Indiana Ex Rel. Anderson v. Brand

303 U.S. 95, 58 S. Ct. 443, 82 L. Ed. 685, 1938 U.S. LEXIS 287, 113 A.L.R. 1482

• Court: Supreme Court of the United States
• Decided: January 31, 1938
• Docket: 256
• Status: Published

Opinions

Mr. Justice Roberts

delivered the opinion of the Court.

The petitioner sought a writ of mandate to compel the respondent¹ to continue her in employment as a public school teacher. Her complaint alleged that as a duly licensed teacher she entered into a contract in September, 1924, to teach in the township schools and, pursuant to successive contracts, taught continuously to and including the school year 1932-1933; that her contracts for the school years 1931-1932 and 1932-1933 contained this clause: “It is further agreed by the contracting parties that all of the provisions of the Teachers’ Tenure Law, approved March 8, 1927, shall be in full force and effect in this contract”; and that by force of that Act she had a contract, indefinite in duration, which could be can-celled by the respondent only in the manner and for the causes specified in the Act. She charged that in July, 1933, the respondent notified her he proposed to cancel her contract for cause; that, after a hearing, he adhered to his decision and the County Superintendent affirmed his action; that, despite what occurred in July, 1933, the petitioner was permitted to teach during the school year 1933-1934 and the respondent was presently threatening to terminate her employment at the end of that year. The complaint alleged the termination of her employment would be a breach of her contract with the school corporation. The respondent demurred on the grounds that (1) the complaint disclosed the matters pleaded had been submitted to the respondent and the County Superintendent who were authorized to try the issues and had lawfully determined them in favor of the respondent; and (2) the Teachers’ Tenure Law had been repealed in respect of teachers in township schools. The demurrer was sustained and the petitioner appealed to the State Supreme Court which affirmed the judgment.² The court did not discuss the first ground of demurrer relating to the action taken in the school year 1932-1933, but rested its decision upon the second, that, by an Act of 1933, the Teachers’ Tenure Law had been repealed as respects teachers in township schools; and held that the repeal did not deprive the petitioner of a vested property right and did not impair her contract within the meaning of the Constitution. In its original opinion the Court said: “The relatrix contends . . . that, having become a permanent teacher under the Teachers’ Tenure Law before the amendment, she had a vested property right in her indefinite contract, which may not be impaired under the Constitution. The question is whether there is a vested right in a permanent teacher’s contract; whether, under the tenure law, there is a grant which cannot lawfully be impaired by a repeal of the statute.” Where the state court does not decide against a petitioner or appellant upon an independent state ground, but deeming the federal question to be before it, actually entertains and decides that question adversely to the federal right asserted, this Court has jurisdiction to review the judgment if, as here, it is a final judgment.³ We cannot refuse jurisdiction because the state court might have based its decision, consistently with the record, upon an independent and adequate non-federal ground. And since the amendment of the judiciary act of 1789⁴ by the act of February 5, 1867 ⁵ it has always been held this Court may examine the opinion of the state court to ascertain whether a federal question was raised and decided, and whether the court rested its judgment on an adequate non-federal ground.⁶ Any ambiguity arising from the generality of the court’s reference to the Constitution is resolved by a certificate signed by all the Justices of the Court, made a part of the record, to the effect that the reference to the Constitution in the opinion was to Art. I, § 10 of the Constitution of the United States.⁷ It thus appearing that the constitutional validity of the repealing act was drawn in question, and the statute sustained, we issued the writ of certiorari.

The court below holds that in Indiana teachers’ contracts are made for but one year; that there is no contractual right to be continued as a' teacher from year to year; that the law grants a privilege to one who has taught five years and signed a new contract to continue in employment under given conditions; that the statute is directed merely to the exercise of their powers by the school authorities and the policy therein expressed may be altered at the will of the legislature; that in enacting laws for the government of public schools the legislature exercises a function of sovereignty and the power to control public policy in respect of their management and operation cannot be contracted away by one legislature so as to create a permanent public policy unchangeable by succeeding legislatures. In the alternative the court declares that if the relationship be considered as controlled by the rules of private contract the provision for reemployment from year to year is unenforceable for want of mutuality.

As in most cases brought to this court under the contract clause of the Constitution, the question is as to the existence and nature of the contract and not as to the construction of the law which is supposed to impair it. The principal function of a legislative body is not to make contracts but to make laws which declare the policy of the state and are subject to repeal when a subsequent legislature shall determine to alter that policy. Nevertheless, it is established that a legislative enactment may contain provisions which, when accepted as the basis of action by individuals, become contracts between them and the State or its subdivisions within the protection of Art. I, § 10.⁸ If the people’s representatives deem it in the public interest they may adopt a policy of contracting in respect of public business for a term longer than the life of the current session of the legislature. This the petitioner claims has been done with respect to permanent teachers. The Supreme Court has decided, however, that it is the state’s policy not to bind school corporations by contract for more than one year.

On such a question, one primarily of state law, we accord respectful consideration and great weight to the views of the State’s highest court but, in order that the constitutional mandate may not become a dead letter, we are bound to decide for ourselves whether a contract was made, what are its terms and conditions, and whether the State has, by later legislation, impaired its obligation.⁹ This involves an appraisal of the statutes of the State and the decisions of its courts.

The courts of Indiana have long recognized that the employment of school teachers was contractual and have afforded relief in actions upon teachers’ contracts.¹⁰ An Act adopted in 1899¹¹ required all contracts between teachers and school corporations to be in writing, signed by the parties to be charged, and to be made a matter of public record. A statute of 1921¹² enacted that every such contract should be in writing and should state the date of the beginning of the school term, the number of months therein, the amount of the salary for the term, and the number of payments to be made during the school year.

In 1927 the State adopted the Teachers’ Tenure Act13 under which the present controversy arises. The pertinent portions are copied in the margin.¹⁴ By this Act it was provided that a teacher who has served under contract for five or more successive years, and thereafter enters into a contract for further service with the school corporation, shall become a permanent teacher and the contract, upon the expiration of its stated term, shall be deemed to continue in effect for an indefinite period, shall be known as an indefinite contract, and shall remain in force unless succeeded by a new contract or cancelled as provided in the Act. The corporation may cancel the contract, after notice and hearing, for incompetency, insubordination, neglect of duty, immorality, justifiable decrease in the number of teaching positions, or other good or just cause, but not for political or personal reasons. The teacher may not cancel the contract during the school term nor for a period of thirty days previous to the beginning of any term (unless by mutual agreement) and may cancel only upon five days’ notice.

By an amendatory Act of 1933¹⁵ township school corporations were omitted from the provisions of the Act of 1927. The court below construed this Act as repealing the Act of 1927 so far as township schools and teachers are concerned and as leaving the respondent free to terminate the petitioner’s employment. But we are of opinion that the petitioner had a valid contract with the respondent, the obligation of which would be impaired by the termination of her employment.

Where the claim is that the State’s policy embodied in a statute is to bind its instrumentalities by contract, the cardinal inquiry is as to the terms of the statute supposed to create such a contract. The State long prior to the adoption of the Act of 1927 required the execution of written contracts between teachers and school corporations, specified certain subjects with which such contracts must deal, and required that they be made a matter of public record. These were annual contracts, covering a single school term. The Act of 1927 announced a new policy that a teacher who had served for five years under successive contracts, upon the execution of another was to become a permanent teacher and the last contract was to be indefinite as to duration and terminable by either party only upon compliance with the conditions set out in the statute. The policy which induced the legislation evidently was that the teacher should have protection against the exercise of the right, which would otherwise inhere in the employer, of terminating the employment at the end of any school term without assigned reasons and solely at the employer’s pleasure. The state courts in earlier cases so declared.¹⁶

The title of the Act is couched in terms of contract. It speaks of the making and cancelling of indefinite contracts. In the body the word “contract” appears ten times in § 1, defining the relationship; eleven times in § 2, relating to the termination of the employment by the employer, and four times in § 4, stating the conditions of termination by the teacher.

The tenor of the Act indicates that the word “contract” was not used inadvertently or in other than its usual legal meaning. By § 6 it is expressly provided that the Act is a supplement to that of March 7, 1921, supra, requiring teachers’ employment contracts to be in writing. By § 1 it is provided that the written contract of a permanent teacher “shall be deemed to continue in effect for an indefinite period and shall be known as an indefinite contract.” Such an indefinite contract is to remain in force unless succeeded by a new contract signed by both parties or cancelled as provided in § 2. No more apt language could be employed to define a contractual relationship. By § 2 it is enacted that such indefinite contracts may be cancelled by the school corporation only in the manner specified. The admissible grounds of cancellation, and the method by which the existence of such grounds shall be ascertained and made a matter of record, are carefully set out. Section 4 permits cancellation by the teacher only at certain times consistent with the convenient administration of the school system and imposes a sanction for violation of its requirements. Examination of the entire Act convinces us that the teacher was by it assured of the possession of a binding and enforceable contract against school districts.

Until its decision in the present case the Supreme Court of the State had uniformly held that the teacher’s right to continued employment by virtue of the indefinite contract created pursuant to the Act was contractual.

In School City of Elwood v. State ex rel. Griffin, 203 Ind. 626; 180 N. E. 471, it was said (p. 634) :

“The position of a teacher in the public schools is not a public office, but an employment by contract between the teacher and the school corporation. The relation remains contractual after the teacher has, under the provisions of a teachers’ tenure law, become a permanent teacher—but the terms and conditions of the contract-are thereafter governed primarily by the statute.”

In Kostanzer v. State, 205 Ind. 536; 187 N. E. 337, an action in mandate to compel reinstatement of a discharged teacher, it was said (p. 547):

“If appellee’s position is not an office appellants insist that mandamus is not available for the reason that the granting of mandatory relief results in enforcing a purely contractual right. It is true that mandatory relief against appellants will result in enforcing appellee’s rights under her contract; but the duty which the judgment of the trial court compelled appellants to perform was a duty enjoined by statute and not by contract. The contract between appellants and appellee created a relation which entitled appellee to have appellants perform the duty in question; but the duty was not imposed by any provision of the contract.”

And in the same case it was also said (pp. 548-549):

. “The tenure act permits a teacher to cancel his contract at any time after the close of a school term up to thirty days prior to the beginning of the next school term, provided five days’ notice is given, and appellant contends that there was no contract between appellee and appellants for the reason ‘that a contract which does not bind both parties binds neither of them.’ This proposition is undoubtedly supported by the law of contracts. But there is nothing in the law of contracts to prevent one party to a contract granting to the other the privilege of rescission or cancellation on terms not reserved to the former party. The local school corporations are agents of the state in the administration of the public schools and the General Assembly has the power to prescribe the terms of the contract to be executed by these agents.”

In State v. Board of School Commissioners of Indianapolis, 205 Ind. 582; 187 N. E. 392, an action in mandate to compel reinstatement of a discharged teacher, the court referred to the indefinite contract of a permanent teacher and held that it remained in full force and effect until succeeded by a new contract or cancelled as provided in § 2 of the Act.

In Arburn v. Hunt, 207 Ind. 61; 191 N. E. 148, it is said: “The source of authority for the so-called permanent teacher’s contract is the statute. The legislature need not have provided for such contracts, but, since it did so provide, the entire statute, with all of its provisions, must be read into and considered as a part of the contract.”

We think the decision in this case runs counter to the policy evinced by the Act of 1927, to its explicit mandate and to earlier decisions construing its provisions. Also that the decision in Phelps v. Board of Education, 300 U. S. 319, that the Act there considered did not create a contract, is not, as the court below suggests, authority for a like result here. Dodge v. Board of Education, 302 U. S. 74, on which the respondent relies is distinguishable, because the statute there involved did not purport to bind the respondent by contract to the payment of retirement annuities, and similar legislation in respect of other municipal employees had been consistently construed by the courts as not creating contracts.

The respondent urges that every contract is subject to the police power and that in repealing the Teachers’ Tenure Act the legislature validly exercised that reserved power of the state. The sufficient answer is found in the statute. By § 2 of the Act of 1927 power is given to the school corporation to cancel a teacher’s indefinite contract for incompetency, insubordination (which is to be deemed to mean wilful refusal to obey the school laws of the state or reasonable rules prescribed by the employer), neglect of duty, immorality, justifiable decrease in the number of teaching positions or other good and just cause. The permissible reasons for cancellation cover every conceivable basis for such action growing out of a deficient performance of the obligations undertaken by the teacher, and diminution of the school requirements. Although the causes specified constitute in themselves just and reasonable grounds for the termination of any ordinary contract of employment, to preclude the assumption that any other valid ground was excluded by the enumeration, the legislature added that the relation might be terminated for any other good and just cause. Thus in the declaration of the state’s policy, ample reservations in aid of the efficient administration of the school system were made. The express prohibitions are that the contract shall not be cancelled for political or personal reasons. We do not think the asserted change of policy evidenced by the repeal of the statute is that school boards may be at liberty to cancel a teacher’s contract for political or personal reasons. We do not understand the respondent so to contend. The most that can be said for his position is that, by the repeal, township school corporations were again put upon the basis of annual contracts, renewable at the pleasure of the board. It is significant that the Act of 1933 left the system of permanent teachers and indefinite contracts untouched as respects school corporations in cities and towns of the state. It is not contended, nor can it be thought, that the legislature of 1933 determined that it was against public policy for school districts in cities and towns to terminate the employment of teachers of five or more years’ experience for political or personal reasons and to permit cancellation, for the same reasons, in townships.

Our decisions recognize that every contract is made subject to the implied condition that its fulfillment may be frustrated by a proper exercise of the police power but we have repeatedly said that, in order to have this effect, the exercise of the power must be for an end which is in fact public and the means adopted must be reasonably adapted to that end,¹⁷ and the Supreme Court of Indiana has taken the same view in respect of legislation impairing the obligation of the contract of a state instrumentality.¹⁸ The causes of cancellation provided in the Act of 1927 and the retention of the system of indefinite contracts in all municipalities except townships by the Act of 1933 are persuasive that the repeal of the earlier Act by the latter was not an exercise of the police power for the attainment of ends to which its exercise may properly be directed.

As the court below has not passed upon one of the grounds of demurrer which appears to involve no federal question, and may present a defense still open to the respondent, we reverse the judgment and remand the cause for further proceedings not inconsistent with this opinion.

Reversed.

Mr. Justice Cardozo took no part in the consideration or decision of this case.

2 5 N. E. (2d) 531; on rehearing, 7 N. E. (2d) 777; dissenting opinion of Treanor, J., 5 N. E. (2d) 913.

3 Murdock v. Memphis, 20 Wall. 590, 635-6; Henderson Bridge Co. v. Henderson, 173 U. S. 592, 608; Rogers v. Hennepin County, 240 U. S. 184, 188-189; Grayson v. Harris, 267 U. S. 352, 358; Virginia v. Imperial Coal Sales Co., 293 U. S. 15, 16; International Steel Co. v. National Surety Co., 297 U. S. 657, 666.

4 § 25, 1 Stat. 85.

5 §2, 14 Stat. 386.

6 Murdock v. Memphis, 20 Wall. 590, 633-634; Kreiger v. Shelby R. Co., 125 U. S. 39, 44; Bank of Commerce v. Tennessee, 163 U. S. 416, 421; Thompson v. Maxwell Land Grant Co., 168 U. S. 451, 456; Columbia Water Power Co. v. Columbia Electric St. Ry. Co., 172 U. S. 475, 488-489; Abie State Bank v. Bryan, 282 U. S. 765, 771; Utley v. St. Petersburg, 292 U. S. 106, 111; Fox Film Corp. v. Muller, 296 U. S. 207, 209.

7 International Steel Co. v. National Surety Co., 297 U. S. 657, 662.

8 New Jersey v. Yard, 95 U. S. 104, 113, 114.

9 Phelps v. Board of Education, 300 U. S. 319, 322, and cases cited.

10 City of Crawfordsville v. Hays, 42 Ind. 200; Charlestown School Twp. v. Hay, 74 Ind. 127; Harrison School Twp. v. McGregor, 96 Ind. 185; Kiefer v. Troy School Twp., 102 Ind. 279; 1 N. E. 560; Sparta School Twp. v. Mendell, 138 Ind. 188; 37 N. E. 604; School City of Lafayette v. Bloom, 17 Ind. App. 461; 46 N. E. 1016; Henry School Twp. v. Meredith, 32 Ind. App. 607; 70 N. E. 393; Gregg School Twp. v. Hinshaw, 76 Ind. App. 503; 132 N. E. 586.

11 Act of Feb. 28, 1899, G. L. Ind. 1899, p. 173, Burns’ Ind. Stat. Ann. 1933, §§ 28-4302 and 28-4303.

12 Act of March 7, 1921; Acts of 1921, p. 195; Burns’ Ind. Stat. Ann. 1933, § 28-4304.

13 Act of March 8, 1927; Acts of 1927, p. 259, Burns’ Ind. Stat. Ann. Supp. 1929, § 6967.1.

14 “Section 1. Be it enacted by the general assembly of the State of Indiana, That any person who has served or who shall serve under contract as a teacher in any school corporation in the State of Indiana for five or more successive years, and who shall hereafter enter into a teacher’s contract for further service with such corporation, shall thereupon become a permanent teacher of such school corporation. . . . Upon the expiration of any contract between such school corporation and a permanent teacher, such contract shall be deemed to continue in effect for an indefinite period and shall be known as an indefinite contract. Such an indefinite contract shall remain in force unless succeeded by a new contract signed by both parties or unless it shall be cancelled as provided in section 2 of this act: Provided, That teachers’ contracts shall provide for the annual determination of the date of beginning and length of school terms by the school corporation: and, Provided, further, That teachers’ contracts may contain provisions for the fixing of the amount of annual compensation from year to year by a salary schedule adopted by the school corporation and such schedule shall be deemed to be a part of such contract: and, Provided, further, That such schedule may be changed by such school corporation on or before May 1st of any year, such changes to become effective at the beginning of the following school year: Provided, That all teachers affected by such changes shall be furnished with printed copies of such changed schedule within thirty days after its adoption.

“Sec. 2. Any indefinite contract with a permanent teacher as defined in section 1 of this act may be cancelled only in the following manner: Not less than thirty days nor more than forty days before the consideration by any school corporation of the cancellation of any such contract, such teacher shall be notified in writing of the exact date, time when and place where such consideration is to take place; and such teacher shall be furnished a written statement of the reasons for such consideration, within five days after any written request for such statement; and such teacher shall, upon written request for a hearing, filed within fifteen days after the receipt by said teacher of notice of date, time and place of such consideration, be given such a hearing before the school board, in the case of cities and towns, and before the township trustee, in the case of townships; such hearing shall be held not less than five days after such request is filed and such teacher shall be given not less than five days’ notice of the time and place of such hearing. Such teacher, at the hearing, shall have a right to a full statement of the reasons for the proposed cancellation of such contract, and shall have a right to be heard, to present the testimony of witnesses and other evidence bearing upon the reasons for the proposed cancellation of such contract. No such contract shall be cancelled until the date set for consideration of the cancellation of such contract; nor until after a hearing is held, if • such hearing is requested by said teacher; nor until, in the case of teachers, supervisors, and principals, the city or town superintendents, in cities and towns, and the comity superintendents, in townships and in cities and towns not having superintendents, shall have given the school corporation his recommendations thereon, and it shall be the duty of such superintendent to present such recommendations upon five days’ written notice to him by such school corporation. . . . Cancellation of an indefinite contract of a permanent teacher may be made for incompetency, insubordination (which shall be deemed to mean a wilful refusal to obey the school laws of this state or reasonable rules prescribed for the government of the public schools of such corporation), neglect of duty, immorality, justifiable decrease in the number of teaching positions or other good and just cause, but may not be made for political or personal reasons: . . .

“Sec. 4. No permanent teacher shall be permitted to cancel his indefinite contract during the school term for which his said contract is in effect nor for a period of thirty (30) days previous to the beginning of such school term unless such cancellation is mutually agreed upon; such permanent teacher shall be permitted to cancel his indefinite contract at any other time by giving a five days’ notice to the school corporation. Any permanent teacher cancelling his indefinite contract in any other manner than in this section provided shall be deemed guilty of unprofessional conduct and the state superintendent is hereby authorized to suspend the license of such teacher for a period of not exceeding one year. . . .

“Sec. 6. This act shall be construed as supplementary to an act of the general assembly, page 195, acts 1921, entitled, ‘An act concerning teachers’ contracts and providing for the repeal of conflicting laws.’ ”

15 Act of March 1, 1933, Acts of 1933, p. 716, Burns’ Ind. Stat. Ann. 1933, § 28-4307.

16 Ratcliff v. Dick Johnson School Twp., 204 Ind. 525; 185 N. E. 143; Kostanzer v. State, 205 Ind. 536; 187 N. E. 337; State v. Stout, 206 Ind. 58; 187 N. E. 267; Arburn v. Hunt, 207 Ind. 61; 191 N. E. 148.

17 Home Bdg. & Loan Assn. v. Blaisdell, 290 U. S. 398, 438; Worthen Co. v. Thomas, 292 U. S. 426, 431, 432; Worthen Co. v. Kavanaugh, 295 U. S. 56, 60; Treigle v. Acme Homestead Assn., 297 U. S. 189, 197.

18 Central Union Tel. Co. v. Indianapolis Tel. Co., 189 Ind. 210; 126 N. E. 628; Downing v. Indiana State Board of Agriculture, 129 Ind. 443 ; 28 N. E. 123.