EDUCATION SERVICE CENTER OF OKLAHOMA, INC. v. INDEPENDENT SCHOOL DISTRICT I-1 POTTAWATOMIE COUNTY

EDUCATION SERVICE CENTER OF OKLAHOMA, INC. v. INDEPENDENT SCHOOL DISTRICT I-1 POTTAWATOMIE COUNTY
1996 OK CIV APP 127
932 P.2d 37
68 OBJ 415
Case Number: 85414
Decided: 01/31/1997
Mandate Issued: 01/31/1997

EDUCATION SERVICE CENTER OF OKLAHOMA, INC., Appellant,
v.
INDEPENDENT SCHOOL DISTRICT I-1 POTTAWATOMIE COUNTY, a/k/a McLoud Public Schools, Appellee.

Appeal from the District Court of Pottawatomie County, Oklahoma; Honorable Paul I Vassar, Trial Judge.
JUDGMENT REVERSED; ATTORNEY FEE AWARD VACATED; AND CAUSE REMANDED FOR FURTHER PROCEEDINGS.

Bill V. Wilkinson, Wilkinson Law Firm Tulsa, for Appellant.
Karen L. Long, Rosenstein, Fist & Ringold, Tulsa, for Appellee.

REIF, Judge.

¶1 This appeal arises from a suit by Education Service Center of Oklahoma, Inc., seeking payment for services rendered to the McLoud Public Schools under a contract signed by the Public Schools, superintendent. There was no dispute that the superintendent contracted with Education Service Center to prepare an application for federal funding known as Impact Aid, and that Education Service Center prepared the application. There also was no dispute that Public Schools received more Impact Aid as a result of the application than had been received the previous year. The controversy concerned the superintendent's authority to enter into this contract which provided that Education Service Center would be paid a preparation fee and a percentage of any increased amount of Impact Aid procured by the application.

¶2 School Board denied that the superintendent had authority to contract for the application preparation, despite its resolution designating the superintendent as School Board's agent to apply for the Impact Aid and other federal funding. School Board also claimed that it did not know of the contract with Education Service Center, despite approving payment of the preparation fee upon a purchase order requisition submitted by the superintendent. The jury returned a verdict in favor of Public Schools and the trial court entered judgment on the verdict. The trial court also awarded Public Schools its attorney fees and costs.

¶3 Education Service Center appeals the judgment on the verdict and the award of attorney fees. Upon review, we agree with the contentions of Education Service Center that the trial court erred in refusing its request for instructions on (1) implied authority of an agent, and (2) acceptance o benefits of a contract as consent to obligations.

¶4 In support of the verdict, School Boar` relies on Sears v. Board of Education, 27] P.2d 319, 320 (Okla.1954) (citation omitted) for the proposition that "[al legal and binding contract against a school district can be made only by its board of education in regular session.', School Board also cites Nottingham v. City of Yukon, 766 P.2d 973, 976 (Okla.1988), for the related proposition that "[w]hoever contracts with a municipality does so with notice of the limitations on its or its agents, powers.', Nottingham, in turn, relies on a case that quotes from Consolidated School District v. Panther Oil & Grease Muff. Co., 197 Okla. 66, 168 P.2d 613, 615 (1946) (per curiam), where the court held that the "superintendent is not authorized to enter into contracts and bind the board.''

¶5 While these are correct general principles of law, they are not without exceptions. In City of Haileyville v. Smallwood 441 P.2d 388, 392 (Okla.1968), the defendant-city sought to avoid the relief requested by the plaintiffs under the rule that "persons dealing with a municipality do so at their own risk and with notice of limitation on the powers of a municipality or its agents.', In rejecting the applicability of this rule, the court stated:

[I]n the instant case, defendant has not contended that it lacked the power to contract with plaintiff. Rather, it contends that plaintiff must show the authority of its agents who allegedly made the contract. It is obvious from the evidence herein that defendant is willing to admit the authority of its agents in accepting the fruits of their labors, but just as obviously wishes to deny their authority in entering into any other agreement necessary to obtain the conveyance of the 110 acre tract. In our opinion, it would be inequitable under the circumstances herein to allow defendant to deny the agency of any person shown to have negotiated for the tract or the power of any such agent to enter into the alleged agreements.

¶6 A similar view was expressed in a case involving a school board's liability for legal services for which formal board approval had not been obtained. Doyle v. School District No. 38, 30 Okla. 81, 118 P. 386, 387 (1911), reversed both a justice court and L district court judgment that had denied the , plaintiff-attorneys recovery for services rendered, because "the contract of employment between said district and plaintiffs, [was] not ... made at a regular, or called, meeting of the school district board." The supreme court stated that "to permit this school district to accept the services, and reap the benefits of the successful efforts of plaintiffs ... and then refuse to pay for the same simply on the ground that no binding contract had been made prior to the rendition of said services....is abhorrent to our sense of justice and fair dealing." Id at 388.

¶7 Doyle

¶8 News Dispatch

¶9 Lastly, even Nottingham recognizes that public officials possess authority to act that is necessarily inferred as incidental to authority that is expressly granted. The contract in Nottingham was not enforced because it was a contract to settle a wrongful termination claim which the court said was a legislative concern completely outside the public official's authority over "personnel matters.', 766 P.2d at 975.

¶10 Without proper instructions that an official possesses authority necessarily inferred as incidental to express authority given and the binding effect of acceptance of the benefits of a contract, we conclude that the jury was misled into believing that the contract in question was not valid because it lacked formal School Board approval. Under the foregoing authority, formal School Board approval was not required because (1) the contract was one the school district was otherwise empowered to make; (2) the contract was made by a "proper officer', in carrying out the express authority he had been given to obtain the very benefits that the contract ultimately achieved; (3) the contract was entered into in good faith without hint of fraud, mistake or lack of understanding of its terms; (4) the existence of the contract and the receipt of services thereunder were disclosed to School Board through a purchase order submitted by the contracting official; (5) partial payment under the contract was approved without inquiry by School Board; and (6) the school district received and retained the benefits of the contract.

¶11 The reversal of the judgment on the jury verdict necessitates the vacation of the attorney fee award. Insofar as the other propositions raised by Education Service Center are concerned, we find no error by the trial court in excluding the testimony of the superintendent and the other school employee on the matters that were inquired about, but we do find error in admitting the policy for making emergency or necessary expenditures. This policy is irrelevant and is to be excluded in the event of a new trial.

¶12 The judgment on the jury verdict is reversed, the award of attorney fees and costs is vacated, and this case is remanded for further proceedings.

¶13 JUDGMENT REVERSED; ATTORNEY FEE AWARD VACATED; AND CAUSE REMANDED FOR FURTHER PROCEEDINGS.

¶14 RAPP, C.J., and TAYLOR, P.J., concur.