Board of Trustees v. John K. Ruff, Inc.

Orth, J., delivered the opinion of the Court. This appeal, before us by grant of writ of certiorari to the Court of Special Appeals, wherein it was pending argument and decision, is in an unusual posture. The final judgment from which the appeal was taken was an order of the Circuit Court for Howard County entered in an action under the Uniform Declaratory Judgments Act brought by John K. Ruff, Inc. (Ruff) against the Board of Trustees of Howard ⁵⁸³ Community College (the Board). Code (1974), Courts and Judicial Proceedings Article § 3-411.

Ruff sought a declaration of the rights of the parties pertaining to the payment of sales tax under a written contract dated 28 June 1974 between it and the Board whereby Ruff was the general contractor for the construction of a facility for the Board. The court’s order, issued upon grant of motion for summary judgment, declared that the Board “... shall reimburse [Ruff] for all sales taxes due and to become due for all materials purchased in furtherance of the contract between the parties, including all materials purchased by subcontractors engaged in said project.” Costs were assessed to the Board. The appeal is in an unusual posture because its crux is a point which was not raised, tried or decided below and was not presented by the parties on appeal. That point concerns the doctrine of sovereign immunity, or as it is often alternatively referred to, governmental immunity. 1 It is of no moment that the matter of sovereign imihunity was not raised below by the pleadings or otherwise.

We made clear in Bd. of Education v. Alcrymat Corp., 258 Md. 508, 516 , 266 A. 2d 349, 353 (1970) that “... the law is well established that counsel for the State or one of its agencies may not either by affirmative action or by failure to plead the defense, waive the defense of governmental immunity in the absence of express statutory authorization, or by necessary implication from a statute....” 2 We must consider whether the doctrine of sovereign immunity is applicable in this case even though it was not previously raised by the parties. ⁵⁸⁴ I Once venerated, recently vilified, and presently substantially limited, the doctrine of sovereign immunity has been long recognized by this Court. We have applied the doctrine for over a century, and a compendium of our discussions regarding it, from State v. B. & O. R. R. Co., 34 Md. 344 (1871), aff'd, 21 Wall. 456 (1875) to Calvert Associates v. Department, 277 Md. 372 , 357 A. 2d 839 (1976), was set out in American Structures v. City of Balto., 278 Md. 356, 359 , 364 A. 2d 55, 56 (1976): “If an action is brought for a money judgment in contract or in tort against the State or an agency of the State without the State’s consent, actual or implied, it must be defended on the ground of sovereign immunity, which cannot be waived unless funds had been appropriated for the purpose or the agency can provide funds by taxation....” The frequent and increasingly vigorous attacks upon the doctrine have been no more persistent than our refusal to abrogate or modify it by judicial fiat. We have consistently adhered to the view that “... it is desirable and in the public interest that any change in the doctrine of sovereign immunity should come from the legislative branch of the State Government rather than from the judicial branch inasmuch as there are fiscal considerations, administrative difficulties and other problems in balancing the rights of the State and its agencies with new possible rights of the individual citizens, which can far better be considered and resolved by the legislative branch than by the judiciary of the State.” Jekofsky v. State Roads Comm’n, 264 Md. 471, 474 , 287 A. 2d 40, 42 (1972). 3 In Calvert Associates v. Department, supra, 277 Md. at 381 , 357 A. 2d at 843 , we found our view strengthened by the fact that the General Assembly in its 1974 session passed House Bill No. 5, which would have killed the doctrine with respect to contract actions. The Governor, however, kept it alive by his veto of ⁵⁸⁵ the Bill.

Such legislation was again enacted by ch. 450, Acts 1976, and this time it was approved to take effect 1 July 1976. It provided that in the absence of a contrary provision, neither the State, its officers, departments, agencies, boards and commissions, or other unit of State government, nor any municipal corporation, or unit of municipal government, nor any county or unit of county government may raise the defense of sovereign immunity in an action based on a written contract brought within one year after the claim arose or the contract was performed, whichever is later. The Act, in any event, does not affect the case sub judice. Section 6 of ch. 450 provides that the Act shall not apply to any action based on a contract entered into or executed prior to 1 July 1976.

As far as community colleges are concerned, the doctrine of sovereign immunity has also been partially waived by ch. 549, Acts 1971, which as amended by ch. 528, Acts 1972, and now codified as Code (1957,1975 Repl. Vol.) Art. 77A, § 10A, provides that the board of trustees of such colleges: “[S]hall carry comprehensive liability insurance to protect the board, its agents and employees, and any agents and employees of any college under its jurisdiction.... Nothing in this section shall be construed as affecting the right of the various boards of trustees, on their own behalf, from raising the defense of sovereign immunity to any amount in excess of the limit of the policy or in excess of one hundred thousand dollars ($100,000) in the case of self-insurance.” That law has no application to this case either. As we observed in Charles E. Brohawn & Bros. v. Board, 269 Md. 164, 171-172 , 304 A. 2d 819, 823 (1973), “[i]t affects only those claims which would be covered by such a ‘comprehensive liability insurance’ policy and, to the extent of the policy, provides a fund from which these can be paid.” ⁵⁸⁶ From what we have said thus far, it is manifest that the doctrine of sovereign immunity may still be viable with respect to the contract which is the subject of the action before us.

To resolve whether it is applicable to the contract at hand, we must (1) decide if the Board is an agency of the State. If the Board is an agency of the State, the doctrine would be applicable (2) unless sovereign immunity had been waived by statute, expressly or by necessary inference therefrom. Even if sovereign immunity had been so waived, the doctrine would nevertheless be applicable (3) if no funds were available to the Board for satisfaction of a judgment against it on the contract, and no power was reposed in the Board to raise such funds by taxation. (1) Over half a century ago this Court observed in Williams v. Fitzhugh, 147 Md. 384, 386 , 128 A. 137, 137-8 (1925): “Public education is a highly important interest of the State government.

In the promotion of that interest the State is acting through an agency which the Legislature created for that purpose and to which broad administrative powers have been delegated. In performing its functions the State Board of Education is representing and exerting the State’s authority. As a governmental agency of the State it shares the immunity from suit to which the State itself is entitled, in the absence of any legislative waiver of that exemption.” In quoting this with approval in Charles E. Brohawn & Bros, v. Board, supra, 269 Md. at 169 , 304 A. 2d at 822 , the Court substituted “Board of Trustees” for “State Board of Education”. It was clear that in the frame of reference of the opinion, the Court considered the Board of Trustees of a community college to be an agency of the State for the purpose of sovereign immunity just as the Court had so considered the State Board of Education years ago.

In Brohawn we made an examination of the relationship which exists between this State and the community colleges located within its borders in order to determine whether the ⁵⁸⁷ Board of Trustees of Chesapeake College inherited from the State the valuable birthright of immunity from suit. It necessarily follows from the flat declaration that the birthright was so inherited, that the Court found that the Board of Trustees was an agency of the State. In this context, we see no material difference between “a regional community college”, established for two or more counties, and “a community college”, established for a single county. See, Code (1957, 1975 Repl.

Vol.) Art. 77A, § 4. In Prince Geo’s Co. v. Bd. of Trustees, 271 Md. 21, 27 , 313 A. 2d 678, 681 (1974), repulsing an attempt by the county to compel the Board of Trustees of Prince George’s Community College to contract only through the county’s purchasing agent, we said flatly that the community college was not an institution, board or corporation of the county government but “... is one created and controlled by the State.” It is manifest from the history of the creation of community colleges as traced by us in Davis v. Montgomery County, 267 Md. 456, 463-466 , 298 A. 2d 178, 183-184 (1972) and Brohawn, 269 Md. supra, at 167-169, 304 A. 2d at 820-822 , that they were State inspired. We note that the State Board for Community Colleges is charged with establishing general policies for the operation of the State’s community colleges and must report annually to the General Assembly on the activities of the colleges, Code (1957, 1975 Repl. Vol., 1976 Cum.

Supp.) Art. 77A, § 8 (d). Powers enjoyed by the boards of trustees of community colleges are bestowed by public general laws. Art. 77A, § 1 (a)-(m). Each community college is financed, up to certain maximum amounts, by State, local and federal funds, but 50% of its current expenses are received from the State.

Art. 77A, § 7. Boards of trustees of community colleges are proper recipients of the State’s sovereign power of eminent domain. Davis v. Montgomery County, supra, 267 Md. at 468 , 298 A. 2d at 185 . In short, in light of the pertinent statutes and our decisions, there is no doubt that the Board of Trustees of Howard County Community College 4 is an agency of the State.

We so hold. ⁵⁸⁸ (2) As the Board here is an agency of the State of Maryland, a litigant is precluded from asserting an otherwise meritorious cause of action against it unless the sovereign immunity which the Board enjoys has been expressly waived by statute or by a necessary inference from such legislative enactment. Dunne v. State, 162 Md. 274, 288-9 , 159 A. 751, 757 (1932). We find that sovereign immunity with respect to boards of trustees of community colleges has been expressly waived by statute. Chapter 873, Acts 1973, was enacted, according to its title, “... to resolve doubts as to whether the trustees of community colleges and trustees of regional community colleges have the power and authority to sue and be sued.” It simply added a new subsection (1-1) to § 1 of Art. 77A, effective 1 July 1973, and by it vested such trustees with the power “To sue and be sued.” Previous decisions of this Court indicate that the “power” to be sued, bestowed upon an agency of the State by the General Assembly is, with limitations, an express waiver by statute of sovereign immunity as to that agency.

In Weddle v. School Commissioners, 94 Md. 334 , 51 A. 289 (1902), the Board of School Commissioners of Frederick County, entitled to the benefit of sovereign immunity, was made “capable to sue and be sued” by statute and was the defendant in a tort action to recover damages for a pupil’s death which was alleged to have been caused by the Board’s negligence. The plaintiff urged that the declaration that the Board was capable to sue or be sued should be construed as imposing unqualified liability in that respect. The Court did not agree: “Now it is obvious, we think, that the Legislature intended by the use of the language ‘shall be capable to sue and be sued’ to restrict the liability of the Boards of County School Commissioners to such suits, in respect to matters within the scope of their duties and to such things as the boards are empowered to do .’’Id., at 344, 51 A. at 291 . As the tort action was not with respect to a matter within the scope of the Board’s duties and did not involve such a thing as it ⁵⁸⁹ was empowered to do, its sovereign immunity was not waived, and it was not liable in the action.

It is implicit in this decision that had the action concerned matters within the scope of the Board’s duties and involved such things as it was empowered to do, sovereign immunity would not have been a defense. See Weisner v. Bd. of Education, 237 Md. 391 , 206 A. 2d 560 (1965); University of Maryland v. Maas, 173 Md. 554 , 197 A. 123 (1938). Code (1957, 1975 Repl. Vol.) Art. 77, § 38 provides that a county board of education “... shall be capable to sue and be sued ....” In light of this law, we said in Bolick v. Bd. of Education of Charles Co., 256 Md. 180, 183 , 260 A. 2d 81 , 32 (1969): “Boards of education in this State [although State agencies], do not per se enjoy governmental immunity from suit....” See, Thomas L. Higdon, Inc. v. Board, 256 Md. 595 , 261 A. 2d 783 (1970); Bd. of Education v. Alcrymat Corp., supra, 258 Md. at 512 , 266 A. 2d at 351 .

In Charles E. Brohawn & Bros. v. Board, supra, decided five days after the approval of ch. 873, Acts 1973, giving boards of trustees of community colleges the power to sue and be sued, but before that law became effective, we discussed the similar provision in Art. 77, § 38, which provided that a county board of education can both sue and be sued. It was argued, relying principally on Keifer & Keifer v. R. F. C., 306 U. S. 381 (1939), that the Board of Trustees of Chesapeake College, as an offspring of the boards of education of the counties concerned, inherited their waiver of immunity conferred by Art. 77, § 88. We found that the reasoning faltered when applied to a regional type college as distinguished from a single county community college. We noted that a regional community college is not brought into being by any action of a county board of education.

We also thought that there may be some significance to the fact that although the board of education constitutes the board of trustees of a single county community college, members of the board, but not necessarily all, constitute the regional community college board of trustees. Thus, we did not, expressly or by implication, reject the* notion that the grant of statutory ⁵⁹⁰