Untitled Texas Attorney General Opinion ( 1973 )

A~TI-IN. TEXAS %'~%'ll
JOHN I, xl,Lr.
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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