The Honorable Joe Max Shelton 

Grayson County Attorney 

Third Floor, Courthouse 

Sherman, Texas 75090 

Opinion No. H-887 

Re: Expenditure of municipal funds for expenses 

of defending suits brought 

against mayor, city policeman, and members of the 

city council. 

Dear Mr. Shelton: 

You have requested our opinion regarding the circumstances under which a Texas general law city may 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 suit by 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 the mayor and members of the city 

council, individually and in their official capacity, seeking 

injunctive and declaratory relief as well as monetary damages. 

The Pottsboro city attorney, who is paid on an hourly basis, 

successfully defended the mayor and city council members before 

both the United States District Court and the Court of Appeals 

for the Fifth Circuit. Fact situation number two arises from 

a suit filed in federal court by a Pottsboro businessman 

against a Pottsboro police officer and three members of the 

city council, alleging deprivation of constitutionally 

protected rights and related tort claims. The defendants in 

fact situation number two have retained a private attorney 

who was employed pursuant to a resolution of the city council. 

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

We have addressed the question of when a governmental 

entity may expend funds to provide legal representation for 

its officers on several recent occasions. Attorney General 

Letter Advisory NO. 24 (1973) considered the constitutionality 

of a bill then pending 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 the performance of public duties. The bill 

further authorized county commissioners to employ and pay 

private counsel when necessary or proper to provide legal 

counsel for county officials. We concluded that the bill 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 is a good faith 

showing that the individual sued was acting within the scope 

of his authority in the performance of public duties." Id. 

at 3-4. The bill was subsequently enacted, and is now article 

332c, V.T.C.S. 

In Attorney General Opinion H-70 (19731, we considered 

whether a school district might purchase liability insurance 

to protect its trustees from the costs of defending litigation 

brought against them individually for acts or omissions 

committed in the good faith discharge of their official duties. 

We concluded that: 

Where a Texas governing body believes in 

good faith that the public interest is at 

stake, even though an officer is sued 

individually, it is permissible for the 

body to employ attorneys to defend the 

action . . . . The propriety of such a 

step is not made dependent upon the outcome 

of the litigation, but upon the bona fides 

of the governing body's motive. Id. at 5. - 

More recently, in Attorney General Opinion H-544 (19751, 

we considered whether a county might authorize the expenditure 

of funds to provide legal representation for a district judge 

who was sued in an effort to enjoin his proceeding with a 

court of inquiry. We observed: 

P- 3735 
The Honorable Joe Max 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, has been 

recognized. . . . . [Citations omitted]. These 

cases are in accord with the general rule in 

the United States that a public body, acting 

in good faith, may indemnify public officials 

for legal expenses incurred in suits brought 

against them for acts committed in discharge 

of their duties. Annot., 130 A.L.R. 736 (1941). 

Conversely, in any case where the public 

official acted outside of or beyond the scope 

of his legal powers, a public body has no 

authority to pay 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 a general law city to be 

essentially identical to those applied to county officials 

in Letter Advisory No. 24, to school trustees in Attorney 

General Opinion H-70, and to a district judge in Attorney 

General Opinion H-544. When the city council believes in good 

faith that the city's interests are at stake, even though an 

officer or employee is sued individually, the city may employ 

an attorney to defend the action. The authority of the city 

council to employ attorneys is limited, however, to those 

situations in which 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 from public funds when city officials have only 

a "direct personal interest" in the use of city funds for their 

own defense. City of Del Rio v. Lowe, 111 S.W.Zd 1208, 1219 

(Tex. Civ. App. 

--- 

-- San Antonio-'r9m rev'd 122 S.W.Zd 191 

(Tex. sup. 1938). See also State v. Averill, 110 S.W.2d 1173 -- 

(Tex. Civ. App. -- San Antonio 1937 writ ref'd). 

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

The expenditure of funds in defense of a suit in which 

city interests are at stake, even though the city may not be 

named as a party 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 "do not constitute 

a gratuity, but constitute a public expenditure of the 

municipality for which city funds may be used . . . ." Id. 

A city is under no duty or obligation to indemnify its omcials 

and employees against legal expenses, "but, if it do employ 

the attornev. the municioalitv becomes leaallv bound to nav 

his compensation." Id. 'see also 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 the public 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 council member or other city officer. Cit of Corsicana 

v. Babb, supra; Chandler 5 Saenz, 315 S.W.2d -T- 87 Tex. Civ. -- 

APP. -- San Antonio 1958, writ ref'd n.r.e.). See also 

Chrestman v. Tompkins, 

-- 

1929, writ?ef'd). 

5 S.W.2d 257 (Tex. Civ. App. -- Dallas 

It is, therefore, our opinion that the governing body of 

a Texas general law city may 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 the performance 

of public duties, and if the governing body believes in good 

faith that the public interest is at stake. Public funds may 

not be expended if the litigation involves only the personal 

interests of city officials or employees in which the city 

has no interest or may have an adverse interest. In situations 

where the use of public funds may be justified, the municipality 

is under no obligation to provide legal representation for its 

officials and employees, but is merely authorized to do so in 

the discretion of its governing body. 

This office cannot resolve the fact situations you present 

since we are unable to resolve questions of fact in the opinion 

process. Your resolution of them must be made in accordance 

with the legal guidelines set out in this opinion. 

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

SUMMARY 

The governing body of a Texas general law 

city may 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 the performance of public 

duties, and if the governing body of the city 

believes in good faith that the public interest 

is at stake. 

Very truly yours, 

Attorney General of Texas 

APPROVED: 'J 

&h 

DAVID M. YinJDALL, First Assistant 

C. ROBERT HEATH, Chairman 

Opinion Committee 

jwb 

p. 3738