Property Exchange & Sales, Inc., (PESI) by Jacobs v. Bozarth

• Decision Date: 12 September 1989
• Docket Number: No. 56106,56106
• Citation: 778 S.W.2d 1
• Parties: PROPERTY EXCHANGE & SALES, INC., (PESI), by Richard JACOBS, Assignee, Plaintiff-Appellant, v. William BOZARTH, et al., Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 1

778 S.W.2d 1

PROPERTY EXCHANGE & SALES, INC., (PESI), by Richard JACOBS, Assignee, Plaintiff-Appellant, v. William BOZARTH, et al., Defendants-Respondents.

No. 56106.

Missouri Court of Appeals,

Eastern District,

Division One.

Sept. 12, 1989.

Motion for Rehearing and/or Transfer

to Supreme Court

Denied Oct. 10, 1989.

Richard Jacobs, St. Louis, for plaintiff-appellant.

Richard C. Bresnahan, Clayton, for defendants-respondents.

SIMEONE, Senior Judge.

Cutting through the numerous issues raised by the parties as to whether certain claims are assignable, the precise issue to be determined in this proceeding is whether an assignee, not a licensed attorney, who is an officer of the corporation which assigned the claims to the officer-assignee to recover a rent-security deposit, may maintain litigation in the courts of this state when the assignor-corporation could not itself maintain suit. We hold that the assignee-officer of the corporation, under such an assignment, cannot file and maintain an action under circumstances where the corporation itself is precluded from so doing without representation by a licensed attorney.

On November 18, 1988, Property Exchange & Sales, Inc. (PESI), in its corporate name, filed a petition for damages in five counts. The petition alleged that PESI is a Missouri corporation in good standing, that the defendants, William T. Bozarth, et al. are non-resident trustees/owners of property located in St. Louis County known as Town & Four Villages. The first count alleged that the defendants made certain fraudulent representations to it that they would return $520 as a security deposit at the termination of a lease. The allegations were that certain premises were leased to a third party prior to December 24, 1984, that the third party wished to sublet the premises and that the plaintiff--PESI--was willing to "take over" said lease. The petition alleged that defendants agreed and represented that PESI could "take over" the premises with a new lease and that if PESI would return the premises in the same condition it was, the entire security deposit of $520 would be given to PESI, that these representations were false and relied upon by PESI, and that the plaintiff was damaged in the amount of $520 plus interest of $421.27.

Count II alleged similar facts but based upon a theory of violations of the Merchandising Practices Act, ch. 407, RSMo., 1986. Count III was based upon a theory of wrongful failure to return a security deposit pursuant to § 535.300, R.S.Mo., 1986. Count IV alleged a breach of contract theory for failing to return the deposit, and Count V alleged a theory of prima facie tort. ¹

Plaintiff prayed for a return of the security deposit, or at least the undisputed amount of the deposit, $384.00, without condition and prayed for punitive damages in the amount of $10,000,000.

On November 21, 1988, PESI filed a "corrected" petition, and on December 23, 1988 filed an amended petition styled "PESI v. William T. Bozarth," et al. In this amended petition, it was additionally alleged that on November 1, 1988, "said Plaintiff assigned to R. Jacobs all of its right title and interest to any causes of action it has against the defendants jointly and severally."

An assignment, dated November 1, 1988, although not attached as part of the petition, but located in the legal file, indicates that PESI assigns to R. Jacobs, an officer of the corporation all of its right, title and interest to any and all causes of action and claims that PESI has as a result of the failure to return the security deposit. The assignment was signed by PESI by R. Jacobs, President as assignor, and by R. Jacobs as assignee.

On December 30, 1988, the defendants moved to dismiss the "Plaintiff's Petition" contending that the petition is filed by the corporation, signed by R. Jacobs, not a licensed attorney, as an officer of the corporation and that in Missouri a corporation is prohibited from maintaining litigation in the courts without the representation of a licensed attorney. On January 10, 1989, defendants filed a supplemental motion to dismiss the petition alleging further that the attempt at assignment to Jacobs is an attempt to circumvent the law that corporations cannot represent themselves in the Missouri courts without retaining an attorney.

The motion to dismiss was heard and argued and on January 18, 1989, the trial court entered its order finding that "the corporation cannot assign to an assignee causes of action for breach of contract, fraud, unlawful practices, [and] failure to refund security deposit. Cause dismissed with prejudice. ² Costs against Plaintiff."

It is not essential in this case to determine in detail whether a corporation may make an assignment of causes of action for fraud, breach of contract, unlawful merchandising practices, failure to refund a security deposit under the law, or prima facie tort, for the reason that it is clearly the law in this state that a corporation, and as we construe it, an assignee who is an officer of that corporation, not a licensed attorney, cannot maintain litigation in this state without the representation of a duly licensed attorney.

Ever since the case of Clark v. Austin, 340 Mo. 467, 101 S.W.2d 977, 983 (1937), Missouri courts have consistently held that a corporation cannot appear in a legal proceeding except through an attorney. See Liberty Mutual Ins. Co. v. Jones, 344 Mo. 932, 130 S.W.2d 945, 955 (1939); Dobbs Houses, Inc. v. Brooks, 641 S.W.2d 441, 443 (Mo.App.1982); Credit Card Corp. v. Jackson County Water Co., 688 S.W.2d 809, 811 (Mo.App.1985); § 484.020, R.S.Mo.1986.

The law recognizes the right of natural persons to act for themselves in their own affairs, although the acts performed by them, if performed by others, would constitute the...