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BRYANT CONSTRUCTION COMPANY, INC., DUNCAN BRYANT AND JEAN BRYANT v. COOK CONSTRUCTION COMPANY

DECEMBER 02, 1987

BRYANT CONSTRUCTION COMPANY, INC., DUNCAN BRYANT AND JEAN BRYANT
v.
COOK CONSTRUCTION COMPANY, INC.



BEFORE, HAWKINS, P.J., PRATHER AND ZUCCARO, JJ.

ZUCCARO, JUSTICE, FOR THE COURT:

Bryant Construction Company, Inc., a corporation, (Bryant) filed suit against Cook Construction Company, Inc. (Cook) in the Circuit Court for the First Judicial District of Hinds County, alleging breach of contract. Cook moved to dismiss the complaint, asserting that Bryant had been suspended under 27-13-2, Miss. Code Ann. (1972) for failure to file tax returns and that Bryant therefore had neither the power to contract nor the right to file suit. The trial court granted the motion to dismiss. Then Duncan and Jean Bryant, the only shareholders of Bryant, filed an application to intervene pursuant to Rule 24, Mississippi Rules of Civil Procedure. After the trial court entered an order allowing intervention and substitution of parties, Duncan Bryant, Jean Bryant and Bryant Construction, on January 13, 1986, filed an amended complaint, again alleging a breach of contract by Cook. Cook moved to dismiss the complaint, asserting that the shareholders' claim was derivative of the corporation's claim, and that because the corporation could file no claim, the shareholders, therefore, had no claim. The trial court granted Cook's motion and entered a judgment dismissing the amended complaint. At the time of this judgment, there was pending before the trial court a motion by Bryant for summary judgment on the merits of the case.

From the trial court's judgment dismissing their complaint, Bryant et al. appeal, assigning three (3) errors:

 I. THE TRIAL COURT ERRED IN DISMISSING BRYANT CONSTRUCTION'S ORIGINAL COMPLAINT.

 II. THE TRIAL COURT ERRED IN ENTERING ITS FINAL JUDGMENT DISMISSING THE AMENDED COMPLAINT.

 III. THE TRIAL COURT ERRED IN DENYING, BY IMPLICATION, THE MOTION FOR SUMMARY JUDGMENT MADE BY BRYANT CONSTRUCTION ET AL.

 FACTS

 On March 21, 1983, the Mississippi State Highway Department entered into a contract with Cook. Under the terms of that contract Cook was to perform certain work on highway construction projects in Hinds and Madison Counties in Mississippi. Also on March 21, 1983, Cook and Bryant entered into a subcontract which provided that Bryant was to perform certain portions of the work on the

 projects.

 On January 27, 1984, the Chairman of the Mississippi State Tax Commission suspended Bryant for failure to file annual reports and pay franchise taxes. In suspending Bryant, the Commissioner acted pursuant to Miss. Code Ann. 27-13-27 (1972), a statute discussed in more detail infra. Although Bryant's suspension was eventually set aside (on December 6, 1985), two (2) important events occurred during the period of that suspension.

 The first of these important events occurred on October 19, 1984, when Bryant - although it had been suspended from "perform[ing] any right acquired by the [corporate form of organization,]" 27-13-27 (1) - entered into a contract with Cook. This contract related to the highway construction project that was the subject of the January 27, 1984 subcontract between Cook and Bryant. The work contracted for in October, however, was not covered in the original subcontract. This October contract is the agreement on which Bryant sued. Pursuant to the October contract, Bryant was to install castings and grates needed for the highway construction project. This agreement was evidenced, not by a lengthy contract, but instead by the following memorandum on Cook Construction letterhead:

 10/19/84 Quote by Don Glenn for labor on Job 865 I-55 North Castings - $0.63/lb. Grates - $1.18/lb.

 This memorandum was signed by G. R. Gatlin of Cook Construction. Bryant did in fact install castings and gratings on the highway construction project, although the pleadings and discovery materials reflect a dispute as to the quantities; but the real dispute was with regard to the prices quoted in the memorandum. Cook refused to pay the prices quoted in the memorandum, claiming that they were quoted in error, that they actually reflected materials costs rather than labor costs, and that they were so high in comparison to prevailing labor costs that Bryant knew or should have known that the quote was incorrect.

 The dispute over the quoted price resulted in Bryant's filing suit. In preparing to defend the suit, Cook learned of Bryant's suspension for failure to pay franchise taxes, and, as noted ante in the statement of the case, the focus

 of the dispute quickly shifted from the issue of the price quote to the issue of whether Bryant had either the power to contract or the power to sue, since the corporation was suspended pursuant to 27-13-27 both at the time it entered into the contract and at the time Bryant originally filed suit. The suspension had been set aside by the time the amended complaint was filed. The following is a list of key events in this case, along with the dates on which those events occurred:

 March 21, 1983 Cook entered into its contract with the Mississippi State Highway Department.

 March 21, 1983 Cook and Bryant entered into the formal subcontract.

 January 27, 1984 Bryant was suspended by the Mississippi State Tax Commission for failure to pay franchise tax.

 October 19, 1984 Bryant and Cook entered into the contract at issue.

 June 18, 1985 Bryant filed its original ...


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