Miller v. Chou, 46755

• Citation: 257 N.W.2d 277
• Decision Date: 03 June 1977
• Docket Number: No. 46755,46755
• Parties: Jerald MILLER, on Behalf of Himself and as Parent and Guardian Ad Litem of His Natural Son, Troy Miller, and Carol Miller, Respondents, v. Shelley N. CHOU et al., Defendants, Regents of the University of Minnesota, Appellant.
• Court: Minnesota Supreme Court

Page 277

257 N.W.2d 277

Jerald MILLER, on Behalf of Himself and as Parent and Guardian Ad Litem of His Natural Son, Troy Miller and Carol Miller, Respondents, v. Shelley N. CHOU et al., Defendants Regents of the University of Minnesota, Appellant.

No. 46755.

Supreme Court of Minnesota.

June 3, 1977.

Syllabus by the Court

The "sue and be sued" clause in the University charter does not alone subject the Regents of the University of Minnesota to tort liability. Under the decision of Nieting v. Blondell, 306 Minn. 122, 235 N.W.2d 597 (1975), the Regents would have enjoyed immunity until August 1, 1976, unless the Board was engaged in a proprietary activity. We remand for a determination whether operation of the University of Minnesota Hospitals is a proprietary or governmental function.

J. H. Geraghty, Sp. Atty., and David C. Hutchinson, St. Paul, R. Joel Tierney, University Atty., Minneapolis, for appellant.

Fredrikson, Byron, Colborn, Bisbee & Hansen and Terence M. Fruth and Neil A. Weikart, Minneapolis, for respondents.

DeParcq, Anderson, Perl, Hunegs & Rudquist, Richard G. Hunegs and J. Michael Egan, Minneapolis, amicus curiae seeking affirmance.

Heard and considered by the court en banc.

KELLY, Justice.

This is an appeal from denial of a motion for summary judgment in Hennepin County District Court, which order certified the issue of the immunity of the Regents of the University of Minnesota as important and doubtful. Pursuant to Rule 103.03(i), Rules of Civil Appellate Procedure, the Regents appeal. We remand for further proceedings.

In June 1973, plaintiffs Jerald and Carol Miller were referred for the care of their newly born son to the University of Minnesota Hospitals by a doctor in St. Cloud. Troy Miller, then 1-day old, was admitted to the hospital with an enlarged head. His condition was diagnosed as hydrocephalus and he was discharged. Plaintiffs allege that Troy's enlarged skull was due instead to a cyst on the brain and that with proper diagnostic tests and care, permanent injury to Troy could have been averted.

Plaintiffs commenced this medical malpractice action in June 1975 against certain physicians and staff members of the University of Minnesota Hospitals and, via respondeat superior, the Regents of the University. They alleged that defendant physicians were negligent in diagnosing Troy's condition and in failing to provide adequate follow-up instructions after his discharge. Plaintiffs prayed for $2,045,000 in damages.

In its answer, the Regents denied that the hospital was negligent in treating Troy and affirmatively alleged that it was immune and had not consented to suit. It moved for summary judgment on the ground of sovereign immunity to actions in tort and denial of that motion engendered the questions to be resolved on this appeal:

(1) Does the Minnesota Constitution provide that the Board of Regents of the University of Minnesota has no immunity to actions in tort?

(2) Did the district court properly apply the decision in Nieting v. Blondell, 306 Minn. 122, 235 N.W.2d 597 (1975), which prospectively abrogated the sovereign immunity of the state?

(3) Is the Board of Regents engaged in a proprietary or governmental activity in operating University of Minnesota Hospitals?

The Regents of the University of Minnesota is a unique entity, being both a constitutional corporation and an agency of the state. Bailey v. University of Minnesota, 290 Minn. 359, 187 N.W.2d 702 (1971); State ex rel. University of Minnesota v. Chase, 175 Minn. 259, 220 N.W. 951 (1928). The hybrid status of the Board of Regents is intimately involved in this appeal.

Amicus curiae asserts that the Minnesota Constitution provides that the Board of Regents has no immunity to actions brought in tort. The Board of Regents was established by the territorial legislature in 1851. Laws 1851, c. 3. Section 7 of that act (also known as the University charter) provides:

"The Regents of the University and their successors in office, shall constitute a body corporate, with the name and style of the 'Regents of the University of Minnesota,' with the right as such, of suing and being sued, of contracting and being contracted with, of making and using a common seal, and altering the same at pleasure." (Italics supplied.)

Six years later, the powers of the Regents were enshrined in the state constitution:

"The location of the University of Minnesota, as established by existing laws, is hereby confirmed, and said institution is hereby declared to be the University of the State of Minnesota. All the rights, immunities, franchises and endowments heretofore granted or conferred are hereby perpetuated unto the said university; and all lands which may be granted hereafter by Congress, or other donations for said university purposes, shall vest in the institution referred to in this section." (Italics supplied.) Minn.Const.1857, art. VIII, § 4.

Minn.Const.1857, art. VIII, § 4, was renumbered in 1962 as art. VIII, § 3; and renumbered and simplified in 1974 as art. XIII, § 3. The constitution added nothing to the Regents' powers; it merely perpetuated the powers the Regents already possessed and made them of constitutional stature. See, e.g., State ex rel. University of Minnesota v. Chase, 175 Minn. 259, 266, 220 N.W. 951, 954 (1928); State ex rel. Peterson v. Quinlivan, 198 Minn. 65, 268 N.W. 858 (1936).

Amicus curiae argues that the right "of suing and being sued" granted in L.1851, c. 3, § 7, ¹ rendered the Regents amenable to tort liability. Since this right is enshrined by Minn.Const. art. XIII, § 3, the Board of Regents is asserted to be constitutionally without immunity to actions brought in tort. ² The difficulty with this argument lies in its initial premise.

Other courts have had occasion to construe "sue and be sued" clauses and a majority has found that the clause alone does not subject a governmental unit to tort liability. Some courts, frowning on the doctrine of immunity, have in recent times interpreted such a clause in a statute liberally to find a waiver of immunity. ³ Three interdependent rationales have been offered for the majority result. First, courts have distinguished between immunity from suit and immunity from tort liability. Although a "sue and be sued" clause indicates consent to suit, the clause itself does not expand a governmental unit's liability and, absent a further provision waiving tort immunity, the unit's immunity for torts is unaffected. ⁴ This result is reached even where, as here, the right of contracting and being contracted with is also granted the governmental unit. See, Shaffer v. Monongalia General Hospital, 135 W.Va. 163, 62 S.E.2d 795 (1950). Second, a "sue and be sued" clause may be construed as enabling suit to be brought against the governmental unit as a separate legal entity. See, University of Alaska v. National Aircraft Leasing, Ltd., 538 P.2d 121, 127 (Alaska 1975). At common law, an unincorporated association could neither sue nor be sued and had no legal identity apart from its members. Bloom v. American Express Co., 222 Minn. 249, 251, 252, 23 N.W.2d 570, 572, 573 (1946). Thus, the clause might be thought to express only the inherent power of a corporation to be sued "as such" (Laws 1851, c. 3, § 7) as a distinct legal entity. 6 Fletcher, Cyclopedia of Private Corporations § 2485, p. 311 (1968 Rev.ed.). See, State ex rel. Ryan v. Civil Service Commission, 278 Minn. 296, 298, 154 N.W.2d 192, 194 (1967). The third rationale was stated by the court in Overholser v. National Home for Disabled Volunteer Soldiers, 68 Ohio St. 236, 250, 67 N.E. 487, 490 (1903), in discussing whether the National Home, a Federal corporation, could be sued for a tort:

" * * * The United States has consented to be sued on its contracts, * * * but it has not yet consented to be liable for actions for torts. * * * Therefore, we are not persuaded by the argument that the power conferred upon this corporation of suing and being sued both at law and in equity, must be construed as a consent by congress that this particular governmental agency may be sued upon any cause of action, whether sounding in contract or in tort. On the contrary, we are constrained * * * to regard this as imposing the power and liability to sue and be sued in respect to such matters only as are within the scope of the other corporate powers of the defendant. The National Home for Disabled Soldiers was not given the right to commit wrongs upon individuals. It was not contemplated that it would do so. It was created and is perpetuated by the federal government for a very different purpose. Hence, it cannot be inferred that congress meant to impose a liability upon this corporation so unusual, so different from its general policy and so different from the liabilities imposed on other public agencies." (Italics supplied.)

This court has accepted the first rationale in an analogous situation. In Bank v. Brainerd School District, 49 Minn. 106, 51 N.W. 814 (1892), a child suffered a fractured leg by tripping over stumps in a school playground. A statute then provided in part: "An action may be brought against (trustees of a school district) in their official capacity, either upon a contract made by such officers in their official capacity, and within the scope of their authority, or for an injury to the rights of the plaintiff, arising from some act or omission of such officers or of the district." (Italics supplied.) G.S. 1878, c. 36, § 117. The court reasoned that at common law a school district would not be liable for negligence in failing to keep its property in repair and that the statute was not intended to change this result:

" * * * We doubt * * * if the legislature intended by this section to render school districts liable in actions for personal injuries for mere neglect to repair. * * * (By the statute) an action may be brought against (the trustees) upon a contract made with them in their official...