An Indiana judge on Friday ordered Gov. Mitch Daniels to be deposed in two lawsuits over the state's cancellation of a $1.37 billion contract IBM received to modernize the state's welfare system, but the state attorney general said he would challenge the order.

"A deposition of a sitting governor would set a precedent that would have ramifications for the Office of the Governor and all of its future officeholders," Attorney General Greg Zoeller said in a statement. "As Attorney General, is it my legal obligation to ensure that this court order is challenged, and therefore it will be challenged in the appropriate court."

Peter Rusthoven, one of the private attorneys representing the state in the suit, said he believed no Indiana governor had ever been compelled to testify in court.

But Marion Superior Court Judge David Dreyer said a law state attorneys say protects Daniels from testifying is "ambiguous" and excluding Daniels from being deposed would be "illogical," given that the state filed the first lawsuit in the case.

Indiana is suing IBM to recover more than $400 million it paid the company before Daniels canceled the 10-year contract in 2009 amid complaints about the automated welfare system. IBM's countersuit says the state still owes IBM about $100 million.

"It is illogical to find the Statute is intended to allow any governor to apparently make relevant decisions and potentially admissible statements in support of the State's own lawsuit and not be questioned," Judge David Dreyer wrote.

IBM contends Daniels could provide details others couldn't. Indiana's attorneys argued it's common for high-ranking government officials to stay out of civil suits.

"The governor's intent and state of mind are issues of fact in this case," the order said. Without the governor's testimony, both sides could be forced to call other witnesses to speculate about his intent, which would be inadmissible, Dreyer wrote.

"I don't think this will be likely to stand up," Daniels told reporters Friday when asked about the ruling. "This is really not about me or one governor. There's a reason Indiana has had a law for a hundred and some years. Governors wouldn't do anything other than sit around in lawyers' offices if every contract would be subject to a deposition."

Rusthoven said attorneys believe the order is wrong and will ask a court to review it. It was not clear from Zoeller's statement which court he intended to appeal in.

"It's a mistake. It's not about this governor. It's not about this lawsuit," Rusthoven said. "It's about protecting any governor from spending his time having to be involved in lawsuits against the state."

The state Family and Social Services Administration, which is a party to the suit, declined to comment.

IBM spokesman Clint Roswell welcomed the court order.

"We are pleased that Judge Dreyer has agreed we should be able to question Governor Daniels under oath since he was personally involved from the earliest days of this project and was hands-on concerning project management — repeatedly praising IBM's efforts," Roswell said in a statement.

"Judge Dreyer's ruling shows that Governor Daniels cannot avoid answering legitimate questions concerning his key role in the welfare program, especially in light of his often-stated promise of transparency in government," he added.