State ex rel. Creighton University v. Smith

• Decision Date: 22 June 1984
• Docket Number: No. 83-514,83-514
• Citation: 217 Neb. 682,353 N.W.2d 267
• Parties: , 19 Ed. Law Rep. 405 STATE of Nebraska ex rel. CREIGHTON UNIVERSITY, Appellee, v. Henry D. SMITH, M.D., Director of Health of the State of Nebraska, et al., Appellants.
• Court: Nebraska Supreme Court

Page 267

353 N.W.2d 267

217 Neb. 682, 19 Ed. Law Rep. 405

STATE of Nebraska ex rel. CREIGHTON UNIVERSITY, Appellee, v. Henry D. SMITH, M.D., Director of Health of the State of Nebraska, et al., Appellants.

No. 83-514.

Supreme Court of Nebraska.

June 22, 1984.

Syllabus by the Court

1. Legislature: Constitutional Law. A state legislature may generally pass any act, because legislative capacity not constitutionally inhibited or prohibited is retained in the people and exercised in the legislature by representatives of the people.

2. Words and Phrases. To appropriate means to set apart, or assign to a particular person or use in exclusion of others, to use or employ for a particular purpose, or in a particular case.

3. Constitutional Law: Public Purpose. Neb. Const. art. VII, § 11, does not prohibit the state from doing business or contracting with private institutions in fulfilling a governmental duty and furthering a public purpose.

4. Administrative Law: Mandamus. Departmental or administrative decisions contrary to law or based on a mistaken view of the law are not within the exercise of discretion lying outside the remedy of mandamus. By mandamus a court can correct such mistake of law and compel the proper application of law, thereby converting an otherwise discretionary act into a purely ministerial duty.

Paul L. Douglas, Atty. Gen., and Marilyn B. Hutchinson, Asst. Atty. Gen., Lincoln, for appellants.

Thomas R. Brown of Fitzgerald, Brown, Leahy, Strom, Schorr & Barmettler, Omaha, for appellee.

KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ.

SHANAHAN, Justice.

Creighton University (Creighton) sought a writ of mandamus compelling Dr. Henry D. Smith, Director of Health of the State of Nebraska (director), to receive and consider Creighton's "Contract Proposal" for cancer research to be conducted by Creighton. The Attorney General of the State of Nebraska (Attorney General) was a party to the suit because Nebraska law (Neb.Rev.Stat. § 84-905.01 (Reissue 1981)) requires the Attorney General to review rules and regulations of state agencies with respect to authority for and constitutionality of an agency's rules and regulations. The director and Attorney General (respondents) appeal the judgment of the district court for Lancaster County granting the requested writ of mandamus. We affirm.

As a university and a Nebraska nonprofit corporation, Creighton includes a college of medicine located in Nebraska. Before the Nebraska Legislature passed the statutes in question, Creighton's college of medicine was engaged in cancer research.

In 1981 the Nebraska Legislature enacted L.B. 506, Neb.Rev.Stat. §§ 81-637 through 81-640 (Reissue 1981) (act), authorizing grants and contracts for research of cancer and smoking diseases. L.B. 506 specified certain considerations of the director in making grants and contracts for the research of cancer and smoking diseases (§ 81-639), and required the director to adopt and promulgate rules and regulations governing an application for a grant or contract and providing criteria for acceptable programs of research.

When L.B. 506 was enacted, article VII, § 11, of the Nebraska Constitution did, and still does, provide in part: "Notwithstanding any other provision in the Constitution, appropriation of public funds shall not be made to any school or institution of learning not owned or exclusively controlled by the state or a political subdivision thereof ...."

After the Legislature passed the act the director sent to the Attorney General "RULES AND REGULATIONS GOVERNING GRANTS AND CONTRACTS FOR RESEARCH OF CANCER OR SMOKING DISEASE OR BOTH" for review pursuant to § 84-905.01. The rules and regulations submitted by the director contained provisions in part as follows:

CONTRACTS FOR RESEARCH

....

007.01F Contract shall mean an agreement between the Department and the contractor in which in return for consideration of funding, the contractor shall carry out a specified project or program in a specified manner.

....

007.01H Contractor shall mean the University of Nebraska or any other postsecondary institution having a college of medicine located in the State of Nebraska.

....

011.01 .... Any contract funds awarded shall be expended solely for the purposes for which the funds were awarded in accordance with the approved contract proposal or application and budget, these Regulations, and the terms and conditions of the contract award.

....

012.01 .... Contract funds may be utilized for the payment of the salaries of personnel participating in the contract project, but not for the payment of overhead. The Director may require that a time and effort report or reports be submitted by a contractor. Contract funds shall be subject to audit by the Department at the discretion of the Director.

In a written opinion dated December 4, 1981, the Attorney General disapproved the rules and regulations submitted by the director. In that opinion the Attorney General required that the application forms "ask whether the postsecondary institution having a college of medicine located in Nebraska is public or nonpublic," and referred to article VII, § 11, of the Nebraska Constitution.

A second draft of rules and regulations was submitted by the director to the Attorney General. This second draft included certain revisions, namely: "007.01H Contractor shall mean the University of Nebraska or any other public postsecondary institution having a college of medicine located in the State of Nebraksa." (Emphasis supplied.)

In response to the director's second draft of rules and regulations, the Attorney General, in a written opinion dated January 7, 1982, stated that certain "changes should be made before we can approve" the director's second draft. Among the required changes was a specific "criterion" in a contract proposal or application--"that the applicant is the University of Nebraska or any other public postsecondary institution" with a medical college in Nebraska. The changes required by the Attorney General were made in the draft of rules and regulations finally adopted and promulgated by the director. On March 22, 1982, the Department of Health issued a "NOTICE OF EFFECTIVE RULES AND REGULATIONS RE GRANTS AND CONTRACTS FOR RESEARCH OF CANCER OR SMOKING DISEASE OR BOTH " which included the statement: "During the course of the review and approval process it was determined by the Attorney General that contracts for research can be awarded only to the University of Nebraska or any other public postsecondary institution having a college of medicine located in the State of Nebraska."

On September 28, 1982, Creighton sent its contract proposal entitled "Breast Cancer Genetics in Nebraska." In his letter of November 18, 1982, the director notified Creighton that he was unable to "file and process" the contract proposal submitted by Creighton

since it has been determined by the Attorney General that, pursuant to the provisions of Article VII, [§ 11], of the Nebraska Constitution, a contract for cancer or smoking disease research cannot be made by the State of Nebraska with any school or institution of learning not owned or exclusively controlled by the State of Nebraska or a political subdivision thereof.

The director returned Creighton's contract proposal and enclosed a copy of the Attorney General's opinions dated December 4, 1981, and January 7, 1982.

Creighton filed its petition for a writ of mandamus. In answer to Creighton's petition, the respondents, among other matters, alleged that the Nebraska Constitution prohibits appropriation of state funds to private institutions and therefore, insofar as L.B. 506 would permit appropriation of state funds to private institutions, L.B. 506 was unconstitutional.

At the hearing regarding the mandamus there was testimony that Creighton had several people on its staff to do cancer research under the supervision of a physician whose "subspeciality in cancer research [was] in the genetics of cancer familial relationships." If the state awards a contract for cancer research, Creighton will supply additional and expanded cancer research "into the actual individual people in the State of Nebraska" regarding the incidence of breast cancer and "targeting familial or family relationships in breast cancer among people in the State of Nebraska." Creighton's cancer research would be focused on people in Nebraska.

After the hearing the district court issued a writ of mandamus which required (1) the director to "promulgate rules and regulations which will permit private postsecondary educational institutions having a college of medicine [in Nebraska] to qualify for contracts" described in the act; (2) the Attorney General "to consider L.B. 506, 1981 legislative session, constitutional insofar as it applies to private institutions designated" in the act; and (3) the Attorney General "not to reject any rules and regulations of the State Health Department [under the act] on the grounds" that the act violates article VII, § 11, of the Nebraska Constitution.

The question on appeal is whether article VII, § 11, of the Nebraska Constitution prohibits the state from contracting with a private university regarding research of cancer in the university's college of medicine. Because the answer to that question turns on construction of the Nebraska Constitution, it is necessary to review the function of a state constitution.

Initially, the people have all legislative power. Unlike the federal Constitution, a state constitution is not a grant of power but a limitation of power. The widely accepted doctrine is that a state legislature may generally pass any act, because legislative capacity not constitutionally inhibited or prohibited is retained in the people and exercised in the legislature by representatives of the people. See, State ex rel. Meyer v. County of Lancaster, 173 Neb. 195, 113 N.W.2d 63 (1962); Earhart v. Frohmiller, 65...