State v. Humble Oil & Refining Co.

263 S.W. 319, 1924 Tex. App. LEXIS 1086
CourtCourt of Appeals of Texas
DecidedApril 9, 1924
DocketNo. 6782.
StatusPublished
Cited by12 cases

This text of 263 S.W. 319 (State v. Humble Oil & Refining Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State v. Humble Oil & Refining Co., 263 S.W. 319, 1924 Tex. App. LEXIS 1086 (Tex. Ct. App. 1924).

Opinion

BLAIR, J.

The state of Texas, through its Attorney General, instituted this suit on August 28, 1923, in the district court of Travis county, against Humble Oil & Refining Company, a private corporation, organized under the laws of Texas, to perpetually enjoin and restrain it from doing business in Texas, to forfeit its charter and franchise rights, and to recover the statutory penalties for violation of the provisions of chapter 1, title 130, Revised Statutes, relating to the anti-trust laws of Texas, alleging that on July 20, 1913, in a suit in the district court of Hunt county, Tex., entitled State of Texas v. Magnolia Petroleum Company et al., the Standard Gil Company of New Jersey, a foreign corporation, organized under the laws of the state of New Jersey, and a party to the above suit in Hunt county, was found guilty of violating the anti-trust laws of Texas on divers and sundry dates between March 13, 1889, and October 26, 1909, and a penalty of $500,000 was assessed; that by reason of said judgment convicting the Standard Oil Company of New Jersey of violating the anti-trust laws of Texas it was from and after the date thereof prohibited by the provisions of article 7808, R. S,, from doing any business in the state of Texas; that the Standard Oil Company of New Jersey did *320 not thereafter comply with the provisions of article 7805, R. S. relating to the manner in which a foreign corporation convicted of violation of the anti-trust laws of Texas might be again permitted to incorporate or do business in Texas; that in December, 1919, subsequent to the entry of the above judgment convicting the Standard Oil Company of New Jersey of violation of the antitrust laws of Texas, it acquired more than 50 per cent, of the capital stock of appellee, Humble Oil & Refining Company, a Texas corporation; and thereafter,” before the filing of this suit, more than 60 per cent, of ap-pellee’s corporate stock had been transferred to the Standard Oil Company of New Jersey, and the money representing the purchase price thereof had been transferred into the treasury of appellee, Humble Oil & Refining Company, which was ¿lleged to be in effect a transfer of the property and business of an ousted corporation to a domestic corporation in Texas, as the successor of the defaulting or ousted corporation; that by reason of the ownership of more than 60 per cent, of the stock of appellee, Humble Oil & Refining Company, the said Standard Oil Company of New Jersey exercised full and complete control and management of appellee by attending, participating and voting in stockholders’ meetings, and by the election of officers and directors, through which the policies of ap-pellee were as fully and fairly managed and controlled as if it were transacting business in Texas in its own name; and that by reason of such control and management appellee has become the means or agency whereby the .Standard Oil Company of New Jersey is doing business in Texas in violation of the anti-trust laws.

Appellee answered by general demurrer, general denial, that the opinions of the Supreme Court of Texas and of the Supreme Court of the United States established a rule of property on the question' involved in this suit, in that they had repeatedly held that the ownership of stock in a Texas corporation by a foreign corporation was not “doing business” within the state of Texas by such foreign corporation, and that such ownership was not a violation of the state laws, which decisions appellee alleges it relied upon in good faith, and upon advice of counsel and its belief that said decisions constituted a rule of property in making the sales of stock in question; and that such sales of stock and the rights resulting therefrom would be protected by said rule of property and the Constitution and law's of the United States and of the state of Texas; and that any change of this rule of property as applied to any sale and purchase of appellee’s stock in the instant case would be in violation of section 10 of article 1 of the Constitution of the United States, and would also be in violation of section 16, article 1, of the Constitution of the state of Texas; that the antitrust laws were in violation of the Fourteenth Amendment to the United States Constitution, and in violation of section 21, article 1, of the Constitution of Texas; that the judgment of the district court of Hunt county convicting the Standard Oil Company of violation of the anti-trust laws of Texas did not forfeit its right to do business in Texas, but to the contrary the proceedings and judgment in the ease are and constitute res adjudicata in this proceeding, for said judgment adjudged it guilty of violation of the anti-trust laws of Texas, and assessed as punishment a fine or penalty of $500,000, and various items of costs, and decreed no ouster, forfeiture, or injunction against said corporation doing business in Texas, but denied all such relief, and dissolved all injunctions issued in the ease, and that the said fine, penalty, and costs of such ease had been paid hy said Standard Oil Company.

Upon the trial of the cause before the court, without a jury, judgment was entered for appellee on both the law and the facts. The state of Texas has duly perfected her appeal from this judgment.

The state of Texas relied upon the judgment of the district court of Hunt county on July 20, 1913, convicting the Standard Oil Company, a foreign corporation, of violation of the anti-trust laws of Texas, and the fact that said foreign corporation thereafter became the owner by purchase of more than 60 per cent of the capital stock of appellee, Humble Oil & Refining Company, a domestic corporation, which stock the foreign corporation voted in all meetings of the domestic corporation by proxies to establish its case that an ousted foreign corporation was doing business in Texas, in violation of articles 7803 and 7805, R. S.

It is therefore clear that the state of Texas based its case upon two grounds, each dependent upon the other to establish the cause of action alleged, and each dependent Upon the other to establish its contention on this appeal. The first contention of thq state of Texas is that the Standard Oil Company of New Jersey, a foreign corporation, having been convicted of violation of the anti-trust laws of Texas, was thereafter, under the provisions of article 7803, R. S., perpetually enjoined from doing any business in Texas, without regard to the character of judgment rendered by the court in which the conviction was had, or whether such judgment of conviction took into consideration the question of thereafter enjoining the convicted corporation from doing uusiness in Texas.

The Standard Oil Company of New Jersey was not made a party to this suit, but appellee, Humble Oil & Refining Company, a Texas corporation, was named defendant; hence of necessity the state must establish that the domestic corporation was in fact the alter ego, or the means or agency through *321 and by wbicb the convicted foreign corporation was doing business in Texas.

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Bluebook (online)
263 S.W. 319, 1924 Tex. App. LEXIS 1086, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-v-humble-oil-refining-co-texapp-1924.