STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

February 16, 1972

Bradley G. Bonynge
State's Attorney, Jerauld County
Wessington Springs, South Dakota 57382

OFFICIAL OPINION NO. 72-07

County commissioners may not purchase liability insurance without legislative authorization.

Dear Mr. Bonynge:

We have received your request for an official opinion on the following situations:

The recent decisions of other jurisdictions have abrogated the rule of sovereign immunity as that rule applies to the states and the subdivisions of state government as counties. Some of these decisions are Holytz v. City of Milwaukee, 17 Wis. 2d 25, 115 N.W. 2d 618; Hargrove v. Town of Coco Beach, 96 So. 2d 130; Spanel v. Mounds View School District, 264 Minn. 279,118 N.W. 2d 795; and see cases in 57 Am. JUT. 2d Municipal, School, and State Tort Liability at Sec. 65 et seq. Our own Supreme court in Conway v. Humbert, 145 N.W. 2d at page 524 rejected the abrogation of governmental immunity but see concurring opinion of Judge Homeyer at pages 529-530. The possibility of a reversal of position by our courts on this matter is a risk which 1 believe should be reckoned with by the counties in exercising judgment in regard to purchase of liability insurance.

Even without the abrogation of governmental immunity, there is imbedded into the law the notion that a county can be held liable for activities carried on in a proprietary as opposed to a governmental function (see 53 Am. Jur. 2d Municipal, School and State Tort Liability at Sec. 2 and the numerous cases cited therein and see also Jerauld County v. St. Paul-Mercury Indemnity Co., a decision of our Supreme Court at 71 N.W. 2d 754). From these cases, it is clear that a county could be held liable without the abrogation of the rule of sovereign immunity and without any statutory authorization for such liability if the court were to hold that a proprietary as opposed to a governmental function was involved in the county's conduct.

The question presented for answer is:

Are the county commissioners of Jerauld County authorized to expend funds for a comprehensive liability insurance policy for the county?

I am aware of the holding in Conway v. Humbert, supra, and in Jerauld County v. St. Paul-Mercury Indemnity Co., supra. The Supreme Court with all judges concurring, held in the Jerauld County case (1955) that a county is not liable for damages resulting from the exercise of its governmental functions, unless the Legislature authorizes such damages to be collected. The court also held that the rule of immunity also applied in cases where nuisance was involved, and if a relaxation of the rule was desired, it should come from the Legislature, rather than from the courts.

In the Conway case, the Supreme Court held that municipalities are exempt from liability when exercising their governmental powers, but not when exercising their corporate or private powers.

Regardless of the fact that such an insurance policy would make good business sense, as you point out in your letter, it is well settled law in South Dakota, as our Supreme Court has stated in State ex rel Jacobson v. Hanson (1955) 75 S.D. 476,68 N.W. 2d 480, that:

A county in this state is a creature of statute and has no inherent authority. It has only such powers as are expressly conferred upon it by statute and such as may be reasonably implied from those expressly granted. Pearson v. Johnson, 59 S.D. 163,238 N.W. 644; South Dakota Employers Protective Association v. Poage, 65 S.D. 198,272 N.W. 806; State ex rel Ball v. Board of County Commissioners of Beadle County, 68 S.D. 237,300 N.W. 832. As the representative of the county having general control over its property and the management of its business and fiscal affairs, SDC 12.0691, the county board can exercise authority in these respects only insofar as statutes confer" power upon the county.

After having examined the Code, with particular emphasis upon the statutes you have cited in your letter, I have been unable to find any statutory authority which would permit the county commissioners to expend public funds for a comprehensive liability insurance policy.

Prior Attorney Generals' opinions have consistently held that a county may not legally purchase insurance covering a nonexistent liability, and I concur with those opinions. See 1963-64 AGR 153,1953-54 AGR 256,1947-48 AGR 251, and 1945-46 AGR 292. A special exception was made to this general rule in 1951-52 AGR 139, in which I also concur. This exception provided that the purchase of a comprehensive liability insurance policy with coverage so great that in some respects it covered nonexistent liability. The purchase would be authorized if the additional cost on the non-liability portion were trivial.

Respectfully submitted,

Gordon Mydland
Attorney General