Harrison v. Wyoming Liquor Commission, 2347

• Citation: 177 P.2d 397,63 Wyo. 13
• Decision Date: 11 February 1947
• Docket Number: 2347
• Parties: M. C. HARRISON and AVANELLE D. HARRISON, doing business as THE HARRISON COMPANY, Plaintiffs and Appellants, v. WYOMING LIQUOR COMMISSION, Defendant and Respondent
• Court: United States State Supreme Court of Wyoming

177 P.2d 397

63 Wyo. 13

M. C. HARRISON and AVANELLE D. HARRISON, doing business as THE HARRISON COMPANY, Plaintiffs and Appellants, v. WYOMING LIQUOR COMMISSION, Defendant and Respondent

No. 2347

Supreme Court of Wyoming

February 11, 1947

APPEAL from District Court, Laramie County; SAM M. THOMPSON, Judge.

Suit by M. C. Harrison and Avanelle D. Harrison, doing business as the Harrison Company, against the Wyoming Liquor Commission to recover damages for alleged breach of contract. From a judgment dismissing the plaintiff's petition, the plaintiffs appeal.

Judgment affirmed.

For the Plaintiffs and Appellants, the cause was submitted upon the brief and also oral argument of A. Joseph Williams and Carleton A. Lathrop, both of Cheyenne, Wyoming.

POINTS OF COUNSEL FOR APPELLANTS

The Wyoming Liquor Commission is subject to suit for the reason that it produces revenue under express legislative command and is therefore performing a non-governmental function. Chapter 87, S. L. of Wyo. 1935; Chapter 117, S. L. of Wyo 1935.

The act creating the Wyoming Liquor Commission has as one of its purposes the regulation and control of liquor and it is in part a police power measure. But the act also has as one of its principal purposes the creating of revenue and the revenue created is not a mere incident of the police power exercised by the State of Wyoming.

The 1939 amendments to the original act made the law applicable to "all earnings" rather than to "all monies" collected. This is a significant modification for it reveals that the legislature was making more clear its intention that the Commission was to remit to the State Treasury "earnings" in the sense and to the extent only that they were net profits.

The Commission is empowered to "purchase such intoxicating liquor in such quantities and from such sources as it may deem desirable". In buying intoxicating liquors, the Commission is engaged in not only a governmental function but also in a proprietary function.

The purpose for which a governmental corporation is created or the function which it is designed to fullfil is generally regarded as of importance in determining whether such a corporation is subject to suit. For example, where a state creates or organizes a corporation and operates the same for a commercial purpose, it is ordinarily held subject to suit the same as any private corporation organized for the same purpose. 49 A. J., States, Territories and Dependencies, Sec 101.

Suits against state agencies with relation to matters in which they have assumed to act in a private or non-governmental capacity, and various suits against certain corporations created by the state for public purposes, but to engage in matters partaking more of the nature of ordinary business rather than functions of a governmental or political character, are not regarded as suits against the state. 59 C J. States, Sec. 467.

Instrumentalities means and operations whereby the states exert the governmental powers belonging to them are exempt from taxation by the United States, but by the very terms of the rule, the immunity of the states from federal taxation is limited to those agencies which are of a governmental character. Whenever a state engages in a business of a private nature, it exercises non-governmental functions, and the business, though conducted by the state, is not immune from the exercise of the power of taxation which the Constitution vests in the Congress. Ohio v. Helvering, 292 U.S. 371, 78 L.Ed. 1311.

Police power applied to business activities is the power to regulate those activities, not to engage in carrying them on. This distinction is the essence of the instant case.

The Legislature contemplated that there might be profits or losses "and that these profits" would be a mere incident of the business engaged in, or a natural result from good business management. Equitable Loan & Security Co. v. Town of Edwardsville, 143 Ala. 182, 38 So. 1016.

The contract was breached by the Commission not in pursuance of the police power, but rather in pursuance of the legislative command to conduct the wholesale liquor business at a specified minimum profit.

The Wyoming Liquor Commission is subject to suit for the reason that it is a quasi corporation.

Besides corporations proper there are some associations and government or political institutions or officers which are not corporations in the full sense, but which are invested by law with some of the attributes of a corporation, as the capacity to sue or to be sued as a corporate body, to have a continued existence unaffected by death or disability of members, or to make particular contracts or hold particular property or rights as a corporate body. 14 C. J. 78.

If the commission has sufficient entity to sue, it can also be sued. Where the state creates a commission or other agency and authorizes it to conduct ordinary business ventures, it is immaterial whether the state expressly provides that it may be sued for such liability arises from the business it is authorized to conduct. Standard Oil Company v. United States, 25 F.2d 480.

The rule is well settled that the state cannot be sued, and that the same protection is extended to the officers of the state. But this rule does not apply to a corporation created by the state for certain public purposes. Gross v. Kentucky Board of Managers of Columbian Exposition, 43 L. R. A. 708.

When the sovereign engaged in business and the conduct of business enterprises and contracts with individuals, whenever the contract in any form comes before the courts the rights and obligations of the contracting parties must be adjusted upon the same principle as if both contracting parties were private persons. Both stand upon equality before the law, and the sovereign is merged in the dealer, contractor, and suitor. Meyer v. State Land Settlement Board, 278 P. 452.

The Wyoming Legislature has consented that the Wyoming Liquor Commission be subject to suit.

It created a wholesaler dealer in liquors, giving it the power to buy and sell such liquors in such amounts and from such sources as the Commission desired, and imposed a legislative command to produce revenue from the operations of the liquor business. Thus the Commission was given the power to enter into contracts.

That any officer, board, or commission of the State of Wyoming, having under his or its charge or control, the enforcement of any contract, lease, or other instrument in writing of any character existing between the State of Wyoming and any person, persons, association, partnership, corporation, or other body for the enforcement of which said contract and the performance of the terms thereof, such officer, board or commission is responsible is hereby granted the power and authority to bring an action upon any such contract in the name of the State of Wyoming for the recovery of damages which may accrue to the State of Wyoming. Chapter 77, S. L. of Wyo. 1935.

For the Defendant and Respondent, the cause was submitted upon the brief of Louis J. O'Marr, Attorney General, Hal E. Morris, Deputy Attorney General, and Frank M. Gallivan, Assistant Attorney General, all of Cheyenne, Wyoming, and oral argument of Mr. O'Marr and Mr. Gallivan.

POINTS OF COUNSEL FOR RESPONDENT

A party, in order to be capable of being sued, must have an entity which the court can recognize, either as a natural or artificial person, or a quasi-artificial person. The capacity to be sued exists only in persons in being. 47 C. J. 66; 39 A. J. 852, 881.

Nelson v. Atlantic Line Railroad Co., Relief Department, 60 S.E. 724; Elsinger v. Harden, 124 S.E. 169; Stinson v. King, 83 S.E. 2d. 398; State Highway Commission v. Utah Construction Company, 278 U.S. 272, 73 L.Ed. 262.

The commission is but the arm or alter ego of the state with no funds or ability to respond in damages.

Consolidated Indemnity and Insurance Co. v. Texas Co., 140 So. 566; New Jersey Health Bd. v. Phillipsburg, 85 N. J. Eq. 161, 163, 96 A. 62; Arkansas State Highway Commission v. Nelson Bros., 87 S.W.2d 394.

There is no statute or law authorizing suit against the Wyoming Liquor Commission.

This state has never given its consent that it or the Commission might be sued for a tort. Price v. State Highway Commission, 62 Wyo. --, 167 P. 2d. 309.

The Wyoming Liquor Commission is a governmental arm of the State of Wyoming and is immune from suit.

If the rights of the state would be directly and adversely affected by the judgment or decree sought, the state is a necessary party defendant, and if it cannot be made a party, that is, if it has not consented to be sued, the suit is not maintainable. 49 A. J. 304.

It has been held that for the purpose of jurisdiction there is no distinction between suits against the government directly, and suits against its property. A suit against a department of the state government or a board or corporation created by the state for governmental purposes is a suit against the state, and cannot be maintained without its consent, but such a suit may be maintained when authorized by statute, as where the statute creating the corporation provides that it may sue and be sued. Whether a state should consent to be sued, so as to put itself on an equality with a citizen, is not a matter for the courts, but for the legislature. Hjorth v. Trustees of University, 30 Wyo. 309, 222 P. 9; 59 C. J. 313.

Revenue derived from the control of the liquor traffic is incidental to that control and fails to make the functions of the State or its Commission proprietary because of, or in pursuance of revenue. The power to control the traffic in alcoholic liquors is so fundamentally a governmental power that the courts have been unanimous in holding that any...