The Honorable Joe Max Shelton

Grayson County Attorney Third Floor, Courthouse Sherman, Texas 75090 Opinion No. H-887

Re: Expenditure ofmunicipal funds for expenses of defending suits brought against mayor, city policeman, andmembers of the city council.

DearMr. Shelton:

You have requested our opinion regarding the circumstances under which aTexas general law citymay expend funds for the defense of elected city officials and employees who have been sued in their official and individual capacities. Specifically, you present two fact situations arising from recent litigation involving officials of the City of Pottsboro. Fact situation number one arises from a suitby residents of an area recently annexed by the City of Pottsboro. You state that several residents of the annexed area filed suit in federal court against themayor andmembers of the city council, individually and in their official capacity, seeking injunctive and declaratory relief aswell asmonetary damages. The Pottsboro city attorney, who ispaid on anhourly basis, successfully defended themayor and city council members before both theUnited States District Court and the Court ofAppeals for the Fifth Circuit. Fact situation number two arises from a suit filed in federal court by a Pottsboro businessman against aPottsboro police officer and threemembers of the city council, alleging deprivation of constitutionally protected rights and related tort claims. The defendants in fact situation number two have retained aprivate attorney who was employed pursuant to a resolution of the city council.

P. 3734The Honorable JoeMax Shelton -page 2 (H-987)

We have addressed the question ofwhen agovernmental entity may expend funds toprovide legal representation for its officers on several recent occasions. Attorney General Letter Advisory NO. 24 (1973)considered the constitutionality of a bill thenpending before the Legislature authorizing district and county attorneys to represent county officials and employees in suits involving any act of the official or employee while in theperformance of public duties. The bill further authorized county commissioners to employ and pay private counsel when necessary or proper toprovide legal counsel for county officials. We concluded that thebill under consideration was constitutional so long as its operation was limited "to those circumstances where the interests of the county

. . .are at stake, and where there isa good faith showing that the individual suedwas acting within the scope of his authority in theperformance of public duties." Id. at 3-4. The billwas subsequently enacted, and isnow article 332c,V.T.C.S.

InAttorney General Opinion H-70 (19731,we considered whether a school district might purchase liability insurance toprotect its trustees from the costs of defending litigation brought against them individually for acts or omissions committed in thegood faith discharge of their official duties. We concluded that:

Where aTexas governing body believes in good faith that the public interest is at stake, even though an officer is sued individually, it ispermissible for the body to employ attorneys to defend the action

. . . . The propriety of such a step isnotmade dependent upon the outcome of the litigation, but upon thebona fides of the governing body's motive. Id. at 5. - More recently, inAttorney General Opinion H-544 (19751, we considered whether a county might authorize the expenditure of funds toprovide legal representation for a district judge who was sued inan effort to enjoin his proceeding with a court of inquiry. We observed:

P- 3735The Honorable JoeMax Shelton -page 3 (H-887)

Among the expenses which the county may authorize or ratify are the costs of hiring
an attorney. The authority of a county commissioners court to employ counsel to represent county interests in suits, even when nominally against individuals, hasbeen recognized.

. . . . [Citations omitted]. These cases are inaccord with the general rule in theUnited States that apublic body, acting ingood faith,may indemnify public officials for legal expenses incurred in suits brought against them for acts committed indischarge of their duties. Annot., 130A.L.R. 736 (1941). Conversely, inany case where the public official acted outside of or beyond the scope of his legalpowers, apublic body has no authority topay such legal expenses. Attorney General Letter Advisory No. 24 (1973).

We believe the analyses of questions you present with regard to officers and employees of ageneral law city tobe essentially identical to those applied to county officials inLetter Advisory No. 24, to school trustees inAttorney General Opinion H-70, and to a district judge inAttorney General Opinion H-544. When the city council believes ingood faith that the city's interests are at stake, even though an officer or employee is sued individually, the citymay employ an attorney todefend the action. The authority of the city council to employ attorneys is limited, however, to those situations inwhich legitimate interests of the city --not merely the personal interests of city officers or employees

-- require assertion or defense. Attorneys clearly may not be compensated frompublic fundswhen city officials have only a "direct personal interest" in the use of city funds for their
own defense. City of Del Riov. Lowe, 111 S.W.Zd 1208, 1219 (Tex.Civ. App. ---

-- SanAntonio-'r9m rev'd 122 S.W.Zd 191 (Tex.sup. 1938). See also State v.Averill, 110 S.W.2d 1173 -- (Tex.Civ.App. -- SanAntonio 1937 writ ref'd).

p. 3736The Honorable Joe Max Shelton -page 4 m-887)

The expenditure of funds indefense of a suit inwhich city interests are at stake, even though the citymay not be named as aparty to the suit, is a "municipal function.“ City of Corsicana v. Babb, 290 S.W. 736, 737 (Tex.Comm'n App. -- 1927, jdgmt adopted). Such expenditures "donot constitute a gratuity, but constitute apublic expenditure of the municipality forwhich city fundsmay be used

. . . ." Id. A city isunder no duty or obligation to indemnify its omcials and employees against legal expenses, "but, if itdo employ the attornev. themunicioalitv becomes leaallv bound tonav his compensation." Id. 'seealso Attorney-General Opinion - H-544 (1975). ---

The authority of the city council to appropriate funds for the legal defense of council members and other city officials, when thepublic interest so requires, has been upheld notwithstanding the statutory prohibition of article 988,V.T.C.S., upon any direct or indirect interest in any city contract by any councilmember or other city officer. Cit of Corsicana
v. Babb, supra; Chandler 5 Saenz, 315 S.W.2d 87 Tex. Civ. -T- -- APP. -- SanAntonio 1958,writ ref'd n.r.e.). See also Chrestman v. Tompkins, -- 1929, writ?ef'd). 5S.W.2d 257 (Tex.Civ. App. -- Dallas

It is, therefore, our opinion that the governing body of a Texas general law citymay lawfully authorize the expenditure of public funds for the defense of elected city officials and employees who have been sued in their official and individual capacities if the suit involves an action of the official or employee within the scope of his authority in theperformance of public duties, and if the governing body believes ingood faith that the public interest is at stake. Public fundsmay not be expended if the litigation involves only thepersonal interests of city officials or employees inwhich the city has no interest ormay have an adverse interest. In situations where theuse of public fundsmay be justified, themunicipality is under no obligation toprovide legal representation for its officials and employees, but ismerely authorized to do so in the discretion of itsgoverning body.
This office cannot resolve the fact situations you present sincewe are unable to resolve questions of fact in the opinion process. Your resolution of themmust bemade in accordance with the legal guidelines set out in this opinion.

P- 3737The Honorable Joe Max Shelton -page 5 m-887)

SUMMARY
The governing body of aTexas general law citymay lawfully authorize the expenditure of public funds for the defense of elected city officials and city employees who have been sued in their official and individual capacities if the suit involves an action of the official or employee within the scope of his authority in theperformance ofpublic duties, and if the governing body of the city believes in good faith that the public interest isat stake.
Very truly yours,

Attorney General of Texas
APPROVED: 'J 

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DAVID M.YinJDALL,First Assistant

C. ROBERT HEATH, Chairman Opinion Committee jwb

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