the principal contract.
‘ ‘ That the work under the principal contract had been completed and accepted by the city and the total amount due defendant was paid in full by the city on the 17th day of April, 1908.
“That although defendant had been paid in full and more than fifteen days had elapsed since such final payment, plaintiff had not been paid the amount due it for material and labor furnished and employed therein. That $11,644.81 was due from defendant to plaintiff prior to the acceptance of the work by the city, which has not been paid, though often demanded, and in addition fifteen per cent, which had been reserved until the acceptance of the work by the city and fifteen days thereafter, amounting to $33,710.79, had not been paid, although the period of fifteen days had expired, making a total of $45,357.50 due plaintiff from defendant, and which was unpaid although often demanded.
“That the Title Guaranty & Trust Company, surety for defendant, had changed its name since executing the bonds to the Title Guaranty & Surety Company of Scranton, Pennsylvania, and was thus impleaded in this cause. That there had been a breach of said bond by defendant and the^ Surety Company for the faithful performance of the principal contract, in that defendant had failed to comply with the terms of the principal contract by refusing to pay plaintiff the amount due it under contract for materials furnished and labor employed in its performance, and then claimed that a cause of action had accrued to the city of St. Louis to the use of the Carroll-Porter Boiler & Tank Company, against defendant and the Title Guaranty & Surety Company, and asking judgment for the penalty of the bond, the sum of $126,660.62 and execution for the amount due plaintiff, to-wit, the sum of $45,-357.50, with interest and costs.
“The Parker-Washington Company’s answer admits its incorporation and that of the Surety Company as alleged in the petition,- and further answering alleges:
“1. That the city of St. Louis has no warrant or authority to bring or maintain this action, and that it has no legal capacity to maintain this action in the manner and form that the same is brought.
“2. That the Carroll-Porter Boiler & Tank Company has no legal capacity to maintain this action, because it has never been 'licensed or authorized to do business in this State.
“3. • That there is a defect of parties plaintiff, because the Carroll-Porter Company is not authorized, empowered or licensed to bring or maintain this action in this State, and for these réasons asks to be discharged with its costs.
“4. Defendant then pleads a counterclaim and set-off against the plaintiff, and alleges therefor the contract between defendant and the Tank Company entered into on the 22nd day of May, 1905, whereby the plaintiff, the Tank Company, agreed to furnish and supply the pipe, together with all incidentals and appurtenances (not including valves) necessary to complete the contract, made by defendant with the city for building, complete in place, the flow line, and that the appurtenances included angle irons, cast steel manhole covers and saddles with necessary extensions and the 36-inch and 12-inch flange connections, and all field rivets, the pipe to be made in sections and with curves, the total amount of which was to be about 19,634 linear feet, according to the plans and specifications of the contract between defendant and the city, which were made a part of the contract between plaintiff and defendant, and that said pipe with all appurtenances was to be delivered by plaintiff to defendant F. O. B. cars at Waterworks; Baden Station, St. Louis, Mo.
“That according to the agreement plaintiff was to deliver these materials in snch quantities and as and when called for by defendant, at a rate not less than 100 linear feet per day, if required, and to begin delivery forty-five days after date of contract, ■ and complete the delivery within eight months from said date.
“That plaintiff agreed to-pay defendant $25 per day as liquidated damages for each and every day it was in default.
' “That plaintiff guaranteed and warranted that the materials furnished should stand every requirement and test of the Water Commissioner of the city and be in accordance with the contract between the city and defendant, and would hold defendant harmless and indemnify it against claims and demands of every person on account of any labor or materials furnished thereunder, or of the performance of said contract by or on the behalf of plaintiff or otherwise on its account.
“The plaintiff did not perform its contract, but violated it in the following particulars':
“ (a) That it failed to furnish such materials in such form as were required by the plans and specifications. It delayed and refused to furnish same promptly. That same, when furnished, were improperly curved and improperly shaped, so they could not be-used as intended, without -great labor and expense, which defendant was obliged to expend thereon to make them conform with the plans and specifications.
“(b) That plaintiff failed to furnish several items agreed to be furnished.
“(c) ■ That plaintiff failed to furnish the material within the time agreed upon, and that much of the pipe furnished was found defective in this, that much of its riveting did not register, that it was imperfect in structure, and so adjudged by the inspectors for the city, so that defendant was put to large expense to put it in sufficient fit condition to comply with the specifications and obtain acceptance by the city.
“(d) That plaintiff refused to correct, amend or rectify these defects and that defendant was obliged to expend large sums for materials, work and labor needful and necessary to put said material into form and condition for use as required by tbe plans and specifications, and in despite of repeated warnings and importunities refused to deliver the materials promptly, and greatly exceeded the limits of time for delivery, whereby defendant became entitled to demand liquidated damages as specified in the' contract.
“Defendant files an itemized account of these various and sundry alleged breaches of the contract, showing the nature and cost thereof, which is marked “Exhibit Z,” and asks that it be made and taken as a part of the answer, and accepted in lieu of a repetition of its recitals. This exhibit shows the amount of items and costs, the latter to the extent of $38,720.34, and asks judgment against plaintiff for that amount, together with interest thereon from the time of demand, which is alleged to have been made on April 16, 1908, and also for its costs. The defendant then denies generally each and every allegation of the petition.
“The answer of the Surety Company admits the incorporation of plaintiff and defendant and alleges: (1) that the Tank Company, at the time of filing the petition, had no legal capacity or license to bring or maintain this suit. (2) That plaintiff had no legal capacity .or authority to bring or maintain this action. (3) That the Tank Company never had .a license to do business in Missouri, and hence has no competency or capacity to maintain this action. (4) Except as admitted in the answer, it denies generally every allegation of the petition.”

From the foregoing a fair conception of the issues may be gleaned. Other matters can best be stated in the course of the opinion, in connection with the points made.

I. In this case, whilst the parties seemingly consented to the appointment of a referee, it is.a case where by reason of an extended account involved, the court could have compelled a reference under the statute (R. S. 1909, sec. 1996), and must be treated here as a compulsory reference. [Williams v. Railway, 153 Mo. 487.] And in such cases the trial court is not bound by the findings of fact by the referee, but may review the evidence and make its own findings of fact. In the Williams case, supra, 153 Mo. l. c. 495, it was said:

“The reference in this case was by consent of both parties duly entered of record, but it was referable without the consent of either. The long and intricate account rendered it peculiarly'proper for a reference. In a word, it was a case for a compulsory reference. In such cases it is the settled law of this court that the circuit court may on the motion of either party review the findings of the referee on the evidence reported and make its own findings and this court on appeal may review the findings and affirm or reverse the judgment of the circuit court in whole or in part. [R. S. 1889, sec. 2138; State ex. rel. v. Hurlstone, 92 Mo. l. c. 333; Wentzville Tobacco Co. v. Walker, 123 Mo. 671; Caruth-Byrnes Hardware Co. v. Wolter, 91 Mo. 484.] On this point of practice both parties are agreed.” •

It is seemingly agreed in this case that such is the settled practice. We mention the rule, however, in view of another which must be considered in the course of the opinion.

II. The pleadings here (petition and answer and counterclaim) evidence actions at law rather than in equity. The findings of fact by the trial court, if supported by any substantial evidence, are binding upon this court. In other words, we will not weigh con-Aiding evidence with the view of determining its weight, but will only review the evidence to determine whether or not there is substantial evidence in support of the trial judge’s findings of fact. And in cases where the trial court has set aside the findings of the referee, and substituted findings of its own, the presumption of correct decision lies with the action of the court, rather than with the action of the referee. And in cases" such as we have before us the substituted findings of fact by the trial court will only be reviewed by this court to the extent of determining whether or not they are supported by substantial evidence. We will not weigh conflicting evidence in such instances.' [Williams v. Ry. Co., 153 Mo. l. c. 511; State ex rel. v. People’s Ice Co., 246 Mo. l. c. 202.] These two cases cover both divisions of this court. In tlie Williams case, supra, which was approved in the Ice Co. case, supra, it is said:

“The next finding of the referee which we must consider is one in favor of plaintiffs for $401.70 for ‘close chopping’ 13.39 acres. This finding of the referee the circuit court rejected, and of this action of the court plaintiffs complain. The amount is small in comparison to other claims, but a proper solution of the matter is'attended with much difficulty. In this conflict between the circuit court and the referee the question arises, in whose favor is the presumption of correct decision?
“In Wentzville Tobacco Co. v. Walker, 123 Mo. 662, it was held that the presumption in this court was in favor of the judicial action of the circuit court whose duty and prerogative it was, in a case like this, to examine the report of the referee in the light of the evidence and affirm or .reverse his action. That decision we think is in harmony with our .practice in reviewing the granting or refusing of new trials. The presumption is in favor of the action of the trial court and it is only when we find that it has abused its discretion do we interfere with its judgment. ”

III. In references of the character involved here it has been held that the findings of the referee are in the nature of special verdicts, and have such status in' this court upon review. [Berthold v. O’Hara, 121 Mo. l. c. 97, and cases cited.] This is on ..the theory that they have been approved by the court, and thus made, in fact and in law, the .findings of the court. [State ex rel. v. People’s Ice Co., 246 Mo. l. c. 210.]

The findings of the referee are wholly without vitality until the court acts. It requires the action of the court in sustaining them to give them, in 'this court, the status of special verdicts. In cases like the Berthold case, supra, and other similar eases, wherein the rule is announced, it will he found that the trial' court sustained the findings of the referee. We of course are referring to references which are compulsory under the statute, and which involve 'actions at law. If such cases (actions at law) were tried by the court in the first instance, his findings of fact would have the weight of a verdict by a jury upon appeal here. In other words, they would not be ignored by this court, but would be binding upon this court, if there was any substantial evidence to support, the findings of fact.

So we reach the conclusion in this case, that in so far as the referee’s findings of fact have bee:p sustained by the trial court they can not be set aside here, if there was substantial evidence to support them. We will not weigh conflicting evidence. It is not the referee’s act which gives them that status here, but the act of the court in approving them. And when the trial court refused to approve such findings, and made findings of its own, such findings of the court have the same'status here. We determine whether the court’s findings have substantial evidence to support them, and if so they are binding here, and this court will not weigh contradictory evidence and judge the weight thereof.

IV. By the foregoing rule we feel constrained to measure this record. There is, however, a preliminary matter which requires disposition at the threshold. By defendant’s answer it is averred that relator was a foreign corporation doing business in Missouri without a license and for that reason could not bring or maintain a suit in our courts. [R. S. 1909, secs. 3037 to 3040, inclusive.]

As to whether relator was doing business in this' State without license is a mixed question of law and fact. Of law, because it is the duty of the court to declare the legal effect of the written .contract between relator and the Parker-Washington Company in determining the fact as to whether or not that contract called for doing of work in Missouri in violation of our law. Both the referee and the trial court found against the defendants upon this point. Relator was furnishing to the Parker-Washington Company the iron pipe which was to be used by the Parker-Washington Company in the construction of the flow line. The initial proceeding was by telegrams. Parker-Washington wired relator asking if it would furnish the pipe at fbe price of $14.25 per lineal foot, and relator accepted at this price. It would seem that the actual written contract was made in Missouri, or was signed by the president of relator, whilst in Missouri, then forwarded to the head office for the signature of relator’s secretary and afterward signed by Parker-Washington Company through its proper officers. By the contract the material to be used was to be manufactured in Ohio and delivered in Missouri, in condition to be placed in the flow line, so that it would stand the tests required by the contract between the city and Parker-Washington Company. Relator had nothing to do with the placing of the pipes in the flow line. Its material when in the flow line was to stand the required tests, but relator’s liability ceased when it delivered on board the cars material which would meet the tests required by the city’s contract, when such material had been-properly placed in the flow line by Parker-Washington Company. The contract fairly read does not place relator in the attitude of doing business in Missouri. As a foreign corporation it had the right to contract to furnish from its factory manufactured material for use in Missouri, as the clothing manufacturer, can contract to deliver his goods to Missouri customers. The court properly found against defendants upon this point. Relator was not doing business in Missouri within the sense of the statutes relied upon. The facts of the case do not bring it within the case of Zinc Co. v. Mining Co., 221 Mo. l. c. 12. This relator had no place of business in Missouri, where, without license, it was transacting the business of its charter in Missouri, as was the fact in the Zinc Company case, supra.

V. A second defense raises the point that the city has no right to bring and maintain this suit at the relation of Carroll-Porter Company. This question is determined byfthe face of the bond itself. The bond Provided that suit might be entered upon the bond by the city at the instance of any material-man, and should be instituted to the use of such materialman. The case falls squarely within the ruling of this court in City of St. Louis to use v. Von Phul, 133 Mo. l. c. 565. The defense is without merit.

This and the foregoing defense are the only ones that go to the whole case. Others go to parts thereof.

VI. For the relator there is a question which touches vitally, the whole defense of counter-claim, and whilst we are disposing of questions of that kind on one side it is well to determine like questions on the other, ma(je by relator is that the material furnished by it was inspected and finally accepted by the city at its factory in Ohio.

If this be true, then there would be little left to the counter-claim. The point made was adversely ruled both by the referee and the trial judge. Whilst the referee and triál judge differed on .the items of the counter-claim which should be allowed, they did not differ upon this question. They agreed upon the question’that the tests made at the factory in the-course of manufacture did not amount to a final test and acceptance of the material.

The city did have a man at the factory of relator to watch the manufacture of the steel material going into these pipes, and the contract provided for such an inspection, and also a test of strength. This man watched these' tests, as well as the material and its manufacture throughout. • But the trial court was right in holding that this was not an acceptance of the material as it came from the factory. The contract between the relator and the Parker-Washington Company made the contract between the city and Parker-Washington Company a part of the contract, and under the latter-named contract the final pressure test, was to be mp,de after the material had been placed in the flow line, and the pressure test was to be satisfactory to the Water Commissioner of the city of St. Louis. In the contract between relator and Parker-Washington Company it is provided:

“The said second party guarantees and warrants that said pipe and appurtenances aforesaid so to be furnished shall stand every requirement and test of the Water Commissioner and be fully in accordance with the contract between said first party and the said city.”

Elsewhere the city contract is by reference made a part of the relator’s contract, and this city contract calls for the final pressure .test, as above indicated. There was no error in overruling this contention of relator.

VII. The referee allowed on defendant’s counterclaim $22,114.10, with interest to June 20, 1910, $2,880.16, or a total of $24,894.26, but in such allowance ignored and refused to allow an item of $10',275 based on the idea of $25 per day as liquidated damages for failure to deliver the pipe within the eight months specified in the contract. The learned referee disallowed this claim of $10,275 as liquidated damages,, and the court took a like view of this question. The referee held that, when all the facts and circumstances were considered (including all the contracts and the bond herein sued upon), it was clear that the parties intended to make this a penalty rather than liquidated damages. The contract between defendant and the city had a like provision, and the bond sued upon in this case was given to secure the faithful performance of that contract. That contract was made a part of plaintiff’s contract. Under it the Water Commissioner, or his office, could make changes and thereby occasion delays. The city had the power to have inspectors at plaintiff’s plant, and these could, and did in fact, occasion some delays. It is worth something to note that when delays began to appear defendant began to keep an accurate book account of the damages actually occasioned by such delays. This tends to show defendant’s understanding of the contract. It tends further to show that under the contract the actual damages occa,sioned by delays could.be readily determined. Further it should be noted, that although defendant was much longer than twelve months in finishing its contract, the city settled without claiming any liquidated damages. We think that both the referee and the court gave to these contracts a fair construction, when they held that this clause therein created a penalty. This was defendant’s first impression, because it at once began an account of actual damages occasioned by the delays. This account forms a part of its counter-claim herein, and on it some allowances have been made. The referee held that an allowance on this counter-claim for the damages suffered by these delays, would be what was intended by the parties in the execution of the contract. In other words, that the parties intended a penalty and not liquidated damages, and with this construction of the contract we are satisfied. There were too many opportunities for delays over which plaintiff had no control under the two contracts, to give the latter contract a different construction. The allowance of this so claimed liquidated damages was properly refused.

VIII. With this $10,275 claim out of the case the •other matters herein are of easy solution. Other matters of exception go to questions turning upon disputed facts. Under the rule, which we have announced as applicable to this case, we are not permitted to disturb the findings of the trial court, unless such findings are unsupported by substantial evidence. These findings have the support of substantial evidence (a, detail of which would serve no good purpose here) and for that reason we cannot disturb them.

From it all it appears that the judgment nisi should be affirmed. It is so ordered.

PER CURIAM.

The foregoing opinion by Graves, C. J., in Division, is adopted as the opinion of Court in Banc.

All concur, except Bond, J., who dissents in opin-' ion filed; Woodson, J., concurs in result.

BOND, J.

(dissenting) — I dissent from the learned majority opinion because it inadvertently overlooks the essential and integral distinction between the scope of the view in cases of compulsory >referenee under our statute and other cases which could not he referred except hy the agreement of parties. The instant case was one in which a reference was compulsory under the strict letter of the statute, and that was recognized by both parties to the suit who conducted the trial on that theory in the court below. The section of-the statute governing compulsory reference (R. S. 1909, sec. 1996) is of ancient daté (R. S. 1845, p. 825, sec. 24; R. S. 1855, p. 199, foot note.) The rule that cases falling within the terms of the statute providing for compulsory reference are reviewable on appeal, like suits in equity, has been established in this State since the adoption of the statute in a continuous course of decisions. [State ex inf. v. Arkansas Lumber Co., 260 Mo. l. c. 274, and cases cited; Reed v. Young, 248 Mo. l. c. 613 et seq.; Sonnenfeld v. Rosenthal, 247 Mo. 250; State ex rel. v. Reynolds, 245 Mo. l. c. 703; Vandagrift v. Masonic Home, 242 Mo. l. c. 154; Utley v. Hill, 155 Mo. 232; Haas v. Garnett, 155 Mo. 568; Williams v. Santa Fe Ry. Co., 153 Mo. l. c. 495; Small v. Hatch, 151 Mo. l. c. 306; Shepard v. Bank, 15 Mo. 144; Edwardson v. Garnhart, 56 Mo. 81; Ice Co. v. Tamm, 138 Mo. 385; Roth v. Wire Co., 94 Mo. App. l. c. 268; Bond v. Finley, 74 Mo. App. 22; Craig v. McNichols Furn. Co., 187 S. W. (Mo. App.) l. c. 796, and cases cited.]

I do not understand it to be disputed by counsel that the record of the long account and array of items of charge on both sides, contained in this record, presented a case falling strictly within the terms of the statute providing for the compelling of references, and I am, therefore, unable to perceive any logical or legal ground taking this case outside of the application of the statute as declared by the appellate courts of this State in the decisions above cited, and hence I am constrained to dissent - from the views expressed in the learned majority opinion.


author: WALKER, J.

text:
    MAMIE A. AUTENRIETH, Administratrix, v. CHARLES E. SCHAFF, Receiver of MISSOURI, KANSAS & TEXAS RAILWAY COMPANY, Appellant.
    In Banc,
    June 30, 1917.
    JUDGE: Voluntary Disqualification of Self. In a civil case a statutory reason must exist and appear of record for the disqualification of the regular and the calling in of a special judge. An order entered of record to the effect that “the judge of this court on. his own motion disqualifies as trial judge in the above entitled cause,” made in anticipation of and to forestall the filing of an application for a change of venue based on his bias and prejudice, was unauthorized by statute, and amounted to a denial of justice; and a trial before a special judge, elected by the bar after-said judge had refused to set aside the other, was coram non judice and cannot be considered on appeal.
    Appeal from Pettis Circuit Court. — Eon. George W. Barnett, Special Judge.
    Reversed and remanded.

      Eenry Lamm, Montgomery S Montgomery and J. W. Jamison for appellant.
    The judgment should be reversed because the special judge presiding at the trial had no jurisdiction. (1) The regular judge during the same term had jurisdiction to set aside the order disqualifying himself. His ruling that after making that order he had no jurisdiction to set it aside or to entertain defendant’s motion in that behalf was contrary to both principle and precedent; and, hence, constituted reversible error. State v. Webb, 74 Mo. 334; Colvin v. Six, 79 Mo. 200; Leise v. Mitchell, 53 Mo. App. 566. (2) Under this record, the regular judge had no warrant of authority either in constitutional or statutory law to disqualify himself, and thus compel the alection of an attorney as special judge, where, as here, the record shows affirmatively that no statutory cause or reason for disqualifying himself existed. In the order itself, or elsewhere in the record, there should have appeared as an “indubitable predicate” to such vital step in changing the venue and the election of an attorney as special judge, some legal inability on the part of the regular judge to try the case. Const, art. 6, sec. 29; art. 2, sec. 18 (arguendo); R. S. 1909, secs. 3961-3967, 1927, 1928, 1931; Bank v. Graham, 147 Mo. 250; State v. Downs, 167 Mo. 478; Ladd v. Porsee, 163 Mo. 509; State v. Witherspoon, 231 Mo. 716; State v. Decker, 217 Mo. 324 (arguendo); State v. Yager, 250 Mo. 404 {arguendo). If a regular judge without statutory reason may renounce his office in one case he may without valid reason renounce it in all cases and put his official duty in “commission” among members of the bar — a doctrine unknown to the law. Plence the order made was a nullity and opposed no barrier to a correct method of procedure (State ex rel. v. O’Bryan, 102 Mo. 259) and it was error to refuse to take jurisdiction of our motion to set it aside and to take jurisdiction of our application for a change of venue. (3) The reasons and grounds for the order disqualifying himself given by the regular judge on the day after he made the entry and made a part of the record, over the objections of defendant, are not statutory or valid grounds for the disqualifying order and entry. Those reasons were, in substance, that the regular judge had heard of an intended application for a change of venue on the part of defendant and hence had disqualified himself in this and the group of companion cases “in justice to his own feeling” and to relieve counsel from making affidavit of bias and prejudice “concerning cases which the court knew nothing of.” Such “reasons” are not only quite unknown to the law but they are at enmity to the letter and spirit of the law. It was not due process of law or correct procedure for the regular judge to attempt to anticipate, forestall and defeat defendant’s application for a change of venue/of which he had given notice, and thus deny to defendant the legal and beneficial incidents that flow from such application, whereby his cause would have been kept within the jurisdiction of some other regular judge unless he had voluntarily consented to the election of a special judge. When the election of a special judge once takes place no lhange of venue is allowed thereafter and, hence, the case sould never again get before a regular judge unless by mutual consent. If the special judge fails or refuses to act or cannot properly preside the only remedy is by another election. R. S. 1909, sec. 3963; Blanchard v. Hazel-tine, 79 Mo. App. 251. If the defendant had not been forestalled in his right to take a change of venue by the voluntary order of the court, entered in anticipation of such application for á change, the mandatory duty of the regular judge on defendant’s application made would have been to send the case to some regular judge unless by mutual consent a special judge had been elected. R. S. 1909, sec. 1931; Douglass v. White, 134 Mo. 234; Penfield v. Vaughan, 169 Mo. 375; State ex rel. v. Flourney, 160 Mo. 331; Blanchard v. Hazeltine, 79 Mo. App. 251. (4) Many cases may be found where the presumption of regularity and rightness in court proceedings has been applied to settling questions pertaining to a change of venue. For example: Green v. Walker, 99 Mo. 75; State v. Gamble, 108 Mo. 504; State v. Hunter, 171 Mo. 440. But such cases are not in point in this case, because such prima-facie presumption of regularity and rightness in court proceedings cannot be invoked to sustain jurisdiction where, as here , all the facts relating to the change of venue affirmatively appear of the record. It is a favorite doctrine of this court that presumptions take flight in the presence of actual facts, and that doctrine has been applied in change of venue cases to the question now in hand, thus: ‘ ‘ The facts appear in the record before us and thus appearing there is no room for the indulgence of any presumption. ” Ladd v. Forsee, 163 Mo. 509. (5) The change of venue statute proper (Sec. 1931, post and ante) and the kindred statutes under the title of “Courts of Record” (Secs. 3960 to 3967, inclusive) together with the constitutional warrant of authority for legislation anent vacancies on the bench (Constitution, art. 6, sec. 29) are in pari materia and must be construed together and harmonized under correct canons of construction. One of these statutes should not be construed so as to be destructive of or repugnant to the other, or so as to be absurd, or so one or the other statute would be put outside the pale of the constitutional warrant of legislative authority.' Bank v. Graham, 147 Mo. 250. The constitutional provision strictly limits legislation to judicial vacancies created by. sickness, absence or some “cause” which makes the regular judge “unable” to hold court, or where the “judge cannot preside.” The change of venue statutes proper hark back to the Constitution and prescribe procedure where the judge is “interested” or “prejudiced” or “related to either party” or has been of “counsel,” or where the opposite party “has undue influence.” Sec. 1927, R. S. 1909. In section 1928 the judge is permitted to move voluntarily when he knows he is “interested,” or “related to either party,” or has been of “counsel.” In such case he may order a change of venue without any application. Turning to the court statutes, they strictly preserve the same constitutional limitations. By section 3960 a vacancy on the bench is predicated of sickness, absence or “any cause” creating an inability to sit. Section 3961 requires as a predicate for electing a special judge a “cause” making the regular judge “unable” to sit, or interest, or relationship, or that he has been of counsel, or when he is in attendance (as here) there must be a “reason” why he “cannot properly preside. ’ ’ Section 3967 prescribes as indicative of legislative intent, that these reasons should appear of record. Changes of venue are outside the course of common law and can go only by force of express statute, not otherwise., Huthsing v. Maus, 36 Mo. 107-8; State ex rel. v. Wofford, 119 Mo. 410. Hence it is. elementary law that they are to be construed with some strictness. State ex rel. v. Denton, 128 Mo. App. 312; Walker v. Ellis, 146 Mo. 327; Allen v. Snyder, 82 Mo. 558. For the foregoing reasons, also, the disqualifying entry was a nullity and the acts of the special judge were coram non judice.

      W. D. O’Bannon, Holmes Hall and R. 8. Robertson for respondent.
    The first point made by appellants in their brief is that the regular judge during the same term had jurisdiction to set aside Ms order disqualifying himself, and that his ruling, after making such order that he had no jurisdiction, was error. Appellant citing in support of this proposition the ease of State v. Webb, 74 Mo; 334, and other cases. We do not controvert the holding of these cases, which is that where an affidavit for change of venue is filed and the court acts thereon, during the same term he may rescind his order and send it elsewhere. Of course, .this rule would be subject to whether or not the other court had assumed jurisdiction, but we are confronted with an entirely different situation in this case, and on the situation we have here it is significant that appellant fails to cite any authority. Here we have a judge by his own act, without any affidavit for change of venue being filed, making a record entry disqualifying himself from proceeding further therein, and, under these conditions, it has been held by this court that he loses all jurisdiction of the case. Lacy v. Barrett, 75 Mo. 469. When he made this order, it is a primary principle of law that we must presume that he made same for good and sufficient reasons and causes and that it would be improper for him to continue to exercise jurisdiction over the case. State v. Hosmer, 85 Mo. 553.
   WALKER, J.

This was an action for damages for the death of plaintiff’s husband, which upon, a trial resulted in a verdict in her favor in the sum of $15,000. From the judgment rendered thereon this appeal was perfected.

Certain errors assigned render necessary a statement of matters occurring before the trial on the merits.

On the 12th day of December, 1916, the regular judge of the circuit court of Pettis County, where this case was pending, made and caused to be entered of record the following order: “Now on this day the judge of this court on his own motion disqualifies as trial judge in the above entitled cause.” No application for a change of venue was on file at the time of this entry and no cause was assigned therefor. The succeeding day defendant filed a motion verified by affidavit to set aside the order of disqualifications on the grounds that the same was void in having been improvidently and irregularly made without authority to forestall an anticipated application on the part of the defendant for a change of venue and render necessary an election of a special trial judge to try this ease by the members of the bar. On the same day the defendant filed his application for a change of venue on the ground of the prejudice of the regular judge. The judge refused to entertain or pass upon either the motion or the application; but stated at the time and caused to be entered of record, over defendant’s objection, that he had disqualified himself because “on yesterday afternoon, or some time during yesterday, which was the 12th day of December, this court was informed by an attorney of record in this case, as well as in about twenty cases pending in this court, that the defendant in this case, and all of these cases, was going to file an application for a change of venue, based upon an allegation and affidavit of the bias and prejudice of this court; that after this court became advised of this state of facts, that in all of the cases in which the M., K. & T. Railway Company, Charles E. Schaff, receiver thereof, which were pending in this cpurt, that the defendant was making the allegation that the court was biased and prejudiced, this court felt a hesitancy after this knowledge came to him to sit upon the bench and have further to do with the said cases, and in justice to his own feeling in the matter, and in an attempt to relieve the attorneys of making any affidavits of bias and prejudice of this court concerning cases of which the court knew nothing, the court thought the just and proper way to proceed was to disqualify himself in all of these cases, which he did. The court at this time refuses to take up any motion connected with this ease or any similar cases in which the court has disqualified.”

After the entry of this order the court asked counsel if they could agree upon a special judge. They announced that they could not; an order was entered to that effect and the clerk was directed to hold an election for special judge to try the case. One of the counsel for plaintiff nominated Gr. W. Barnett. The roll of attorneys was called, twelve voting for Mr. Barnett and five, which included counsel for defendant, refusing to participate in the election. The- clerk announced the election of Mr. Barnett as special judge and he went upon the bench and proceeded with the trial. To this entire proceeding counsel for defendant preserved exceptions, but participated in the trial under protest.

The testimony discloses that the plaintiff’s deceased husband, whose death is the basis of this action, and who will be hereafter designated as the deceased, was a conductor of a train in the service of the defendant. In the early morning of the accident, before it was fully light, the trainmen’s lanterns still being used, the deceased' was engaged at Higbee in the making up of a train consisting of a locomotive, freight cars and a caboose. After the train had been made up, nothing remaining to accomplish same except the coupling thereto of the caboose, it was attempted to effect this coupling automatically by impact, but the effort resulted only in shoving the caboose a half car’s length from the rear of the train. Thereupon the deceased went in between the caboose and the rear car, either to adjust the coupler or make the air connection — it having been admitted that deceased was there for one or the other of these purposes and both having been pleaded, as between the two it is immaterial which was the moving cause of his presence there. It will suffice then to say that he stepped between the caboose and the rear car and the engineer, upon a signal from one of the brakemen, backed the cars down against the caboose, catching and crushing the deceased between them and inflicting the injuries from which he died.

The duties incumbent upon a judge, under his oath of office, are mandatory. The importance of these duties affecting as they do the lives, liberty and property of citizens, is such that the responsibility for their performance cannot be lightly put aside to satisfy personal caprice or in anticipation of the action of liti8ailts. In short, a proper administration of justice requires that such duties be performed ag ancj wben they'arise under the exigencies of each particular case and not in contemplation of and to forestall any possible future action of parties to the proceeding. Snch judicial conduct, therefore, as limits or defeats the freedom of authorized action of a litigant is, in effect, a denial of justice. This rule, which underlies all common-law procedure affecting judicial actions, has, in the wisdom of the Legislature, been given definite statutory expression so far as it affects the right of a judge to divest himself of duties imposed by law. This statute is as follows:

“Whenever the judge, from any cause, shall be unable to hold any- term or part of term of court, and shall fail to procure another judge to hold said term or part of term, or if the judge is interested or related to, or shall have been counsel for either party, or when the judge, if in attendance, for any reason cannot properly preside in any cause or causes pending in such court, and the parties to such cause or causes fail to agree to select one of the attorneys of the court to preside and hold court for the trial of cause or causes, the attorneys of the court who are present, but not less in number than five, may elect one of its members then in attendance having the qualifications of a circuit judge, to hold the court for the occasion.” [Sec. 3961, R. S. 1909.]

The substitution of a special for a regular judge, being purely statutory and a departure from the general procedure pertaining to courts of record, the general rule of construction is applicable thereto that statutes-authorizing special proceedings should be closely scrutinized and the powers therein conferred strictly construed. [Straughan v. Meyers, 268 Mo. l. c. 593.] The record entries in-such cases “constitute not only the authority of the special judge, but the evidence of that authority” (Smith v. Haworth, 53 Mo. 88), and hence the statute which requires not only that an entry of the order under which the special judge was elected be made, but that the reasons therefor be stated. The ruling of this court in State v. Hosmer, 85 Mo. 553, is not necessarily contrary to the conclusion here reached, because it appears in that case that the regular judge had declared the existence of the disqualifying facts and while they do not appear in the opinion it is evident from the court’s reasoning that the record of disqualification set forth the reasons for same and hence complied with the statute (Sec. 3967) or that this statute was overlooked and hence not taken into consideration. Nor is there anything in our most recent discussion of this question in Johnston v. Ragan, 265 Mo. l. c. 443, and the cases there cited, which militates against the conclusión that a statutory reason must exist and appear of record for the disqualification of the regular and the calling in of a special judge. In that case the record stated the reason to be “the absence and inability of Judge Powell to attend and try the case.” This was clearly within the terms of the statute (Sec. 3961).

Other rulings of this court which seem to hold generally that the record need not recite the reasons of a judge’s disqualification and the calling in of a special judge, are found in criminal cases (State v. Newsum, 129 Mo. 154; State v. Gillham, 174 Mo. l. c. 673), for the hearing and determination of which a separate code, ample in its provisions (Secs. 5198-5201, R. S. 1909) has been provided ; and while it has been held that these provisions do not forbid the disqualification of a regular and the election of a special judge under the general statute (Secs. 3961-3965, R. S. 1909; State v. Downs, 164 Mo. 471), it is evident that whatever seeming conflict there is in the authorities on this question arises.from the.fact that there is no express provision in the criminal code requiring the record to show the reasons for a judge’s disqualification or for the election of- a special judge. As a consequence, in invoking the general statutes in this regard in criminal cases the result has been to ignore section-3967, a part of siich general statute which requires the reasons of the court’s action to be stated. Certainly in a civil case where a judge has disqualified himself and thereby necessitated the calling in of a special judge, the reasons for same should appear of record; and if the general law is invoked io a criminal case the same rule should apply. Except to explain the reason for the seeming confusion rather than the conflict in our authorities, and to define the procedure, the distinction made is unnecessary to a determination of the matter at issue, because the record here not only shows no reason for the court’s disqualification, but on the contrary it appears affirmatively that the court’s action was anticipatory and was founded only on rumor. If it were true, as subsequent events demonstrated it was, that counsel for defendant contemplated filing an application for a change of venue alleging prejudice on the part of the judge, it was time enough, in the proper discharge of a judicial function, to rule upon the application when it was submitted. To rule before that time was to forestall a right.to which the defendant was entitled and hence result in a denial of justice.

In the very nature of things a lawsuit involves a controversy in which counsel are expected and required to insist upon and demand every right to which they may deem their clients are entitled under the law and in the observance of well recognized ethical rules; the courts, in recognition of such rights have no alternative when they are demanded in conformity with our procedure, but to grant them. Personal feelings of judges have no place in the performance of judicial functions and when allowed to control can only work injustice. The action of the trial court in entering the order of disqualification was therefore unauthorized.

Nothing said herein is intended to restrict the right of a trial judge to disqualify himself in any case for any of the reasons stated in the statute and to determine the existence of such reasons and declare the same in the order of disqualification.

The order of disqualification having been unauthorized for the reasons stated, the election of the special judge was a nullity and the proceedings before him were as a consequence coram non judice and need not be considered.

Tins results in a reversal and remanding of this cause that the regular judge, who had not disqualified himself at the time of the filing of the application for a change of venue, may hear and determine same.

Graves, G. J., Farts and Woodson, JJ., concur; Williams and Blair, JJ., dissent; Bond, J., not sitting.


author:
BOND. J.
      GRAVES, C. J.

text:
    PUBLIC SERVICE COMMISSION, Appellant, v. UNION PACIFIC RAILROAD COMPANY.
    In Banc,
    June 30, 1917.
    PUBLIC SERVICE COMMISSION: Issue of Bonds by Union Pacific Railroad: Consent of Commission. A railroad company, incorporated under tbe laws of another State, owning and operating 3500 miles of railroad, having a total trackage in this State of only about one thousand feet and that consisting of terminal facilities and switch tracks maintained for the accommodation of private shippers and industrial plants, and being in every sense an interstate carrier, in 1908 executed a first-lien and refunding mortgage on its entire system to secure an issue of $200,000,000 bonds, the mortgage being recorded in this State prior to the enactment of the Public Service Commission Act in 1913, but only $65,902, 000 of bonds were issued at that time, the balance being reserved for future issue to cover expenditures to be made from time to time for construction of new track, rolling stock, improvements and betterments. Having expended over two million dollars for equipment and improvement, the company in 1914 applied to the trustee under the original mortgage for the issuance of $2,250,000 additional of the reserve bonds by way of reimbursement, and the bonds having been authenticated and delivered to the company are now in its treasury available for sale. The Public Service Commission, contending that the railroad company is subject to the provisions of the Public Service Act, which took effect on April 15, 1913, and that before consummating said sale the company must secure the permission of the commission, applied for an injunction to restrain the sale until such permission is obtained. Held, that the said statute does not require said company to secure the consent and approval of the commission to the sale of said bonds.
    Appeal from Jackson Circuit Court. — Hon. T. J. Seehom, Judge.
    Affirmed.

      'A. Z. Patterson and James D. Lindsay for appellant.
    (1) The Legislature vested tke Public Service Commission with complete authority and jurisdiction over the issuance by every railroad corporation of bonds to "be secured by liens upon the property of such corporations situated in this State, whether such corporations be organized under the laws of this State or of some other State, Secs. 43, 54, 55, 57, 58 and 59, also subdivisions, 6, 8 and 9 of Section 2, Public Service Commission Act 1913; State ex rel. v. Public Service Comm., 187 S. W. (Mo.) 827; Laws 1870, p. 90; Sec. 790, R. S. 1879; Sec. 3078, R. S. 1909; State ex rel. v. Patterson, 105-Mo. 303; Black on Interpretation of Laws, 141. (2) The State has the right to control the method and conditions of the conveyance or encumbrance of' real property within its jurisdiction. In the absence of Congressional action regulating the encumbrance to secure a bond issue by a public service corporation of property located in and forming part of the State, though forming part of a system extending into another State and used in interstate transportation, the right of encumbrance of property within the State must be held and exercised in conformity with the laws of the State. State ex rel. v. Public Service Comm., 187 S. W. (Mo.) 829; DeLashmutt v. Teetor, 261 Mo. 433; Arndt v. Griggs, 134 U. S. 316; United States v. Pox, 94 U. S. 315. (3) The Provisions of the Public Service Commission Act, and particularly sections 54, 56, 57, 58 and 59 thereof, as applied to respondent are an exercise of +he police power of the State, exerted for the general welfare in the absence of Congressional action on the same subject, affecting the interstate commerce of defendant only incidentally and remotely, and not in a manner to constitute a regulation of or an inhibited interference with said interstate commerce. Hall v. Geiger-Jones Co., 242 U. S. 539; Railroad v. Illinois, 177 U. S. 514; Express Co. v. Croninger, 226 U. S. 500; Railroad v. Kansas, 216 U. S. 262; Hennington v. Georgia, 163 U. S. 299; Railroad v. Ohio, 173 U. S. 285; Puller on Interstate Commerce, p. 19; Pearsall v. Railroad, 161U. S. 677; Securities Co. v. United States, 193 U. S. 317; Railroad v. Solan, 169 U. S. 133; Railroad v. Tobacco Co., 169 U. S. 311. (4) Supervision over the making and sale of bond issues secured by liens upon the property of public service corporations owning property and doing business in the State is the essential purpose of law. The fee provided for is a secondary and incidental matter, and is not a tax in any proper sense. The one is a measure-of protection of the State and of its citizens, and of the property in the State devoted to public use; the other a provision for reimbursement to the State for the services performed by the commission in the exercise of supervisory power. State ex rel. v. Public Service Comm., 187 S. W. 827; Tel. Co. v. New Hope, 187 U. S. 419; Tel. Co. v. Philadelphia, 190 U. S. 160. (5) The fee charged is not a tax. As a fee it is not invalid because measured by the amount of the entire bond issue which is also secured in part by property situated outside of this State. Railway Co. v. Botkin, 240 U. S. 227; Mining Co. v. Massachusetts, 231 U. S. 68; Railroad v. Stiles, U. S. Supreme Court Advance Opinions (January 15, 1917), No. 4, page 58. (6) Property held by respondent in this State is held ‘ ‘ subject to all regulations and provisions of the law governing railroads in this State.” Sec. 3078, R. S. 1909; Railroad v. Public Service Comm., 187 S. W. 829.

      Henry N. Clark, N. H. Loomis, B. W. Blair and I. N. Watson for respondent.
    (1) Section 55 of the Public Service Commission Law concerns the transfer and encumbering of'public service franchises; it is an exercise of jurisdiction inhering in the State’s own grant of such franchises. Section 57 concerns the issue of securities by domestic corporations; it is an exercise of the reserved power over the State’s own creatures. Neither section is an exercise of the police power or of the sovereign power over the ownership of real property. People ex rel. v. Stevens, 197 N. Y. 1; People ex rel. v. Public Service Comm., 203 N. Y. 299; Christian Union v. Yount, 101 U. S. 352; Coppage v. Kansas, 236 U. S. 14; Railroad Co. v. McGuire,- 219 U. S. 569. (2) Sections 55 and 57, correctly construed, are inapplicable to the bond issue and incidental encumbrance in suit, since the railroad company is a foreign corporation, enjoys no franchise from the State of Missouri and engages therein exclusively in interstate commerce. Christian Union v. Yount, 101 U. S. 352; Western Union v. Kansas, 216 U. S. 21; Moran v. Ross, 79 Calif. 159; Elliott on Railroads (2 Ed), see. 1 (a). (3) If, however, sections 55 and 57 are construed as applicable to the bond issue and incidental encumbrance in suit they constitute a direct burden upon interstate commerce and upon property and business outside the State. Crutcher v. Kentucky, 141 S. 47; Western Union v. Kansas, 216 U. S. 1-; Text Book Co. v. Pigg, 217 U. S. 91; Laird v. Railroad, 121 Md. 179.
   BOND. J.

I. The Public Service Commission seeks by this action to enjoin the Union Pacific Railroad Company from making a proposed issue of bonds to cover its expenditures for rolling stock and other improvements and betterments, without first applying to it for authority.

The Union Pacific is one of the largest railroad systems in the United States. It was incorporated under the laws of the State of Utah, and now owns and operates 3500 miles of railroad, which traverses seven , , „ ., , , , ~ , states from its western terminus at Ogden, Utah, to its eastern terminus at Kansas City, Missouri. The book value of the company’s holdings and property is about three hundred millions of dollars, of which onbjr three millions is located in Missouri. Its Missouri property consists of rights of way and land acquired by purchase for terminal purposes and warehouses for the handling and storage of freight, together with its main track, which extends into the State only half a mile, and certain spur or switch tracks maintained for the accommodation of private shippers and industrial plants, its total trackage in Missouri being only about one thousand feet.

In 1908, the company executed its First Lien and Refunding Mortgage on its entire system to secure an issue of $200,000,000 four per cent bonds. This mortgage was duly recorded in the recorder’s office of Jackson County, Missouri, prior- to the enactment of the Public Service Commission Law, and only $65,902,000 of bonds were issued thereunder, the balance being reserved for future issue to cover expenditures to be made from time to time for construction of new track, rolling stock, improvements and betterments.

Playing expended over two million of dollars for equipment and improvements, in 1914 the company applied to the trustee under the original mortgage for the issuance of $2,250,000 additional of reserved bonds by way of reimbursement, and the bonds having been authenticated and delivered to the company they are now in its treasury available for sale.

The commission contends the Union Pácific Company is subject to the provisions of the Public Service Commission Act of the State of Missouri, which took effect April 15, 1913, and that before consummating the sale and delivery of such bonds, it must secure permission to do so from the commission. The respondent railroad contends that the act does not apply to railroad corporations incorporated under the laws of another State, enjoying no franchise from the State of Missouri, and engaged therein exclusively in interstate commerce; that the application of the provisions of the act to defendant company would impose a direct burden upon interstate commerce and property and business outside the State. The pertinent portions of the Public Service Commission Act will be Seated in the opinion.

On the allegations of the petition and answer both parties moved for judgment. The court sustained the motion of defendant, whereupon the plaintiff appealed to this court.

II. That the Legislatures of the several states may delegate to administrative bodies any power which is not “strictly and exclusively legislative” (Chief Justice Marshall) is an evolution of the law wrought by the logic of events and now firmly established. "We have moved beyond the over-restrictive an- .... , . , . . . cient rulings and now accord to lawmaking bodies full power, within the Constitution, to make use of any special agency necessary to effective action. In many states this is secured by adequate constitutional amendments. In others, lacking that facility, the organic law has received constructions narrowing its limitations to the strict letter of the chart. In the solution the reciprocal rights of the public and the great carriers and utility corporations, the Legislature cannot, in many cases, do justice to both, since its constitution and term of office disable it to make the investigation essential to that end. In such eases to act with wisdom, fairness and promptness, it must have expert and informative findings beyond the scope of any direct inquiry by the Legislature itself. Hence the necessity of employing special administrative bodies “charged with the solution of a problem demanding expert treatment” and having “no functions outside the field offered by this problem.” This is the primal principle in the nature of the commissions created by the states. The Interstate Commerce Commission is a wholly different body and possesses larger powers as the delegatory of Congress, which in itself and through such agency, possesses plenary power “to regulate commerce.” [U. S. Constitution, art. 1, sec. 8, sub-see. 3; Railroad v. United States, 234 U. S. l. c. 355 et seq.] The primal purpose to provide a corps of capable investigators and the requirement that their resultant finding shall be lawful and reasonable, are interpretative aids if borne in mind in'the consideration of the statutes defining the power of public commissions. The ones involved in this appeal are, viz.: sections 54, 55 and 57, Pub. Serv. Act 1913.

Section 54 is, to-wit:

“Right to Issue Stocks, Bonds and Notes is Subject to Regulation By State. The power of railroad corporations, street railroad corporations and common carriers to issue stocks and bonds, notes and other evidences of indebtedness and to create liens upon their property situated in this State is a special privilege, the right of supervision, regulation, restriction and control of which is and shall continue to be .vested in the State, and such power shall be exercised as provided by law and under such rules and regulations as the commission may prescribe. ’ ’ [Laws 1913, p. 592.]

Section 55 is, to-wit:

“Transfer of Franchises or Stocks. No railroad corporation, street railroad corporation or common carrier , shall hereafter sell, lease, assign, transfer, mortgage or otherwise dispose of or encumber the-whole or any, part of its railroad or street railroad necessary or useful in the performance of its duties to the public, or any franchise or permit or any right thereunder, nor by any means whatsoever, direct or indirect, merge or consolidate such railroad or street railroad, franchise or permit, or any part thereof, with any other corporation, person or public utility, without having first secured from the commission an order authorizing it so to do. Every such sale, assignment, lease, transfer, mortgage, disposition, encumbrance, merger or consolidation made other than in accordance with the order of the commission authorizing the same shall be void. The permission and approval of the commission to the exercise of a franchise or permit under this act or the sale, assignment, lease, transfer, mortgage or other disposition or encumbrance of a franchise or permit under this section, shall not be construed to revive or validate any lapsed or invalid franchise or permit, or to enlarge or add to the powers or privileges contained in the •grant of any franchise or permit, or to waive any forfeiture. Nothing in this subsection contained shall be construed to prevent the sale, lease or other disposition by any corporation, person or public utility of a class designated in this subsection of property which is not necessary or useful in the performance of its duties to the public, and any sale of its property by such corporation, person or public utility shall be conclusively presumed to have been of property which is not useful or necessary in the performance of its duties to the public, as to any purchaser of such property in good faith for value.” [Laws 1913, pp. 592, 593.]

Section 57, as far as relied upon by appellant is, to-wit:

“Approval of Issues of Stocks, Bonds and Other Forms of Indebtedness. A common carrier, railroad corporation or street railroad corporation organized or existing, or hereafter incorporated under or by virtue of the laws of the State of Missouri, may issue stocks, bonds, notes or other evidences of indebtedness payable at periods of more than twelve months after the date thereof, when necessary for the acquisition of property, the construction, completion, extension or improvement of its facilities, or for the improvement or maintenance of its service or for the discharge or lawful refunding of its obligations or for the reimbursement of moneys actually expended from income.” [Laws 1913, p. 594.]

III. The first question presented is the applicability of any of the above sections to the respondent railroad under the facts shown by its answer, leaving out of view for that discussion any question °£ the validity of such act.

Although the Public Service Act bears internal evidence that it was constructed by the eclectic method, its congruous and related parts should be considered in unison as far as practicable. The sections quoted appear in article 3, Laws 1913, p. 580. The article contains many diverse provisions as to the special powers and duties of the commission with which -those under review have no necessary connection. The first section (Sec. 54, Laws 1913, p. 592) declares in substance that a corporate franchise, viz., the power to issue stocks and bonds or to create liens upon their property situated in this State, “is a special privilege” granted certain corporations, “the control of which is vested in the State” and shall be exercised “as provided by law” and the rules prescribed by the commission. In thus declaring itself to be “vested” with the control of the “special privilege” inhering in the charters of certain corporations, the State necessarily referred to those charters lying within its own grant or, in other words, to domestic corporations. Any other construction of the terms of this statute would involve the illogical consequence that a foreign corporation could not “issue stocks,” etc., authorized by its charter, upon the assumption that its power to do so is a “special privilege,” the right to control which “is and shall contimie to be vested” in the State of Missouri. This assumption is, however, impossible for the reason that the entire authority of a foreign corporation to issue shares of stock, grows out of and is limited by the terms of the charter granted to it by the State where it is created. It necessarily results that the right to issue such stock is not a “special privilege” given by the State of Missouri. Demonstrably, therefore, the Legislature could not have intended, by making that privilege the basis of the right to State control, to embrace corporations other than those who obtain such privilege from this State. It follows, upon the hypothesis of section 54, supra, that the provisions therein have no application to the respondent, which acquired no charter rights nor special privilege from the State of Missouri at any time.

The purpose of section 54 was to embody in the form of positive law the general legal principle that the right to control corporations owing duties to the public, was an incident to the grant to them of special privileges by the State asserting such authority. The provisions of this statute deny such corporations the right to exercise certain special privileges granted to them, by the State of Missouri, except as “provided by law” and the rules of the commission. It is therefore a statute of regulation of such corporations by negation. But in the succeeding section (57, supra) the Legislature also regulated the exercise of the same franchises, viz., the right to “issue stock” by the same corporations and carriers, but uses in section 57 supra the words (omitted in section 54, supra): “organized and existing or hereafter incorporated, under or by virtue of the laws of the State of Missouri.” We think this shows beyond doubt that the Legislature intended both its enactments to apply to the same corporations as specifically described in the latter section (57, supra).

IY. There'is another reason equally controlling why the respondent was not required to'seek permission of appellant before issuing the bonds which it had previously contracted to use to pay for future rolling stock and the betterment of its railroad. The statutes of tins and other states provide two prerequisites to the validity of a finding and order made by the Public Service Commission: They must be both “reasonable and lawful.” [Laws 1913, sec. 111; Atchison, T. & S. F. Ry. Co. v. Pub. Serv. Com., 192 S. W. 460.]

The proposal of respondent in this case is to issue a series of bonds which were executed in accordance with the provisions of a mortgage covering the assets of its entire system in 1908, in which instrument it was agreed that the portion of bonds not then demanded for the immediate needs of the company, should be reserved and subsequently issued to reimburse the company for necessary expenses in the improvement of its roadbed and in the acquisition of property. In accordance with that stipulation the bonds now proposed to be issued have been surrendered by the trustee in order to reimburse the respondent for the purchase of rolling stock specifically described in section 14 of its answer, for which it expended $2,174,567.31 and $75,432.69 for other additions to and betterments of its road. The verity of this transaction is admitted, as is also the fact that according to the terms of the mortgage' contract, the reserved bonds now requested to be delivered in reimbursement of such expenses will become a lien pari pasu with all previous issues upon the entire system of railroad owned by the respondent at the date of the mortgage contract and all property subsequently acquired by it. It thus stands admitted, that the respondent is acting in the utmost good faith and in strict accordance with this mortgage contract in seeking to apply the bonds now delivered to it by the trustee to the payment of the very indebtedness created in reliance upon that promise. It is not suggested in any way that the public, here or elsewhere, could suffer by this appropriation of the bonds according to the contract therefor before the creation of the Public Service Commission. The amount of property owned by respondent in this State is only one per cent of that which is owned in other States, and all of its property is exclusively employed in the performance of its duties as an interstate carrier. In these circumstances it is impossible to conceive any reasonable ground for the theory of the appellant that the issuance of the above bonds should now be arrested because not previously approved by appellant. [Laird v. Railroad, 121 Md. 179.] This contention is not rooted in reason, nor is it conducive to the interest or welfare of the people of this State, if, indeed, its sustention would not be a direct impairment of the terms and stipulations of the contract, made by respondent when it executed the mortgage authorizing the use of the bonds for the purpose to which respondent now seeks to devote them. "We do not think that an order of the commission-refusing permission for the issuance of these bonds would be sustained, if made, under the facts stated in -the answer and admitted to be true by appellant in this case. Our conclusion is that appellant is not entitled to the relief sought, either under sections 54 and 57, supra, nor upon the facts in the record.

Y. Section 55, supra, clearly affords no basis for this suit to enjoin respondent from the issuance of the bonds to reimburse it for moneys paid out in reliance on re-i^rsements by their use. That section was evidently intended to provide against a disposition of their property by steam and street railroads and common carriers, charged with duties to the public, through some method of sale or merger; and to that end it prescribes that no such transaction shall take place without the permission of the Public Service Commission. This purpose on the part of the Legislature is emphasized by the concluding portion of the section, which provides that nothing therein contained “shall be construed to prevent the sale, lease or other disposition ... of property which is not necessary or useful in the performance of its duties to the public,” and by the further provision that in case of a sale by any such corporation, of its property to a purchaser in good faith, it shall be conclusively presumed that the property so disposed of “is not useful or necessary in the performance of its duties to the public. ” It is apparent from the provisions of this section and the mischiefs sought to be prevented by it, that it is wholly inapplicable to - the transaction shown in this record, whereby respondent is simply reimbursed for any outlays in maintaining its property for the purpose of performing its duty to the .public..

VI. Some suggestion is made that this injunction ought to issue upon the ruling of the Supreme Court of the United States in the Geiger case (Hall v. Geiger-Jones Co., 242 U. S. 539), where it was held that an Ohio state law, commonly known as the “blue sky law” an(j intended to prohibit sales- of fraudulent securities, did not trench upon interstate commerce in requiring persons engaged in making such sales in that state, to take out a license. We fail to see any analogy between the facts of that case and the sections of the statutes under review. It was held in that case that such a requirement as to license only incidentally or indirectly affected interstate commerce, and having been passed in genuine exercise of the police power, would not be held invalid in the. absence of any action having been taken by Congress.

The statutes under review in this case were not directed primarily against any action falling within the just boundaries of the police power. They were designed omy, as has been shown, to safeguard reasonable control by the State, through its agencies, of corporations enfranchised by it.

The conclusion we have reached with reference to the meaning and object of the statutes under review, renders it wholly unnecessary for us to consider the point made by respondent that if applicable to it, they would constitute an interference with interstate commerce. [International Text Book Co. v. Pigg, 217 U. S. 91; Western Union Tel. Co. v. Kansas, 216 U. S. 1.] Having held that under the facts shown in this record respondent’s transaction was not within the purview of the statutes, the further question as to their validity is wholly academic.

Our conclusion is the judgment of the circuit court dismissing the bill was correct. It will, therefore, be affirmed.

Walker, J., concurs; Faris, Woodson and Williams, JJ., concur in result; Graves, G. J., concurs in separate opinion; Blair, J., dissents.

GRAVES, C. J.

(concurring). — I concur in the result of the majority opinion, in this case. I place such concurrence in the result upon one ground only. The right to sell the bonds in question was a fixed right long before the enactment of our Public Service Commission Act. This fixed aqd vested right was not, and could not be, disturbed by our Act of 1913.' For this reason, and this alone, I concur in the result reached by the majority opinion.