author: SPURLOCK, Justice.

text:
    Richard W. RUSSELL et al., Appellants, v. George TRUITT et al., Appellees.
    No. 17830.
    Court of Civil Appeals of Texas, Fort Worth.
    Aug. 4, 1977.
    Rehearing Denied Sept. 8, 1977.

      Trickey & Trickey, Richard M. Trickey, Fort Worth, for appellants.
    Steves, Morgan & Harper, James E. Mann and Sterling W. Steves, Fort Worth, for appellee.
   OPINION

SPURLOCK, Justice.

Defendants appeal from a judgment for $8,000.00 plus $55,000.00 exemplary damages in a suit for breach of fiduciary duty by the agent and co-venturer in an apartment construction and management project. Among the issues presented by this appeal is whether the award of equitable relief for breach of fiduciary duty will support an award of exemplary damages.

We affirm.

Plaintiffs George W. Truitt, Gene Felker, Ray Campbell, W. J. Chamy, Donald G. Reames, and Philip H. Trew were joint venturers in the Hurst Estates Apartment Project on Precinct Line Road, along with Frank Campbell and Defendant Richard W. Russell.

The joint venturers appointed as their agent for the project Defendant Richard W. Russell Company, Inc., whose president and sole owner is Defendant Russell. Defendant Russell also owns and controls Defendant Rubaco Builders, Inc., whose president was co-venturer Frank Campbell. The joint venturers rejected a bid submitted by Rubaco on the construction contract.

On February 20, 1969, with the knowledge of plaintiffs, Defendant Russell Company, as agent, entered into a construction contract with Allied Enterprises, Inc. On March 1, 1969, Allied and Defendant Ruba-co Builders entered into a letter agreement to share profits and losses on the construction project and give Rubaco Builders final authority to approve or disapprove the subcontractors’ work. This agreement was signed for Rubaco Builders by its president, Frank Campbell, who was himself a co-ven-turer with plaintiffs and Defendant Russell. Plaintiffs allege that this letter agreement was made without their knowledge and in spite of their express rejection of Rubaco Builders’ bid on the contract.

The project later encountered difficulties, and Allied abandoned work. Plaintiffs were then told that Allied was not bonded, although they had directed that a $150,-000.00 performance bond be obtained.

Rubaco Builders submitted another bid for the contract and was again rejected by the joint venturers. The joint venturers hired Frank Campbell as sub-agent to complete the project. In early 1970 the agency of Defendant Russell Company was terminated. Eventually the project’s long-term financing was withdrawn, and the First National Bank of Fort Worth foreclosed on the project.

Plaintiffs made the following allegations in part: Defendants wilfully and intentionally concealed the secret written agreement of March 1,1969, and plaintiffs learned of it only by accident in March 1970. This concealment was a violation of the defendants’ fiduciary duties as managing agent and managing co-venturer. Rubaco, Russell and Allied subsequently had conflicts on the progress of the job and on the amounts paid out of the interim loan and had other problems directly and proximately caused by the secret joint venture arrangements created by Russell. Plaintiffs sought to recover the $500.00 monthly payments made to their agent, Defendant Russell Company and exemplary damages of $370,-908.14 from Russell individually and the other defendants jointly and severally for the breach of fiduciary duty.

The jury found (1) that Russell, the Russell Company and/or Rubaco entered into an agreement with Allied without the knowledge of the respective plaintiffs; (2) that the letter agreement of March 1, 1969, between Rubaco and Allied gave Russell an advantage to himself at the expense of the plaintiffs; (3) that the defendants entered into the agreement with the intent to secure an advantage over the plaintiffs; (4) that the defendants received no monetary advantage as a result of the agreement; and (5) that the plaintiffs were entitled to $55,000.00 exemplary damages. The court then rendered judgment for the plaintiffs for $8,000.00 plus an additional $55,000.00 as exemplary damages.

Defendants contend that the trial court erred in rendering judgment against them for “actual damages” in the amount of $8,000.00 because there is no supporting pleading that the defendants failed to perform the agreement as managing agent with the plaintiffs and no evidence to support said damages. They also argue that there is no evidence and insufficient evidence that the alleged secret agreement was the proximate cause of any damages to the plaintiffs.

We overrule points 1, 2, 9, and 10 and note at the outset that the court did not label the $8,000.00 award “actual damages.” Plaintiffs need not plead a failure to perform the agreement as managing agent in order to recover the $8,000.00. The evidence is undisputed that $8,000.00 in agency fees was paid to Defendant. Russell Company. In Moore v. Kelley, 162 S.W. 1034, 1037 (Tex.Civ.App.—Amarillo 1914, writ ref’d), the court quoted the following with approval:

“An agent is held to uberrima fides in his dealings with his principal; and, if he acts adversely to his employer in any part of the transaction, or omits to disclose any intent which would naturally influence his conduct in dealing with the subject of the employment, it amounts to such a fraud upon the principal as to forfeit any right to compensation for services.”

Here the plaintiffs pled as a breach of fiduciary duty the alleged secret agreement and sought recovery of the $500.00 monthly payments made to Defendant Russell Company for acting as their agent pursuant to written contract. No other pleadings were necessary to support the $8,000.00 award.

There was no fact issue raised under these pleadings as to the amount recoverable, since the amount paid in agency fees was undisputed. Plaintiffs were entitled to their recovery as a matter of law if the breach of fiduciary duty was proved. Anderson v. Griffith, 501 S.W.2d 695 (Tex.Civ.App.—Fort Worth 1973, writ ref’d n.r.e.); Moore v. Kelley, supra.

Defendants take the position that the plaintiffs’ damages resulted from the general contractor’s failure to complete the project, his drawing down construction money ahead of the completion of improvements, and the falsification of accounts to show that materials had been paid for when in fact they had not.

Defendants’ argument does not address the issue. If the letter agreement constitutes a breach of the defendants’ equitable duties as a fiduciary, it is unnecessary to decide whether the breach was the proximate cause of the project’s failure. The breach automatically results in the forfeiture of the agent’s compensation. Anderson v. Griffith, supra.

In point 3 the defendants argue there is insufficient evidence to support the $8,000.00 award because the evidence conclusively shows that Russell and Frank Campbell paid over 162/3 and 15% of the $8,000.00 respectively and because both later paid a portion of the funds due from defaulting joint venturers.

Defendants’ point in effect attempts to raise the defense of set-off based upon the contributions of the two non-plaintiff joint venturers. The pleadings do not contain any allegations that the defendants are entitled to a set-off, and they requested no jury findings on the question. Having thus raised it for the first time on appeal, the question in point 3 is waived. Machann v. Machann, 269 S.W.2d 826 (Tex.Civ.App.—Waco 1954, writ ref’d n.r.e.); Tex.R.Civ.P. 94.

We also overrule defendants’ points 4 and 5 attacking the $8,000.00 award on the grounds there is no evidence and insufficient evidence that defendant had any duty as agent for plaintiffs to do anything other than enter into the initial contract with the builder of the apartment units until such time as the construction was completed. Defendants cite no authority in support of these points.

The pertinent language of the Management Contract and Agreement between the joint venturers and the agent, Defendant Richard W. Russell Company, Inc., for the Hurst Estates Apartment Project is as follows:

WHEREAS, the parties . . . desire that Richard W. Russell Co. act as their Agent in arranging for the construction of said apartment units and as their Agent in managing the said same apartment house unit during and after construction of the same; and
WHEREAS, said Richard W. Russell Co. is willing to act as Agent for the OWNERS upon the terms and conditions hereinafter set forth;
NOW, THEREFORE ... it is agreed between the parties as follows:
1. Employment of Agent. The OWNERS hereby employ the AGENT as the sole and exclusive renting and management agent of the property .
Further, OWNERS authorize the said Richard W. Russell Co. as their AGENT to enter into a contract with a contractor to construct apartment units ....
2. General Responsibility and Authority of Agent. OWNERS authorize AGENT to take over and effect complete management of the aforesaid apartment units during their construction and after completion .
7. Compensation of Agent. The OWNERS shall pay to the AGENT the following compensation:
a) Initial Compensation. For management from the closing date of the land acquisition to the time that the management fee as hereinafter provided from leasing income equals or exceeds $500.00 per month, the AGENT shall receive a fee of $500.00 a month, payable out of interim financing. .

Moreover, an agreement signed by all joint venturers, including Defendant Russell, recites that the “Richard W. Russell Co. will act as Agent for the parties to this agreement in all matters relating to the . property and the construction of an apartment complex thereon . . . .”

Defendant Russell Company continued to accept the $500.00 monthly agency payments long after the construction contract was awarded on February 20, 1969, and its fiduciary role as agent was not terminated until early 1970.

Defendants also argue in points 6 and 7 that the $8,000.00 award was error because there is no evidence and insufficient evidence to show that the agreement of March 1, 1969, between Defendant Rubaco Builders and Allied was inconsistent with, or contrary to the interest of plaintiffs.

In considering the no evidence point we must view the evidence in the light most favorable to the jury’s findings and disregard all the evidence to the contrary. If there is any evidence of probative force to support the jury’s findings, we are bound by those findings. In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660 (1951).

In considering whether the evidence is insufficient to support the jury’s findings, we must review all the evidence. The case should be remanded for new trial only if the verdict is so contrary to the overwhelming weight of all the evidence as to be clearly wrong or manifestly unjust. In re King's Estate, supra.

The pertinent provisions of that letter agreement signed by Allied’s president, John Olmstead, and Frank Campbell, president of Rubaco, were as follows:

For consideration hereinafter mentioned, Rubaco Builders, Inc., agrees to enter into a joint sponsorship of said project with you. In computing distribution of profits, an allowance of: (1), $9,000.00 for your job foreman; (2), $8,000.00 for Allied Enterprises, Inc.’s administrative overhead, and; (3), $8,000.00 for Rubaco Builders, Inc.’s office overhead, shall be applied to the contract price of $558,642.00, developing an adjusted basis for profit computation of $553,-642.00. We agree to split any and all net building profits equally on a 50-50 basis taking the aforementioned bid-basis and allowances into consideration.
Likewise, any loss occuring [sic] from any additional cost above the adjusted basis figure of $533,642.00 shall be shared equally by Allied Enterprises, Inc., and Rubaco Builders, Inc., and shall be paid by both parties when and as needed after determination has been made that said loss exists.
Further, it is agreed by both parties to this letter that Rubaco Builders, Inc., shall take a prominent role in co-ordinat-ing efforts with sub-contractors, and in the scheduling and charting of work stages. Rubaco Builders, Inc., shall have final authority to approve or disapprove.

Defendants’ position is that the letter agreement arose after the construction contract of February 20, 1969, was signed, therefore having no possible bearing on it, and that in fact the letter agreement put defendants in a better position to look after the interest of plaintiffs. Frank Campbell testified Russell said there was no need to disclose the agreement to plaintiffs because it would give defendants added insight into the construction costs.

Although the alleged secret agreement may have put Defendant Rubaco Builders in a better position to look after the interests of the plaintiffs it also put defendants in a position to make an additional profit which plaintiffs would not share. There was testimony that the agreement created a situation in which it would have been in Defendant Rubaco Builders’ interest to cut materials and labor costs in order to increase its profit. (There is testimony, however, that the joint venturers were satisfied with the quality of the work done.)

Under the terms of the letter agreement, Allied and Defendant Rubaco Builders were to split any savings on the construction job. Truitt testified Russell had told plaintiffs before the contract was awarded that he did not know Olmstead’s reputation, and asked Truitt to investigate him. The evidence is uncontroverted, however, that Defendant Russell helped Olmstead with the preparation of Allied’s bid format before it was submitted. In addition, Trew testified that some of the subcontractors, when contacted later, voluntarily reduced their bids from the amount specified in Allied’s bid. He testified he could not prove they had padded their bids, and he declined to testify that a kickback scheme was necessarily the explanation for their reductions.

There was also evidence in a letter from Olmstead, Allied’s president, to Frank Campbell, president of Rubaco Builders, in which Olmstead advanced the view that the letter agreement was merely a device to pay Rubaco Builders for overhead expenses which it did not actually incur.

Plaintiffs were aware of a possible conflict of interest: they testified that they had expressly rejected Rubaco’s bids on the construction contract because of the conflict of interest as well as Rubaeo’s lack of experience. They also testified they would not have invested in the project had they known Rubaco Builders would become a joint venturer with Allied.

Under these circumstances we overrule points 6 and 7 and hold there was ample evidence that the agreement was contrary to plaintiffs’ interest.

Alternatively, we hold that the mere failure to disclose to plaintiffs all aspects of the transaction is in itself a breach of agent Russell Company’s and co-venturer Russell’s fiduciary duty. Kinzbach Tool Co., Inc. v. Corbett-Wallace Corporation, 138 Tex. 565, 160 S.W.2d 509 (1942); Reynolds-Southwestern Corp. v. Dresser Indus., Inc., 438 S.W.2d 135 (Tex.Civ.App.—Houston [14th Dist.] 1969, writ ref’d n.r.e.).

Defendants further contend in point 8 that the $8,000.00 award was error because there was a disputed fact issue over the amount of money paid by plaintiffs to defendants, paid by Allied to defendants, and paid back by defendants to plaintiffs or for their benefit, on the apartment project. Their position is that the jury found this issue against plaintiffs in finding that defendant did not receive any monetary advantage over plaintiffs as a result of the March 1, 1969 agreement with Allied. Defendants also state that there was conclusive evidence that defendant put more money into the project than defendant received from Allied under the March 1, 1969 agreement.

The alleged disputed fact issues to which defendants refer concern transactions of Rubaco Builders. Defendants argue that Rubaco Builders paid out more on behalf of the joint venturers than it took in from Allied, leaving it with a deficit of $4,386.00.

However, there is no dispute that an $8,000.00 management fee was paid to Defendant Russell Company, the agent for the joint venturers. The jury’s finding that defendants received no monetary advantage does not render the $8,000.00 award improper here. Nor was any special issue necessary to support the award because there was no dispute as to the amount of the agency fees.

In point 11 defendants argue that the jury’s answer to special issue 1, that defendant and Allied entered into the March 1,1969 agreement without plaintiffs’ knowledge, should be disregarded because it is so against the overwhelming weight and preponderance of the evidence as to be manifestly wrong and unjust.

Defendants point to a tape recording of a September 13,1969 meeting introduced into evidence in which Trew, Frank Campbell and Russell made reference to a deal between Russell, Frank Campbell, and the primary contractor for assistance with and supervision of the record-keeping. They did not refer to shared profits or losses. At any rate, this conversation is certainly not evidence that plaintiffs knew of the agreement at the time it was entered into on March 1, 1969, and plaintiffs all testified they had no knowledge of the agreement when it was made. Frank Campbell also testified that Russell told him it was unnecessary to disclose the existence of the letter agreement to plaintiffs because there would be no additional cost to them and it would provide an opportunity to gain “some insight as to the construction costs.”

In point 12 defendants argue that the award for exemplary damages of $55,000.00 is error because there is no showing under the pleadings, special issues and evidence that plaintiffs are entitled to any actual damages.

We disagree. Although there is a division of authority on the question whether a court of equity can or will grant punitive or exemplary damages as incidental to equitable relief, the law in Texas is that it may do so. International Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567 (Tex.1963); Annot., 48 A.L.R.2d 947 (1956).

The forfeiture of the $8,000.00 in agency fees is a form of equitable relief awarded for the breach of the equitable duties of those in a fiduciary role. D. DOBBS, REMEDIES, § 10.4, at 679 (1973). Accordingly, under the rule in International Bankers Life, supra, no actual damages are necessary to support the exemplary damage award.

In point 13 defendants argue there is no evidence or insufficient evidence to show that defendant intended to injure plaintiffs. In point 14 it is argued that the jury’s answer to Special Issue Number IB should be disregarded because there is insufficient evidence to support the finding that defendant intended to secure an advantage over plaintiffs and such finding is so against the overwhelming weight and preponderance of the evidence as to be manifestly wrong and unjust.

Point 13 actually raises both fact and law issues and is thus subject to the criticism that it is multifarious. However, we will consider both questions raised therein because we are able nonetheless to determine the nature of the complaint. Brungs v. Consolidated Plan Service, Inc., 529 S.W.2d 79 (Tex.Civ.App.—San Antonio 1975, writ ref'd n.r.e.).

Defendants cite no authority in connection with these points. They argue that because Russell, as a co-venturer, also had much at stake in this project, he would not have intended to injure himself and that he and his companies actually lost more money on the project than any of the plaintiffs.

Such argument is irrelevant and does not address the central issue of fiduciary responsibility already discussed. The issue is not whether defendants intended to injure the joint venturers but whether they intended to gain an additional benefit for themselves. International Bankers Life, supra. The jury so found, and there is ample evidence to support that finding.

In defendants’ final point it is argued that the $55,000.00 exemplary damages award is excessive and indicates that the jury was influenced by passion or prejudice against defendants. Defendants assert that this award is out of proportion to and bears no reasonable relationship to the $8,000.00 award.

The question of excessiveness of exemplary damages depends on the facts of the particular case and is largely within the discretion of the jury. Among the factors to be considered are “the nature of the wrong, the character of the conduct involved, the degree of culpability of the wrongdoer, the situation and sensibilities of the parties concerned, and the extent to which such conduct offends a public sense of justice and propriety.” Cain v. Fontana, 423 S.W.2d 134, 139 (Tex.Civ.App.—San Antonio 1967, writ ref’d n.r.e.); Schutz v. Morris, 201 S.W.2d 144, 147 (Tex.Civ.App.—Austin 1947, no writ).

In this case the jury found that defendants entered into a secret agreement without plaintiffs’ knowledge. Moreover, the evidence shows the agreement was made after the plaintiffs had expressly rejected Rubaco’s construction bid. The agreement gave the agent a secret advantage in the form of an opportunity to reap extra profits over those of the co-venturers and principals who were relying on Russell and his company as their agent in the project.

Under these circumstances we find no evidence that the jury was influenced by passion or prejudice. We hold that the exemplary damages award is not out of proportion to the $8,000.00 award. Ratios of over 8 to 1 have been upheld on appeal as bearing a reasonable relationship to actual damages in appropriate cases. Cotton v. Cooper, 209' S.W. 135 (Tex.Com.App.1919, jdgmt. adopted).

All points having been considered, each is overruled and the judgment is affirmed.


source: Caselaw Access Project

author: CHADICK, Chief Justice.

license: Public Domain

text:
    Richard HAGER, Appellant, v. D. E. CARTER, Appellee.
    No. 8493.
    Court of Civil Appeals of Texas, Texarkana.
    Aug. 23, 1977.

      Edmund M. Anderson, Gumm & Anderson, Bedford, for appellant.
    Frank W. Sullivan, III, Fort Worth, for appellee.
   CHADICK, Chief Justice.

This is an appeal in a statutory action to contest the results of a city election. The trial court adjudged contestant, D. E. Carter, “. . . entitled to hold the office of City Councilman, Place 2, City of Keller, for the statutory term.” Contestee, Richard Hager, has appealed.

An election to select councilmen for the City of Keller, Texas, was held on April 3, 1976. Candidates for the office of City Councilman, Place 2, included Richard Hag-er, D. E. Carter, Roby Stephens, Paul Meine and Gaines Blevins. The ballots cast at the election were counted the evening of the election day under supervision of the election precinct judge. When the ballot count was completed the election judge announced that the two candidates for Councilman, Place 2, receiving the highest number of votes were Hager and Carter and that each received 149 votes. Honorable George Richardson, Mayor of the City of Keller, requested the precinct judge to make a recount immediately. Without other formalities a recount was promptly conducted. The requested recount determined that Hager received 150 votes and Carter received 149. The election judge filed an official return of the election certifying such vote count. The official election returns were canvassed on the evening of April 5,1976, by the Keller City Council and that same evening the Council made its official declaration of the election results declaring Hager elected as Councilman, Place 2.

On April 8, 1976, Mayor Richardson of the City of Keller received the following letter dated April 6, 1976, addressed to the mayor and members of the city council and signed by D. E. Carter, to-wit:

“In view of the alleged and possible discrepancies in the election for City Councilmen conducted in Keller, Texas, Tar-rant County, April 3, 1976, the following action is hereby taken.
“In accordance with Vernon’s Texas Statute, Revised Civil Statutes, I, Delmer E. Carter, whose domicile is located at 800 Elaine Street, Keller, Texas, Tarrant County, and who was a candidate for City Councilman Place # 2 in said election, do hereby request and demand a recount and certification of all ballots, balloted in this said election.
“The time and date of said recount to be set by the City Council, and the writer is to be notified of such time and date in sufficient time for assurance of his attendance at said meeting.”

A recount was ordered April 12 and conducted April 16. The recount showed Hag-er received 150 votes and Carter 149. On the date of the recount the City Council officially declared Hager elected. He immediately took the oath of office and was seated as a re-elected councilman. On May 14, 1976, the twenty-eighth day after the Carter requested recount, Carter instituted an election contest in a District Court of Tarrant County. Contestee Hager moved to abate the suit on the ground that Carter’s notice and statement of contest were not delivered to him, Hager, within thirty days after the election return day as required by Tex.Election Code Ann. art. 9.03.

The Election Code provision last mentioned (Article 9.03) provides-that any per-' son intending to contest the election of a person holding a certificate of election, shall within thirty days after the return day of the election, give the certified person a notice thereof in writing and deliver to such person, or the person’s agent or attorney, a statement of the grounds upon which the contestant relies to sustain the contest. “Return day” is defined in the article to mean “the day on which the votes cast in said election are counted and the official result thereof declared.” It is obvious that if the result declared April 6 was the legal return day the election contest suit should have been abated as the suit was filed more than thirty days after such declared result.

A recount of manually counted ballots, as in this case, is governed by Tex.Election Code Ann. art. 9.38a (Supp.1976-1977). Subdivision 1 thereof sets out the grounds that will authorize a recount and contemplates that an application for recount will state the ground or grounds relied upon.

In addition to the contents and allegations of an application required by the provisions of Subdivision 1, the provisions of Subdivision 2 require that the candidate making the request file a written signed application with the presiding officer of the body which canvasses the returns, designated the canvassing board for the purpose of the statute, not later than the second day after the official declaration of the result of the election is made, subject to a proviso not here material. Subdivision 2(a). The application must show (a) the name and address of each opposing candidate and (b) the name and address of the presiding judge of each election precinct for which recount is requested. And on the same day that application to recount is delivered or mailed to the presiding officer of the canvassing board the applicant must deliver in person, or mail by certified or registered mail with return receipt requested, a copy of the application and any supporting papers to each candidate that opposed him in the election. Subdivision 2(b). There must also be deposited with the presiding officer of the canvassing board a deposit, in the form prescribed, in the amount of $10.00 for each election precinct in which it is requested that a recount be made or in the amount of $50.00, whichever amount is the greater. If the application is filed under the first ground for recount stated in Subdivision 1(a)(1), the deposit must accompany the application; if grounded on Subdivision 1(a)(2), the deposit must be made within three days after the date the Secretary of State makes the certification therein set out. Subdivision 5.

Subdivision 7 explicitly provides that a canvassing board will not conduct a recount until “a candidate has complied with all conditions for obtaining a recount . .” In addition, the several steps and procedures specified for obtaining a recount are stated in mandatory language. By reference to an early paragraph it may be seen that Carter’s application does not contain the name and address of opposing candidates or of the election judge, and review of the record does not disclose that on the same day the application for recount was filed that Carter mailed or delivered a copy of the application to each candidate that opposed him in the election. It is not necessary to further analyze Carter’s application for defects as it is apparent that it does not even substantially comply with several of the noticed requirements of Article 9.38a.

The canvassing board created by Article 9.38a, the Keller City Council in this instance, is a wholly statutory administrative agency. The article does not purport to confer or grant unlimited power or jurisdiction to the canvassing board to recount paper ballots in a public election. Jurisdiction for such purpose must be invoked by compliance with and in the manner directed by the empowering statute. A general statement of the applicable rule is found in 1 Tex.Jur.2d, Administrative Law, Sec. 19, where it is said:

“Proceedings before an administrative agency are wholly statutory, and a person who seeks to avail himself thereof must comply with the statutory provisions. These provisions are mandatory and exclusive, and conformity thereto in each and every particular is essential to the exercise of jurisdiction by the agency.”

Carter’s application is clearly defective in the particulars heretofore pointed out and therefore fails to meet statutory requirements. The courts of this State on numerous occasions have held that defective applications will not invoke or confer jurisdiction upon administrative agencies and that orders of an administrative agency pursuant to a defective application are void. Mesquite Independent School Dist. v. Gross, 123 Tex. 49, 67 S.W.2d 242 (1934); State Line Consol. School Dist. v. Farwell Ind. School Dist., 48 S.W.2d 616 (Tex.Comm.App.1932, holding approved); Grand Lodge, Etc., Sons of Hermann v. Curry, 108 S.W.2d 574 (Tex.Civ.App. San Antonio 1937, writ ref’d).

Even if Hager participated, this is disputed to some extent, in Council action which ordered a recount, his presence or vote therefor at a council meeting and his failure to voice objection did not give legality to a void council transaction. Neither Hager nor the Council had the right or authority to grant a recount on the basis of a defective application or waive defects therein. The recount order of April 12 was that of the Council and exceeded its powers. Intentional waiver of a known personal right by Hager is not shown. See Wheeler v. Coleman, 176 Mich. 285, 142 N.W. 570 (1913); State v. Reeves, 229 Ind. 164, 96 N.E.2d 268 (1951); 29 C.J.S. Elections § 291b, p. 771.

The recount order of April 12 was void. It follows that the recount of April 16 and the canvass and declaration of result on that day were void. Return day for the purposes of the contest suit was April 6, 1976. The election contest suit was tardily filed and should have been abated. Appellant’s Points of Error 1 and 2 are sustained. The judgment of the trial court is reversed and judgment rendered abating Carter’s suit.


author: BARDGETT, Judge.

text:
    KANSAS CITY AREA TRANSPORTATION AUTHORITY OF the KANSAS CITY AREA TRANSPORTATION DISTRICT, Respondent, v. James G. ASHLEY, Jr., and Olive J. Ashley, Individually and as Executrix of the Estate of James G. Ashley, Sr., d/b/a Kansas City Public Service Freight Operation, Appellants.
    No. 59472.
    Supreme Court of Missouri, en banc.
    July 11, 1977.
    L. R. Magee, Kansas City, for appellants.
    Jack W. R. Headley, William K. Waugh, III, Jack D. Rowe, Kansas City, for respondent.
    Phil Hauck, Erwin L. Milne, Trenton, Aaron A. Wilson, Walter J. O’Toole, Jr., Kansas City, for amicus curiae.
   BARDGETT, Judge.

This appeal arises from a condemnation proceeding brought by the Kansas City Area Transportation Authority of the Kansas City Area Transportation District (ATA) against defendants-condemnees, the Ashleys. The Ashleys appealed to the court of appeals, Kansas City district, after a jury verdict assessing damages at $175,000 for the taking of the right of way and operating equipment of a freight railroad operated by the Ashleys. The court of appeals reversed and remanded with directions to enter an order of dismissal. We transferred the case to this court pursuant to art. V, sec. 10, Mo.Const.

A short synopsis of the relevant facts is all that is necessary. ATA was organized under a compact agreement between the state of Kansas and the state of Missouri. This compact was authorized by the legislature and is set forth in full in section 238.-010, RSMo 1969. Section 238.030 authorized the ATA to seek the approval of Congress for the compact. The approval of the Congress of the United States was obtained in 1968 under Public Law 89-599, 80 Stat. 826.

The Ashleys, defendants in the condemnation suit, are a copartnership, the immediate grantees of the Kansas City & West-port Belt Railway Co. The Ashleys purchased from the railway company an operating freight line and in addition acquired a right-of-way easement which ATA now seeks to condemn. The transfer from the railway company to the Ashleys was approved by the Interstate Commerce Commission (ICC) as evidenced by its certificate and order. The property sought to be condemned extends generally from a point at 40th and Main street in Kansas City, Missouri, to a switching facility located in the southwestern portion of Jackson county, Missouri. The right of way varies from 50 to 100 feet in width and has several lots or parcels appurtenant to it used for a variety of purposes at the present time, but which were originally used for railroad purposes in the switching and loading of freight trains.

From 1957 to 1962 the Ashleys performed all freight switching operations over the right of way as an independent contractor for the Kansas City & Westport Belt Railway Co. In 1962 the Ashleys negotiated for and purchased the railroad right of way and rights to continue the switching operations. In 1968, however, after a decline in business, the Ashleys, with the approval of the ICC embargoed the entire railroad. This embargo meant the Ashleys would no longer accept any freight traffic or deliver any freight on any point of the railroad. Such embargo has continued through the present. It appears that all of the parties and the ICC view this as an operating railroad regardless of the embargo and the present physical condition of the track, roadbed, and equipment.

Although a number of contentions are made by appellants contesting the right of the ATA to acquire their right of way by condemnation, the decisive fact which controls our decision in this case is that appellant-railroad is a common carrier engaged in interstate commerce and is, therefore, under the jurisdiction of the ICC. 49 U.S.C. sec. 1. It is true that appellant-railroad has rendered no service since appellants sought and obtained the consent of the ICC to an embargo of its entire line of track in 1968. Furthermore, a reading of prior cases involving this appellant and this right of way, together with the record and briefs in this case, strongly indicates that there has been a de facto abandonment of all railroad service by appellants and that no resumption of railroad service by this, appellant-railroad is anticipated in the foreseeable future. Seventy-Ninth Street Improvement Corp. v. Ashley, 509 S.W.2d 121 (Mo.1974); Kansas City Area Transportation Auth. v. Ashley, 478 S.W.2d 323 (Mo.1972); Kansas City v. Ashley, 406 S.W.2d 584 (Mo.1966); Kansas City Area Transportation Auth. v. Ashley, 485 S.W.2d 641 (Mo.App.1972).

The effect of ATA’s condemnation action, if successful, would be that it would take over the entire railroad right of way and bring about a permanent and total cessation of railroad service by appellant-railroad as well as any other railroad over this entire line of track. The appellant-railroad, however, remains under the jurisdiction of the ICC and the legal abandonment of its line of track or discontinuance of service can only be accomplished by order of the ICC. 49 U.S.C. sec. la(l); Commonwealth v. Bartlett, 384 F.2d 819 (1st Cir. 1967), 266 F.Supp. 390 (U.S.D.C.Mass.1967); New Orleans Terminal Company v. Spencer, 366 F.2d 160 (5th Cir. 1966); City of Des Moines, Iowa v. Chicago & N.W. Ry. Co., 264 F.2d 454 (8th Cir. 1959).

Title 49 U.S.C. sec. la(l) prohibits any railroad subject to that chapter from abandoning all or any portion of its lines of railroad or discontinuing rail service without a certificate issued by the ICC. It also provides: “Abandonments and discontinuances shall be governed by the provisions of this section or by the provisions of any other applicable Federal statute, notwithstanding any inconsistent or contrary provision in any State law or constitution, or any decision, order, or procedure of any State administrative or judicial body.” Under other provisions of Title 49 U.S.C. see. la, the ICC is required to consider a number of factors in arriving at a decision regarding abandonment and is afforded the alternative of allowing another to provide rail service over the line of track (49 U.S.C. sec. la(6)), or allow a disposition of the properties for other public purposes, including mass transportation (49 U.S.C. sec. la(10)).

Although the federal act does not specifically provide for the petition for abandonment or a petition seeking to revoke or terminate a certificate of convenience and necessity previously issued to be filed by an interested party, such as ATA, federal cases hold that such may be done. See Commonwealth v. Bartlett, supra, and New Orleans Terminal Co. v. Spencer, supra.

We do not believe the ICC will allow this appellant-railroad to persist in a nonservice (embargoed) status and continue to exist under the facade of an operating railroad merely to keep a right-of-way easement in a metropolitan area out of public use in the face of the congressional intent evidenced by 49 U.S.C. sec. la(10), which clearly demonstrates a national policy that unused railroad right of ways be utilized where feasible for other public purposes.

The other issues briefed by the parties need not be reached. The ICC is the agency which, at the present time, has jurisdiction of the matters involved in this case. The court erred in overruling appellants’ motion to dismiss.

The judgment is reversed and remanded with directions to enter an order of dismissal.

MORGAN, C. J., and HENLEY, FINCH, DONNELLY and SEILER, JJ., concur.

RENDLEN, J., not participating because not a member of the court when cause was submitted.

      . Certain types of trackage are exempted which are not pertinent to this case but which were the subject of Seventy-Ninth Street Development Corp. v. Ashley, supra.

      . “(10) In any instance in which the Commission finds that the present or future public convenience and necessity permit abandonment or discontinuance, the Commission shall make a further finding whether such properties are suitable for use for other public purposes, including roads or highways, other forms of mass transportation, conservation, energy production or transmission, or recreation. If the Commission finds that the properties proposed to be abandoned are suitable for other public purposes, it shall order that such rail properties not be sold, leased, exchanged, or otherwise disposed of except in accordance with such reasonable terms and conditions as are prescribed by the Commission, including, but not limited to, a prohibition on any such disposal, for a period not to exceed 180 days after the effective date of the order permitting abandonment unless such properties have first been offered, upon reasonable terms, for acquisition for public purposes.


author: DONNELLY, Judge. FINCH, Judge, SEILER, Judge,

text:
    Hiram GAINES, Presiding Judge, et al., County Judges, County Court, Bollinger County, Plaintiffs-Petitioners, v. Honorable Stanley A. GRIMM and Honorable A. J. Seier, Circuit Judges, Defendants-Respondents.
    No. 60073.
    Supreme Court of Missouri, en banc.
    July 11, 1977.
    Rehearing Denied Sept. 12,1977.

      Albert C. Lowes, Jackson, for plaintiffs-petitioners.
    Jack L. Oliver, Cape Girardeau, for defendants-respondents.
    Shulamith Simon, St. Louis, for amicus curiae.
   DONNELLY, Judge.

On February 10, 1977, the Circuit Judges of the 32nd Judicial Circuit issued an order directed to the County Court Judges of Bollinger County authorizing the Sheriff of Bollinger County to appoint five full-time deputy sheriffs and one part-time deputy sheriff and setting their salaries.

On February 28, 1977, the County Court Judges met in regular session and rejected the directions of the Circuit Judges.

On March 1, 1977, the Circuit Judges issued an order ordering the clerk of Bol-linger County to issue warrants for payment of wages pursuant to the order of February 10, 1977. They further ordered the County Court Judges to convene and to order the County Clerk to make such payments.

On March 4, 1977, the County Court Judges voted to refuse to obey the order of the Circuit Judges.

On March 7, 1977, the Circuit Judges issued an order to the County Court Judges ordering them to show cause why they should not be held in contempt of court.

On March 8, 1977, the County Court Judges filed a “Petition for Review” in this Court and this Court issued its Order granting the Circuit Judges until March 14, 1977, to file responsive pleadings and staying any further action by the Circuit Judges against the County Court Judges.

On March 14, 1977, the Circuit Judges filed, with other pleadings, a Motion to Dismiss.

On April 11, 1977, the Motion to Dismiss was ordered taken with the case.

On May 17, 1977, the cause was argued and submitted to the Court for decision.

In State ex rel. Weinstein v. St. Louis County, 451 S.W.2d 99, 101, 102 (banc 1970), this Court, cognizant of “the fundamental nature and function of the judicial department of government” and intent upon preserving “the powers which it possesses to carry out such function”, declared:

“We are of the opinion that within the inherent power of the Juvenile Court of St. Louis County, subject to the supervisory control of the Circuit Court of St. Louis County (Art. V, §§ 4, 15 and 28, Const, of Mo., 1945, V.A.M.S.; § 478.063, RSMo 1959, V.A.M.S.; and State ex rel. MacNish v. Landwehr, 332 Mo. 622, 60 S.W.2d 4), is the authority to select and appoint employees reasonably necessary to carry out its functions of care, discipline, detention and protection of children who come within its jurisdiction, and to fix their compensation. In order that the Court may administer justice under the Juvenile Code, it is essential that it control the employees who assist it.
“If, after the Juvenile Court, acting under the supervisory control of the Circuit Court of St. Louis County, determines its needs as to personnel and fixes compensation, the County Council deems such action to be unreasonable, the County Council may file a petition for review and final determination of such question in this Court, which has final superintending control over the Circuit Court of St. Louis County and its Juvenile Court. Article V, § 4, Const, of Mo. 1945, V.A. M.S. Necessarily, in order not to interfere with operations of the Juvenile Court, such petition must be filed without unnecessary delay. In the absence of a determination, pursuant to such petition for review, that the action of the Juvenile Court is unreasonable, its order with respect to the personnel reasonably needed and their compensation will be final, and under such circumstances mandamus will lie, if necessary, to compel payment.”

The County Court Judges filed their “Petition for Review” in reliance upon the authority of Weinstein, supra. Their reliance on Weinstein is misplaced. The Circuit Judges do not assert that they have acted in this case in order that they may carry out the judicial function. They contend their authority lies in § 57.250, RSMo 1969, which reads as follows:

“The sheriff in counties of the third and fourth classes shall be entitled to such number of deputies and assistants, to be appointed by such official, with the approval of the judge of the circuit court, as such judge shall deem necessary for the prompt and proper discharge of his duties relative to the enforcement of the criminal law of this state. The judge of the circuit court, in his order permitting the sheriff to appoint deputies or assistants, shall fix the compensation of such deputies or assistants. The circuit judge shall annually, and oftener if necessary, review his order fixing the number and compensation of the deputies and assistants and in setting such number and compensation shall have due regard for the financial condition of the county. Each such order shall be entered of record and a certified copy thereof shall be filed in the office of the county clerk. The sheriff may at any time discharge any deputy or assistant and may regulate the time of his or her employment.”

It must be understood that the petition for review which originated in Weinstein was based on a doctrine of inherent power and was for the unique purpose of providing a method of resolving disputes where the ability and capacity of courts to function is at stake. It was not intended for use in a dispute between a sheriff and a county court.

Accordingly, the Motion to Dismiss filed by the Circuit Judges is sustained and the cause dismissed.

BARDGETT, HENLEY and RENDLEN, JJ., concur.

FINCH, J., concurs in separate concurring opinion filed.

SEILER, J., dissents in separate dissenting opinion filed.

MORGAN, C. J., not participating.

FINCH, Judge,

concurring.

I concur in the principal opinion. It makes what I consider to be the correct disposition of the “Petition for Review” filed by petitioners. In State ex rel. Weinstein v. St. Louis County, 451 S.W.2d 99 (Mo. banc 1970), we fashioned a remedy by way of a “Petition for Review” to permit resolution of disputes concerning expenditures ordered under the court’s inherent power to do those things necessary to enable the courts to function and perform their constitutional mandate. We were considering in that case situations wherein the action taken involved expenditures which were a part of the court’s budget for its activities. That is not true in this instance. Here, the dispute concerns employees in the executive branch of the government and was taken pursuant to statute, not inherent power of the courts. The “Weinstein” remedy is not applicable.

However, there are questions posed by this most unfortunate controversy which are not before us for decision in this case which may arise in the future. I address them briefly.

It is to be noted that prior to the filing of the “Petition for Review” in this court an order to show cause why the county court judges should not be held in contempt of court was issued. It is at least possible that dismissal of the petition herein may result in a continuation of the contempt proceedings. I have reservations as to the propriety of utilizing that method of enforcing the orders of February 10, 1977, and March 1, 1977, when other procedures are available. See State ex rel. Weinstein v. St. Louis County, supra. This is particularly true if the action of the circuit judges in approving the appointment of deputy sheriffs and fixing their compensation is an administrative rather than a judicial act. I recognize that Pogue v. Swink, 365 Mo. 503, 284 S.W.2d 868 (1955), held that a circuit judge’s action in approving appointment of a deputy circuit clerk and approving her salary was a judicial act but, in my view, that holding is debatable. In my judgment this court, when the issue is presented in an appropriate proceeding, should review this part of the decision in Swink.

In his dissenting opinion, Judge Seiler expresses the view that the judges, when acting pursuant to § 57.250, RSMo 1969, were acting in a judicial capacity, but he so concludes on the basis that if they were not so acting, the statute would be unconstitutional under Art. II, § 1, Mo.Const. A more plausible case can be made for concluding that the act of the judges in approving the number of deputy sheriffs and their salaries was not a judicial act but was an administrative act, something the county court does in the case of other non-judicial department employees and would have done with reference to the sheriff’s department in the absence of § 57.250.

If, when presented, it is determined that a circuit judge acts in an administrative rather than a judicial capacity when he approves the appointment of deputy sheriffs and fixes their compensation pursuant to § 57.250, RSMo 1969, then the question arises as to whether the assignment of such duties relating to appointment of and compensation for persons in the executive branch of government may contravene the provisions of Mo.Const. art. II, § 1. That is the section which provides for separation of powers between the legislative, executive and judicial departments and prohibits any department from exercising powers properly belonging to another department unless expressly directed or permitted by constitutional provision. State ex rel. Richardson v. County Court of Kanawha County, 138 W.Va. 885, 78 S.E.2d 569 (1953), cited in Judge Seiler’s opinion, is persuasive authority that § 57.250 may be unconstitutional.

SEILER, Judge,

dissenting.

As the principal opinion points out, the petition for review device resorted to in State ex rel. Weinstein v. St. Louis County, 451 S.W.2d 99 (Mo. banc 1970) was based on a doctrine of inherent power of the court to carry out its functions and it follows that the county judges in the case before us have selected an inappropriate title for their pleading when they denominated it a “petition for review”. But we are not inflexibly constrained by the title of the petition. We can look at the allegations for what they actually set forth, even if the parties have denominated the petition erroneously. “. . . The case is whatever the pleadings and the facts make it, regardless of what name plaintiff gave it.” W. A. Ross Const. Co. v. Chiles, 344 Mo. 1084, 130 S.W.2d 524, 528 (1939). “ ‘. . . [T]he character of a cause of action is determined from the facts stated in the petition and not by the prayer or name given the action by the pleader’ . . . ” McClellan v. Highland Sales and Investment Co., 426 S.W.2d 74, 77 (Mo.1967).

So viewed, I do not believe the matter can be disposed of on the basis that the petition for review device is not to be used in a dispute between a sheriff and a county court. What we have here is more a dispute between the circuit judges and the county court than it is between the county court and the sheriff, who is not even a party to the litigation. Both plaintiffs and defendants rely on § 57.250 as justifying their positions. All we have before us are the pleadings, affidavits and exhibits.

Taking the allegations of the petition as true (and, of course, we have no right to do otherwise in determining the sufficiency of the petition), the claim of the county judges is that the circuit judges have authorized the employment of three additional deputies for the sheriff when the county does not have the money to pay for them; that in making their order the circuit judges failed to have “due regard for the financial condition of the county” as required by § 57.250; that the salaries, social security, and mileage for the additional deputies would amount to approximately $20,000, which can be obtained only by reducing other budgeted items in the general revenue fund; that the circuit judges failed to consider the funds available to the county or the commitments by the county for the same.

I do not know who is correct on the facts in this dispute and I believe that responsible public officials should have been able to resolve a fiscal disagreement of this sort without resort to expensive litigation, but since they have not, I think we should appoint a special master to take evidence and make findings of fact on the issue of whether in authorizing three additional deputies and setting their salaries at approximately $20,000, the defendants had due regard for the financial condition of Bollinger county.

I believe the words “due regard” were inserted in the statute for a purpose and that the circuit judges cannot act in disregard thereof, if such be the fact. The circuit judges are part of the judicial system and when they act they act judicially. It would be a violation of the distribution of powers as set forth in Art. II, § 1 of the 1945 Missouri Constitution for them to act in a legislative or executive capacity.

Article II, § 1 prohibits one department from exercising any power belonging to another, “except in the instances in this constitution expressly directed or permitted.” Art. YI, § 7 provides that the county court “shall manage all county business as prescribed by law, and keep an accurate record of its proceedings.” I find nothing in the constitution which authorizes the judiciary to manage county business and whatever the circuit judges do as to setting the number of sheriff’s deputies and their salaries must be viewed as being done judicially, in my opinion, if it is to be constitutional.

While I do not find a Missouri case in point, in State ex rel. Richardson v. County Court of Kanawha County, 138 W.Va. 885, 78 S.E.2d 569 (1953), the court had under consideration the constitutionality of a statute which authorized a trial court to fix the salaries of the chief probation officer and various assistants and clerks within certain limits, with the same to be paid by the county court. The statute was held unconstitutional, as violating the separation of powers provisions of the West Virginia constitution, the court holding that the fixing of salaries of probation officers and other appointees was primarily nonjudicial. Under this view, of course, § 57.250, which includes fixing the number of appointees as well as fixing their salaries, would be unconstitutional. However, the general rule is that if a statute is subject to two constructions, one constitutional and the other unconstitutional, courts should adopt the former and it seems to me that the “due regard” portion of § 57.250, previously discussed, makes it possible to say that the circuit judges are acting judicially, not administratively.

The county court is responsible for the fiscal affairs of the county, both by constitutional and statutory provision. An examination of Chapters 46-67 of the 1969 Revised Statutes pertaining to county government shows that the county court, not the circuit judges, have charge of county finances and are responsible for maintaining a balanced budget. Necessarily, therefore, the provisions of § 57.250 that the circuit judges in fixing the number and compensation of deputies “shall have due regard for the financial condition of the county” mean that the order of the circuit judges cannot be immune to challenge by the county court. Otherwise, the circuit judges could order any number of deputies at whatever salaries they see fit, regardless of the financial condition of the county. This could nullify the efforts of the county court to live within the income of the county.

If we accept what the county judges say, there is no claim being made that law enforcement would otherwise suffer (in fact, the county judges say that one of the circuit judges stated to them that law enforcement in Bollinger county was the best it had been in years and was the best available among surrounding counties), the county is already up to its maximum tax levy, the budget which the county court proposed for the sheriff’s office was substantially the same as the amount on which the sheriff’s office had operated for the past several years, and to give $20,000 additional to the sheriff meant the county court would have to take money from either the county roads and bridges, ambulance service, or the county landfill project, which the county judges did not believe was warranted.

On the other hand, if we accept what the defendants say, offenses' and arrests are climbing in Bollinger county, the amount of money authorized the sheriff by the county court is less than in comparable surrounding counties, the circuit judges assure us that they did have “due regard for the financial condition” of the county, and although the circuit judges attempted to meet with the county judges and arrive at a mutually satisfactory figure, the county judges were unwilling to talk.

If the circuit judges are acting in a judicial capacity in what they are attempting to do here, as I believe to be the case for reasons stated above, then under Art. V., § 4 of the constitution, this court or the court of appeals has general superintending control over the actions of the defendants as here challenged and we should ascertain the facts and dispose of the case on the merits.

For these reasons, I respectfully dissent.


author: PER CURIAM.

text:
    J. E. WILLIAMS CONSTRUCTION COMPANY, a corporation, Appellant, v. James R. SPRADLING, Director, Department of Revenue of Missouri, Respondent.
    No. 59922.
    Supreme Court of Missouri, en banc.
    Sept. 12, 1977.

      Kenneth H. Suelthaus, St. Louis, for appellant
    J. Mike Davis, Asst. Atty. Gen., Jefferson City, for respondent.
   PER CURIAM.

This case, transferred to this court by our order after opinion by the Court of Appeals, St. Louis district, involves an assessment by the Department of Revenue of sales/use tax against a general contractor for materials purchased and used in the construction of a building for the city of Troy.

On June 15, 1972, an assessment of sales/use tax was made by the Missouri Department of Revenue (Department) against J. E. Williams Construction Company (Taxpayer or Appellant) in the amount of $75,195.75 (including interest). In due time the Taxpayer filed a petition for reassessment pursuant to § 144.240, RSMo 1969. A hearing was held before a hearing examiner at which the Taxpayer and the Department introduced evidence. Thereafter, in October, 1973, the Director of Revenue (Director) made and entered his final decision approving and upholding the assessment originally made by the Department in 1972. In due time the Taxpayer filed its petition for review in the circuit court of St. Louis county, pursuant to § 144.261, RSMo 1969. As indicated, the circuit court’s judgment affirmed the decision of the Director and this appeal followed. We affirm.

In connection with his decision the Director made and filed findings of fact and conclusions of law, as follows:

“FINDINGS OF FACT
“1. That the Assessment dated June 15, 1973, [sic] in the amount of $75,195.75 against Taxpayer is based upon materials used in the construction as described in a Contract (Exhibit F) between Taxpayer and ‘Owner’ as defined in Taxpayer’s Exhibit F.
“2. That no Sales/Use Tax had been paid by Taxpayer on the purchase of said materials.
“3. That ‘Owner’, defined in said Contract (Taxpayer’s Exhibit F), ‘refers to Harper & Row, Publishers, Inc., tenants under a lease with the City of Troy, Missouri, except that as specifically indicated and where appropriate it may also include the City of Troy, landlord under said lease.’
“4. That the terms of said Contract required Taxpayer to furnish all indicated materials and labor for the construction of a Distribution Center in The City of Troy, Missouri, for the sum of $3,081,578.00.
“5. That said Contract was signed by Taxpayer’s President on behalf of Taxpayer; and by the Secretary of Harper & Row, Publishers, Inc., on behalf of Harper & Row, Publishers, Inc.; and approved by Mayor Briggs on behalf of the City of Troy, Landlord.
“6. That certain subcontracts were entered into between Taxpayer and specified Subcontractors which required said Subcontractors to furnish all necessary labor, materials, etc., to complete said specified work.
“7. That pursuant to said subcontracts Taxpayer made payments for materials to said Subcontractors.
“8. That pursuant to the Contract between Taxpayer and ‘Owner,’ as defined in Exhibit F, Taxpayer received a separate payment drawn upon an account referred to as Troy, Missouri Construction Fund; and that said Fund was a deposit of monies received from the issuance of certain property bonds.
“9. That the City Treasurer of the City of Troy, Missouri, received a certain letter from the Director of Revenue dated August 13,1969 (Exhibit J), which described a sales tax exempt purchase by a city.
“10. That no representatives of Taxpayer or the City of Troy, nor anyone on their behalf, were ever informed that the procedure for the payment of materials actually implemented was satisfactory to exempt such purchase of materials from Sales/Use Tax liability by officials of the Department of Revenue.
“CONCLUSIONS OF LAW
“1. That the City of Troy, Missouri, did not take title to or ownership of the materials furnished in the construction as described in Exhibit F. Article III Section 39(10) Mo.Const.1945 & Section 144.030, RSMo 1969.
“2. That the City of Troy was not obligated for the purchase of materials as defined or described in the Subcontracts between Taxpayer and the various Subcontractors.
“3. That the City of Troy by and through the ‘Construction Fund’ made payments to Taxpayer for materials furnished by Taxpayer in the completion of the construction as defined in the Contract (Exhibit F).
“4. That the Contract (Exhibit F) was not entered into by the City of Troy, Missouri.
“5. That Taxpayer was never appointed agent for the City of Troy, Missouri, for the purpose of purchasing materials for the completion of the work described in the Contract (Exhibit F).
“6. That representation by the officials of the Department of Revenue, if any, may not be used to estop the Department of Revenue to assert its legal position based on the law.
“7. That all material purchases included in the Assessment were subject to the imposition of Sales/Use Tax according to statute and the Taxpayer is liable therefor in the amount shown in the Assessment. Section 144.020, RSMo 1969; and City of St. Louis v. Smith (Mo.Sup.1937) [342 Mo. 317], 114 S.W.2d 1017.”

We adopt parts of the Court of Appeals statement of the facts, as follows.

The appellant presented evidence consisting of testimony of Howard Briggs, Mayor of the City of Troy, of J. E. Williams, Jr., president of the appellant corporation, and documentary evidence which shall hereinafter be referred to. The thrust of their testimony was that early in 1968 the Chamber of Commerce of the City of Troy formed an Industrial Development Committee (later known as the Lincoln County Industrial Development Corporation) for the purpose of encouraging industry to locate in the Troy area. To take advantage of the provisions of Chapter 100, RSMo 1969 whereby municipalities might carry out projects for the industrial development thereof, a “community profile” was submitted to the Missouri Industrial Commission. Section 100.050, RSMo 1969. On April 24 or 25, 1968, Gilbert Keith of the Missouri Industrial Commission visited the City accompanied by Bryan Murphy of Harper & Row Publishers, Inc., and Gilbert Ross, of Ross & Company, a New York City engineering and architectural firm. Harper & Row (as the publishing company shall hereinafter be identified) was interested in establishing a midwest distribution center for its publications and this visit was for that purpose.

After numerous telephone calls and several visits to the City by representatives of Harper & Row, it was decided in July or August, 1968, that the publishing company would locate its distribution center in that city. It was agreed that the City would finance the project by issuing industrial revenue bonds pursuant to the authority of § 100.100, RSMo 1969, would own the project, and would lease the facilities to Harper & Row pursuant to the provisions of § 100.180, RSMo 1969. Accordingly, on September 6, 1968, a bond issue election was held pursuant to § 100.110, RSMo 1969 and was passed by a vote of approximately 900 to 6. The City was authorized to issue $4,900,000 industrial revenue bonds.

Subsequently over a period of several months, Mayor Briggs and various other members of the Committee made several trips to New York to iron out the terms of the lease so that the City would be the sole owner and have complete control of the building. At the time Mayor Briggs, acting under authority of the Board of Aldermen of Troy as the one in charge of the bond issue, represented the City in all negotiations with respect to the lease with Harper & Row. During these negotiations, plans and specifications for the construction of the distribution center were drawn up by Ross & Company (as the engineering and architectural firm shall hereinafter be identified) and were then presented to Harper & Row and Mayor Briggs for approval. After the plans and specifications were approved the lease with Harper & Row was signed and invitations for bids were sent out to several construction companies. The bids submitted were opened in March, 1969, and the successful low bidder was J. E. Williams Construction Company, the appellant. This bid was in the amount of $3,155,-000.

Despite the fact appellant’s bid was the low bid, it was learned that it was somewhere in the neighborhood of $200,000 in excess of the anticipated amount budgeted for construction of the distribution center. Gilbert Ross, of Ross & Company, Bryan Murphy, of Harper & Row, and Mayor Briggs met and discussed this development and in an effort to reduce this excess, May- or Briggs suggested that perhaps the materials to be used in the construction of the building might be exempt from sales tax due to the fact the City was to be the owner of the distribution center. It was decided that Mayor Briggs should investigate this possibility so that an effort could be made to renegotiate the original bid by appellant.

Upon his return to the City the Mayor arranged a meeting at Jefferson City in the office of the Department of Revenue to explore the possible sales tax exemption of the materials going into the building of the distribution center building. He met with the Director of Research and counsel, authorized officials of the Department, sometime in April, 1969, and discussed how the project should proceed so that it would enjoy the tax exempt status of the City. According to the Mayor, these officials informed him that for the project to be tax exempt the City would have to make all payments for the material. The Mayor indicated to them that it would be impossible for the City to issue all of the individual checks because the City had only one secretary and Williams Company would thereby lose control of the billing. The Director of Research handed him a form letter on which he had filled in the blank spaces. According to this completed form, in order for the City to be exempt from sales/use tax on the purchase of materials to be used in the project, the City had to “take title to, ownership of, and pay for all materials purchased with a check or draft drawn on the treasury of the City of Troy, Mo.” (Emphasis supplied.) This form letter bore no signature. According to the Mayor, if the city handled matters in conformity with the letter, a finalized letter would later be issued. Mayor Briggs forwarded copies of the form letter to Harper & Row and to appellant.

In the interim, appellant had been in the process of preparing a list of proposed modifications to its original bid. After Gilbert Ross, Bryan Murphy and Mayor Briggs reviewed the changes proposed in the original bid contract, appellant prepared a second list of modifications tallying a net reduction of $73,420 from the original bid. Included in this figure was a deduction of $32,252 for sales tax.

On April 22,1969, a contract for construction of the distribution center for $3,081,578 was executed on an American Institute of Architects “Standard Form of Agreement Between Owner and Contractor.” This contract identified the “Owner” as “Harper & Row, Publishers, Inc.” but contained a “Note” which reads as follows:

“The term ‘Owner’ as used in the contract documents refers to Harper & Row, Publishers, Incorporated, tenants under a lease with the City of Troy, Missouri, except that as specifically indicated and where appropriate it may also include the City of Troy, landlord under said lease.”

Work at the construction site commenced in May, 1969, and throughout the summer consisted primarily of grading and site preparation. On May 13, 1969, J. E. Williams, Jr. sent Mayor Briggs a memorandum setting out the mechanics for handling the purchase of material for the City of Troy and the letting of contracts for labor in connection with construction of the distribution center. Shortly after receiving this memorandum, Mayor Briggs wrote a letter (undated) to the Department of Revenue, marked for the attention of the Director of Research, outlining the way the City proposed to handle the purchase of materials. In this letter Mayor Briggs adopted as his own the wording of the memorandum from Mr. Williams but did not identify it as such to the Department; the result being that the reader reasonably would understand that the City, “in order to maintain control of the project,” would make “appropriate payments to suppliers and subcontractors” for materials.

In August of 1969, Mayor Briggs received a letter from John E. Schaffner, Director of Revenue, dated August 13,1969, the text of which was identical with the form letter given him on the occasion of his initial visit with the two Department officials in the Department offices after his return from the discussions concerning how appellant’s original bid could be reduced to come within the amount of the Industrial Bond Fund budgeted for construction of the distribution center. Because this letter did not authorize payment out of the Industrial Bond Fund, Mayor Briggs and Bryan Murphy again went to Jefferson City and discussed the method of billing and payment. Mayor Briggs came away from this meeting with the understanding that the project would be tax exempt so long as the material was sent to the job site and separately billed to and paid for by the City, through its fiscal agent, the Franklin National Bank, out of the Industrial Bond Fund.

Some weeks after this visit,the Department of Revenue issued to the “City Treasurer, City of Troy” another letter dated August 13,1969, identical in all respects to the form letter referred to previously and the initial letter of August 13, 1969, except that this letter authorized payment out of the Industrial Bond Fund of the City. A copy of the letter was forwarded by Mayor Briggs to appellant.

J. E. Williams, Jr., after receipt from Mayor Briggs of this latest letter from the Department of Revenue, arranged for a third meeting with the Department, and, accompanied by Mayor Briggs, went to Jefferson City where, according to his testimony, he outlined in detail the proposed procedure for billing to the Department officials in order to make sure that the procedure followed would result in the material purchases being tax exempt. When appellant’s counsel questioned Mayor Briggs about what the Department officials had to say about this procedure, he replied: “They said that as long as these were complied with in this manner that there would be absolutely no problem and they would see no reason that it should ever be even questioned as to this thing being a strictly, a legitimate, sales use tax exempt project.” Mr. Williams’ testimony was that he had outlined the procedures which had been set out in the letter, apparently referring to the Director’s last letter dated August 13,1969, or to Mayor Briggs’ undated letter to the Director, and that he believed that they had reached on oral understanding. He (Mr. Williams) said he believed when he came away from this conference that the procedures outlined with these officials were correct and were the procedures that should be followed to achieve a tax exemption for the purchases of materials going into construction of the distribution center.

The construction progressed and was substantially completed by June, 1972.

During the course of construction appellant entered into contracts with subcontractors and materialmen and each contract contained the following:

“NOTE: This is a sales-use tax exempt project. In order to conform with State requirements all invoices shall be made out to the City of Troy, Mo., for the Harper & Row Project, Inc., Midwestern Distribution Center, Troy, Mo., in care of the J. E. Williams Construction Company, Agent for the City of Troy, Mo. No charges for sales tax shall be included with any invoices in connection with this contract.”

Letters of Instruction were also sent by appellant to all subcontractors and material suppliers concerning payment procedures, as follows:

“Enclosed find a copy of a letter from the Department of Revenue, State of Missouri, signed by Mr. James E. Shaffner, dated August 13. The first three paragraphs of this letter are self-explanatory. “In order for you to receive your monthly payment it will be necessary for you to submit your invoices as follows:
“Each invoice should show the total amount due for materials which together with your labor and overhead will be the amount of your monthly payment request.
“The total amount due for material shall be substantiated by material invoices from your suppliers, or your invoices for materials taken from your warehouse. “SAMPLE BILLING FOR MATERIAL INVOICES:
“SOLD TO: City of Troy, Lincoln County, Missouri for the Harper & Row Publishers, Troy, Missouri, J. E. Williams Construction Company as AGENT 6490 Page Boulevard, St. Louis, Missouri, 63133.”

From invoices submitted, some of which did not conform to requirements of the aforesaid letter of instruction or to the note in the aforesaid contracts with subcontractors and materialmen, appellant prepared a monthly estimated billing showing the total materials supplied by each subcontractor and materialman and also the total amount due each for material and lábor. This estimated monthly billing was submitted' to Ross & Company which would then forward same to Mayor Briggs for his approval. After approval, the billing was forwarded to the City’s fiscal agent for the Industrial Bond Fund which issued two checks payable to appellant, one for labor and the other for material.

Upon receipt of these checks, appellant deposited them in its account and then issued its checks in payment for materials and labor due the subcontractors and mate-rialmen, being one check for labor and one for material.

The evidence presented by the Director of Revenue in addition to the tax assessment consisted of testimony of the auditors who conducted the audit initiated after discovery of some sales invoices in the files of subcontractors of appellant on which no sales tax was paid. These two auditors were Francis Saali and Charles Mudd. Their testimony was that the audit was commenced sometime in February, 1972, and concluded in April, 1972. That appellant was fully cooperative. Their audit revealed that approximately $1,300,000 worth of materials had gone into the Harper & Row project and on that basis they arrived at their sales/use tax assessment. Mr. Saa-li, over appellant’s hearsay objection, testified that shortly after the audit was commenced he contacted a superior officer in Jefferson City to determine whether appellant was the agent and that the City was not paying for the sales/use tax on the project. He testified that this official told him to continue the audit, and informed “us” about the discussions with the representatives from the City and Harper & Row and that one of the Department officials had said “that was not the way they informed the City of Troy to handle it and how it should have been paid by the City of Troy to the suppliers.” Neither appellant nor the Department of Revenue called either of these officials as witnesses at the hearing.

We recognize that neither the circuit court nor this court may substitute its discretion for discretion vested in the Director and should not set aside his findings unless they are “unsupported by competent and substantial evidence upon the whole record”; or are “for any other reason, unauthorized by law”; or are “arbitrary, capricious or unreasonable”; or unless a finding “involves an abuse of discretion.” Stein v. State Tax Commission, 379 S.W.2d 495, 498[3] (Mo.1964); State ex rel. Kahler v. State Tax Commission, 393 S.W.2d 460, 464[2] (Mo.1965); § 536.140, subsection 2, RSMo 1969. We also recognize that when the action being reviewed does not involve the exercise of discretion in light of the facts, but involves a question of law or “application * * * of law to the facts,” the court may weigh the evidence and determine the facts, giving “due weight to the opportunity of the agency to observe the witnesses.” Section 536.140, subsection 3, RSMo 1969; Stephen & Stephen Properties v. State Tax Commission, 499 S.W.2d 798, 802[1] (Mo.1973).

Appellant contends that the circuit court erred in affirming the decision of the Director, because: (1) the Department was, in equity, estopped to deny that the purchase of materials for use in construction of the distribution center building was exempt from sales/use taxes; and (2) the decision “was not supported by competent and substantial evidence upon the whole record, was based upon an improper application of the law to the facts and improper conclusions of law, and was for those reasons also arbitrary, capricious, and unauthorized by law.”

Appellant, contending that the principle of equitable estoppel is applicable to governmental agencies charged with collecting taxes, argues that the Department is es-topped in this case, because it (appellant) relied in good faith and to its detriment upon representations of authorized Department officials that the constitutional and statutory exemption of the City of Troy from payment of the sales/use tax would be accorded to the purchase of all materials to be used in the construction of the building to be leased to Harper & Row.

The evidence of representations by Department officials upon which appellant relies consists of and begins with the first letter of August 13 from the Department to the City Treasurer. It continues with (1) the letter, requested by Department officials, from Mayor Briggs to the Department in which he stated the procedures the City proposed to follow in connection with purchase of and payment for the materials so as to make these purchases those of the City, and therefore sales tax exempt; and (2) the second August 13 letter from the Department to the City which, coming when it did, may be considered to be an approval of the procedures proposed by the City. In addition to this evidence there is the testimony of Mr. Williams and Mayor Briggs regarding discussions had with Department officials at meetings in Jefferson City. Prom all this evidence appellant concludes and contends the procedures followed by it are the procedures represented by Department officials to be the proper procedures to follow for the purchases of these materials to be exempt from sales/use taxes; that therefore the Department is estopped to claim that the purchases were not tax exempt.

We do not reach the ultimate question of whether the principle of equitable estoppel is applicable to governmental agencies charged with collecting sales/use taxes, because we determine that there was no es-toppel under the facts presented.

One finding of fact (No. 10) by the Director crucial to the question of whether there was estoppel is, in substance, that neither appellant nor the City were informed by Department officials that payment for the materials by appellant direct to the material suppliers and subcontractors would be permissible under the tax exemption letter of August 13. In other words, the Director found there was no representation by Department officials that it would be permissible under the tax exemption letter for appellant to pay the materialmen and subcontractors. There was competent and substantial evidence to support this finding. Both August 13 letters from the Department to the City make it clear that the City “must take title to, ownership of, and pay for all materials * * * .” May- or Briggs’ undated letter to the Department stating the procedures the City proposed to follow recites that “we * * * [the City] will make appropriate payments to suppliers and subcontractors.” There is nothing said in that letter from which the Department should understand that it was intended that appellant, instead of the City, would pay the suppliers and subcontractors for the materials. It was understood by at least one of the interested parties that Department officials would not approve the project as tax exempt if such procedure were followed. Mayor Briggs testified, at one point, that it had been his understanding “that the project would be tax-exempt so long as the material was sent to the job site and separately billed to and paid for by the City.”

An examination of materials invoices found among the exhibits discloses that not all were billed to the City as purchaser. Despite the note in the subcontracts and instructions by letter to suppliers from appellant in order to make it appear that the materials had been sold to the City through appellant as its agent, some invoices billed the materials to another as purchaser (presumably a subcontractor) and many which did bill the City as purchaser showed that they were directed to Kremer-Hicks as agent, a person or persons no one even suggests was an agent of the City.

It is true that Mayor Briggs also testified that at the third meeting with Department officials held in late August or early September, 1969, he and Mr. Williams outlined, and these officials approved as exempt from sales/use taxes, a procedure in which appellant would pay the suppliers and subcontractors for the materials. The Director could have but did not accept this version of what representations had been made by Department officials concerning the procedures to be followed. Instead, he accepted the version evidenced by Mayor Briggs’ letter and the second August 13 letter from the Department, which version is also consistent with and supported by the first part of Mayor Briggs’ testimony. We cannot say that the Director abused his discretion in accepting this version.

We conclude (1) that the procedures followed by appellant and the City in connection with payment for materials did not conform to those approved by the Department; (2) that the purchases of and payment for materials used in this project were by appellant and its subcontractors, and not by the City; (3) that for these reasons the purchases were subject to the sales/use tax. City of St Louis v. Smith, 342 Mo. 317, 114 S.W.2d 1017, 1019[1, 2] (1937); State ex rel. Thompson-Stearns-Roger v. Schaffner, 489 S.W.2d 207 (Mo.1973).

The judgment is affirmed.

All concur.

      . Throughout the hearing all testimony of May- or Briggs with respect to his authority to act for the Board of Aldermen of the City and the approval of the Board of his actions came in without objection. At no time was any evidence of any ordinance or resolution passed by the Board of Aldermen ever produced or introduced into evidence.

      . This letter on stationery bearing the letterhead of the City of Troy, is as follows:
      “Director of Revenue Sales Tax Division Jefferson City, Mo.
      Dear Sir:
      The following is an outline of the way the City of Troy proposes to handle the purchase of materials for the construction of the facility to be leased to Harper & Row, Publishers, Inc. (Emphasis supplied.)
      SUBJECT: Harper & Row
      Midwestern Distribution Center Troy, Missouri SALES-USE TAX

      We are herein outlining a proposed method for handling the purchasing of material for the City of Troy and the letting of contracts for all labor required in addition to that of our own forces to achieve construction of the Distribution Center to be leased from the City of Troy by Harper & Row, Publishers, Inc.
      In order to correlate the work and to keep paper work and correspondence within a reasonable limit yet still provide required records, we propose to receive monthly invoices from suppliers of material and from subcontractors for the entire project as follows:
      All invoices will be to the City of Troy, Missouri, for the Harper & Row, Publishers, Inc., Distribution Center, Troy, Mo., with c.c. to the J. E. Williams Construction Company, Agent.
      Each invoice will show a breakdown, if pertinent, between labor, materials, and rental equipment and accompanying each invoice will be invoices for all material from suppliers, the sum of which will equal the amount shown for material of the invoice involved.
      All records will be open for audit by the Dept, of Revenue if they wish to audit sales tax exemptions. We will submit our monthly estimate covering the total cost of work completed, in break down form according to the outline attached, which you will note wrill show a total for materials and rental equipment and a total for labor.
      The City of Troy will issue to the J. E. Williams Construction Company a payment check to cover the total cost of labor, material, and rental equipment, and we in order to maintain control of the project will make appropriate' payments to suppliers and subcontractors. (Emphasis added.)
      It is our understanding that when the proper procedure is established, the State will issue a letter to the City of Troy, exempting the city from paying Sales-Use Tax on the purchase of

        material for this project and in turn permitting our Company and all other suppliers and subcontractors to purchase materials for the Project without payment of Sales-Use Tax. Sincerely,
      G. Howard Briggs
      GHB: elm”

      . The body of this letter is as follows:
      “Section 144.010-144.510, RSMo. 1959, Rule # 3, exempts from Sales/Use Tax the purchase or acquisition of tangible personal property or taxable services by a county or other political subdivision paid for out of the funds of such county or subdivision.
      “The words ‘Political subdivision’ include townships, cities, towns, villages, school, road, drainage, sewer and levee districts, water districts, and ail other public corporations or quasi public corporations having the power to tax. “This letter is authority for the City of Troy, Lincoln County, Missouri, to purchase any and all materials necessary to construct and equip the facility to be leased to Harper & Row, Publishers, Inc.
      “It shall be understood that the City of Troy, Lincoln County, Missouri, in order to be exempt from Sales/Use Tax on purchase of materials to be used in the Harper & Row facilities, must take title to, ownership of, and pay for all materials purchased with a check or draft drawn on the Industrial Bond Fund of the City of Troy, Missouri.”

      . Mo.Const. Art. Ill, § 39(10) and § 144.030, subsection 1, RSMo 1969.

      . See footnote 3.

      . In this connection, the Director did not need to consider (if he did) the so-called hearsay testimony of the Department auditors; there is sufficient competent and substantial evidence without this testimony.


author: PER CURIAM:

text:
    In re Richard K. HOUTCHENS, Respondent.
    No. 59454.
    Supreme Court of Missouri, en banc.
    Sept. 12, 1977.

      Harlan D. Burkhead, Kansas City, for informant.
    Ernest H. Fremont, Jr., Kansas City, for respondent.
   PER CURIAM:

“The Advisory Committee”, created by Rule 5, did on March 2, 1976, charge respondent, Richard K. Houtchens, with conduct violative of various Disciplinary Rules of the Code of Professional Responsibility, Rule 4.

On April 20, 1976, the Honorable Noah Weinstein was appointed Master to take testimony and report findings of fact and conclusions of law. The same have been filed, arguments made and the cause submitted.

Respondent does not challenge the factual findings of the Master; and, for that reason, it is sufficient that we only detail a summarized version thereof.

COUNT I: That respondent in May of 1973, and thereafter, represented several wholesalers of shoes in their efforts to collect funds due from a retailer of shoes in Clinton, Missouri; that respondent was authorized to settle said claims on a 50% basis; that the retailer through its attorney made said payments in consideration of receipt of releases from the wholesalers; that respondent failed to remit such funds to his clients, deposited the same in his bank account and “advised said clients that payment of said settlement proceeds had not been made; that respondent did not remit said funds to his clients until in or about October, 1974, after having been contacted by another attorney for his clients retained for the purpose of obtaining said funds .” Restitution was made after respondent had “. . . commingled his said clients’ funds with his own funds . and used said funds for his own personal and professional use.”

COUNT II: That respondent in the years 1974 and 1975 represented a man and his wife in a claim for damages arising out of an automobile collision; that settlement was made with the insurance carrier for others involved in the amount of $4,000; that respondent in return for a draft payable to him and his clients delivered on February 21, 1975, a release, purportedly executed by his clients, to the insurance carrier; that the clients had not signed or executed the release nor endorsed the draft which respondent deposited to his personal account; that until June 16, 1975, respondent failed to remit to his clients any of the settlement proceeds and to that date denied that there had been a settlement. Restitution was made after the start of this proceeding.

COUNT III: The Master found that the evidence did not support the allegation respondent had entered into an unreasonably excessive contingent fee contract with his clients mentioned in Count II.

COUNT IV: That respondent in the years 1973 and 1974 represented two married couples in their claims for damages arising out of an automobile collision on November 23, 1973; that respondent on or about May 17, 1974, settled said claims for $3,000 and $500, respectively, delivered releases to the other party’s insurance carrier and deposited the drafts in his professional account; that, again, the clients had not signed or executed the releases or endorsed the drafts. Restitution was made on October 24,1975, just prior to respondent’s third appearance before the Advisory Committee.

Misconduct, such as that with which respondent is charged, is totally incompatible with the ethical standards of the legal profession; and, absent some very persuasive and acceptable mitigating factor, disbarment is the proper answer.

Respondent, after admitting that he acted as charged, denies that he has knowingly or intentionally “done any wrongdoing.” It is submitted that he suffered from a mental and physical illness which clouded his judgment, impaired his memory and “made it impossible [for him] to conduct his business and professional affairs in a clear, logical fashion.” Medical evidence of record suggests the presence of psychotemporal epilepsy reflected in periodic states of amnesia, confusion and disorientation. Difficulty in handling “stress” is shown by respondent’s chronic tension and excessive worry, as well as his tendency to pout, become sullen and procrastinate when a difficult task is encountered. During the period in question, excessive use of alcohol not only aggravated the problem but seemed to trigger more frequent periods of irrational conduct. Abstinence helps but unfortunately does not eliminate the problem. Nothing would be gained by a recitation of the many traumatic personal experiences suffered by respondent.

Informants suggest that respondent is suffering from a “selective” form of amnesia and that his credibility is suspect; but they do not seek to establish an absence of the extremely severe mental and physical problems reflected in the record. It is contended, nevertheless, that the “defense” offered addresses itself to an improper inquiry of whether or not respondent should be punished and ignores the principal concern of protection of the public and advancement of the integrity and prestige of the Bar.

It was concluded by the Master that suspension “for a period of one year with leave to apply for reinstatement thereafter upon a showing that he has recovered from his illness so that he can practice law in compliance with Rule 4” was adequate and he so recommended. His conclusion was based, in part, on the fact respondent “quit drinking” and is “doing well now” in addition to his acceptance of a long range program of psychiatric care for a projected period of five years.

Resolution of the problem must start from the oft-quoted statement of this court found in In Re Randolph, 347 S.W.2d 91 (Mo. banc), l.c. 109, that: “The main purpose of a proceeding of this nature is to make an inquiry into the fitness of an attorney to continue in the practice of law. Its main objective is not to punish the attorney but the protection of the public and the maintenance of the integrity of the profession and of the courts.”

Whether or not the “main objective,” just noted, can be accomplished in this case short of disbarment has been and is a question of grave concern to us. The practice of law, generally, involves situations wherein “stress” is present and it is imperative that a lawyer have the capacity to deal with the same. The possibility respondent will never be able to do so on a regular basis should be of immediate concern to him and those interested in his welfare.

The chance respondent can recover from his health related problems is a factor which we are free to consider. In Re Lurkins, 374 S.W.2d 67 (Mo. banc 1964); In Re O’Brien, 478 S.W.2d 310 (Mo. banc 1972). However, until such time as he has recovered, protection of the public as well as the profession is paramount. Suspension of respondent from the practice of law will accomplish the latter and not proscribe the former. The period of suspension actually is not too important, because removal of the same can only follow a hearing which shows a full capacity to practice law. We select three years for suspension that false hopes will not be created nor recovery efforts be further frustrated.

Wherefore, it is ordered that Richard K. Houtchens be suspended indefinitely from the practice of law with leave to apply for reinstatement after expiration of a period of three years from the date of the rendition of this opinion upon a showing that he is a person of good moral character and fully qualified to be licensed as a member of the Bar of Missouri.

All concur.

      . References to rules are to Missouri Supreme Court Rules and V.A.M.S.

      . Dr 1-102(4), DR 1-102(5), DR 1-102(6) and DR 9-102 in Counts I and II; DR 2-106(A) and DR 2-106(B) in Count III; and, DR 102(4), (5) and (6) and DR 9-102 in Count IV.