Beifuss v. Westerville Bd. of Educ., 86-1697

• Decision Date: 22 June 1988
• Docket Number: No. 86-1697,86-1697
• Citation: 37 Ohio St.3d 187,525 N.E.2d 20
• Parties: , 47 Ed. Law Rep. 670 BEIFUSS et al., Appellants, v. WESTERVILLE BOARD OF EDUCATION, Appellee.
• Court: Ohio Supreme Court

Page 187

37 Ohio St.3d 187

525 N.E.2d 20, 47 Ed. Law Rep. 670

BEIFUSS et al., Appellants, v. WESTERVILLE BOARD OF EDUCATION, Appellee.

No. 86-1697.

Supreme Court of Ohio.

Submitted March 1, 1988.

Decided June 22, 1988.

Syllabus by the Court

A public school board of education is not liable for the payment of prejudgment interest on an award of back pay absent a statute requiring such payment or an express contractual agreement to make such payment.

Appellants were teachers employed by the appellee, Board of Education of the Westerville City School District ("board"), for the 1981-1982 and 1982-1983 school years, pursuant to individual limited or continuing contracts. Appellants held non-classroom positions such as guidance counselors, media specialists and school psychologists. Such positions require the teacher to work additional days before and after the normal teacher work year. These "extended service" days are for the purpose of preparing for and finishing up after the days in which the schools are open for instruction with pupils in attendance. For the 1981-1982 school year, each of the contracts, with the exception of the contract of appellant Gloria Fitzpatrick, contained provisions which required appellants to work ten extended service days before the opening day of classes and ten extended service days after the conclusion of classes.

In April 1982, the appellee board voted to unilaterally reduce the extended service of non-classroom teachers from twenty days to ten days. Prior to April 30, 1982, each of the appellants, except appellants Fitzpatrick, Beifuss and Weinberger, received notice of appellee's action informing them that their extended service would be reduced from twenty days to ten days for the 1982-1983 school year. All the appellants received annual notice of salary for the 1982-1983 school year reflecting the reduced lump-sum compensation for extended service. Beifuss and Weinberger received "new" continuing teacher contracts and Fitzpatrick received a new one-year limited contract for half-time service for the 1982-1983 school year, each contract providing for only ten days' extended service with the notation that "[e]xtended time is contingent upon need and funding on an annual basis."

Thereafter, appellants brought an action seeking relief in mandamus, declaratory judgment, and injunction from appellee's action reducing their compensation for extended service. The trial court rejected appellants' claims and rendered judgment for appellee. On appeal, the court of appeals reversed the decision of the trial court and remanded the action for further proceedings with instructions to enter a declaratory judgment in accordance with its opinion. On remand, the trial court entered an interim order granting back pay to all appellants except Fitzpatrick, and reserved ruling on Fitzpatrick's claim and the issue of interest on the back-pay awards. On March 7, 1986, the trial court entered final judgment granting appellants prejudgment interest on their back-pay awards and finding in favor of Fitzpatrick on her back-pay claim.

On appeal, the court of appeals vacated the judgment awarding prejudgment interest, but upheld the decision in favor of Fitzpatrick.

The court of appeals, finding its decision on the issue of prejudgment interest to be in conflict with the decision of the Court of Appeals for Ross County in Huntington Local Edn. Assn. v. Bd. of Edn. of the Huntington Local School Dist. (Oct. 4, 1982), No. 9826, unreported, certified the record of the case to this court for review and final determination.

Cloppert, Portman, Sauter, Latanick & Foley, Frederick G. Cloppert, Jr., Frederick A. Portman and Michael J. Hunter, Columbus, for appellants.

Means, Bichimer, Burkholder & Baker Co., L.P.A., and James P. Burnes, Columbus, for appellee.

LOCHER, Justice.

The primary issue presented in this action is whether a public school board of education can be held liable for prejudgment interest on damages assessed in a contract action. We hold in the negative and, accordingly, affirm the decision of the court of appeals.

It is well-established that "[i]n the absence of a statute requiring it, or a promise to pay it, interest cannot be adjudged against the state for delay in the payment of money." State, ex rel. Parrott v. Bd. of Public Works (1881), 36 Ohio St. 409, paragraph four of the syllabus; State, ex rel. Nixon v. Merrell (1933), 126 Ohio St. 239, 246, 185 N.E. 56, 58; Lewis v. Benson (1979), 60 Ohio St.2d 66, 67, 14 O.O.3d 269, 397 N.E.2d 396; State, ex rel. Home Care Pharmacy, Inc. v. Creasy (1981), 67 Ohio St.2d 342, 344, 21 O.O.3d 215, 216, 423 N.E.2d 482, 484; State, ex rel. Montrie Nursing Home, Inc. v. Creasy (1983), 5 Ohio St.3d 124, 126-127, 5 OBR 258, 260, 449 N.E.2d 763, 766. However, a contrary rule has been applied with regard to interest assessed against a municipal corporation. See State, ex rel. Crockett v. Robinson (1981), 67 Ohio St.2d 363, 21 O.O.3d 228, 423 N.E.2d 1099.

Appellants initially contend that interest should be assessed against a public school board just as it is assessed against a municipal corporation. We disagree. Although a public school board is not per se a state agency controlled by the State Personnel Board of Review, it has long been recognized as quite different from a municipal corporation. "City and village school districts constitute a part of the state policy in promoting and fostering common schools, and have become state agencies in the school system of education contemplated in the constitution. * * * Owing to the very limited number of corporate powers conferred on them, boards of education rank low in the grade of corporate existence, and hence are properly denominated quasi corporations. This designation distinguishes this grade of corporations from municipal corporations, such as cities and towns acting under charters or incorporating statutes, which are vested with more extended powers and a larger measure of corporate life. * * * It possesses but limited powers and small corporate life. A corporation in some sense political, but in no sense a municipal corporation." Finch v. Bd. of Edn. of Toledo (1876), 30 Ohio St. 37, 46-47. "It is well settled that a board of education is a quasi corporation acting for the public as one of the state's ministerial education agencies 'for the organization, administration and control of the public school system of the state.' " (Citation omitted.) Wayman v. Bd. of Edn. (1966), 5 Ohio St.2d 248, 249, 34 O.O.2d 473, 474, 215 N.E.2d 394, 395.

Furthermore, a municipal corporation possesses its significant home rule powers pursuant to Section 3, Article XVIII of the Ohio Constitution. On the other hand, a public school board can be accurately described as an "arm" of the state with its direct duties and powers defined extensively in Title 33 of the Revised Code and through its receipt of direct guidance and support from the State Board of Education. " * * * [T]here is no question but that the public school boards, as 'arms or agencies of the state,' * * * are ultimately managed and controlled by the dictates of the General Assembly * * *." (Citation omitted.) Thaxton v. Medina City Bd. of Edn. (1986), 21 Ohio St.3d 56, 57, 21 OBR 357, 358, 488 N.E.2d 136, 137.

Thus, based on the foregoing, we cannot equate public school boards with municipal corporations in this context. We find that the aforementioned "interest rule" should be applied to public school boards as it has been applied to the state and its agencies.

Appellants also contend that this court's decision in Carbone v. Overfield (1983), 6 Ohio St.3d 212, 6 OBR 264, 451 N.E.2d 1229, requires a finding that prejudgment interest should be awarded in this action. Carbone held in its syllabus that: "The defense of sovereign immunity is not available to a board of education in an action seeking damages for injuries allegedly caused by the negligence of the board's employees." Appellants urge this court to broaden the scope of the Carbone decision which eliminated the defense of sovereign immunity for public school boards in tort actions and to abandon our longstanding rule in contract actions that, in the absence of a statute requiring it, or a promise to pay it, interest cannot be assessed against the state for delay in the payment of money. We decline appellants' invitation to do so. In State, ex rel. Home Care Pharmacy, Inc., supra, and State ex rel. Montrie Nursing Home, Inc., supra, we refused to abandon the interest rule despite the fact that prejudgment interest was allowable in cases filed against the state in the Court of Claims under R.C. 2743.18. Moreover, while Carbone created tort exposure for public school boards, we refused to judicially expand a public school board's contractual liability. Judicial intrusion into the matters of contracting parties is an extreme measure which should occur sparingly, if at all. We find that such an expansion of a public school board's contractual liability should be created through clearly expressed legislation ¹ by the General Assembly or by the parties themselves at the bargaining table.

Therefore, we hold that a public school board of education is not liable for the payment of prejudgment interest on an award of back pay absent a statute requiring such payment or an express contractual agreement to make such payment. In the case sub judice, there is no contractual duty on the appellee to pay interest on the back-pay award. Nor is there any statutory authority requiring the payment of prejudgment interest by this governmental entity. Accordingly, we find that appellants were not entitled to prejudgment interest on the backpay awards and affirm the judgment of the court of appeals on this issue.

Finally, appellee maintains that the court of appeals erred by affirming the trial court's...