Opinion ID: 1664522
Heading Depth: 1
Heading Rank: 6

Heading: Effect of Todd

Text: With that background in mind we turn to the question at hand. Since waiver of this state's sovereign immunity from suit in the federal courts rests with the Legislature, a more accurate phrasing of the question is whether Todd v. Board of Educational Lands and Funds, 154 Neb. 606, 48 N.W.2d 706 (1951), interprets any enactment of the Nebraska Legislature as constituting a waiver of this state's sovereign immunity for actions brought in federal court pursuant to contract. In Todd the plaintiffs brought an action asking for a declaration of their rights. Specifically, they wanted to know whether the assignment provisions in a school land lease could be modified by subsequent legislation. Todd assigned his school land lease to another. When Todd and his assignee applied to the Board of Educational Lands and Funds for approval of the assignment, they were ordered to comply with a new provision enacted by the Legislature subsequent to the creation of Todd's original lease. Todd and the assignee then brought an action in the district court for Lancaster County, Nebraska, alleging that the subsequently enacted law was not applicable to the lease and that if the Legislature intended the law to apply retrospectively, it was invalid and unconstitutional because it would violate both federal and state constitutional mandates and prohibitions. The district court sustained the board's demurrer and dismissed the case. We reversed the district court's judgment, holding that the new legislation did not apply to Todd's lease. In doing so we reasoned: The quoted provision of the statute existed from 1899 to 1947 without change. Laws 1899, c. 69, § 18, p. 310, appearing as § 72-241, R.S.1943. There was during that period no statutory prohibition and no other condition of an assignment of a school land lease. In the absence of statutory or contractual restrictions, a lease for a definite term may be assigned by the lessee without the consent of the lessor. Towle v. Morrell, 129 Neb. 398, 261 N.W. 827; Annotation, 70 A.L.R. 486; Annotation, 23 A.L.R. 135; 32 Am.Jur., Landlord and Tenant, § 319, p. 293. This is true of a lease made by the state. It, by entering into a contract, abandons its attributes of sovereignty and binds itself, to the extent of its power to contract, substantially as an individual does when he makes a contract. The state may not impair any of the substantial rights secured by its contract to a citizen with whom it contracts. Poindexter v. Greenhow, 114 U.S. 270, 29 L.Ed. 185, 5 S.Ct. 903; Carr v. State ex rel. Coetlosquet, 127 Ind. 204, 26 N.E. 778, 11 L.R.A. 370, 22 Am.S.R. 624; Woodruff v. Trapnall, 10 Howard 190, 13 L.Ed. 383; 12 Am.Jur., Constitutional Law, § 400, p. 32. The insertion in the act of 1947 of the provisions that No lease shall be sublet or assigned without the written approval of the board (§ 72-233, R.R.S.1943) and    that the lessee shall not sublease or otherwise dispose of said lands without the written consent of the board    (§ 72-234, R.R.S.1943) directly and strongly supports the meaning ascribed herein to the provision concerning the assignment of a school land lease as it was before that act was passed. The Board of Educational Lands and Funds in leasing school land is limited by the authority granted it by the Legislature. It has no other power. The law on the subject in force at the time of the execution of a lease is a part thereof and determines the rights of the lessee. A lease made in compliance with the direction and permission of the Legislature between the state and the lessee is a contract and is property. The rights resulting from the contract vest on its execution and delivery. The state may not subsequently by legislation deprive the lessee of any substantial right secured to him by the lease. Constitutional guaranties and prohibitions safeguard it. These include the mandate that no state shall deprive any person of property without due process of law; no state shall enact any law impairing the obligations of a contract; and the property of no person shall be taken or damaged for public use without compensation. State v. Platte Valley Public Power & Irrigation Dist., 147 Neb. 289, 23 N.W.2d 300, 166 A.L.R. 1196; Reavis v. State, 140 Neb. 442, 300 N.W. 344; Stanser v. Cather, 85 Neb. 305, 123 N.W. 316; Hile v. Troupe, supra [77 Neb. 199, 109 N.W. 218]; State ex rel. Patterson v. Wenzel, 55 Neb. 210, 75 N.W. 579; State ex rel. Beer v. Thayer, 46 Neb. 137, 64 N.W. 700; State ex rel. Brown v. McPeak, 31 Neb. 139, 47 N.W. 691. 154 Neb. at 610-11, 48 N.W.2d at 710. Patteson claims that our statements in Todd indicate that the state has waived its immunity from suit, both in the state and federal courts, on claims arising out of contracts. To support his assertion he refers us to Smith v. Hanlon, No. CV81-L-273 (D.Neb. Dec. 17, 1982), rev'd on other grounds, Smith v. Sorensen, 748 F.2d 427 (8th Cir.1984), which held, among other things, that Todd did waive the state's immunity from suit in federal court in a contract action. In Smith, employees of CETA, a division of the Department of Labor of the State of Nebraska, brought an action challenging attempted layoffs as violations of their civil rights under 42 U.S.C. § 1983 (1982) and 28 U.S.C. § 1343(3) (1982). The State of Nebraska, the Department of Labor, and the Joint Merit System were named as defendants. The defendants claimed immunity from suit under the eleventh amendment. In denying those claims Chief Judge Warren K. Urbom reasoned: While it is true that states and state agencies such as those mentioned are immune from suit, see Alabama v. Pugh, 438 U.S. 781, 782 [98 S.Ct. 3057, 3057, 57 L.Ed.2d 1114] (1978); Edelman v. Jordan, 415 U.S. 651, 663 [94 S.Ct. 1347, 1355, 39 L.Ed.2d 662] (1974), that immunity may be waived in certain instances. In cases where an action is founded on contract, the Supreme Court of Nebraska has held that the state by entering into a contract, abandons its attribute of sovereignty and binds itself, to the extent of its powers to contract, substantially as an individual does when he makes a contract. Todd v. Board of Ed. Lands, 154 Neb. 606, 610, 48 N.W.2d 706, 710 (1951). It is true that the Todd case involved a lawsuit in Nebraska state court. As such, it may be argued that the waiver in the case does not extend to a federal court, as it is not a clear manifestation of intent to waive immunity. See Kennecott Copper Corp. v. State Tax Commissioner, 327 U.S. 573, 577 [66 S.Ct. 745, 747, 90 L.Ed. 862] (1946); Riggle v. State of California, 577 F.2d 579, 585 (C.A. 9th Cir.1978). The language of Todd, however, is extremely broad in terms of the courts in which the waiver is effective. I do not believe that the waiver always need name federal courts to be effective therein; it is enough that the state is permitted as any individual to sue or be sued, when it is a contracting party. I also note that the court in Todd cited Poindexter v. Greenhow, 114 U.S. 270 [5 S.Ct. 903, 29 L.Ed. 185] (1884). Poindexter, held that Eleventh Amendment concerns do not erect an immunity for cases in federal court based on an alleged unconstitutional impairment of contract by a state when the state is one of the contracting parties. 114 U.S. at 286 [5 S.Ct. at 911]. It would be anomalous not to extend the reasoning in the Todd court used in citing Poindexter for the constitutional prohibition on impairment of contracts to a claim under the Fourteenth Amendment based on an unconstitutional deprivation of contractural [sic] rights, when the state is one of the contracting parties. To do otherwise would dictate contrary results for identical contract suits based on different parts of the Constitution. Accordingly, I shall not dismiss the State of Nebraska, the Department of Labor, and the Joint Merit System as defendants, as I do not believe they possess sovereign immunity in this court on these claims. Smith v. Hanlon, supra, slip op. at 12. Although the members of this court have the greatest respect for the learned Judge Urbom, the fact remains that it is this court which is the final arbiter in matters of Nebraska law. This court must, therefore, make its own analysis and reach its own conclusion with respect to the question presented. Beal v. Missouri Pacific R. Co., 312 U.S. 45, 61 S.Ct. 418, 85 L.Ed. 577 (1941); Neal v. School Dist. of York, 205 Neb. 558, 288 N.W.2d 725 (1980). This court finds it cannot agree with Chief Judge Urbom's analysis of Todd v. Board of Educational Lands and Funds, 154 Neb. 606, 48 N.W.2d 706 (1951). It is noted, first of all, that Todd was not interpreting a legislative enactment concerning whether the state could be sued; that issue was not present. Rather, Todd was concerned with whether a legislative enactment could be applied so as to hinder or impair a preexisting contract. Thus, this court's observations about the application of constitutional contract principles to the state must be read in that context. See Yoder v. Nu-Enamel Corporation, 140 Neb. 585, 300 N.W. 840 (1941). Todd was brought in the district court for the county in which the state's capital is located to determine the plaintiffs' rights with respect to a school land lease obtained from the Board of Educational Lands and Funds. Such an action is permitted by § 24-319(5), both as it existed then and as it exists now. Section 24-324 (Reissue 1948) provided then, as it does today, that the state may be sued in the district court of the county where the capital is located in matters of contract. The Todd discussion of an individual's constitutional rights with respect to contracts and the limitations on the state to impair those rights is aimed at pointing out the reasons that the legislation at issue therein could not be applied retroactively. As noted earlier in our discussion concerning the applicable federal principles, it does not follow from a state's consent to be sued in its own courts that it has waived its immunity to be sued in federal court. Wiseman v. Keller, 218 Neb. 717, 358 N.W.2d 768 (1984). Neither does the Todd discussion of a citizen's federal constitutional rights in any sense imply a waiver of the state's immunity from suit in the federal courts. State courts, after all, have as great a constitutional obligation to uphold and protect the federal Constitution and law as do the federal courts. See Hathorn v. Lovorn, 457 U.S. 255, 102 S.Ct. 2421, 72 L.Ed.2d 824 (1982), reh'g denied 458 U.S. 1131, 103 S.Ct. 15, 73 L.Ed.2d 1401. See, also, State v. Jones, 209 Neb. 296, 307 N.W.2d 126 (1981). It was that obligation, among others, which Todd fulfilled. There is nothing in Todd which holds that any enactment of the Nebraska Legislature contains an unequivocal expression of the state's consent to waive its sovereign immunity from suit in the federal courts pursuant to a contract. Accordingly, we answer the second question in the negative. JUDGMENT ENTERED.