Powers v. Union City Bd. of Ed.

• Decision Date: 05 July 1973
• Citation: 308 A.2d 71,124 N.J.Super. 590
• Parties: John J. POWERS, Plaintiff, v. UNION CITY BOARD OF EDUCATION, Defendant.
• Court: New Jersey Superior Court

Page 590

124 N.J.Super. 590

308 A.2d 71

John J. POWERS, Plaintiff, v. UNION CITY BOARD OF EDUCATION, Defendant.

Superior Court of New Jersey,

Law Division.

July 5, 1973.

Richard A. Levin, Newark, for plaintiff (Amster & Levin, P.A., Newark, attorneys).

Stephen G. Weiss, East Orange for defendant (Greenwood, Weiss, & Shain, East Orange, attorneys).

LARNER, A.J.S.C.

This action is brought to recover reasonable counsel fees and expenses incurred by plaintiff in the defense of criminal litigation against him in the Federal District Court of New Jersey. The action is bottomed upon a claim of indemnity by plaintiff, as a member of the Board of Education of Union City, pursuant to the provisions of N.J.S.A. 18A:12--20, which in pertinent part provides:

Whenever * * * a criminal action has been brought against any person for any act or omission arising out of and in the course of the performance of his duties as a member of a board of education, and in the case of a criminal action such action results in final disposition in favor of such person, the cost of defending such action, including reasonable counsel fees and expenses, * * * shall be borne by the board of education.

See similar provisions for officers and employees of a board of education, N.J.S.A. 18A:16--6 and 6.1, and for employees of state educational institutions, N.J.S.A. 18A:60--4 and 5.

Plaintiff was indicted under several counts, along with four codefendants, charging them with violations of 18 U.S.C.A. § 1951 in that, through 'the wrongful use of fear of financial injury' they extorted moneys from several contractors who did business with the Union City Board of Education, and, further, conspired to commit such wrongs. The essence of the proofs offered by the government at the criminal trial was that all the defendants participated in a pattern or practice which required most business concerns furnishing products or services to the board to pay kickbacks for their use and benefit, in return for the privilege of doing business and assuring prompt payment of invoices.

The most damaging inculpatory evidence against Powers came from the mouth of an unindicted coconspirator, Dr. Philip F. Castorino, who testified that Powers participated with him each month in counting the funds from the kickbacks and dividing them among the board members, including Powers. Castorino also testified that Powers had advised him of a 10% Kickback due on two particular contracts. These allegations of Castorino were categorically denied by Powers, and testimony was offered in defense affecting the credibility of Castorino.

For present purposes it is not essential to review all the testimony at the criminal trial except to note that the litigation involved allegations of unlawful acts occurring while Powers was a member of the board of of education and stemming from the business relationship between the board and its suppliers. The allegations were denied by Powers. The jury acquitted him on all counts of the indictment, while two of his codefendants were convicted.

The acquittal is conclusive for the purpose of determining the right of indemnity under the statute. Hence, the court is not called upon to make a finding of guilt or innocence as a precondition for application of the statute.

Powers commenced his service as a board member on October 27, 1968 and is still serving in that capacity. He has served on several committees, including the maintenance committee which has the responsibility of recommending the award of contracts to the board as an entity, whether on bid or sales solicitation. In addition, he had some degree of responsibility for communication with Anthony Genovese, the architect for the construction of school additions, whose contract and alleged kickbacks were part of the factual complex of the criminal charge.

The basic issue to be determined is whether the criminal charge of which defendant was acquitted was 'for any act or omission arising out of and in the course of the performance of his duties as a member of a board of education,' within the intendment of the Legislature in making such provision for indemnification.

There are no reported cases which have construed this statute as applied to a criminal action. However, it has been considered in its applicability to civil litigation.

In Errington v. Mansfield Tp. Bd. of Ed., 81 N.J.Super. 414 195 A.2d 670 (App.Div.1963), the court determined the issue on common law principles since the statute in question was not adopted until 1965. Plaintiff there brought an action in lieu of prerogative writs to restrain the expenditure of school funds for the expense of defending a libel suit brought against the individual members of the board. The court held that the board could not underwrite the expense of defending a libel suit against the members individually since the libelous writing was not in performance of a public duty of such members imposed or authorized by law, even though the subject matter which induced the writing related to a proposed site for a new school. The litigation therefore was purely personal in nature and did not advance any school purpose. As a consequence, the Appellate Division affirmed a summary judgment in favor of the plaintiff.

The Supreme Court reversed, 42 N.J. 320, 200 A.2d 492 (1964), and remanded the matter so that a full record could be developed in the libel actions as a basis for decision of the prerogative writ suit, finding that the meager record was inadequate to resolve the question.

The mandate of the Supreme Court was carried out, and by the time the in lieu action came up for further hearing on the complete record the Legislature had passed N.J.S.A. 18:5--15.20 (now N.J.S.A. 18A:12--20). The trial court again held that the expenditure of public funds for defense of the libel actions was unwarranted, by construing the statute strictly and finding that a letter and a resolution of the board which were the basis of the libel action did not strictly arise out of the performance of the 'duties' of the members of the board.

On the second appeal to the Appellate Division, the judgment was modified so as to authorize payment for a portion of the expenditures allocated to the adoption of the resolution. Errington v. Mansfield Tp. Bd. of Ed., 100 N.J.Super. 130, 241 A.2d 271 (App.Div.1968). Although that case involved civil litigation and its facts are not analogous, the rationale of the court is significant:

The trial court emphasized the word 'duties' in reaching its conclusion and strictly interpreted it to exclude the adoption of a resolution to authorize the defense of a board member sued for libel. We would not construe the expression 'in the performance of their duties' so narrowly. Such a strict construction of 'duties' would exclude all tortious conduct by a board member, because it is never a 'duty' of a board member to commit a tort. It would also exclude all invalid resolutions because it is not a 'duty' of a board member to pass an invalid resolution. The purpose of the new statute is to make manifest the implied power of boards of education to provide for the legal defense of a member of the board who is sued individually for some action taken by him in furtherance of his prescribed duties. (at 137, 241 A.2d at 275.)

See also, Cobb v. City of Cape May, 113 N.J.Super. 598, 274 A.2d 622 (Law Div.1971) where in the context of the...