Kansas City v. Rathford

186 S.W.2d 570, 353 Mo. 1130, 1945 Mo. LEXIS 469
CourtSupreme Court of Missouri
DecidedMarch 5, 1945
DocketNo. 39231.
StatusPublished
Cited by46 cases

This text of 186 S.W.2d 570 (Kansas City v. Rathford) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kansas City v. Rathford, 186 S.W.2d 570, 353 Mo. 1130, 1945 Mo. LEXIS 469 (Mo. 1945).

Opinions

Action instituted May 2, 1939, to recover $327,500 damages alleged to have been sustained by reason of a fraudulent plan, scheme and conspiracy, and fraudulent and unlawful acts in pursuance thereof. The issues were submitted to a jury, and plaintiff has appealed from the judgment resultant upon verdict for defendants.

Plaintiff (appellant), Kansas City, alleged defendants (respondents) John J. Rathford and John J. Pryor; William D. Boyle, now deceased (defendant-respondent Roy W. Crimm is executor of the will of William D. Boyle); and others, entered into a conspiracy to defraud plaintiff out of large sums of money. It was alleged the conspiracy was made effective by "creating . . . a company . . . or `fictitious shell' known as the `Rathford Engineering Company,' . . . through which false . . . material statements . . . would be made to this plaintiff, to the effect that said company could and would render valuable services to this plaintiff and its water department in discovering . . . pretended leaks . . . in the . . . lines of the plaintiff's water supply system and thereby induce the plaintiff . . . to make large appropriations to the water department . . . based upon budgets prepared and submitted by . . . McElroy . . . as city manager, . . . and to issue warrants . . . which would be received by the defendants . . . without . . . rendering such alleged service and without . . . entering into a contract in writing in the manner and form as contracts are required to be entered into by and with municipal corporations under . . . Section 2962 of the Revised Statutes of Missouri, 1929 (now Sec. 3349, R.S. 1939), and Section 92 of Article IV of the Charter of Kansas City, and the Administrative Code of Kansas City . . .

"3. That to carry out said . . . conspiracy . . . said conspirators . . . did form a certain fictitious . . . company by the name of `Rathford Engineering Company,' and falsely and fraudulently represented to plaintiff that said `company' could . . . render valuable services to the plaintiff . . .; that no lawful contract was ever entered into . . . for the performance of water leakage service . . .; but said parties prepared or caused to be prepared semi-monthly written statements . . . and presented said statements . . . to the . . . acting director of the water department . . ., and said . . . acting director, T.B. Samuel, Jr., wrongfully and unlawfully approved same, and other officers . . ., not knowing of said fraudulent scheme . . ., and relying on the truth . . . of said statements . . . put said bills in line for payment and in due course issued . . . treasury warrants *Page 1138 thereon; that said warrants were issued and made payable to said Rathford Engineering Company, and delivered . . . to the defendant, John J. Rathford, John J. Pryor and William D. Boyle, who, for themselves and those acting with them . . . endorsed said warrants and received payment thereon [573] from the water funds of Kansas City . . . in the aggregate amount of three hundred fifty-six thousand five hundred dollars . . .; that said statements . . . were false and known to be false by the defendants . . . and were made with the intention and purpose of cheating, wronging and defrauding the plaintiff . . .

"4. That the plaintiff, municipal corporation, its council and administrative officers (other than said H.F. McElroy and . . . T.D. Samuel, Jr., . . .) were deceived and misled. . . .

"6. Plaintiff further states that said William D. Boyle, now deceased, was an active participant in the conspiracy and fraud herein and personally profited thereby and therefrom. . . .

"8. Plaintiff further states that no contract was ever entered into between the plaintiff and . . . defendants, or . . . William D. Boyle, or the Rathford Engineering Company . . . as contracts are required to be entered into by municipal corporations under . . . Section 2962 of the Revised Statutes of Missouri, 1929 (now Sec. 3349, supra), and Section 92 of Article IV of the Charter of Kansas City; that no contract or agreement . . . was ever authorized by the Council of Kansas City, Missouri, or the Commissioner of Purchases Supplies of Kansas City, Missouri, as required by Article XV of Ordinance No. 52820. . . .

"9. Plaintiff further states that each and all of said treasury warrants, issued as aforesaid, semi-monthly, and aggregating the sum of $356,500, were void and the payments of said warrants were . . . in violation of the Charter and Ordinance of Kansas City, Missouri, and particularly (regulations relating to contracts, payment of claims, purchases, and public lettings) . . .

"10. Plaintiff further states that by reason of the fraudulent plan, scheme and conspiracy, and the fraudulent and unlawful acts in pursuance thereof, as aforesaid, wrongs were done to its property rights and interests, its property, money and assets were diminished, and it sustained damages in the sum of . . ."

"Wherefore, plaintiff prays judgment against the defendants herein, and each of them, in the sum of . . ."

Defendants, John J. Pryor and Roy W. Crimm, Executor, filed separate answers denying the conspiracy. Defendant John J. Pryor further stated the Rathford Engineering Company (at times herein referred to as "Company"), in October, 1931, submitted to plaintiff its proposal in writing to make the survey; the proposal was accepted by the acting director of City's water department, who ordered Company to proceed with the work; in response to the acceptance *Page 1139 and work order, Company entered upon the performance of and performed the work, with full knowledge and consent of plaintiff, from November 1, 1931, until December, 1938, except for a period from December 1, 1933, to November 1, 1934; the acceptance and order, performance of the work, plaintiff's knowledge thereof, and plaintiff's payment of the compensation constituted conduct by which plaintiff is estopped from asserting the invalidity of the contract or its performance; plaintiff City, in the operation of its waterworks system, acted in its proprietary and not its governmental capacity, and in such capacity appropriated money by ordinance and paid for the services performed in compliance with the proposal; and further, plaintiff's cause of action accrued more than five years prior to the institution of the action and, by reason of plaintiff's knowledge of the facts, the action is barred by limitation. Defendant Crimm, Executor, likewise alleged plaintiff, in operating its water department, was acting in a proprietary capacity; averred plaintiff is estopped from asserting the contract was not valid; and pleaded the bar of limitation, and the abatement of the action upon the death of William D. Boyle. Plaintiff replied, traversing defendants' pleas, and specifically denied that it, in operating its water department, had rendered itself amenable as though it were a person acting in an individual capacity.

Plaintiff assigns errors in the giving of instructions requested by defendants, in modifying the principal instruction requested by plaintiff, and in rulings upon the admissibility of evidence. But defendants contend plaintiff did not make out a submissible case. We will first examine this contention. Other questions raised by the parties will be considered in the course of the opinion.

Defendants urge plaintiff stated a cause of action only in deceit and the evidence [574] failed to uphold an essential element of such a tort action, that is, the falsity of defendants' representations.

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Bluebook (online)
186 S.W.2d 570, 353 Mo. 1130, 1945 Mo. LEXIS 469, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kansas-city-v-rathford-mo-1945.