Bell County Board of Education v. Lee

• Decision Date: 26 May 1931
• Parties: Bell County Board of Education v. Lee.
• Court: United States State Supreme Court — District of Kentucky

239 Ky. 317

Bell County Board of Education v. Lee.

Court of Appeals of Kentucky.

Decided May 26, 1931.

1. Contracts. — Contract by which one employs another to render services in looking up evidence to be used on trial is valid unless its tendency is to prevent or impede due course of justice.

2. Contracts. — That recovery of compensation for services in looking up evidence is contingent on success of suit does not nullify employment contract.

3. Schools and School Districts. — Contingent fee contract, whereby board of education employed auditor to audit former sheriff's books, held valid.

The county board of education employed the auditor to audit the former sheriff's books to ascertain whether sheriff had collected money for school purposes for which he had failed to account, and the board agreed to pay the auditor a fee contingent on amount discovered and recovered.

4. Schools and School Districts. — School boards have only powers expressly granted (Constitution, sec. 162).

5. Schools and School Districts. — Enumerated powers of school board necessarily include those reasonably incidental to their proper exercise (Constitution sec. 162).

6. Schools and School Districts. — Court will not interfere with broad discretion vested in board of education where properly exercised.

7. Schools and School Districts. — County board of education had power to employ auditor to audit former sheriff's books to discver money due board on contingent fee basis (Ky. Stats., sec. 4399a-4 et seq.).

8. Schools and School Districts. — Power of county board of education to institute suit implies power to prepare for trial (Ky. Stats. 4399a-4 et seq.).

9. Schools and School Districts. — That fiscal court had employed salaried auditor, and that state revenue agent was required to investigate accounts of all officers, did not deprive county board of education of authority to employ auditor to examine delinquent officer's books (Ky. Stats., secs. 1840, 4262, 4263, and sec. 4398a-1 et seq., and sec. 4399a-4 et seq.).

10. Contracts. — Word "recovery" in connection with contingent fee contracts is used in ordinary sense.

Word "recovery," in connection with contingent fee contracts, is understood to be used in the ordinary sense of obtaining thing sought, although a strict judicial meaning may be getting possession or the enforcing of a right through judgment.

11. Schools and School Districts. — Contract between county board of education and auditor held to contemplate payment of compensation based on percentage of only such money as might be obtained by reason of auditor's services.

The contingent fee contract employed auditor to audit books of former sheriff to ascertain whether sheriff had failed to pay any moneys collected for school purposes to school treasurer, and provided that the compensation should be based on any sum recovered by the board against the sheriff.

12. Schools and School Districts. — Contingent fee contract between county board of education and auditor looking to recovery of money from delinquent former sheriff held not to include compensation for money which sheriff voluntarily paid (Ky. Stats., secs. 4135, 4399a-8).

13. Schools and School Districts. — Where auditor's fee was contingent on amount recovered by board of education from delinquent former sheriff, and board failed to endeavor to collect delinquencies, auditor could not recover on quantum meruit.

14. Schools and School Districts. — On refusal of board of education to enforce collection of delinquent sum, taxpayer may prosecute such action.

15. Schools and School Districts. — County auditor, employed under contingent fee contract, discovering items due by former sheriff to board of education, could sue as interested taxpayer to recover fund from sheriff and then secure compensation.

16. Schools and School Districts. — Auditor employed under contingent fee contract discovering items due by sheriff to board of education could secure compensation by assuming burden of first recovering delinquent funds as one having interest in result.

Appeal from Bell Circuit Court.

MARTIN T. KELLY and WALTER B. SMITH for appellant.

J.H. TAYLOR and R.L. POPE for appellee.

OPINION OF THE COURT BY STANLEY, COMMISSIONER.

Reversing on original appeal and affirming on cross-appeal.

On April 2, 1930, the Bell county board of education formally entered into a contract with the appellee, J. Henry Lee, by which it employed him to make an audit of the books of certain county officers for the four years ending December 31, 1929, in order to ascertain whether or not the sheriff and county clerk had "failed to pay any and all moneys collected by them for school purposes" to the school treasurer. The board agreed to "pay him for his services for his work in auditing said books a sum equal to 33 1-3% of all delinquent payments by the said Sheriff and Clerk, or a sum equal to 33 1-3% of any sum recovered . . . through litigation or compromise or otherwise." It was further stipulated that Lee should be given credit for and receive a commission on any money which the two former officers should pay to the treasurer of the board for the period covered during and after he should begin the audit of the books. The accountant agreed in the event of a suit to collect any delinquent payments that he would be "ready and willing at any time and all times under proper and sufficient notice to appear in court and testify as a witness in said case," at his own expense. It was further agreed that each party to the contract should pay one-half of all attorney's fees if it should be necessary to collect the delinquencies by litigation.

The accountant at once entered upon the audit. On April 11th, the former sheriff, Helton, paid to the school treasurer $2,500, and on May 19th the further sum of $10,500, both on account of 1929 taxes. On June 6, 1930, Lee filed a report of his audit with the board showing that as of April 12, 1930, the former sheriff owed it $29,379.75, of which $14,229.78 was on account of 1929, and that included the $13,000 which he had paid. It does not appear that any further sum was paid by the officer or that any attempt was made to recover anything from him.

The board advanced Lee $200 near the commencement of his services. It declined further payment, and he sued the board, claiming it was indebted to him 331-3 per cent. of $29,379.75, the sum reported to be delinquent. The suit was defended upon several grounds and a counterclaim asserted for recovery of the $200 paid Lee. Near the conclusion of the introduction of the evidence, the court having indicated his views as to the law of the case, the plaintiff filed an amended petition alleging that his services were reasonably worth $2,500, and that he had incurred $1,000 expenses in the work, and testified accordingly. The court, over the objection of both parties, then instructed the jury to find for the plaintiff on a quantum meruit and his necessary expenses. Its verdict was for $750 and $500, respectively, a total of $1,250, credited by the $200 which had been paid. An appeal and cross-appeal are prosecuted, which brings the whole matter before us.

The board now charges that the contract is void because ultra vires and contrary to public policy; also, that it was improvident and unnecessary, and was brought about by the collusion of the appellee and the county school superintendent.

1. The last-mentioned ground may be quickly disposed of by saying that the evidence in our opinion falls far short of proving collusive fraud. We do not regard it as showing even bad faith on the part of any one associated with the execution of the contract.

2. A contract by which one employs another to render services in looking up evidence that would establish a claim or which is to be used on a trial is recognized as valid, unless its tendency is to prevent or impede the due course of justice. The mere fact that the recovery of compensation is to be contingent upon the success of the suit is not sufficient to nullify the contract. Jones v. Henderson, 189 Ky. 412, 225, S.W. 34, 20 A.L.R. 1471; 6 R.C.L. 757; 16 A.L.R. 1437, 1440. Of course, if the contract partakes of maintenance or violates some duty, it is otherwise. Lucas v. Allen, 80 Ky. 681. If the contract partakes of the pernicious character indicated, it is to be held illegal and unenforceable as contrary to public policy — that variable principle, incapable of precise definition, addressing itself for application in each case, within a broad limit, to the good, common sense of the courts. The question is to be determined by the purpose and tendency of the contract. 6 R.C.L. 707; Gordon v. Gordon's Adm'r, 168 Ky. 409, 182 S.W. 220, L.R.A. 1916D, 576, Ann Cas. 1917D, 886. We perceive nothing inimical to public policy or the well-being of society in the contract before us. On the contrary, it is to the interest of the public welfare that public officials should be held strictly to account, and the courts look with favor upon all good-faith efforts seeking that end. Fox v. Lantrip, 169 Ky. 759, 185 S.W. 136.

3. It is a fundamental and elemental law that school boards and similar municipal executive or administrative bodies have only such powers as are expressly granted by law. Section 162, Constitution. But enumerated powers necessarily include those which are reasonably incidental and indispensable to their proper exercise and to the accomplishment of the purpose of their creation and existence and the object to be attained. Barrow v. Bradley, 190 Ky. 480, 227 S.W. 1016; Cf. Estill County v. Wallace, 219 Ky. 174, 292 S.W. 816. The school board is given independent control of the school property and funds. Fidelity & Deposit Company v. Board of Education, 228 Ky. 362, 15 S.W. (2d) 287. It is charged with the preparation of a budget and with the duty of providing funds sufficient to maintan their institutions and to expend the tax money solely for school...