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P.T. & L. Construction Co. v. Commissioner

Decided: March 20, 1972.

P.T. & L. CONSTRUCTION CO., INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
COMMISSIONER, DEPARTMENT OF TRANSPORTATION, STATE OF NEW JERSEY, DEFENDANT-RESPONDENT



For reversal -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Mountain. For affirmance -- None. The opinion of the Court was delivered by Weintraub, C.J.

Weintraub

This matter is before us for the third time. Plaintiff seeks to recover $110,360.64, as the balance due upon an express contract with the State, which sum the State withheld, claiming damages in that amount for delay in the performance of the contract. The merits of the controversy have never been adjudged in any court. The sole question on all of the appeals was and remains whether plaintiff is entitled to have a court pass upon the claim.

On the first appeal, 55 N.J. 341 (1970), we held that the concept of sovereign immunity from suit upon an express contract had no sustaining roots in reason and probably none in relevant history; that the trial of claims against the State was appropriately a function of the judiciary; and that although the payment of a judgment might depend upon further

legislative action if moneys had not already been appropriated, still we should not assume the Legislature would be indifferent to our judgments. We stressed that "Obviously there should be an established forum in which all such claims may be presented as of right and upon known principles," and we noted that "other jurisdictions have held, on one theme or another, that a State may be sued in its own courts on contracts it authorized." 55 N.J. at 346. We accordingly remanded the case for trial.

Before a trial could be had, the Legislature enacted L. 1970, c. 98 (N.J.S.A. 52:4A-1), which read:

Except for actions founded upon the Constitution of this State or the United States or an express provision of the statutory laws of this State, no action shall be instituted or continued against the State or any department or other agency thereof for the recovery of money damages, whether based on contract or tort, where the cause of action accrues prior to July 1, 1971.

The trial court granted the State's motion to dismiss. That led to the second appeal. Upon that appeal the State disavowed any purpose in that statute to repudiate its contracts, saying that the aim was merely to permit the Legislature "to study the problems resulting from the P.T. & L. and Willis decisions." The reference to "P.T. & L." was to our first opinion in this matter, and Willis referred to Willis v. Department of Conservation and Economic Development, 55 N.J. 534, 540 (1970), where we held the judiciary should accept a like responsibility to adjudicate the tort liability of the State. Accepting the purpose of the 1970 statute to be to permit a study rather than to repudiate contractual obligations, we affirmed the judgment but reserved to plaintiff the right to appropriate relief in the light of legislative action or inaction before July 1, 1971, the terminal date specified in the 1970 statute. 57 N.J. 439 (1971).

On June 2, 1971 the Legislature adopted c. 187 extending the 1970 statute to April 1, 1972. Plaintiff moved before us to restore the cause to the calendar and we granted the motion.

The State contends (1) the statute created only a moratorium and did not repudiate the State's contractual obligations and (2) even if the statute did repudiate those obligations, still the State may withdraw its consent to be sued. We will deal first with the second proposition. As to it, the State agrees that contract rights are protected by the federal constitutional guarantees against the taking of property without just compensation or without due process of law. Indeed for that reason it was held in Lynch v. United States, 292 U.S. 571, 54 S. Ct. 840, 78 L. Ed. 1434 (1934), that the Congress could not annul policies of war risk insurance. See also Perry v. United States, 294 U.S. 330, 55 S. Ct. 432, 79 L. Ed. 912 (1935). But the State says that consent to be sued in such circumstances is a different matter, and this the State may withhold.

Relevant cases are Beers for use of Platenius v. Arkansas, 20 How. 527, 61 U.S. 527, 15 L. Ed. 991 (1858); Bank of Washington v. Arkansas, 20 How. 530, 61 U.S. 530, 15 L. Ed. 993 (1858); South & N.A. Railroad Co. v. Alabama, 101 U.S. 832, 25 L. Ed. 973 (1880); Memphis and Charleston Railroad Co. v. Tennessee, 101 U.S. 337, 25 L. Ed. 960 (1880); Louisiana ex rel. Elliott v. Jumel, 107 U.S. 711, 28 S. Ct. 128, 27 L. Ed. 448 (1883); Baltzer v. North Carolina, 161 U.S. 240, 16 S. Ct. 500, 40 L. Ed. 684 (1896). These cases do support the proposition that the State's denial of the remedy of suit will not alone warrant intervention by the federal courts. There are two underlying thoughts. One is that a State as a sovereign may withhold consent to suit within its own courts, and that as to the federal courts the Eleventh Amendment shields the State from a direct action against it. Another is that a judgment ...


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