Arkansas State Highway Commission v. Dodge

• Decision Date: 28 November 1932
• Docket Number: 4-2888
• Parties: ARKANSAS STATE HIGHWAY COMMISSION v. DODGE
• Court: Arkansas Supreme Court

55 S.W.2d 71

186 Ark. 640

ARKANSAS STATE HIGHWAY COMMISSION v. DODGE

4-2888

Supreme Court of Arkansas

November 28, 1932

Prohibition to Pulaski Chancery Court; Frank H. Dodge Chancellor; writ denied.

Writ denied.

Hal L Norwood, Attorney General and Walter L. Pope, Assistant, for petitioner.

Coleman & Riddick, for respondent.

OPINION

BUTLER, J.

The respondent has made a concise statement of the case, which we adopt and set out as follows:

"R. J. Lynch and H. Levinson, doing business as R. J. Lynch & Company, brought a suit in the Pulaski Chancery Court against the chairman and members of the Arkansas State Highway Commission seeking to recover, as upon a quantum meruit, the value of labor and materials furnished the commission in the construction of certain roads and bridges in the State highway system. The highway commission filed a demurrer to the complaint upon the ground that the Pulaski Chancery Court was without jurisdiction of the case because it is one against the State of Arkansas. The demurrer was overruled. The Commission thereupon filed in this court a petition for a writ of prohibition to prevent the chancery court from proceeding with the case.

"In the case in the Pulaski Chancery Court it is alleged and admitted by the demurrer that the plaintiffs performed the work for the highway commission under certain written contracts requiring the construction of roads and bridges in the State highway system, and, further, that the work performed, labor done and materials furnished were in every respect in accordance with the plans and specifications of the State Highway Commission applicable to such construction work; that, after performance, the Highway Commission accepted the work, labor and materials furnished by plaintiffs; and that the roads and bridges built are now in use by the public as a part of the State highway system.

"The suit in the chancery court is brought to recover upon a quantum meruit for the reasonable and fair value of materials and labor furnished, because, though the work was done under written contracts, let after competitive bidding, there was no previous advertisement of the work as required by the statutes of this State."

It is conceded that, if the petitioners are correct in the position taken, and that the court improperly overruled the demurrer, prohibition is the proper remedy. Section 4, art. 7, of the Constitution; Monette Road Imp. Dist. v. Dudley, 144 Ark. 169, 222 S.W. 59; Roberts v. Tatum, 171 Ark. 148, 283 S.W. 45; Ark. State Highway Commission v. Dodge, 181 Ark. 539, 26 S.W.2d 879. It is insisted by the petitioner that this is a suit against the State, differing in essential particulars from Ark. State Highway Commission v. Dodge, supra, and that this suit cannot be maintained because of § 20, art. 5, of the Constitution, which provides: "The State of Arkansas shall never be made a defendant in any of her courts."

It is secondly insisted that, even though the suit might be maintained, the State is under no liability to Lynch & Company, and that, if there is a moral obligation, the General Assembly is the only source of relief. It seems to us that a consideration and discussion of the second point raised would at this time be premature and improper. The question we should now determine is, has the court below jurisdiction to hear and determine the case? and, if so, the question of liability would be first for its decision. Therefore, we proceed to a consideration of the question whether the suit can be maintained against the petitioner.

In Ark. State Highway Comm. v. Dodge, supra, where the right to maintain a suit against the Highway Commission was upheld, the case of Grable v. Blackwood, 180 Ark. 311, 22 S.W.2d 41, was cited in support of that holding. That was a suit brought against the State Highway Commission to enforce the payment of outstanding indebtedness incurred prior to January 1, 1927, against a road improvement district under act No. 153 of the Acts of 1929, which provided for the ascertainment of valid outstanding indebtedness incurred prior to the date mentioned against any road district, and for the payment thereof by the Highway Commission out of appropriations provided for the payment of road district bonds and interest obligations. Act No. 153 and the right of the plaintiffs to maintain the action was attacked on various constitutional grounds, but § 20, art. 5, was not invoked. It was held that the act did not violate the Constitution, and that the suit might be maintained against the Highway Commission. The case of Urquhart v. State, 180 Ark. 937, 23 S.W.2d 963, was also cited in the majority opinion in support of the conclusion reached by the writer. That case was really an issue as to the extent of the liability of the State for interest upon a contract to purchase a State convict farm and the sufficiency of the appropriation to discharge the obligation, when its extent was adjudged by the courts of Pulaski County, the agencies created for that purpose. The following quotation was made from Urquhart v. State, supra: "The Legislature itself might have ascertained the amount, both of principal and interest, and have made an appropriation accordingly, but it elected to constitute another agency to make this finding of fact, and made an appropriation in what was assumed to be a sufficient amount to pay both the principal and interest, and, under the remittitur which has been entered, the appropriation is sufficient," and the court said: "It is true that suit was brought by the State, as the act provided it should be, but the act also provided that the State's vendor might litigate his claim for interest, and that either party should have the right to appeal from an unfavorable decision."

Mr. Justice SMITH and Mr. Justice MEHAFFY adopted the reasoning of Mr. Justice GRAVES in the case of State, etc., v. Bates, 317 Mo. 696, 296 S.W. 418, and quoted with approval from that opinion as follows: "It (State Highway Commission) is an entity, with powers of a corporation, established and controlled by the State for a specific public purpose, but that does not make this legal entity the sovereign State. No contract it is authorized to make is made in the name of the State, but in the name of the Commission. The sovereign State could have contracted for the building of its public highways in its own name, but it chose to create a legal entity for this work. This act gave to this legal entity no part of the State's sovereignty, but authorized it to proceed to do certain work which the State could have done by private contract made direct with the State. Thus it has been well said in 14 C. J., at page 75: 'Although a corporation may be public, and not private, because established and controlled by the State for public purposes, it does not necessarily follow that such a corporation is in effect the State, and so not subject to the rules of law governing other corporations, for the State may, by engaging in a particular business through the instrumentality of a corporation, divest itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations. Thus, although incorporated banks, established by the State for its own public purposes and owned and controlled entirely by the State, are undoubtedly public corporations, it has been held that they are not for that reason invested with the attributes of sovereignty, but are mere corporations, and subject generally to the rules of law governing other corporations.'"

The conclusion was that the Highway Commission, as created and functioning, was in effect a qu...