Court Opinion

ID: 9516162
Source: CourtListenerOpinion
Date Created: 2023-08-06 23:35:58.132051+00
Date Added: 2024-06-11T09:14:40.844925
License: Public Domain

ANDERST, Circuit Judge.
The plaintiff contracted with the defendant on or about May 3, 1965, to construct a state highway department office and laboratory building. The building consists of two connected sections, referred to as the “A” section and “B” section. The contract provided the “B” section was to be completed by September 1, 1966, and the “A” section was to be completed by December 1, 1966. The plaintiff was subsequently given an extension of the completion date on each section. The “B” section was actually completed on January 8, 1967, or 85 days later than the extended dateline, and the “A” section was completed on March 19, 1967, or 63 days later than the extended dateline on that section. The defendant retained $280 per day on each section as liquidated damages under the terms of the contract, or a total retained of $41,440.
This action was initiated by the plaintiff, G. H. Lindekugel & Sons, Inc., against the defendant, South Dakota State Highway Commission, pursuant to the provisions of Ch. 110, S.L.1964, now SDCL 31-2-34 through 31-2-39. The plaintiff’s complaint asserted two causes of action. The first cause of action sought damages of $118,543.48 for additional labor and materials because of alleged impossibility of performance, claimed misrepresentation, and breach of warranty with respect to the foundation of the building. The second cause of action is divided into two parts. The first paragraph seeks damages of $28,407.98 for extra work and materials alleged to have been made necessary by faulty plans and specifications. The second paragraph seeks return of the amount asserted to have been wrongfully retained by the state as liquidated delay damages.
The defendant joined the architects, Wendell G. Fritzel, Jean R. Kroeger, Edward L. Griffin, Milton L. Berg, d/b/a *35Fritzel, Kroeger, Griffin & Berg, and the soil consultants, Woodward-Clyde-Sherard, as third party defendants. Defendant thereafter moved to dismiss the plaintiff’s complaint. An order dismissing the first cause of action, as well as that part of the second cause of action for alleged additional compensation, because there was no appropriation for such claims, was granted. The defendant’s motion to dismiss the second paragraph of the second cause of action seeking recovery of the liquidated damages withheld was denied. As to that issue, a court trial was held and judgment was entered in favor of defendant and against plaintiff. Separate judgments were entered between the defendant, State Highway Commission, and the third party defendants, the architects and the soil consultants.
The plaintiff appealed from the judgment which dismissed its action against defendant State, and assigned as error the entry of the above mentioned order which dismissed two of plaintiff’s claims and the judgment for defendant on the merits as to its third claim.
The judgments between defendant, as third party plaintiff, and third party defendants, architects and soil consultants, have not been appealed to this Court, thus we have no jurisdiction to grant the motion to dismiss that appeal or take other action except to note the record shows no appeal as to them.
The South Dakota Constitution, Article III, § 27, provides:
“The Legislature shall direct by law in what manner and in what courts suits may be brought against the state.”
Of further importance is Article XI, § 9:
“* * * 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. * * *”
This suit is brought under the provisions of SDCL 31-2-34 wherein:
*36“The state of South Dakota may be sued and made defendant in any court in which an action is brought against the South Dakota state highway commission 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 state highway commission. * *”
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”.
See also SDCL 31-2-39. Plaintiff contends this provision is an appropriation statute with a continuing appropriation to pay any judgment for damages which might be obtained thereunder. With this contention we cannot agree.
SDCL 31-2-34 through 31-2-39 is very similar in nature to SDCL 21-32-10 through 21-32-14. The main distinction is the former provides suit may be initiated in any court while the latter provides for original jurisdiction in the Supreme Court. Of special interest is a similarity to SDCL 31-2-39 and SDCL 21-32-14 stating how payment of any judgment obtained therein is made.
This court has held on numerous occasions, Griffis v. State, 69 S.D. 439, 11 N.W.2d 138; Griffis v. State, 68 S.D. 360, 2 N.W.2d 666; Kansas City Bridge Co. v. State, 61 S.D. 580, 250 N.W. 343; and Sigwald v. State, 50 S.D. 37, 208 N.W. 162, that SDCL 21-32-14 was not an appropriation statute. It is further well settled law this court is without jurisdiction to render judgment, (under SDCL 21-32-10 through 21-32-14) in the absence of an .appropriation available for their payment. Griffis v. State, 68 S.D. 360, 2 N.W.2d 666, and Kansas City Bridge Co. v. State, supra.
The expenditure of moneys levied and collected for state highway purposes, or appropriated for state highway purposes, is *37limited by SDCL 31-5-8 to “laying out, marking, constructing, reconstructing, or maintaining public highways forming the trunk highway system”, and “such sums as are required for the maintenance of the [state] Highway Commission”. As stated in Griffis v. State, 69 S.D. 439, 445, 11 N.W.2d 138, 141:
“In view of Section 9, Article XI, State Constitution, * * * this court in Sigwald v. State, supra, held that moneys [levied and collected or appropriated for state highway purposes] * * * were not available for the payment of damages for breach of contract caused by the Highway Commission; that the word ‘specific’ in this Constitutional provision impelled such conclusion. True, the claim in the Sigwald case was for damages for prevention of performance and the claim in the instant case is for labor performed in excess of the requirements of the contract. The question in either instance is whether there is an appropriation for payment of damages accruing from the breach of contract.” (emphasis supplied)
Sigwald posed the question as follows:
“In the language of the constitutional provision [§ 9, Art. XI, supra], is the above [now SDCL 31-5-8, supra] ‘an appropriation for the specific purpose’ of paying damages arising from the breach of a contract caused by the highway commission? The word ‘specific’ compels a negative answer to the question whatever the answer might be were it not for that word.
“This claim therefore [is] adjustable only by the Legislature * *
Sigwald further reached the conclusion “that the Legislature, in granting permission to sue the state, had in mind only such actions as might result in a judgment which could lawfully be paid”.
The first Griffis, v. State opinion, 68 S.D. 360, 2 N.W.2d 666, discussed damages and extra work in the following language:
*38“This court has held that where funds are only available for highway construction and maintenance an action cannot be maintained by a contractor for damages for breach of contract, (citations omitted)
"Plaintiffs contend that the purpose of this action is to secure compensation for extra work and not for damages for breach of contract, and that their claim may be paid from funds appropriated for the construction and maintenance of highways under the supervision of the State Highway Commission. It is conceded that funds have not been specifically appropriated for payment of damages for breach of contract.”
Cuka v. State, 80 S.D. 232, 122 N.W.2d 83, was an action where, pursuant to an offer of the Highway Commission and a contract of purchase and sale, Cuka delivered a deed to the right-of-way involved. His claim was approved by the commission, and the state auditor issued a warrant which was delivered to the commission. Sometime later the commission decided not to proceed and returned that deed to Cuka. After citing our earlier opinions, the court wrote:
“In effect, plaintiff is asking for damages for breach of contract. As such his claim must be denied as there are no appropriated highway funds available to pay the same.”
The pertinent limitation on the expenditure of moneys levied, collected or appropriated for state highway purposes in SDCL 31-5-8, stated earlier in the opinion, is to “laying out, marking, constructing, reconstructing, or maintaining public highways forming the trunk highway system”.
Article XI, § 8 of the South Dakota Constitution provides generally that the proceeds of the imposition of licenses, fees or charges with respect to operation of motor vehicles on public highways and taxes on motor fuels “shall be used exclusively for the maintenance, construction and supervision of highways and bridges of this state.” The words maintenance and construction are substantially the same as those used in SDCL 31-5-8.
*39It is evident for the same reasoning and the construction given SDCL 31-5-8 that Article XI, § 8 does not permit payment of damages for breach of contract (as distinguished from payments due under the contract), nor for extra or unexpected costs incurred by a contractor, which costs were not provided for in and. were in excess of the contract. They do not come within the cited clause or limitation of expenditures in Article XI, § 8.
We believe that SDCL 31-2-34 through 31-2-39 is comparable to SDCL 21-32-10 through 21-32-14 in that it is not an appropriation statute, but a procedure remedial in nature whereby an aggrieved party may bring suit against the state to recover claims for damages against funds already appropriated for that purpose. The trial court was correct in granting its order to dismiss plaintiffs claim for damages.
The second major contention of the plaintiff’s appeal is the trial court erred in finding the state properly withheld liquidated damages. Plaintiff properly invoked the jurisdiction of the circuit court on the merits of this claim as it was within the terms and amount of the contract. While denying recovery for four of plaintiff’s claims, the court in the first Griffis v. State decision, supra, held a determination of the propriety of deductions made by the state for overtime days and failure to pay for riprap at the price stipulated in the contract was a proper subject of an action against the state. A voluminous record was made on this issue in the present action. It was agreed that much of the evidence was conflicting, each party arguing his version was correct. Proposed findings of fact presented by both parties to the court were rejected, the court thereafter making its own independent findings.
“ ‘It is well settled that the credibility of witnesses and weight of evidence is for the trial court and that a reviewing court accepts that version of the evidence, including the inferences that can be fairly drawn therefrom, which is favorable to the trial court’s action. Consequently, an appellate court is not free to disturb findings unless they are contrary to the clear preponderance of the evidence.’ ” Kent v. Association Life Insurance Co., 84 S.D.8, 166 N.W.2d 429.
*40This court has reviewed the evidence and will not disturb the trial court’s finding the state properly withheld the sum as liquidated damages. The order and judgment appealed from are affirmed.
HANSON, P. J., and BIEGELMEIER, J., concur.
WOLLMAN and DOYLE, JJ., concur in part and dissent in part.
ANDERST, Circuit Judge, sitting for WINANS, J., disqualified.