STATE ex rel. C & D EQUIPMENT COMPANY, etc. v. HONORABLE DENZIL L. GAINER, Auditor, etc.
No. 12920
Supreme Court of Appeals of West Virginia
Decided April 14, 1970
Submitted March 3, 1970. Dissenting Opinion June 9, 1970.
174 S.E.2d 729 | 154 W. Va. 83
The Workmen‘s Compensation Appeal Board has determined that the claimant has failed to show good cause for reopening his claim, and, upon the entire record, we cannot say that the ruling of the Board is plainly wrong. Bragg v. State Workmen‘s Compensation Commissioner, 152 W.Va. 706, 166 S.E.2d 162; Dunlap v. Workmen‘s Compensation Commissioner, 152 W.Va. 359, 163 S.E.2d 605; Hosey v. Workmen‘s Compensation Commissioner, 151 W.Va. 172, 151 S.E.2d 729.
For the reasons stated in this opinion, the order of the Workmen‘s Compensation Appeal Board, dated September 10, 1969, is affirmed and this decision will be certified to the Board and to the Workmen‘s Compensation Commissioner.
Affirmed.
Chauncey H. Browning, Jr., Attorney General, Joseph E. Hodgson, Victor A. Barone, Assistant Attorneys General, for respondent.
BERRY, JUDGE:
This is an original proceeding in mandamus initially filed in this Court on December 9, 1969, in which the petitioner, C & D Equipment Company, a corporation, for the use and benefit of the First National Bank of South Charleston, West Virginia, to which money had been assigned, seeks a writ to compel the respondent, Denzil L. Gainer, Auditor of the State of West Virginia, to draw a warrant for the payment of an agreed amount between the petitioner and the State Building Commission of West Virginia on the funds of the said Commission in the hands of the State Treasurer of West Virginia, the said agreed amount to be paid to the petitioner as the result of a compromised claim for damages
The controversy involved herein arose out of a contract executed December 29, 1967, between the C & D Equipment Company and the State Building Commission which provided for the demolition by the petitioner of approximately fifty structures in the vicinity of the State Capitol which occupied the site of two new office buildings which have since been erected with some adjacent parking areas. The contract was entitled “Demolition Contract, Project: Capitol Complex,” and was awarded to the petitioner as a result of the petitioner being the low bidder for the work to be done after notices had been given to prospective contractors for such work and sealed bids of the various bidders had been submitted to the Commission. The petitioner‘s bid was in the amount of $41,717 for the work to be done and was accepted by the Commission. Attached to the contract was a list of structures to be demolished and the location thereof by street numbers around the area to be cleared.
According to the allegations of the petition, when the company started to work soon after the contract was executed, it developed that the Commission had not cleared all of the structures for demolition and some tenants were still occupying the structures. As the result of this situation, the company had to move its equipment around the structures which were occupied and not ready for demolition. This resulted in the unnecessary moving of the equipment and in numerous delays in waiting for various structures to be vacated in order that they could be demolished. The company had rented extra
After the complaint with regard to the extra cost was presented to the Building Commission a subcommittee was appointed by the Commission to investigate the matter, and after an examination of the claim was made, it recommended the payment of $29,907.68. The Building Commission, by its secretary, then submitted a requisition for this amount to the State Auditor with the request that he issue a warrant to the State Treasurer to pay such amount.
The Auditor refused to issue a warrant authorizing the payment of the claim and gave as a reason by an endorsement on the requisition that the amount was in excess of the contract, was not supported by an authorized change order, and could possibly be presented as a claim for consideration by the Court of Claims.
After the refusal of the Auditor to issue a warrant on the first requisition a purported change order was drawn up by the Commission and forwarded with another requisition to the Auditor for the payment of the claim of $29,907.68. The Auditor again refused to authorize the payment as requested and stated that the requisition was for an increase of approximately seventy per cent over the amount contained in the original contract and that he did not mean to convey the idea that a change order was all that was needed for the authorization for the payment in such case. He further stated that he
The Court of Claims apparently considered the request for an advisory opinion without a hearing and indicated that it was not proper to bring the claim to its attention in this fashion but that there should be a hearing with evidence presented to it on the matter by the petitioner if petitioner desired to file a claim. The petitioner apparently did not ask the Court of Claims to consider its claim but instead instituted the instant proceeding in this Court.
It is contended by the petitioner that the Court of Claims did not have jurisdiction to hear this claim because the money for the operation of the Building Commission comes from the sale of bonds issued by the Commission which do not encumber the general funds of the State and that the Building Commission can be sued in the courts of this State and, therefore, under the statute creating the Court of Claims it has no jurisdiction in such cases.
The respondent filed a demurrer and an answer. In the demurrer he takes the position that the Commission is a State agency and therefore immune from a suit based on negligence or breach of contract, that this matter represents an effort to obtain additional compensation for a contractor, which is prohibited by the Constitution of this State, that it is his duty to refuse the authorization of such payment unless and until the claim has been declared to be a moral obligation by the Legislature and that mandamus, if granted, would compel him to do an illegal or unauthorized act.
The respondent‘s answer denies there was any particular plan of operation in connection with the work required by the contract between the petitioner and the Commission and states that there was no duty on the part of the Commission to have each building lined up in order to conform to any plan the company might have had for the demolition work. The answer further states that the respondent did not ask
It is also contended by the respondent that regardless of the money source and any power to renegotiate the contracts by the Commission, such payment would be improper because renegotiation does not contemplate an increase in price without some corresponding increase in service rendered and must be for the benefit of the Building Commission in that its interest must be best served; that the Commission is a State agency with public funds and payment of such claim is forbidden by the Constitution; and that the income of the Commission will be derived from rentals paid to it by other State agencies and departments from which the money comes out of appropriations by the Legislature.
The controlling question in this case is whether the State Building Commission is a State agency and can not be sued.
It is the contention of the petitioner that an action may be maintained against the Building Commission in the courts of this State, and therefore the Court of Claims is without jurisdiction, and specifically excluded from hearing such claims by the provisions of
It is true that both the Federal District Court and this Court have held that the West Virginia Turnpike Commission is not such an agency of the State of West Virginia as is immune from being sued in the courts of law under the provisions of
However, there are marked differences in the two statutes setting up respectively the Turnpike Commission and the Building Commission. Both provide for bonds to finance the building of each, but the money obtained for the use of the Turnpike and to pay off its obligation is obtained from the public users of the Turnpike, while the money obtained to pay off the obligation of the Building Commission is from the State agencies for rent which money is obtained from State funds. This clearly distinguishes the Turnpike Commission from the Building Commission. Then, too, the Turnpike Commission, under the statute creating it, handles its own funds and no requisition is required to be presented to the State Auditor for a warrant directed to the Treasurer to pay any claim against it. This is not true with regard to the statute pertaining to the Building Commission. All moneys of the Building Commission, from whatever source derived, are turned over to the State Treasurer and kept in a separate fund and can not be paid out without a requisition being made to the Auditor and a warrant issued by him to the State Treasurer. The Building Commission statute also requires the State Auditor to audit the funds of the Commission which is not required of the Turnpike Commission.
It is the contention of the petitioner that the settlement of the claim between the petitioner and the Commission is merely a renegotiation of the original contract which is authorized by the provisions of
It is quite true that after the completion of the work the petitioner was entitled to the amount called for in the contract of $41,717 and the State Auditor would be required to issue a warrant to the Treasurer for such amount; but he is not authorized or required to issue a warrant for any additional amount for claims settled between the parties in connection with the contract. In fact, the allowance of extra compensation in such cases is prohibited by
In the case of George A. Fuller Co. v. Commonwealth, (Mass.) 21 N.E.2d 529, the contractor contended that it had to do extra work in connection with a road contract and consequently made a claim for over $300,000 more than the original amount of the contract. A settlement was agreed upon with the contractor for $135,000 and the state treasurer refused to pay the claim. It was held that only the legislature could authorize such payment and the authority to negotiate the contract did not give the authority to the state officers to determine the damage as the result of the Commonwealth‘s error, and any such agreement with regard to damages would be ancillary and create a new and independent obligation which the state officers had no authority to do. In the case of California Highway Commission v. Riley, (Calif.) 218 P. 579, a contract was entered into by the state with a contractor to build a road in California. It was decided later by the state commission that it did not want to build the road in question, and it attempted to compromise the claim of the contractor for expenses incurred by paying him several thousand dollars to give up the contract, which the state comptroller refused to pay. It was held in that case that mandamus did not lie to compel the comptroller to pay the claim.
In the case of Cramp & Sons Ship & Engine Building Co. v. United States, 216 U.S. 494, 30 S. Ct. Rep. 392, 54 L. Ed. 587, which involved a claim for over $49,000 for extra work in the building of a battleship which the United States Government caused the ship building company to lose, the Supreme Court of the United States held that the executive
Any monetary claims against an agency of the State which is immune from suit is within the jurisdiction of the Court of Claims. City of Morgantown v. Ducker, 153 W.Va. 121, 168 S.E.2d 298. It was held in that case that by reason of the immunity from suit of a State agency as an arm of the State, the State Court of Claims has jurisdiction of a monetary claim against such State agency and that mandamus is the proper remedy to require the State Court of Claims to assume jurisdiction of a monetary claim against such State agency. This holding is under
The State Court of Claims has never refused to entertain the claim involved in this proceeding. The petitioner has never presented its petition to the Court of Claims for consideration of the claim and has insisted that the Auditor be forced to issue a warrant for the payment thereof. The authorities dealing with the matter involved in this proceeding clearly indicate that the Auditor can not be required by mandamus to issue a warrant for the payment of the claim involved upon requisition of the State Building Commission as it is purely a compromise of a claim based upon improper performance of a contract. If it could be compromised for $29,000 any like claim could be compromised in the future regardless of the amount.
Although the claim in question may be a just claim and should be paid, there is no authority for the Auditor to issue a warrant for such claim without the authorization for payment by the Legislature. The proper procedure, therefore, to have the claim considered for payment is for the petitioner to file a petition with the Court of Claims as held in the case of City of Morgantown v. Ducker, supra.
Writ denied.
HAYMOND, JUDGE, dissenting:
I disagree completely with the decision of the majority in this proceeding. In my judgment it ignores the real issue involved, needlessly discusses irrelevant questions to which it applies inapplicable principles of law, and produces an erroneous and intolerably impracticable result which will interfere with the ordinary routine transactions of the various departments of the State which have contractual obligations with private agencies and members of the general public. The result of this decision, as I see it, is that an instrumentality of the State which is authorized to make and enter into contracts with private individuals can not amicably and in good faith compromise any dispute by an agreed settlement between the parties without resorting to a moral obligation to approve such settlement which will necessarily produce doubt, confusion and delay in such transactions between a State agency and any member of the public. Under the present decision it is difficult to understand how any person, who admittedly can not sue the State, can transact business with a State agency on any acceptable or satisfactory basis if such person and the State agency can not settle a contractual difference by a fair and mutually acceptable agreement without resort to an expensive and possibly prolonged proceeding in the Court of Claims for a declaration of a moral obligation and an appropriation by the Legislature.
The material facts, which are fairly stated in the majority opinion, are not controverted. The original contract, based on the bid of the petitioner C & D Equipment Company of $41,717.00 for the demolition work involved, was regularly entered into and was in all respects a valid and binding agreement. The provision which required the State Building Commission to make available the various buildings to be demolished was admittedly violated by the Commission with the result that the petitioner sustained damages in excess of
“8. To make contracts, and to execute all instruments necessary or convenient to effectuate the intent of, and to exercise the powers granted to it by, this article“; and
“9. To renegotiate all contracts entered into by it whenever, due to a change in situation, it appears to the commission that its interest will be best served; * * *” (Emphasis supplied.)
The action of the Commission in making the foregoing settlement, in my judgment, clearly constitutes a renegotiation of the original contract which it was by the statute expressly empowered to do. Those statutory provisions completely refute the irrelevant statement in point 2 of the syllabus, which is not supported by the authority of any decision of this Court, that State agencies being immune from suit are not authorized to entertain claims for unliquidated damages or to enter into any binding compromise of a claim.
After the agreed settlement was reached and a requisition for the agreed amount was submitted to the Auditor, and his refusal to honor the requisition for the stated reasons that the amount was in excess of the contract, was not authorized by a
The decision of the majority in refusing to require the Auditor by writ of mandamus to honor the requisition of the Commission and to issue his warrant for the agreed amount of $29,907.68, to which the petitioner was entitled to compensate it for, not all but a part of the loss actually incurred by it as the result of the admitted breach of the contract by the Commission, ignores the applicable statute and erroneously denies it force and effect. This I would not do.
I disagree with the erroneous statement in the majority opinion that the controlling question in this case is whether the State Building Commission is a State agency and can not be sued. That question is not an issue in this case; and if it were it has been resolved by this Court as long ago as 1950 in The City of Charleston v. Southeastern Construction Company, 134 W.Va. 666, 64 S.E.2d 676, in which this Court held in point 1 of the syllabus that the State Building Commission under its then name of the State Office Building Commission “is a State agency, and, as such, is an arm of the State and under Section 35, Article VI of the Constitution of this State is immune from suit.” Moreover, the original statute declares in Section 1 that the Commission is “an agency of the State of West Virginia.” That question is not even remotely involved and is not relevant to the decision of this case for the reason that the petitioner is not suing the State and has not sued the State in this or any other action. To obtain the relief to which it is entitled a suit against the State, which, of course, can not be maintained, is neither necessary nor desirable. The only relief that could be obtained in an action against the State, if such could be maintained, would be to reduce the claim of the petitioner to judgment to render it certain and a binding obligation. The action of the Commission in the
The difference between the legal status of the State Building Commission and that of the West Virginia Turnpike Commission is made clear and unmistakable by the prior decisions of this Court involving each of those agencies. As already indicated, the State Building Commission is an arm of the State and as such is immune from suit.
Thought the Court of Claims under the statute creating it has jurisdiction of claims which can not be enforced by any suit against the State or any of its instrumentalities but which instead must be disposed of by declaration of a moral obligation by the Legislature and an appropriation for the payment of the claim, the claims that have been dealt with by the Court of Claims and its predecessors, unlike the claim here involved which is not disputed as to its validity or amount but is agreed to between the parties, have been claims in which the validity or the amount has not been admitted but instead had to be established by proof upon hearing by the Court of Claims. As there is no dispute between the parties as to either of those factors there is no necessity for determination of either of them by any action of the Court of Claims.
I have prepared the opinions of this Court in many of the cases involving moral obligations and the jurisdiction of the Court of Claims in such matters and in none of those cases was the validity or the amount of the claim admitted by any of the parties but in every instance the validity or the amount of the claim was challenged to the extent that the claimant was required to establish it by evidence. See City of Morgantown v. Ducker, 153 W.Va. 121, 168 S.E.2d 298; State ex rel. Cox v. Sims, 138 W.Va. 482, 77 S.E.2d 151; State ex rel. Utterback v. Sims, 136 W.Va. 822, 68 S.E.2d 678; Price v. Sims, 134 W.Va. 173, 58 S.E.2d 657; Saunders v. Sims, 134 W.Va. 163, 58 S.E.2d 654; State ex rel. Davis Trust Company v. Sims, 130 W.Va. 623, 46 S.E.2d 90; State ex rel. Cashman v. Sims, 130 W.Va. 430, 43 S.E.2d 805, 172 A.L.R. 1389.
The controlling question for decision in this proceeding is not, as erroneously stated by the majority, whether the State Building Commission is an agency of the State which is constitutionally immune from suit or whether the claim here involved is to be disposed of as a moral obligation, but instead is whether the State Building Commission, under the
The applicable statute,
In the most recent of those cases, State ex rel. Board of Governors of West Virginia University v. Sims, 140 W.Va. 64, 82 S.E.2d 321, this Court held that when a requisition regular in form and properly itemized for the payment of annual membership dues of a public educational institution in this State to a regional educational accrediting association is submitted to the Auditor and the expenditure of public money in payment of such dues has been authorized and approved by the Board of Public Works and has been approved by the budget director, as provided by statute, and there are sufficient funds appropriated for the purpose in the state treasury to pay such dues, it is the mandatory duty of the Auditor to honor such requisition and mandamus lies to compel him to perform that act. In that case the Auditor had refused to honor the requisition submitted by the president
In the opinion in the case just cited this Court used this pertinent language, which is here peculiarly applicable: “The Auditor in the discharge of his duties has the right, in a mandamus proceeding to compel him to honor a requisition for the payment of public funds appropriated by the Legislature, to question the constitutionality of the appropriation, State ex rel. West Virginia Board of Education v. Sims, 139 W.Va. 802, 81 S.E.2d 665; Woodall v. Darst, 71 W.Va. 350, 77 S.E. 264, 80 S.E. 367, 44 L.R.A., N.S., 83, Ann. Cas. 1914B, 1278; but it has been said that if an administrative officer refuses to act under a statute on the ground of its unconstitutionality he does so at his peril and that if he is mistaken he is liable for nonfeasance of duty. See Payne v. Staunton, 55 W.Va. 202, 46 S.E. 927. The Auditor, however, does not have the right to substitute his opinion or judgment for that of the Board of Public Works in authorizing and approving the expenditure of public funds for the payment of membership dues of a public educational institution to an educational accrediting organization, or of the Budget Director in approving a requisition for such expenditure, or to question the wisdom, the propriety or the necessity of such action by the Board of Public Works or the Budget Director, or the policy of the
In State ex rel. West Virginia Board of Education v. Sims, 139 W.Va. 802, 81 S.E.2d 665, the petitioner West Virginia Board of Education, a State agency immune from suit, sought a writ to require the defendant, Edgar B. Sims, Auditor of the State of West Virginia, to honor a requisition submitted by the business manager of Shepherd College, a State educational institution, in the amount of $242.77 for the purpose of paying Sarah Helen Cree, professor of physical education at Shepherd College, who engaged in a regular course of graduate study in physical education at Penn State, State College, Pennsylvania, for which she had been granted sabbatical leave by the West Virginia Board of Education. Sabbatical leaves and payment for them had been authorized by a statute of this State, Section 12, Article 2, Chapter 74, Acts of the Legislature, Regular Session, 1953. The Auditor refused to honor the requisition on these grounds: (1) authorized payment of moneys from the personal services appropriation of the State educational institutions under the control of the West Virginia Board of Education was for a private purpose in violation of
In the case at bar, as in the case just cited, the requisition of the State Building Commission was authorized by, and issued pursuant to, the statutory provisions already cited and, as in the cited case, the Auditor is charged with a ministerial duty of honoring the requisition submitted to him. It is significant that no question of moral obligation was raised or intimated in that case.
In State ex rel. Roth v. Sims, 139 W.Va. 795, 81 S.E.2d 670, an original proceeding in mandamus in this Court, in which the petitioner Roth, State Director of Public Assistance, sought a writ to require the Auditor to honor a requisition drawn by him for the payment of $97.50 to Elizabeth Mitchell, an employee of the Department of Public Assistance, and to require the Auditor to issue his warrant in payment of the requisition, this Court held that it was the clear legal duty of the defendant to honor the requisition. The statutes considered in that case provided that the State Director should establish regular periods of technical and specialized instructions for employees of the department and should designate the persons who shall attend each period of instruction and that such attendance should be compulsory and be compensated for as a part of regular employment. In accordance with the statute the Director issued the requisition which the Auditor refused to honor. This Court unanimously held that it was the clear legal duty of the Auditor to honor the requisition drawn by the State Director against funds paid into the State Treasury by the federal government for payment to an employee of the department
In State ex rel. West Virginia Commission on Interstate Cooperation v. Sims, 135 W.Va. 257, 63 S.E.2d 524, the petitioner sought a writ in a mandamus proceeding in this Court to compel the defendant Sims, Auditor of the State of West Virginia, to honor a requisition drawn on him by the petitioner in favor of the Council of State Governments in the amount of $6,000.00 which requisition the Auditor had refused to honor. At its 1949 session the Legislature appropriated the sum of $8,500.00 for the Commission with the provision that “Out of the above appropriation the sum of $6,000.00 may be made available for West Virginia‘s membership in the council of state governments.” The chairman of the Commission submitted a requisition for that amount, in accordance with the appropriation, this Court awarded the writ, and held in point 2 of the syllabus that ““A peremptory writ of mandamus will issue to require the discharge by a public official of a non-discretionary duty. Glover v. Sims, 121 W.Va. 407,” [3 S.E.2d 612]. In that case also, no question was raised as to the requirement of a moral obligation for the payment of the requisition in favor of the Council of State Governments. See also State ex rel. The West Virginia Board of Aeronautics v. Sims, 129 W.Va. 694, 41 S.E.2d 506; Glover v. Sims, 121 W.Va. 407, 3 S.E.2d 612. In each of those two cases, as in the cases previously cited and discussed, the Auditor was required to honor the requisition submitted to him by a representative of a State agency, as in the case at bar, which had been authorized by statutory provisions.
The foregoing cases are controlling in the decision of the case at bar. In this proceeding the duly authorized State agency is the Building Commission which, under paragraph
I disagree with the statements in the majority opinion that the settlement between the petitioner and the Commission to cover the admitted loss suffered by the petitioner in the sum of $29,907.68 is not a renegotiation of the contract but that “even if it were an actual renegotiation of the original contract the power or authority given to the Commission to renegotiate such contract is only when its interest will be best served.‘” It is obvious to me that the Commission did renegotiate the contract to extend it to the loss actually sustained by the petitioner as a result of the breach of the contract by the Commission under the statutory power of the Commission to renegotiate the contract “whenever, due to a change in situation, it appears to the commission that its interests [not the State‘s interest] will be best served;” and, contrary to the position of the majority that payment of the settlement does not best serve the State‘s interest, I assert that the action of the Commission in treating the petitioner fairly and in making it substantially, though not completely, whole for the loss caused it by the breach of the contract by the Commission does best serve the interest of both the Commission and the State from every standpoint and particularly from the standpoint of equity, justice and fair dealing which the State owes to its people. The State, by and through the Commission, dealt fairly with the petitioner in agreeing to pay the loss it had caused the petitioner and its attempt to do justice should not be arbitrarily thwarted by the refusal of one of its administrative officers to discharge his nondiscretionary duty. I also assert that the refusal of the State to make good the loss which the breach of the contract had caused the petitioner will constitute a manifest detriment to the interest of the State which would be harmful because inequitable and the resulting loss of its prestige for honesty and fair dealing would far outweigh the cost of relieving the
The expression in the majority opinion that ” * * * the allowance of extra compensation in such cases [meaning the $29,907.68 item] is prohibited by
I also challenge as completely gratuitous, erroneous, misleading and irrelevant these sentences in the majority opinion: “Although the claim in question may be a just claim and should be paid, there is no authority for the auditor to issue a warrant for such claim without the authorization for payment by the legislature. The proper procedure, therefore, to have the claim considered for payment is for the petitioner to file a petition with the Court of Claims as held in the case of City of Morgantown v. Ducker, supra.” In the first place, the requisition for a warrant for the payment of the claim of the petitioner is authorized by the Legislature by the cited provisions of
For the reasons stated and under the cited decisions of this Court, I would grant the writ as prayed for by the petitioner and require the defendant to honor the requisition submitted by the Commission and to issue a warrant for the payment of the claim.