Kansas City Hotel Co. v. Sauer

• Decision Date: 31 October 1877
• Parties: KANSAS CITY HOTEL COMPANY v. SAUER, APPELLANT.
• Court: Missouri Supreme Court

65 Mo. 279

KANSAS CITY HOTEL COMPANY

v.SAUER, APPELLANT.

Supreme Court of Missouri.

October Term, 1877.

Appeal from Jackson Circuit Court.--HON. SAMUEL L. SAWYER, Judge.

John C. Gage for appellant.

I. The theory that defendant is precluded by his execution of the bond to plaintiff from denying the corporate existence of plaintiff is unsupported by the authorities. What is said in St. Louis v. Shields, 62 Mo. 247, on that subject, is a mere dictum. The authorities sustain the following propositions:

1. It is always competent for a defendant when sued by a corporation plaintiff, either as a wrong doer, or upon contract executed by the defendant with the plaintiff, as such corporation, to plead nul tiel corporation.

2. Upon such plea the burden of proof is upon the plaintiff to prove that it is a corporation by producing its charter or what is equivalent, and proving user thereunder.

3. If the charter be a public statute, or the corporation be formed under a general law of the State, in which the suit is brought, the court will take judicial notice thereof, but not otherwise, and if the corporation be formed under general law by some such act as the filing of articles with some public officer, which act is made by law a public act of which the court trying the case takes judicial notice, then such proof is dispensed with; otherwise it is indispensible.

4. Slight proof of user only is required in such cases, the mere act of executing the contract sued on being sometimes held sufficient.

5. The plaintiff having thus proved its charter and user thereunder, the defendant is estopped by his contract, if the action is upon a contract with the plaintiff as a corporation, from proving any informality, irregularity or defect in the organization of the alleged corporation under his plea.

6. The courts are greatly divided on the question whether the plea of the general issue in such case imposes upon the corporation plaintiff the burden of proving that it is a corporation. See in support of the foregoing: Welland Canal Co. v. Hathaway, 8 Wend. 480; U. S. Bank v. Stearns, 15 Wend. 314; Meth. Epis. Un. Church v. Pickett, 19 N. Y. 482; Eaton v. Aspinwall, 19 N. Y. 121; Lessee of Frost v. Frostburg Coal Co., 24 How. 278; Bank of Utica v. Smalley, 2 Conn. 778; Bill v. Pres., &c. G. W. T. Co., 14 Johns. 415; 3 Hawks 520; Carey v. Cin. & Chic. R. R., 5 Clark (Ia.) 357; Appleton Mut. F. Ins. Co. v. Jesser, 5 Allen 446; Heaston v. Cin. &c. R. R., 16 Ind. 278; Nat. F. Ins. Co. v. Yeomans, 8 R. I. 33; Grant on Corp. 293; State v. Carr, 5 N. H. 371; Pres. &c. v. Thompson, 20 Ills. 200; Hamilton v. Carthage, 24 Ills. 22. Kayser v. Bremen, 16 Mo. 88 is not opposed to these.

II. The third instruction of plaintiff, which declared that it is entitled to recover the attorney's fees and costs alleged to have been paid out by it on the motion to set aside the sales of the property under the executions in the mechanics' lien cases, is erroneous. The judgments in the lien cases being rendered against plaintiff's property, and executions being issued against its property, it was plaintiff's duty to pay them. Defendant had agreed to pay them, but this agreement did not relieve the plaintiff from its duty. When the defendant failed to pay, plaintiff ought to have paid, and relied upon the bond for reimbursement. It had no right to stand by and see the property sold. The case of Hahn v. Hirt, 61 Mo. 496, sufficiently establishes that the attorney's fees could not be recovered as damages upon this bond, and the case of Sangford v. Sanger, 40 Mo. 160, is exactly in point in holding that the allegations of the petition regarding these fees and costs were mere surplusage, and that the failure of defendant to deny the same amounts to no admission of liability therefor.

W. E. Sheffield for appellant.

I. The petition in each of the mechanics' lien cases, offered in evidence, alleges (and it is not denied in the answer) that the plaintiff was the “owner of said described real estate, being lots 27 and 30 and 40 feet off south side of lot 26 in block 3, old town, &c.), and the said hotel building situated thereon, etc.,” but the judgment in each of those cases offered in evidence was the enforcement of the liens “against the following described real estate, to-wit: The Nelson house building, situated on lots, &c.” hence the judgment does not give the lien against the lots, but only the building, and authorized the sale of the building only. The mechanics' lien law nowhere authorizes a judgment for a lien against a building only, where the land upon which it is situated is owned by the owner of the building. Sec. 1 of Art. 3 of Chap. 88 of Wag. Stat. p. 907 provides that every mechanic, &c. * * upon complying with the provisions of this chapter, shall have for his work or labor done * * * a lien upon such building, erection or improvement, and upon the land belonging to such owner or proprietor upon which the same is situated, &c. And Sec. 2 provides that the entire land, &c., shall be subject to all liens created by this chapter to the extent of all the rights, title and interest owned therein by the owner of such building, &c. By Sec. 3 it is provided that the lien shall attach to the building in preference to any prior lien upon the land, and in such case the person may have such building sold under execution and removed within a reasonable time thereafter. In such case, and by Sec. 4, in case of leasehold property, it is specially provided for a sale and removal of the building, but in no case can there be a judgment against the building, a sale and removal thereof, where the proprietor owns both the building and the land unincumbered at the time the lien attaches. Bridwell v. Clark, 39 Mo. 170.

II. Plaintiff could have paid the judgments, if they were binding upon its property, when they were rendered, and should not have permitted its property to be advertised and sold thereon, and costs to be made simply for the purpose of increasing the damages against defendant. Therefore it is not entitled to recover as its damages the amount paid out and expended in costs and attorney's fees in prosecuting the proceedings to set aside said sale. Gadsden v. Bank of Georgetown, 5 Richardson (S. C.) L. 336. Moreover, there was no evidence whatever as to the amount of costs and attorney's fees paid by plaintiff

III. The court erred in refusing the instruction asked by defendant, “That if the evidence shows that the plaintiff had, prior to the commencement of this suit, suffered acts to be done which had the effect to destroy the end and object for which it was created, it was equivalent to a surrender of its rights; and that if plaintiff was originally incorporated for the sole purpose of purchasing and holding the necessary real estate on the north-east corner of Main and 2nd streets in the city of Kansas, Mo., and in erecting and completing a hotel building thereon, managing and controlling said property, leasing and renting the same from time to time for hotel and other purposes; and that plaintiff, before the commencement of this suit, sold and conveyed all of its interest in and to the real estate mentioned in its articles of association, and the hotel building which it had commenced thereon; and that thereupon and before the commencement of this suit plaintiff had abandoned the enterprise of building a hotel at the place designated in its articles of association, then it became unincorporated, and plaintiff could not maintain an action in its corporate name.” See Moore v. Whitcomb, 48 Mo. 543; Slee v. Bloom, 19 John. 456.

Brown & Case for respondent.

I. (a) Appellant having executed the agreement and bond sued on directly to respondent as a corporation, and during the pendency of this suit had business transactions with it as such corporation, thereby solemnly admitted its corporate existence and is estopped from denying it. Nat. Ins. Co. v. Bowman, 60 Mo. 252; Farmers & Mer. Ins. Co. v. Needles, 52 Mo. 17; St. Louis v. Shields, 62 Mo. 247.

(b) Even though appellant had not, by his said acts, been estopped from denying the existence of said corporation, yet, the court below, in that case, properly refused appellant's 5th instruction, because: 1st, A sale of respondent's said hotel property did not dissolve the corporation. 41 Mo. 563; 40 Mo. 140. 2nd, Nor did respondent's cessation of active business operate as a dissolution of the corporation so as to deprive it of its right of action. 57 Mo. 446.

II. (a) The final judgments in the lien cases were not void, but valid, against said hotel building, under Sec. 3, Art. 3, Chapter 88, Wag. Stat., and the record of said judgments and executions, with the officer's return, were properly admitted in evidence.

(b) Even though the said final judgments were irregular, yet, the court that rendered same, having complete jurisdiction, they were binding until set aside in a direct proceeding, and a sale under said executions issued thereon made a valid title. McNair v. Biddle, 8 Mo. 257; Castleman v. Relfe, 50 Mo. 583; Martin v. McLean, 49 Mo. 361; Wilkinson's Appeal,65 Pa. St. R. 189; Cooper v. Reynolds, 10 Wall. 308.

III. (a) The allegations in said 5th breach “that by reason of defendant's failure to pay said lien debts, plaintiff, in order to protect the title to said hotel property, was compelled to and did pay out in expenses, attorney's fees and costs, the aggregate sum of five hundred dollars, in the proceedings had on plaintiff's motions against Borgstede, said purchaser, to have said sale set aside,” not being denied by the answer, the same and respondent's measure of damages, as to said breach, stood confessed, and the court below found and assessed the damages properly on said 5th breach. Wag. Stat., Chap. 110, Art. 5, Sec. 36; Butcher v. Death, 15 Mo. 271; Reveley v. Skinner, 33 Mo. 98.

(b) The sale of the hotel property being the direct consequence arising from the failure of appellant to pay said judgments,...