State v. Bates

• Decision Date: 27 June 1927
• Docket Number: No. 27808.,27808.
• Citation: 296 S.W. 418
• Parties: STATE ex rel. STATE HIGHWAY COMMISSION OF MISSOURI v. BATES, Circuit Judge.
• Court: Missouri Supreme Court

296 S.W. 418

STATE ex rel. STATE HIGHWAY COMMISSION OF MISSOURI v. BATES, Circuit Judge.

No. 27808.

Supreme Court of Missouri, in Banc.

June 27, 1927.

Original action in prohibition by the State of Missouri, on the relation of the State Highway Commission of Missouri, against S. W. Bates, Judge of the Circuit Court of Jasper County. Temporary rule in prohibition made absolute.

North T. Gentry, Atty. Gen., Lue C. Lozier and Edgar Shook, both of Jefferson City, and Hugh Dabbs, of Joplin, for relator.

A. G. Young, of Webb City, for respondent.

GRAVES, J.

Original action in prohibition. The facts are undisputed, because the pleadings nisi were so framed as to make questions of law only. It appears that J. Frank Todd and Ben 0. Aylor, partners doing business under the name of Highway Construction Company, sued the relator herein (state highway commission of Missouri) in Jasper county, Mo., for damages on a contract. The damages claimed was 826,000. The contract out of which it is claimed that these damages arose was one entered into by relator and the plaintiffs in the action, brought in Jasper county, for the construction of a certain state highway in Howard county, Mo. In the Jasper county suit the plaintiffs sued out two writs of summons, one to Jasper county, and one to Cole county. Both were served. The one to Jasper county was served:

"By delivering a duly certified copy of said original writ and certified copy of the petition to one Dean Wilson, assistant division engineer of relator, at one of the offices of relator, said office being one usually had and maintained by relator in the transaction of its usual, ordinary, and customary business in said county, and the said Dean Wilson at that time being in charge of said office; that return of the alleged service upon relator as aforesaid was made by the sheriff to the clerk of said circuit court of Jasper county, at Joplin."

The writ directed to Cole county was served:

"By delivering a true copy of the same, with a petition thereto attached, as certified to by A. E. Taggart, circuit clerk of Jasper county, Missouri, to E. J. McGrew, secretary of relator; that return of said service upon relator, as aforesaid, was made by the said sheriff of Cole county to the clerk of said circuit court of Jasper county, at Joplin."

The relator here (defendant nisi) filed, in the lower court, both a special and limited motion to quash the service, and a special and limited motion or plea to the jurisdiction. We mean by "special" that defendant centered its appearance only for such motions, and not generally. The trial court (respondent herein) sustained the motion to quash the service, so far as the service in Jasper county was concerned, but overruled the motion as to the service in Cole county. The motion or plea to the jurisdiction was overruled. Such are the facts, and we have left but a few knotty propositions of law.

I. It is first contended by the relator that:

"It is fundamental that the state, being sovereign, cannot be sued without its consent."

If such is the status of this case—i. e., that the state is being sued without its consent—then, as Lamm, J., said in Merchants' Exchange v. Knott, 212 Mo. loc. cit. 647, 111 S. W. 574, "That the sovereign state may not be sued is a truism." It should be added that the sovereign may, by law, give consent to the citizen to sue it. But this ruling does not dispose of the point, because there are two questions left open. They are: (1) Is the state the real party; and (2) if so, has the state not given consent to be sued?

Relator was sued in Jasper county (according to the terms of the petition, attached to relator's petition for our writ in the instant case) "as a corporation created by the laws of the state of Missouri, with authority to sue and liable to be sued in its official name," and we do not understand the learned Attorney General to gainsay that relator is not a legal entity of the state, created by the laws of the state, and having powers similar to a corporation. Counsel may differ as to the exact character of this legal entity, but they do not differ as to the relator being a legal entity possessed of the powers of a corporation. Relator, among other things, contends that it is not a private corporation, so as to make it amenable (so far as the method of getting service upon it is concerned) to the statutes providing for service upon private corporations. The act of 1921 (Laws Extra Session 1921, p. 131 et seq.), which created the "state highway commission of Missouri," leaves no doubt of the fact that such body is a legal entity with powers of a corporation. The name, quoted supra, is taken from section 12 of the act of 1921. Laws Extra Session 1921, p. 136. This name is required to be the inscription upon the seal to be used by the commission. In our judgment it is a legal entity created by the state, by direct legislative action, for the purpose of building and maintaining state highways out of funds provided for such purpose, which funds are set apart for the specific purpose and can be used for no other purpose.

It is an entity, with powers of a corporation, established and controlled by the state for a specific public purpose, but that does not make this legal entity the sovereign state. No contract it is authorized to make is made in the name of this state, but in the name of the commission. The sovereign state could have contracted for the building of its public highways in its own name, but it chose to create a legal entity for this work. This act gave to this legal entity no part of the state's sovereignty, but authorized it to proceed to do certain work which the state could have had done by private contracts made direct with the state. Thus it has been well said in 14 C. J. at page 75:

"Although a corporation may be public, and not private, because established and controlled by the state for public purposes, it does not necessarily follow that such a corporation is in effect the state, and so not subject to the rules of law governing other corporations for the state may, by engaging in a particular business through the instrumentality of a corporation, divest itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations. Thus, although incorporated banks, established by the state for its own public purposes and owned and controlled entirely by the state, are undoubtedly public corporations, it has been held that they are not for that reason invested with the attributes of sovereignty, but are mere corporations, and subject generally to the rules of law governing other corporations."

Such is the status of this commission. It is not the state, but a mere entity created by the state, for the specific purpose of contracting for the building of state highways and bridges and the maintenance of the same and doing all other things pertaining thereto. In the language of Walker, J., in State v. Board of Regents, 305 Mo. loc. cit. 68, 264 S. W. 701, it was constituted "a legal entity, without in any wise lessening the state's sovereignty." It is in no sense entitled to immunity from suit, as is the state. In fact, the state, which created the commission, subjected it to be sued by express statutory provisions. If, on the other hand, it is in fact and in law the state, or the state's alter ego, the state has consented to suit being brought. The commission is not the state, with the state's sovereignity (or any part thereof), but is a mere creature of the state, created for the express purpose of performing a specific work. A case fully in point is the case of Gross v. Kentucky Board of Managers of World's Columbian Exposition, 105 Ky. 840, 49 S. W. 458, 43 L. R. A. 703. At page 843 of the majority opinion (49 S. W. 459) it in said:

"The rule is well settled that the state cannot be sued, and that the same protection is extended to the officers of the state. But this rule does not apply to a corporation created by the state for certain public purposes. If appellee was made by the acts referred to a corporation, or a quasi corporation, we see no reason why it should be exempted from the rule allowing suits to be brought against corporations on contracts they have made. So the question is presented whether appellee was invested by the Legislature with the character of a corporation, or quasi corporation. It is not necessary that the thing created by the Legislature should be named by it a corporation. Its character depends upon the powers given it, and not upon the name by which the Legislature may call it. Following a decision of this court, the Supreme Court of the United States, in Hancock v. Louisville & Nashville Railroad Co., 145 U. S. 415, 12 S. Ct. 971, 36 L. Ed. 755, said: 'By the act of 1869, this prescribed portion of Shelby county was authorized to issue bonds and subscribe stock. The bonds, when issued, were not the obligations of Shelby county, nor of the individual taxpayers, and still there must be some debtor. That debtor was this portion of Shelby county. Giving to it power to issue bonds and create indebtedness is the creation of an entity with power to act, and, if this entity has power to create a debt, it becomes subject to suit. That this entity was not in terms named a corporation is not decisive. It is enough that an artificial entity was created, with power to exercise the functions of a corporation. It was, though not named, a corporate entity.' * * * The board was authorized to have a house built, and a restaurant run in it, to employ agents and assistants, and to take all necessary steps to have the state properly represented at that exposition. The commissioners clearly were not personally responsible for their obligations, the state expressly declared that it was not to be responsible, and the only reasonable conclusion is that the board of managers, to whom the $100,-000 was committed...