State ex rel. Guste v. Board of Highways, 9214

• Decision Date: 28 February 1973
• Docket Number: No. 9214,9214
• Citation: 275 So.2d 207
• Parties: STATE of Louisiana ex rel. William J. GUSTE, Jr., Attorney General v. Louisiana BOARD OF HIGHWAYS et al.
• Court: Court of Appeal of Louisiana — District of US

Page 207

275 So.2d 207

STATE of Louisiana ex rel. William J. GUSTE, Jr., Attorney General v. Louisiana BOARD OF HIGHWAYS et al.

No. 9214.

Court of Appeal of Louisiana, First Circuit.

Feb. 28, 1973.

Rehearing Denied April 9, 1973.

Kendall L. Vick, New Orleans, and William J. Guste, Jr., Atty. Gen., Baton Rouge, for appellant.

Charles W. Roberts (Burton & Roberts), Baton Rouge, for appellees.

Before SARTAIN, BLANCHE, and WATSON, JJ.

BLANCHE, Judge.

This is a devolutive appeal by plaintiff, State of Louisiana ex rel. William J. Guste, Jr., Attorney General, from the judgment of the trial court maintaining the peremptory exceptions urging no cause of action and no right of action filed on behalf of defendants-exceptors, the Louisiana Board of Highways and the Louisiana Department of Highways, and dismissing plaintiff's suit as to these two defendants. We affirm.

The trial judge in Written Reasons for Judgment ably summarized the factual situation giving rise to this litigation and the legal principles supporting the judgment which he rendered, from which Written Reasons we reproduce with approval the following excerpts:

'In a suit testing the authority of the State over one of its departments, the State of Louisiana, through its Attorney General, William J. Guste, Jr., has instituted this action for a preliminary injunction and declaratory judgment against the Louisiana Board of Highways, the Department of Highways and the First National Bank of Jefferson. The State's petition asks that the Board and Department of Highways be enjoined from cashing any check or expending any of the funds representing $188,831.40 received in settlement of a claim against the First National Bank of Jefferson. The petition further alleges that the compromise or settlement made among the defendants be declared ultra vires and be set aside in view of the fact that such agreement to compromise or settle was made without the consent of the Attorney General.

'The State avers that from 1960 to 1966 the Board and Department of Highways deposited and withdrew idle state funds in the approximate amount of $23,000,000.00. The State says these idle funds were deposited in a non-interest bearing account contrary to the requirements of LSA-R.S. 39:462, with a resulting loss to the State of approximately $820,000.00 for the aforementioned period. The State further alleges that Board and Department of Highways' claim for the lost interest was compromised or settled by an agreement the latter entered into with the First National Bank of Jefferson Parish on April 27, 1972. The State through its Attorney General contends that the settlement was ultra vires since the final responsibility to settle disputes involving state agencies rests with the Attorney General pursuant to Article VII, Section 56 of the Louisiana Constitution. The settlement is also alleged to be ultra vires because the defendants knew that the Attorney General and the claim under investigation for possible criminal or civil action, but despite this fact, nevertheless entered into the disputed compromise and settlement. The petition alleges the State will suffer irreparable injury if the proceeds from the settlement are spent by the Board and Department of Highways and that it is necessary for a preliminary injunction to issue to prevent such a loss. The remaining relief sought by the State is to have the settlement entered into among the defendants annulled, recognizing the paramount interest of the State.

'The only exhibits submitted by the parties in the suit are: a copy of the compromise agreement referred to above, an authorization by the Board of Directors of the defendant bank to enter the compromise, and a copy of a letter from Mr. Guste's predecessor as Attorney General, Jack P. F. Gremillion, indicating the Attorney General's interest in delaying any settlement in the matter. The parties have stipulated that these documents are authentic and correct. They have further stipulated that the check received by the Department of Highways in connection with the settlement agreement was already deposited by the Department in its General Highway Fund prior to the filing of this particular lawsuit.

'The exception of no right and no cause of action raises the primary issue for consideration by the Court. The exceptors argue that the Board and Department of Highways is a separate and distinct entity from the State, having the power to sue and be sued similar to an independent corporation. They further argue that since the State nor the Attorney General were parties to the settlement, neither the State nor the Attorney General has any interest whatsoever in the compromise agreement. The State alleges that its interest in instituting an action for declaratory judgment is founded on LSA-Constitution Article VII, Section 56. The pertinent part of that section reads as follows:

'* * * They, or one of the (The Attorney General or his assistants), shall attend to, and have charge of All legal matters in which the State has an interest, or to which the State is a party, with power and authority to institute and prosecute or to intervene In any and all suits or other proceedings, civil or criminal, As they may deem necessary for the assertion or protection of the rights and interest of the State.' (Parenthetical explanation and emphasis supplied by the Court)

'The State argues that this section gives it power to approve or reject the compromise agreement at issue herein, particularly in view of the outgoing Attorney General's letter to the exceptors expressing the State's interest in the claim held by the exceptors. The State further argues that its interest is manifest by reason of LSA-R.S. 39:131, which requires collections of any kind made by state agencies or departments to be deposited into the State Treasury. The reasoning here is that the settlement proceeds are such collections, therefore susceptible of being characterized as state funds. Since state funds are involved, the Attorney General says the State's interest is obvious.

'The question of the State's authority, through the Attorney General, to take legal action for or against one of its own departments or political subdivisions is well documented and discussed in the jurisprudence, particularly by the Supreme Court of this State. A brief review of these cases, especially where they relate to the right of the State through the Attorney General to legally determine the course of action to be taken by a department, should prove enlightening and possibly helpful in establishing some guidelines for resolution of the issue.

'The first important case bearing on the authority of the State versus one of its duly constituted political subdivisions is a 1910 case, State v. Tensas Delta Land Co., (Sup.Ct.) ((126 La. 59) 52 So. 216. The Attorney General sued in the name of the State to annul an alleged fraudulent sale of lands belonging to the Tensas Basin Levee District to the defendant Tensas Delta Land Co., a corporation organized by the levee district commissioners under the laws of Michigan, for a nominal consideration. The Attorney General also alleged that the defendant company had fraudulently sold its purchased lands to third persons. The Court held that while the levee board was an agency or intrumentality of the State, it also had a separate existence under the Constitution and statutes of the State. The Court said that so long as these laws remained effective, The levee board must be the one to regulate its property and to assert any rights it may have, and not the Attorney General of the State. (emphasis supplied by Court) The Court concluded with the following language:

'Again, it is true that if the governing body of one of these corporations fails in its duty to bring a suit which it clearly ought to bring, the courts may (only, however, under highly exceptional circumstances) allow any citizen or taxpayer of the district to bring the suit; and, in such a case, the same privilege might for the same reason be extended to the state; but nothing of that kind is pretended in this case. There is no suggestion that the board of commissioners of the district has failed to bring suit, or is unwilling to do so. In fact, this court knows the contrary from the public prints.' State v. Tensas Delta Land Co., 52 So. 216, 221.

The court held that the Attorney General had no interest in the litigation, by further noting that the people of the levee district, the real parties in interest, were protected by the Governor's power to change the membership of the levee board.

'In a later case, State v. Standard Oil Co. (164 La. 334), 113 So. 867 (Sup.Ct.1927), the State sued Pure Oil Co. and Standard Oil Co. for the value of seven-eights of certain oil alleged to have been extracted from the dry bed of Ferry Lake in Caddo Parish. The State claimed to be owner of the land by virtue of the land's former status as the bed of a navigable body of water. The defendants had contended that the land had been placed under the control of a levee board by legislative act. The court held that the levee board had the right to sue and be sued and that it alone must assert its rights of action. The Court cited the Tensas Delta Land Co. case, supra, as authority for its position and quoted language therefrom. The controlling factor seemed to be the levee board's power to sue and be sued.

'Great emphasis is placed on the case of Saint v. Allen (172 La. 350), 134 So. 246 (Sup.Ct.1931), by the exceptors. In that case, the Highways Commission attempted to hire five attorneys as its own independent counsel. The Attorney General and the State sued to prevent the Highway Commission from so employing the attorneys, alleging that the Attorney General's office had charge of all legal matters of the State and that such employment was done without the approval of the Attorney General. The Attorney General relied heavily on LSA-Constitution Article VII,...