DeLong Corporation v. Oregon State Highway Com'n

• Citation: 233 F. Supp. 7
• Decision Date: 24 August 1964
• Docket Number: Civ. No. 64-79.
• Parties: DeLONG CORPORATION, a Delaware corporation, Plaintiff, v. The OREGON STATE HIGHWAY COMMISSION, composed of Glenn L. Jackson, Kenneth N. Fridley and David B. Simpson, in their capacity as Oregon State Highway Commissioners and Individually, Forrest Cooper and Ivan D. Merchant, Defendants.
• Court: U.S. District Court — District of Oregon

233 F. Supp. 7

DeLONG CORPORATION, a Delaware corporation, Plaintiff, v. The OREGON STATE HIGHWAY COMMISSION, composed of Glenn L. Jackson, Kenneth N. Fridley and David B. Simpson, in their capacity as Oregon State Highway Commissioners and Individually, Forrest Cooper and Ivan D. Merchant, Defendants.

Civ. No. 64-79.

United States District Court D. Oregon.

August 24, 1964.

COPYRIGHT MATERIAL OMITTED

George W. Mead, Portland, Or., for plaintiff.

J. Robert Patterson, Chief, Trial Section, Oregon State Highway Commission, Salem, Or., for defendants.

KILKENNY, District Judge.

Under its amended complaint, the plaintiff seeks a declaration¹ of rights in connection with the provisions of a certain contract between plaintiff and the state of Oregon, acting by and through its State Highway Commission. The contract covers the construction of a massive bridge over the Columbia River between Astoria, Oregon, and Megler, Washington, which is being built through the joint efforts of the states of Oregon and Washington. Before the court is defendants' motion to dismiss on the following premises: (1) the court lacks jurisdiction over the subject matter; (2) the court lacks jurisdiction over the persons of defendants; (3) the amended complaint fails to state a claim upon which relief can be granted; and (4) failure to join indispensable parties.

Defendant Cooper is the State Engineer employed by the Highway Commission and defendant Merchant is the assistant to Cooper.

Ripe for discussion and decision at this stage are the jurisdictional questions arising under points (1), (2) and (4).

Simply stated, defendants contend that they are clothed with the immunity of the state of Oregon, and that the Eleventh Amendment to the United States Constitution does not permit the prosecution of this action.

Plaintiff counters with the claims: (1) that the court has jurisdiction under the diversity statute² on the theory that plaintiff is a citizen of the state of Delaware, with its principal place of business in New York; that defendants are citizens of the state of Oregon, and that the amount involved is in excess of the statutory minimum; (2) that the court has jurisdiction by reason of 28 U.S.C. § 1331 in that the agreement between Oregon and Washington authorizing construction of the bridge constitutes a compact within the meaning of Article I, Sec. 10, Clause 3 of the United States Constitution, and that no Congressional consent, as required by said clause, was obtained by the states of Oregon and Washington; (3) that jurisdiction under the provisions of said section 1331 is present by reason of the requirements of the General Bridge Act of 1946,³ under which the highway departments of the states of Oregon and Washington and the Washington Toll Bridge Authority obtained approval for the construction of said bridge from the Secretary of the Army and its chief engineer, the plaintiff asserting that the plans and specifications mentioned in the contract were incorrect and faulty, and that by reason thereof the approval of the Secretary of the Army and/or the Chief of Engineers was invalidly obtained and was, therefore, void; (4) that jurisdiction is present by reason of defendants obtaining a contribution from the United States towards the expense of the construction of the bridge in pursuance of Title 23 U.S.C.; that said payments had to be approved by the Bureau of Public Roads and that the Bureau of Public Roads will not approve further payments to plaintiff if it is established that the agreement was obtained on the basis of incorrect plans and specifications; and (5) to the extent that defendants might represent the state of Oregon and act on behalf of the state, that the state of Oregon waived immunity from suit under the Eleventh Amendment and consented that the Highway Commission be sued in this court.

I. For decision under the first point is whether the Oregon State Highway Commission is a citizen of the state of Oregon. In considering this subject, we must keep in mind that diversity jurisdiction, in the last analysis, presents a problem which is separate and distinct from the immunity of the state under the Eleventh Amendment. Jurisdiction exists under the diversity statute when the controversy arises between citizens of different states, not when it arises between a citizen of one state and another state. State Highway Commission of Wyoming v. Utah Construction Co., 278 U.S. 194, 49 S.Ct. 104, 73 L.Ed. 262 (1929). The real party in interest, rather than the names of particular parties, is the important factor in determining whether there is diversity jurisdiction. Thus, in the case at bar, if the state of Oregon is the real party in interest, there is an absence of diversity jurisdiction even though the state may not be named. California, ex rel. McColgan v. Bruce, 129 F.2d 421, 147 A.L.R. 782 (9th Cir., 1942), cert. den. 317 U.S. 678, 63 S.Ct. 157, 87 L.Ed. 544; Weyerhaeuser Co. v. State Roads Comm'n of Maryland, 187 F.Supp. 766 (D.C.Md., 1960); Ex parte Nebraska, 209 U.S. 436, 28 S.Ct. 581, 52 L.Ed. 876 (1908). Therefore, the point at issue is whether this litigation amounts to anything more than an action against the state of Oregon. If it does not, jurisdiction cannot be predicated on the ground of diversity. In arriving at a proper conclusion, the court must look to the real party in interest, rather than the parties named in the pleadings. Ex parte Nebraska, supra; Missouri v. Homesteaders Life Ass'n, 90 F.2d 543 (8th Cir., 1937), cert. den. 302 U.S. 717, 58 S.Ct. 37, 82 L.Ed. 553. In making this determination, the federal courts will be influenced by state decisions, dealing with the character and status of state agencies, but ultimately the question is one which the federal courts must answer. State Highway Commission in Arkansas v. Kansas City Bridge Co., 81 F.2d 689, 691 (8th Cir., 1936); Louisiana Highway Commission v. Farnsworth, 74 F.2d 910 (5th Cir., 1935), cert. den. 294 U.S. 729, 55 S.Ct. 638, 79 L.Ed. 1259.

In order to arrive at an intelligent conclusion, the court must closely analyze, not only the legislation which created the Oregon State Highway Commission, but also legislation, subsequently enacted, touching on the powers and duties of said Commission.

Originally, the Highway Commission of the state of Oregon consisted of the Governor, the Secretary of State and the State Treasurer.⁴ The chief executive officer of the Commission was the State Highway Engineer. There is little doubt but the Highway Commission, under the original Act, was a mere agent of the state, even though it had power to let contracts for the construction of roads and to exercise any and all powers in connection therewith. In 1917, under an Act which was known as the Oregon Highway Law,⁵ the legislation was amended under which the Highway Commission was thereafter to consist of three members to be appointed by the Governor. In that legislation, the State Highway Commission and the State Highway Engineer and all of their employees were designated as the State Highway Department. In other words, the State Highway Commission was, and still is, a branch of the State Highway Department of the state of Oregon.⁶ Of interest, and probably of significance, is the fact that the legislature in the 1917 legislation distinguished between the powers and duties of the Commission and the duties of the Highway Engineer.⁷ Section 8 of that legislation required that all contracts executed for the improvement of state highways should be in the name of the State of Oregon and executed by the Commission. The power of condemnation was in the state, acting by and through the Commission, as was the right to acquire rights-of-way by donation, purchase or agreement.⁸ At that time the funds of the Commission were obtained by a state levy on all property in the state equaling one-fourth mill for each dollar of taxable property within a specific county, the highway tax to be collected by the county and transmitted to the State Treasurer, the said money so collected to constitute and to be kept in a fund known as the State Highway Fund.⁹ In the same year, the Oregon legislature authorized the State Highway Commission to sell general obligation bonds of the state of Oregon to raise revenue for the construction of hard surfaced highways and certain post and forest roads in the state and to use said funds in connection with the expenditure of federal funds to be provided for the same purpose.¹⁰ By section 13 of that legislation, the Highway Commission was authorized to enter into contracts for the purpose of constructing the roads mentioned in the act. This particular legislation was referred to and adopted by the people of the state of Oregon at an election held on the 4th day of June, 1917. From time to time, over the course of the years, the legislation touching on the powers, duties and authorities of the Highway Commission was amended. However, to this date, the Highway Commission is but a part of the Highway Department of the state of Oregon. Although the delegated powers and imposed duties of the Department¹¹ are varied, complex and broad, it is crystal clear that the Oregon legislature never intended the Commission to be anything other than an integral part of the state government. Examples are the requirement that the Engineer, rather than the Commission, collect and compile information and statistics relative to the condition of highways and bridges, both on state and county highways, make studies to determine the best methods of road construction in the various counties and sections of the state, the establishment of a highway fund with the State Treasurer in the name of the Highway Engineer,¹² the control exercised over office hours of the Commission and the requirement that the principal office of the Commission should be in Salem¹³ and the direction to the Commission to establish, under its jurisdiction and control, a department to be...