decided: January 8, 1945.
FORD MOTOR CO
DEPARTMENT OF TREASURY OF INDIANA ET AL.
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SEVENTH CIRCUIT.
Stone, Roberts, Black, Reed, Frankfurter, Douglas, Jackson, Rutledge; Murphy took no part in the consideration or decision of this case.
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MR. JUSTICE REED delivered the opinion of the Court.
This writ brings here for review an action by petitioner, a non-resident foreign manufacturing corporation, against the respondents, the department of treasury of the State of Indiana and M. Clifford Townsend, Joseph M. Robertson and Frank G. Thompson, the Governor, Treasurer and Auditor, respectively, of the State of Indiana, who "together" constituted the board of the department of treasury.*fn1 Petitioner seeks a refund of gross income taxes paid to the department and measured by sales claimed by the state to have occurred in Indiana.*fn2 Jurisdiction of the United States District Court is founded on allegations of the violation of Article I, § 8, the Commerce Clause, and
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the Fourteenth Amendment of the Constitution. The state statutory procedure for obtaining a refund which petitioner followed is set forth in § 64-2614 (a) of the Indiana statutes.*fn3
The District Court denied recovery. The Circuit Court of Appeals affirmed.*fn4 Certiorari was granted*fn5 on petitioner's
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assertion of error in that the Circuit Court of Appeals decided an important question of local law probably in conflict with an applicable decision of the Supreme Court of Indiana. Department of Treasury v. International Harvester Co., 221 Ind. 416, 47 N. E. 2d 150. As we conclude that petitioner's action could not be maintained in the federal court, we do not decide the merits of the issue.
Petitioner's right to maintain this action in a federal court depends, first, upon whether the action is against the State of Indiana or against an individual. Secondly, if the action is against the state, whether the state has consented to be sued in the federal courts. Recently these questions were discussed in Great Northern Insurance Co. v. Read, 322 U.S. 47.
In that case this Court held that as the suit was against a state official as such, through proceedings which were authorized by statute to compel him to carry out with state funds the state's agreement to reimburse moneys illegally exacted under color of the tax power, the suit was one against the state. We said that such a suit was clearly distinguishable from actions against a tax collector to recover a personal judgment for money wrongfully collected under color of state law. 322 U.S. 47, 50-51. Where relief is sought under general law from wrongful acts of state officials, the sovereign's immunity under the Eleventh Amendment does not extend to wrongful individual action, and the citizen is allowed a remedy against the wrongdoer personally. Atchison, T. & S. F. R. Co. v. O'Connor, 223 U.S. 280; cf. Matthews v. Rodgers, 284 U.S. 521, 528. Where, however, an action is authorized by statute against a state officer in his official capacity and constituting an action against the state, the Eleventh Amendment operates to bar suit except in so far as the statute waives state immunity from suit. Smith v.
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of the state, not as individuals against whom a personal judgment is sought. The petitioner did not assert any claim to a personal judgment against these individuals for the contested tax payments. The petitioner's claim is for a "refund," not for the imposition of personal liability on individual defendants for sums illegally exacted. We have previously held that the nature of a suit as one against the state is to be determined by the essential nature and effect of the proceeding. Ex parte Ayers, 123 U.S. 443, 490-99; Ex parte New York, 256 U.S. 490, 500; Worcester County Trust Co. v. Riley, 302 U.S. 292, 296-98. And when the action is in essence one for the recovery of money from the state, the state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants. Smith v. Reeves, supra; Great Northern Insurance Co. v. Read, supra. We are of the opinion, therefore, that the present proceeding was brought in reliance on § 64-2614 (a) and is a suit against the state.
It remains to be considered whether the State of Indiana has consented to this action against it in the federal court.
The Eleventh Amendment 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 States by Citizens of another State, or by Citizens or Subjects of any Foreign State." This express constitutional limitation denies to the federal courts authority to entertain a suit brought by private parties against a state without its consent. Hans v. Louisiana, 134 U.S. 1, 10; Ex parte New York, 256 U.S. 490, 497; Missouri v. Fiske, 290 U.S. 18, 25; United States v. U.S. Fidelity & Guaranty Co., 309 U.S. 506, 512; Great Northern Insurance Co. v. Read, supra; State v. Mutual Life Ins. Co., 175 Ind. 59, 71, 93 N. E. 213; Hogston
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v. Bell, 185 Ind. 536, 548, 112 N. E. 883. While the state's immunity from suit may be waived, Clark v. Barnard, 108 U.S. 436, 447; Gunter v. Atlantic Coast Line, 200 U.S. 273; Missouri v. Fiske, 290 U.S. 18, 24, there is nothing to indicate authorization of such waiver by Indiana in the present proceeding.
Section 64-2614 (a) authorizes "action or suit against the department in any court of competent jurisdiction; and the circuit or superior court of the county in which the taxpayer resides or is located shall have original jurisdiction of action to recover any amount improperly collected." In the Read case we construed a similar provision of an Oklahoma tax refund statute as a waiver of state immunity from suit in state courts only. 322 U.S. 47, 54. As was said in that case: "When a state authorizes a suit against itself to do justice to taxpayers who deem themselves injured by any exaction, it is not consonant with our dual system for the federal courts to be astute to read the consent to embrace federal as well as state courts. . . . when we are dealing with the sovereign exemption from judicial interference in the vital field of financial administration a clear declaration of the state's intention to submit its fiscal problems to other courts than those of its own creation must be found." Cf. United States v. Shaw, 309 U.S. 495, 501. Section 64-2614 does not contain any clear indication that the state intended to consent to suit in federal courts.*fn8 The provision in
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this section which vests original jurisdiction of suits for refund in the "circuit or superior court of the county in which the taxpayer resides or is located" indicates that the state legislature contemplated suit in the state courts.*fn9 Moreover, this interpretation of § 64-2614 (a) to authorize suits only in state courts accords with the state legislative policy. Indiana has adopted a liberal policy toward general contract claimants but confines their suits against the state to state courts.*fn10
It remains to be considered whether the attorney general for the State of Indiana in his conduct of the present proceeding has waived the state's immunity from suit. The state attorney general is authorized to represent the state in actions brought under the Indiana refund statute.*fn11 He appeared in the federal District Court and the
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Circuit Court of Appeals and defended the suit on the merits. The objection to petitioner's suit as a violation of the Eleventh Amendment was first made and argued by Indiana in this Court. This was in time, however. The Eleventh Amendment declares a policy and sets forth an explicit limitation on federal judicial power of such compelling force that this Court will consider the issue arising under this Amendment in this case even though urged for the first time in this Court.
It is conceded by the respondents that if it is within the power of the administrative and executive officers of Indiana to waive the state's immunity, they have done so in this proceeding. The issue thus becomes one of their power under state law to do so. As this issue has not been determined by state courts,*fn12 this Court must resort to the general policy of the state as expressed in its Constitution, statutes and decisions. Article 4, § 24 of the Indiana Constitution provides:
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"Provision may be made, by general law, for bringing suit against the State, as to all liabilities originating after the adoption of this Constitution; but no special act authorizing such suit to be brought, or making compensation to any person claiming damages against the State, shall ever be passed."
We interpret this provision as indicating a policy prohibiting state consent to suit in one particular case in the absence of a general consent to suit in all similar causes of action. Since the state legislature may waive state immunity only by general law, it is not to be presumed in the absence of clear language to the contrary, that they conferred on administrative or executive officers discretionary power to grant or withhold consent in individual cases. Nor do we think that any of the general or special powers conferred by statute on the Indiana attorney general to appear and defend actions brought against the state or its officials can be deemed to confer on that officer power to consent to suit against the state in courts when the state has not consented to be sued.*fn13 State court decisions
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construe strictly the statutory powers conferred on the Indiana state attorney general and hold that he exercises only those powers "delegated" to him by statute and does not possess the powers of an attorney general at "common law."*fn14 It would seem, therefore, that no properly authorized executive or administrative officer of the state has waived the state's immunity to suit in the federal courts.
Gunter v. Atlantic Coast Line, 200 U.S. 273, is not applicable to the instant case since it involved a taxpayer's ancillary suit to enjoin South Carolina tax officials from collecting taxes in violation of an earlier decision of this Court upholding the validity of a state agreement to exempt the taxpayer's property. Humphrey v. Pegues, 16 Wall. 244. The Pegues case involved a suit against the state in the person of its tax officials, the state attorney general appearing for the state and arguing the case on the merits, no issue of sovereign immunity being raised. In the Gunter proceeding, brought over twenty
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years later, defendant South Carolina attacked the validity of the Pegues judgment on the ground that in that proceeding the state had not consented to be sued. This Court held the Pegues judgment was res judicata and binding on the state because the South Carolina statutes conferred on the state officials and the attorney general power there to "stand in judgment for the state," 200 U.S. at 285, 286-87. The state's submission to the court was authorized by statute, not by the unauthorized consent of an official. Farish v. State Banking Board, 235 U.S. 498, 512. No distinction was drawn between federal and state courts. Reliance was placed on contemporaneous administrative interpretation of the state statutes, absence of any legislative action repudiating the attorney general's conduct of the case and the failure of the state government in all its departments, for more than twenty years, to assert any right in conflict with the Pegues adjudication. Administrative construction by a state of its statutes of consent has influence in determining our conclusions. Great Northern Insurance Co. v. Read, supra.
As we indicated in the Read case, the construction given the Indiana statute leaves open the road to review in this Court on constitutional grounds after the issues have been passed upon by state courts. The advantage of having state courts pass initially upon questions which involve the state's liability for tax refunds is illustrated by the instant case where petitioner sued in a federal court for a refund only to urge on certiorari that the federal court erred in its interpretation of the state law applicable to the questions raised.
The judgment of the Circuit Court of Appeals is vacated and the cause is remanded to the District Court with directions to dismiss the complaint for want of consent by the state to this suit.
MR. JUSTICE MURPHY took no part in the consideration or decision of this case.
141 F.2d 24, vacated.