Fidelity & Deposit Co. of Maryland v. Trustees of University of Wyoming

16 F.2d 150, 1926 U.S. Dist. LEXIS 1573
CourtDistrict Court, D. Wyoming
DecidedAugust 10, 1926
DocketNo. 1658
StatusPublished

This text of 16 F.2d 150 (Fidelity & Deposit Co. of Maryland v. Trustees of University of Wyoming) is published on Counsel Stack Legal Research, covering District Court, D. Wyoming primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fidelity & Deposit Co. of Maryland v. Trustees of University of Wyoming, 16 F.2d 150, 1926 U.S. Dist. LEXIS 1573 (D. Wyo. 1926).

Opinion

KENNEDY, District Judge.

The pertinent facts disclosed by the hill of complaint and the state statutes involved afford the basis for the determination of the points presented to the court upon the present hearing. The Trustees of the University of Wyoming is a corporation, so designated under the Wyoming statute, having for its function the management and control of the State University, but it has never been specifically given the right to sue or be sued as such corporation.

Some time in July, 1923, the Trustees of the University of Wyoming entered into a contract with one of the defendants, Johnson, for the construction of a new gymnasium building as a part of the University. This contract fixed the price at which the building should be constructed, and bound the contractor to follow the plans and specifications of the architect, to comply with all laws, ordinances, and regulations affecting the performance of the contract, including the Workmen’s Compensation Law, and some other specific laws enumerated. It further provided that, as the work progressed, the contractor should be paid monthly upon a basis of 85 per cent, of the amount of the contract of labor and materials incorporated in the work or delivered, and required him to keep the premises free and clear from waste material and rubbish, and to remove all tools, scaffolding, and other surplus material. In connection with the contract, the contractor was required to give a bond, which he did, with the plaintiff as the surety, which generally insured the carrying out of the terms of the contract, said bond also carrying a provision that the contractor, the principal in the bond, should keep the surety indemnified against loss, liability, costs, damages, attorney’s fees and expenses of every kind whatsoever, and for the purpose assigned the right and interest of the contractor in and to all percentages retained on account of the contract.

Some time in June, 1925, the defendant Trustees of the University notified the surety company that the contractor had defaulted in his’ contract by stopping the work, after which the defendant Trustees, with the per[151]*151mission of the plaintiff, proceeded to complete the building. The defendant Trustees afterwards advertised under a statute of the state that it required of all claimants for work done and material furnished to file their claims with the Trustees within a certain specified date. Creditors filed claims in an amount exceeding $75,000, only $25,000 of which the plaintiff claims and alleges are proper to be allowed and paid out of the balance in the hands of the Trustees. The alleged balance in the hands of the Trustees is approximately $37,000, and plaintiff claims the right to participate in this fund for expenses and attorney’s fees incurred by reason of the default of its principal, the contractor.

Up to the time of the commencement of this suit it would appear by the allegations of the bill that the Trustees of the University have not paid out any of the $37,000 balance. All of the claimants, except those_ whose claims are recognized by plaintiff as legitimate, aggregating, as before stated, the approximate sum of $25,000, have been named as defendants in the bill. The bill further alleges that, unless restrained by order of the court, the Trustees of .the University of Wyoming will pay said money or a part of it over to the defendants, who are not entitled to the same. The reasons why defendants are not entitled to participate in the funds still remaining in the hands of the Trustees of the University are also set forth.

The prayer is that the defendant the Trustees of the University of Wyoming be restrained from paying out any of the fund remaining in its hands during the pendency of the action; that the defendants be directed to appear and show what right, title, or interest they may have in the fund; that the court decree the distribution of the fund by the Trustees- of the University in the manner contended for by plaintiff; and that, upon the payment of the alleged legitimate claims by the plaintiff, it be subrogated to the rights of said claimants, and thereby be entitled to reimbursement out of the fund in the hands of the Trustees for its costs, expenses, and attorney’s fees, along with recognized material and labor claimants.

The bill is challenged on behalf of the Trustees of the University of Wyoming by a motion to dismiss, and by a like motion on behalf of the defendants the First National Bank of Laramie and H. R. Butler, and it is these motions which are now before the court for consideration.

The principal contention of the defendant the Trustees of the University of Wyoming, under its motion to dismiss, is that the suit is one against the state of Wyoming, and in contravention of the Eleventh Amendment to the Constitution of the United States, which provides that the judicial power of the United States shall not be construed to extend to any suit in law or equity commenced against one of the United States by citizens of another state or by citizens or subjects of any foreign state. Counsel for this defendant assert that the Supreme Court of the state of Wyoming and two of the lower state courts have held that a suit against the Trustees of the University is in effect a suit against the state, consent to which has not been given, and which cannot therefore be maintained. The leading decision of the Supreme Court of Wyoming is found in the case of Hjorth Royalty Co. v. Trustees of University, 30 Wyo. 309, 222 P. 9, in which it was held that the Legislature of the state had in no way given its consent to the Trustees of the University as a corporation to be sued. The ease arose over an attempt to quiet title to lands which had been granted by the federal government to the state of Wyoming for the use of the University.

This court, however, takes the view that as to whether or not a suit is in contravention of the Eleventh Amendment to the Constitution of the United States is a matter which must be determined by the federal courts, although the Construction of the state court as to whether or not the statutes of the state give power and authority to the Trustees of the University to be sued or not to be sued may be binding upon the federal courts, so that it becomes necessary to look farther for a solution of the questions here involved. It has been held by the Supreme Court of the United States that the court must look through form to substance in construing the Eleventh Amendment, where the state is not specifically named as a party, to determine whether or not the suit is one in effect against the state. Hopkins v. College, 221 U. S. 636, 31 S. Ct. 654, 55 L. Ed. 890, 35 L. R. A. (N. S.) 243.

The case at bar upon its face is not a suit against the state, but against one of its authorized agencies, which opens up a field very prolific of judicial interpretation by the federal courts. All suits against state officials are apparently not in contravention of the Eleventh Amendment, as some suits have been held to be permissible and others not. The Supreme Court through a series of decisions have attempted to draw a line of demarcation between these two classes of [152]*152-suits, which affords a rational basis for the decision of a case of this character, if one ‘is able to classify the suit at hand. In one class, where suits are brought against officers of the state to compel them to carry oiit their contractual obligations, it has been held that such a suit is one against the state and cannot be maintained.

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Bluebook (online)
16 F.2d 150, 1926 U.S. Dist. LEXIS 1573, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fidelity-deposit-co-of-maryland-v-trustees-of-university-of-wyoming-wyd-1926.