Flinn v. Gillen

• Citation: 10 S.W.2d 923
• Parties: E.J. FLINN, Appellant, v. JAMES GILLEN ET AL.
• Decision Date: 30 July 1928
• Court: Missouri Supreme Court

10 S.W.2d 923

E.J. FLINN, Appellant, v. JAMES GILLEN ET AL.

Supreme Court of Missouri, Division One.

July 30, 1928.

Appeal from Clay Circuit Court. — Hon. Ralph Hughes, Judge.

AFFIRMED.

W.D. Bush and Clarence S. Palmer for appellant.

(1) It is the duty of the council of a city of the third class to award contracts for street improvements to the lowest and best bidder. This duty is not nullified by Secs. 9790-9793, R.S. 1919. Sec. 8324, R.S. 1919, amended 1921, Laws 1921, Ex. Sess., p. 117; State ex rel. v. McGrath, 91 Mo. 386; Johnson v. Duer, 115 Mo. 376; Clapton v. Taylor, 49 Mo. App. 117; Collins v. Jaicks Co., 279 Mo. 404; 36 Cyc. 1130, 1131. Awarding the contract to the contractor and issuing the tax bills are public acts and cannot be attacked collaterally as between third parties. Hardin v. Lee, 51 Mo. 241; Heman v. Schulte, 166 Mo. 417; Dennison v. City of Kansas, 95 Mo. 416; Heman Const. Co. v. Lyon, 277 Mo. 628; Heman v. Allen, 156 Mo. 534; Prior v. Construction Co., 170 Mo. 439; Young v. St. Louis. 47 Mo. 492; Merchant v. Bothwell, 60 Mo. App. 341; Hess Ventilating Co. v. Elevator Co., 280 Mo. 163. (2) The provisions of the statutes requiring foreign corporations to comply with the Missouri law before doing business in this State, do not apply to contracts made by the State or one of its governmental agencies. 1 Blackstone, 261; 1 Kent (13 Ed.) 460; Parks v. State, 7 Mo. 194; State v. Surety Co., 210 Mo. App. 203; 36 Cyc. 1171; Kubach v. McGuire, 248 Pac. 676; Fidelity Dep. Co. v. State Bank, 242 Pac. 825; Lumber Co. v. Carter Bros., 78 W. Va. 11; Balthaser v. Electric Ry. Co., 202 Pac. 37; State v. Book Co., 69 Kan. 1; Clinton ex rel. v. Henry County, 115 Mo. 566; City of Edina ex rel. v. School District, 305 Mo. 452; Harris v. Bond Co., 244 Mo. 689. (3) When an illegal contract has been fully executed by the parties and as a result thereof some new title to property or some new property right vests in one of them, he may maintain a suit to recover upon or enforce such new title or right. 11 Fletcher, Cyc, Corp. sec. 5963; Id. 1927 Supplement; Hartford Fire Ins. Co. v. Ry. Co. v. Ry. Co., 239 S.W. 919; Good Roads Mach. Co. v. Broadway Bank, 267 S.W. 43; Handlan-Buck Mfg. Co. v. Const. Co., 124 Mo. App. 349; Parker v. Wear, 230 S.W. 79; Central Coal & Coke Co. v. Lead & Zinc Co., 139 S.W. 527; State v. Blakemore, 126 S.W. 429; Gutta Percha Mfg. Co. v. Lehrack, 201 Mo. App. 550; 14a C.J., 1305, sec. 4008. (4) The judgment violates the constitutional provisions against impairing obligations of contracts and taking property without due process of law. Puget Sound Traction Co. v. Reynolds, 223 Fed. 371, affirmed 214 U.S. 574; Ford v. Delta Land Co., 43 Fed. 181, affirmed 164 U.S. 662; Gamble v. School District, 146 Fed. 113; Hicks v. Cleveland, 106 Fed. 459; Port of Mobile v. Watson, 116 U.S. 289; Houston Railroad Co. v. Texas, 177 U.S. 66; City of Watertown v. Electric Co., 296 Fed. 832; Union Bank v. Board of Commrs. of Oxford, 90 Fed. 7.

Harris L. Moore and John W. Moore for respondents.

(1) An unlicensed foreign corporation doing business in Missouri cannot collect the consideration for its illegal transactions. Chicago & Lumber Co. v. Sims, 197 Mo. 507; Tri-State Amusement Co. v. Amusement Co., 192 Mo. 404; Ehrhardt v. Robertson Bros., 78 Mo. App. 404; Booth v. Scott, 276 Mo. 1; Bank v. Smith, 202 Mo. App. 133; Frazier v. Rockport, 199 Mo. App. 80; United States Shoe Machinery Co. v. Ramlose, 210 Mo. 631; Lumber Co. v. Lumber Co., 247 S.W. 225; Dunn v. Utah Serum Co., 65 Utah, 527. (2) The assignee of the offending corporation cannot collect the consideration for the business wrongfully transacted. Ehrhardt v. Robertson Bros., 78 Mo. App. 404. (3) A tax bill issued for street paving to a foreign corporation wrongfully doing business in a state is void. FruinColnon Contracting Co. v. Chatterson, 146 Ky. 504; Frazier v. Rockport, 199 Mo. App. 80; Hogan v. St. Louis, 176 Mo. 149. (4) There is a clear distinction between the governmental powers of a city on the one hand, and its strictly municipal functions on the other hand. 43 C.J. 182, 183; Barrel v. Cape Girardeau, 197 Mo. 382; Ely v. St. Louis, 181 Mo. 723. (5) The construction of streets and the payment therefor is a municipal function and is not an exercise of the city's governmental powers. Barrel v. Cape Girardeau, 197 Mo. 382; Brightwell v. Kansas City, 153 Mo. App. 526; Ely v. St. Louis, 181 Mo. 723; Cassidy v. St. Joseph, 247 Mo. 197; City v. Dunham Towing Co., 246 Ill. 29. (6) The principle that the sovereign is not bound by the general terms of statutes where such statutes would restrict the powers of the sovereign, has no application to cities in the exercise of their municipal powers. 2 C.J. 219; 37 C.J. 715; County of St. Charles v. Powell, 22 Mo. 525; Lumber Company v. Craig, 248 Mo. 319; Hunter v. Pinnell, 193 Mo. 142; Palmer v. Jones, 188 Mo. 163; Doniphan County v. Chouteau, 120 Mo. 577; Pendleton v. Perkins, 49 Mo. 565; City v. Duuham Towing Co., 246 Ill. 29

LINDSAY, C.

The plaintiff, as assignee of a special tax bill issued by the city of Excelsior Springs, a city of the third class, in payment of street paving, sought to enforce the same as a lien upon the property of defendant. The only defense made was that the contractor constructing said improvement was a foreign corporation, organized under the laws of the State of Delaware, and had not complied with the laws of the State of Missouri concerning foreign corporations doing business in this State and was not licensed to do business in this State. The answer of defendant pleaded the character of the contractor as a foreign corporation, which had not complied with the laws of this State, and the evidence so showed.

The plaintiff in his reply denied that he had any knowledge of the status of the contractor; alleged that the contract had been fully performed, and that the contractor had no interest in the tax bill; that the defendant had filed with the city clerk of said city notice that he desired to pay the tax bill to be issued against his property, in five annual installments; that plaintiff had examined the record of the proceedings with reference to said contract, and had seen the request of defendant that his tax bill should be made payable in installments, and relying upon the conduct of the defendant therein, had purchased said tax bill and made payment therefor, and that the defendant is now estopped from asserting the invalidity of said tax bill. Plaintiff in his reply further alleged that he had no interest in the contracting company — "The Southwest Company, Engineers and Contractors;" that the city, by legislative action, had made and delivered said tax bill and had a right to issue said tax bill; and denied that the validity of the same could be attacked collaterally. He further alleged that he is a resident of the State of Missouri, and that without any knowledge that the contractor was a foreign corporation he purchased the tax bill relying upon the conduct of defendant, and authority of the city to award the contract and issue the tax bill, and pleaded that to declare said tax bill to be void on account of the incapacity of said contractor would amount to confiscation of plaintiff's property, and impairment of the obligation of the contract, evidenced by said tax bill by legislative enactment, in violation of Section 30 of Article II and of Section 15 of Article II of the Constitution of the State of Missouri.

The evidence showed that the contract in question and the construction of the improvements thereunder was not a single or isolated transaction, but that the contractor had obtained and performed numerous other like contracts.

Certain contentions are made by counsel for plaintiff in consideration of which it is urged that the court erred in holding the plaintiff was not entitled to recover. Counsel say that it was the duty of the council of the city to Lowest award the contract to the lowest and best bidder; and, and Best that this duty is not nullified by the provisions of Bidder. Sections 9790-9793, Revised Statutes 1919. If this argument be given its necessary and ultimate effect, it means that if a foreign corporation, not licensed to do business in this State, is found to be the lowest bidder for the construction of a public improvement, and also the best bidder in the sense of resources and facilities for performance of the work to be done, then, the duty is laid upon the city council of awarding the contract to such foreign corporation, although it is without legal authority to transact the business involved in the construction of the improvement called for by the contract. Our attention is called to State ex rel. v. McGrath, 91 Mo. 386; Johnson v. Duer, 115 Mo. 366; Clapton v. Taylor, 49 Mo. App. 117; Collins v. Jaicks Co., 279 Mo. 404. These are cases in which there was sustained the exercise of power and discretion of the awarding body or officer; but in none of them was there involved the question of legal status of the bidder, or, whether the contractor or bidder had legal capacity to transact the business at all. Allied to the foregoing is the further contention, that the statutory requirements, to be complied with by the foreign corporation as a condition precedent to its right and authority to do business in the State, do not apply to contracts made by the State or by one of its governmental agencies. The ultimate and necessary effect of this argument would be that because the city is a governmental agency, it may, in entering into a contract with a foreign corporation, disregard the question whether such corporation has been authorized by the State to do the business of the kind contemplated; and, it would follow on the same ground, that such foreign corporation, because its contract is made with a municipality, and the business to be done thereunder is for a municipality, for that reason, is not required to comply with...