1. Suit against the state Highway Commission and its members on
a road construction contract executed by it in the name and on
behalf of the state,
held in effect a suit against the
state. P.
278 U. S.
199.
2. The district court can have no jurisdiction on the ground of
diverse citizenship of suit against a state. P.
278 U. S. 200.
23 F.2d 638, reversed; 16
id. 322 (district court),
affirmed.
Certiorari, 277 U.S. 580, to a judgment of the circuit court of
appeals reversing a judgment of the district court which dismissed
for want of jurisdiction an action on a contract.
Page 278 U. S. 196
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
Prior to 1916, the State of Wyoming could not engage in works of
internal improvement unless specially authorized by popular vote.
During that year, the following section was added to Article XVI of
her Constitution:
"Sec. 9. State Highway Construction. The provision of Section 6
of Article XVI 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."
In 1919, the legislature passed the State Highway Act, Session
Laws 1919, c. 132, which directed:
That there shall be a highway department, consisting of a
Commission of five members, and a superintendent. The
"Commission shall have the power to sue in the name of the
'State Highway Commission of Wyoming,' and may be sued by such name
in any court upon any contract, executed by it."
All roads, the cost of which is paid from the state highway
fund, shall be constructed in accordance with plans and
specifications prepared by the Highway Superintendent, and shall be
performed by or under
Page 278 U. S. 197
contracts approved and awarded by the Commission. Except as
otherwise specified,
"construction and maintenance of all state highways, including
all bridges, and culverts thereon, shall be performed at the
expense of the state and by and under the supervision of the
Commission and the State Highway Superintendent."
"A State Highway Fund is created, to be in the custody and
keeping of the State Treasurer," and payments therefrom shall be on
warrants based upon vouchers by the Highway Superintendent.
The original act was amended in 1927 so as to provide:
"The Commission shall have the power to sue in the name of the
'State Highway Commission of Wyoming,' and may be sued by such name
in the courts of this state and in no other jurisdiction upon any
contract executed by it."
By a contract dated June 1, 1922,
"between the State of Wyoming, acting through the State Highway
Commission, and Utah Construction Company, a corporation, of Ogden,
in the State of Utah, hereinafter called the contractor,"
the parties undertook: that the contractor, at his own cost,
should do all work and furnish all labor, materials, and tools,
"except such as are mentioned in the specifications to be furnished
by the State of Wyoming," and construct a designated highway.
"The State of Wyoming shall pay and the contractor shall receive
and accept as full compensation for everything furnished and done
by the contractor under this contract and also for all loss or
damage arising out of the nature of the work, the action of the
elements or from any unforeseen contingencies or difficulties
encountered in the prosecution of the work, the prices stipulated
in the proposal."
"Time shall be of the essence of this contract," and, for
failure to complete the work as agreed,
"damage will be sustained by the State of Wyoming; . . . and it
is therefore agreed that said contractor shall pay to the State of
Wyoming,
Page 278 U. S. 198
as liquidated damages and not as penalty, an amount equal to the
cost of maintaining the necessary force of engineers and inspectors
on the work during the additional time; . . . and the State Highway
Commission may deduct the same from the amount due or to become due
to the contractor. . . . The State of Wyoming hereby reserves the
right to accept and make use of any portion of said work before the
completion of the entire work without invalidating the contract or
binding itself to accept the remainder of the work or any portion
thereof whether completed or not."
The writing concluded thus:
"In witness whereof, the State of Wyoming, acting through its
State Highway Commission, party of the first part, has caused these
presents to be executed by its superintendent and the seal thereof
to be hereunto affixed."
It was signed "State Highway Commission of Wyoming, by L. E.
Laird, Superintendent," and by the Utah Construction Company.
A supplemental agreement dated December, 1922, and signed "State
Highway Commission of Wyoming, by L. E. Laird, Superintendent" and
the Utah Construction Company, undertook to modify the contract of
June 1, 1922, in certain material respects.
By an amended petition naming the Wyoming State Highway
Commission and its individual members as defendants, filed in the
United States District Court of Wyoming August 2, 1925, the Utah
Construction Company sought to recover damages arising out of the
breach of the above-described construction contract, as
supplemented. Jurisdiction of the court was invoked under ยง 24 of
the Judicial Code (U.S.Code, Tit. 28) on the ground of diverse
citizenship of the parties. The petition alleges that the plaintiff
is a citizen of Utah; the Commission and its individual members are
citizens of Wyoming; more than $3,000 is involved.
Page 278 U. S. 199
The district court concluded that the suit, in effect, is one
against the state; a state is not a citizen under the Judiciary
Acts; there is no diversity of citizenship, and no
jurisdiction.
The circuit court of appeals thought that the proceeding is not
really one against the state, and that the statute makes the
Highway Commission a legal entity subject to suit. It accordingly
reversed the district court and directed that the cause be
remanded.
It seems to us sufficiently clear that the suit is, in effect,
against the State of Wyoming. The contract for the construction of
the work in question was between the Utah Construction Company and
the state. The state, acting through the Highway Commission, as it
might through any officer, became a party to the original agreement
and obligated herself thereby. Neither the Commission nor any of
its members assumed any direct or personal responsibility. The
supplemental agreement was not intended to impose liability where
there was none before. Its purpose, considering the changed
circumstances, was to modify in the ways specified what the
original parties had undertaken to do. The Commission was but the
arm or
alter ego of the state, with no funds or ability to
respond in damages. There is no claim that the members of the
Commission are personally liable.
Hjorth Royalty Co. v.
Trustees of University, 30 Wyo. 309;
Franzen v. Southern
Surety Co., 35 Wyo. 15;
Ex parte Ayers, 123 U.
S. 443,
123 U. S. 502;
Hopkins v. Clemson College, 221 U.
S. 636,
221 U. S. 642;
Ex parte New York, No. 1, 256 U.
S. 490,
256 U. S.
500.
It is unnecessary for us to consider the effect of the general
grant of power to sue or be sued to the Highway Commission or its
withdrawal in 1927 -- this suit, in effect, is against the state,
and must be so treated. No consent by the state to submit itself to
suit could affect the question
Page 278 U. S. 200
of diverse citizenship.
"A state is not a citizen. And, under the Judiciary Acts of the
United States, it is well settled that a suit between a state and a
citizen or a corporation of another state is not between citizens
of different states, and that the Circuit Court of the United
States has no jurisdiction of it, unless it arises under the
Constitution, laws or treaties of the United States."
Postal Telegraph Cable Co. v. Alabama, 155 U.
S. 482,
155 U. S. 487;
Minnesota v. Northern Securities Co., 194 U. S.
48,
194 U. S.
63.
Here, the petition showed no diversity of citizenship between
the real parties in interest -- the state and the construction
company. No other ground of jurisdiction was asserted. Consequently
there was no jurisdiction. The judgment of the circuit court of
appeals must be reversed; that of the district court will be
affirmed.
Reversed.