Katz v. Washington Suburban Sanitary Commission

Murphy, C. J., delivered the opinion of the Court. We deal here in a single opinion with three separate but related appeals involving appellee Washington Suburban ⁵⁰⁵ Sanitary Commission’s invocation of the defense of governmental immunity from tort liability. At issue in each case is whether the Circuit Court for Montgomery County properly concluded that the Washington Suburban Sanitary Commission (the WSSC) is a State agency entitled to governmental immunity and that this immunity has not been waived. We granted certiorari in all three cases prior to decision by the Court of Special Appeals.

In Appeal No. 48, the appellants allege that the WSSC is liable in tort for damage to their goods and inventory which resulted when a water main owned by WSSC burst and flooded their basement. The court (Mathias, J.) granted WSSC’s motion raising preliminary objection under Maryland Rule 323 a 9, holding that WSSC is “a state agency and as such entitled to sovereign immunity unless waived.” The court considered § 1-3 of the Washington Suburban Sanitary District Code (1970) 1 in determining whether there had been a waiver of WSSC’s sovereign immunity. That section provides: “The members of said commission shall be a body corporate by the name of the ‘Washington Suburban Sanitary Commission,’ with the right to use a common seal, to sue and be sued, and to do any and all other corporate acts for the purpose of carrying out the provisions of this chapter. In the event of a judgment at law or in equity being recovered against said commission or for the purpose of amicably adjusting threatened or pending litigation, the commission shall at the annual tax levying period of the county council of Montgomery County and the county commissioners of Prince George’s County next succeeding the rendition of said judgment or compromise, certify to said county council of Montgomery County and county commissioners of Prince George’s County, a tax rate, in addition to ⁵⁰⁶ that required for its interest, serial bonds and sinking fund requirements, that will, when levied and collected under the provisions of ... [section 4-5 of this Code], produce an amount sufficient to satisfy said judgment or other sum including costs and counsel fees, if any, provided, however, that this provision shall relate only to any cause of action occurring subsequent to April 26, 1927____” The court concluded that § 1-3 did not effect a waiver of WSSC’s sovereign immunity.

The Chesapeake & Potomac Telephone Company of Maryland, appellant in No. 49, sued WSSC for compensatory damages for money expended in repairing telephone cables which had been severed by WSSC’s contractor. In granting a motion raising preliminary objection, the court (Fairbanks, J.) held that “WSSC is a state agency for the purposes of determining its right to invoke the doctrine of sovereign immunity,” and that there had been no statutory waiver of its immunity under § 1-3 of the Sanitary District Code. In No. 50, Liberty Mutual Insurance Company, exercising its rights of subrogation, sued WSSC to recover money that it paid to a policyholder whose house was destroyed by fire. Liberty Mutual alleged that WSSC’s negligent maintenance of fire hydrants caused the fire department pumps to become clogged with rocks and debris which entered the pumps from WSSC’s hydrants.

The court (Mitchell, J.) granted WSSC’s motion raising preliminary objection on the ground of sovereign immunity and dismissed the action. The appellants contend that the WSSC is not a State agency or instrumentality, but is simply a local entity which provides water and sewer services for its own customers in Montgomery and Prince George’s Counties and collects revenues for these services by monthly billing. They maintain that even if the WSSC is a State agency, § 1-3 constitutes an effective waiver of its governmental or sovereign immunity because it expressly permits the WSSC to “sue and be sued” and to raise funds to satisfy any judgment rendered against it. ⁵⁰⁷ The WSSC argues that it is a “sister agency” to the Maryland-National Capital Park and Planning Commission, and that the reasons for our holding in O & B, Inc. v. Md.-Nat’l Cap. P. & P., 279 Md. 459 , 369 A. 2d 553 (1977), that the Commission is a State agency, which had not waived its immunity from suit, apply with equal force to the WSSC.

It reasons that no waiver of its sovereign immunity can be found in § 1-3 because the power “to sue and be sued” does not of itself constitute either an express or an implied waiver. Further, it asserts that the authority bestowed upon it to certify a tax rate sufficient to satisfy judgments does not constitute authority to mandate such an appropriation and that absent such a mandate, there would be no fund to satisfy a judgment. I The doctrine of sovereign immunity from suit, rooted in the ancient common law, is firmly embedded in the law of Maryland. 2 See, e.g., Bradshaw v. Prince George’s County, 284 Md. 294 , 396 A. 2d 255 (1979); American Structures v. City of Balto., 278 Md. 356 , 364 A. 2d 55 (1976); University of Maryland v. Maas, 173 Md. 554 , 197 A. 123 (1938). Although originally based on the tenet that “the King can do no wrong,” the doctrine is presently viewed as a rule of policy which protects the State from burdensome interference with its governmental functions and preserves its control over State agencies and funds.

See Godwin v. County Comm’rs, 256 Md. 326 , 260 A. 2d 295 (1970); Baltimore v. State, 173 Md. 267, 271 , 195 A. 571, 573-74 (1937); State v. Wingert, 132 Md. 605 , 104 A. 117 (1918); State v. B. & O. R. R. Co., 34 Md. 344 (1871), aff’d, 88 U. S. 456 (1875); 72 Am. Jur. 2d States, Territories, & Dependencies § 99 (1974). In Maryland the doctrine of sovereign immunity is applicable not only to the State itself, but also to its agencies and instrumentalities, unless the General Assembly has waived the immunity either directly or by necessary ⁵⁰⁸ implication. Godwin; id. at 334, 260 A. 2d at 299 . 3 We held in Board v. John K. Ruff, Inc., 278 Md. 580, 590 , 366 A. 2d 360 (1976), “that when the General Assembly expressly authorizes suits to be brought against one of the State’s agencies, it is the giving of a positive consent and has the effect of waiving sovereign immunity as to that agency within its scope of duties and obligations.” We there pointed out, however, that it does not necessarily follow that a money judgment may be obtained, even with respect to matters within the scope of the agency’s duties.

We explained: “Legislative authority for a governmental agency to be sued is not free from restrictions, even though .limitations are not expressly made by the Legislature. Such authority does not impose unqualified liability even as to matters within the scope of the agency’s duties and obligations. This Court has consistently held that suits may not be maintained unless money has been appropriated for the payment of such damages as may be awarded, or the agency itself is authorized to raise money for that purpose. We said in University of Maryland v. Maas, supra, 173 Md. at 558-559, 197 A. at 125 : 'The decisions in this state go further ' than holding that without legislative sanction an arm of the state government... may not be sued, and are to the effect that, even though there is a legislative authorization to sue, such suits may not be maintained unless funds are available or may be made available by the agency itself for the purpose of paying the claim for damages that may be established by the suit....

So it is established that neither in ⁵⁰⁹ contract nor tort can a suit be maintained against a government agency, first, where specific legislative authority has not been given, second, even though such authority is given, if there are no funds available for the satisfaction of the judgment, or no power reposed in the agency for the raising of funds necessary to satisfy a recovery against it.’ ” 278 Md. at 590-91. II We think the lower courts correctly decided that the WSSC is a State agency. Created by the legislature through a public general law (ch. 122 of the Acts of 1918), the WSSC is vested with broad authority to construct and operate water supply and sewer systems within the Washington Suburban Sanitary District, which comprises most of the counties of Prince George and Montgomery adjacent to the District of Columbia. Under various provisions of the Washington Suburban Sanitary District Code (the WSSD Code), the WSSC is also authorized to construct and operate within the Sanitary District refuse and drainage disposal systems and marina and boat basins.

It is authorized to construct and operate water supply systems in and for the residents of Anne Arundel and Howard Counties. The WSSC operates under the jurisdiction of a six-member commission. Three members are appointed from Montgomery County and three from Prince George’s County. The appointments are made by the county executive and county council of the respective counties, pursuant to detailed governing provisions of the WSSD Code.

The capital and operating budgets of the WSSC are, with limitations, subject to review and approval by the county executives and county councils of the two counties. The WSSC is vested with the State’s sovereign power of eminent domain. It is authorized to create an employee merit system, subject in some particulars to compliance with state law governing state employees and to directives of the State Secretary of Personnel. It is authorized to enter into contracts with the ⁵¹⁰ District of Columbia authorities and with any federal, state, county or municipal authorities, and with any public water, sewerage or drainage commission; such contracts “have the full force and effect” of a contract with the State of Maryland.

WSSD Code, § 1-9. It is empowered by § 9-1 of the WSSD Code to make and enforce rules and regulations as may be necessary to carry out the provisions of law. As we observed in O & B, Inc. v. Md.-Nat’l Cap. P. & P., supra, “[t]here is no single test for determining whether a governmental body is an agency of the state for purposes of sovereign immunity.” 279 Md. at 462 .

The relationship between the State and the governmental body must be examined in order to determine its status as either a state agency or a county or municipal agency. See, e.g., Board v. John K. Ruff, Inc., 278 Md. 580 , 366 A. 2d 360 (1976), where we considered the status of a community college, partially funded by local funds and with a board of trustees comprised of members of the county board of education. Despite these indicia of local agency status, we concluded that the college was more properly characterized as an agency of the State because, among other things, it was created by the State, and because the powers of the board of trustees are set forth in public general laws. See also Chas.

E. Brohawn & Bros. v. Board, 269 Md. 164 , 304 A. 2d 819 (1973). In O & B, Inc.