1. STATES — Contracts — Performance — Responsibility. All contracts entered into by the State of Colorado, or by any department in its behalf, are required to be awarded to the lowest responsible bidder, and once enters into are binding upon the state as well as upon the other contracting party.
2. Contracts — Sovereign Immunity — Waiver. The applicable principle is that when a state entered into authorized contractual relations, it thereby waives immunity from suit.
3. Sovereign Immunity — Implied Counsel. The doctrine of implied consent has grown out of judicial interpretation of the doctrine of sovereign immunity, weighed against other equally important tenets of the law.
4. CONSTITUTIONAL LAW — Courts — Basis of Determination. Decisions will not be based on constitutional grounds unless necessary to a determination of the issues involved.
5. STATUTES — Claims Against the State — Contracts. C.R.S. '53, 130-2-1, 2 and 4, providing procedures for the hearing, determination and allowance of claims against the state, is not applicable to amounts contracted to be paid under the terms of a contract entered into by a department of the state pursuant to legislative authority.
6. STATES — Contracts — Sovereign Immunity — Waiver. The making of a contract pursuant to legislative authority, is a waiver by the state of its immunity from suit, and of any statutory requirements for the filing of claims.
7. STATUTES — Contracts — Claims Against the State — Filing. C.R.S. '53, 130-2-1 et seq., does not require a person contracting with the state to file requests for payment with the state controller where money has been previously appropriated therefor and the contract itself provides for the method of payment.
MR. JUSTICE SUTTON delivered the opinion of the Court.
THIS action was brought by plaintiff in error, to whom we will refer as plaintiff, against defendants in error, to whom we will hereinafter refer as defendants, to recover the loss allegedly sustained by it as a result of defendants' conduct in preventing the performance of a contract.
Plaintiff alleged in its complaint: That is entered into a written contract with defendants under which it agreed to spray 1,500,000 acres of range land in order to control a grasshopper infestation; that it was to receive 13 3/4 cents per acre for the work and materials to be used; that it submitted its bid of 13 3/4 cents per acre on the written assurance of defendants that the work to be done involved 1,500,000 acres of land, and the bid was submitted on that basis; that plaintiff procured and had available its agents, employees and requisite number of aircraft and stood ready at all times to perform the contract; that plaintiff in reliance on the contract borrowed money from banks for financing and preparing aircraft and personnel; that thereafter defendants, although ordering and requiring plaintiff to supply aircraft and personnel, failed to provide the necessary acreage for the fulfillment by plaintiff of its contract, but permitted it to spray only 240,000 acres, and paid it at the rate of 13 3/4 cents per acre for the area sprayed; that plaintiff had secured aircraft and personnel adequate to perform the contract in full, and effectively carried out its agreement as far as it was permitted to do so and was ready to perform in connection with the portion thereof which it was prevented, by defendants, from carrying out; that the Colorado legislature appropriated the sum of $200,000.00 for the payment of services which plaintiff contracted to perform and said sum was available to defendants for payment to plaintiff; that defendants failed to any the sum due plaintiff, and it prays for judgment in the sum of $40,000.00.
Defendants, appearing by the Attorney General, filed their motion to quash, based on the proposition that as representatives of the State of Colorado they are immune from suit since the sovereign State of Colorado cannot be subjected to the processes of the courts without its consent, and no such consent had been granted.
The trial court sustained the motion to quash, holding that such an action cannot be maintained without consent. The court relied upon opinions of this court antedating Boxberger v. Highway Dept., 126 Colo. 438, 250 P.2d 1007, and Highway Dept. v. Dawson, 126 Colo. 490, 253 P.2d 593, and entered judgment dismissing the action.
Sole Question To Be Determined: Where the legislature of Colorado authorized the State Department of Agriculture to eradicate a grasshopper infestation and appropriated adequate funds to defray the expense thereof; and where the said Department, in complying with the legislature direction entered into a contract for services and the use of equipment in carrying out the program as directed; will the law imply a consent, by the state, to be sued on said contract if the other contracting party asserts a breach of the contract on the part of the state?
This question is answered in the affirmative.
All contracts entered into by the State of Colorado or by any of the Departments in its behalf, are required to be awarded, pursuant to statute, to the lowest responsible bidder. Once entered into they are binding upon the state as well as upon the other contracting party. To hold that the state may enter into a contract by which the other party is compelled to expend large sums in acquiring material, machinery and personnel to enable it to perform its obligation, and then arbitrarily repudiate the contract relegating the injured party to the doubtful remedy of appealing to the legislature for justice in the form of a bill for relief, would be to sanction the highest type of governmental tyranny.
The applicable principle is that when a state enters into authorized contractual relations it thereby waives immunity from suit. This is not a new doctrine in this country. The Supreme Court is Indiana in 1891, in the case of Carr v. State, 127 Ind. 204, 26 N.E. 778, made the following pertinent ascertain:
"In entering into the contract it laid aside its attributes as a sovereign, and bound itself substantially as one of its citizens does when he enters into a contract. Its contracts are interpreted as the contracts of individuals are, and the law which measures individual rights and responsibilities measures, with few exceptions, those of a state whenever it enters into an ordinary business contract. * * * The principle that a state, in entering into a contract, binds itself substantially as an individual does under similar circumstances, necessarily carries with it the inseparable and subsidiary rule that it abrogates the power to annul or impair its own contract. It cannot be true that a state is bound by a contract, and yet be true that it has power to cast off its obligation and break its faith, since that would invoke the manifest contradiction that a state is bound and yet not bound by its obligation. * * * Hence it is that where there is no statute making an appropriation no action will lie against the officers of the state. State v. Stanton, 6 Wall. 50; Hans v. Louisiana, 24 Fed. Rep. 55. Whether an appropriation shall or shall not be made is a legislative question, and over purely legislative questions the courts have no supervision or control. A question of that character is beyond the touch of the judiciary, for one department of government cannot enter the domain of another. * * * The right of the relator to compel the auditing and payment of his claim must, it is evident, depend upon whether there is an appropriation on which a warrant can be rightfully drawn, and out of which it can be lawfully paid; * * *."
To like effect is the opinion of the Court of Appeals of Georgia in the case of Regents of 'University System v. Blanton, 49 Ga. App. 602, 176 S.E. 673, from which we quote the following:
"A state or any of its departments entering into contracts lays aside its attributes of sovereignty, and binds itself substantially as one of its citizens does when he enters into a contract, and, in general, its contracts are interpreted as the contracts of individuals are, and are controlled by the same laws. Ohio L. Ins. Trust Co. v. Debolt, 16 How. 416, 14 L.Ed. 997; notes, 42 L.R.A. (N.S.) 117. Where there is an act of the state legislature authorizing a contract by a state department, the courts have power to enforce the contract against the state. Carr v. State, 127 Ind. 204, 26 N.E. 778, 11 L.R.S. 370, 22 Am. St. Rep. 624, and notes."
From the opinion of the Supreme Court of Nebraska in the case of Todd v. Board of Educational Lands and Funds, 154 Neb. 606, 48 N.W.2d 706, we quote the following:
"This is true of a lease made by the state. It, by entering into a contract, abandons its attributes of sovereignty and binds itself, to the extent of its power to contract, substantially as an individual does when he makes a contract. The state may not impair any of the substantial rights secured by its contract to a citizen with whom it contracts. * * *"
The doctrine of sovereign immunity from suit has a historical basis steeped in antiquity and antedating the establishment of any organized government on this continent. Variations from it have usually been made only by express acts by the Congress of the United States or by state legislatures. The original basis for the existence of the doctrine under English common law was that the king or sovereign could do no wrong, was considered untouchable and above the law. Later in the democracies it was recognized that to permit suits against the state would result in the depletion of its treasury and of tax funds necessary for the operation of the government on behalf of all its citizens. The doctrine of sovereign immunity as applied to democratic government is also based upon the proposition that since a democratic state represents the people an action against it is in effect suing oneself, which is a legalistic anomaly. The doctrine of implied consent has grown out of judicial interpretation of the doctrine of sovereign immunity weighed against other equally important tenets of the law.
The question is posed by the concurring opinion as to whether this court should determine the questions involved solely upon constitutional grounds; that is, whether the alleged loss to plaintiff corporation, based upon the contract involved, is "property" within the meaning of Article II, section 25 of the Constitution of Colorado, and whether "due process of law" has been afforded plaintiff.
The majority of this court adhering to the rule that decisions will not be based upon constitutional grounds unless necessary to a determination of the issues involved, prefer to decide the issues before us on the clean cut example of implied consent. To do otherwise would be to ignore the ratione decidendi of the case, flaunt stare decisis and engage in fathering more dicta. It is true that Boxberger v. Highway Dept., and Highway Dept. v. Dawson, supra, cannot be reconciled with some of the other opinions of this court relating to sovereign immunity as stated in the concurring opinion. To reconcile those cases with other decisions and overrule those deemed erroneous and out of harmony with the Boxberger and Dawson cases, is not necessary or proper to a determination of the issues before us.
All that we are holding, and can hold here, is that as to the contract entered into between the parties to this action, the state has waived its immunity form suit.
The theory has been advanced that the legislature has provided exclusive administrative procedures by which all claims against the state must be presented to, and heard, allowed and determined by, the state controller. C.R.S. '53, 130-2-1, 2 and 4, are cited as authority for this position. We state that this is not such a case. Amounts contracted to be paid are not "claims" within the meaning of these statutes. Webster's New International Dictionary, Second Edition, says in part in defining the word "claim": "Syn. — Claim, Assert, Maintain. It is error to use claim in the sense of assert or maintain when there is no question of he assertion or maintenance of one's right, title, advantage, or the like."
Let us examine the facts before us and the statutes in question. The record shows:
1. That paragraph 12 of the complaint recites. "That in July and August, 1954, plaintiffs, by and through its president * * * duly filed a petition for (sic) the Commission of Agriculture requesting payment of sums due, and which payment has now finally been refused."
2. That the contract entered into contained the following express provisos as to payments:
(a) "TERMS AND CONDITIONS OF THE INVITATION FOR BIDS (which is unnumbered Section I) * * *
"6. SELLERS INVOICES. — Invoices shall be prepared and submitted in triplicate unless otherwise specified. Invoices shall contain * * *."
(b) "SECTION III. THE STATE AND ITS CO-OPERATORS AGREE: * * *
"3. To pay the contractor for the contract rate for such acreages as are acceptably sprayed."
(c) "SECTION IV. IT IS MUTUALLY AGREED AND UNDERSTOOD THAT: * * *
"18. Partial payments will be made on the basis of weekly reports and receipt of formal request for payment approved by the State and its cooperates as soon after the close of each week as properly certified vouchers can be audited and passed for payment. * * *." (Emphasis added.)
The allegedly applicable parts of the cited statutes read:
"130-2-1. Claims presented within two years. — Persons having claims against the state shall exhibit the same, with the evidence in support thereof, to the state controller to be audited, settled and allowed within two years after such claim shall accrue, and not afterwards.
* * *
"130-2-2. Suits — setoff — what may be shown — In all suits brought in behalf of the state, no debt shall be allowed against the state as a setoff but such as have been exhibited to the controller and by him allowed or disallowed, except only * * *."
"30-2-4. Certificate of indebtedness issued, when — In all cases where the laws recognize a claim for money against the state, and no appropriations shall have been made by law to pay the same, the state controller shall audit and adjust the same, and when the claim shall have been approved by the governor and attorney general, he shall give the claimant a certificate of the amount thereof, under his official seal if demanded, and shall report the same to the general assembly, * * *."
Reading the legislatively authorized contract with the cited statutes and the complaint we are forced to one of two conclusions, either of which affirms our position. First: the complaint affirmatively alleges filing of a petition (claim) requesting payment and that it was refused. The request naturally enough was filed with the other party to the legislatively authorized contract because it was that party who was authorized by the state to make the payments. Thus the contract itself was a waiver by the state of any statutory provisions urged upon us. Second: The method of payment provided by the contract does not mean that the invoices submitted thereunder were not actually submitted to the state controller for audit, settlement and allowance. In fact it may be standard operating procedure for this type of contract to have all invoices so approved and in such a case the Department of Agriculture would be the agent of the state to receive them for the auditor. There is no denial in this record that such was done and the plaintiff has affirmatively alleged the submission of its petition for payment to the same party who would have passed it on to the state controller, if that is the procedure used, and as many have been done with the previous contract vouchers which were admittedly paid. To now hold in effect that the first vouchers paid under the contract were proper but that any balance due cannot be paid because not affirmatively shown by the record to have been filed direct with the state controller under C.R.S. '53, 130-2-1, would indeed be a travesty on fair dealing and justice.
We hold that these statutes do not require a person contracting with the state to file requested for payments with the state controller where money has been previously appropriated therefor and the contract itself provides for the method of payment.
The judgment is reversed and the cause remanded for further proceedings consistent with the views herein expressed.
MR. CHIEF JUSTICE MOORE and MR. JUSTICE HOLLAND specially concur.
MR. JUSTICE FRANTZ and MR. JUSTICE HALL dissent.
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