Untitled Texas Attorney General Opinion ( 1952 )

Hon. J. W. Edgar Opinion No. V-1566
Commissioner of Education "
Texas Education Agency Re: Authority of the Board of
Austin, Texas School Trustees of Karnack
Independent School Dis-
trict to pay current funds
to the Federal government
to reimburse lunch program
money fraudulently obtained
by a former superintendent
of the district some four
Dear Dr. Edgar: or five years ago.
Your request for an opinion of this office
relates to a factual situation wherein a former super-
intendent of the Karnack Independent School District,
now deceased, allegedly submitted false claims to the
federal government asking to be reimbursed for an
amount of money in excess of that due for serving school
lunches. It is also alleged that the superintendent
forged the school board's endorsement on several of the
school lunch program checks, and a substantial amount
of this money was traced to his personal account, The
school district never realized any benefit from such
monies illegally diverted, and the school district has
never ratified in any manner the actions of the school
superintendent. The federal government has made demand
upon the Karnack Independent School District for $l,l32.-
56.
The questions presented for determination are:
"1. Under the facts submitted, IS the
Rarnack Independent School District liable
to the Government for payment of school
lunch program money paid four to five years
ago on misrepresentations and falsifica-
tions of its agent, who diverted the money
fraudulently to his own use? Or stated
another way: Is the school district liable
to the Government for embezzlement and mis-
appropriation of funds obtained from the
Government by its agent, superintendent of
. .
. .
Hon. J. W. Edgar,page 2 (V-1566):
I, . ~,. .. ..~
,I,
the.-distrdct>:~based'on
false claims of'&
superintendent of:which the,'~bbard,had
no
kaowledge?:.' ',!
_ ~;Tr ::.~~ ~,
"2. If the answer to the above ques-
tion is in the affirmative, may the school
district pay the claim from current or
futuresrevenues of the distriat, such claims
admittedly being based on fraudulent acts
committed four to five years ago?
13. If it is your opinion that such
claims may be paid from school district
funds, what school funds, assuming avail-
ablerunds exist, may be used for that
purpose?"
The act setting up the National Hot Lunch Pro-
gram (42 U.S.C.A. Sets. 1751-1760) declares it to be
the policy of Congress, as a measure of national security
to safeguard the health and well-being of the nation's
children ,and to encourage the domestic consumption of
nutritious agricultural commodities and other foods, by
assisting the states in providing an adequate supply of
food and other facilities for the establishment and
maintenance of nonprofit school lunch programs. "An
examination of the Federal statute creating the lunch
program shows that Federal agencies are charged with the
duty of keeping the funds devoted to the hot lunch pro-
gram under surveillance and their misappropriation ~
beyond question would constitute a Federal offense.s'
Hunt v. Allen, 53 S.E.2d 509 (W.Va. Sup. 1948).
An examination of the factual situation pre-
sented reveals that the money in question was obtained
through-the fraudulent practices of the former superin-
tendent, whereby claims were presented to the federal
government in excess of the amount actually used in the
hot lunch program, and no benefits either directly or
indirectly were received by the Karnack Independent
School District. This being true, the question is im-
mediately presented as to whether the claim of the
federal government is one sounding in tort or one based
solely upon contract. Clearly, if the action is one
sounding in tort there is no liability on the part of
the school district, whereas liability might be
established if this be a claim upon a contract. School
.
,.-. Hon. J. W. Edgar, page 3 (V-1566)
districts are public corporations and governmental
agencies exercising a governmental function.
v. Whitney Independent School District, 205
7Tex.Civ.App. 1947). It performs no proprietary
functions which are separate and independent of its
governmental powers and a school district has no liability
for actions sounding in tort arising out of the performance
of governmental functions. ,Braun v. Trustees of Victoria
Independent School District, 144 S 0W *2d 947 (Tex.Civ.
APP. 1938 error ref.) and authorities cited thereini
Att'y Gent Op. O-443 (1939).
In 1 C.J.S. 1098, Actions, Sec. 44, it is said:
"The distinction between an action in
contract and one in tort is not one merely
of form but is rather one of substance, the
r,emedyin tort being broader than that in
contract. As indicated by the'definitions
previously given in B 1, actions in contract
and in tort are to be distinguished in that
an action in contract is for the br,eachof
a duty arising out of a contract either ex-
press or implied, while an action in tort
is for a breach of duty imposed by law,
which arises from an obligation created by
a relation, ordinarily unconnected with a
contract, but may arise either independently
of any contract or by virtue of certain con-
tract relations. In the latter, if the
cause of action as stated arises from a
,breach of promise it is ex contractu, but if
it arises from a breach of a duty growing
out of the contract it is in form ex delict0
even though it incidentally involves a
breach of contract.
"While the general distinction between
actions in contract and in tort is clearly
defined and well understood, it is often
difficult to determine whether a particular
action is one or the other, particularly
under the code system of pleading, and where
under the circumstances of the particular
case either form of action might be maintained.
A treatment of the distinction between actions
in contract and in tort assumes a twofold
aspect, involving on the one hand a considera-
tion of the essential nature of the cause of
.
Hon. J. W. Edgar, page 4 (v-1566)
action, as for the purpose of determining
which is the proper or only available form,
of remedy, and whether an action which is
clearly in the one form or the other can be
maintained; and on the other hand, particu-
larly where either form of action might be
maintained, a consideration of the question
as tomwhich form plaintiff has in fact
res~ortedto. In some cases both features
of this question are involved, and they are
so.closely related that they may pro erly
be, and are, considered together in 18 45 -
51 .",
It would appear beyond doubt, from your factual
recitation, that the acts of the former superintendent
of the Earnack Independent School District were outside
the scope of his authority. It is well settled law that
a governmental agency in the performance of a g,overn-
mental function can be bound only by such acts of its
agent as arpeauthorized b law or by contract. State
v. Perlstein, 79 S.W.2d 1t3 (Tex.Civ.App.~1934, error
Da Eat. Guard Armory Board v. McGraw, 132
Tex. 613-TCTS W 2d 627 (1939) Charles Scribner's Sons
v. Marrs, 114 $e;. 11, 262 S.W: 722 ( 24) j Fort Worth
C$vary Club v. Sheppard, 125 Tex. 33;: 83 S.W.2d 660
. In Campbell Building Company v. State Road
Commission,~ P.2d 837, 864, 866 (Utah Sup. 1937) the
court stated:
"We think that the engineer had no
authority to waive on behalf of the state
the requirements in the written contract.
He undoubtedly had no authority to enter
into a new or different contract, and.it
would follow that he had no authoritv to
waive the provisions in this one. The
" con-
tract specified what his duties and powers
were and this was well known to the con-
tractor. It is generally:,~heldthat an
architect or engineer in charge of con-
struction work ioes not have authority to
waive a provision requiring written extra
work orders. . . The state cannot be held
for the acts of its engineer beyond the
powers conferred by law or the written con-
tract. . . .
Hon. J. W. Edgar, page 5 (V-1566)
"The state cannot be held for any such
actions by its employees, even if true, for
the reason that it can be held only on the
contract and for the acts of its a ents and
officials pursuant toXi?contract -%?ici3
for any unauthorized or malicious conduct
which may have resulted in damage;" (Under-
scoring ours.)
In Clodselter v. State, 86 N.C. 54 (1882) the
court stated:
"That the doctrine of respondeat
superior, applicable to the relation of
principal and agent created between other
persons, does not prevail against the
sovereign in the necessary employment of
public agents, is too well settled upon
authority and practice to admit of con-
troversy.
"No government has ever held itself
liable to individuals for the malfeasance.
lathes, or unauthorized exercise of power*
by its officers and agents." (Underscoring
ours
.)
It is therefore our opinion that the Karnack
Independent School District would not be liable for the
unlawful acts of its former superintendent, and the
claim of the federal government is seemingly based
upon an action in tort for which there is no liability
on the part of the Karnack Independent School District.
Moreover, the money obtained by the former
superintendent under our factual situation was never
placed in the depository of the school diStriCt. Since
the school board never ratified his unauthorized acts
and the district never received any benefit from them,
there would be no liability for repayment attaching to
the district on the ground of estoppel or other similar
ground. In First National Bank of Athens v. Murchison
Independent School District, 114 S.W.2d 382 (Tex.Civ.
App. 1938), the court said:
. .._
Hon. J. W. Edgar, page 6 (V-1566)
"Plaintiff's cause of action under its
pleading was upon the three instruments
executed to the said payee bank, 'in part
payment of the purchase price of school
furniture~and equipment.' The great weight
of the testimony established that the de-
fendant district did not purchase theLschoo1
equipment above recited, with proceeds of
funds advanced by the Murchison bank, hence
a failure of proof resulted under plaintiff's
allegations of liability. Applying the -..;
strict rule governing such contracts of pub-
lic corporations, we conclude that the war-
rants sued upon by plaintiff, under this
record, were unauthorized and created no
obligation against the defendant district.
37 Tex.Jur., Schools, i% 75-loo..,Nor were
there, for the particular years, over and
above the amounts necessary to conduct the
school, any available funds out of which
these debts could be paid. Collie~rv.
Peacock, 93 Tex. 255, 54 S.W, 1025; Warren
v. San er Independent School District, 116
Tex.'l83, 288 S.W. 159; Harllngen Tndepend-
ent School Dtitrlct v. C. H. Page & Bro.,
Tex. Corn.App.,48'S.W. 2d 983; Templeman
Common School District v. Boyd B. Head Co.,
Waco Court of Civ. Appeals, 101 S.W.2d
352. The defense of estoppel does not ac-
crue to the plaintiff bank, no school
furniture and equipment having been received
by the district, though the warrants and
board resolution stated otherwise. city
of Dublin v. H. B. Thornton & Co., Eastland
Court of Civil Appeals, writ refused, 60
S.W.2d 302, and many cases there reviewed."
In answer to your first question submitted,
it is our opinion that no liability attaches to the
Karnack Independent School District under the facts by
reason of the fraudulent practices