AGO 1961 No. 71 - Oct 11 1961
CITIES AND TOWNS ‑- FIRST CLASS ‑- LIABILITY INSURANCE ‑- AUTHORITY TO PURCHASE.
(1) A city of the first class, in the absence of any restrictive provision of its own charter, has the power under existing state law to enact an ordinance authorizing the purchase of liability insurance out of city funds to protect its employees against liability from false arrest or assault and battery, as a part of their compensation.
(2) A city of the first class, in the absence of any restrictive provision in its own charter, has the power under state law to enact an ordinance providing for the use of corporation counsel to defend civil suits brought against its officers and employees in their individual capacity for wrongful arrest or assault and battery under certain specified conditions.
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October 11, 1961
Honorable Mark Litchman, Jr.
State Representative, 45th District
719 Arctic Building
Cite as: AGO 61-62 No. 71
By letter, previously acknowledged, you have requested the opinion of this office on the following questions:
1. Can a first class city of this state purchase liability insurance, paying for such insurance out of public funds, such insurance covering the wrongful arrest or assault and battery by employees of the city?
2. Can the corporation counsel of a first class city appear as attorney of record and defend employees of the city when they are sued in a civil action for damages arising out of assault and battery and the city is not joined as a party defendant?
We answer both your questions in the affirmative as qualified in the analysis.
A municipal corporation, being but a creature of the state, derives [[Orig. Op. Page 2]] its existence, powers, and duties from the legislative body of the state. Othello v. Harder, 46 Wn. (2d) 747, 284 P. (2d) 1099 (1955). Generally speaking, the powers of a municipal corporation, and the powers and duties of its officers, are limited to those which have been granted expressly or by necessary implication by the applicable statutes, and if there is a doubt as to whether a power has been granted, it is denied. Pacific Etc. Ass'n v. Pierce County, 27 Wn. (2d) 347, 178 P. (2d) 351 (1947);Othello v. Harder, supra.
There is a notable exception to this rule, however, in the case of a city of the first class operating under its constitutionally authorized charter. (Cf. Article XI, § 10, Washington State Constitution.) According to several decisions by the supreme court of this state, the rule to the effect that "any fair or reasonable doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied," should not be followed in determining a question involving the power of a city of the first class under its charter, as subject to and controlled by general laws. See,State ex rel. Ennis v. Superior Court, 153 Wash. 139, 279 Pac. 601 (1929);Ayers v. Tacoma, 6 Wn. (2d) 545, 108 P. (2d) 348 (1940). The broadest statement by the court on that subject is found in Winkenwerder v. Yakima, 52 Wn. (2d) 617, 622, 623, 328 P. (2d) 873 (1958), as follows:
"It is clear from theEnnis case and from many other decisions of this court that the only limitation on the power of cities of the first class is that their actioncannot contravene any constitutional provision or any legislative enactment . . . [Citing cases.] The principles adhered to in the preceding cases clearly indicate that a city of the first class has as broad legislative powers as the state, except when restricted by enactments of the state legislature.
". . . If the state could constitutionally exercise the powers which the city is here attempting to exercise, then the ordinance and agreement are valid,unless they contravene some provision of the city's charter. (Double emphasis ours.)
Turning to your first question, on the subject of purchasing liability insurance, this office has had previous occasion to consider the power of municipalities in this regard. In AGO 57-58 No. 18, to the prosecuting attorney of Douglas county, the question asked was whether or not a county could legally pay false arrest insurance premiums for the [[Orig. Op. Page 3]] sheriff and his deputies as a legitimate county expense. Answering in the negative we pointed out a county was not liable for the acts of the sheriff and his deputies; that, therefore, the expenditure would inure to the benefit of those individuals and not the county; and that, therefore, the expenditure would violate Article VIII, § 7, of the State Constitution, which provides as follows:
"No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm, or become directly or indirectly the owner of any stock in or bonds of any association, company or corporation."
A copy of the opinion is enclosed for your reference.
In so far as your first question relates to insurance for false arrest, or other acts of city employees performed in connection with governmental functions (as distinguished from business or proprietary functions) of a city, the first premise in the reasoning of that opinion would be equally applicable; namely, that the liability insured against would not be the liability of the city. See, Lakoduk v. Cruger, 47 Wn. (2d) 286, 287 P. (2d) 338 (1955).
In the cited opinion, however, we did not discuss the question of whether or not the payment of such premiums might be made a legitimate part of an employee's compensation plan. Possibly the result would have been the same, as regards counties, and other municipalities other than first class cities. The compensation of county officers is expressly limited by statute (RCW 36.17.010). As to municipal employees, generally, the payment of compensation in the form of insurance and such fringe benefits was discussed in AGO 61-62 No. 18, dated March 21, 1961, to the prosecuting attorney of Yakima county. In that opinion, a copy of which is also enclosed, we concluded that the existence of a pattern of express legislation, granting the authority to provide fringe benefits in certain cases, together with the rule requiring a strict construction of municipal powers, limited the authority of a municipal corporation to provide benefits of this nature except as expressly authorized by statute.
Obviously, the conclusion of that opinion cannot be said to apply here. Unlike other kinds or classes of municipal corporations, the powers of first class cities are not necessarily limited to the express or implied provisions of any statute. According to the cases cited above, particularly the Winkenwerder case, supra, a city of the first class has "as broad legislative powers as the state," except where restricted by the state constitution, by a statute, or by a provision of the [[Orig. Op. Page 4]] city's own charter.
We find no statutory or constitutional provision in this state which prohibits a city of the first class from providing liability insurance to its employees as a part of the employees' compensation plan. In fact, the power has been expressly granted by statute to certain other municipalities, and those statutes are presumed to be constitutional. See, for instance, RCW 28.76.410, which grants such power to educational institutions and school districts.
Accordingly, it is the opinion of this office that a first class city may, as a part of its compensation plan, validly provide and pay the premiums for liability insurance, to protect its employees against liability from wrongful arrest or assault and battery, provided the city properly exercises the power by appropriate legislation in the form of an ordinance, and with the further qualification that such ordinance does not contravene any provision of the city's own charter.
The answer to your second question is likewise in the affirmative, on similar principles.
In several previous opinions, this office has concluded that (a) the prosecuting attorney of a county may not, in his official capacity, defend the county sheriff (AGO 45-46, page 335, to the prosecuting attorney of Kitsap county, September 11, 1945 [[1945-46 OAG 335]]; reaffirmed in an informal opinion to the prosecuting attorney of King county December 12, 1945); (b) a county may not pay the cost of reasonable attorney's fees incurred by the sheriff (see informal opinion to the prosecuting attorney of Snohomish county, March 7, 1941); and (c) a county may not employ special counsel to defend the sheriff sued individually in an action for false arrest (see informal opinion to the prosecuting attorney of Stevens county, January 20, 1925). Copies are enclosed.
Again, the basic reason for these conclusions was the county's nonliability for the acts of the sheriff. The opinions did not discuss the question from the standpoint of constitutional limitations, but rather, on the reasoning that there was no express statutory authority for the act in question, and no necessarily implied power.
In the present case, if the action by the corporation counsel is taken pursuant to proper authorization from the city's governing body, our inquiry is necessarily limited (for the reasons set out above) to the question of whether or not the authorization by the governing body of a first class city would be in violation of any existing constitutional, statutory or charter provisions. Having found no restrictive statute on the subject, and in the absence of a question directed to the provisions of any particular city charter, the only remaining question is whether or not the city's own enactment on this subject would be violative of any provision of our state constitution.
[[Orig. Op. Page 5]]
We have previously quoted the provisions of Article VIII, § 7, Washington State Constitution. Another provision, Article VII, § 1, Amendment 14, reads in pertinent part that ". . . All taxes . . . shall be levied and collected for public purposes only. . . ."
Under these constitutional provisions, it is fundamental that public funds cannot be expended for private purposes. State ex rel. Collier v. Yelle, 9 Wn. (2d) 317, 115 P. (2d) 373 (1941). Furthermore, regardless of whether the purpose of the expenditure is public or private, Article VIII, § 7, supra, prohibits all gifts of money, property, or credit to or in aid of, any individual, or corporation. See,Johns v. Wadsworth, 80 Wash. 352, 141 Pac. 892 (1914).
As a general consideration it has been stated that
". . . It is the essential character of the direct object of the expenditure which must determine its validity, and not the magnitude of the interests to be affected, or the degree to which the general advantage of the community, and thus the public welfare, may be ultimately benefited by their promotion. . . ." 42 Am.Jur. Public Funds, § 57, p. 758.
Conversely, if the primary object is to subserve a public municipal purpose (and the expenditure is not in its nature a gift or gratuity to a private individual or entity) ". . . it is immaterial that, incidentally, private ends may be advanced . . ." 15 McQuillin, Municipal Corporations § 39.19, p. 36.
Courts of other jurisdictions have recognized the power of cities to indemnify a city officer or employee against liability by reason of an act done by him in the bona fide performance of his official duties under certain conditions. See 15 McQuillin,supra, § 39.21, pp. 5253; Id., 3 McQuillin, § 12.137;State ex rel. Feist v. Foote, 151 Minn. 130, 186 N.W. 230 (1932). The expenditure has been recognized as for a public purpose, apparently on the theory that the city can recognize an interest of its own in defending the actions of its officers. See, for instance,Cullen et al. v. The Town of Carthage, 103 Ind. 196, 2 N.E. 571 (1885);City of Moorhead v. Murphy, 94 Minn. 123, 102 N.W. 219 (1905).
There are further decisions from other states which would be persuasive to the effect that such expenditures are not necessarily in the nature of gifts. In State ex rel. Crow v. City of St. Louis, 174 Mo. 125, 73 S.W. 623 (1903), a police officer fired at a steer running loose in the streets and a bullet accidentally struck a passerby, who sued the policeman for damages. The issue was presented as [[Orig. Op. Page 6]] to whether or not the city could indemnify the officer, or whether such indemnification would amount to a violation of Article IV, §§ 45 and 47 of the Missouri constitution, which provided substantially the same as our own Article VIII, § 7, supra. Holding that the expenditure was not violative of those sections, the supreme court of Missouri said, at page 630 (73 S.W. 623):
". . . If the ordinance in question made a donation of public money to an individual, it would be void, as was well said in Hitchcock v. St. Louis, 49 Mo. 484. But such is not the fact here. The ordinance only appropriates the expense that a public officer incurred and paid, while in the discharge of his duty as such officer, in removing a nuisance from the public highway, which the law expressly required him to do, and which the city was under obligation to its citizens to do in the discharge of its police power and its health and safety duty. . . ."
Similarly if the ordinance providing for the furnishing of counsel is based upon recognition of a moral obligation to the officer or employee, the necessary expense thereof is not considered a gift. In theMatter of Evans v. Berry, 262 N.Y. 61, 186 N.E. 203 (1933), the New York court considered the validity of a local law authorizing the award of damages to a person injured by a police officer while engaged in making an arrest, as an obligation of the city. Article VIII, § 10 of the New York constitution provided in pertinent part as follows:
"No . . . city . . . shall hereafter give any money or property, or loan its money or credit to or in aid of any individual, association or corporation, . . ."
In the course of its opinion, holding that this section was not violated, the New York court said at page 206 (186 N.E. 203):
"Assumption of liability does not constitute a gift or gratuity to the injured person so long as it is the legitimate recognition of an equitable claim [citing cases]. The purpose is a city purpose for it provides for the protection of people who are thus exposed to the risk of injury when on city streets.
[[Orig. Op. Page 7]]
"The extent to which moral and equitable claims against the city should be recognized is primarily for the city itself to determine [citing cases] provided only that it may not expend the city money for other than a city purpose or give it away. Constitutional local self-government should not be hamstrung by the courts for economic reasons. Prior to the Home Rule Amendment, the state might have imposed such liability on the city. Now the city may self-impose such liability, if it sees fit to assume the burden. The local law should be upheld."
On similar reasoning, the "moral obligation" theory, the supreme court of this state has upheld the constitutionality of a statute providing for veterans' bonus payments. InState ex rel. Hart v. Clausen, 113 Wash. 570, 573, 194 Pac. 793 (1921), the court said in the course of its opinion:
". . . If the purpose for which the taxing power is exercised is a public purpose, a moral obligation on the part of the state to meet that purpose is sufficient to sustain the law. . . ."
According toWinkenwerder v. Yakima, supra, holding that the legislative powers of a first class city are as broad as those of the state, we must conclude that a first class city has the power to recognize a moral or equitable obligation to defend the actions of its officers and employees in certain cases, subject to the provisions of any restrictive statutory provisions (none of which have been found in this case) and to the provisions of its own charter.
However, the rule itself is subject to certain qualifications, stated in 3 McQuillin,supra, § 12.137, as follows:
"'. . . did the act done by the officer relate directly to a matter in which the city had an interest, or affect municipal rights or property, or the right or property of the citizens which the officer was charged with a duty to protect or defend?' It has been said that in order to justify the expenditure of money by a municipal corporation in the indemnity of one or any of its officers for a loss incurred in the discharge of their official duty, three things must appear. First, the officer must have been acting in a matter [[Orig. Op. Page 8]] in which the corporation had an interest. Second, he must have been acting in discharge of a duty imposed or authorized by law. And third, he must have acted in good faith. . . ."
Thus, for instance, if the municipal authorities find in advance reasonable grounds to believe that the alleged assault and battery was in fact a reasonable exercise of force in the making of a valid arrest, by a police officer in good faith, the defense would be clearly proper under an enabling ordinance. On the other hand, the cases and authorities cited in this opinion would not support expenditures of municipal funds to defend officers or employees of a city in civil suits for private torts or in prosecutions for crime or official misconduct.
A further consideration is recommended in the language of the court inMoorhead v. Murphy, 94 Minn. 123, 126, supra, as follows:
"'It would seem, therefore, to be the wisest to leave the indemnification of the officer to the discretion of those who represent the interests of the city, that, . . . they should not be obliged to protect every officer, though acting in good faith, under circumstances which seem to them to indicate a blamable want of care and caution.'"
Our conclusions may be summarized as follows:
1. A city of the first class, in the absence of any restrictive provision of its own charter, has the power under existing state law to enact an ordinance authorizing the purchase of and payment for out of city funds, liability insurance to protect its employees against liability from wrongful arrest or assault and battery, as a part of their compensation.
2. Subject again to any restrictive provision in its own charter, a city of the first class has the power under existing state law to enact an ordinance providing for the use of corporation counsel to defend civil suits brought against its officers or employees in their individual capacity for wrongful arrest or assault and battery, under certain specified conditions.
We trust that this information will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
ROBERT F. HAUTH
Assistant Attorney General