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Office of the Attorney General of the State of Georgia
Opinion 80-67
1980 Ga. AG LEXIS 138; 1980 Op. Atty Gen. Ga. 141
May 23, 1980

To: Superintendent, Georgia Fire Academy
From: Arthur K. Bolton, Attorney General

You have requested an opinion from the Attorney General on the question of whether or not the Georgia Fire Academy may agree to terms set forth in a Georgia Power Company Encroachment Agreement which would require the Fire Academy to indemnify the Power Company for money paid for personal injuries and property damages arising from the Fire Academy's use of its right of way and to reimburse the Power Company for its cost for any damage to its facilities resulting from the Fire Academy's use of its right of way.

Paragraph 8 of the Encroachment Agreement requires the Fire Academy "to indemnify and save harmless and defend the Power Company" from the payment of money on account of injuries to persons or damage to property in any way attributable to use of the right of way by the Fire Academy. Article III, Section VIII, Paragraph XII of the Constitution of Georgia of 1976 (Georgia Code Annotated § 2-1413) forbids the state's granting "any donation or gratuity in favor of any person, corporation, or association." In Washburn v. MacNeill, 205 Ga. 772 (1949), the Georgia Supreme Court held that the prohibition against gratuities prevents the state from refunding payments made by sureties on a recognizance bond. See also, McCook v. Long, 193 Ga. 299 (1942); Op. Att'y Gen. U76-28.

Op. Att'y Gen.68-328 (unofficial) interpreted Article III, Section VIII, Paragraph XII of the Constitution to prohibit an indemnity and hold harmless clause in a proposed contract, under which clause the Georgia State Patrol would indemnify Brink's, Incorporated, for any liability, personal injury and property damage incurred as a result of use by the State Patrol of a vehicle leased pursuant to the proposed contract.

The opinion advised that the "hold harmless" agreement in the proposed Brink's contract was also violative of Article VII, Section III, Paragraph III of the Constitution of Georgia of 1945 (Article VII, Section III, Paragraph IV of the Constitution of Georgia of 1976 [Georgia Code Ann. § 2-4804]) which provides that "the credit of the State shall not be pledge or loaned to any individual, company, corporation or association." See also, Op. Att'y Gen. 74-115 which discusses the application of this constitutional provision to the contractual incurring of a liability which is not to be discharged by a tax levied within the year in which the liability is undertaken. It is my opinion that the proposed hold harmless provision in Paragraph 8 of the Encroachment Agreement constitutes both a gratuity and a pledge of the state's credit and thus falls within the prohibitions contained in Article III, Section VIII, Paragraph XII and in Article VII, Section III, Paragraph IV of the Constitution of Georgia of 1976.

By virtue of the doctrine of sovereign immunity, suit may not be maintained in the courts of this state against the state without the express consent of the legislature. Koehler v. Massell, 229 Ga. 359 (1972); Crowder v. Department of State Parks, 228 Ga. 436, 438 (1971). See the discussion contained in Op. Att'y Gen. 66-261 in which the Attorney General advised the Board of Regents that the legislature's delegation of the power to contract to the Regents does not include by implication the power to waive sovereign immunity by the contractual assumption of tort liability and that an attempt by Regents to do so would be ultra vires and void. Similarly, an attempt by the Georgia Fire Academy to contractually waive the state's sovereign immunity by entering into an indemnity agreement would be ultra vires and void.

Therefore, in summary it is my official opinion that Article III, Section VIII, Paragraph XII and Article VII, Section III, Paragraph IV of the Constitution of Georgia of 1976 prohibit execution of an indemnification agreement by the Georgia Fire Academy and that such an agreement would furthermore be invalid as an unauthorized attempt to contractually waive the state's sovereign immunity.

In Paragraph 6 of the proposed Encroachment Agreement the Fire Academy agrees to reimburse the Power Company for all cost and expense for any damage to Power Company facilities resulting from its use of the right of way. The Fire Academy further agrees that if in the opinion of the Power Company it becomes necessary, as a result of the Fire Academy's use of the right of way, to relocate, rearrange, change or raise any of the Power Company's facilities, it will promptly reimburse the Power Company for this expense. Since Paragraph 6 involves a contractual pledge of the state's credit to pay for damages and expenses incurred by the Power Company without time or monetary limits, it is my official opinion that it is prohibited by Article VII, Section III, Paragraph IV of the Constitution of Georgia of 1976.