Department of Highways of La. v. Morse Bros. & Assoc., 14542.

• Decision Date: 12 March 1954
• Docket Number: No. 14542.,14542.
• Citation: 211 F.2d 140
• Parties: DEPARTMENT OF HIGHWAYS OF LOUISIANA v. MORSE BROS. & ASSOCIATES, Inc.
• Court: U.S. Court of Appeals — Fifth Circuit

211 F.2d 140 (1954)

DEPARTMENT OF HIGHWAYS OF LOUISIANA v. MORSE BROS. & ASSOCIATES, Inc.

No. 14542.

United States Court of Appeals, Fifth Circuit.

March 12, 1954.

L. C. Parker, Joseph A. Loret, W. Crosby Pegues, Jr., D. Ross Banister, Philip K. Jones, Baton Rouge, La., for appellant.

John B. Hussey, Hussey & Smith, Shreveport, La., Harold A. Wright, Minneapolis, Minn., for appellee.

Before BORAH and RUSSELL, Circuit Judges, and DAWKINS, District Judge.

DAWKINS, District Judge.

Appellee sued for damages alleged to have been caused by the breach of a contract for the performance of certain highway work through failure of appellant to make available the land or property upon which it was to be done.

The first question to be determined is whether or not the appellant is an entity, corporate or otherwise, constituting it a citizen subject to suit by a non-resident in the Federal Courts. In the original complaint, appellee alleged:

"Defendant, Department of Highways of the State of Louisiana, is a body corporate or politic in law, existing under and by virtue of the constitution and laws of the State of Louisiana, with its domicile in the Parish of East Baton Rouge, Louisiana."

In its answer defendant, appellant, admitted "the allegations of Article 2 * * * of the complaint". However, if it be correct in the present contention, this erroneous admission of an allegation of law can not serve to vest a Federal Court with jurisdiction which legally it did not have. So an examination of the pertinent constitutional and statutory provisions of the State, as construed by its courts, becomes necessary.

Counsel for appellant argues that the act creating the Department of Highways, as distinguished from its predecessor, the Highway Commission, was changed to conform to the law governing the Board of Commissioners of the Port of New Orleans, by omitting the express declaration that the department should be a body corporate.

In the statute creating the Department of Highways, Act. No. 4 of 1942, Section 8, LSA-R.S. 48:22, it was provided:

"The Department of Highways shall have and enjoy all of the rights, powers and immunities incident to corporations; and shall have power to acquire, own, administer, alienate and otherwise dispose of all kinds of property, movable and immovable, tangible and intangible, to contract, to adopt, make, alter, have or destroy an official seal; to sue and be sued, implead and be impleaded in any competent court of justice, subject to all applicable laws relative to jurisdiction."

Section 3 of the same Act, LSA-R.S. 48:12, declares:

"The domicile of the Department of Highways shall be in the City of Baton Rouge, Parish of East Baton Rouge, State of Louisiana. Service of citation and other process directed to the Department of Highways shall be made on the Department by handling such citation or other process to the Director of Highways or to the Chief Engineer." (Emphasis by the writer.)

With respect to the Board of Commissioners of the Port of New Orleans, Act No. 70 of 1896, LSA-R.S. 34:1, establishing a "commission for the port of New Orleans", in Section 2, LSA-R.S. 34:21, among other things, declared that said Board "* * * shall have and enjoy all the rights, powers and immunities incident to corporations." Act No. 36 of 1900 amended Section 2 and, in turn, was amended by Act No. 14 of the Special Session of the Legislature of 1915. The language quoted as first incorporated in the law creating the Board of Port Commissioners for the City of New Orleans (hereafter referred to as the Dock Board), has never been changed.

Appellant cites three decisions of the Supreme Court holding that the Dock Board was not a corporation, to wit, Duffy v. City of New Orleans, 49 La.Ann. 114, 21 So. 179; State ex rel. Tallant v. Board of Commissioners of Port of New Orleans, 161 La. 361, 108 So. 770; and Miller v. Board of Commissioners of Port of New Orleans, 199 La. 1071, 7 So.2d 355. In the first of these cases, plaintiff sued the City of New Orleans, attacking Act 70 of 1896 as unconstitutional and void. Judge Breaux, as the organ of the court, said 49 La.Ann. 114, 21 So. 180 "Whether the legislature can pass a valid act to establish a commission for the port of New Orleans, define their powers and duties, and provide revenue therefor, is the question before us. The first ground of nullity urged is that the act creates a corporation" in violation of Article 46 of the then constitution "prohibiting the general assembly from passing any local or special law creating corporations." It was decided that the statute creating the board and vesting in it certain powers, was not a local law, for the reason that the subject matter dealt with was one affecting the whole state, to wit, the commerce of the port of New Orleans. Judge Breaux's peculiar style is such that no direct quotation from the body of the decision can be used to state concretely his finding, except in the syllabus No. 1, which reads:

"Legislation resulting in the appointment of a board of commissioners, with functions defined, does not necessarily create a corporation, though vested with some of the essentials to the life of a corporation."

In State ex rel. Tallant v. Board of Commissioners of Port of New Orleans, the plaintiff was an employee, receiving a salary of $241 per month, who was removed from that position and given another with a salary of only $150. He brought suit by way of mandamus to be reinstated, and to recover the difference in salary which he would have received. The Supreme Court quoted from the opinion of the District Judge, which begins with a discussion of the Act of 1915 above referred to. In connection therewith reference was made to another statute, Act No. 15 of 1915 (Ex.Sess.), creating an "examining board" with authority to establish rules and regulations, but it was said "* * * the crux of this whole case is embodied in the last sentence of section 5 (presumably the act creating the examining board) which reads as follows:

"`They (employees and appointees under civil service) shall hold their offices or employment during good behavior, and shall only be removed on charges preferred against them to said board of commissioners, and which shall be proven contradictory against them to the satisfaction of said board.\'" 161 La. 361, 108 So. 772.

Incidentally, the court's finding was of considerable length and somewhat involved, and its conclusion is tersely stated in the first syllabus, to wit,

"Board of commissioners of the port of New Orleans, created by Act No. 70 of 1896, is not a corporation, but a `state agency,\' administering public property to advance prosperity of the port."

In Miller v. Board of Commissioners of Port of New Orleans 199 La. 1071, 7 So.2d 356, the action was one in tort, by an employee of the lessee of one of the wharves on the river front. The Supreme Court held that the board was "an agency of the State, performing purely administrative functions", citing State ex rel. Tallant v. Board of Commissioners of Port of New Orleans, supra. It was further stated: "From an examination of the Constitution and the Acts of the legislature dealing with the Dock Board, it is apparent that the right to sue the Dock Board in tort has not been granted." The court then refers to and analyzes the two prior cases referred to above. It answered the contention that a state agency is liable in tort, even though it is engaged in a governmental function, if the injury arises from the failure or neglect to perform a mandatory (as distinguished from a discretionary) duty; (2) that such an agency was liable because the activities out of which the injury arose were for profit; and (3) a state agency is liable in tort, if the injury arises through the agency performing a non-governmental or proprietary function, by saying

"The authorities cited by counsel involve municipalities and corporations authorized by charter or by statute `to sue or to be sued.\'" (Emphasis by the writer.)

It was stated in argument by one of the attorneys for appellant that in the act changing the name to Department of Highways in 1942, the declaration that the Highway Department should be a corporation, was purposely omitted, to make applicable the decisions affecting the Dock Board. However, there was no lessening whatever of its powers and authority. It is still authorized to sue and be sued as was held in the case of Department of Highways v. Lykes Bros. S. S. Co., Inc., 209 La. 381, 24 So.2d 623, as disclosed by the first syllabus, as follows:

"Though Department of Highways is not a `corporation\' in the true sense of statute creating it, it was given the same rights as a corporation and therefore, for purposes of suit by department to recover for damages to bridge maintained by department of highway system as result of collision with bridge by ship, rules applicable to corporations are applicable thereto. Act No. 4 of 1942, § 8."

On the other hand the courts of the state, as have the Federal Courts, following the construction placed upon its laws by the former, have held, as to the highway commission, predecessor of appellant, that it was an entity or juridical personage or corporation expressly authorized to sue and be sued, and in fact, the only one entitled to stand in judgment with respect to its powers and the properties under its control. Saint v. Allen, 172 La. 350, 134 So. 246; Farnsworth v. Louisiana Highway Commission, D.C. 1934, 8 F.Supp. 11, affirmed in, 5 Cir., 74 F.2d 910. In Saint v. Allen, supra 172 La. 350, 134 So. 249, the Louisiana Supreme Court said:

"The commission, in our opinion, is a distinct legal entity from the state. Section 3 of Act No. 95 of 1921 (Ex.Sess.) LSA-R.S. 48:22 makes it a body corporate, with power as such to sue and be sued. It is an agency of the state, and not the state itself, created for the purpose of executing certain duties, devolving primarily upon the state. In a general

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