This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Each of the states of the Union is a government possessing general and unlimited powers, except such as are expressly or impliedly denied to it by the Constitution of the United States. Within the sphere of its powers it may make such contracts as it wishes.1 A state contract possesses the usual incidents of contracts. Thus a contract between the governor and a private partnership for public printing is assignable and the assignee may mandamus college officials for "copy," and sureties on that bond are not released by such assignment.2 It is held, however, that a state is not liable for interest unless it has agreed to pay it.3 So the state may employ an agent to prosecute a claim against the United States.4
The people of the state, being the ultimate sovereign power therein, may in the state constitution restrict the contractual power of the various departments of the state. Thus they may limit the amount of the debt to be contracted for specified purposes,5 or may require advertisement for bids, in the absence of which no liability even in quantum, meruit will arise.6 A constitutional provision that bids must be let to the lowest responsible bidder does not refer to incidental matters, such as printing proceedings of the general assembly from day to day, for which advertising is impracticable.7 A limitation on the amount of indebtedness does not apply to a warrant payable only out of a specific fund.8 So the people may by the constitution forbid all contracts except those made in pursuance of some statute.9
567; Goodman v. Niblack, 102 U. S. 556; Lopez v. United States, 24 Ct. C1. 84; 2 L. R. A. 571; Dulaney v. Scudder, 94 Fed. 6; 36 C. C. A. 52; Thayer v. Pressey, 175 Mass. '225; 56 N. E. 5.
32 Dexter v. Meigs, 47 N. J. Eq. 488; 21 Atl. 114; In re Hone, 153 N. Y. 522; 47 N. E. 798. The statute does not apply where the work was finished by the creditors of the contractor, and one of the creditors secured all the money and applied it to his claim; other creditors gar-nisheed. Fewell v. Surety Co., 80 Miss. 782; 28 So. 755.
33 York v. Conde, 147 N. Y. 486; 42 N. E. 193; U. S. R. S. Sec. 3477.
1 Poole v. Fleeger, 11 Pet. (U. S.) 185; Green v. Biddle, 8 Wheat. (U. S.) 1; Kaufmann v. Cooper, 46 Neb. 644; 65 N. W. 796; Van Dusen v. State, 11 S. D. 318; 77 N. W. 201.
2 Leader Printing Co. v. Lowry, 9 Okl. 89; 59 Pac. 242.
3 Carr v. State, 127 Ind. 204; 22 Am. St. Rep. 624; 11 L. R. A. 370; 26 N. E. 778.
4 Davis v. Massachusetts, 164 Mass. 241; 30 L. R. A. 743; 41 N. E. 292.
The peculiarity of the contracts of a state, like those of the United States, is that they cannot be enforced against the state unless the state consents thereto.10 A branch of the state government, such as a state university,11 cannot be sued except by statutory authority.12 The rule that a state cannot be sued without its own consent cannot be evaded by bringing a suit in the nature of mandamus against a state officer the effect of which will be to enforce a contract against the state.13 Thus an architect submitting plans for state capitol cannot have specific performance, as the state is the real party defendant.14 But while mandamus will not lie without statutory authority against state officials in cases in which the state is really a party as an indirect means of enforcing a state contract it will lie to compel a board to let a contract which it has awarded, if the proceedings have been regular, and the letting is a mere ministerial act.15
5 In re Contracting of State Debt, 21 Colo. 399; 41 Pac. 1110.
6 Mulnix v. Ins. Co., 23 Colo. 71; 33 L. R. A. 827; 46 Pac. 123.
7 Stone v. Publishing Co. (Ky.), 55 S. W. 725.
8 Allen v. Grimes, 9 Wash. 424; 37 Pac. 662.
9 Locke v. State, 140 N. Y. 480; 35 N. E. 1076; Stanton v. State, 5 S. D. 515; 59 N. W. 738.
10 Denning v. State, 123 Cal. 316; 55 Pac. 1000; Hope v. Board of Liquidation, 41 La. Ann. 535; 6 So. 819; Coxe v. State, 144 N. Y. 396; 39 N. E. 400; Sayre v. State. 123 N. Y. 291; 25 N. E. 163; Northwestern, etc.. Bank v. State, 18 Wash. 73; 42 L. R. A. 33; 50 Pac. 586.
11 Oklahoma, etc, College v. Willis, 6 Okla. 593; 40 I, R. A. 677; 52 Pac. 921.
12 University of Illinois v. Bruner, 175 111. 307; 51 N. E. 687; affirming 66 111. App. 665; distinguishing, Thomas v. University, 71 111. 3)0.
13 Fitts v. McGhee, 172 U. S. 516, In re Ayers, 123 U. S 433; Hagood v. Southern, 117 U. S. 52; Mills Publishing Co. v. Larrabee, 78 Ia. 97; 42 N. W. 593; People v. Du-laney, 96 111. 503; Board v. Gannt, 76 Va. 455; Miller v. Board, etc., 46 W. Va. 192; 76 Am. St. Rep. 811; 32 S. E. 1007.
14 Cope v. Hastings, 183 Pe. St. 300; 38 Atl. 717.
The legislature may ratify specific contracts.16 Where shrubbery and trees were planted on the grounds of a state college under an unauthorized contract with the board of regents, the state was held liable for a reasonable value therefor where without ratifying it the state passively enjoyed the benefit of such contract.17 A contract which cannot be enforced at any time or by any means is of course an anomaly. At the same time these are genuine contracts, though unenforceable without the consent of the state. This may be seen from the following considerations: (1) The principle that a state cannot be sued is not especially applicable to state contracts. It also prevents recovery in quasi-contract. So a county which overpaid its taxes cannot sue the state for them18 unless by statutory authority.19 The same principle prevents recovery in tort. (2) The state may grant permission to bring suit against it. This permission does not create the liability sought to be enforced.20
Statutory permission to sue includes breaches of contract occurring before the passage of such statute,21 and implies that the case will be governed by the usual rules of law.22 Thus statutes of limitation will apply, and the court will not recommend the payment of what would otherwise be a just claim.23 Power given to a court to allow "legal rights" against the state does not include mere moral obligations neither legal nor equitable.24 Permission to sue on a contract is not ratification thereof.25 A statutory right to sue a state can be revoked unless rights have vested thereunder.26 If a state gives its consent to be sued it may impose such conditions as it pleases, as that the action can be brought only in a state court.27 So if the state gives a certain remedy against itself by statute only that remedy can be had.28 So permission to sue on certain classes of claims does not confer the right to sue on other classes. An injury suffered by a fall of seats used to view horse racing on the grounds of a fair under state control cannot be treated as a breach of implied contract with the state.29 (3) Under the Constitution of the United States30 the judicial power of the United States extends to controversies between two or more states and between a state and citizens of another state. The supreme court of the United States has original jurisdiction of cases in which a state shall be a party. While the convention that drafted the Constitution seems to have believed that this grant of power did not give to an individual the right to sue a state, the Supreme Court decided that it did, and the action of assumpsit was allowed.31 In consequence of that decision the eleventh amendment to the Constitution of the United States was adopted, which 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
15 State v. Toole, 26 Mont. 22; 91 Am. St. Rep. 386; 55 L. R. A. 644; 66 Pac. 496 (but relief was here refused as bids had not been advertised for properly).
16 Brown v. State. 14 S. D. 219; 84 N. W. 801; Geo. H. Fuller Dock Co. v. State, 6 Ida. 315; 55 Pac. 857.
17 Jewell Nursery Co. v. State, 5 S. D. 623; 59 N. W. 1025.
18 Attorney General v. Bay County, 106 Mich. 662; 64 N. W. 570.
19 White v. Smith, 117 Ala. 232; 23 So. 525.
20 Denning v. State, 123 Cal. 316; 55 Pac. 1000.
21 Chapman v. State, 104 Cal. 690; 43 Am. St. Rep. 158; 38 Pac. 457.
22 Harris v. State, 9 S. D. 453; 69 N. W. 825.
23 Cowles v. State, 115 N. C. 173; 20 S. E. 384.
24 Western, etc., Ry. v. State, (Ga.), 14 L. R. A. 438.
25 Carolina National Bank v. State, 60 S. C. 465; 85 Am. St. Rep. 865; 38 S. E. 629. (A superintendent of the penitentiary had taken notes for convict hire, and endorsed them to the bank. It was held that as he had no authority to take them, the state was not liable on his indorsement, or for money had and received.) Nichols v. State, 11 Tex. Civ. App. 327; 32 S. W. 452 (defective advertisement for bids).
26 Maury v. Commonwealth, 92 Va. 310; 23 S. E. 757.
27 Smith v. Reeves, 178 U. S. 436.
28 Cornwall v. Commonwealth, 82 Va. 644; 3 Am. St. Rep. 121.
29 Melvin v. State, 121 Cal. 16; 53 Pac. 416. (In this case the statute specifically forbade an appropriation of money for horse-races.) Citing Gibbons v. United States, 8 Wall. (U. S.) 269.
30 Art. III., Sec. 2.
31 Chishclm v. Georgia, 2 Dall. (U. S.) 419.
States by citizens of another state or by citizens or subjects of a foreign state." While this restricts the jurisdiction of the Supreme Court in cases brought by a natural person, it leaves it unaffected in suits brought against a state by the United States or another state of the Union. The Supreme Court of the United States may therefore enforce contracts made between two states of the Union.32 So if a natural person buys bonds issued by one state and donates them absolutely to another state, the latter state may sue the former on them, even if the purpose of the assignment was to enable the state to maintain such action, as long as it was for the benefit of the state.33 However, if the assignment of bonds to the state is not absolute, but merely for the purpose of enabling it to sue for the benefit of the real owners of the bonds the state cannot maintain the action.34 So the United States may sue a state in the action of debt on bonds issued by the latter,35 or it may sue a state for an accounting and money.36 (4) While an individual cannot maintain an action against a state on a contract made with it, he can assert rights which he has acquired by virtue of such contracts; such as a contract for taxing a railroad in a certain manner.37 So in an action to which the state is not a party, rights existing by virtue of a contract made by a state may be asserted and enforced, as under a contract between two states.38
32 Virginia v. Tennessee, 148 U. S. 503.
33 South Dakota v. North Carolina, 192 U. S. 286.
34 New Hampshire v. Louisiana, 108 U. S. 76.
35 United States v. North Carolina, 136 U. S. 211.
36 United States v. Michigan, 190 U. S. 379.
37 Stearns v. Minnesota, 179 U. S. 223.
38 Poole v. Fleegler, 11 Pet. (U. S.) 185; Green v. Biddle, 8 Wheat. (U. S.) 1.