|Legal Opinion: |
Text of Document: December 7,1990
Your question is whether it is legal for the board of mayor and aldermen to approve the payment of a "separation allowance" to a police officer in the amount of $12,000. Under the facts, as they were related to me, the board had strong evidence that the officer reeked of alcohol while on duty, an action for which he was first suspended by the mayor with pay pending an investigation and hearing before the board of mayor and aldermen, following which the board suspended him, without pay. The officer was represented by counsel at the hearing. The board subsequently decided to terminate the officer, but apparently in consideration of his eight years previous service, voted to give him the separation allowance in question.
In my opinion, the payment of the separation allowance is probably illegal.
It is a fundamental principal of municipal law that municipalities may make expenditures only for public purposes. (15 McQuillin, The Law of Municipal Corporations, Section 39.19.) That limitation on public expenditures is also contained in the Tennessee Constitution, Art. 2, Sec. 29. What constitutes a public purpose under Art. 2, Sec. 29 cannot be precisely defined, but depends upon the facts of each case. (Smith v. City of Pigeon Forge, 600 S.W.2d at 232.) While I can find no cases that measure a similar payment against the public purpose requirement, I fail to see what public purpose is served by paying an officer a separation allowance of $12,000 under those circumstances.
In City of Chattanooga v. Harris, 223 Tenn. 51, 441 S.W.2d 602 (1969), the Tennessee Supreme Court considered whether a state statute authorizing the expenditure of public funds by a municipality to provide defense counsel for police and fire officers in damage suits arising out of the performance of their official duties in the course of their employment met the public purpose requirement of the Tennessee Constitution, Art. 2, Sec. 29. It had this to say about the payment of salaries and "fringe benefits to police officers and firemen:"
It is not to be questioned at this stage of the development of municipal activities that the maintenance of police and fire departments are proper corporate activities and for a public and corporate purpose. Nor, do we feel that, considering the difficulty encountered in filling and sustaining the ranks of these departments, it can be questioned that the giving of certain "fringe benefits" as well as salaries are necessary in order to effectuate these public purposes. In recognition of the necessity of providing such benefits, pension plans, tenure acts, retirement and vacation benefits have been adopted by individual cities by resolution, changes in charters, and often by acts of the legislature. One method of approach in considering the instant statute is to consider it as providing another such fringe benefit. As it removed the burden from the individual of carrying insurance coverage for, and defending against suits which arise out of his employment, it might even be said that it provides an indirect pay raise for such employees. At the very least it makes employment in these departments more attractive for both the veteran and the recruit, just as other "fringe benefits" do.
The fact that the individual policemen and firemen do gain a benefit from the implementation of the statute does not deny that a public purpose is being served. This Court, in Pack v. Southern Bell Tel. & Tel. Co., ... noted that the test for whether or not the expenditure of funds is for public purpose is the end or total purpose, and the mere fact that some private interest may derive some incidental benefit from the activity does not deprive the activity of its public nature if its primary function is public.
"Fringe benefits," for policemen and firemen then, are permissible without running afoul of the public purpose doctrine. However, Harris is not carte blanche for the city to give its employees individual gifts. Note that the Court spoke of "fringe benefits" according to systematic schemes adopted by "resolution, changes in charters, and often by acts of the legislature;" in other words, by legislative act which applies to all employees or a class of employees. The $12,000 payment in question is in the nature of a gift to one employee given on an ad hoc basis. The "end or total purpose" of the expenditure is not public; rather, it serves one, totally private interest.
In addition, the Court spoke of "fringe benefits" as a means of making police and fire work generally attractive because of the public purpose which those municipal functions serve: "filling and sustaining the ranks." In this case, it is difficult to see a relationship between the payment in question and "filling and sustaining the ranks." A payment is being made to an officer who has been suspended and already terminated for misconduct. From my point of view, it takes fantastic logic to suggest that an expenditure that rewards misconduct with $12,000 has as its public purpose the making of police work generally attractive. Arguably, it could put other employees, both law enforcement and non-law enforcement, in line for similar rewards and depress the morale of employees who think there is something wrong with rewarding misconduct rather than good conduct.
However, assume for the purpose of argument that the payment in question is salary that complies with the public purpose doctrine. Absent any constitutional, general law or charter provisions to the contrary, municipal governing bodies have the discretion to fix and increase or decrease the salaries of their employees, as long as the discretion is not abused. [Emphasis is mine.] (4 McQuillin, The Law of Municipal Corporations, Secs. 12.176, 12.177f, 12.180. Also see Rhyne, The Law of Local Government Operations, secs. 13.25, 13.30.)
There are no constitutional or general law provisions governing the payment of municipal salaries. The charter is also silent as to the compensation of employees as opposed to officers (although an argument can be made that the term "officer" within the context of the charter means "employee.") But if the $12,000 payment represents salary, it seems to me that its payment reflects an abuse of discretion on the part of the board of mayor and aldermen because it has no rational basis and is not paid according to a general legislative scheme.
It is my opinion that a general, implied authority to pay salaries and compensation to public employees cannot be used to justify a payment of the kind in question. Where there is an absence of such authority, the act is ultra vires and void. (See Crocker v. Town of Manchester, 178 Tenn. 67 (1941).)
The Tennessee Supreme Court in Cobb v. Shelby County Board of Commissioners, 771 S.W.2d 124 (1989) declared that taxpayers have standing to sue to recover illegal expenditures of public monies, if three conditions are met: (1) proof of taxpayer status, (2) specific illegality in the expenditure of public funds, and (3) prior demand [upon the governing body for corrective action]. In the same case, the Court said that "Finally, the action must be brought against the delinquent public officials. The Courts will not entertain a citizen action to recoup public funds from private individuals." What that means is that if the payment in question is made, and under a successful taxpayers suit is held to be illegal, it is the individual members of the board of mayor and aldermen who are liable to pay the expenditure.
I hope this letter helps you determine the course of action the city should take in this matter. If I can help you further, please let me know.
Sidney D. Hemsley
Senior Law Consultant