Powell v. Board of Educ. of Harrodsburg

• Decision Date: 27 December 1991
• Docket Number: No. 90-CA-2133-S,90-CA-2133-S
• Citation: 829 S.W.2d 940
• Parties: 75 Ed. Law Rep. 603 Marilyn K. POWELL, Appellant, v. BOARD OF EDUCATION OF HARRODSBURG, Kentucky, and Clinton D. Kirk, in His Official Capacity as Superintendent of the Harrodsburg Schools, Appellees.
• Court: Kentucky Court of Appeals

Page 940

829 S.W.2d 940

75 Ed. Law Rep. 603

Marilyn K. POWELL, Appellant, v. BOARD OF EDUCATION OF HARRODSBURG, Kentucky, and Clinton D Kirk, in His Official Capacity as Superintendent of the Harrodsburg Schools, Appellees.

No. 90-CA-2133-S.

Court of Appeals of Kentucky.

Dec. 27, 1991.

Discretionary Review Denied

by Supreme Court June 17, 1992.

Arthur L. Brooks, Brooks, Coffman & Fitzpatrick, Lexington, for appellant.

James W. Barnett, Robert L. Chenoweth, Bryan, Fogle & Chenoweth, Frankfort, for appellees.

Before DYCHE, EMBERTON and HOWERTON, JJ.

HOWERTON, Judge.

Marilyn K. Powell appeals the denial of prejudgment interest on an award of back pay and retirement contribution. Because there is no specific statute or contractual obligation providing for the payment of prejudgment or post-judgment interest, we affirm.

By previous appeal, Board of Education of Harrodsburg v. Powell, Ky.App., 792 S.W.2d 376 (1990), this Court affirmed the trial court's ruling that Powell is entitled to tenure in the school system and reversed the trial court's denial of full-time salary for school years 1987-88 and 1988-89. This Court also determined that Powell was due contributions to the Kentucky Teachers Retirement System for 1987-88 and 1988-89. The only issue in this appeal is whether the trial court erred in denying Powell prejudgment interest on the salary and retirement contribution awards.

At common law, interest was not allowed on judgments, but now it is generally provided by statute. 45 Am.Jur.2d Interest and Usury Sec. 59 (1969) [hereinafter "45 Am.Jur.2d Interest " ]. KRS 360.040 provides that "[a] judgment shall bear twelve percent (12%) interest compounded annually from its date." However, such a statute does not generally include judgments against state agencies, 45 Am.Jur.2d Interest Sec. 60, of which a board of education is one. Clevinger v. Board of Education of Pike County, Ky., 789 S.W.2d 5, 10 (1990).

It is a well-settled principle that neither a state nor public agency is liable for interest on public debts unless there is statutory authority or a contractual provision authorizing the payment of interest. Commonwealth, Dept. of Transportation v. Lamb, Ky., 549 S.W.2d 504, 507 (1976), (citing Bankers Bond Co. v. Buckingham, Commonwealth Treasurer, 265 Ky. 712, 718, 97 S.W.2d 596 (1936)). Although Bankers Bond has been criticized by Humphreys v. J.B. Michael & Company, Ky., 341 S.W.2d 229, 235-36 (1960), this latter case has been expressly overruled by Foley Construction Company v. Ward, Ky., 375 S.W.2d 392, 396 (1963). In Humphreys, suit was permitted against a state agency when it entered into a contract for highway construction. The court held that when the state agency is authorized to enter into such contracts, "it is divested, to that extent, of the attributes of sovereignty and invested with the attributes of a private person." Humphreys, 341 S.W.2d at 236. That decision reversed a denial of interest on an amount overdue on the contract. In Ward, the court criticized as unsound those cases which have permitted the state to be sued on a contract or for damages without express legislative authority. Ward, 375 S.W.2d at 396. Authority for this view comes from Sec. 231 of our Kentucky Constitution which reads, "The General Assembly may, by law, direct in what manner and in what courts suits may be brought against the Commonwealth."

Merely because a state agency has waived its sovereign immunity for purpose of suit, it does not necessarily follow that the agency has also waived its immunity from liability for payment of interest in such suit. The fact that KRS 160.160 makes a board of education a body politic and subject to suit, does not divest the board of immunity regarding interest, absent a statutory provision. Since a state can be sued only with its consent, a statute waiving immunity must be strictly construed and cannot be read to encompass the allowance of interest unless so specified. See generally Brown v. State Highway Commission, 206 Kan. 49, 476 P.2d 233, 234 (1970); Annot., 24 ALR 2d 928 (1952). Furthermore, we do not believe that the general interest on judgment statute (KRS 360.040) applies to state agencies without an explicit declaration by the legislature or contract provisions expressly so stating. Cases which Powell cites for the premise that interest runs on a liquidated claim as a matter of right are suits against private parties as opposed to a state agency.

While there are cases to the contrary, see Citizens...