Opinion ID: 1920417
Heading Depth: 1
Heading Rank: 4

Heading: breach of contract, implied contract and equitable claims

Text: The circuit court dismissed Candee's breach of contract, implied contract and equitable claims based on the rationale of G.H. Lindekugel & Sons, Inc. v. South Dakota St. Hy. C., 87 S.D. 32, 202 N.W.2d 125 (1972). In Lindekugel, the court construed SDCL 31-2-34 through 31-2-39 as a procedural remedy and not an appropriation statute that would allow payment of a judgment for breach of contract against the State of South Dakota. The court also based its decision upon Article XI, §§ 8 and 9 of the state constitution. Upon review, we believe the interpretation provided by the Lindekugel court is overly restrictive. We reach this conclusion by first examining the plain meaning of SDCL 31-2-34 and SDCL 31-2-38. SDCL 31-2-34 provides: The State of South Dakota may be sued and made defendant in any court in which an action is brought against the South Dakota department of transportation respecting any claim, right, or controversy arising out of the work performed, or by virtue of the provisions of any construction contract entered into by the South Dakota department of transportation. Further, SDCL 31-2-38 provides that any successful litigant obtaining a judgment shall be paid out of the state highway fund from all the moneys levied and collected by the state by general state taxation for state highway purposes, or appropriated for state highway purposes. The plain meaning of any claim, right or controversy arising out of the work performed,..., SDCL 31-2-34, permits an action either under the terms of the contract or outside of it for work performed. This interpretation is also supported by the fact that the phrase is followed by the disjunctive phrase or by virtue of the provisions of any construction contract.... SDCL 31-2-34. If contractors are limited to actions under the provisions of the contract, then the phrase any claim right or controversy arising out of the work performed... is meaningless. In interpreting statutes, all provisions within a statute must be given effect if possible. Hartpence v. Youth Forestry Camp, 325 N.W.2d 292 (S.D.1982); Matter of Silver King Mines, Permit EX-5, 315 N.W.2d 689 (S.D.1982). We believe that this interpretation gives effect to all of the provisions of SDCL 31-2-34. Even if a contractor can bring suit under SDCL 31-2-34, an appropriation is necessary to pay a judgment. Article XI, § 9 of the state constitution provides: All taxes levied and collected for state purposes shall be paid into the state treasury. No indebtedness shall be incurred or money expended by the state, and no warrant shall be drawn upon the state treasurer except in pursuance of an appropriation for the specific purpose first made. The Legislature shall provide by suitable enactment for carrying this section into effect. We interpret SDCL 31-2-38 as providing a continuing appropriation for damages awarded and costs assessed against the State of South Dakota as a result of an action against the state under SDCL 31-2-34. The plain meaning of SDCL 31-2-38 is that damages awarded will be paid out of the state highway fund from all the moneys levied and collected by the state by general state taxation for state highway purposes, or appropriated for state highway purposes. Our final consideration is whether our interpretation of SDCL 31-2-34 and 31-2-38 conflicts with the requirements of Article XI, § 8 of the state constitution which requires that the license, registration fees or other charges for operating a motor vehicle on the public highways and the proceeds from taxes for motor fuels used to propel motor vehicles upon public highways, shall be used exclusively for the maintenance, construction and supervision of highways and bridges of this state. On prior occasions, this court has strictly construed the meaning of Article XI, § 8. In Opinion of the Supreme Court Etc., 257 N.W.2d 442 (S.D.1977), the court observed: The history of Article XI, § 8 of our Constitution, ... clearly indicates that this is a restricted and impressed fund created by the Constitution that prevents the use of the funds described in the Article for payment of any obligation of the state other than those described in the Article. Id. at 445. In South Dakota Auto. Club, Inc. v. Volk, 305 N.W.2d 693 (S.D.1981), the court held: [I]n reading the amendment to Art. XI § 8, the obvious intent of the framers and voters was to dedicate the proceeds of the taxes on fuel used by motor vehicles on the highways for the maintenance, construction, and supervision of the highways and bridges over which those motor vehicles traveled. Id. at 699. We do not believe that payment of damages for work performed on a highway construction project violates the intent of Article XI, § 8. We reverse Lindekugel to the extent it holds to the contrary.