delivered the opinion of the court:
Plaintiff Thomas Molitor, a minor, by Peter his father and next friend, brought this action against Kaneland Com*13munity Unit School District for personal injuries sustained by plaintiff when the school bus in which he was riding left the road, allegedly as a result of the driver’s negligence, hit a culvert, exploded and burned.
The complaint alleged, in substance, the negligence of the School District, through its agent and servant, the driver of the school bus; that plaintiff was in the exercise of such ordinary care for his own safety as could be reasonably expected of a boy of his age, intelligence, mental capacity and experience; that plaintiff sustained permanent and severe burns and injuries as a proximate result of defendant’s negligence, and prayed for judgment in the amount of $56,000. Plaintiff further alleged that defendant is a voluntary unit school district organized and existing under the provisions of sections 8 — 9 to 8 — 13 of the School Code and operates school buses within the district pursuant to section 29 — 5. Ill. Rev. Stat. 1957, chap. 122, pars. 8—9 to 8—13 and par 29—5.
The complaint contained no allegation of the existence of insurance or other nonpublic funds out of which a judgment against defendant could be satisfied. Although plaintiff’s abstract of the record shows that defendant school district did carry public liability insurance with limits of $20,000 for each person injured and $100,000 for each occurrence, plaintiff states that he purposely omitted such an allegation from his complaint.
Defendant’s motion to dismiss the complaint on the ground that a school district is immune from liability for tort was sustained by the trial court, and a judgment was entered in favor of defendant. Plaintiff elected to stand on his complaint and sought a direct appeal to this court on the ground that the dismissal of his action would violate his constitutional rights. At that time we held that no fairly debatable constitutional question was presented so as to give this court jurisdiction on direct appeal, and accordingly the cause was transferred to the Appellate Court for *14the Second District. The Appellate Court affirmed the decision of the trial court and the case is now before us again on a certificate of importance.
In his brief, plaintiff recognizes the rule, established by this court in 1898, that a school district is immune from tort liability, and frankly asks this court either to abolish the rule in to to, or to find it inapplicable to a school district such as Kaneland which was organized through the voluntary acts of petition and election by the voters of the district, as contrasted with a school district created nolens volens by the State.
With regard to plaintiff’s alternative contention, we do not believe that a logical distinction can be drawn between a community unit school district organized by petition and election of the voters of the district pursuant to article 8 of the School Code, (Ill. Rev. Stat. 1957, chap. 122, pars. 8—9 to 8—13,) and any other type of school district, insofar as the question of tort liability is concerned. All are “quasi-municipal corporations” created for the purpose of performing certain duties necessary for the maintenance of a system of free schools. The reasons for allowing or denying immunity apply equally to all school districts without regard to the manner of their creation. We are unwilling to further complicate the law relating to governmental torts by now drawing highly technical distinctions between the various types of Illinois school districts and making tort liability depend thereon.
Thus we are squarely faced with the highly important question — in the light of modern developments, should a school district be immune from liability for tortiously inflicted personal injury to a pupil thereof arising out of the operation of a school bus owned and operated by said district ?
It appears that, while adhering to the old immunity rule, this court has not reconsidered and re-evaluated the doctrine of immunity of school districts for over fifty years. During these years, however, this subject has re*15ceived exhaustive consideration by legal writers and scholars in articles and texts, almost unanimously condemning the immunity doctrine. See, Borchard, Governmental Liability in Tort, 34 Yale L. J. 1; Green, Freedom of Litigation, 38 Ill. L. Rev. 355; Harno, Tort Immunity of Municipal Corporation, 4 Ill. L. Q. 28; Prosser on Torts, chap. 21, sec. 108, p. 1063; Pugh, Historical Approach to the Doctrine of Sovereign Immunity, 13 La. L. Rev. 476; Repko, American Legal Commentary on the Doctrines of Municipal Tort Liability, 9 Law and Contemporary Problems 214; Rosenfield, Governmental Immunity from Liability for Tort in School Accidents, 5 Legal Notes on Local Government 380; Approaches to Governmental Liability in Tort, 9 Law and Contemporary Problems 182; Note: Limitations on the Doctrine of Governmental Immunity from Suit, 41 Col. L. Rev. 1236; Note: The Sovereign Immunity of the States, The Doctrine and Some of Its Recent Developments, 40 Minn. L. Rev. 234; Tort Claims Against the State of Illinois and Its Subdivisions, 47 N.W. L. Rev. 914.
Historically we find that the doctrine of the sovereign immunity of the state, the theory that “the King can do no wrong,” was first extended to' a subdivision of the state in 1788 in Russell v. Men of Devon, 2 Term Rep. 671, 100 Eng. Rep. 359. As pointed out by Dean Prosser (Prosser on Torts, p. 1066), the idea of the municipal corporate entity was still in a nebulous state at that time. The action was brought against the entire population of the county and the decision that the county was immune was based chiefly on the fact that there were no corporate funds in Devonshire out of which satisfaction could be obtained, plus a fear of multiplicity of suits and resulting inconvenience to the public.
It should be noted that the Russell case was later overruled by the English courts, and that in 1890 it was definitely established that in England a school board or school district is subject to suit in tort for personal injuries on *16the same basis as a private individual or corporation. (Crisp v. Thomas, 63 L. T. N. S. 756 (1890).) Non-immunity has continued to be the law of England to the present day. See: Annotation, 160 A.L.R. 7, 84.
The immunity doctrine of Russell v. Men of Devon was adopted in Illinois with reference to towns and counties in 1870 in Town of Waltham v. Kemper, 55 Ill. 346. Then, in 1898, eight years after the English courts had refused to apply the Russell doctrine to schools, the Illinois court extended the immunity rule to school districts in the leading case of Kinnare v. City of Chicago, 171 Ill. 332, where it was held that the Chicago Board of Education was immune from liability for the death of a laborer resulting from a fall from the roof of a school building, allegedly due to the negligence of the Board in failing to provide scaffolding and safeguards. That opinion reasoned that since the State is not subject to suit nor liable for the torts or negligence of its agents, likewise a school district, as a governmental agency of the State, is also “exempted from the obligation to respond in damages, as master, for negligent acts of its servants to the same extent as is the State itself.” Later decisions following the Kinnare doctrine have sought to advance additional explanations such as the protection of public funds and public property, and to prevent the diversion of tax moneys to the payment of damage claims. Leviton v. Board of Education, 374 Ill. 594; Thomas v. Broadlands Community Consolidated School Dist. 348 Ill. App. 567.
Surveying the whole picture of governmental tort law as it stands in Illinois today, the following broad outlines may be observed. The General Assembly has frequently indicated its dissatisfaction with the doctrine of sovereign immunity upon which the Kinnare case was based. Governmental units, including school districts, are now subject to liability under the Workmen’s Compensation and Occupational Disease Acts. (Ill. Rev. Stat. 1957, chap. 48, pars. 138.1, 172.36; McLaughlin v. Industrial Board, 281 Ill. 100; Board of Education v. Industrial Com. 301 Ill. 611.) *17The State itself is liable, under the 1945 Court of Claims' Act, for damages in tort up to $7,500 for the negligence of its officers, agents or employees. (Ill. Rev. Stat. 1957, chap. 37, pars. 439.1-439.24.) Cities and villages have been made directly liable for injuries caused by the negligent operation of fire department vehicles, and for actionable wrong in the removal or destruction of unsafe or unsanitary buildings. (Ill. Rev. Stat. 1957, chap. 24, pars. 1—13, 1—16.) Cities and villages, and the Chicago Park District, have also been made responsible, by way of indemnification, for the nonwilful misconduct of policemen. (Ill. Rev. Stat. 1957, chap. 24, par. 1—15.1; chap. 105, par. 333.23K.) In addition to the tort liability thus legislatively imposed upon governmental units, the courts have classified local units of government as “quasi-municipal corporations” and “municipal corporations.” And the activities of the latter class have been categorized as “governmental” and “proprietary,” with full liability in tort imposed if the function is classified as “proprietary.” The incongruities that have resulted from attempts to fit particular conduct into one or the other of these categories have been the subject of frequent comment. Rhyne, Municipal Law, p. 732; Phillips, “Active Wrongdoing” and the Sovereign-Immunity Principle in Municipal Tort Liability, 38 Ore. L. Rev. 122, 124; Davis, Tort Liability of Governmental Units, 40 Minn. L. Rev. 751, 774; Note, Tort Claims Against the State of Illinois and Its Subdivisions, 47 N.W. L. Rev. 914, 921; Green, Freedom of Litigation (III): Municipal Liability for Torts, 38 Ill. L. Rev. 355. See also Roumbos v. City of Chicago, 332 Ill. 70.
Of all of the anomalies that have resulted from legislative and judicial efforts to alleviate the injustice of the results that have flowed from the doctrine of sovereign immunity, the one most immediately pertinent to this case is the following provision of the Illinois School Code: “Any school district, including any non-high school district, which provides transportation for pupils may insure *18against any loss or liability of such district, its agents or employees, resulting from or incident to the ownership, maintenance or use of any school bus. Such insurance shall be carried only in companies duly licensed and authorized to write such coverage in this state. Every policy for such insurance coverage issued to a school district shall provide, or be endorsed to provide, that the company issuing such policy waives any right to refuse payment or to deny liability thereunder within the limits of said policy, by reason of the non-liability of the insured school district for the wrongful or negligent acts of its agents and employees, and, its immunity from suit, as an agency of the state performing governmental functions.”
Thus, under this statute, a person injured by an insured school district bus may recover to the extent of such insurance, whereas, under the Kinnare doctrine, a person injured by an uninsured school district bus can recover nothing at all.
Defendant contends that the quoted provision of the School Code constitutes a legislative determination that the public policy of this State requires that school districts be immune from tort liability. We can read no such legislative intent into the statute. Rather, we interpret that section as expressing dissatisfaction with the court-created doctrine of governmental immunity and an attempt to cut down that immunity where insurance is involved. The difficulty with this legislative effort to curtail the judicial doctrine is that it allows each school district to determine for itself whether, and to what extent, it will be financially responsible for the wrongs inflicted by it.
Coming down to the precise issue at hand, it is clear that if the above rules and precedents are strictly applied to the instant case, plaintiff’s complaint, containing no allegation as to the existence of insurance, was properly dismissed. On the other hand, the complaint may be held to state a good cause of action on either one of two theories, (i) application of the doctrine of Moore v. Moyle, 405 *19Ill. 555, or (2) abolition of the rule that a school district is immune from tort liability.
As to the doctrine of Moore v. Moyle, that case involved an action for personal injuries against Bradley University, a charitable educational institution. Traditionally, charitable and educational institutions have enjoyed the same immunity from tort liability as have governmental agencies in Illinois. (Parks v. Northwestern University, 218 Ill. 381.) The trial court dismissed the complaint on the ground that Bradley was immune to tort liability. The Supreme Court reversed, holding that the complaint should not have been dismissed since it alleged that Bradley was fully insured. Unfortunately, we must admit that the opinion in that case does not make the basis of the result entirely clear. (See Note, 45 Ill. L. Rev. 776.) However, the court there said, p. 564: “* * * the question of insurance in no way affects the liability of the institution, but would only go to the question of the manner of collecting any judgment which might be obtained, without interfering with, or subjecting the trust funds or trust-held property to, the judgment. The question as to whether or not the institution is insured in no way affects its liability any more than whether a charitable institution holding private nontrust property or funds would affect its liability. These questions would only be of importance at the proper time, when the question arose as to the collection of any judgment out of nontrust property or assets. * * * Judgments may be obtained, but the question of collection of the judgment is a different matter.” If we were to literally apply this reasoning to the present school district case, we would conclude that it was unnecessary that the complaint contain an allegation of the existence of insurance or other nonpublic funds. Plaintiff’s complaint was sufficient as it stood without any reference to insurance, and plaintiff would be entitled to prosecute his action to judgment. Only at that time, in case of a judgment for plaintiff, would the question of insurance arise, the pos*20session of nonpublic funds being an execution rather than a liability question. It cannot be overlooked, however, that some doubt is cast on this approach by the last paragraph of the Moore opinion, where the court said: “It appears that the trust funds of Bradley will not be impaired or depleted by the prosecution of the complaint, and therefore it was error to dismiss it.” These words imply that if from the complaint it did not appear that the trust funds would not be impaired, the complaint should have been dismissed. If that is the true holding in the case, then liability itself, not merely the collectibility of the judgment, depends on the presence of nontrust assets, as was pointed out by Justice Cramp ton in his dissenting opinion. The doctrine of Moore v. Moyle does not, in our opinion, offer a satisfactory solution. Like the provision of the School Code above quoted, it would allow the wrongdoer to determine its own liability.
It is a basic concept underlying the whole law of torts today that liability follows negligence, and that individuals and corporations are responsible for the negligence of their agents and employees acting in the course of their employment. The doctrine of governmental immunity runs directly counter to that basic concept. What reasons, then, are so impelling as to allow a school district, as a quasi-municipal corporation, to commit wrongdoing without any responsibility to its victims, while any individual or private corporation would be called to task in court for such tortious conduct ?
The original basis of the immunity rule has been called a “survival of the medieval idea that the sovereign can do no wrong,” or that “the King can do no wrong.” (38 Am. Jur., Mun. Corps., sec. 573, p. 266.) In Kinnare v. City of Chicago, 171 Ill. 332, the first Illinois case announcing the tort immunity of school districts, the court said: “The State acts in its sovereign capacity, and does not submit its action to the judgment of courts and is not liable for the torts or negligence of its agents, and a corporation created by the State as a mere agency for the more efficient exer*21cise of governmental functions is likewise exempted from the obligation to respond in damages, as master, for negligent acts of its servants to the same extent as is the State itself, unless such liability is expressly provided by the statute creating such agency.” This was nothing more nor less than an extension of the theory of sovereign immunity. Professor Borchard has said that how immunity ever came to be applied in the United States of America is one of the mysteries of legal evolution. (Borchard, Governmental Liability in Tort, 34 Yale L. J. 1, 6.) And how it was then infiltrated into the law controlling the liability of local governmental units has been described as one of the amazing chapters of American common-law jurisprudence. (Green, Freedom of Litigation, 38 Ill. L. Rev. 355, 356.) “It seems, however, a prostitution of the concept of sovereign immunity to extend its scope in this way, for no one could seriously contend that local governmental units possess sovereign powers themselves.” 54 Harv. L. Rev. 438, 439.
We are of the opinion that school district immunity cannot be justified on this theory. As was stated by one court, “The whole doctrine of governmental immunity from liability for tort rests upon a rotten foundation. It is almost incredible that in this modern age of comparative sociological enlightenment, and in a republic, the medieval absolutism supposed to be implicit in the maxim, ‘the King can do no wrong,’ should exempt the various branches of the government from liability for their torts, and that the entire burden of damage resulting from the wrongful acts of the government should be imposed upon the single individual who suffers the injury, rather than distributed among the entire community constituting the government, where it could be borne without hardship upon any individual, and where it justly belongs.” (Barker v. City of Santa Fe, 47 N.M. 85, 136 P.2d 480, 482.) Likewise, we agree with the Supreme Court of Florida that in preserving the sovereign immunity theory, courts have overlooked the fact that the *22Revolutionary War was fought to abolish that “divine right of Icings” on which the theory is based.
The other chief reason advanced in support of the immunity rule in the more recent cases is the protection of public funds and public property. This corresponds to the “no fund” or “trust fund” theory upon which charitable immunity is based. This rationale was relied on in Thomas v. Broadlands Community Consolidated School Dist. 348 Ill. App. 567, where the court stated that the reason for the immunity rule is “that it is the public policy to protect public funds and public property, to prevent the diversion of tax moneys, in this case school funds, to the payment of damage claims.” This reasoning seems to follow the line that it is better for the individual to suffer than for the public to be inconvenienced. From it proceeds defendant’s argument that school districts would be bankrupted and education impeded if said districts were called upon to compensate children tortiously injured by the negligence of those districts’ agents and employees.
We do1 not believe that in this present day and age, when public education constitutes one of the biggest businesses in the country, that school immunity can be justified on the protection-of-public-funds theory.
In the first place, analysis of the theory shows that it is based on the idea that payment of damage claims is a diversion of educational funds to an improper purpose. As many writers have pointed out, the fallacy in this argument is that it assumes the very point which is sought to be proved, i.e., that payment of damage claims is not a proper purpose. “Logically, the ‘No-fund’ or ‘trust fund’ theory is without merit because it is of value only after a determination of what is a proper school expenditure. To predicate immunity upon the theory of a trust fund is merely to argue in a circle, since it assumes an answer to the very question at issue, to wit, what is an educational purpose? Many disagree with the ‘no-fund’ doctrine to the extent of ruling that the payment of funds for judgments *23resulting from accidents or injuries in schools is an educational purpose. Nor can it be properly argued that as a result of the abandonment of the common-law rule the district would be completely bankrupt. California, Tennessee, New York, Washington and other states have not been compelled to shut down their schools.” (Rosenfield, Governmental Immunity from Liability for Tort in School Accidents, 5 Legal Notes on Local Government, 376-377.) Moreover, this argument is even more fallacious when viewed in the light of the Illinois School Code, which authorizes appropriations for “transportation purposes” (Ill. Rev. Stat. 1957, chap. 122, par. 17—6.1), authorizes issuance of bonds for the “payment of claims” (Ill. Rev. Stat. 1957, chap. 122, par. 19—10), and authorizes expenditures of school tax funds for liability insurance covering school bus operations. (Ill. Rev. Stat. 1957, chap. 122, par. 29—11a.) It seems to us that the payment of damage claims incurred as an adjunct to transportation is as much a “transportation purpose” and therefore a proper authorized purpose as are payments of other expenses involved in operating school buses. If tax funds can properly be spent to- pay premiums on liability insurance, there seems to be no good reason why they cannot be spent to pay the liability itself in the absence of insurance.
Neither are we impressed with defendant’s plea that the abolition of immunity would create grave and unpredictable problems of school finance and administration. We are in accord with Dean Green when he disposed of this problem as follows: “There is considerable talk in the opinions about the tremendous financial burdens tort liability would cast upon the taxpayer. In some opinions it is stated that this factor is sufficient to warrant the courts in protecting the taxpayer through the immunity which they have thrown around municipal corporations. While this factor may have had compulsion on some of the earlier courts, I seriously doubt that it has any great weight with the courts in recent years. In the first place, taxation is not the subject matter *24of judicial concern where justice to the individual citizen is involved. It is the business of other departments of government to provide the funds required to pay the damages assessed against them by the courts. Moreover, the same policy that would protect governmental corporations from the payment of damages for the injuries they bring upon others would be equally pertinent to a like immunity to protect private corporations, for conceivably many essential private concerns could also be put out of business by the damages they could incur under tort liability. But as a matter of fact, this argument has no practical basis. Private concerns have rarely been greatly embarrassed, and in no instance, even where immunity is not recognized, has a municipality been seriously handicapped by tort liability. This argument is like so many of the horribles paraded in the early tort cases when courts were fashioning the boundaries of tort law. It has been thrown in simply because there was nothing better at hand. The public’s willingness to stand up and pay the cost of its enterprises carried out through municipal corporations is no less than its insistence that individuals and groups pay the cost of their enterprises. Tort liability is in fact a very small item in the budget of any well organized enterprise.” Green, Freedom of Litigation, 38 Ill. L. Rev. 355, 378.
We are of the opinion that none of the reasons advanced in support of school district immunity have any true validity today. Further we believe that abolition of such immunity may tend to decrease the frequency of school bus accidents by coupling the power to transport pupils with the responsibility of exercising care in the selection and supervision of the drivers. As Dean Harno said: “A municipal corporation today is an active and virile creature capable of inflicting much harm. Its civil responsibility should be co-extensive. The municipal corporation looms up definitely and emphatically in our law, and what is more, it can and does commit wrongs. This being so, it must assume the responsibilities of the position it occupies in society.” (Harno, Tort *25Immunity of Municipal Corporations, 4 Ill. L. Q. 28, 42.) School districts will be encouraged to exercise greater care in the matter of transporting pupils and also to carry adequate insurance covering that transportation, thus spreading the risk of accident, just as the other costs of education are spread over the entire district. At least some school authorities themselves have recognized the need for the vital change which we are making. See Editorial, 100 American School Board Journal 55, Issue No. 6, June, 1940.
“The nation’s largest business is operating on a blueprint prepared a hundred, if not a thousand, years ago. The public school system in the United States, which constitutes the largest single business in the country, is still under the domination of a legal principle which in great measure continued unchanged since the Middle Ages, to the effect that a person has no financial recourse for injuries sustained as a result of the performance of the State’s functions * * *. That such a gigantic system, involving so large an appropriation of public funds and so tremendous a proportion of the people of the United States, should operate under the principles of a rule of law so old and so outmoded would seem impossible were it not actually true.” Rosenfield, Governmental Immunity from Liability for Tort in School Accidents, 9 Law and Contemporary Problems 358, 359.
We conclude that the rule of school district tort immunity is unjust, unsupported by any valid reason, and has no rightful place in modern da)r society.
Defendant strongly urges that if said immunity is to be abolished, it should be done by the legislature, not by this court. With this contention we must disagree. The doctrine of school district immunity was created by this court alone. Having found that doctrine to be unsound and unjust under present conditions, we consider that we hai^e not only the power, but the duty, to abolish that immunity. “We closed our courtroom doors without legislative help, and we can likewise open them.” Pierce v. Yakima Valley *26 Memorial Hospital Ass’n, 43 Wash.2d 162, 260 P.2d 765, 774.
We have repeatedly held that the doctrine of stare decisis is not an inflexible rule requiring this court to blindly follow precedents and adhere to prior decisions, and that when it appears that public policy and social needs require a departure from prior decisions, it is our duty as a court of last resort to overrule those decisions and establish a rule consonant with our present day concepts of right and justice. (Bradley v. Fox, 7 Ill.2d 106, 111; Nudd v. Matsoukas, 7 Ill.2d 608, 615; Amann v. Faidy, 415 Ill. 422.) As was stated by the New Jersey Supreme Court in overruling the doctrine of charitable immunity: “The unmistakable fact remains that judges of an earlier generation declared the immunity simply because they believed it to be a sound instrument of judicial policy which would further the moral, social and economic welfare of the people of the State. When judges of a later generation firmly reach a contrary conclusion they must be ready to discharge their own judicial responsibilities in conformance with modern concepts and needs. It should be borne in mind that we are not dealing with property law or other fields of the law where stability and predictability may be of the utmost concern. We are dealing with the law of torts where there can be little, if any, justifiable reliance and where the rule of stare decisis is admittedly limited. See Pound, supra, 13 N.A.C.C.A.L.J. at 22; Seavey, Cogitations on Torts, 68 (1954); Cowan, ‘Torts,’ 10 Rutgers L. Rev. 115, 119 (1955).” Collopy v. Newark Eye and Ear Infirmary, 27 N.J. 29, 141 A.2d 276.
In here departing from stare decisis because we believe justice and policy require such departure, we are nonetheless cognizant of the fact that retrospective application of our decision may result in great hardship to school districts which have relied on prior decisions upholding the doctrine of tort immunity of school districts. For this reason we feel justice will best be served by holding that, except as *27to the plaintiff in the instant case, the rule herein established shall apply only to cases arising out of future occurrences. This result is in accord with a substantial line of authority embodying the theory that an overruling decision should be given only prospective operation whenever injustice or hardship due to reliance on the overruled decisions would thereby be averted. Gelpcke v. City of Dubuque, 68 U.S. 175, 17 L. ed. 520; Harmon v. Auditor of Public Accounts, 123 Ill. 122 (where decision sustaining validity of statute authorizing bond issue is, subsequent to the issue, overruled, overruling decision operates prospectively) ; Davies Warehouse Co. v. Bowles, 321 U.S. 144, 88 L. ed 635; People ex rel. Attorney General v. Salomon, 54 Ill. 39 (where public officers have relied on statutes subsequently held unconstitutional, decision given only prospective operation) ; State v. Jones, 44 N.M. 623, 107 P.2d 324 (prospective operation given decision overruling precedent as to what constitutes a lottery); Continental Supply Co. v. Abell, 95 Mont. 148, 24 P.2d 133 (prospective operation given decision overruling prior cases as to corporate directors’ liability to stockholders) ; Hare v. General Contract Purchase Corp., 220 Ark. 601, 249 S.W.2d 973 (prospective operation given decision changing prior rule as to what constitutes usury.) See also: Snyder, Retrospective Operation of Overruling Decisions, 35 Ill. L. Rev. 121; Kocourek, Retrospective Decisions and Stare Decisis, 17 A.B.A.J. 180; Freeman, The Protection Afforded Against the Retroactive Operation of an Overruling Decision, 18 Col. L. Rev. 230; Carpenter, Court Decisions and the Common Law, 17 Col. L. Rev. 593; Note, Prospective Operation of Decisions Holding Statutes Unconstitutional or Overruling Prior Decisions, 60 Harv. L. Rev. 437.
Likewise there is substantial authority in support of our position that the new rule shall apply to the instant case. (Dooling v. Overholser, (D.C. cir.) 243 F.2d 825; Shioutakon v. District of Columbia, (D.C. cir.) 236 F.2d 666; Durham v. United States, (D.C. cir.) 214 F.2d 862; Barker *28v. St. Louis County, 340 Mo. 986; 104 S.W.2d 371; Farrior v. New England Mortgage Security Co. 92 Ala. 176, 9 So. 532; Haskett v. Maxey, 134 Ind. 182, 33 N.E. 358; Dauchey v. Farney, 173 N. Y. Supp. 530.) At least two compelling reasons exist for applying the new rule to the instant case while otherwise limiting its application to cases arising in the future. First, if we were to merely announce the new rule without applying it here, such announcement would amount to mere dictum. Second, and more important, to refuse to apply the new rule here would deprive appellant of any benefit from his effort and expense in challenging the old rule which we now declare erroneous. Thus there would be no incentive to appeal the upholding of precedent since appellant could not in any event benefit from a reversal invalidating it.
It is within our inherent power as the highest court of this State to give a decision prospective or retrospective application without offending constitutional principles. Great Northern Railway Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 77 L. ed. 360.
Although ordinarily the cases which have invoked the doctrine of prospective operation have involved contract or property rights or criminal responsibility, the basis of the doctrine is reliance upon an overruled precedent. Despite the fact that the instant case is one sounding in tort, it appears that the ’’reliance test” has been met here. We do not suggest that the tort itself was committed in reliance on the substantive law of torts, i.e., the bus driver did not drive negligently in reliance on the doctrine of governmental immunity, but rather that school districts and other municipal corporations have relied upon immunity and that they will suffer undue hardship if abolition of the immunity doctrine is applied retroactively. In reliance on the immunity doctrine, school districts have failed to adequately insure themselves against liability. In reliance on the immunity doctrine, they have probably failed to investigate past accidents which they would have investigated had they *29known they might later be held responsible therefor. Our present decision will eliminate much of the hardship which might be incurred by school districts as a result of their reliance on the overruled doctrine, and at the same time reward appellant for having afforded us the opportunity of changing an outmoded and unjust rule of law.
For the reasons herein expressed, we accordingly hold that in this case the school district is liable in tort for the negligence of its employee, and all prior decisions to the contrary are hereby overruled.
The judgment of the Appellate Court sustaining the dismissal of plaintiff’s complaint is reversed and the cause is remanded to the circuit court of Kane County with instructions to set aside the order dismissing the complaint, and to proceed in conformity with the views expressed in this opinion.
Reversed and remanded, with directions.