Simpson v. Tobin

• Decision Date: 01 May 1985
• Docket Number: Nos. 14096,14619,s. 14096
• Citation: 367 N.W.2d 757
• Parties: John J. SIMPSON, William F. Day, Jr., Mick Grossenburg and Stanley E. Whiting, for and in behalf of the other taxpayers of Tripp County, South Dakota, Plaintiffs and Appellees, v. Tommy Drake TOBIN, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 757

367 N.W.2d 757

John J. SIMPSON, William F. Day, Jr., Mick Grossenburg and Stanley E. Whiting, for and in behalf of the other taxpayers of Tripp County, South Dakota Plaintiffs and Appellees, v. Tommy Drake TOBIN, Defendant and Appellant.

Nos. 14096, 14619.

Supreme Court of South Dakota.

Argued Nov. 26, 1984.

Decided May 1, 1985.

J.M. Grossenburg of Day, Grossenburg & Whiting, Winner, for plaintiffs and appellees; William F. Day, Jr. and Stanley E Whiting of Day, Grossenburg & Whiting, John J. Simpson, Winner, on brief.

Jack Theeler of Morgan, Fuller, Theeler & Cogley, Mitchell, for defendant and appellant.

HERTZ, Circuit Judge.

This is an appeal by appellant Tommy Drake Tobin (Tobin) from a final judgment disallowing a claim for legal services filed by Tobin and approved and paid by a majority of the members of the county commission of Tripp County, South Dakota (Appeal # 14096). Appeal is also taken from the supplemental judgment entered by the trial court, which held House Bill 1266 unconstitutional (Appeal # 14619). The South Dakota State's Attorneys Association was authorized by this court to file an amicus curiae brief as to the constitutionality of House Bill 1266.

Appeal # 14096 stems from an action brought by appellees on behalf of the taxpayers of Tripp County against Tobin for the recovery of $101,691.79 paid to Tobin for certain legal services rendered pursuant to an agreement between Tobin and the county commission.

Tobin at all times material to the action was the duly elected and acting state's attorney of Tripp County, South Dakota. By a resolution duly passed on April 13, 1976, the Tripp County Board of County Commissioners authorized Tobin to proceed with certain litigation in federal or state court. A "Memorandum of Understanding" was executed on October 31, 1978, confirming the agreement and prescribing that certain hourly fees and costs be paid for such services. This "Memorandum of Understanding" was signed by two of the county commissioners and by Tobin.

On January 5, 1982, Tobin accepted a check in the sum of $101,691.79. Four days later appellees commenced a taxpayer action seeking a refund of the payment.

The trial court subsequently ruled that the payment was illegal and by a judgment dated December 20, 1982, Tobin was ordered to reimburse Tripp County.

By order of this court Appeal # 14096 was remanded to the trial court with instructions to make a determination on the constitutionality of House Bill 1266. The trial court entered a supplemental judgment declaring House Bill 1266 unconstitutional. This judgment is the subject of Appeal # 14619. Appeals # 14096 and # 14619 were then consolidated for argument and disposition.

The issues raised by this consolidated appeal are stated under appropriate headings and are separately treated in this opinion.

I. Is judicial review of county commission action as provided for in SDCL 7-8-27 and 7-8-28 et seq. an exclusive remedy?

Appellee taxpayers alleged a cause of action for the recovery of public funds illegally expended under an invalid contract. Tobin urges that appellees were required to appeal either under the provisions of SDCL 7-8-27 or SDCL 7-8-28, and having failed to perfect such an appeal, are barred from pursuing reimbursement of claimed illegally expended funds by suit against him.

The pertinent part of SDCL 7-8-27 provides: "From all decisions of the board of county commissioners upon matters properly before it, there shall be allowed an appeal to the circuit court by any person aggrieved...." It is apparent and Tobin admits, that appellees are not "person[s] aggrieved" under this statute. This court has declared that this statute provides for an appeal from decisions of the board of county commissioners only to such persons who suffer personal or individual grievances, as distinguished from those grievances suffered by taxpayers or the public generally. Houser v. Olmstead, 57 S.D. 41, 230 N.W. 224 (1930). Therefore, this claimed right of appeal was not available to appellees.

SDCL 7-8-28 sets forth the procedure for general taxpayers' challenges to county commission action Upon written demand of at least seven taxpayers of the county, the state's attorney shall take an appeal from any action of such board when such action relates to the interests or affairs of the county at large or any portion thereof, in the name of the county, when he deems it to the interest of the county so to do[.]

This statute requires that at least seven taxpayers concur in the action; that the state's attorney exercise his discretion in determining the merits of the action; and that the action be commenced in the name of the county. SDCL 7-16-2 provides for the appointment of a state's attorney pro tem where the state's attorney refuses to act or has a conflict of interest, as is the situation in the instant case.

This court has held on a number of occasions that the strict limitations on the availability of taxpayer challenges to county commission action were enacted to help reduce the number of lawsuits brought by taxpayers in order to prevent continued and unnecessary interference with the conduct of public affairs. Holmes v. Miller, 71 S.D. 258, 23 N.W.2d 794 (1946); State v. Richards, 61 S.D. 28, 245 N.W. 901 (1932). Essentially all of these cases stand for the proposition that where there is a remedy by appeal, that remedy must be followed, rather than actions in equity or at common law. It is to be noted, however, that none of the cases cited by Tobin involve the payment of public funds to a part-time state's attorney, and there are special statutory restrictions applicable in such cases, as pointed out later in this opinion. In this case, of course, the remedy by appeal is in effect no remedy at all since Tobin had been fully paid and it was from him that a refund is sought. In other words, a successful appeal would only declare the illegality of the payment, it would not and could not restore the illegally paid funds since those funds were in the possession of Tobin, who would not have been a party to the appeal.

In a very early case, Campbell County v. Overby, 20 S.D. 640, 642, 108 N.W. 247, 248 (1906), this court recognized the right of a county to recover in an action for illegal expenditures of public funds. The court there said:

The contention that an appeal from the decision of the board allowing defendant's claim was plaintiff's only remedy is clearly untenable.... 'A county board has no power to audit and allow accounts on their face not legally chargeable to the county, and if it does so, it acts in excess of its jurisdiction, and its action will create no legal liability on the part of the county. In accordance with this rule, it has been held that if an illegal charge has been paid in consequence of an improper allowance an action lies at the suit of the county to recover back the money paid.' 7 Am. & Eng.Ency.Law (2d Ed.) 960.

This court has specifically recognized common law taxpayer actions for the recovery of public funds illegally paid by municipalities and townships. Hauck v. Bull, 79 S.D. 242, 110 N.W.2d 506 (1961); Carlson v. City of Faith, 75 S.D. 432, 67 N.W.2d 149 (1954). Moreover, such actions are clearly encouraged by our legislature. SDCL 15-17-18 states:

The circuit court of this state in the event of a recovery by the plaintiff shall have the power to fix a reasonable sum to reimburse the plaintiff for costs and expenses, including attorney fees, in any action brought in such court by a taxpayer on behalf of himself and other taxpayers similarly situated, to recover into the public treasury of any school district, city or county within this state funds wrongfully expended, misappropriated or misapplied by any governing board or public official of such political subdivision.

This statute even provides for the payment of a reasonable sum for attorney fees (not claimed by appellees here). It is clear the legislature intended that taxpayers keep a vigilant eye on the expenditures of public moneys and then to bring suit where such expenditures appear to be unlawful. Taxpayers' actions for the return to the public treasury of misappropriated funds appear to be especially favored by the courts. 74 Am.Jur.2d, Taxpayers' Actions, Sec. 16 (1974).

Since Campbell, supra, authorizes counties to commence actions where necessary to recover illegally expended funds, it surely must follow that taxpayers of that same county have a similar right. Furthermore, since Tobin, by virtue of his motion to dismiss, has admitted that the payment to him was a discretionary act and not a quasi-judicial act, the appeal procedures of SDCL ch. 7-8 would not be applicable, since only quasi-judicial acts appear to be appealable under this statute. Barnum v. Ewing, 53 S.D. 47, 220 N.W. 135 (1928).

Tobin asserts that there is no common law taxpayer action available to county taxpayers in South Dakota. It is important here to note that SDCL 1-1-24 expressly provides that the common law prevails in those instances where it does not conflict with the code. Jones v. Woodwarth, 24 S.D. 583, 124 N.W. 844 (1910). SDCL 1-1-24 declares:

The evidence of the common law, including the law merchant, is found in the decision of the tribunals.

In this state the rules of the common law, including the rules of the law merchant, are in force, except where they conflict with the will of the sovereign power, expressed in the manner stated in Sec. 1-1-23.

Tobin would immediately re-assert his claim that a common law taxpayer action for the recovery of public funds illegally expended is in conflict with the appeal provisions of SDCL 7-8-27 and SDCL 7-8-28, and that these remedies are exclusive and bar the present action. However, it is written at 74 Am.Jur.2d, Taxpayers' Actions, Sec. 16 (1974), at 209, that:

Statutory remedies to question the illegal expenditure of public funds have been generally regarded as merely cumulative and...