Stanson v. Mott

• Decision Date: 22 June 1976
• Citation: 130 Cal.Rptr. 697,17 Cal.3d 206,551 P.2d 1
• Court: California Supreme Court
• Parties: , 551 P.2d 1 Sam STANSON, Plaintiff and Appellant, v. William Penn MOTT, Jr., as Director, etc., Defendant and Respondent. L.A. 30567.

Page 697

130 Cal.Rptr. 697

17 Cal.3d 206, 551 P.2d 1

Sam STANSON, Plaintiff and Appellant, v. William Penn MOTT, Jr., as Director, etc., Defendant and Respondent.

L.A. 30567.

Supreme Court of California In Bank.

June 22, 1976.

As Modified July 22, 1976.

Joel M. Kriger, San Diego, for plaintiff and appellant.

Evelle J. Younger, Atty. Gen., Carl Boronkay, Asst. Atty. Gen., Anthony C. Joseph and Anthony M. Summers, Deputy Attys. Gen., Los Angeles, for defendant and respondent.

TOBRINER, Justice.

On June 4, 1974, California voters approved a $250 million bond issue to provide funds for the future acquisition of park land and recreational and historical facilities by state and municipal authorities. One day before the election, plaintiff Sam Stanson filed the present taxpayer suit, alleging that defendant William Penn Mott, Jr., director of the California Department of Parks and Recreation (department), had authorized the department to expend more than $5,000 of public funds to promote the passage of the bond issue. Asserting the illegality of such use of public funds, plaintiff sought a judgment that would require Mott personally to repay the funds to the state treasury and any other appropriate relief.

Defendant Mott demurred to the complaint, arguing that the expenditure of public funds to promote the passage of a bond issue placed on the ballot by the Legislature was not improper, and that, in any event, he could not be held personally liable for such expenditures. The trial court sustained the demurrer without leave to amend and entered judgment in favor of defendant Mott. Plaintiff appeals from that judgment.

We conclude that the decision of the trial court must be reversed. As we explain, past decisions in both California and our sister states establish that, at least in the absence of clear and explicit legislative authorization, a public agency may not expend public funds to promote a partisan position in an election campaign; in the present case, no legislative provision accorded the Department of Parks and Recreation such authorization. Although the department did possess statutory authority to disseminate 'information' to the public relating to the bond election, the department, in fulfilling this informational role, was obligated to provide a fair presentation of the relevant facts. Since plaintiff specifically alleged that public funds were expended for 'promotional,' rather then 'informational,' purposes, his complaint stated a valid cause of action, and the trial court erred in sustaining defendant's demurrer. If plaintiff proves the allegations of his complaint at trial, he will be entitled to at least a declaratory judgment that such expenditure of public funds was improper, and, perhaps, to injunctive relief as well.

Whether defendant Mott may be held personally liable for the funds which have already been spent presents a more difficult question. Although early California decisions held public officials strictly liable for any unauthorized expenditure of public funds, even when such expenses were incurred in good faith, subsequent legislation has considerably narrowed the circumstances under which public employees are generally held personally accountable for resultant losses. In accommodating the policy underlying this legislative development with the long-recognized public interest in protecting the public treasury from potential mismanagement or abuse, we conclude that defendant may be held personally liable to repay expended funds only if he failed to exercise due care in authorizing the expenditure of the funds.

I. The facts.

We begin by summarizing the allegations of plaintiff's first amended complaint, allegations which, for purposes of this proceeding, must be accepted as true. The complaint alleges that defendant Mott authorized the department to expend more than $5,000 in public funds to promote the passage of the State Beach, Park, Recreational and Historical Facilities Bond Act of 1974 (bond act), a ballot proposition submitted to the voters upon the approval of the Legislature. (Stats. 1972, ch. 912, p. 1620.)

According to the complaint, the department's 'promotion' of the bond issue took a number of forms: first, upon plaintiff's request for information concerning the bond issue election, the department allegedly sent him materials written and printed by the public agency which 'were not merely informative but presented promotional material in favor of the . . . Bond Act'; second, the department also allegedly sent plaintiff 'promotional materials written by Californians for Parks, Beaches and Wildlife,' a private organization formed to promote the passage of the bond act; third, the department allegedly expended state funds from June 1973 to June 1974 'for speaking engagements and travel expenses' to promote the passage of the act; and fourth and finally, a three-person staff, established under defendant's authorization to work specifically on the bond act, allegedly expended 'time and state resources' to promote the passage of the act. The complaint did not include copies of the promotional material allegedly distributed by the public agency.

On the basis of these allegations and the further assertion that '(t)he promotion of public support for the purpose of winning an election is not a proper governmental function or reason for expenditure of state funds,' plaintiff sought a judgment ordering defendant to account for and repay all improperly expended funds, and any other relief that 'the court may deem just and proper.'

Defendant filed a general demurrer to the amended complaint, maintaining that 'the promotion of public support for (the bond act) was a proper purpose for (the) expenditure of state funds' and that, in any event, defendant Mott could not be held personally liable for such expenditures. Defendant argued that because the Legislature had approved the bond act before placing it on the ballot, the department's promotion of its passage clearly fulfilled a 'public purpose.'

After a hearing, the trial court sustained the demurrer by minute order, and thereafter entered judgment in defendant's favor. This case is before our court on appeal from that judgment.

2. Plaintiff is not collaterally estopped from challenging the propriety of defendant's expenditures in connection with the bond act.

Before beginning our analysis of the propriety of defendant's alleged promotional expenditures, we must consider defendant's preliminary argument that plaintiff is presently collaterally estopped from attacking the propriety of such expenditures by virtue of the Court of Appeal decision in Stanson v. Brown (1975) 49 Cal.App.3d 812, 122 Cal.Rptr. 862, decided during the pendency of the instant appeal. In Stanson v. Brown, unlike the instant case, the present plaintiff attacked the legality of the 1974 bond election itself and attempted, under various provisions of the Elections Code, to have the election set aside. (See Elec.Code, § 20021, et seq.) As a basis for that election challenge, Stanson alleged, inter alia, that the park director had made improper campaign expenditures and had issued misleading public statements as to the need for the bond issue.

The trial court in Stanson v. Brown sustained a demurrer to the complaint and entered judgment accordingly; the Court of Appeal affirmed, pointing out that while the complaint alleged numerous improprieties by the park director, it did not allege facts or conduct which, by statute, would justify the setting aside of an election (see Elec.Code, § 20021, subd. (c)) and, moreover, failed to allege that the asserted improprieties had actually affected the outcome of the election. (See Canales v. City of Alviso (1970) 3 Cal.3d 118, 129--130, 89 Cal.Rptr. 601, 474 P.2d 417; Willburn v. Wixson (1974) 37 Cal.App.3d 730, 738, 112 Cal.Rptr. 620; Elec.Code, §§ 20022, 20024.) On these grounds the Court of Appeal's affirmance was unquestionably correct.

Although the complaint in the Stanson v. Brown action had been aimed solely at setting aside the bond election, the Court of Appeal appended a concluding paragraph to its decision indicating that the park director's alleged promotional expenditures were in fact proper, ¹ and it is this paragraph which defendant now suggests operates collaterally to estop plaintiff from raising the issue in the instant case. The statements in question in the Stanson v. Brown opinion, however, were pure dicta; the propriety or impropriety of the park director's alleged expenditures was completely irrelevant to the decision, for, as the Court of Appeal itself recognized, even if such expenses had been found improper they would not have afforded a basis for setting aside the election. (See also Brennan v. Black (Del.1954) 34 Del.Ch. 380, 104 A.2d 777, 790--791; Citizens to Protect Pub. Funds v. Board of Education (1953) 13 N.J. 172, 98 A.2d 673, 676.)

Moreover, although the Stanson v. Brown court justified its discussion of this issue on the ground that the trial court had denied plaintiff leave to amend his complaint, Stanson had never attempted to join the present taxpayer action with his election challenge; under existing California law, a plaintiff is not required to join separate causes of action arising out of the same transaction (see 3 Witkin, Cal.Procedure (2d ed. 1971) Pleading, §§ 243, 244, pp. 1915--1918 and (1975 Supp.) p. 56), and thus the Court of Appeal in Stanson v. Brown had no reason or authority to pass on the propriety of the park director's expenditures. Under these circumstances, the Court of Appeal's statements in the earlier decision cannot operate collaterally to estop plaintiff in the instant case. (See Estate of Simmons (1966) 64 Cal.2d 217, 223, 49 Cal.Rptr. 369, 411 P.2d 97; Albertson v Raboff (1956) 46 Cal.2d 375, 384--385, 295 P.2d 405; 4 Witkin, Cal.Procedure (2d ed. 1971) Judgment, § 210, pp. 3348--3349.)

3. Defendant could not properly expend...