Delmar Jockey Club v. Missouri

The plaintiff in error was organized as a corporation under the laws of the state of Missouri on January 18, 1901, for the following purposes, stated in its articles of association:

'The purposes for which this corporation is formed are to encourage and promote agriculture and the improvement of stock, particularly running, trotting, and pacing horses, by giving exhibitions of agricultural products and exhibitions of contests of speed and races between horses, for premiums, purses, and other awards and otherwise; to establish and maintain suitable fair grounds and a race track in the city and county of St. Louis, with necessary buildings, erections, and improvements, and to give or conduct on said grounds and race track public exhibitions of agricultural products and stock, and of speed or races between horses, for premiums, purses, or other awards, made up from fees or otherwise, and to charge the public for admission thereto and to said grounds and track; to engage in pool selling, book making, and registering bets on exhibition of speed or races at the said race track and premises, as provided by law, and to let the right to others to do the same; to conduct restaurants, caf es, and other stands for the sale of food and other refreshments to persons on said premises; and to do and perform all other acts necessary for fully accomplishing the purposes hereinbefore specifically enumerated.'

In 1905 the attorney general of Missouri, ex officio, filed in the supreme court of the state of Missouri an information, in the nature of quo warranto, seeking to annul the charter of the company and forfeit all of its franchises and property, for the following alleged acts of abuse and nonuse of its corporate powers and franchises: First, engaging in book making, pool selling, and the registration of bets upon horse races, from the date of its incorporation up to June 16, 1905; second, during the same period selling pools and accepting and registering bets from minors upon the result of horse races run on the track of the corporation; third, engaging in book making, pool selling, and the registration of bets upon horse races after June 16, 1905, in violation of an act of the legislature of Missouri approved March 21, 1905; and fourth, failure to give any exhibition of agricultural products, or to give any exhibition of speed in races between horses for the purposes of improving the stock of trotting and pacing horses, or to establish or maintain any fair grounds in the city or county of St. Louis, or any other place.

The corporation demurred to the information upon nine grounds. In the first it was recited that, as the information did not charge that the defendant was not licensed to engage in the business of book making, etc., alleged to have been carried on prior to June 16, 1905, no violation of law was stated. The remaining grounds set forth reasons why it was asserted that the information in the second and third grounds, heretofore stated, did not charge violations of law or state facts upon which a judgment of ouster for such alleged acts could lawfully be based. After hearing argument, the supreme court of Missouri sustained the first ground of demurrer and overruled all the others, and granted defendant fifteen days in which to answer the remaining allegations contained in the information, viz., the second, third, and fourth grounds of alleged misuse and nonuse of the corporate franchises, heretofore referred to. 200 Mo. 34, 92 S. W. 185, 98 S. W. 539. Subsequently an answer was filed, of which (omitting title) a copy is in the margin.

Respondent, Delmar Jockey Club, comes by its attorneys, and, for its answer to the information of the attorney general herein, admits that it is a corporation duly organized and incorporated under the laws of the state of Missouri, and denies each and every other allegation in said information alleged or contained.

Wherefore, respondent prays that it be hence discharged with its costs.

II. For its further answer to that portion of the information of the attorney general herein, wherein it is alleged that respondent has failed to exercise certain franchises claimed to be possessed by it, this respondent states that it has fully carried out and exercised all those provisions in its, Thereupon a motion for a final judgment of ouster, etc., on the pleadings, was filed, for the following reasons:

'First. That said return and answer fails to state facts showing any sufficient cause or excuse for, or any legal defense to, the nonuser of respondent's franchises, authorizing it to give exhibitions of agricultural products and exhibition of contests of speed or races between horses for the purpose of encouraging and promoting agriculture and the improvement of stock, and for the establishing and maintaining of suitable fair grounds in the city and county of St. Louis, as set forth and charged in the information herein.

'Second. It appears from the facts stated in said return and answer, and the second count thereof, that respondent is guilty of the acts of misuser and abuser of its franchises charged in the information herein filed, in this; to wit, that respondent engaged in the business of book making and pool seeling, registration of bets, and the acceptance of bets, in violation of the laws of this state:

'Wherefore, informant prays that final judgment of ouster be rendered against the respondent, as prayed for in the information in the case.'

A motion to strike from the files having been overruled, the motion was heard and granted, and judgment of ouster was entered, a fine of $5,000 was imposed upon the corporation because of nonuse, misuse, and violation of its franchises, and provision was made for the winding up of the affairs of the corporation. A motion for a rehearing was made, in which the protection of various clauses of the Constitution of the United States was invoked, the following only being material to the controversy arising on this record:

'Third. Respondent is charged with nonuse of its corporate franchise as to the right to hold fairs. The general denial of respondent applies to this charge, and there has been no trial as to that fact. Yet the judgment adjudges the respondent guilty without a hearing, thereby also violating the 14th Amendment to the Constitution of the United States.

'But without this, the plea of estoppel interposed by the respondent to the charge of nonuse does not deprive respondent of the benefit of its general denial of that charge. Even at common law, and certainly since the statute of Anne, a plea of estoppel may be united with a general denial in a quo warranto proceeding.

'Fifth. The judgment of ouster ought not to be entered in this case in the present state of the pleadings, for the reason that, even though the power conferred by the charter of the respondent to engage in book making and pool selling be regarded as taken away by the repeal of the breeder's law, and even though respondent has lost its charter privileges to conduct fairs by failure to exercise those privileges, nevertheless, respondent has other privileges, conferred by its charter which are not contrary to any law of this state or to the policy of the state, and which have not been lost by nonuser, among which privileges is the right to conduct horse races for prizes or purses or at pleasure, and which the judgment of this court deprives respondent of without respondent having, in any manner, lost the right so to do; and in this respect, also, the judgment deprives the respondent of its property without due process of law, contrary to the guarantees of the 14th Amendment to the Constitution of the United States, which respondent here invokes.'

The motion for a rehearing was granted, and, upon a reconsideration of the cause, the motion for judgment on the pleadings was again sustained upon the ground of nonuser of the corporation franchises, and judgment was entered, ousting the corporation of all of its franchises and charter rights, and adjudging that the same be forfeited to the state, and the corporation dissolved, 200 Mo. 34, 92 S. W. 185, 98 S. W. 539. A motion for a rehearing having been filed and overruled, the cause was brought here by writ of error.

Messrs. John Kennish and Herbert S. Hadley for defendant in error.

[Argument of Counsel from Page 331 intentionally omitted]

Mr. Justice White after making the foregoing statement, delivered the opinion of the court: