Caldwell v. Donaghey

• Decision Date: 28 April 1913
• Citation: Caldwell v. Donaghey, 156 S.W. 839, 108 Ark. 60 (Ark. 1913)
• Parties: CALDWELL v. DONAGHEY
• Court: Arkansas Supreme Court

156 S.W. 839

108 Ark. 60

CALDWELL v. DONAGHEY

Supreme Court of Arkansas

April 28, 1913

Appeal from Pulaski Circuit Court, Second Division; Guy Fulk, Judge affirmed.

Judgment affirmed.

J. W Blackwood, for appellant.

1. The State can not enact laws impairing or materially affecting its contractual obligations. The acts assailed are within the prohibited class and are no protection to defendants. 16 Wall. 203, 233; 15 How. 308; 16 How. 370; 6 Cr. 87; 103 U.S 302; 105 U.S. (26 L. Ed.) 1090; 134 Id. 842, 849; 3 Ark. 285; 12 Wheat. 213, 327; 8 Id. 184; 6 How. (12 L. Ed.) 447; 14 Ky. (4 Litt.), 34, 35, 47, 69; 96 U.S. (24 L. Ed.), 793; 140 U.S. (35 L. Ed.), 363; 1 Kent, Com. 414-419.

2. This is not an action against the State. 140 U.S. (35 L. Ed.), 363; 70 Ark. 568, 583-4; 216 U.S. 165; 209 Id. 123; 221 Id. 636; 109 Id. 446, 452; 93 Ark. 519, 520; 6 Wheat. 264.

Rose, Hemingway, Cantrell & Loughborough, for appellee.

1. A contractor who has a lien does not acquire the right of possession. Phillips on Mech. Liens, § 9; Boisot on Mech. Liens, § 7; Overton on Liens, § 547. No public building is subject to mechanic's liens. 49 Ark. 94-7; 55 Id. 476.

2. The Patterson and Oldham acts did not impair the obligations of the contract. 1 Denio 317; 64 N.Y. 107; 89 Id. 45; 36 N.W. 794-7; 106 U.S. 96; 15 N.E. 422; 108 N.Y. 542; 15 A. & E. Enc. L. 1041; 70 Ark. 585.

MCCULLOCH, C. J. WOOD, J. concurs.

OPINION

MCCULLOCH, C. J.

The State of Arkansas entered into a written contract with appellants, Caldwell & Drake, dated August 14, 1903, whereby the latter undertook to construct for the State, on its grounds, a new State Capitol building for a certain price, payable in installments on certificates of the architect as the work progressed. The work of constructing the building progressed until the year 1907, when interrupted by failure of the General Assembly to make appropriation of funds for payments under the contract. Appellants, upon instructions from the State Capitol Commission, boarded up the openings of the uncompleted building and suspended work thereon until an appropriation could be made at the next (1909) session of the General Assembly. The General Assembly of 1909 passed an act discharging appellants as contractors, also discharging the architect, George R. Mann, and the capitol commissioners, and creating a commission to "adjust the controversy between the State of Arkansas and Caldwell & Drake" concerning the performance of the contract. That statute is commonly known as the Patterson Act. Subsequently at the same session another statute was enacted entitled "An Act to provide for carrying forward the work on the new State Capitol and making appropriations therefor, and for paying any sums which may be found due the former contractors, and for the creation and appointment of a capitol commission and defining its duties." That is known as the Oldham Act, Acts 1909, page 727, and it provided that the new commission should be composed of the Governor of the State and four other citizens to be appointed by him. Appellee, George W. Donaghey, was then Governor of the State, and, pursuant to the terms of the statute, he appointed his coappellees, John I. Moore, H. L. Remmel, Chas. L. Thompson and R. F. Foster, as the other members of the commission.

A synopsis of each of the statutes above referred to is set forth in the two opinions of this court in Jobe v. Caldwell, 93 Ark. 503, 125 S.W. 423, and 99 Ark. 20, and it is unnecessary to set them out again.

The capitol commission, composed of appellees, proceeded, pursuant to the terms of the Oldham Act, to take possession of the uncompleted building and to let a new contract for its completion. According to the allegations of the complaint in this case, they broke the locks, took possession of the building over the protest of appellants, who claimed to be in possession thereof, and caused to be torn out, certain portions of the building which appellants had constructed.

Appellants assert that by reason of said acts of appellees in taking from them the possession of said uncompleted building and "by advertising to the world that these plaintiffs have been discharged" they sustained damages in the sum of $ 250,000, and they instituted this action against appellees in the circuit court of Pulaski County to recover the damages alleged to have been thus sustained.

The circuit court sustained a demurrer to the complaint, and from the final judgment of the court rendered upon the failure of appellants to plead further, an appeal to this court is prosecuted.

This is characterized by learned counsel for appellants as simply an action to recover damages for unlawful trespass committed by appellees. The substance of the argument is that appellants were in lawful and peaceable possession of the State's property for the purpose of performing their contract with the State and had the right to retain possession until they completed the Capitol building according to contract; that the statutes enacted by the General Assembly of 1909, attempting to discharge appellants as contractors, and to complete the building through other agencies, were unconstitutional and void as impairing the obligation of the State's contract with appellants, and that all acts of appellees in going upon the premises and disturbing appellant's quiet possession, constituted trespass which rendered appellees liable in damages for any injury which resulted. This argument involves the inquiry, primarily, into the question as to what possessory rights appellants had, if any, as between them and the State, to the latter's premises and the building thereon in process of construction. The State owns the premises and merely contracted with appellants to erect a building thereon for public use as a capitol or seat of government. The answer is plain that the State did not cede to appellants, either partially or exclusively, its possessory right to the premises. It merely granted to them the privilege or license to enter upon the premises for the purpose of constructing the building according to the terms of the contract. That did not constitute either a right to the premises or a right in same.

Even between individuals, whether a lien be given by statute or not, a building contractor does not acquire, against the owner, the right to hold possession of the premises. Overton on Liens, § 547; Phillips on Mechanic's Liens, § 9; Boisot on Mechanic's Liens, § 7. For a stronger reason one who contracts with the State to construct a building on its premises, can not hold possession against the will of the State's authorized agents.

With that question out of the way it remains to inquire whether the statutes of 1909, which discharged appellants and provided other agencies for completing the building, were valid, or whether they were unconstitutional as impairing the obligations of appellant's contract with the State. We speak of the Patterson Act discharging appellants as contractors. That is what we said of it in the opinion in Jobe v. Caldwell, 99 Ark. 20, 136 S.W. 966. "Whatever else may be said of the Patterson Act," is the language used, "it abrogated the contract with plaintiffs to the extent that the State refused to allow further performance, and it also amounted to an assertion that the condition of accounts between plaintiffs and the State called for an adjustment."

Let us say now that the Patterson Act was, at least, a determination by the State, speaking through its highest agency, not to permit appellants to complete the building. Whether or not the Legislature did right in that respect depends on the question of fact whether appellants had broken the contract (a question we do not have to decide in this case), for the State had no greater right than an individual to refuse performance of its contract. The exact language of the Patterson Act is that the contract with Caldwell & Drake "is hereby annulled, cancelled and set aside." We are only concerned, so far as relates to the present controversy, with the effect of the statute in withdrawing the State's consent to the completion of the building by appellants. That much is embraced in the language used, whatever else may have been intended, and to that extent the statute was valid, even if it was unjust and amounted to a violation of the contract. There is a wide distinction between the power to break a contract and the right to do so. The one thing may exist in the absence of the other. The power to violate a contract exists when the circumstances are such that courts will not decree specific performance; but the right to do so depends upon some justification recognized in the law. The present case is only affected by the State's exercise of its power to treat the contract with appellant as broken; and we are not called upon now to determine the question of its justification in doing so, for the power to violate a contract does not necessarily involve the impairment of the obligation. The obligation remains after the contract has been broken.

The General Assembly controls the economic and administrative policies of the State, and if the statutes in question wrongfully violated the contract with appellants, the obligation of that contract remains unimpaired; but the power of the Legislature to violate the contract can not be questioned any more than the exercise of the like power by an individual.

The doctrine applicable to this case is very clearly stated by the New York Court of Appeals in the case of Lord v Thomas, 64 N.Y. 107. The State of New York had contracted for the erection of a certain building, but before the completion of the building, discharged the contractors and appointed commissioners with directions to construct the building...