Utah Const. Co. v. State Highway Commission

• Decision Date: 04 December 1926
• Docket Number: No. 1547.,1547.
• Citation: 16 F.2d 322
• Parties: UTAH CONST. CO. v. STATE HIGHWAY COMMISSION OF WYOMING.
• Court: U.S. District Court — District of Wyoming

16 F.2d 322 (1926)

UTAH CONST. CO. v. STATE HIGHWAY COMMISSION OF WYOMING.

No. 1547.

District Court, D. Wyoming.

December 4, 1926.

W. L. Walls, of Cheyenne, Wyo., and Story & Crow, of Salt Lake City, Utah, for plaintiff.

D. J. Howell, Atty. Gen., Ray E. Lee, Marion A. Kline, and John Dillon, all of Cheyenne, Wyo., for defendant.

KENNEDY, District Judge.

This is an action in which the plaintiff, a citizen of the state of Utah, seeks to recover of the defendant damages growing out of a construction contract involving a state highway. The petition was originally met by a demurrer, which, after hearing was overruled, and an answer filed, followed by a reply thereto. The matter is again before the court upon a demurrer filed to the reply, as well as a general demurrer to the petition, which last demurrer, as did the one formerly overruled, challenges the jurisdiction of this court, but upon a different ground. Whatever may be the legal formality by which the question is presented, whenever the lack of jurisdiction of the court is suggested, it becomes the court's duty to investigate the matter, and if jurisdiction is wanting to dismiss the cause, or if upon removal remand the same. Section 37, U. S. Judicial Code (Comp. St. § 1019).

Under the demurrer which was overruled, the point suggested was that the court was without jurisdiction because the suit was against the state of Wyoming, and therefore in contravention of the Eleventh Amendment to the Constitution of the United States, forbidding the judicial power of the United States to extend to suits against the states by citizens of another state. In this respect the court ruled in effect that, inasmuch as the Legislature creating the state highway commission of Wyoming had by an act authorized it to sue and be sued in any court, then whether or not the suit was against the highway commission as a distinct entity or against the state itself was immaterial, because the state had by its affirmative act waived its immunity under the Eleventh Amendment, and citing as authority Smith v. Reeves, 178 U. S. 436, 20 S. Ct. 919, 44 L. Ed. 1140; Clark v. Barnard, 108 U. S. 436, 2 S. Ct. 878, 27 L. Ed. 780. This court then entertained the view which has recently been expressed by the Eighth Circuit in the case of Hertz v. Knudson (C. C. A.) 6 F.(2d) 812, where at page 816 the court says:

"The Eleventh Amendment to the Constitution, which provides that `the judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by citizens of another state, or by citizens or subjects of any foreign state,' is not here involved. By this amendment a privilege is granted for the benefit of the state, which applies specifically to suits prosecuted against the state. It has been uniformly held under this amendment that a state cannot be made a defendant in a federal court against its consent, but that the privilege may be waived if the state sees fit voluntarily to submit itself to the jurisdiction."

Upon the presentation of this demurrer, however, it is suggested that, even though the state has waived its immunity, it still being insisted that the action is one against the state, the United States District Court has no jurisdiction of the subject-matter, and jurisdiction cannot be conferred by consent of the parties, or by consent of the state to be sued in the courts of the United States; the gist of the argument being that the jurisdiction here is wanting because the suit is based upon an amount in controversy in excess of the statutory limitation and the diversity of the citizenship of the parties, and that the diversity of citizenship is destroyed because of judicial holdings that the state is not a citizen.

Two points, therefore, press for determination in the present controversy: First, it now becomes necessary to determine whether or not the action is in effect one against the state; and, second, if so, whether or not this court has jurisdiction of the case.

In the determination of the first question, a brief analysis of the nature of the action and an examination of the law under which roads of the character in controversy are constructed would seem to throw some light upon the subject. The contract sued upon, entered into in June, 1922, was for the construction of a state highway in what is known as the Big Horn Canyon in this state, and called for such construction according to plans and specifications made by the state highway engineer. There was also a supplemental contract, calling for additional excavation upon the same basis of remuneration as the original contract. The petition sets forth in substance that, after the first plans and specifications were presented, they were subsequently changed by other engineers of the department in such a way that it made substantially a new route, which the plaintiff did not discover until near the completion of the contract, thereby causing the plaintiff to suffer additional and extraordinary expense in completing the project, which the plaintiff sues to recover.

In a former hearing upon a general demurrer to the petition, this court held that the action was in its nature one upon a contract, and not an action upon quantum meruit, upon the strength of the following cases: Christie v. United States, 237 U. S. 234, 35 S. Ct. 565, 59 L. Ed. 933; United States v. Atlantic Dredging Co., 253 U. S. 1, 40 S. Ct. 423, 64 L. Ed. 735; United States v. Gibbons, 109 U. S. 200, 3 S. Ct. 117, 27 L. Ed. 906; United States v. Spearin, 248 U. S. 132, 39 S. Ct. 59, 63 L. Ed. 166. The contract itself by its caption recites that the agreement is between the state of Wyoming, acting through the state highway commission and the plaintiff, is executed by the state highway commission through its superintendent, and provides that the work shall be done under the direct supervision of the highway commission, subject to inspection and approval by the Secretary of Agriculture under the Act of July 11, 1916, thereby showing that the construction involved was under what is known as the Federal Aid Act (Comp. St. § 7477a et seq.).

The law pertaining to the question is found in the Wyoming Constitution and statutes. In 1916 Wyoming adopted an amendment to her Constitution known as section 9 of article 16, which reads as follows:

"The provision of section 6 of article 16 of this Constitution prohibiting the state from engaging in any work of internal improvement unless authorized by a two-thirds vote of the people shall not apply to or affect the construction or improvement of public roads and highways; but the Legislature shall have power to provide for the construction and improvement of public roads and highways in whole or in part by the state, either directly or by extending aid to counties; and, notwithstanding said inhibition as to works of internal improvement, whenever grants of land or other property shall have been made to the state, especially dedicated by the grant to particular works of internal improvement, the state may carry on such particular works and shall devote thereto the avails of such grants, and may pledge or appropriate the revenues derived from such works in the aid of their completion."

Under this constitutional provision, in 1919 the Legislature adopted an act, now known as chapter 185 of the Wyoming Compiled Statutes of 1920, providing for the issuance of bonds for road-building purposes, and the same year passed an act authorizing the state to go into the road-building business, such act being known as chapter 186 of the same Compiled Statutes. The latter act by its terms provides, among other things, that a state highway department be created, to consist of the state highway commission and a state highway superintendent; that the commission shall consist of five state highway commissioners, who shall be appointed by the Governor by and with the consent of the Senate; that the commissioners shall qualify by taking the constitutional oath of office; that the commission shall maintain offices in the state capitol; that the commission shall have power to sue in the name of the "state highway commission of Wyoming," and may be sued in any court upon any contract executed by it; that the Attorney General shall be legal advisor of the commission; that the commission shall have an official seal, and that all records of its office certified under the hands of its secretary shall be received in any court; that the commission shall appoint a state highway superintendent, who shall take the constitutional oath of office upon qualifying; that said superintendent shall have complete charge of laying out and establishing highways; that the commission shall have authority to acquire rights of way by condemnation proceedings; that the work to be performed upon highways, except where the same is in co-operatioin with the Secretary of Agriculture, shall be performed at the expense of the state; that the commission shall have power to co-operate with counties in the construction of highways; that there be created a fund, to be known as the "state highway fund," in which the state treasurer shall place all moneys received from any source for highway purposes, which shall be paid out only on vouchers approved by the state highway superintendent; that there is appropriated the sum of $300,000, made available for road building on and after March 1, 1920, and all balances remaining of the fund shall not revert to the general fund, but be subject to subsequent expenditure; and that the overhead expense in connection with the administration shall not exceed 15 per cent. of the total amount expended each year.

Is the action upon a contract, such as here outlined under the Constitution and statutes referred to, one in effect against the state of Wyoming, or one against a separate entity created by the state, so as to take it out of the class of cases held...