University of Maryland v. Maas

• Court: Maryland Supreme Court
• Citation: University of Maryland v. Maas, 173 Md. 554, 197 A. 123 (Md. 1938)
• Decision Date: 03 February 1938
• Docket Number: 68.
• Parties: UNIVERSITY OF MARYLAND v. MAAS et al.

197 A. 123

173 Md. 554

UNIVERSITY OF MARYLAND v. MAAS et al.

No. 68.

Court of Appeals of Maryland

February 3, 1938

Appeal from Superior Court of Baltimore City; Duke Bond, Judge.

Action by F. Leonard Maas and another, copartners, trading as the Maas Construction Company, against the University of Maryland for damages for breach of contract. From a judgment for plaintiffs, defendant appeals.

Judgment reversed without a new trial.

URNER PARKE, and JOHNSON, JJ., dissenting.

Contractors could not recover from state university for breach of contract to construct dormitory on ground that legislature had made appropriation for construction to be paid out of federal and state funds in hand and that there was money available to pay contractors' claim, where dormitory had been completed, university had no money of its own with which to make payments or pay a judgment, and contractors offered no evidence to substantiate their contentions, since money was impressed with a trust for public use, and it could be inferred that it had been expended for constructing dormitory. Laws 1812, c. 159; Laws 1922, cc. 29, 500. Hilary W. Gans, Deputy Atty. Gen. (Herbert R O'Conor, Atty. Gen., on the brief), for appellant.

Eugene Frederick, of Baltimore (Robert R. Carman, of Baltimore, on the brief), for appellees.

Argued before BOND, C.J., and URNER, OFFUTT, PARKE, SLOAN, MITCHELL SHEHAN, and JOHNSON, JJ.

SHEHAN Judge.

The Maas Construction Company sued the University of Maryland in the superior court for Baltimore City and recovered a judgment for $11,000 damages for breach of contract, from which the defendant appealed. The questions here presented for review of this court arise on the ruling on a demurrer to a second amended declaration and brings into question the immunity of this university from suit by reason of its status as a governmental agency of the state, and also a question on the ruling on a prayer relating to an alleged breach of contract by the appellees, which, by their own wrong, it is claimed, precluded a recovery. The prayer was rejected on the theory that the plaintiff had not violated the terms of the contract by ceasing work in the construction of a dormitory as provided in the contract. The University of Maryland urged upon the lower court, as it does here, that because of the relationship it bears to the state, it was entitled to immunity from suits of this character; and, further, that all of its funds being appropriated by law for the purposes of such agency are, therefore, charged with the public trust and is restricted in its expenditures to legislative appropriations and to those purposes expressly designated by law, and without any inherent authority to raise money for the payment of claims against it.

The questions before us are: First, is the University of Maryland, as a governmental agency, protected and immune from suits for damages unless legislative authority has been given to sue it, and has such authority been given; second, does it possess funds with which to pay the judgment if recovered against it, and if not, does this suit fail for that reason; and, third, did the construction company abandon the work under the contract without legal justification or excuse? We will consider these questions in the order named, first reviewing briefly the facts.

The contract in question provided for the construction of a dormitory for the University of Maryland. Under its terms, the construction company was entitled to receive ninety per cent of the value of the work done up to the first day of the month, less the sum of such payments previously made, and this payment was to be made on or about the tenth day of the succeeding month. The architect was required to certify, on or before the tenth day of each month, the amount of the work completed. Upon the failure of the University of Maryland to pay the construction company within seven days after the certificate was issued, the appellee had the right, upon seven days' written notice by them to the University of Maryland, to stop work and terminate the contract and to recover from the University payment 'for all work executed and any loss sustained upon any plant or materials and reasonable profits and damages.'

In May, 1934, the work was commenced. A certificate, under the provisions of said contract, was issued on the 9th day of July, for $10,101.91, representing 90 per cent. of the work actually done. The construction company, on the 11th day of July, demanded of the University of Maryland the payment of this sum and notified it unless the payment was made in accordance with the amount certified by the architect, pursuant to the terms of the contract, on or before seven days from the date of receiving the letter, they would stop work and terminate the contract.

The first difficulty between the parties grew out of a notice to the appellant, from the National Casualty Company, surety on the construction company's bond, requesting the University to withhold payments pending arrangements or assurances whereby the money paid would be used to pay subcontractors. Dr. H. C. Byrd notified the appellees of this request from the surety company, and suggested that they communicate with the surety company and endeavor to reach an agreement with respect to the application of payments, and on July 17th, consent was had from the surety company that the University pay the amounts certified by the architect. On the 18th of July, the foreman of the company was advised that the money would be available for the payment at any time. This information was given to the foreman because neither of the appellees could be found. On July 20th, counsel of the appellees was advised that the surety company had withdrawn its objection and that the money would be paid as soon as the check could be cleared through the comptroller's office, but on the next day, the 21st of July, the construction company wrote the Regents of the University as follows: 'You are hereby advised that all work on said contract is being terminated as of this date, the equipment removed and from and after this date all materials on the job are there at your risk. Our watchman will not remain on the premises after tonight.' With this exchange of communications and assertions of rights, work under the contract was finally terminated. The construction company brought this suit to recover damages for the breach of contract, and the demurrer raises the question first above mentioned.

It has been decided in Pearson v. Murray, 169 Md. 478, 182 A. 590, 591, that the University of Maryland is an arm or agency of the state government and chapter 500 of the Laws of 1922, and the case of University of Maryland Board of Regents v. Coale, 165 Md. 224, 167 A. 54, further establish this beyond question, as well as the character of the governmental functions of this institution of learning. The decided cases here and elsewhere recognize and affirm the principle that purely governmental agencies, because of their relation to the state, are entitled to immunity from suits as is the state itself, unless the Legislature has expressly authorized suits to be brought against it, but this authority to sue is not free from restrictions, even though they are not expressly made by the Legislature, for this court has held that suits may not be maintained unless money has been appropriated for the payment of such damages as may be awarded, or the agency itself is authorized to raise money for that purpose.

In the case of State v. Rich, 126 Md. 643, 95 A. 956, 957, Judge Urner, speaking for this court, said: 'In view of the relation which the commission thus bears to the state, it is entitled, in a case like the present, to the benefit of the state's immunity from suit, unless it has been made liable to be sued for negligence by legislative enactment.' That case further supports the conclusion that it cannot be successfully contended that the State Roads Commission can rightfully apply any of the funds in its hands to the payment of damages for personal injuries, and that it is not vested with any authority to raise money for that purpose. The powers of the commission were definitely prescribed and the application of funds was specifically provided, and these provisions effectually prevent its funds being diverted to purposes other than those specifically named.

These conclusions are supported in the case of Weddle v. School Commissioners, 94 Md. 334, 51 A. 289. In the case of Williams v. Fitzhugh, 147 Md. 384, 128 A. 137, suit was brought against the Board of Trustees of the State Normal School by one of the teachers for damages for an alleged breach of contract of employment. The right to maintain this suit was denied on the grounds that the Board of Trustees had no means of 'procuring funds beyond the...