Board of Councilmen v. State Highway Commission , 236 Ky. 253 ( 1930 )

Reversing.

This suit is in the nature of a mandamus proceeding to compel the state highway commission and the members thereof to perform a contract which was entered into between the commission and the board of councilmen of the city of Frankfort on July 23, 1923. By the contract the commission agreed to take over the reconstruction, according to its plans and specifications, of 1.972 miles of certain streets in Frankfort, constituting state project No. 17a, Franklin county (but now known as U.S. Highway No. 60), and to maintain same. The contract for the work was to be awarded by the commission subject to the approval of the council. The cost was to be assessed by the city against the abutting property and the Interurban Trunk Railway Company (succeeded by the Kentucky Traction Terminal Company). The commission firmly bound itself to pay one-half of the cost of construction, which was to be credited on the warrants of the property owners in a manner set out in the contract. It further bound itself to maintain thereafter the streets as a part of the public highways of the state. No question is raised as to the legality of the procedure taken by the city. The authority of the commission to make the contract is to be found in section 8, of chapter 17, Acts of 1920, establishing the highway commission (published as section 4356t-8, in the 1922 edition of the Statutes), which is as follows:

"When any primary road herein designated must pass through a city or town, the state highway commission is hereby empowered to enter into a contract with such city or town for the construction of such road if the road through the city or town is to be different from the road constructed outside of the city or town, but if the road is the same the cost thereof shall be paid as is the cost of other roads designated herein. In the event it is necessary to construct a road or street at a greater cost than is paid for construction of a like lineal mileage outside of the city or town, such city or town must pay the additional cost of construction, and the details shall be agreed upon between such city or town and said state highway commission."

This section was construed in Wickliffe's Executors v. Smith,225 Ky. 796, 10 S.W.2d 291; and Perry County v. Townes,228 Ky. 608, 15 S.W.2d 521. It may be said in passing that that law was changed by chapter 178 of the Acts of 1928, but the modification could not affect the contract rights here involved.

The petition of the council against the commission, the Irvine Construction Company, the Traction Company, and Leslie W. Morris, who owns abutting property, was filed November 24, 1924. It asked that the commission be required to carry out the terms of its contract, and for a declaration of rights of the plaintiff and the three other defendants. It was therein shown that pursuant to the contract the commission had received as the lowest and best bid one of the Irvine Construction Company in the sum of $215,052.15, but it does not appear that any contract was entered into with that company.

A special demurrer of the commission on the ground that the action was against the commonwealth without its consent was overruled and an answer filed. The members of the commission were then individually made parties by amendments. The answer set up various defenses, including a denial of the right to maintain the suit; that the contract was ultra vires; and that it had been canceled by order of the commission because of the limitations placed upon it by this court in the case of Billeter Wiley v. State Highway Commission, decided May 6, 1924, reported in 203 Ky. 15, 261 S.W. 855. Several demurrers and motions were passed on by the court from time to time, and on January 17, 1929, an amended petition was filed alleging that since, the filing of the original petition the streets had become in bad repair, and because of the necessity of maintaining them in a reasonably safe condition and the refusal of the commission to perform its contracts, the city, by proper ordinances and resolutions, had caused them to be constructed at the expense of the city and abutting property holders at a cost of $103,072.46. A list of the property owners, with the amount paid by each, was filed as an exhibit. It is stated that the city was suing in its corporate capacity and for the use and benefit of the abutting property holders and all of its citizens. It prayed judgment against the commission for one-half of the cost of construction, to wit, $51,536.23, which it is averred should be prorated among those entitled to it. The amended petition further asked that the commission be required to take over and maintain the streets involved.

The court sustained a special demurrer to the petition as amended, on the ground that the suit was in effect one against the commonwealth without its consent, and the petition was dismissed. Only that action of the trial court is before us.

The immunity of the commonwealth as the sovereign from suit without legislative consent is absolute and unqualified. The state highway commission is an agency of the commonwealth and not a separate corporate body. Section 231 of the Constitution provides that the General Assembly may direct in what manner and in what courts suits against the commonwealth may be sustained. Under that section may be found references to numerous cases construing this organic principle, and we shall not here enter upon the treatment of that subject generally, but confine ourselves to authorities having specific application.

In the recent case of Taylor v. Westerfield, 233 Ky. 619,26 S.W.2d 557, 69 A.L.R. 482, the sound reasons for exempting the state and its agencies from liability for damages either in tort or on contract are given and the doctrine of their immunity reaffirmed. But as to an independent contractor who is engaged in road construction and who may be guilty of negligence the rule was changed and several cases were overruled.

In Hunt-Forbes Construction Company v. Robinson, 227 Ky. 138,12 S.W.2d 303, the general rule in this state is given as being that a suit for damages may not be maintained against a contractor doing work under and in accordance with a contract with the state highway commission in the absence of negligence. This on the theory that the contractor is but an agent of the commission, and it would be in effect a suit against the commonwealth.

B. B. Wilson Co. v. Van Diver, 230 Ky. 27,18 S.W.2d 308, was a suit which involved the question of making the state highway commission a garnishee in an action against one it owed under a contract. It was held that the commission is not a body corporate and that it was the state which owed the money sought to be attached, and so far as the attachment was concerned it was in reality a suit against the state and could not be maintained. Of like character is Looney v. Stryker, 31 N.M. 557,249 P. 112, 50 A.L.R. 1404.

However, it does not seem to us that this case is to be brought within the rules affirmed in those cases. It is not a suit for damages or, strictly speaking, to collect a debt. It is a suit to compel the officers of the state to perform their undertaking made in behalf of the state under its direct authority. The rule that suits may not be maintained against officers or agencies who are but nominal parties where the state is the real party in interest does not apply where the suit is instituted against the agency or officer to compel performance of a duty required by statute. 25 Rawle C. L. 414. An action against state officers to compel them by mandamus or other similar process to perform official duties of a purely ministerial nature, involving no discretion as to the use of political or governmental power, is not a suit against the state and may be maintained without its consent. White Eagle Oil Refining. Company v. Gunderson, Governor, 48 S.D. 608,205 N.W. 614, 43 A.L.R. 397. The commission had exercised its authorized discretion when it made the contract. This principle was applied in State ex rel. v. Toole, Governor,26 Mont. 22, 66 P. 496, 498, 55 L.R.A. 644, 91 Am. St. Rep. 386, where a board, composed of the Governor, Attorney General, and secretary of state, and constituting a "State Furnishing Board" had, because of a protest received from a labor union, refused to execute a contract after legally making an award for the purchase of supplies and furniture for the capitol. Said the court:

"But the present proceeding is not, in effect, an action or proceeding against the state. If the allegations of the petition are true, the proposal of the plaintiff was regularly accepted, and the contract let to it as the lowest responsible bidder, after a compliance with all the statutory requirements. The state, by its authorized agent, awarded a contract, and the object of the present proceeding is to compel the defendants, as public officers of the state, to sign the formal contract, and thereby perform what is alleged to be their ministerial duty. If the duty to be performed by a public officer of the state is purely ministerial, the writ of mandate may be issued, the case being otherwise a proper one for the employment of such writ. State ex rel. State Pub. Co. v. Smith, 23 Mont. 44, 57 P. 449, and cases there cited; Marbury v. Madison, 1 Cranch. 137, 2 L. Ed. 60; In re Ayers, 123 U.S. 506, 31. L.Ed. 230, 8 S. Ct. 183."

In Reliance Mfg. Company v. Board of Prison Commissioners,161 Ky. 135, 170 S.W. 941, 944, the plaintiff was the owner of a contract for prison labor made in the name of the commonwealth by the board of prison commissioners. It gave notice of its exercise of the option contained in the contract to renew it for a period of four years. The board declined to renew the contract and suit was brought to restrain the commissioners from ousting the company from the prison shops and to compel the board to renew the contract in accordance with its terms. Holding that the board was acting under legal authority in making and providing for the renewal of the contract, the question appeared whether the suit was in reality a suit against the commonwealth for which no consent had been given. Describing the board of prison commissioners to be of a character very similar to the state highway commission, and holding that it had acted within its powers, and that the contractor had the right to demand a renewal of the contract, the opinion continues:

"So that the only ground left upon which the board can defend its refusal is that, being an agency of the state, it cannot be compelled to do that which it was authorized to do and that which it agreed to do. If the board cannot be compelled to renew this contract, then one of the parties to the contract is denied, without any fault or wrongdoing or breaches, the right to compel the other party to perform his part of the contract. . . .

"Cases like this present strong reasons why the courts should afford relief, unless the right to do so is unmistakably withheld. Public agents of the state ought not to be allowed to perpetrate a wrong or commit a breach of contract and prevent the injured party from seeking redress in the courts by shielding themselves behind the barrier that the state, upon grounds of public policy, has erected for its protection against suits, unless the suit plainly falls within the prohibited class. The commonwealth of Kentucky does not desire to wrong any of its citizens or any one else. It wants, as do all well-governed states, to do what is right.

"Therefore, to prevent the injustice and wrong that in many cases would result if people dealing with public agents were left without remedy, however just their demands might be, this court has announced in many cases that public boards and agents of the state might be sued, although the acts about which suit arose were performed by them in their capacity as agents of the state. The correct rule, and the one supported by authority, is that a public agent, whether it be styled a body corporate, with the power to sue and be sued, or be a board or an individual with certain powers, may be sued by a private citizen to restrain the commission of a contemplated injury or wrong or compelled, as any other private citizen might be, to perform acts, essential to protect the property or contract rights of individuals having dealings with the agent, when the suit, whatever its nature may be, will not do more than restrain the commission of some wrong or compel the performance of some duty by the agent; or, to put it in another way, when the suit directly concerns some act of the board or agent, whether of omission or commission, that is not expressly authorized by the state."

Many authorities are cited for the conclusion reached that the plaintiff was entitled to the relief sought.

In the more recent case of Gordon v. Morrow, 186 Ky. 713,218 S.W. 258, the court held that the Governor had the power to cancel a contract with attorneys who had been legally employed by his predecessor in office, but that the attorneys, who had been employed on a contingent fee, had the right to require the Governor to consent of record that compensation to which they were entitled for services rendered might be determined by the court with the assistance of a jury, and that when judgment was rendered the attorneys could demand a warrant of the auditor for its payment, and in case of his refusal they might bring a mandamus suit to compel him to do so. The principle upon which that phase of the decision was based was that the statute under which the attorneys had been employed was in itself a legislative direction to the auditor to issue a warrant for their compensation; and that the proceeding to ascertain and determine by the Judgment of the court the amount to which they were entitled as compensation was no more a suit against the state within the meaning of section 231 of the Constitution than would a mandamus suit by them against the auditor to compel him to issue a warrant for the amount due them under the contract, had they been permitted to complete it.

It is to be observed that in cases of this kind the distinction is drawn between suits seeking to create or increase the liability of the state, and suits seeking to compel administrative officers to satisfy a liability theretofore created — one to establish a right and the other to satisfy a right already established under authority of law.

In the instant case, according to the allegations of the petition, the liability of the commonwealth was created by the contract. It is now a matter of enforcing the contract. Of course, there may be presented a valid defense, but we are concerned here only with the sufficiency of the petition as amended on demurrer.

The court is of the opinion that the cause of action stated in the petition as amended comes within that class of cases which may be maintained against agents and officers of the state, and, therefore, that the court erred in sustaining a special demurrer to it.

The judgment is reversed for consistent proceedings.

Whole court sitting.

Chief Justice THOMAS and Judges DIETZMAN and REES dissenting.