City of Birmingham v. Wilkinson

• Decision Date: 07 March 1940
• Docket Number: 6 Div. 557.
• Citation: 194 So. 548,239 Ala. 199
• Parties: CITY OF BIRMINGHAM v. WILKINSON.
• Court: Alabama Supreme Court

194 So. 548

239 Ala. 199

CITY OF BIRMINGHAM v. WILKINSON.

6 Div. 557.

Supreme Court of Alabama

March 7, 1940

Appeal from Circuit Court, Jefferson County; Richard V. Evans Judge.

Action by Horace C. Wilkinson against the City of Birmingham to recover an attorney's fee. From a judgment for plaintiff defendant appeals.

Affirmed.

W. J Wynn and John S. Foster, both of Birmingham, for appellant.

Frank A. Wilkinson, of Birmingham, for appellee.

BOULDIN Justice.

Action against the City of Birmingham to recover an attorney's fee stipulated in a contract for defending an injunction suit. There was judgment for plaintiff. The city appeals.

The pleadings are voluminous. Elaborate briefs deal with rulings presented in assignments of error.

We deal with principles of law limiting a statement of the case to matters deemed essential to a discussion of the applicable law of the case.

The governing body of the City of Birmingham is a City Commission, composed of three members, a president of the commission and two associate commissioners. The action of the majority within the lawful functions of the governing body is the action of the city.

On August 27, 1937, a taxpayer's bill in equity was filed against the two associate commissioners, individually, and in their official capacity, alleging that after their defeat for re-election "they entered into a pernicious, iniquitious and fraudulent conspiracy to use the powers conferred upon them by their official positions to exploit the city treasury of Birmingham for their own private use and benefit, to manipulate the purchasing power of said City to the enhancement of their personal fortunes, and to defraud the City of Birmingham and its tax payers by diverting money from the treasury of said City and using the same for their personal and private financial aggrandizement. As evidencing said conspiracy and the acts of said respondents in furtherance thereof, complainant shows the following facts."

Then followed charges at length. We summarize:

That in furtherance of the conspiracy to exploit the city treasury and defraud the taxpayers, they concocted and passed a resolution appropriating to each the sum of $4,000, purporting to be due on unpaid salaries, after accepting a reduction of salaries in setting up the city budget; had drawn a portion of such appropriations and were demanding the remainder.

That in furtherance of said conspiracy to exploit the city treasury for their own private use and defraud the taxpayers they had repealed an ordinance requiring wholesale distributors of beer to pay an excise tax and substituted a blanket license tax resulting in the loss of $75,000 revenue; that this was brought about by a slush fund raised by beer dealers, etc.

That despite the precarious condition of the finances of the city and no emergency needs for new fire equipment, these commissioners, by resolution, called for bids on certain equipment of the fire department, estimated to cost $181,000, and planned to purchase same at prices twenty to thirty per cent above those obtaining in other cities of the same class.

That pursuant to authority to set up a budget for the fiscal year, beginning September 1, 1937, these commissioners were threatening and intended to include the price of such equipment in the budget, which action "is but a part and parcel of the aforesaid scheme and conspiracy on the part of said respondents to manipulate the purchasing power of said city to subserve their selfish, private interests and to defraud the tax payers of said city; and complainant avers that in furtherance of said scheme and conspiracy said respondents are conniving at the excessive estimated charges for said equipment or they are acting in collusion with certain concerns which purpose to sell said equipment to said City at a price between twenty and thirty per cent more than the reasonable market value thereof."

The bill further alleges these commissioners plan to set up an unlawful, excessive and fictitious budget as part of the plan to carry out the scheme for purchasing the fire equipment, "that the credit of the city will be impaired, its funds ruthlessly and fraudulently exploited," etc.

The bill prayed a temporary injunction, restraining and enjoining these commissioners, individually and in their official capacity, from purchasing the proposed fire equipment and "from making and adopting a budget for the City of Birmingham for the fiscal year commencing September 1, 1937, which calls or provides for the expenditure or contract to expend any amount of money in excess of the revenue collected or estimated in good faith to be due and payable during said year into the treasury of said city; that said respondents be further enjoined from doing any act calculated to cause the City Commission of the City of Birmingham to appropriate any sum necessary for the expenditures of the several departments of said city, and for the interest on its bonded and other indebtedness, exceeding in the aggregate within ten per centum of the estimated receipts of said City for the fiscal year of said city beginning September 1, 1937, or to cause said City Commission to appropriate from the funds of said City, received and to be received during said fiscal year, for the purpose of operating said city or otherwise, any sum or sums in the aggregate exceeding the annual legally authorized revenue of said city during said fiscal year. And complainant further prays that upon the final hearing of this cause said injunction will be made permanent."

A temporary injunction was granted as prayed, the writ promptly issued and served.

Thereupon the respondents conferred with appellee with reference to the defense of the suit, resulting in the passage of a resolution by the commission employing appellee, and another member of the bar, as counsel to defend the suit, fixing their fees at $1,000 each. The resolution was adopted by the vote of these two commissioners alone.

Admittedly the authority of a city to employ legal counsel is incident to the power to sue and be sued.

In Fitts v. Commission of City of Birmingham et al., 224 Ala. 600, 141 So. 354, dealing with the broad powers of the City of Birmingham in the promoting and safeguarding the welfare of the people of the city, we held it was within the implied power of the governing body to employ at public expense representatives to safeguard by legal advice and other proper means the interests of the city in legislative matters in a pending session of the Legislature. We there recognized this view was more liberal than obtained in several states. The case must be treated as a recognition of the enlarging sphere of interests of a city like Birmingham, and of implied power in the city to employ legal counsel or other agents when such services are needed.

When, in the exercise of such discretion, counsel has been employed, the service has been performed, and the city declines to pay on the ground of illegality, the burden is on the city to show wherein the employment was unlawful as matter of law, or of law and fact. With this premise in mind, we note other facts.

The injunction was issued upon a nominal bond of $200. As the first, and quite proper proceeding, the employed counsel moved to require an adequate injunction bond. Reasonable counsel fees for the defense of the suit, a well-recognized element of damages, in case the injunction was improperly issued, was the question to which evidence was directed on this motion. Pending this hearing the bill was dismissed on motion of the complainant.

Meantime, an answer had been prepared denying in much detail and in aggressive terms all the charges of fraud, corruption, and graft made in the bill.

This answer, never filed, but put in evidence under the general issue is looked to only on the question of services performed.

We quote from the very earnest reply brief on behalf of the city:

"We ask the court to pass particularly on this question:

"Has a public officer the authority to spend public money, or to obligate the public to spend public money, in employing counsel to defend him in a suit charging him with public robbery?

"That question looms above all others. For upon the proper answer to that question depends not only sound decision of this case, but the future public morality in Alabama."

We must deal with this grave inquiry on the record before us.

The charges of fraud, corruption and graft so strongly asserted in the bill above outlined were never proved in that cause, but were abandoned upon a dismissal of the bill on motion of complainant therein. None of the pleas in the present action to which demurrers were sustained asserts the truth of any of these charges. The real inquiry then is: Did the fact that the suit was based on allegations of fraud on the part of these commissioners, disable the city, through them, to employ counsel to defend the suit, regardless of the truth or falsity of the charges of fraud and corruption? On the basis of these averments, these commissioners had been enjoined and inhibited to exercise their functions as members of the governing body in relation to important municipal functions committed to them. Being a majority of the governing body, the injunction operated to strip the city itself of power to function in the matters enjoined.

The city is a party in interest to a bill to enjoin members of its governing body from exercising the functions committed to them. It cannot be said the city had no interest in the defense of the injunction suit.

But apart from a direct interest of the city, has the city through its governing body, authority to defend its officials at public expense against unfounded and defamatory charges of...