Baylis v. City of Tulsa , 780 P.2d 686 ( 1989 )

SUMMERS, Justice.

The lone controlling question is whether plaintiff/appellee police officers and firefighters who seek judgment against the City of Tulsa (city) for money due under a contract clause requiring the city to give reclassified employees a five percent pay raise must comply with the provisions of 62 O.S.1981 §§ 362 and 363 in order for the judgment to be valid. We hold that they must. Because plaintiffs presented no evidence at trial to satisfy these provisions, the judgment of the trial court is void for want of jurisdiction.

All of the plaintiffs hold supervisory or managerial positions with the City of Tulsa police or fire departments. Each was hired by oral agreement. In 1978 many of the conditions of their employment became controlled by the city’s written policy and procedures manual. This dispute focuses upon a provision of that manual which states that

“upon reclassification to a position of a class in the Professional/Managerial Service, the new rate shall be the minimum rate of the range or a rate 5% above the former rate, whichever is higher.” City of Tulsa, Policy and Procedures Manual, 1978 § 210.4.

The manual defines reclassification as “a change in classification and/or pay grade ...” Id. at § 210.1.

All the plaintiffs allege that they were reclassified within the meaning of the manual, and were entitled to the five percent increase after a personnel salary study (the Hay study) was conducted by a consulting firm as directed by the city in 1978. As a result of the Hay study, the city divided the “PM” employee group, to which all plaintiffs belong, into eight rather than the existing seven segments. The plaintiffs who had previously been designated PM-01 employees were redesignated PM-02.

In 1982 the city changed its reclassification rule to eliminate the pay increase based on reclassification. In 1984 the plaintiffs brought this action in district court seeking a declaratory judgment that they had been deprived of property without due process. At trial the court found that the plaintiffs were entitled to judgment for a five percent raise for the five year period from June 27, 1979 until April 12, 1985. On appeal, the city argued (1) that the trial court’s judgment is void for lack of subject matter jurisdiction due to plaintiffs’ failure to comply with 62 O.S.1981 §§ 362 and 363; (2) that plaintiffs’ exclusive remedy lay with an appeal to the Civil Service Commission as provided in the manual; (3) that plaintiffs had failed to exhaust administrative remedies; (4) that plaintiffs’ claims are barred by the three year statute of limitations; (5) that the trial court improperly applied the doctrine of collateral estoppel; and (6) that since the plaintiffs have been routinely granted other pay increases, they are not entitled to the five percent amount as stated in the manual. Because we find that plaintiffs’ failure to comply with 62 O.S.1981 §§ 362 and 363 resolves the matter, we need not reach the remaining arguments.

Sections 362 and 363 of title sixty-two control judgments in contract against municipalities, and function as jurisdictional predicates “to govern the expenditures within the limits set by [Article 10, Section 26 of] the [Oklahoma] Constitution.” Oklahoma City v. Green Construction Co., 184 Okl. 98, 84 P.2d 623 (1938). These sections provide in pertinent part as follows:

62 O.S.1981 § 362.

“Before final judgment in any suit based on contract shall be rendered against any municipality by any court of any county in the State of Oklahoma, except in proceedings to refund any indebtedness of said municipality, proof shall be made to the court, of the existence, character and amount of the outstanding legal indebtedness of said municipality, ...”

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62 O.S.1981 § 363.

“No judgment shall be rendered against any municipality by any court until the provisions of [§ 362], have been fully complied with. Any judgment rendered in violation of the provisions of this act shall be void and of no effect.” (Emphasis added)

The plaintiffs object to the city raising the jurisdictional defect for the first time on appeal. However,

“the rule is well settled that an objection that the trial court had no jurisdiction er the subject matter may be raised at any state of the proceedings. It is not waived by a failure to raise the question in the trial, but may be raised for the first time in the appellate court. Otherwise, consent of parties could give jurisdiction.” State National Bank of Shawnee v. Wood & Co., 88 Okl. 292, 212 P. 1002, 1003 (1923)

Again, the Court stated in Oklahoma City v. Green Constr. Co., supra

“Where an action based on a contract is brought against a city, the trial court is without jurisdiction to render judgment against the city unless ... 62 O.S. §§ 361-364 are complied with; and complaint of the failure to comply therewith may be raised for the first time on appeal.” Syllabus by the Court at P. 623.

This remains an accurate statement of the law today. La Bellman v. Gleason & Sanders, Inc., 418 P.2d 949 (Okla.1966). Further, regardless whether the city had raised the jurisdictional issue,

“the question of jurisdiction is an issue which is primary and fundamental in each case. This Court must inquire into its own jurisdiction as well as to the jurisdiction of the court from which the appeal is taken, regardless of whether it is raised by the litigants.” Cate v. Archon Oil Co., Inc., 695 P.2d 1352, 1356 n. 12 (Okla.1985) (citation omitted).

Having been properly raised, we find that the jurisdictional question resolves the matter. No evidence appears in the record that satisfies the requirements of 62 O.S. 1981 §§ 362 and 363. Consequently the trial court’s order is void unless the indebtedness arises from a claim based on a constitutional governmental function, which claims are not subject to the debt limitation provisions of Article 10, Section 26 of the Oklahoma Constitution. Smartt v. Board of County Commissioners of Craig County, 67 Okl. 141, 169 P. 1101 (1917); Protest of Kansas City Southern Ry. Co., 157 Okl. 246, 11 P.2d 500 (1932); Hillcrest Medical Center v. State, 675 P.2d 432 (Okla.1983).

The constitution limits a municipality’s ability to become indebted, and provides in pertinent part that

“no county, city, town, township, ... shall be allowed to become indebted, in any manner, or for any purpose, to an amount exceeding in any year the income and revenue provided for such year without the assent of three fifths of the voters thereof, voting at an election, to be held for that purpose ...” Okla.Const. Art. 10, Sec. 26.

We recognize, however, that

“certain necessary fundamental functions must always be actively exercised in order to preserve the existence of the state and secure to the people the rights guaranteed to the, ... and should the state become so impotent as to be unable to discharge these functions, there would result a failure of the purposes for which government was established Smartt, supra at 1102.

In Smartt, we ruled that expenses incurred by the sheriff in feeding prisoners amounted to expenses necessary in the “performance of duties imposed upon him by the state in which he had no discretion, and were not included within the limitations of Art. 10, Sec. 26”. Id. at 1104. Thus, we recognized an exception to the debt limitation provisions for “those liabilities which are imposed upon the municipality by the superior power of the sovereignty as expressed in the Constitution or valid acts of the Legislature.” Id. at 1104.

We cannot conclude that the city’s act in voluntarily obligating itself to a five percent pay raise for reclassified managerial personnel constitutes a non-discretionary expense incurred by the city in the performance of a mandatory duty such that its non-payment “would render the life of the state and the security of the citizen precari-ous_” Id. at 1104. Consequently, these expenses fall within the statutory jurisdictional mandates of 62 O.S.1981 §§ 362 and 363 which require that the plaintiff prove the municipality’s ability to pay the claim at issue in order that any judgment not exceed the constitutional debt limitations. Graves v. Board of Commissioners of Cimarron County, 170 Okl. 282, 39 P.2d 532 (1934); Deal v. Excise Board of Pontotoc County, 179 Okl. 73, 64 P.2d 859 (1937); Board of County Commissioners of Okmulgee County v. Alexander, 171 Okl. 288, 42 P.2d 884 (1935).

The plaintiffs neither alleged nor proved facts in compliance with §§ 362 and 363. The claims at issue fail to fall within the exception to these requirements as expenses incurred in the performance of a constitutionally required governmental function. Consequently, the trial court was without subject matter authority to enter judgment in their favor, and its order is void. However, in Valley Vista Development Corp. v. City of Broken Arrow, 766 P.2d 344 (Okl.1988), the savings clause of 12 O.S.1981 § 100 was held to have extended the time within which to re-file an action held void under these provisions.

We have previously granted certiorari, and accordingly vacate the opinion of the Court of Appeals. We declare void and of no legal effect the judgment of the trial court, and remand the matter with directions to dismiss.

HARGRAVE, C.J., and LAVENDER, DOOLIN, ALMA WILSON and KAUGER, JJ., concur. SIMMS, J., concurs by reason of stare decisis. OPALA, V.C.J., and HODGES, J., dissent.