Opinion
14194
December 31, 1935.
Before HOLMAN, J., County Court, Richland, September, 1935. Affirmed.
Action by B. Harris against J.D. Fulp, as administrator of the South Carolina Emergency Relief Administration, and another. From an order sustaining defendants' demurrer and granting a motion to dismiss the complaint plaintiff appeals.
The order of Judge Holman is as follows:
This matter comes before me on a motion to dismiss the complaint and a demurrer. The motion to dismiss the complaint is supported by the affidavit of Hon. Corrington Gill, assistant administrator of the Federal Emergency Relief Administration, also the affidavit of Hon. O.D. Johnston, Governor of the State of South Carolina, and the Federal Emergency Relief Administration, Form 11-B, which is the application by the Governors of the several states to the Federal Emergency Relief Administrator at Washington for grants under the several Relief Acts of Congress.
The question before the Court upon hearing the motion to dismiss the complaint and demurrer is, primarily: Has this Court jurisdiction by its processes to impound and direct the disposition of funds received by the South Carolina Emergency Relief Administration? This requires the answering of the question first of a determination of the title of such funds.
Under the Act of Congress, known as Public Act No. 15, 73d Cong., 48 Stat., 55 (15 U.S.C.A., §§ 721-728), there was created what was known as the Federal Emergency Relief Administration which the President and Congress desired to be created as a government organ to relieve destitution existing in our country. Among other things, this Act provided, Section 4, Subsection (a), 15 U.S.C.A., § 724 (a): "The Administrator is authorized to make grants to the several States to aid in meeting the costs of furnishing relief and work relief and in relieving the hardship and suffering caused by unemployment in the form of money." Other parts of said Act enlarges on this power of granting moneys to the several states. Further, under Act No. 93, 73d Cong., 48 Stat., 351, the above-quoted Act was reaffirmed and carried on.
The Governor of the State of South Carolina requests periodically from the Federal Emergency Relief Administrator under the said Act of Congress, namely, Section 5, and Subsection (c) of Section 4 of said Act, and for the purpose of Subsection (a) of Section 4 of said Act (15 U.S.C.A., §§ 725, 724 (c. a.), funds in the form of grants, using therefor Federal Emergency Relief Administration Form 11-B and the Treasurer of the United States sends the United States checks periodically for such funds to the Governor of the state, who, in his application, promises that these funds and the disbursement thereof shall be expended and made in accordance with the said Act of Congress and the rulings and regulations prescribed by the Federal Emergency Relief Administrator. It appears, therefore, that the Federal Emergency Relief Administration makes these grants under the said Act of Congress to the Governor as the Governor of the State of South Carolina upon the promise that the Governor shall expend the funds so received as the Act of Congress intended it to be expended, namely, for the relief of destitution and unemployment.
The question then is: When the Governor receives this money, to whom does it belong, to the State of South Carolina or the Federal government?
The United States Supreme Court has not had this question as yet before it for determination but has had similar matters before it, but the Comptroller General of the United States, under his decision of January 2, 1934, A-56783, has decided that these grants, when they are receipted for by the Governor of the State, become state funds and the Commissioner of Internal Revenue, under his decision, found in Internal Revenue Bulletin, Vol. 14, No. 8, of February 25, 1935, pages 16 and 17, has held that the funds received by the states and turned over to the several State Emergency Relief Administrations are state funds and not taxable under Section 620 of the Revenue Act of 1932 as amended (26 U.S.C.A., § 1481 note), for the purchase of gasoline, lubricating oils, etc. It seems therefore that the Federal authorities consider the funds when received and receipted for by the state or its agents, that they become state funds.
The last case decided by the United States Supreme Court of a grant to the state is the case of King County v. Seattle School District No. 1, 263 U.S. 361, 44 S.Ct., 127, 128, 68 L.Ed., 339. In that case under the Act of Congress of May 23, 1908, 35 Stat., 260 [16 U.S.C.A., § 500] Congress directed the Secretary of the Treasury to pay over to the states involved, funds received from Forest Reserves for school purposes, and the Court held, "when turned over to the state, the money belongs to it absolutely. There is no limitation upon the power * * * to prescribe how the expenditures shall be made for the purposes stated, though, by the Act of Congress, `there is a sacred obligation imposed upon its public faith.'"
The next case that seems in point is the case of the State of Wyoming ex rel. Wyoming Agricultural College et al. v. William C. Irvine, 206 U.S. 278, 27 S.Ct., 613, 615, 51 L.Ed., 1063. In that case a suit was brought against the defendant as the treasurer of the State of Wyoming attempting to compel him to make certain payments to the Wyoming Agricultural College. There the Act of Congress construed was the Act of July 2, 1862, 12 Stat., 503, chapter 130 and amended March 3, 1883, 22 Stat., 484, C., 102, 7 U.S.C.A., § 304; also Act of August 30, 1890, 26 Stat., 417, C., 841, 7 U.S.C.A., § 321 et seq. By these Acts Congress granted lands and made appropriations to the several states for the purpose of education, and such grants were made to the states with that in view. In the State Court below, a demurrer was interposed to a petition for a writ of mandamus to compel the state treasurer to pay to the treasurer of Wyoming Agricultural College certain funds in its hands. The demurrer was sustained, and the United States Supreme Court has this to say: "The agricultural college claims that it is entitled under those statutes to receive this money. If this claim fails it is the end of the case. But, as has been shown, both the fund and its interest and the annual appropriations are the property of the state, and not of any institution within it. The agricultural college shows no title or right to this money under these statutes. The whole case of the plaintiff in error fails at the threshold, and it is unnecessary to determine whether the state has complied with its trust in bestowing the government bounty upon the University of Wyoming, or has violated the obligation of a contract by repealing, as it has, the Act establishing the agricultural college. These questions were discussed with learning and ability in the Court below, and we do not intend to intimate any disagreement with the conclusions of that Court. But, as the plaintiff in error must fail in the attempt to compel the payment to it of the money in the hands of the defendant for the reasons already given, there is no need to go further in this Court, and the judgment of the Supreme Court of Wyoming is therefore affirmed."
One of the earliest decisions on a grant by the Government to a state is the case of Cooper v. Roberts, 18 How., 173, 182, 15 L.Ed., 338. There the Supreme Court says: "In the present instance, the grant is to the State directly, without limitation to its power, though there is a sacred obligation imposed on its public faith."
From a review of the above authorities this Court finds and holds that when the Federal Emergency Relief Administration makes the several grants to the Governor, under the above referred to Acts of Congress, that these funds become the funds of the State of South Carolina and when the Governor, as the Governor of the State of South Carolina, turns said funds over to the administrator of the South Carolina Emergency Relief Administration, in this case the defendant, J.D. Fulp, that he occupies, with reference to such funds, the same position that the treasurer of the State of South Carolina occupies with relation to other funds of the State of South Carolina.
The next question is whether this Court has jurisdiction without an enabling Act by the State Legislature or an enabling provision in the Acts of Congress, which made these grants possible.
None has been cited to the Court, and the Court presumes that there is none. It is a maxim in our law that a suit will not lie against the state by an individual and that the state is not subject to suit, and that even if the state permits itself to be sued, she can withdraw this permission at any time; and neither can the Courts of this State by its processes impound the funds of the State of South Carolina. See Treasurers v. Cleary, 3 Rich., 372; State v. Corbin and Stone, 16 S.C. 533; Neal v. Suber, 56 S.C. 298, 33 S.E., 463. Also U.S. Casualty Co. v. State Highway Dept., 155 S.C. 77, 151 S.E., 887. Also Dabney v. Bank of State of South Carolina, 3 S.C. 124, affirmed Baring v. Dabney, 19 Wall., 1, 22 L.Ed., 90; Ex Parte Dunn, 8 S.C. 207.
Counsel for the plaintiff lays great stress on the case of Hopkins v. Clemson Agricultural College, 221 U.S. 636, 31 S.Ct., 654, 55 L.Ed., 890, 35 L.R.A. (N.S.), 243. That case was discussed and analized by our Supreme Court and distinguished in the case, Chick Springs Water Company v. State Highway Dept., 159 S.C. 481, 157 S.E., 842, wherein our Supreme Court held that immunity from suit does not extend to either commonwealth or its political subdivisions where the Act complained of constitutes the taking of private property without just compensation as this would be in violation of Article 1, § 17 of the Constitution. That no enabling Act would be necessary for a suit against the state to recover when private property has been taken for public use without just compensation.
The complaint in this instance is not one under Article 1, § 17 of the Constitution, neither is it so contended, but is for an alleged underpayment and by reason of an alleged contract of employment. When one contracts with the agents of the state, as such, he must take notice of the state's immunity from suit. I quote from the case of Neal v. Suber, 56 S.C. 298, 33 S.E., 463, 464: "The plaintiff demurred to the counterclaim, upon the ground it was in effect a suit against the state. I sustain the demurrer upon the authority of Treasurers v. Cleary, 3 Rich., Law [372], 373; State v. Baldwin, 14 S.C. [135], 138; State v. Corbin, 16 S.C. [533], 540. The counterclaim is a suit by Suber against the state penitentiary. A judgment could be paid only out of the state's resources. The state's resources are under the exclusive jurisdiction of the general assembly. This is no hardship on defendant. Every citizen who contracts with the agents of the state, as such, takes notice of the state's immunity from suit. The rule is a wise one. The revenues of the state would be subject to grievous hindrances, if they could be litigated by every citizen in the courts of the state."
It follows from the above that this is an action against the State of South Carolina and an effort to impound, through the processes of this Court, funds of the State of South Carolina granted to it by the Federal government and I sustain the demurrer and grant the motion to dismiss the complaint on the ground that this Court is without jurisdiction in the matter.
Mr. S.B. Knotts Jr., for appellant, cites: Title to trust fund: 91 Va., 421; 22 S.E., 175. As to exercise of sovereign power: 292 U.S. 574; 78 L.Ed., 1434; 267 U.S. 79; 69 L.Ed., 521; 45 S.Ct., 211; 99 U.S. 732; 25 L.Ed., 506. Taking of property: 221 U.S. 636; 169 S.C. 481; 118 U.S. 235; 38 L.Ed., 173; 6 S.Ct., 1038; 115 U.S. 620; 245 U.S. 60; 39 S.Ct., 16; 263 U.S. 198; 16 Wall, 36; 125 U.S. 339; 4 Wheat, 518.
Mr. Norbert A. Theodore, for respondent, cites: As to title to funds: 76 F.2d 817; 232 U.S. 168; 34 S.Ct., 301; 58 L.Ed., 555; 127 U.S. 182; 8 S.Ct., 1047; 32 L.Ed., 66; 18 How., 173; 15 L.Ed., 338; 107 U.S. 557; 2 S.Ct., 654; 27 L.Ed., 578; 263 U.S. 361; 44 S.Ct., 127; 68 L.Ed., 339; 111 U.S. 701; 48 S.Ct., 663; 28 L.Ed., 569; 56 F., 55; 19 R.C.L., 722; 87 A.L.R., 365; 58 S.W.2d 979. Use of moneys appropriated: 272 U.S. 52; 47 S.Ct., 21; 71 L.Ed., 160; 169 U.S. 331; 19 S.Ct., 374; 42 L.Ed., 767; 146 U.S. 1; 36 L.Ed., 869. Contract with state: 3 Rich., 372; 16 S.C. 533; 56 S.C. 298; 43 S.C. 154; 20 S.E., 1002; 172 U.S. 475; 19 S. Ct., 247; 79 S.C. 316; 60 S.E., 928; 213 U.S. 174; 29 S. Ct., 465; 87 S.C. 270; 69 S.E., 391; 240 U.S. 307; 36 S.Ct., 293; 3 S.C. 124; 19 Wall., 1; 8 S.C. 207.
December 31, 1935. The opinion of the Court was delivered by
In August, 1935, appellant, a resident and citizen of Richland County, S.C. commenced an action in the Richland County Court against J.D. Fulp, as administrator of the South Carolina Emergency Relief Administration, and T. W. Miller, as administrator of the Richland County Emergency Relief Administration, respondents herein alleging: "111. That the South Carolina Emergency Relief Administration is an organization having its offices in the several counties of the State and that the Richland County Emergency Relief Administration is the county organization for the said South Carolina Emergency Relief Administration and that the plaintiff, from August 1, 1934, through January 31, 1935, was employed at sixty (60c) cents per hour as a foreman on what was known as a cattle project in the said Richland County and that such employment was made by the Richland County Emergency Relief Administration and the South Carolina Emergency Relief Administration. That during the said time or period the plaintiff was paid for five hundred seventy-six (576) hours and that he actually worked twenty-two hundred eight (2,208) hours."
Appellant then set forth that there was a balance due him of $979.20, and prayed judgment therefor.
The respondents demurred on the ground that they were agencies and sub-agencies of the State of South Carolina, that there had been no enabling Act enacted allowing suits against such governmental agencies, and that no Court in the State had jurisdiction over them, the action being one against the State. In addition to the demurrer, respondents served notice of motion to dismiss the action, attaching thereto affidavits showing the source of the money received for disbursement by respondents, its purpose and that title thereto became vested in Honorable Olin D. Johnston, as Governor of the State of South Carolina, and in the State of South Carolina, being impressed with a quasi trust, for disbursement through respondents as agencies and subagencies of the State of South Carolina, and of the said Olin D. Johnston, as Governor of said State.
The motion to dismiss the action raised the same legal issues as the demurrer.
The demurrer and motion were heard together before Honorable A.W. Holman, Judge of the Richland County Court, who passed his order sustaining the demurrer and granting the motion to dismiss the complaint, and appeal was perfected to this Court.
On the hearing before this Court, and in printed brief, appellant took the position that he was entitled to maintain his suit under Article 1, Section 17, of the Constitution as for a "taking" of his property without compensation, but aside from the fact that the word "property" would not extend so far as to include services performed under a contract, the cause of action alleged in the complaint is plainly one for services performed under an alleged contract, and not for a taking of property without compensation.
Counsel for appellant states in his brief that "the sole question presented by this appeal is whether the courts of South Carolina have jurisdiction to try this case."
He then undertakes to subdivide this question into four queries, as follows:
"1. Are the defendants agents or sub-agents of the Government, State or National?
"2. Does the source of a fund determine the jurisdiction of a court and its power to impound such fund?
"3. Is the granting of relief the exercise of a sovereign power?
"4. If the defendants are agents or sub-agents of the State of South Carolina or National Government can they be sued on a contract of employment?"
It is unnecessary to consider other than 1 and 4.
We agree with the conclusion reached by Judge Holman, and direct that his order sustaining the demurrer and dismissing the complaint be printed.
We deem it not amiss to state that the complaint does not show on its face that respondents are such legal entities as may sue or be sued.
All exceptions are overruled, and the order appealed from affirmed.
MR. CHIEF JUSTICE STABLER and MESSRS. JUSTICES CARTER, BONHAM and FISHBURNE concur.