Court Opinion

ID: 4133308
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:36:24.444812+00
Date Added: 2024-06-11T14:07:17.524320
License: Public Domain

A~TI-IN. TEXAS         %'~%'ll
  JOHN    I, xl,Lr.
.A.x¶-oRNRYo-Ex*I.
                                            July 25,    1973

         The Honorable Dr. J. W. Edgar                    Opinion No.   H- 70
         Commissioner    of Education
         Texas Education Agency                           Re:     Purchase    of insurance to
         201 East Eleventh                                        protect school trustees from
         Austin,  Texas 78701                                     costs of litigation growing
                                                                  out of discharge    of official
         Dear   Dr.   Edgar:                                      duties, and related questions.

             Your request for our ,opinion states as background information        that
         members    of boardsof trustees of independent school distri:ts     have been
         sued individually for actions taken by them in their capacity as board
         members.     You give a specific example of one case involving the use of
         corporal punishment administered       pursuant to Texas law, in which a
         Federal Court ultimately     determined the suit to be without merit and dis-
         missed it but; nevertheless,     the individual board members     were put to the
         expense of providing their own defense.       You state that there is a growing
         number, of claims against such officers which discourages        responsible
         persons from seeking service on school boards.

             You ask two questions:

              (1) May a school district purchase liability insurance coverage       (a) to
         protect its trustees from costs of defending litigation brought against them
         individually for acts or omissions      committed in the good faith discharge   of
         their official duties: and/or     (b) to protect school board members    from
         liability,  if any, imposed on them for damages resulting from an action,
         affirmative    or omission,   occasioned  while in the performance  of duties or
         responsibility    as a school trustee?

              (2) Where liability insurance protection individually      of school district
         trustees legally is impermissible,   can they individually      rely solely on
         governmental    immunity without defense?

                                             p.   300
The Honorable    Dr.   J. W.   Edgar,   page 2      (H-70)

     The questions you raise are difficult to answer because of the variety
of situations in which trustees may be sued for actions taken by them in
their capacity as board members.

     (1) They may be sued by themselves       to recover on a cause of action
based in tort for which the school district,     if a private person not shielded
by governmental    immunity,    might be liable,   as for example,   for injuries
inflicted on a student through the negligent administration      of corporal
punishment (exempted specifically       from the Texas Tort Claims Act by
5 14(10), Article 6252-19,   V. T. C. S.

    (2) They may be sued.as defendant on a cause of action for which the
school district itself would be liable,   as for instance, injuries growing
out of the operation of a school bus or other motor-driven       vehicle for
which the Tort Claims Act specifically      abrogates the doctrine of govern-
mental immunity.      Article 6252-19.  $ 5 3 and 4. V. T. C. S.

    (3) They may be sued in situations where no damages are sought
( or no damages would be recoverable   from the school board), as for
example a challenge to dress codes and other similar school policies.

    (4)    They may be sued where no damages are sought from                them as
in civil   rights suits brought under P2 II. S. C. $1983.

    (5) They may be sued as individuals            as, for instance,  for slander,
assault, or other tort committed as part           of and growing out of their
function as members    of the school board         but not within the scope of their
agency-where   the school board would not          be involved under zany circumstances.

     (6) They may be sued under circumstances                 which would constitute    a
wrong as to the school board, as for example,                abusing their positions   to
their private profit, usurping an office, etc.

    There surely are other situations. It must be remembered    that any
suit may be spurious and the board members   may be entitled to a judgment
or dismissal as a matter ,of law.

    Prior to the adoption of the Tort Claims Act, opinions had been issued
by this office holding that a school board could not spend school funds to
purchase insurance covering the operation of school busses.     Attorney General
Opinions O-1418 (1939); O-6182 (1944); letters from Attorney General Waggoner
Carr, December,      1963, and Crawford Martin in May, 1968, to Dr. J. W. Edgar.

                                        p.   301
The Honorable    Dr.   J. W.   Edgar,    page 3    (H-70)

     It has long been the position of this office that a school district may
retain and pay attorneys to protect its interests    in Court.   In a May 11,
1931, letter opinion found in the Attorney General’s     Letter Opinion
Collection (book 321 at page 313) and addressed     to the State Superintendent
of Public Education,   the Honorable Scott Gaines,     then an Assistant
Attorney General,    advised:

        II . . . [T] rustees of school districts   have the implied
        authority to contract the employment      of attorneys to
        represent them and their school districts       in legal
        proceedings    respecting school affairs,   and the author-
        ity exists to pay such attorneys reasonable      compen-
        sation for their services   out of the local maintenance
        fund of the district. ”

Also see Arrington v. Jones, 191 S.W. 361 (Tex. Civ. App.,               no writ);
Chrestman     v. Tompkins,      5 S.W.2d 257 (Tex. Civ. App.,      , nb writ);
Hardin g v. Ra ymondville      Ind. School Dist. i 51 S.W.2d 826 (Tex. Civ. App.,
      , ~writdis’m.,   W. b. j. ); Stewart v. Newton Ind. School Dist.,     134
S.W.2d 429 (Tex. Civ. App.,            no writ); Carlile v. Bradley,   223 S.W.2d
564 (Tex. Civ. App. ,          no wii;);  51 Tex. Jur. 2d. Rev.,  Part 1, Schools,
§ 97; Anno:     75 ALR2d 1439 (1961).

    .But the authority of school trustees to employ attorneys       is limited to
those situations where the legitimate     interests  of the district - - not merely
the personal interests of the trustees     - - require assertion    or defense.    See
Attorney General Opinion O-2130 (1940) where payment of attorneys fees
charged for resisting     quo warrant0 suits directed against the former trustees
was disapproved.      Also see Graves & Houtchens v. Diamond Hill Ind. School
*,       243 S.W. 638 (Tex Civ. App.,     1922, no writ); State v. Averill,    110
S.W.2d 1173 (Tex. Giv. App. , 1937, writ ref’d. ); City of Del Rio v. Lowe,
111 S.W.2d 1208 (Tell: Civ. hpp.,  1937, reversed   on procedural    point, 122
S. W. Zd’l91); Anno: 130 A.L.R. 736 (1941).

    Our recent Letter Advisory     No. 24 (1973) concerned    a proposed statute
to permit counties to provide legal representation      to county officials   and
employees   if the suit against them involved “any act of the official or
employee while in the performance      of public duties. ” Citing City National
Bank of Austin v. Presidio     County, 26 S.W. 775 (Tex. Civ.App.,       1894, no
writ), among others,    we said that public money could not be spent to defend
private interests;  that suits might be only nominally against individuals

                                        p.   302
The Honorable    Dr.   J. W.   Edgar,    page 4    (H-70)

when they were really designed to obstruct or control the legitimate
performances     of official duties; and that there was no constitutional   pro-
hibition against the use of public funds to defend a county’s interests      in
a legal contest,   even if the count:y was not named as a party to the suit.
We went on to say that, if only the private interests of the defendant
officer or employee are at stake, no defense could be provided,         even
though   the act which precipitated    the suit occurred while the officer
or employee was ostensibly       engaged in the performance   of public duties.

    Indemnification  of municipal officers  against liability incurred by
reason of an act ~done by them in the bona fide performance      of official.
duties has been described   as a legitimate  municipal function for which
public funds may be spent.    City of Corsicana   v. Babb, 290 S.W. 736
(Tex. Comm, , 1927).

     The Babb holding was restricted   by City of Del Rio v. Lowe, supra.
(a case where citycommissioners      were indicted for felonious misconduct
in office) to situations “where the city commissioners    [do not] have a
direct personal interest in the use of city funds for their own defense”
and “where the city is [sot] the injured party, as a result of the,officer’s
acts. ”

    The Texas Education Code contains no specific authorization      for the
purchase.of    liability insurance covering trustees; however, $20.48    does
provide;   in,pertinent part:

            “(a) The public free school funds shall not be
        expended except as provided in this section.

            “.   . .

             “(c) Local school funds from districts taxes,
        tuition fees of pupils not entitled to free tuition
        and other local sources may be used for the pur-
        poses enumerated for state and county funds . . .
        for the payment of insurance~premiums,        . . . and
        for other purposes necessary      in the conduct ofthe
        public schools to ‘be determined by the board of
        trustees,   . . .‘I

                                        p.   303
The Honorable    Dr.   J. W.   Edgar,   page 5,    (H-70)

    We are of the opinion that it is no longer possible to conclude as a
matter of law that it is an unreasonable   or unnecessary   expenditure
public funds to buy insurance against potential legal costs,   expenses
or liability that might be incurred by school districts   or their repres-
entatives who act in a public capacity.

    Even though immunity of the district may be complete,          it is still
necessary  that governmental     bodies and officials  enjoying immunity
defend themselves    in courts of law when their invulnerability      is tested.
Immunity is an affirmative     defense which public officers must raise by
pleadings in the State courts under Rule 94 of the Texas Rules of Civil
Procedure   and in the Federal courts under Rule 8 of the Federal Rules
of Civil Procedure.     If the defense is not presented,   a default judgment
is risked.  See 51 Tex. Jur. 2d. Rev.,    Part 1, Schools,    § 100.

    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.     City
National Bank of Austin-v.    Presidio County, supra.    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.

     School districts   are not authorized to purchase insurance coverage
for their,officers    and employees   “as an element of employee compensation.     ”
If purchased at all! insurance must be purchased for the purpose of pro-
tecting a public interest,    not a private one - - though private inter.ests
may be incidentally benefited.       Article 3, $ 51, Constitution of Texas.~ If
school officers,    are subjected to the risk of legal expense and legal liab-
ility, the risk is a public - - not merely private - - concern which the
school board may legitimately       seek to reduce by either expending funds
for lawyers to defend the suit or by purchasing insurance to avoid the
need for such expenditures.

     It is our opinion that insurance to protect against the expense of liti-
gation and insurance against liability must be treated differently.     Even
though a governmental     body may be immune,    nevertheless  it may be sued
and its immunity put to the test.    Thus, despite immunity,    there is the
risk of legal expense and this is a proper risk for insurance.

                                        p.   304
The Honorable    Dr.   J. W.    Edgar,   page 6     (H-70)

     On the other hand, so long as immunity exists,         there is little risk of
liability and to provide insurance funds to discharge        the liability of an
individual trustee would be a grant of public money or aid of an individual,
in violation of Article     3, $ $ 51 and 52 of the Constitution.    This would be
particularly    true where the insurance premiums        would be determined
retrospectively     or based on experience,     shifting the burden to the insured.
Where,    however,    liability insurance to respond for the trustee’s      liability
should be a legitimate       expense ifmade   to depend on abolition or abrogation
of the immunity doctrine.

     In answer to your questions,     therefore,  it is our ,opinion that a school
district may purchase insurance to protect itself (and its trustees) from
the cost and expense of defending litigation brought against them indiv-
idually for acts or omissions     committed by them in the good faith discharge
of their official duties (situations 1, 2, 3 and 4, above) but not insofar as
the litigation is directed against the trustees for acts personal to them
in which the school district has no interest or in which the school district
may have an adverse interest.       (situations  5 and 6)

    Our answer to your second question is that the school district may
purchase insurance to indemnify its trustees from awards of damages
only where the district itself was or might have been held liable for the
same damages.

     Governmental   immunity will not shield any defendant without his
raising it as a defense through a proper written answer or motion filed
in the suit.

                               SUMMARY

            The trustees of a school district are authorized
        by the Education Code to purchase insurance to pro-
        vide indemnity to the district against the costs and
        expenses of all litigation and against an award of
        damages where the district is not immune,     and such

                                         p.   305
The Honorable   Dr.   J. W.   Edgar,    page 7     (H-70)

       purchase does not violate the Constitution if the same
       indemnities  are extended to the district trustees.    The
       school board may not purchase insurance to indemnify
       its trustees in situations where it is not itself exposed,
       actually or potentially to a similar liability.

                                            Very   truly yours,

                                                       HILL
                                            Attorney   General    of Texas
                                 f/

DAVID M. KENDALL,        Chairman
Opinion Committee

                                       p.   306