State ex rel. Miller v. Hall

141 N.W. 124, 25 N.D. 85, 1913 N.D. LEXIS 102

• Court: North Dakota Supreme Court
• Decided: April 7, 1913
• Status: Published

Opinion

Spalding, Ch. J.

It is first contended that the pl-aintiff-relator cannot maintain this action, for the reason that the rights sought to be secured are private only. We are of the opinion that the relator is qualified to bring this action. He is interested as a taxpayer and as a citizen, and it would seem that there must be someone who may champion the interests of the state in case the attorney general, as in this case, refuses to do so. We need not discuss the subject further, because we have so recently passed upon it in State ex rel. McCue v. Blaisdell, 18 N. D. 55, 24 L.R.A.(N.S.) 465, 138 Am. St. Rep. 741, 118 N. W. 141. See also Frame v. Felix, 167 Pa. 47, 27 L.R.A. 803, 31 Atl. 375, which is directly in point.

2. We will next consider what character is impressed upon this contract on its face. Is it a lease or is it virtually an assignment of the contract between the state and the journal company ? Is it a hiring- by the journal company of the work done, or is it a contract for the hiring of the use of the machinery belonging to the Dakota company, a contract for the purchase of material from it, and a contract by the Dakota company to furnish these thing’s and the help necessary to do the work? It is immaterial what the contract is denominated by the parties, as its terms and conditions, rather than the name applied to it, must govern. If it is a lease, or if it is a contract for the use or hiring of machinery, purchase of material, and to furnish these things and the help, it is evident that, as far as it discloses on its face, it could be entered into lawfully by the parties without affecting the contract between the journal company and the state, or the rights of the state or any citizen within it. On the other hand, if it is merely a subterfuge or a device to cover up the real intent of the parties, and is, in fact, only a method of transferring the doing of the work from the journal company to the Dakota company, then work of the third and fourth classes done under it must be done in violation of the terms of chapter 185, Laws of 1907. It is apparent on the face of it that it provides for the use by the journal company of the presses and machinery, etc., belonging to the Dakota company. It is clearly apparent that it is an agreement on the part of the Dakota company to sell to the journal company material for its use in carrying out these contracts. The journal company is given possession of all the property that it requires for its use during the two years covered by the contract, at all times, day or night, when it has use for it and desires to use it. It has possession at all such times to the exclusion of the Dakota company. The fact that the Dakota company may have the right to use the plant when the journal company has no use for it, and it would otherwise be idle, as far as we are able to see, in no manner casts a cloud of suspicion upon the intent of the parties in entering upon the contract. The journal company did not make the contract cover miscellaneous work for outside parties; it only covers the state work, and this provision for the Dakota company using the plant when not in use by the journal company was undoubtedly made in contemplation of the journal company not having work to employ the plant, or all of it, during the entire period covered by the .contract. It cannot prejudice the journal company to have it in use by the Dakota company during such times as the plant would otherwise remain idle; and we see nothing in this proposition that in any way militates against the construction that, so far as the plant is concerned, it is a hiring by the journal company. As to the purchase of material, it will be noticed that the contract requires the Dakota company to carry in stock and furnish to the journal company the material, which we suppose includes printing paper, leather used in binding, and other material entering into the manufacture of pamphlets and such books as are required by the state within these classes. The journal company is not a manufacturer of material, and it has to purchase it somewhere and of someone. To carry in stock the amount of material of this nature required for the state printing manifestly requires considerable capital, — possibly capital in excess of that of the journal. As to this we are not informed. It must be of considerable advantage to the journal company to have the stock available in Bismarck, and thereby avoid the delay which would at times occur if compelled to order from jobbing points. For these reasons the allowance of 10 per cent which is provided for in the contract on such material does not seem to us, on its face, to be so large as to alone cast suspicion upon the parties or their contract.

The most difficult question relates to the furnishing of the help, which we assume includes typesetters, machine operators, such binders as may be necessary, etc. It is not perfectly clear that this contract might not be considered in respect to the help as providing simply for the Dakota company doing the work of the journal company, but when read in connection with the other provisions of the contract, particularly those relating to the material and the use of the plant, and considered in the light of well-known facts as they exist in the labor world, we think it entirely consistent with the theory that the employees when engaged on the work of the journal company are the employees of the latter. As far as indicated by the contract, at such times they are under the dominion and control of the journal company. There is nothing to disclose that the Dakota company directs the manner in which the work shall be performed, the hours of employment, or assigns different workmen to different classes of work. It would rather appear that all this is done by the journal company. The contract in this respect does not materially differ from those engaging help' in various employments through employment agencies or through the means of labor unions; and we are satisfied that the burden is on the relator to show that the employees are under the control and the direction of the Dakota company while doing the work, in order to prove his case. This he has not done. We may add that the contract in this respect is not so clear, but that evidence of the construction placed upon it by the parties would have much weight, but the burden is on the relator. We conclude that so far as the contract on its face is concerned it contains nothing inconsistent with the claims of the intervener and tba state that it is a contract of hiring a plant, for the sale of material and the furnishing to the journal company of the help necessary to carry out its contracts with the state.

3. Does the evidence disclose such a condition of affairs and such ■circumstances surrounding the making of the contract between the journal company and the Dakota company, the doing of the work, and the relations of the parties, as to sustain the claim of appellant that such contract is only a device intended to conceal the fact claimed by appellant that the Dakota company is the party really doing the work, and that it is being done in violation of the statute referred to? We shall consider the additional facts claimed to bear upon this question largely as stated in the brief of appellant. It appears that in the spring of 1912, which was before the contract between the state and the journal company had been entered into, or taken effect, the journal company had a contract for the printing of a pamphlet known as the “publicity pamphlet” for the state, and hired it done by the Farnum Printing Company, of Minneapolis, and that this job was done in Minneapolis, Minnesota. We do not recall that it is disclosed in the record how the journal company happened to have this printing, but that is immaterial. The testimony shows that it was a very large job, one pamphlet being required to be sent to each elector in the state, that the time for the execution of the work was very limited, and, it is claimed, that no plant in the state was able to do the work in time so the pamphlet could be distributed when necessary. This is given as the reason why it was done in Minneapolis, and it of course also appears that at that time the plant of the Dakota company in Bismarck had not been constructed or equipped. Bloom, the journal manager, secured the printing through negotiations with one Dummer, a traveling representative of the Farnum Printing Company. Bloom testifies that he did not then know who the officers of the Farnum Printing Company were. We need not consider whether this contract, or the doing of this work, was legal or not; and we assume that the reason why it is referred to is because, through it, Bloom undoubtedly got into touch and formed an acquaintanceship with the officers of the Farnum Printing Company, and that, when organized, the Dakota company stockholders were either officers or relatives or employees of the Farnum Printing Company, aside from Mr. Bloom. It seems to be the contention of appellant that this fact casts suspicion upon their relations, and tends to show that the Farnum Printing Company is really the Dakota company and a Minnesota concern, rather than a North Dakota concern. It suffices to say that, so far as appears, both are corporations, and persons may be stockholders in two or more corporations without justifying the conclusion that the corporations are one, particularly where they are organized and conduct their business in different states. We do not discern any necessarily impeaching or suspicious circumstance in connection with these facts. It is claimed by appellant that the evidence discloses that the Dakota company was to receive 10 per cent profit on the cost of material and labor used in the state printing, and that the testimony of Bloom shows that he only figured on 10 per cent profit on the state work, and that this, in connection with the fact that he was to pay the additional sum of $250 per month, shows that if the journal company was the real party contracting with the state, or interested in it, it would be an unprofitable job on its face. The record on this is not quite clear, but we think it fairly warrants the conclusion that the journal company figured on a 10 per cent profit over and above what the total cost might be for securing the work done. This disposes of that point.

The next point is that the $1,000 payment made by the state to the journal company for printing between the 1st of January, 1913, and the trial of this proceeding, was turned over m ioio to the Dakota company. This is fully and reasonably explained by Bloom. His expíanation is to the effect that while tabulations were kept of all the labor1 and material furnished by the Dakota company to the journal company in the execution of its contract with the state, and while strictly in accordance with the terms of the contract they should have, at stated periods, adjusted their financial affairs, that during the sixty days’ session of the legislature, which session had not expired when this trial occurred, the plant and the men were worked to the limit, and that the adjustment or stating of accounts and- settlements which should have taken place in the interim were deferred until the work was less pressing, and the parties had more time and a better opportunity to strike a balance, and that as the work done at the time of the receipt of the payment on the estimate amounting to $7,000 amounted to a greater sum than that, the entire payment was turned over to the Dakota company to apply on account, leaving settlement to be made in full at a later date. The fact that the printing thus far done was delivered to Bloom as a representative of the journal company, and by him turned over to the Dakota company in boto, is without material significance, particularly when we consider that, except as to an insignificant amount, all belonged in the first and second-classes, which are not involved in this proceeding. It is shown that the Dakota company was actually engaged in doing work for other parties; that at the time of the trial it had done something like $5,000 worth- of" such work. Much emphasis is placed upon the fact that the negotiations between Bloom and the other incorporators of the Dakota company for the formation of such a corporation commenced very soon after the letting of the contract between the state and the journal company referred to. This does not strike us as casting suspicion upon the conduct of the parties, or indicating that they intended to evade the law. It is conceded that the journal company did not possess a plant in Bismarck, and that some arrangement had to be made whereby the first and second class work could be done in Bismarck, and their negotiations resulted in a feasible and practical method of securing the use of- a plant and material with which to comply with the terms of the contract; and it was incumbent upon the journal company to make such provision before it became necessary for it to enter upon the execution of the contract, and before the legislature should convene, early in January. Negotiations would naturally take place with people who were in the printing business, or who knew something about it; and unless Bloom desired to move the journal plant from Devils Lake to Bismarck, such arrangements were, of necessity, made with other parties.

It is again insisted that the plant in Bismarck is being operated and conducted for the benefit of the Dakota company. We cannot agree wholly with this. When parties enter into a contract it is presumed to be contemplated that the benefits will be mutual; otherwise one party or the other would decline to join. We have shown clearly what benefits were anticipated by the respective parties to this contract. The record, we think, shows that the journal company contemplated making at least a 10 per cent profit on the work over and above all expenditures; that the Dakota company contracted for a 10 per cent profit on the labor and material, and that the $250 per month might reimburse them for the use of machinery, type, the furnishing of power, floor space, and building, etc., none of which were covered by the 10 per cent feature. It is also urged that the fact of the payment of $250 per month during the entire period covered by the contract should receive great weight and be construed favorably to appellant. We think what we have said regarding the whole contract and the facts disclosed sufficiently answer this. We are not experts in the value of the use of printing machinery, type, the furnishing of power for presses, and the other machinery; and we cannot say that it is an unreasonable compensation, or even so unreasonable as to impeach the motives of the parties in entering upon such contract, and prove that it was merely a scheme to cover up a violation of law. It would seem that Bloom contemplated doing work under his contract with the state aggregating considerable more than $100,000. The proportions of the different classes are not disclosed. The advantage to the journal company from having an accessible plant during the legislative session may have been, and doubtless was, of great value. Certain it is that without it that company would have been powerless to perform, and, as Bloom testifies, it was up to him to procure a plant.

We think we have covered sufficiently the contentions of appellant as to the facts which he claims shed light upon the nature of the contract and the acts of the parties. We realize that, as to. these considerations, the appellant had to rely upon the testimony adduced from hostile witnesses, but this does not relieve him from maintaining the burden of proof in the case; and when the whole record is considered and due weight given to this fact, we are unable to reach the conclusion that it shows a violation or an evasion of the statute. The contract called for the furnishing of material and labor, and a plant, to the journal company, with which it might do the work contemplated by its contracts with the state. The evidence neither proves that the work was being done otherwise than under the terms of the contracts, or in disregard of their terms, or by the Dakota company. In á sense, of course, all hired work is done by the party hired, but the principal is the responsible party. We have not assumed to cover, in this opinion, all of the evidence submitted. We cannot do so. We have only referred to the most salient points and the most important specific contentions of the appellant, which he claims tend to impeach the acts of the journal company. While we might possibly infer that the parties contemplated that a portion, at least, of the third and fourth class printing is to he done at the plant in Bismarck, yet the positive testimony of Bloom is that the greater portion of it will be done in Devils Lake. The only circumstance indicating that the remaining portion may be done in Bismarck is the fact of this contract with the Dakota company and the improbability of its being given to other parties, and any conclusion that it is to be done here is purely a conclusion resting upon inference.

We may add, as a final consideration, that appellant in his argument, in effect, concedes that if the transaction between the journal company and the Dakota Company was in fact a lease it was lawful. We are unahle to see what object the manager of the journal company might have in evading the law, or in turning the work over to the Dakota company to do, if he could hire the plant. Bloom, the manager of the journal company, owned only a one-thirtieth interest in the Dakota company, while he owned a controlling interest in the journal company. It follows that his profits to be realized from the work to be done by the Dakota company would be small as compared with like profits if done by the journal company. In view of the conditions, why should he not adopt the legal, rather than the illegal, method of accomplishing the end he had in view ? Why should the court discredit respondents’ theory and adopt appellant’s view of the relation between these printing concerns, when all presumptions are in favor of legal, rather than illegal, transactions? And even if the proof was susceptibie of a construction which would render the transaction legal, or of the other, rendering it illegal, it would be the duty of the court, in case of grave doubt, to adopt the former.

We decide, without considering other questions which, by reason of our conclusion, become immaterial, that the judgment of the District Court must be affirmed.