Opinion ID: 1793194
Heading Depth: 2
Heading Rank: 1

Heading: Proprietary Versus Governmental Functions.

Text: The City argues that only the City street department knew that the manhole covering the stop boxes and shut-off valves had been paved over, and this knowledge cannot be imputed to the water division. Further, it argues that regardless of such knowledge, the water division had no duty to the College under the common law to keep the stop boxes or shut-off valves accessible, to warn about their location or to train its employees how to find privately-owned stop boxes and shut-off valves, nor did it assume such a duty by ordinance or contract. It argues that the City's negligence, if any, was in paving over the manhole cover, not in any water division functions, and that the paving over of the manhole cover constitutes a condition of public property. As the College never claimed that any exception to sovereign immunity applied to its paving under sections 537.600(2) and 537.610, RSMo 1994, [2] the City argues it has no liability at all. The College alleged that the trial court was correct in finding the City negligent because the City water division was acting in a proprietary capacity in selling water to its customers for profit; thus, sovereign immunity does not apply to it. Under the common law, only the State and its entities were entitled to complete sovereign immunity from all tort liability. Jungerman v. City of Raytown, 925 S.W.2d 202, 204 (Mo. banc 1996). Municipal corporations traditionally have had immunity, however, for those actions they undertake as a part of the municipality's governmental functions  actions benefiting the general public. Id. See also, State ex rel. St. Louis Hous. Auth. v. Gaertner, 695 S.W.2d 460, 462 (Mo. banc 1985). Municipal corporations do not enjoy sovereign immunity in tort while performing proprietary functions. Proprietary functions are those actions performed for the special benefit or profit of the municipality acting as a corporate entity. Jungerman, 925 S.W.2d at 204. See also, Dallas v. City of St. Louis, 338 S.W.2d 39, 44 (Mo.1960); State ex rel. City of Marston v. Mann, 921 S.W.2d 100, 102 (Mo.App. S.D.1996); Schulz Through Schulz v. City of Brentwood, 725 S.W.2d 157, 160 (Mo.App. E.D.1987). In 1978, when the legislature reinstated sovereign immunity in tort as it existed at common law, sec. 537.600, it created two exceptions to sovereign immunity in tort for: (1) Injuries directly resulting from the negligent acts or omissions of public employees arising out of the operation of motor vehicles ...; (2) Injuries caused by the condition of a public entity's property if the plaintiff establishes that the property was in a dangerous condition at the time of the injury, .... Sec. 537.600.1. In 1985, the legislature further clarified the application of this provision to municipalities by adding section 537.600.2, which states: The express waiver of sovereign immunity in the instances specified in subdivisions (1) and (2) of this section are absolute waivers of sovereign immunity in all cases within such situations whether or not the public entity was functioning in a governmental or proprietary capacity and whether or not the public entity is covered by a liability insurance for tort. Sec. 537.600.2. In Wollard v. City of Kansas City, 831 S.W.2d 200 (Mo. banc 1992), this Court held that if the conduct that forms the basis of the claim pertains to a dangerous condition of public property, and so comes within the terms of section 537.600, then the previous distinctions between proprietary and governmental functions are irrelevant. The statute provides for a complete waiver of sovereign immunity, regardless whether the conduct would previously have been considered proprietary or governmental, but recovery is limited to the amount prescribed by statute. See secs. 537.610; 537.615, RSMo 2000. The College does not attack Wollard or address its potential application to the repaving of Oakland Avenue; therefore, there is no reason for this Court to reach the question whether such repaving created a dangerous condition of public property or whether the statutory limitation on damages applies to any negligence in repaving. Rather, the College asserts that section 537.600 and any limitations on recovery for a dangerous condition of public property are irrelevant, for it is not suing for a dangerous condition of public property, nor has it alleged it is entitled to recover from the City for improperly paving over the stop box and shut-off valve. It instead asserts fault on the City's part in its functions and capacity as a supplier of water. The College argues that because the alleged negligence of the City as a supplier of water does not involve a condition of public property, section 537.600.2 is irrelevant, and the distinction between proprietary and governmental functions therefore applies to the City in its capacity as supplier of water. Therefore, the College argues, the City is liable if its supplying of water is a proprietary function and if the water division had and breached a duty either to: 1) maintain the accessibility of the fire line shut-off valve; 2) mark the location of the paved manhole cover or warn the College that it was paved over; or 3) properly train its water division employees so that they could locate the shut-off valve in a timely fashion. The College alleged that these duties on the part of the City arose under the common law, or alternatively, that the City assumed these duties in 1993 when it passed an ordinance requiring the City to uncover paved-over manhole covers in certain circumstances, and that the City breached one or more of these duties. [3] The College is correct that the limitations on liability set out in section 537.600.1 do not apply where the alleged tort does not involve a dangerous condition of public property or the operation of a motor vehicle, and that in such cases the distinction between whether a municipality is operating in a proprietary or governmental capacity is still important. Numerous cases have addressed whether a municipal water division is acting in a proprietary or governmental capacity in supplying water as a public utility. Where a city supplies water for use in putting out fires, it is performing a governmental function and is immune from liability. See Lober v. Kansas City, 74 S.W.2d 815, 822 (Mo.1934) (noting that in the extinguishment of fires, a municipality acts in its governmental capacity). See also, Theodoro v. City of Herculaneum, 879 S.W.2d 755, 761 (Mo.App. E.D.1994) (The creation of a municipal fire department is for the benefit of the general public, and therefore, any act or omission of the municipality associated with the performance of this service is a governmental function for which the municipality ordinarily may not be held liable.); O'Dell v. City of Breckenridge, 859 S.W.2d 166, 168 (Mo.App. W.D.1993) (accord). But, when a municipality is in the business of selling water to customers for profit or revenue, it is engaged in a proprietary function. Lober, 74 S.W.2d at 822. Here, it is stipulated that the City operates a Water Division which distributes and sells water to residential, commercial and industrial customers, including the College. The water that flooded was not being used by it to fight a fire or for another public purpose. The water was being purchased by the College to run through lines solely owned by the College and intended for use solely on its property. In supplying this water, the City was engaged in a proprietary function, and its alleged fault in regard to supplying water for use in this private line does not constitute a dangerous condition of public property, so that sovereign immunity principles do not apply.