Source: https://openjurist.org/323/us/459
Timestamp: 2019-04-23 00:32:10+00:00

Document:
DEPARTMENT OF TREASURY OF STATE OF INDIANA et al.
The District Court denied recovery. The Circuit Court of Appeals affirmed.4 Certiorari was granted5 on petitioner's assertion of error in that the Circuit Court of Appeals decided an important question of local law probably in conflict with an applicable decision of the Supreme Court of Indiana. Department of Treasury v. International Harvester Co., 221 Ind. 416, 47 N.E.2d 150. As we conclude that petitioner's action could not be maintained in the federal court, we do not decide the merits of the issue.
Petitioner's right to maintain this action in a federal court depends first, upon whether the action is against the State of Indiana or against an individual. Secondly, if the action is against the state, whether the state has consented to be sued in the federal courts. Recently these questions were discussed in Great Northern Life Insurance Co. v. Read, 322 U.S. 47, 64 S.Ct. 873.
In that case this Court held that as the suit was against a state official as such, through proceedings which were authorized by statute to compel him to carry out with state funds the state's agreement to reimburse moneys illegally exacted under color of the tax power, the suit was one against the state. We said that such a suit was clearly distinguishable from actions against a tax collector to recover a personal judgment for money wrongfully collected under color of state law. 322 U.S. 47, 50, 51, 64 S.Ct. 873, 874, 875. Where relief is sought under general law from wrongful acts of state officials, the sovereign's immunity under the Eleventh Amendment does not extend to wrongful individual action, and the citizen is allowed a remedy against the wrongdoer personally. Atchison, T. & S.F. Ry. Co. v. O'Connor, 223 U.S. 280, 32 S.Ct. 216, 56 L.Ed. 436, Ann.Cas.1913C, 1050; cf. Matthews v. Rodgers, 284 U.S. 521, 528, 52 S.Ct. 217, 220, 76 L.Ed. 447. Where, however, an action is authorized by statute against a state officer in his official capacity and constituting an action against the state, the Eleventh Amendment operates to bar suit except in so far as the statute waives state immunity from suit. Smith v. Reeves, 178 U.S. 436, 20 S.Ct. 919, 44 L.Ed. 1140; Great Northern Life Insurance Co. v. Read, 322 U.S. 47, 64 S.Ct. 873.
We are of the opinion that petitioner's suit in the instant case against the department and the individuals as the board constitutes an action against the State of Indiana. A state statute prescribed the procedure for obtaining refund of taxes illegally exacted, providing that a taxpayer first file a timely application for a refund with the state department of treasury.6 Upon denial of such claim, the taxpayer is authorized to recover the illegal exaction in an action against the 'department.' Judgment obtained in such action is to be satisfied by payment 'out of any funds in the state treasury.'7 This section clearly provides for a action against the state, as opposed to one against the collecting official individually. No state court decision has been called to our attention which would indicate that a different interpretation of this statute has been adopted by state courts.
Petitioner's suit in the federal District Court is based on § 64-2614(a) of the Indiana statutes and therefore constitutes an action against the state, not against the collecting official as an individual. Petitioner brought its action in strict accord with § 64-2614(a). The action is against the state's department of treasury. The complaint carefully details compliance with the provisions of § 64-2614(a) which require a timely application for refund to the department as a prerequisite to a court action authorized in the section. It is true the petitioner in the present proceeding joined the Governor, Treasurer and Auditor of the state as defendants, who 'together constitute the Board of Department of Treasury of the State of Indiana.' But, they were joined as the collective representatives of the state, not as individuals against whom a personal judgment is sought. The petitioner did not assert any claim to a personal judgment against these individuals for the contested tax payments. The petitioner's claim is for a 'refund,' not for the imposition of personal liability on individual defendants for sums illegally exacted. We have previously held that the nature of a suit as one against the state is to be determined by the essential nature and effect of the proceeding. Ex parte Ayers, 123 U.S. 443, 490, 499, 8 S.Ct. 164, 174, 175, 31 L.Ed. 216; Ex parte State of New York, 256 U.S. 490, 500, 41 S.Ct. 588, 590, 65 L.Ed. 1057; Worcester County Trust Co. v. Riley, 302 U.S. 292, 296, 298, 58 S.Ct. 185, 186, 187, 82 L.Ed. 268. And when the action is in essence one for the recovery of money from the state, the state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants. Smith v. Reeves, supra; Great Northern Life Insurance Co. v. Read, supra. We are of the opinion, therefore, that the present proceedings was brought in reliance on § 64-2614(a) and is a suit against the state.
The Eleventh Amendment provides that: 'The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State or by Citizens or Subjects of any Foreign State.' This express constitutional limitation denies to the federal courts authority to entertain a suit brought by private parties against a state without its consent. Hans v. State of Louisiana, 134 U.S. 1, 10, 10 S.Ct. 504, 505, 33 L.Ed. 842; Ex parte State of New York, 256 U.S. 490, 497, 41 S.Ct. 588, 589, 65 L.Ed. 1057; State of Missouri v. Fiske, 290 U.S. 18, 25, 54 S.Ct. 18, 20, 78 L.Ed. 145; United States v. United States Fidelity & Guaranty Co., 309 U.S. 506, 512, 60 S.Ct. 653, 656, 84 L.Ed. 894; Great Northern Life Insurance Co. v. Read, supra; State v. Mutual Life Ins. Co., 175 Ind. 59, 71, 93 S.E. 213, 42 L.R.A.,N.S., 256; Hogston v. Bell, 185 Ind. 536, 548, 112 N.E. 883. While the state's immunity from suit may be waived, Clark v. Barnard, 108 U.S. 436, 447, 2 S.Ct. 878, 27 L.Ed. 780; Gunter v. Atlantic Coast Line, 200 U.S. 273, 26 S.Ct. 252, 50 L.Ed. 477; State of Missouri v. Fiske, 290 U.S. 18, 24, 54 S.Ct. 18, 78 L.Ed. 145, there is nothing to indicate authorization of such waiver by Indiana in the present proceeding.
It remains to be considered whether the attorney general for the State of Indiana in his conduct of the present proceeding has waived the state's immunity from suit. The state attorney general is authorized to represent the state in actions brought under the Indiana refund statute.11 He appeared in the federal District Court and the Circuit Court of Appeals and defended the suit on the merits. The objection to petitioner's suit as a violation of the Eleventh Amendment was first made and argued by Indiana in this Court. This was in time, however. The Eleventh Amendment declares a policy and sets forth an explicit limitation on federal judicial power of such compelling force that this Court will consider the issue arising under this Amendment in this case even though urged for the first time in this Court.
We interpret this provision as indicating a policy prohibiting state consent to suit in one particular case in the absence of a general consent to suit in all similar causes of action. Since the state legislature may waive state immunity only by general law, it is not to be presumed in the absence of clear language to the contrary, that they conferred on administrative or executive officers discretionary power to grant or withhold consent in individual cases. Nor do we think that any of the general or special powers conferred by statute on the Indiana attorney general to appear and defend actions brought against the state or its officials can be deemed to confer on that officer power to consent to suit against the state in courts when the state has not consented to be sued.13 State court decisions construe strictly the statutory powers conferred on the Indiana state attorney general and hold that he exercises only those powers 'delegated' to him by statute and does not possess the powers of an attorney general at 'common law.'14 It would seem, therefore, that no properly authorized executive or administrative officer of the state has waived the state's immunity to suit in the federal courts.
Gunter v. Atlantic Coast Line, 200 U.S. 273, 26 S.Ct. 252, 50 L.Ed. 477, is not applicable to the instant case since it involved a taxpayer's ancillary suit to enjoin South Carolina tax officials from collecting taxes in violation of an earlier decision of this Court upholding the validity of a state agreement of exempt the taxpayer's property. Humphrey v. Pegues, 16 Wall. 244, 21 L.Ed. 326. The Pegues case involved a suit against the state in the person of its tax officials, the state attorney general appearing for the state and arguing the case on the merits, no issue of sovereign immunity being raised. In the Gunter proceeding, brought over twenty years later, defendant South Carolina attacked the validity of the Pegues judgment on the gound that in that proceeding the state had not consented to be sued. This Court held the Pegues judgment was res judicata and binding on the state because the South Carolina statutes conferred on the state officials and the attorney general power there to 'stand in judgment for the state,' 200 U.S. at pages 285, 286, 26 S.Ct. at page 256, 50 L.Ed. 477. The state's submission to the court was authorized by statute not by the unauthorized consent of an official. Farish v. State Banking Board, 235 U.S. 498, 512, 35 S.Ct. 185, 189, 59 L.Ed. 330. No distinction was drawn between federal and state courts. Reliance was placed on contemporaneous administrative interpretation of the state statutes, absence of any legislative action repudiating the attorney general's conduct of the case and the failure of the state government in all its departments, for more than twenty years, to assert any right in conflict with the Pegues adjudication. Administrative construction by a state of its statutes of consent has influence in determining our conclusions. Great Northern Life Insurance Co. v. Read, supra.
We need not consider the present status of the board of the department of treasury as § 64-2614, Burns, Indiana Stat.Ann. (1943 Replacement), provides for suit agaisnt the 'department.' See Indiana Acts 1933, ch. 4, § 13; Indiana Acts 1941, ch. 4 and ch. 13, §§ 2, 8; Tucker v. State, 218 Ind. 614, 35 N.E.2d 270.
Burns, Indiana Stat.Ann. § 64-2602 (1943 Replacement).
Ford Motor Co. v. Department of Treasury of State of Indiana et al., 7 Cir., 141 F.2d 24.
322 U.S. 721, 64 S.Ct. 1266.
See note 3 supra, § 64-2614(a).
Burns, Indiana Stat.Ann. § 64-2614(b) (1943 Replacement).
It does not appear that the right to sue the department of treasury for erroneous tax payments, which was granted by § 64-2614(a), Burns, Indiana Stat.Ann. (1943 Replacement) (see Acts 1937, ch. 117, § 14, pp. 631, 632) has been repealed or transferred to the state board of finance by the Acts 1941, ch. 27, or otherwise.
If it is held by Indiana that the state's consent to be sued for the recovery of taxes was covered by § 60-310 rather than by § 64-2614(a), we should be of the opinion, until otherwise advised by Indiana adjudications, that the consent was limited to suits in the state courts.
Reference to a particular state court in a California statute similar to § 64-2614 was held to warrant an inference that the state legislature consented to suit against the state in a state court only. See Smith v. Reeves, 178 U.S. 436, 441, 20 S.Ct. 919, 921, 44 L.Ed. 1140.
State ex rel. Woodward v. Smith, 85 Ind.App. 56, 152 N.E. 836, is the only Indiana decision which has come to our attention as involving the authority of state executive or administrative officials to consent to suit against the state. In that case plaintiff sued to foreclose a mortgage on certain land and joined the state of Indiana as defendant in order to obtain cancellation of a prior judgment lien on this property in favor of the state. The defendant state filed a cross-complaint for affirmative relief seeking satisfaction of its lien. The intermediate state court held that since the state appeared, pleaded to the merits and filed a cross-complaint for affirmative relief, it thereby consented that it might be made a party to determine the priority of its lien. This case involves an application of the well-accepted principle that when a sovereign sues for affirmative relief, it is deemed to have waived its sovereign immunity as to the issues presented by its affirmative claim. State v. Portsmouth Savings Bank, 106 Ind. 435, 7 N.E. 379.
Section 64-2614(c) specifically authorizes him to represent the state in actions brought under the provisions of § 64-2614(a) under which petitioner's suit is brought. See note 11, supra.
State ex rel. v. Home Brewing Co., 182 Ind. 75, 87—95, 105 N.E. 909; Julian et al. v. State, 122 Ind. 68, 23 N.E. 690. Various lower federal court decisions have held that a state attorney general cannot waive state immunity from suit. Deseret Water, Oil & Irrigation Co. v. State of California, 9 Cir., 202 F. 498; Title Guaranty & Surety Co. v. Guernsey, D.C., 205 F. 91; O'Connor v. Slaker, 8 Cir., 22 F.2d 147; Dunnuck v. Kansas State Highway Commission, D.C., 21 F.Supp. 882. The United States Attorney General has been held to be without power to waive the sovereign immunity of the United States. Stanley v. Schwalby, 162 U.S. 255, 269, 270, 16 S.Ct. 754, 760, 40 L.Ed. 960; cf. United States v. Shaw, 309 U.S. 495, 501, 60 S.Ct. 659, 661, 84 L.Ed. 888.
See Richardson v. Fajardo Sugar Co., 241 U.S. 44, 36 S.Ct. 476, 60 L.Ed. 879, where, without consideration of any limitations on his powers, we held that the attorney general of Puerto Rico could waive its sovereign immunity.

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