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AGO 1988 No. 21 - October 12, 1988
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Ken Eikenberry | 1981-1992 | Attorney General of Washington

CITIES AND TOWNS ‑- MUNICIPAL CORPORATIONS ‑- GIFTS AND LOANS OF PUBLIC FUNDS ‑- MORAL OBLIGATIONS 

A city may not, solely on the basis of recognizing a moral obligation, reimburse another party to a lawsuit for costs and attorney fees, where the court has determined that the city has no legal liability for the fees and costs in question. 

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                                                                October 12, 1988 

Honorable James E. Hargrove
State Representative, 24th District
Route 3, Box 896
Hoquiam, WA 98550

Cite as:  AGO 1988 No. 21                                                                                                                

 Dear Representative Hargrove:

             By letter previously acknowledged, you requested our opinion on a question we have rephrased as follows:

             May a city pay to one of its residents the sum of $20,000, which is the amount of attorney fees and costs incurred by the resident in a lawsuit, where the city has no legal obligation to pay but wishes to make the payment for moral purposes?

             We answer this question in the negative.

                                                                        FACTS

             As we understand the facts of the matter, a property owner in the city of Ocean Shores brought suit against Ole and Barbara Gunderson and the city of Ocean Shores, alleging that the Gundersons' house was placed closer to the front line of their lot than permitted by the city's zoning ordinance.  The Court of Appeals eventually ordered the Gundersons to move their house and ordered the city to pay the entire cost of moving the house.  Radach v. Gunderson, 39 Wn. App. 392, 401, 695 P.2d 128, review  [[Orig. Op. Page 2]] denied, 103 Wn.2d 1027 (1985).1/

             However, the Court of Appeals refused to order the city to pay the Gundersons' attorney fees.  Id. at 400-01.

             Nevertheless, the Ocean Shores City Council believes it has a moral obligation to pay the Gundersons $20,000 to cover the Gundersons' attorney fees and costs in this litigation.

                                                                      ANALYSIS

             The Washington State Constitution permits the expenditure of public funds only for public purposes.  Const. art. 7, § 1 (amend. 14).2/

             Accordingly, where there is no legally enforceable claim, but only a moral obligation to make an expenditure, it is necessary that payment of the moral obligation be for a public purpose.  State ex rel. Collier v. Yelle, 9 Wn.2d 317, 331-34, 115 P.2d 373 (1941);State ex rel. Hart v. Clausen, 113 Wash. 570, 572-73, 194 P. 793, 13 A.L.R. 580 (1921).

             One reported opinion in this state has been cited as authority for the payment of a moral obligation.  State ex rel. Maddaugh v. Ritter, 74 Wash. 649, 134 P. 492 (1913).3/

             We do not believe, however, that Maddaugh provides support for this proposition today.  In Maddaugh, the State Supreme Court authorized a city to refund a portion of the fee paid for a liquor license that was cancelled prior to its stated expiration date.  Maddaugh predated the approval of amendment 14 to the state constitution in 1930.  Since then, the court has cited Maddaugh to support the expenditure of public funds in the absence of a legal obligation only where the public entity had received some consideration.  See, e.g.,Edwards v. Renton, 67 Wn.2d 598, 604-05, 409 P.2d 153 (1965).  Because your question does not relate to payments in return for consideration received, we believe thatMaddaugh has no application here.

              [[Orig. Op. Page 3]]

             It is therefore our opinion that State ex rel. Collier, supra, and State ex rel. Hart, supra, correctly state the law under article 7, section 1:  where there is no legally enforceable obligation to make an expenditure, but only a moral obligation, a city's expenditure for that moral obligation is permitted only where the expenditure also is for a public purpose.  Because there clearly is no legal obligation to pay the Gundersons, the question left for further consideration is whether there is a public purpose that would support the contemplated payment to the Gundersons.

             Because your question concerns the expenditure of city funds, two other constitutional provisions relate to this inquiry:

                         The legislature shall have no power to impose taxes upon counties, cities, towns or other municipal corporations, or upon the inhabitants or property thereof, for county, city, town, or other municipal purposes, but may, by general laws, vest in the corporate authorities thereof, the power to assess and collect taxes for such purposes.

 Const. art. 11, § 12.

                       The legislature may vest the corporate authorities of cities, towns and villages with power to make local improvements by special assessment, or by special taxation of property benefited.  For all corporate purposes, all municipal corporations may be vested with authority to assess and collect taxes and such taxes shall be uniform in respect to persons and property within the jurisdiction of the body levying the same.

 Const. art. 7, § 9.  Pursuant to these provisions, the use of city funds must be not only for public purposes, but also for "municipal" or "corporate" purposes.

             In a recent opinion, the State Supreme Court quoted and then applied the following explanation of a public municipal purpose:

             [T]he public purposes for which cities may incur liabilities are not restricted to those for which precedent can be found, but the test is whether the work is required for the general good of all the inhabitants of the city.  But it is not essential that the entire community, or even a considerable portion of it, should directly enjoy or participate in an improvement in order to make it a public one. . . .  [T]he test of a public purpose should be whether the expenditure confers a direct benefit of reasonably  [[Orig. Op. Page 4]] general character to a significant part of the public . . . .

 United States v. North Bonneville, 94 Wn.2d 827, 834, 621 P.2d 127 (1980) (quoting from 15 E. McQuillin, Municipal Corporations, § 39.19, at 31-32 (3d ed. 1970) (footnotes omitted)).  See also Marriage of Johnson, 96 Wn.2d 255, 258-59, 634 P.2d 877 (1981) (expenditure of state funds).

             InNorth Bonneville, the court approved the expenditure of town funds.  There, the town site was to be taken by the federal government for construction of a dam powerhouse.  The court found a public municipal purpose in the use of town funds to purchase land upon which to relocate the town.  94 Wn.2d at 834-35.  Another example of a public municipal purpose is the expenditure of city funds for an urban renewal project.  Miller v. Tacoma, 61 Wn.2d 374, 388, 378 P.2d 464 (1963).

             In a similar vein, the State Supreme Court has found the following expenditures of state funds to be for public purposes:  state services to enforce the collection of child support, Marriage of Johnson, supra, 96 Wn.2d at 258-60; and a grant under the Economic Assistance Act of 1972 to the Kalispel Indian Community to construct an industrial building and provide economic opportunities, Anderson v. O'Brien, 84 Wn.2d 64, 70, 524 P.2d 390 (1974).

             On the other hand, inState ex rel. Collier, supra, the court held that the proposed expenditure violated article 7, section 1.  There, property owners along a certain Seattle street were to be given rebates of a portion of the assessments paid in connection with a street improvement project.  The court was unable to conceive of any public purpose advanced by such rebates to these particular property owners and accordingly struck down the appropriation.  9 Wn.2d at 333-34.

             We now apply the law to your question.  The above discussion indicates that, even where there is no legal obligation to pay, the expenditure of public funds is permitted pursuant to legislation or an appropriation authorizing the expenditure if the expenditure confers a direct benefit of reasonably general character to a significant part of the public.  There is no state statute or appropriation that so authorizes the proposed payment to the Gundersons.  As a code city, the City of Ocean Shores has the power to enact ordinances and make appropriations so long as the ordinances and appropriations do not exceed the authority granted by the state constitution and are consistent with the general laws of the state.  RCW 35A.11.020, 35A.11.030.  You have not informed us of any ordinance or appropriation by the city council authorizing payment of the Gundersons' attorney fees and costs.  Furthermore, to comply with article 7, section 1, article 7,  [[Orig. Op. Page 5]] section 9, and article 11, section 12, any such ordinance or appropriation would have to confer a direct benefit of a reasonably general character on a significant part of the community.

             In the absence of a statute, ordinance, or appropriation that both authorizes the payment to the Gundersons and confers a direct benefit of a reasonably general character on a significant part of the public, we must answer your question in the negative.

             We trust that the above will be of assistance to you.

 Very truly yours,
KENNETH O. EIKENBERRY
Attorney General

JEAN M. WILKINSON
Assistant Attorney General 

                                                         ***   FOOTNOTES   ***

 1/The validity of the Court of Appeals' determination that Ocean Shores was liable is questionable in light of recent Supreme Court rulings.  See Taylor v. Stevens County, 111 Wn.2d 159, ___ P.2d ___ (1988); Meaney v. Dodd, 111 Wn.2d 174, 180, ___ P.2d ___ (1988).  The Court of Appeals' decision still stands as a final determination in the case, of course.

 2/Although it expressly refers only to the power of taxation, article 7, section 1 has been held to impose the same limitation on the expenditure of public monies as it does on the collection of public monies.  State ex rel. Collier v. Yelle, 9 Wn.2d 317, 326, 115 P.2d 373 (1941).

 3/See 56 Am. Jur. 2d Municipal Corporations § 817 (1971).

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