Fruin-Colnon Corp. v. Missouri Highway and Transp. Com'n, FRUIN-COLNON

• Decision Date: 15 September 1987
• Docket Number: FRUIN-COLNON,No. 68919,68919
• Citation: 736 S.W.2d 41
• Parties: CORPORATION and Granite Construction Company, Appellants, v. The MISSOURI HIGHWAY AND TRANSPORTATION COMMISSION, Respondent.
• Court: Missouri Supreme Court

Page 41

736 S.W.2d 41

FRUIN-COLNON CORPORATION and Granite Construction Company, Appellants, v. The MISSOURI HIGHWAY AND TRANSPORTATION COMMISSION, Respondent.

No. 68919.

Supreme Court of Missouri,

En Banc.

Sept. 15, 1987.

J. Roger Edgar, Larry B. Luber, Michael D. Garner, St. Louis, Harold F. Blasky, Washington, D.C., for appellants.

Rich Tiemeyer, Chief Counsel, Mo. Highway & Transp. Com'n, Tana K. Van Hamme, Asst. Counsel, Jefferson City, Roland A. Eckert, Mary F. Stafford, Chicago, for respondent.

DONNELLY, Judge.

This is an appeal from an order sustaining a motion for judgment on the pleadings. Rule 55.27(a)(7) (nonjoinder of necessary party). This Court ordered transfer from the Court of Appeals, Mo. Const.Art. V, § 10 (1945), which upheld dismissal of appellants' breach of contract claim. We also affirm.

The well-pleaded facts of appellants' petition and incorporated documents stand admitted and are taken as true. Madison Block Pharmacy v. United States Fidelity & Guaranty Co., 620 S.W.2d 343, 345 (Mo. banc 1981); Holt v. Story, 642 S.W.2d 394, 395 (Mo.App.1982). The validity of conclusions of law, however, is not admitted. State ex rel. Jackson County Library District v. Taylor, 396 S.W.2d 623, 624 (Mo. banc 1965); Holt v. Story, 642 S.W.2d at 396.

On December 18, 1963, Missouri and Illinois, through respective authorized state agencies, ¹ entered an agreement to design and construct a bridge spanning the Mississippi River south of St. Louis. Ninety percent of the cost was to be supplied by the federal government. 23 U.S.C. §§ 101-57 (1982) (Federal-Aid Highway Act). Illinois and Missouri agreed to share the remaining cost equally. Pursuant to the agreement, officials in both states invited bids from bridge contractors. Bid advertisements described the required design of the structure and anticipated construction conditions. Appellants, Fruin-Colnon Corporation and Granite Construction Company, submitted a bid as joint venturers. Illinois' Department of Transportation awarded appellants a contract to construct the substructure of the bridge. The substructure was to be completed according to the bid invitation plans and "Standards for Road and Bridge Construction" promulgated by the State of Illinois. ²

Appellants encountered construction problems when certain representations in the contract plans proved inaccurate. The plans indicated the Illinois riverbank commenced 360 feet west of its actual location; appellants had to extend their work trestle at added cost to accommodate the underestimate. Further, the plans represented only one navigation channel existed along the river at the proposed site; in fact, there were two such channels. River-traffic collided with one of appellants' partially-completed "cofferdams" ³ necessitating its reconstruction and installation of a protective nose cone to prevent future damage. The plans also were incorrect in representing certain "Illinois riverbank piers" needed no protection from "scour"; ⁴ two of appellants' work trestles were destroyed due to a lack of protection against this phenomenon.

Appellants complained to IDOT on several occasions about the difficulties they were experiencing, requesting that they be given time extensions for completing the work and additional compensation through "change orders" to cover losses and added expense arising from unforeseen events. IDOT refused to grant these requests.

Appellants brought suit in Cole County Circuit Court. MHTC was named a party defendant, but IDOT was not joined. Appellants complained: 1) they had not been fully paid upon satisfactory completion of the project, and IDOT refused to approve the completed work; 2) they were entitled to reimbursement for salvage and reconstruction costs incurred through loss of equipment; 3) they had incurred extra-contractual labor costs to complete the project according to an accelerated deadline imposed by IDOT, and to accommodate IDOT's insistence that aspects of the work be done according to revised and more onerous specifications.

The trial court dismissed appellant's claim on considering MHTC's motion for judgment on the pleadings. The court found IDOT necessary and indispensable party to the action. Rule 52.04. ⁵

Whether IDOT was a party "needed for just adjudication" is a procedural matter. See Shepherd v. Consumers Coop. Ass'n, 384 S.W.2d 635, 640 (Mo. banc 1964) (substantive law relates to rights and duties giving rise to claim; procedural law pertains to "machinery for carrying on the suit"). As such, Missouri law applies to this issue. Meredith v. Missouri Pac. R. Co., 467 S.W.2d 79, 82 (Mo.1971).

IDOT has an interest in the litigation below as a signatory to the contract; in fact, MHTC was not a contracting party. Rule 52.04(a)(2). Moreover, MHTC may become "subject to a substantial risk of incurring ... inconsistent obligations by reason of [IDOT's] claimed interest." Rule 52.04(a)(2)(ii). ⁶ Thus, we find IDOT a necessary party; for the latter of these reasons, we also find IDOT an indispensable party which cannot be joined. ⁷ See Rule 52.04(b) (extent to which judgment might prejudice those already parties a factor in determining indispensability). ⁸

Next, appellants argue that since MHTC and IDOT acted as joint venturers or as principal and agent in pursuing the bridge project, IDOT need not be joined as a defendant in this action. We disagree, finding neither relationship to exist on these facts.

First, we must determine which state's law to apply reference these issues. Restatement (Second) Conflicts of Law §§ 6 & 188 (1971); see National Starch & Chemical Corp. v. Newman, 577 S.W.2d 99, 102 (Mo.App.1979). The focal "contacts" suggested by section 188 aid little in determining the more significant forum relationship here. On this record, we do not know where the contract was negotiated or made. See id. § 188(2)(a), (b). Performance of the contract and location of the bridge were to be in both states. See id. § 188(2)(c), (d). Since IDOT is an Illinois agency, Fruin-Colnon a Missouri corporation, and Granite Construction a California company doing business in Missouri, section 188(2)(e) likewise adds nothing. Where specific guidelines in the Restatement prove insufficient for analysis, it becomes necessary to resort to more general scrutiny under section 6. National Starch & Chemical Corp. v. Newman, 577 S.W.2d at 102-03.

Illinois awarded this contract to appellants; appellants agreed to its terms. The contract provided that disputes were to be submitted to the Illinois Court of Claims. Illinois, therefore, has a contractual expectation that its own law be applied, Restatement (Second) Conflict of Laws § 6(2)(d) (1971). Further, application of that state's law offers "certainty, predictability and uniformity of result." Id. § 6(2)(f). Third, the 1963 agreement between the states delegated all "direct supervision, coordination and administration of construction engineering [including] the letting and award of construction contracts ... and the processing of field change orders" to Illinois, subject only to Missouri's agreement on "material decisions of policy and procedure...." As such, Illinois' interest in "the determination of the particular issue" is stronger. Id. § 6(2)(c). We find Illinois to have the more significant relationship with respect to the question raised, and apply Illinois law.

In Illinois, a joint venture is characterized as an undertaking "to carry out a single project for profit," Baker Farmers Co. v. Harter, 28 Ill.App.3d 393, 395, 328 N.E.2d 369, 372 (1975), and is so conducted that the parties: 1) possess a community of interest in achieving a common purpose; 2) have a proprietary interest in the subject matter; 3) have the right to direct and control policy; 4) agree to share profit and loss. Id. at 395, 328 N.E.2d at 372. "Courts look to the substance and not to the form to determine whether there is a joint venture with the most important element being the intention of the parties." Petry v. Chicago Title & Trust Co., 51 Ill.App.3d 1053, 1057, 9 Ill.Dec. 951, 953, 367 N.E.2d 385, 387 (1977).

Although Missouri and Illinois expressed a desire to proceed as a joint venture in the 1963 agreement, there is no element of profit accruing to the governments of the party-states themselves. The most to be said is the end product, a bridge, enures to the benefit of all who use it. ⁹ Moreover, there was no meaningful sharing of costs of construction; ninety percent of the expense, therefore conceivable risk of losing contributed capital during construction, was assumed by the federal government. Under the circumstances, we cannot find that Missouri and Illinois acted as joint venturers, notwithstanding expressed intent.

Appellants' alternative claim fails as well. In Illinois, "the test of agency is the existence of the right to control the method or manner of accomplishing a task by the alleged agent...." Matter of Estate of Rice, 130 Ill.App.3d 416, 429, 85 Ill.Dec. 577, 585, 473 N.E.2d 1382, 1390 (1985); Allstate Ins. Co. v. National Tea Co., 25 Ill.App.3d 449, 462, 323 N.E.2d 521, 530 (1975). The facts do not meet this test. Missouri's authority under the 1963 agreement is at very most co-equal to that of Illinois; the agreement gave Missouri no "veto" power over the day-to-day decisions of Illinois in supervising construction, nor did Illinois agencies function at Missouri's direction. Missouri had only the right to be consulted and a voice in "decisions concerning policy and procedure and basic design criteria." Moreover, we have difficulty with the suggestion that one state may be considered "controlled" by another in any cooperative undertaking. We find insufficient basis for concluding an agency relationship existed.

The judgment is affirmed.

BILLINGS, C.J., and WELLIVER, ROBERTSON and HIGGINS, JJ., concur.

RENDLEN, J., concurs in result.

BLACKMAR, J., concurs in result in separate opinion filed.

BLACK...