State ex rel. State Highway Commission v. City of St. Louis

Decision Date31 October 1978
Docket NumberNo. 38235,38235
PartiesSTATE of Missouri ex rel. STATE HIGHWAY COMMISSION of Missouri, Plaintiff-Appellant, v. CITY OF ST. LOUIS and John H. Poelker, Mayor, Defendants-Respondents. . Louis District, Division Two
CourtMissouri Court of Appeals

John H. Gladden, State Highway Comm., Joplin, Bruce A. Ring, State Highway Comm., Jefferson City, for plaintiff-appellant.

Donald L. Schlapprizzi, Alfred Lebowitz, St. Louis, for defendants-respondents.

STEWART, Judge.

The relator, State Highway Commission of Missouri (Commission) brought suit for breach of contract against the City of St. Louis, its Mayor, its Comptroller and Travelers Insurance Company as surety on the bond of the Comptroller. We shall refer to defendants as City. City filed a counterclaim for damages contending the contracts sued upon by Commission and other contracts of the same nature were the result of duress. The verdict of the jury was in favor of City on Commission's action and in favor of City for $13,861,810.00 and $4,114,647.25 interest on City's counterclaim. Commission appeals from the judgment entered on the verdict. We reverse and remand as to Count IV of Commission's petition and affirm in all other respects.

The Commission's petition in four counts alleges that between 1958 and 1966 it entered into four contracts with City in which City agreed to pay a percentage of the acquisition costs of rights-of-way for that portion of urban highway construction projects within the City of St. Louis. The contracts alleged in Counts I and III called for payment of 50% Of the acquisition costs and those alleged in Counts II and IV call for 10% Of such costs.

The highways were being built in accordance with the provisions of the Federal-Aid Highway Act 23 U.S.C. § 101 et seq. The percentage of the acquisition costs required by the contracts represented the percentage of those costs which the Commission would not receive by way of reimbursement from the Federal Government.

City filed an answer and counterclaim. As pertinent to our discussion City's answer raised the affirmative defenses of duress and ultra vires. We note at this point that at the time of submission the defense of ultra vires was abandoned as to Counts I, II and III. City's counterclaim alleged that it had entered into the four contracts sued upon by Commission and other contracts 1 with the Commission under duress and sought recovery of the sums paid by it to the Commission.

Many of the facts were admitted by the parties by way of stipulation. They agreed as to the identity of the four contracts sued upon by Commission; that the contracts were executed by persons generally authorized to execute such contracts; that the amounts sued for by the Commission were the amounts remaining unpaid under those contracts; 2 that Commission had acquired and paid for all of the right-of-way referred to in the contracts and that all of the right-of-way acquired was within the City of St. Louis; that all of the highway projects involved had been completed and that Commission has complied with the terms of the contracts in all other respects.

The parties further stipulated that City had paid a total of $13,861,810.00 to Commission on the various projects. Of that amount the sum of $5,022,984.97 was paid on the four contracts sued upon by Commission. 3

It was further stipulated that City was required by the Commission to comply with those regulations of the Commission that required City to pay the percentage of the cost of acquisition of right-of-way set out in the contracts on all projects as a condition precedent to the commencement of construction of the highway project. Commission drafted all of the contracts involved in this action and the terms with respect to the percentage of payment and the requirement that payment be made were not negotiable.

The additional facts which we set out hereafter will be viewed in the light most favorable to City, the prevailing party. Parker v. Stern Bros. & Co., 499 S.W.2d 397 (Mo.1973).

Prior to 1950 the Commission adopted a policy requiring cities having a population in excess of 5,000 to pay a portion of the cost of right-of-way acquisition. This policy prevailed with insubstantial modification until January 12, 1968.

The highway construction projects are based upon need. It is apparent, from the fact that the contracts presented to City had designated routes for acquisition, that the various highway projects underlying the contracts involved in this litigation had been planned before the contracts were submitted to City by Commission.

Commission urges eleven primary issues for our consideration. We consider the points raised in the posture in which they are presented to us.

Commission's principal contentions are that the trial court should have directed a verdict in its favor on each count of its cause of action and in its favor on City's counterclaim because "there was no substantial evidence to show coercion and duress by (Commission) against (City's) legislative body, the Board of Aldermen, in obtaining the execution of the contracts sued on in . . . (Commission's) petition."

We first consider the basic elements of "duress." In Missouri it is said that the question of duress is one of fact in the particular case. As the court said in Coleman v. Crescent Insulated Wire & Cable Co., 350 Mo. 781, 168 S.W.2d 1060 (1943) 168 S.W.2d l. c. 1066:

"The question is: Was the person so acted upon by threats by the person claiming the benefit of the contract, for the purpose of obtaining the contract, . . . and was the contract thereby obtained. So duress is to be tested, not by the nature of the threats, but rather by the state of mind induced thereby in the victim. The ultimate fact in issue is whether the alleged injured party was bereft of the free exercise of his will power; and of which, the means used to produce such state of mind, the age, sex, capacity, situation, and relation of the parties, are all evidentiary."

The court in Coleman also took note of the fact that the victim of duress "acts knowingly but unwillingly because of the coercion . . ." and he may continue to be submissive to the threatened force which caused him to act after the action has accrued.

It is admitted that the provision of the contracts requiring City to make payment for the costs of right-of-way was part of the contract because of a policy of the Commission which was passed by resolution of the board. The policy has the effect of a rule or regulation of an administrative body. § 536.010(4) RSMo. The policy ostensibly had the force and effect of law. It was stipulated by the parties that City had to comply with the policy of the Commission or Commission would not commence construction of that portion of the highway project within the City of St. Louis. A number of letters to City from Commission indicate a reluctance on the part of City to enter into one of the contracts because of lack of funds. In one instance City sought a modification of the contract so as to provide that City make payments under the contract "when funds are available and appropriated for such purposes." The Commission in reply requested that the "(c)ontract be executed as submitted . . ." In another letter in answer to a statement by City that it was not in a position to sign one of the contracts because of lack of funds, Commission said that no construction would be started within the City limits until the agreement was signed. It reiterated, "(T)his policy Will be adhered to . . .,"

The contracts involved in this case extended over the terms of Mayors Tucker and Cervantes. Mayor Poelker was Comptroller, the fiscal officer of City, during this period and for most of the period Conway Briscoe was President of the Board of Public Service. Letters urging execution of the contracts and threatening to halt acquisition of the right-of-way and to withhold construction of the highways that were to be constructed within the City limits were sent to all of the above, with the exception of Mr. Poelker. Mr. Briscoe recommended that the contracts not be signed, but Mayor Tucker expressed the fear that if the contracts were not signed as presented the roads would not be built.

In addition to the Mayor, Mr. Poelker, as Comptroller, was required to sign all contracts. He was aware of the policy of Commission which required payment by the City for a portion of the cost of acquiring right-of-way. Mr. Poelker feared that if he did not sign the contract presented to him the roads would not be built.

It has been held that where a provision in a contract requires compliance with a statute which is unconstitutional that provision of the contract is unenforceable because it is not the result of the voluntary assent of the parties. City of Cleveland v. Clements Bros. Const. Co., 67 Ohio St. 197, 65 N.E. 885 (1902). We believe that the principle enunciated in that case to be sound and that it is applicable to the facts of this case. As we shall demonstrate, the policy requiring City to pay part of the cost for acquiring right-of-way was invalid.

In the case at bar Commission, one of the contracting parties, was in a position to adopt policies which could have the force of law. When it adopted the policy requiring cities with a population in excess of 5,000 to pay for the cost of acquisition of right-of-way this policy ostensibly had the force of law. In view of the fact that the route of the highways had been determined the threats to discontinue acquisition of right-of-way and to withhold construction was not based upon its discretionary power to determine the route according to its standards but to force City to pay for the cost of right-of-way. When the Commission demanded compliance with its policy as a condition precedent to construction of highways within the...

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