State v. Horr
| Decision Date | 23 October 1925 |
| Docket Number | 24,960 |
| Citation | 205 N.W. 444,165 Minn. 1 |
| Parties | STATE v. R. L. HORR |
| Court | Minnesota Supreme Court |
Action in the district court for Ramsey county to recover the remainder of the price of certain timber. The case was tried before R. D. O'Brien, J., who ordered judgment in favor of defendant. Plaintiff appealed from the judgment. Affirmed.
When doctrine of estoppel applies to state and when it does not.
1. When a state acts in its prerogative of a sovereignty, the doctrine of estoppel has no application, but such doctrine does apply when the state makes itself a party to an action in its proprietary capacity.
Doctrine of estoppel applies to this action.
2. The state prosecuted such an action. The officials handling the matter assumed to make a compromise settlement. The prosecution of this action to recover the amount deducted by the compromise is not an attribute of sovereignty.
Estoppel against state asserting invalidity of compromise settlement with its officers.
3. Upon the facts stated in the opinion it is held that the state is estopped from asserting the invalidity of a compromise settlement contract, made by defendant with the attorney general and state auditor while handling the matter for the state, disposing of the litigation.
1. See Estoppel, 21 C.J. pp. 1186, 1187, § 190.
2. See Estoppel, 21 C.J. p. 1189, § 191.
3. See Estoppel, 21 C.J. pp. 1190, § 193 (Anno); 1252, § 269.
Clifford L. Hilton, Attorney General, James E. Markham, Deputy Attorney General, and Ernest C. Carman, Assistant Attorney General, for appellant.
Fryberger Fulton, Hoshour & Ziesmer, for respondent.
In October, 1912, in accordance with the laws of the state plaintiff sold to defendant certain timber which was cut and removed, prior to June 1, 1914, by his assigns. The timber was scaled by an employe of the state, and the state auditor's office rendered bills to the defendant, who paid the amount demanded. In 1917 it was claimed by the state that the report of the state's scaler was false and made with the intention of concealing from the state the true amount of timber cut. In February, 1918, the state commenced actions against the defendant and his surety to recover additional moneys for timber which it claimed was cut in excess of that for which defendant had paid. In these actions issue was joined and a bona fide dispute existed between the parties. The parties made several attempts to rescale the amount of timber that had been cut from the land involved, and at different times attempted to appoint scalers upon each side to agree upon a scale of timber that had been cut. However, the conditions on the land, owing to lapse of time, weathering of stump, removal or burning of top and also owing to several fires through the cuttings, were such that an accurate rescale of the timber could not be made.
The controversy arose out of five different timber permits. There were five actions commenced. The aggregate claim was for $25,528.87. Negotiations between the parties and their counsel toward a compromise settlement resulted in the superintendent of state timber, an employe of the state auditor, under date of December 2, 1918, writing a letter to the attorney general, as follows, to-wit:
On the following day a stipulation in each case was entered into as follows:
In 1923 the state commenced this action to collect the $11,115.57 with interest from January 5, 1917. This was the amount deducted in the compromise from the original aggregate claim. The defendant, answering, alleged the settlement and claimed that the state was estopped from prosecuting the present action.
The trial court found for the defendant and the state's alternative motion for amended findings or for a new trial was denied, and it now appeals from a judgment entered in favor of defendant.
In view of the conclusion reached, it is unnecessary for us to pass upon the authority of any of the state officials to make a compromise contract of settlement. The question presented is, do the facts estop the state from asserting the invalidity of the compromise settlement?
When a state acts in its prerogative of sovereignty, the doctrine of estoppel has no application. Examples include the exercise of police or taxation power. The state is free from its operation only when it would impair an inherent sovereign attribute. This is true only for reasons of public policy.
When the state steps into an industrial or commercial enterprise, it is subject to the same laws that govern and control individuals. If it becomes a party to a negotiable instrument, it has the rights and assumes the liabilities of an individual in a similar position. U.S. v. Bank of Metropolis, 15 Pet. 377, 392, 10 L.Ed. 774; United States v. Barker, 12 Wheat. 559, 6 L.Ed. 728; Cook v. United States, 91 U.S. 389, 398, 23 L.Ed. 237.
Does the state in this action act in its sovereign capacity or in its proprietary caspacity? It seems to us that the state, as a body politic or artificial person having the power to hold property as other persons natural or artificial, brings this action to redress an alleged wrong. If it were suing for treapass, its rights and remedies would be the same as an individual owner, and when it sues, as it does here, for the recovery of money, it asserts a pecuniary demand against a citizen of the state and the court has authority, and is under duty, to withhold relief to the state "except upon terms which do justice to the citizen or subject, as determined by the jurisprudence of the forum in like subject-matter between man and man." Walker v. U.S. (C.C.) 139 F. 409. When the state comes into a court asserting a property or pecuniary right, it occupies the position of any and every other suitor. "Its rights are precisely the same; no greater, no less." Mountain Copper Co. v. United States, 142 F. 625, 73 C.C.A. 621; Denver & R.G.R. Co. v. U.S. 241 F. 614, 154 C.C.A. 372.
If the state, by virtue of section 2 of article 8 of our Constitution and the grant of the school lands, received these lands in its sovereign capacity to hold in trust for the school fund, it does not follow that it does not act in its proprietary capacity in making contracts and conducting litigation in reference thereto. The claim that the state now acts in this suit in its sovereign capacity is without support in principle. The state holds title. It is the proprietor of these lands. It has dominion over them. It administers them. Out of this administration an alleged claim has arisen, and the state has come into court to enforce that claim. What it is required to do with the money received is not the question. The prosecution of this suit is not an attribute of sovereignty. It is an attempt to enforce a claim in which the state puts itself on the plane of the ordinary citizen who does likewise. In so doing it submits to the jurisdiction of the court as though it were an individual and in a limited measure is subject to judicial control. We hold that in the prosecution of this action the state is acting in its proprietary capacity and not in its sovereign capacity.
It is the law that, when a state makes itself a party to an action or to a contract in its proprietary capacity, it is subject to the law of estoppel. St. Paul S. & T.F.R. Co. v. First Div. St. P. & P.R. Co. 26 Minn. 31, 49 N.W. 303; State ex rel. Douglas v. School District No. 108, 85 Minn. 230,...
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