Case Name: Charles NOTTINGHAM, Appellee, v. CITY OF YUKON, Oklahoma, a municipal corporation, Appellant
Court: Oklahoma Supreme Court
Jurisdiction: Oklahoma
Decision Date: 1988-11-15
Citations: 766 P.2d 973
Docket Number: No. 66245
Parties: Charles NOTTINGHAM, Appellee, v. CITY OF YUKON, Oklahoma, a municipal corporation, Appellant.
Judges: HARGRAVE, V.C.J., and LAVENDER, SIMMS and SUMMERS, JJ., concur.
Reporter: Pacific Reporter 2d
Volume: 766
Pages: 973–979

Head Matter:
Charles NOTTINGHAM, Appellee, v. CITY OF YUKON, Oklahoma, a municipal corporation, Appellant.
No. 66245.
Supreme Court of Oklahoma.
Nov. 15, 1988.
As corrected Nov. 16, 1988.
Rehearing Denied Jan. 18, 1989.
Ramey, Biehler, Miller & Flanagan by Fenton R. Ramey and Patricia A. Flanagan, Yukon, for appellant.
Miller & Associates by Ray E. Zschiesche, Yukon, for appellee.

Opinion:
HODGES, Justice.
The issue presented is whether a city manager has either the express or implied authority to settle and compromise an employee's claim of wrongful demotion. We hold that the city manager lacked authority to settle and compromise an employee's claim under the Yukon City Charter.
Appellee, Charles Nottingham (employee), was employed by the City of Yukon as a captain in the fire department. In March, 1981, he was demoted from the rank of captain to the rank of firefighter because he drove a fire truck to the grocery store to pick up his lunch. When the city manager gave the employee the choice of being fired or being reduced to the rank of firefighter, he chose a reduction in rank.
At trial, the employee alleged that his attorney and the city manager entered into an oral contract in which the firefighter agreed to forego his wrongful demotion claim against the city in exchange for reinstatement as captain. The City of Yukon claimed that the city manager was not authorized to bind the city in a settlement and compromise agreement with the employee.
Because the statute of limitations had run, the trial court dismissed the firefighter's claim for wrongful demotion. His claim asserting breach of a settlement and compromise agreement was submitted to an advisory jury on March 4, 1986. The jury returned a verdict for damages in the amount of $50,446.00 and recommended the firefighter be reinstated to the rank of captain retroactively to August 1, 1984. The trial court allowed the employee to elect damages or specific performance. The employee chose money damages and attorney fees from which the City of Yukon appeals.
Municipal officers have only such powers and can exercise only such authority as are expressly granted or necessarily to be inferred as incidental to those expressly granted. City National Bank v. Incorporated Town of Kiowa, 104 Okl. 161, 230 P. 894 (1924). The Yukon City Charter is silent concerning whether the city manager is authorized to settle and compromise claims. The trial court ruled that the city manager was so authorized. We now reverse.
The Yukon City Charter authorizes the municipality to settle and compromise claims presented or filed against it incident to its power to sue or be sued. However, the fact that a municipality may compromise a claim does not automatically give that authority to municipal officers. All powers of the city, not otherwise delegated, are vested in the city council.
Employee attempts to characterize the agreement as an employment contract citing the city manager's authority over personnel matters. This characterization is incorrect. It ignores the fact that the employee remained employed with the Yukon Fire Department from 1969 through the trial of the case and beyond. Clearly the parties were attempting to settle and compromise employee's wrongful demotion claim.
While the Yukon City Charter grants the city manager the power to administer city government, this authority does not include the power to settle and compromise the claims of city employees. The agreement was not an employment decision. It was not, as employee asserts, incidental to the city manager's administrative power to hire and fire. Thus, the agreement was not binding on the City of Yukon.
This result is required by Oklahoma City v. Miller, 190 Okl. 234, 122 P.2d 807 (1942). In Miller, an injured employee alleged a binding contract with the City of Oklahoma City as a result of the city manager's oral promise to pay compensation. The Court noted that any recovery was premised on the existence of a contract executed by the proper officers. Nothing in the city charter was found to give the city manager the authority to make such a contract. 190 Okl. at 236, 122 P.2d at 809. In denying recovery, the Court held the promise "amounted to nothing more than a verbal assurance on the part of the manager . and in no wise constituted a valid or binding contract between the plaintiff and defendant." Id. The Court's decision in City of Muskogee v. Senter, 186 Okl. 174, 96 P.2d 534 (1939), was cited for the proposition that neither the mayor nor the city manager possessed the authority to bind the city to a contract not approved by the city council in the absence of a charter provision delegating that authority.
In the absence of some contrary provision, power to compromise a claim is lodged with the legislative branch of a municipality. City of Fairmont v. Hawkins, 304 S.E.2d 824 (W.Va.1983). Matters of legislative concern, such as the assertion of the city's legal rights, should be addressed by the city council, not the city manager. Approval of the agreement by the city council was required by the city charter's reservation of this power to the legislative branch of the municipality.
The Yukon City Manager acted in excess of his statutory authority by attempting to settle and compromise a wrongful demotion claim. As this Court has noted:
Whoever contracts with a municipality does so with notice of the limitations on its or its agents' powers. Everyone is presumed to know the law, and whoever contracts with such municipality or furnishes it supplies does so with reference to the law; if such persons go beyond the limitations imposed, they do so at their own peril.
Independent School District v. Howard, 336 P.2d 1097, 1098 (Okla.1959) (quoting Consolidated School District v. Panther Oil & Grease Manufacturing Co., 197 Okl. 66, 168 P.2d 613 (1946)). Employee's claim of wrongful demotion was a legal matter and not part of the administrative powers of the city manager. The oral agreement by an officer unauthorized to compromise and settle an employee's claim did not bind the municipality.
In view of our holding, it is unnecessary to discuss the other arguments asserted for reversal of the trial court's decision. The judgment of the trial court is reversed.
HARGRAVE, V.C.J., and LAVENDER, SIMMS and SUMMERS, JJ., concur.
OPALA, J., concurs in part, dissents in part.
DOOLIN, C.J., and ALMA WILSON and KAUGER, JJ., dissent.
. The Yukon City Charter provides that "[t]he city shall have power to adopt a corporate seal and to alter it at pleasure, to sue and to be sued, and to make contracts." Yukon, Okla. Charter, § 3.
. Section 7 of the Yukon City Charter provides that "[e]xcept as otherwise provided in this charter, all powers of the city, including the determination of all matters of policy, shall be vested in the council."
. The powers and duties of the Yukon City Manager concerning employment matters are as follows:
The city manager shall be chief executive officer and head of the administrative branch of the city government. He shall execute the laws and ordinances and administer the government of the city, and shall be responsible therefor to the council. He shall:
(1) Appoint, and when deemed necessary for the good of the service, lay off, suspend, demote or remove, all directors, or heads, of administrative departments and all other administrative officers and employees of the city, except as he or the council by ordinance may authorize the head of a department, an officer or an agency to appoint, lay off, suspend, demote and/or remove subordinates in such department, office or agency, subject to such merit system regulations as the council may adopt;
Yukon, Okla. Charter, § 22.