American Hospital Sup. Corp. v. York County Inst. Dist.

• Decision Date: 28 July 1954
• Docket Number: Civ. No. 4744.
• Citation: 123 F. Supp. 187
• Parties: AMERICAN HOSPITAL SUPPLY CORP. v. YORK COUNTY INSTITUTION DIST.
• Court: U.S. District Court — Middle District of Pennsylvania

123 F. Supp. 187

AMERICAN HOSPITAL SUPPLY CORP. v. YORK COUNTY INSTITUTION DIST.

Civ. No. 4744.

United States District Court, M. D. Pennsylvania.

July 28, 1954.

McClean Stock, York, Pa., for plaintiff.

John F. Rauhauser, Jr., York, Pa., for defendant.

FOLLMER, District Judge.

Plaintiff alleges that it is an Illinois corporation duly qualified to do business in the Commonwealth of Pennsylvania; that "Defendant, York County Institution District, is a municipal corporation organized and existing under the laws of the Commonwealth of Pennsylvania, being co-terminus with the County of York, Pennsylvania, its executive board having its offices at the Court House, York, Pennsylvania;" that plaintiff entered into a written agreement to supply to the defendant certain furnishings and equipment (a copy of the contract being attached to the complaint); that plaintiff submitted a statement for the amount due and owing (a copy thereof being attached to the complaint); and that the "architect" supplied to defendant a final certificate, as required by the contract.

Defendant, as its first defense, contends that the action is essentially against the Commonwealth of Pennsylvania and therefore within the prohibition of the Eleventh Amendment to the Constitution of the United States. Plaintiff, on the other hand, on the basis of the pleadings, supplemented by affidavits and stipulation, has filed a motion for summary judgment.

The county institution districts were created by an Act of the Legislature of Pennsylvania which provided, inter alia, that

(1) "Each county, as herein defined, is hereby created a district to be known as `. . . . . . County Institution District,' which district shall be a body corporate * * *." 62 P.S. § 2251.

(2) "The commissioners of each county shall be the executive and administrative officers of the institution district of that county, and the county treasurer shall be its treasurer. * * *" 62 P.S. § 2252.

(3) "For the purposes of the institution district and for the payment of the obligations of the predecessor poor district, the commissioners of each county shall have the power to levy and collect on real estate, trades, occupations and professions, in the same manner and at the same time as county taxes, an annual tax, to pay the current expense of the institution district, not exceeding ten mills on the dollar of the last adjusted assessed valuation for county purposes. * * *" 62 P.S. § 2257.

As pointed out in Pennsylvania Turnpike Commission v. Welsh, 3 Cir., 188 F.2d 447, 450, "the issue is whether the state is the real party in interest against whom relief is sought. * * * Whether a state is the real party in interest will turn on factors widely variant from case to case."

Defendant concedes that "it is well established that independent self-governing municipal entities such as counties are considered as citizens for the purpose of diversity, Lincoln County v. Luning, 1890, 133 U.S. 529 10 S.Ct. 363, 33 L.Ed. 766; Pearl River County Miss. v. Wyatt Lumber Co. 5 Cir., 1921, 270 F. 26, 27; Board of Commissioners of Jackson County, Kansas v. U. S. 10 Cir., 100 F.2d 929, as are cities, City of Long Beach v. Metcalf 9 Cir., 1939, 103 F.2d 483; and as are state supported public corporations, Hopkins v. Clemson Agricultural College, 1910, 221 U.S. 636 31 S.Ct. 654, 55 L.Ed. 890." However, it seeks to differentiate county institution districts in that "The commissioners, as the `local authorities', were charged with specific duties to be performed `according to rules, regulations, and standards established by the State Department of Welfare,' * * *. While the local authorities are given the power to make rules and regulations deemed proper, convenient and necessary for the local institution districts, such rules and regulations cannot be inconsistent with the act creating the districts nor with the rules and regulations of the State Department of Welfare.", and that furthermore the Supreme Court of Pennsylvania has held that "a county institution district is a state agency performing a governmental function", citing Heilig Bros. Co., Inc. v. Kohler, 1950, 366 Pa. 72, 77, 76 A.2d 613, 616; Davis v. Carbon County, 369 Pa. 322, 330, 85 A.2d 862.

Even if defendant's interpretation of the statements by the Supreme Court of Pennsylvania were correct, it would not be decisive of the question. The doctrine is aptly stated by Judge Sanborn in State Highway Commission in Arkansas v. Kansas City Bridge Co., 8 Cir., 81 F.2d 689, 690, as follows:

"* * * It is scarcely conceivable, however, that federal jurisdiction in a case such as that before us, which jurisdiction is governed by the Constitution and laws of the United States (Smith v. Reeves, supra, 178 U.S. 436, 441, 20 S.Ct. 919, 44 L.Ed. 1140; Collin County Nat. Bank of McKinney, Tex. v. Hughes, 8 Cir., 152 F. 414, 415; Barber Asphalt Pav. Co. v. Morris, 8 Cir., 132 F. 945, 949, 67 L.R.A. 761), could be controlled by the varying views of the Supreme Court of Arkansas, so that on one day the federal court would have jurisdiction because under the state law the commission was regarded as an entity separate from the state, and the next day would be without jurisdiction because in the meantime the state Supreme Court had held that the commission was the state and could not be sued. No doubt, the federal courts, in determining the character and status of state agencies, will be influenced by state decisions, but the question of whether a suit is one between citizens of different states is ultimately a question as to which the federal courts must express an independent judgment. * * *"¹

Nor would a state statute have such effect. In Lincoln County v. Luning, 133 U.S. 529, 10 S.Ct. 363, 364, 33 L.Ed. 766, the Supreme Court stated:

"* * * `But it was argued that counties in Illinois, by the law of their organization, were exempted from suit elsewhere than in the circuit courts of the county. And this seems to be the construction given to the statutes concerning counties by the supreme court of Illinois. * * * The power to contract with citizens of other states implies liability to suit by citizens of other states, and no statute limitation of suability can defeat a jurisdiction given by the constitution.'"

The converse situation is, of course, where the State has held that an agency is not such a State instrumentality as would be entitled to immunity from suit under the Eleventh Amendment.² Such a decision is in effect a waiver by the State of its immunity from suit under the Eleventh Amendment. In an analogous situation concerning the effect of a lien created by a State law, the Supreme Court in United States v. Security Trust & Savings Bank, 1950, 340 U.S. 47, 71 S.Ct. 111, 113, 95 L.Ed. 53, said:

"The effect of a lien in relation to a provision of federal law for the collection of debts owing the United States is always a federal question. Hence, although a state court's classification of a lien as specific and perfected is entitled to weight, it is subject to reexamination by this Court. On the other hand, if the state court itself describes the lien as inchoate, this classification is `practically conclusive.' People of State of Illinois ex rel. Gordon v. Campbell, 329 U.S. 362, 371, 67 S.Ct. 340, 345, 91 L.Ed. 348."

However, to say that the defendant is a State agency performing governmental function or that it is a State instrumentality is not the equivalent of saying that it is entitled to the immunity of the Eleventh Amendment. In Hopkins v. Clemson Agricultural College of South Carolina, 221 U.S. 636, 645, 31 S. Ct. 654, 657, 55 L.Ed....