Lister v. Board of Regents of University Wisconsin System

• Decision Date: 12 April 1976
• Docket Number: No. 650,650
• Citation: 72 Wis.2d 282,240 N.W.2d 610
• Parties: Thomas E. LISTER et al., Appellants, v. BOARD OF REGENTS OF the UNIVERSITY WISCONSIN SYSTEM and Thomas H. Hoover, Respondents. (1974).
• Court: Wisconsin Supreme Court

Page 610

240 N.W.2d 610

72 Wis.2d 282

Thomas E. LISTER et al., Appellants, v. BOARD OF REGENTS OF the UNIVERSITY WISCONSIN SYSTEM and Thomas H. Hoover, Respondents.

No. 650 (1974).

Supreme Court of Wisconsin.

Argued March 3, 1976.

Decided April 12, 1976.

Daniel W. Hildebrand, Madison (argued), and Ross, Stevens, Pick & Ross, S.C., Madison, for appellant.

LeRoy L. Dalton, Asst. Atty. Gen. (argued), Bronson C. La Follette, Atty. Gen., on brief for respondents.

BEILFUSS, Justice.

The plaintiffs, four former University of Wisconsin law school students, seek to recover the difference between nonresident and resident tuition paid for the 1970--1971 and 1971--1972 school years. The Board of Regents of the University of Wisconsin System and Thomas Hoover, the Registrar of the University of Wisconsin, Madison campus, are named defendants.

The plaintiffs commenced an action for an injunction, declaratory relief, and damages in the United States District Court for the Western District of Wisconsin in October, 1971. The complaint in that action alleged that sec. 36.16, Stats.1969, which set forth the standards for determining resident status, violated the federal constitution as applied to them. On July 11, 1973, the district court granted the defendants' motion to stay the proceedings pending a state court determination of the construction to be given sec. 36.16. The district court was of the opinion that the constitutional issues raised by the plaintiffs could be 'substantially altered or obviated altogether' if the ambiguities concerning the construction and application of sec. 36.16 were resolved in the plaintiffs' favor. The court then invoked the federal abstention doctrine and retained jurisdiction 'pending the resolution in the Wisconsin state courts of the issues of state law presented.'

The plaintiffs then commenced this action for declaratory judgment and damages in the circuit court for Dane county. In the amended complaint it is alleged that the plaintiffs, while students of the University of Wisconsin Law School, applied for and were denied resident status and that each of them has satisfied the criterion set forth in sec. 36.16. Stats., to be classified as a resident student. At the time in question, the tuition fees for a resident student were approximately $305 per semester, and for nonresidents about $770 to $780. The plaintiff Lister claims to have overpaid $1,551 because of his nonresident status; the plaintiff Cooney $3,091; the plaintiff Thiel $770; and the plaintiff Turley $1,551. These amounts are claimed to have been unlawfully collected because of an improper construction of sec. 36.16 and that the defendants exceeded their authority and power. The plaintiffs also allege the defendant Hoover is personally liable because he directly participated in the improper classification process.

The complaint contains a prayer for a judgment pursuant to sec. 269.56, Stats., declaring the plaintiffs' rights to have been classified as residents for tuition purposes under sec. 36.16; for such supplemental relief as may be necessary and proper pursuant to sec. 269.56(8); and for the amounts of nonresident tuition collected from each plaintiff.

The defendants demurred to the complaint on the ground that, as to the request for declaratory relief, there was no presently existing justiciable controversy. As to the request for a money judgment, the defendants demurred on the ground that the plaintiffs had 'not followed the dictates of sec. 285.01, Stats., regarding an action for debt against a state agency.' The trial court sustained the demurrer and dismissed the amended complaint. The plaintiffs have appealed from that decision.

The gravamen of the complaint in this action commenced in the circuit court for Dane county and upon appeal here is that the plaintiffs were improperly classified as nonresidents for tuition purposes while students at the University of Wisconsin Law School during the 1970--1971 and 1971--1972 school years. The allegations of the complaint raise several questions concerning the proper construction and application of sec. 36.16, Stats.1969. The provisions of that statute provided for the determination of student status for tuition purposes at the time this dispute arose. It has since been repealed and re-enacted in an amended form pursuant to ch. 335, Laws of 1973. See sec. 36.27, Stats.1973.

The plaintiffs allege that the defendants misconstrued and misapplied sec. 36.16, Stats., in classifying them as nonresidents, thereby exceeding their authority under that statute. ¹ Board upon these allegations, the plaintiffs seek the following relief: (1) A declaration that they should have been classified as residents for tuition purposes and appropriate supplemental relief pursuant to sec. 269.56; (2) a judgment ordering the defendant Board of Regents to refund amounts alleged to have been unlawfully collected as nonresident tuition; and (3) a judgment imposing personal liability for those amounts on the defendant Hoover.

In sustaining the demurrer the circuit court held that the claims for monetary relief were barred by principles of state sovereign immunity. The claim for declaratory relief was dismissed on the ground that such a declaration would not terminate the controversy. The broad question on this appeal is whether the circuit court erred in sustaining the demurrer and dismissing the complaint.

The plaintiffs seek a refund of the amounts which they allege were unlawfully collected as nonresident tuition. The defendants demurred to this claim on the ground that 'the court lacks jurisdiction over the subject matter in that the plaintiffs have not followed the dictates of sec. 285.01 regarding an action for debt against a state agency.' The circuit court characterized the plaintiffs' claim as one for 'money had and received' and held that the state had not consented to be sued on such claims unless the conditions contained in sec. 285.01, Stats., had been complied with. That section provides:

'Actions against state; bond. Upon the refusal of the legislature to allow a claim against the state the claimant may commence an action against the state by service as provided in s. 262.06(3) and by filing with the clerk of court a bond, not exceeding $1,000, with 2 or more sureties, to be approved by the attorney general, to the effect that he will indemnify the state against all costs that may accrue in such action and pay to the clerk of court all costs, in case he fails to obtain judgment against the state.'

It did not appear from the complaint that the plaintiffs had presented their claims to the legislature and been refused, therefore the circuit court concluded that the doctrine of sovereign immunity precluded recovery.

The plaintiffs contend, initially, that sec. 285.01, Stats., and the accompanying principles of sovereign immunity have no application to their claim for a refund of nonresident tuition.

The concept of sovereign immunity in this state derives from art. IV, sec. 27 of the Wisconsin Constitution, which provides:

'The legislature shall direct by law in what manner and in what courts suits may be brought against the state.'

From this provision the rule developed that the state cannot be sued without its consent. ² This immunity is procedural in nature and, if properly raised, deprives the court of personal jurisdiction over the state. ³

The principal question raised by an objection based on the state's sovereign immunity is whether the action, in fact, constitutes a 'suit against the state.' It has been said that the state's immunity from suit extends to its arms or agencies. ⁴

Are the defendants in this action, the Board of Regents and one of its employees, 'agents' of the state? The determination of whether an action is really one against the state cannot be made solely by reference to the nominal parties to the action. The fact that the state is not named as a party defendant does not conclusively establish that the suit is not one against the state. Whether the defense of sovereign immunity may be asserted depends not so much upon the character of the parties defendant as it does upon the nature of the relief which is sought. ⁵

When an action 'is in essence one for the recovery of money from a state, the state is the real substantial party in interest and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants.' ⁶ The question thus presented is whether a judgment for the plaintiffs on their claims for a refund would require payment from state funds. Sullivan v. Board of Regents of Normal Schools, supra, requires an affirmative answer.

In this case a teacher sought to recover a money judgment for the balance alleged due on a teacher's contract and for the reasonable value of services as a manager of the cafeteria at a state normal school. A demurrer was interposed on the ground of sovereign immunity. The Board of Regents appealed from an order overruling the demurrer. In its decision this court recognized the principle that the state can waive its sovereign immunity from suit when it creates an agency with independent proprietary powers and functions. There is no immunity from suit with respect to the activities of such an agency. ⁷

However, the court held that the Board of Regents was not such an 'independent going concern.' The statutory powers of the board in that case demonstrated that it was merely an administrative body with none of the attributes of a municipal or quasi-municipal corporation. The board had no power to raise money or incur liability beyond the amount appropriated by the legislature. The board could not dispose of property without express authority from the state. Most importantly, all funds belonging to the board were in the custody of the state treasurer.

When the acts which gave rise to this lawsuit occurred, the Board of Regents had the powers set forth in ch. 36...