Knowledgebase-Liability of City Council for Mispaid Salaries


Information Product

Title:Liability of City Council for Mispaid Salaries
Summary:MTAS was asked to analyze the question of the liability of the members of the city council for mispaid salaries.
Original Author:Hemsley, Sid
Co-Author:
Product Create Date:04/12/2004
Last Reviewed on::05/11/2017
Subject:Personnel--Compensation; Personnel--Compensation--Laws and regulations; City council
Type:Legal Opinion
Legal Opinion: Liability of City Council for Mispaid Salaries public.doc

Reference Documents:

Text of Document: April 12, 2004


Dear City Recorder:

You have the following question: Are the mayor and aldermen of the city required to pay back to the city pay raises they received by motion approving the raises, when the raises were required by the city charter to be approved by ordinance?

Actually, the minutes of the city council below in which the pay of the mayor and city council members was set reflect another question: Were any raises that were given to members of the city council during their terms legal no matter by what formal method the council approved them?

The answer to the first question is probably no, with regard to the salaries paid to the city council members that would have otherwise been legally paid had they been approved by ordinance, and if the city council ratifies such payments by ordinance.

The answer to the second question is no, and such payments cannot be ratified by the passage of an ordinance.

In the analysis of those two questions, I will speak of both the mayor and of the council members as the council members.

Privates Acts 1998, Chapter 181, provided that:

The city council is authorized to set the salary of the mayor and members of the council by ordinance as provided in this subsection. The salary of the mayor and of members of the council may not be altered prior to the end of the term for which such person was elected. For the mayor the ordinance may set a salary which may not be less than three hundred dollars ($300) per month nor more than one thousand dollars ($1,000) per month. For the members of the council the ordinance may set a salary which may not be less than two hundred dollars ($200) per month nor more than five hundred dollars ($500) per month.

Apparently that act was ratified by the city council by the required two-thirds vote on May 29, 1998. The June 9, 1998, minutes of the city council reflect that the council passed a motion approving a salary of $300 a month for the mayor, and a salary of $200 a month for council members, beginning with the FY 98/99 budget year. The May 9, 2000 minutes of the city council reflect that the council passed a motion approving a pay raise of $200 a month for the mayor, and a pay increase of $100 a month for the council members, for the next budget year.

Let me analyze the second question first.

The above minutes do not indicate that the pay raises were restricted to the council members in their future terms of office. Private Acts 1998, Chapter 181, clearly prohibits pay raises for members of the city council during their terms of office. Indeed, Article XI, 9, of the Tennessee Constitution, provides in part that:

The General Assembly shall have no power to pass a special, local or private act having the effect of removing the incumbent from any municipal or county office or abridging the term or altering the salary prior to the end of the term for which such officer was selected....

If that constitutional provision applies to pay raises authorized by private acts to be adopted by a municipality by ordinance, such pay raises were not only in violation of Private Acts 1998, Chapter 181, they were also unconstitutional. Surprisingly, the question of whether a private act authorizing a local government to give pay raises to its elected officials by ordinance is a private act “having the effect of” altering the salary of such officers prior to the end of their term has never been directly answered in Tennessee. All of the cases involving salaries under Article XI, 9, involve salaries actually set or changed by the private act itself. MTAS attorneys are not even in agreement on the answer to that question. In any event, any pay raises that applied to the city council members during their terms of office stand a chance of being unconstitutional under Article XI, 9. But even if such pay raises were not unconstitutional, they were clearly in violation of Private Acts 1998, Chapter 131, which prohibits the alteration of the salaries of council members during their terms of office. Generally, charter provisions are mandatory.
That brings us to the first question, which, of course, deals with salary raises that might have been paid to city council members during their next terms of offices, that would have been legal had they been approved by ordinance.

In City of Lebanon v. Baird, 756 S.W.2d 236 (Tenn. 1988), the Tennessee Supreme Court discussed at length the effect of ultra vires contracts. It pointed to two kinds of ultra vires contracts: (1) Contracts wholly outside the scope of the city’s authority under its charter or a statute; and (2) Contracts not undertaken consistent with the mandatory provisions of its charter or a statute. It declares that the first kind of contracts are simply illegal, but that with respect to the latter kind of ultra vires actions, the court will weigh the equities to determine if the action should be voided, including the equity of whether the contract is executory. That case involved a contract into which the city had entered but had not approved by ordinance as required by the city charter, but its language suggests it applies to all city actions.

Unfortunately, there is also language in that case that suggests that no equities in the city’s case would rebound to the city for failure to adopt pay raises by ordinance. In fact, in the unreported case of City of Johnson City v. Campbell, 2001 WL 112311 (Tenn. Ct. App.), it was held that City of Lebanon v. Baird did not help save an exercise of eminent domain by the city where the city exercised that power under its charter, the charter required the exercise by ordinance, but the city did it by resolution. It is difficult to believe that the courts would treat pay raises for public officers required by the charter to be done by ordinance but done by resolution in the same manner it treats contacts required by the charter to be done by ordinance, but done by resolution. In Baird, the court looked to the question of whether the contract had been executed and whether the city had received benefit from it. The same analysis does not appear to me to apply to pay raises for public officers.

But the inquiry does not end there. Strong support appears in the law for the right of the city council by ordinance to ratify the payment of the salaries that would have otherwise been legal had they been paid under the authority of an ordinance as prescribed by Private Acts, 1998, Chapter 181. It is said in 4 McQuillin, Municipal Corporations, 12.217, that “wrongful disbursements” of public funds cannot be ratified. But it is also said in 4 McQuillin, Municipal Corporations, 13.47, that:

Generally, a governmental body may effectively ratify what it could previously have lawfully authorized. Ratification after the act is said to be as potent as authority before the act....The above rules have been applied to numerous situations, such as the borrowing of the ratification of municipal contracts; of money; the mayor’s unauthorized application for an airport certification; and conveyance of property, bond issues, and expenditures.

There is no inconsistency in those two provisions of McQuillin. The pay raises given to city council members during their terms were illegal under Private Acts 1998, Chapter 181; therefore they cannot be ratified. However, the pay raises given to the city council members in their future terms were not in themselves illegal. They were given illegally by resolution; therefore, they are apparently subject to ratification. Even City of Lebanon v. Baird is not contrary to such an outcome.

Generally, where money is illegally paid to public officers, a suit for its recovery must:

1. Show that the person seeking recovery of the money is a taxpayer;

2. Allege a specific legal prohibition upon the use of the funds;

3. Show that the person seeking recovery of the money has notified “appropriate” public officials of the illegal expenditure and have given them an opportunity to take corrective action short of litigation. [See Cobb v. Shelby County Board of Commissioners, 771 S.W.2d 124 (1989); Badgett v. Rogers, 436 S.W.2d 292 (1969); Metropolitan Government of Nashville v. Fulton, 701 S.W.2d 597 (Tenn. 1985).]

If procedural issues on any attempted recovery of illegally paid city council salaries become an issue, I will be glad to discuss them further.

Sincerely,

Sidney D. Hemsley
Senior Law Consultant

SDH/

Please remember that these legal opinions were written based on the facts of a given city at a certain time. The laws referenced in any opinion may have changed or may not be applicable to your city or circumstances.

Always consult with your city attorney or an MTAS consultant before taking any action based on information contained in this database.