Arkansas v. Texas/Opinion of the Court

delivered the opinion of the Court.

This is a motion by Arkansas to file a complaint against Texas and invoke our original jurisdiction granted by Art. III, § 2, of the Constitution.

The complaint alleges that the University of Arkansas, acting through its Board of Trustees, and the William Buchanan Foundation, a corporation organized under the laws of Texas, entered into a contract whereby the Foundation agreed to contribute a sum of $500,000 to the construction of a one-hundred bed pediatric floor in a new hospital in the Arkansas State Medical Center. The allegations are that, though the University of Arkansas and the Foundation are ready, willing, and able to perform, the State of Texas, acting through her Attorney General, has filed suit in the texas courts to enjoin the Foundation from performing the contract on the grounds that under Texas law the trust funds of the Foundation must be expended for the benefit of Texas residents. The complaint further alleges that the University of Arkansas is an official instrumentality of Arkansas, that in reliance on the agreement with the Foundation it let contracts for the construction of the hospital, proceeded with construction to the sixth floor, and is without funds to proceed further unless Texas is enjoined from interference with the contract.

We issued a rule to show cause why leave to file the complaint should not be granted, 345 U.S. 954. Texas has made return to the rule and the case has been argued.

Texas first argues that the William Buchanan Foundation is an indispensable party to the suit. We do not agree. The theory of the complaint is that Texas is interfering without legal justification with Arkansas' contract with a third person. At least since Lumley v. Gye, 2 El. & Bl. 216, 118, Eng. Rep. 749 (Q.B. 1853), a cause of action based on that tortious conduct has been recognized. See Angle v. Chicago, St. P., M. & O. R. Co., 151 U.S. 1, 13–15; [p370] Bitterman v. Louisville & N. R. Co., 207 U.S. 205, 222–223. However appropriate it might be to join the Foundation as a defendant in the case, see Texas v. Florida, 306 U.S. 398, 405, the controversy is between Arkansas and Texas—the issue being whether Texas is interfering unlawfully with Arkansas' contract.

The contention that the controversy is between two Stats is challenged on the ground that the injured party is the University of Arkansas, which does not stand in the shoes of the State. Arkansas must, of course, represent an interest of her own and not merely that of her citizens of corporations. Oklahoma v. Cook, 304 U.S. 387. But as we read Arkansas law the University of Arkansas is an official state instrumentality; and we conclude that for purposes of our original jurisdiction any injury under the contract to the University is an injury to Arkansas.

The University, which was created by the Arkansas legislature, is governed by a Board of Trustees appointed by the Governor with consent of the Senate. The Board, to be sure, is "a body politic and corporate" with power to issue bonds which do not pledge the credit of the State. But the Board must report all of its expenditures to the legislature, and the State owns all the property used by the University. The Board of Trustees is denominated "a public agency" of the State, the University is referred to as "an instrument of the state in the performance of a governmental work", and a suit against the University is a suit against the State.

[p371] In determining whether the interest being litigated is an appropriate one for the exercise of our original jurisdiction we of course look behind and beyond the legal form in which the claim of the State is pressed. We determine whether in substance the claim is that of the State, whether the State is indeed the real party in interest. Oklahoma v. Cook, supra, pp. 392–396. Arkansas is in our view the real party in interest. The University of Arkansas is her agency in the educational field—a branch or department of the State.

The central question which the case tenders is whether the william Buchanan Foundation has authority to spend its funds for furtherance of this Arkansas project. That is necessarily a question of Texas law, for the Foundation gets its existence and its powers from Texas. Texas courts speak with authority on those issues. Were we to undertake to resolve the questions we might find ourselves in conflict with the courts that have the final say. Moreover litigation is now pending in the Texas courts which will authoritatively determine what the Texas law is. We therefore follow the course we have taken in analogous situations, cf. Thompson v. Magnolia Co., 309 U.S. 478, 483; Herb v. Pitcairn, 324 U.S. 117, and continue the present motion until the litigation in the Texas courts has been concluded. If that litigation resolves the whole controversy, leaving no federal questions, there will be no occasion for us to proceed further.

It is so ordered.