State ex rel. Stiers Bros. Const. Co. v. Hughes

• Citation: 190 S.W.2d 880,354 Mo. 659
• Decision Date: 05 November 1945
• Docket Number: 39596
• Parties: State of Missouri, at the Relation of Stiers Brothers Construction Company, a Corporation, Relator, v. Hon. William C. Hughes, Hon. Edward J. McCullen and Hon. Lyon Anderson, Judges of the St. Louis Court of Appeals
• Court: United States State Supreme Court of Missouri

190 S.W.2d 880

354 Mo. 659

State of Missouri, at the Relation of Stiers Brothers Construction Company, a Corporation, Relator, v. Hon. William C. Hughes, Hon. Edward J. McCullen and Hon. Lyon Anderson, Judges of the St. Louis Court of Appeals

No. 39596

Supreme Court of Missouri

November 5, 1945

Rehearing Denied December 3, 1945.

Original Proceeding in Certiorari.

OPINION OF COURT OF APPEALS QUASHED IN PART AND JUDGMENT OF TRIAL COURT REVERSED AND REMANDED.

Robert N. Jones and Arnot L. Sheppard for relator.

(1) Plaintiff's theory as it tried to present it to the jury in the trial court was merged identity of Mullgardt and relator. As a consequence, this is an action in equity and not at law; and the trial court erred in overruling relator's oral motion that this cause should be tried before a chancellor rather than before a jury. State ex rel. v. Shell Pipe Line Corp., 139 S.W.2d 510; Sommer v. Yakima Motor Coach Co., 174 Wash. 638, 26 P.2d 92; Pittsburgh & Buffalo Co. v. Duncan, 232 F 584. (2) But on appeal plaintiff changed his theory of recovery from merged identity to principal and agent claiming that relator was plaintiff's undisclosed principal (Respondents' opinion, Exhibit A). Respondents permitted plaintiff to make this change in its theory of recovery and affirmed on the principal and agent theory directly contrary to this court's decisions holding that the appellate and trial theory must be the same. Mertz v Tower Grove Bank & Trust Co., 344 Mo. 1150, 130 S.W.2d 611; Presbyterian Orphanage of Missouri v Fitterling, 342 Mo. 299, 114 S.W.2d 1004. (3) The contract does provide that any contract for construction work which Mullgardt may secure "shall be backed, financed or underwritten" by relator; but this does not create the relationship of principal and agent between relator and Mullgardt. On the other hand, it does create the relationship of creditor and debtor between them. As used in contracts of this character and in similar contracts, the term "backed" means no more than that one party will advance for the account of the other a sum of money. Miles v. Columbia River Packers' Assn., 41 Ore. 617, 69 P. 827. (4) The term "financed" means merely to lend money to. Fred G. Clark Co. v. C.C. Warner Co., 188 Minn. 277; Hopgood v. Ehless, 141 N.C. 344, 53 S.E. 857. (5) The term "underwrite" apparently is a loose expression which has no legal significance in a contract of this kind. When used with respect to insurance policies, it means the act of writing one's name under a contract to insure, whereby the signer becomes liable for all or a specified portion of the face of the policy. When used with respect to the sale of bonds or shares of stock to the public, the term means the duty or responsibility created by a contract whereby one takes upon himself the duty of selling and agrees to sell to the public all or a specified portion of the shares of stock or bonds of a corporation and, in the event he fails to sell all of such stock or bonds, to retain the remainder. In re Hackett, Hoff & Thiermann, 70 F.2d 815; Stewart v. Miller & Co., 168 Ga. 919, 132 S.E. 535, 45 A.L.R. 559. (6) Plaintiff's petition does not plead, nor does its evidence tend to show, an implied agency. To create such a relationship, the facts in evidence taken as a whole must fairly disclose that one party is acting for or representing another by the latter's authority. However, the law does not indulge in any presumption that an agency exists and if it is to be found to have existed without any express contract creating it, as here, but only by implication, the conclusion must be reached from a natural and reasonable, rather than a forced, strained or distorted construction of the facts in evidence. 2 C.J.S., sec. 23, p. 1046; Kaden v. Moon Motor Car Co., 26 S.W.2d 812. (7) There is no evidence in this record tending to support the theory that the relation between relator and Mullgardt was that of principal and agent, respectively. Respondents' holding to the contrary is directly in conflict with this court's opinion in State ex rel. v. Shell Pipe Line Co., 139 S.W.2d 510. (8) The evidence in this case is wholly insufficient to warrant a court of equity in disregarding the separate identities of relator and Mullgardt. These facts drawn from plaintiff's own evidence, preclude the application of the theory of merger of identity between Mullgardt and relator. State ex rel. v. Shell Pipe Line Co., 139 S.W.2d 510; Berkey v. Third Avenue R. Co., 244 N.Y. 84, 155 N.E. 58, 50 A.L.R. 599; Owl Fumigating Corp. v. California Cyanide Co., 30 F.2d 812; Kingston Dry Dock Co. v. Lake Champlain Transportation Co., 31 F.2d 265; Sommer v. Yakima Motor Coach Co., 174 Wash. 638, 26 P.2d 92; Peterson v. C., R.I. & P.R. Co., 205 U.S. 364, 27 S.Ct. 513, 51 L.Ed. 841; Pittsburgh & Buffalo Co. v. Duncan, 232 F. 584; Prince v. McLaughlin, 16 F.2d 886; Ambridge v. Philadelphia Co., 129 A. 67, 39 A.L.R. 1064; William C. Atwater & Co. v. Fall River Pocahontas Collieries Co., 119 W.Va. 549, 195 S.E. 99; Pagee Horton & Co. v. Harmon Paper Co., 236 A.D. 47, 258 N.Y.S. 168; Shepard v. Banking & Trust Co. of Jonesboro, 79 F.2d 767. (9) The undisputed evidence in this case discloses that the sole relationship between relator and plaintiff was that of creditor and debtor, respectively. Chase v. West, 121 Me. 165, 116 A. 213; Chicago Mill & Lumber Co. v. Boatmen's Bank, 234 F. 41. (10) Where one corporation lends money to another, the fact that the former assumes an active role in the management of the latter does not merge the identities of the two corporations, or make the latter liable for the debts of the former. Owl Fumigating Corp. v. California Cyanide Co., 24 F.2d 718; Peterson v. C.R.I. & P.R. Co., 205 U.S. 364, 51 L.Ed. 841; United States v. American Bell Tel. Co., 29 F. 17; Powell, Parent and Subsidiary Corps., p. 11; Krohn v. Lambeth, 114 Cal. 302, 46 P. 164; Burton v. Larkin, 36 Kan. 246, 13 P. 398; A., T. & S.F.R. Co. v. Maher, 23 Kan. 163. (11) Plaintiff's principal instruction is erroneous for several reasons: It leaves to the jury the question of relationship between relator and Mullgardt, to be determined by a construction of the written contract, always a question for the court. There is no ambiguity in the written contract insofar as it relates to the status of relator and Mullgardt. Therefore, the relation of those two companies as established by that contract is a question of law for the court and not a question of fact to be determined by a jury. Ross v. St. Louis Dairy Co., 98 S.W.2d 717; Keyes Farm & Dairy Co. v. Prindle, 249 Mo. 600. (12) Even if the contract were ambiguous there is no dispute in plaintiff's evidence (and there was no other evidence) with respect to the intention of the parties to the contract. Plaintiff's witness Mullgardt's testimony shows relator was no more than the creditor of Mullgardt. Therefore, under the decisions of this court, the relationship of relator and Mullgardt was a question of law for the court and not one of fact for the jury. Respondents' opinion holding to the contrary is in direct conflict with this court's decisions hereafter cited. Ross v. St. Louis Dairy Co., 98 S.W.2d 717; Keyes Farm & Dairy Co. v. Prindle, 249 Mo. 600. (13) Merged identity is not the theory upon which plaintiff claimed that he tried the case in the trial court and it will not be permitted to change its theory on appeal. Mertz v. Tower Grove Bank & Trust Co., 344 Mo. 1150, 130 S.W.2d 611; Presbyterian Orphanage of Missouri v. Fitterling, 342 Mo. 299, 115 S.W.2d 1004; and the instruction is unquestionably confusing and misleading. Hopkins v. Highland Dairy Farms, 159 S.W.2d 254. (14) The only hypothetical facts found in plaintiff's instruction are the admitted provisions of the written contract. There is no pleading that the contract is ambiguous; there is no dispute about the contents of the contract. Therefore, the construction of the contract was for the court rather than the jury. Ross v. St. Louis Dairy Co., 98 S.W.2d 717; Prideaux v. Plymouth Securities Co., 84 S.W.2d 166; Cowell v. Employers' Indemnity Corp., 34 S.W.2d 705; Kliethermes v. Cole Motor Service, 102 S.W.2d 819; Gillioz v. State Highway Comm., 348 Mo. 211, 153 S.W.2d 18. (15) The testimony of Haase as to statements made by Harold Stiers was clearly incompetent, and respondents' opinion holding to the contrary is directly opposed to the opinions of this court hereafter mentioned. There is neither any ambiguity nor any conflicting evidence as to the contractual relationship between relator and Mullgardt. Therefore, no evidence with respect to its interpretation by the parties was admissible. Ross v. St. Louis Dairy Co., 98 S.W.2d 717; Keyes Farm & Dairy Co. v. Prindle, 249 Mo. 600. (16) If there were any ambiguity in the contract, its meaning can be ascertained by the actions of the parties only if the conduct of both parties evidences agreement upon its construction. Meissner v. Railway Equipment Co., 211 Mo. 112. (17) To make evidence of the construction by one party to the contract admissible it must show long continued conduct proving an interpretation acquiesced in by the other party, whereby the first party to the contract, not a third party, acquires the right to rely upon that construction. State ex rel. McKittrick v. Springfield City Water Co., 345 Mo. 6, 131 S.W.2d 525. (18) In any event, Haase's testimony was not admissible because it shows no more than Harold Stiers' conclusion respecting the legal effect of the contract here involved. State ex rel. v. Shell Pipe Line Co., 139 S.W.2d 510; Ross v. St. Louis Dairy Co., 98 S.W.2d 717. (19) But even assuming its admissibility and truth, it could have no probative value. The status of relator and plaintiff had been fixed by the written...