Ace Flying Service, Inc. v. Colorado Dept. of Agriculture

• Decision Date: 12 August 1957
• Docket Number: No. 17974,17974
• Citation: 136 Colo. 19,314 P.2d 278
• Parties: ACE FLYING SERVICE, Inc., a corporation, Plaintiff in Error, v. The COLORADO DEPARTMENT OF AGRICULTURE, and Paul W. Swisher, Commissioner, Defendants in Error.
• Court: Colorado Supreme Court

Page 278

314 P.2d 278

136 Colo. 19

ACE FLYING SERVICE, Inc., a corporation, Plaintiff in Error, v. The COLORADO DEPARTMENT OF AGRICULTURE, and Paul W. Swisher Commissioner, Defendants in Error.

No. 17974.

Supreme Court of Colorado, En Banc.

Aug. 12, 1957.

Charles F. Keen, Pueblo, and Vincent Cristiano, Robert Bugdanowitz, Denver, for plaintiff in error.

Duke W. Dunbar, Atty. Gen., Frank E. Hickey, Deputy Atty. Gen., Samuel R. Freeman, Asst. Atty. Gen., for defendants in error.

SUTTON, Justice.

This action was brought by plaintiff in error, to whom we will refer as plaintiff, against defendants in error, to whom we will hereinafter refer as defendants, to recover the loss allegedly sustained by it as a result of defendants' conduct in preventing the performance of a contract.

Plaintiff alleged in its complaint: That it entered into a written contract with defendants under which it agreed to spray 1,500,000 acres of range land in order to control a grasshopper infestation; that it was to receive 13 3/4 cents per acre for the work and materials to be used; that it submitted its bid of 13 3/4 cents per acre on the written assurance of defendants that the work to be done involved 1,500,000 acres of land, and the bid was submitted on that basis; that plaintiff procured and had available its agents, employees and requisite number of aircraft and stood ready at all times to perform the contract; that plaintiff in reliance on the contract borrowed money from banks for financing and preparing aircraft and personal; that thereafter defendants, although ordering and requiring plaintiff to supply aircraft and personnel, failed to provide the necessary acreage for the fulfillment by plaintiff of its contract, but permitted it to spray only 240,000 acres, and paid it at the rate of 13 3/4 cents per acre for the area sprayed; that plaintiff had secured aircraft and personnel adequate to perform the contract in full, and effectively carried out its agreement as far as it was permitted to do so and was ready to perform in connection with the portion thereof which it was prevented, by defendants, from carrying out; that the Colorado legislature appropriated the sum of $200,000 for the payment of services which plaintiff contracted to perform and said sum was available to defendants for payment to plaintiff; that defendants failed to pay the sum due plaintiff, and it prays for judgment in the sum of $40,000.

Defendants, appearing by the Attorney General, filed their motion to quash, based on the proposition that as representatives of the State of Colorado they are immune from suit since the sovereign State of Colorado cannot be subjected to the processes of the courts without its consent, and no such consent had been granted.

The trial court sustained the motion to quash, holding that such an action cannot be maintained without consent. The court relied upon opinions of this court antedating Boxberger v. State Highway Dept., 126 Colo. 438, 250 P.2d 1007, and State Highway Dept. v. Dawson, 126 Colo. 490, 253 P.2d 593, and entered judgment dismissing the action.

Sole Question To Be Determined:

Where the legislature of Colorado authorized the State Department of Agriculture to eradicate a grasshopper infestation and appropriated adequate funds to defray the expense thereof; and where the said Department, in complying with the legislative direction entered into a contract for services and the use of equipment in carrying out the program as directed; will the law imply a consent, by the state, to be sued on said contract if the other contracting party asserts a breach of the contract on the part of the state?

This question is answered in the affirmative.

All contracts entered into by the State of Colorado or by any of the Departments in its behalf, are required to be awarded, pursuant to statute, to the lowest responsible bidder. Once entered into they are binding upon the state as well as upon the other contracting party. To hold that the state may enter into a contract by which the other party is compelled to expend large sums in acquiring material, machinery and personnel to enable it to perform its obligation, and then arbitrarily repudiate the contract relegating the injured party to the doubtful remedy of appealing to the legislature for justice in the form of a bill for relief, would be to sanction the highest type of governmental tyranny.

The applicable principle is that when a state enters into authorized contractual relations it thereby waives immunity from suit. This is not a new doctrine in this country. The Supreme Court of Indiana in 1891, in the case of Carr v. State ex rel. Coetlosquet, 127 Ind. 204, 26 N.E. 778, 779, 11 L.R.A. 370, made the following pertinent assertion:

'In entering into the contract it laid aside its attributes as a sovereign, and bound itself substantially as one of its citizens does when he enters into a contract. Its contracts are interpreted as the contracts of individuals are, and the law which measures individual rights and responsibilities measures, with few exceptions, those of a state whenever it enters into an ordinary business contract. * * * The principle that a state, in entering into a contract, binds itself substantially as an individual does under similar circumstances, necessarily carries with it the inseparable and subsidiary rule that it abrogates the power to annul or impair its own contract. It cannot be true that a state is bound by a contract, and yet be true that it has power to cast off its obligation and break its faith, since that would invoke the manifest contradiction that a state is bound and yet not bound by its obligation. * * * Hence it is that where there is no statute making an appropriation no action will lie against the officers of the state. State [of Georgia] v. Stanton, 6 Wall. 50 ; Hans v. [State of] Louisiana, C.C., 24 F. 55. Whether an appropriation shall or shall not be made is a legislative question, and over purely legislative questions the courts have no supervision or control. A question of that character is beyond the touch of the judiciary, for one department of government cannot enter the domain of another. * * * The right of the relator to compel the auditing and payment of his claim must, it is evident, depend upon whether there is an appropriation on which a warrant can be rightfully drawn, and out of which it can be lawfully paid; * * *.'

To like effect is the opinion of the Court of Appeals of Georgia in the case of Regents of University System of Georgia v. Blanton, 49 Ga.App. 602, 176 S.E. 673, 675, from which we quote the following:

'A state or any of its departments entering into contracts lays aside its attributes of sovereignty, and binds itself substantially as one of its citizens does when he enters into a contract, and, in general, its contracts are interpreted as the contracts of individuals are, and are controlled by the same laws. Ohio Life Ins. & Trust Co. v. Debolt, 16 How. 416, 14 L.Ed. 997; notes, 42 L.R.A.,N.S., 117. Where there is an act of the state Legislature authorizing a contract by a state department, the courts have power to enforce the contract against the state. Carr v. State [ex rel. Coetlosquet], 127 Ind. 204, 26 N.E. 778, 11 L.R.A. 370, 22 Am.St.Rep. 624, and notes.'

From the opinion of the Supreme Court of Nebraska in the case of Todd v. Board of Educational Lands and Funds, 154 Neb. 606, 48 N.W.2d 706, 710, we quote the following:

'This is true of a lease made by the state. It, by entering into a contract, abandons its attributes of sovereignty and binds itself, to the extent of its power to contract, substantially as an individual does when he makes a contract. The state may not impair any of the substantial rights secured by its contract to a citizen with whom it contracts. * * *'

The doctrine of sovereign immunity from suit has a historical basis steeped in antiquity and antedating the establishment of any organized government on this continent. Variations from it have usually been made only by express acts by the Congress of the United States or by state legislatures. The original basis for the existence of the doctrine under English common law was that the king or sovereign could do no wrong, was considered untouchable and above the law. Later in the democracies it was recognized that to permit suits against the state would result in the depletion of its treasury and of tax funds necessary for the operation of the government on behalf of all its citizens. The doctrine of sovereign immunity as applied to democratic government is also based upon the proposition that since a democratic state represents the people an action against it is in effect suing oneself, which is a legalistic anomaly. The doctrine of implied consent has grown out of judicial interpretation of the doctrine of sovereign immunity weighed against other equally important tenets of the law.

The question is posed by the concurring opinion as to whether this court should determine the questions involved solely upon constitutional grounds; that is, whether the alleged loss to plaintiff corporation, based upon the contract involved, is 'property' within the meaning of Article II, section 25 of the Constitution of Colorado, and whether 'due process of law' has been afforded plaintiff.

The majority of this court adhering to the rule that decisions will not be based upon constitutional grounds unless necessary to a determination of the issues involved, prefer to decide the issues before us on the clean cut example of implied consent. To do otherwise would be to ignore the ratione decidendi of the case, flaunt stare decisis and engage in fathering more dicta. It is true that Boxberger v. State Highway Dept., and State Highway Dept. v. Dawson, supra, cannot be reconciled with some of the other opinions of this court relating to sovereign immunity as stated in the concurring opinion. To reconcile those cases with other...