What remedies might let a newly elected volunteer fire department board access county tax revenue in a bank account?

Plain-English summary

Legislators asked how a newly elected Gepp Volunteer Fire Department board could access county sales-tax revenue deposited in a department bank account when previous board members and the bank had not cooperated. The AG said the answer depends on why access is denied. A dispute over the department's contractual obligations to the bank is a private matter on which he did not opine. If former signatories refuse to cooperate, he identified three possible civil claims: statutory usurpation, state-brought quo warranto, and a citizen's illegal-exaction suit.

A statutory usurpation claim requires a public office or franchise. The AG said board members of certain certified fire departments would hold public offices, but he lacked enough information to determine whether Gepp's board did. On the supplied facts, Gepp's board did not appear to occupy a county office, a separate condition for the prosecutor's duty to bring a statutory action if no entitled person sues or the entitled person waits three months.

Quo warranto may remove an usurper, but only the state may bring it. A citizen may file an illegal-exaction suit concerning misuse or mishandling of public funds. Depending on proof and the claim, the AG described possible court orders concerning account control, repayment, and accounting. He did not decide that any named person was a usurper or that the bank was liable.

What this means for you

Volunteer fire department boards

The opinion identifies possible civil claims when former account signatories refuse access. Whether statutory usurpation applies depends on the department's creation, certification, and board authority. The AG did not establish those facts for Gepp. If a bank contract is the reason for denial, he treated that as a private dispute outside this opinion.

Prosecutors and citizens

For a county office or franchise, A.C.A. § 16-118-105 describes when the prosecutor must bring a statutory usurpation suit. A separate quo warranto claim belongs to the state. Ark. Const. art. 16, § 13 permits a citizen to bring an illegal-exaction claim over public funds. The opinion does not assume that any of these claims has already succeeded.

Banks

Footnote 3 quotes A.C.A. § 23-47-201 on bank rules stated in a signed document as a valid contract with the depositor. The AG did not resolve a bank-contract dispute or address a claim against this bank.

Common questions

Can the new board use statutory usurpation to remove former signatories? Possibly, if the disputed position is a public office or franchise and the statutory conditions are met. The AG lacked enough facts to decide whether Gepp's board positions qualify.

Can a board member file quo warranto personally?
No. The AG says only the state may bring that common-law claim.

Can a citizen challenge misuse of the tax money?
The AG identifies an illegal-exaction claim under Ark. Const. art. 16, § 13 as a possible civil remedy, depending on the facts. He does not find in this opinion that funds were misused.

Did the AG order the bank to transfer funds?
No. He discussed possible lawsuits and declined to opine on bank-contract questions.

Background and statutory framework

A.C.A. § 16-118-105 addresses statutory usurpation and specifies when a prosecutor must act for a county office or franchise. The opinion cites cases on the definition of public office and discusses fire department structures and certification as relevant facts. It distinguishes common-law quo warranto, which the state alone may bring, from a citizen's illegal-exaction claim under Ark. Const. art. 16, § 13. Footnote 6 limits the opinion to selected civil remedies and says it does not survey all civil or criminal remedies.

Citations

• A.C.A. § 16-118-105; § 23-47-201(a)–(b)
• Ark. Const. art. 16, § 13
• Bean v. Humphrey, 223 Ark. 118, 264 S.W.2d 607 (1954)
• Pederson v. Stracener, 354 Ark. 716, 128 S.W.3d 818 (2003)
• State ex rel. Robinson v. Jones, 194 Ark. 445, 108 S.W.2d 901 (1937)

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

TIM GRIFFIN
ATTORNEY GENERAL

Opinion No. 2023-076

April 3, 2024

The Honorable David Wallace
State Senator
Senate Chair, Legislative Joint Auditing Committee
Post Office Box 11
Leachville, Arkansas 72438

The Honorable Jimmy Gazaway
State Representative
House Chair, Legislative Joint Auditing Committee
1603 South 30th Street
Paragould, Arkansas 72450

Dear Senator Wallace and Representative Gazaway:

I am writing in response to your request for my opinion on how a newly elected board of a volunteer fire department may access or transfer county tax funds from an account over which previous board members will not relinquish control. Your correspondence states that “a volunteer fire department (Gepp Volunteer Fire Department) located in Fulton County is a non-profit corporation and was organized to provide fire protection services to those living in Gepp and the surrounding area.” You report that, in 2002, “the citizens of Fulton County approved a ballot question that [called] for the collection and distribution of sales and use tax on certain purchases.” You report that the “purpose of the tax is to fund fire protection facilities in Fulton County” and that “the Fulton County Treasurer has distributed these tax collections as required,” namely, by dividing the tax revenue into “equal shares” and distributing it to fire departments on a specific list.

You also note that the newly elected board members have been unable to access the bank account where the tax revenues have been deposited for the use of the Gepp Volunteer Fire Department.

You state that neither the previous board members nor the bank have cooperated in “relinquishing access to the funds on deposit.” You have attached to your request the county ordinance, Ordinance No. 2002-14, that levied a county-wide sales-and-use tax “for

323 CENTER STREET, SU ITE 200
LITTLE ROCK, ARKANSAS 72201
The Honorable David Wallace, State Senator
The Honorable Jimmy Gazaway, State Representative
Opinion No. 2023-076
Page 2

the purpose of funding fire protection facilities for the various fire departments in Fulton County, Arkansas.”

The Ordinance provides that the revenue from the sales and use tax will be “divided and spent for fire protection facilities” and divided between certain named fire departments in Fulton County, including the “Gepp Fire Department, Gepp, Arkansas.”1

You ask the following two questions:

1. Are there any statutory remedies that would provide the newly elected board with access to the funds held on deposit with the bank?

2. Are there any rights or duties in statute available to any public official (state, county, or otherwise) to require the previous board or the bank to relinquish control of the funds to the newly elected board for providing fire protection services to the corresponding service area?

RESPONSE

The available remedies will depend on the reason why the newly elected board cannot access or transfer the tax revenue. Those remedies could include a statutory usurpation action, a common-law writ of quo warranto, or an “illegal exaction” lawsuit under Article 16, § 13, of the Arkansas Constitution.

DISCUSSION

Your request concerns state tax dollars being held by a private bank. It appears from your opinion request that the bank or the signatories over the account in question, or both, are not allowing deposits kept in a Gepp Volunteer Fire Department bank account to be accessed or transferred out by a newly elected Gepp Volunteer Fire Department Board.2 The core question here is how the newly elected board may access or transfer the funds currently held in a fire-department account.

The answer to that question depends on the reason why the newly elected board is not being given access to, or the ability to transfer, the tax money. If the reason is that the Gepp

1
Between your opinion request and the attached county ordinance, the fire department in question is referred to as both the “Gepp Volunteer Fire Department” and the “Gepp Fire Department.” I will assume for purposes of this opinion that both labels refer to the same fire department and not two different fire departments. Consequently, I will refer to the fire department in this opinion as the “Gepp Volunteer Fire Department,” which is the term used in your opinion request. 2 For purposes of this opinion, I assume, to the extent that there are at least two bank accounts at issue, that both bank accounts in question are Gepp Volunteer Fire Department bank accounts: One with signatories who are no longer associated with or authorized to act on behalf of the Gepp Volunteer Fire Department, and one opened by the newly formed Gepp Volunteer Fire Department Board. The Honorable David Wallace, State Senator The Honorable Jimmy Gazaway, State Representative Opinion No. 2023-076 Page 3

Volunteer Fire Department has not met certain contractual obligations with the bank,3 then this is a private matter on which I cannot opine. But if the reason is that the two signatories over the original checking account refuse to cooperate in allowing access or in transferring the tax money from the bank account, then the following legal remedies may be available:4 (1) a statutory usurpation action; (2) a common-law writ of quo warranto; (3) or a taxpayer “illegal exaction” lawsuit under Article 16, § 13, of the Arkansas Constitution.5 To use any of these legal doctrines, either the state or the person entitled to the office or franchise (in the first instance), the state (in the second instance), or a citizen (in the third instance), would need to file a civil lawsuit in court.6

1. Statutory usurpation action. Under A.C.A. § 16-118-105, one may bring an usurpation
   action to prevent an usurper—someone who either intrudes into a vacant public office or purports to hold a public office without any color of title—from holding or exercising the powers of a public office or franchise.7 A person who is “entitled to the office or franchise” may file a lawsuit to “prevent the usurper from exercising the office or franchise.”8 For “county offices or franchises where there is no other person entitled” to the office or where “the person entitled fails to institute the action for three (3) months after the usurpation,” it is the prosecuting attorney’s duty to file a lawsuit on behalf of the state to stop the usurper.9

For purposes of a statutory usurpation action, the threshold question is whether the Department’s board members are public officials for purposes of A.C.A. § 16-118-105. If

3
See A.C.A. § 23-47-201(a)–(b) (providing that banks have the “power to make rules governing deposits” and that such rules, when stated on a signature card or other signed document, are “a valid contract between the depositor and the bank, subject to the right of the bank to change or amend the rules”). 4 Someone may wonder whether the tax money held in the bank account in question could escheat to the state. Under the Arkansas Unclaimed Property Act, A.C.A. § 18-28-201 et seq., bank deposits without any customer-initiated activity for three years are presumed to be abandoned, id. § 18-28-210(a), and subject to the custody of the Auditor of State, id. § 18-28-210(b). 5 E.g., Ark. Att’y Gen. Op. 2008-012 (discussing these three legal remedies). A key question here is what authority, if any, do the signatories or the bank have over state tax dollars held in an account for the Gepp Volunteer Fire Department. 6 This opinion reviews certain civil remedies. It does not review every possible civil remedy or any possible criminal remedy. It is within the authority of the prosecutor of a particular jurisdiction to prosecute any violations of criminal law. 7 The Arkansas Supreme Court has held that de facto officers or “hold-over” public officials are “usurpers” within the meaning of A.C.A. § 16-118-105. See Looper v. Thrash, 334 Ark. 212, 217–18, 972 S.W.2d 250, 252 (1998); see also Neal v. Parker, 200 Ark. 10, 139 S.W.2d 41, 44 (1940) (providing that, under the applicable usurpation statutes, a “usurper of a public office” is one who either “intrudes into a vacant office” or “ousts the incumbent without any color of title”). 8 A.C.A. § 16-118-105(b)(1).
9
Id. § 16-118-105(b)(3)(A).
The Honorable David Wallace, State Senator
The Honorable Jimmy Gazaway, State Representative
Opinion No. 2023-076
Page 4

they are not, then the analysis stops, and a statutory usurpation action cannot move forward. A “necessary requisite” to a position being a “public office” is the authority to exercise “sovereign power.”10 This means public offices and officers typically have decision- making power and are not limited to simply advising.11 Other factors indicating that someone holds a “public office” include tenure, compensation, and duties “fixed by law” and “the taking of an oath of office, the receipt of a formal commission, and the giving of a bond.”12 But “no single factor is ever conclusive.”13

Whether these factors indicate the Gepp Volunteer Fire Department Board and its members occupy a “public office” depends on how the Department was created and is governed or managed. In Arkansas, a fire department is any “organization established for the prevention or extinguishment of fires, including…fire departments organized under municipal or county ordinances, improvement districts, membership fee-based private fire departments, and volunteer fire departments.”14 And such fire departments may be “certified by the Director of the Office of Fire Protection Services as meeting minimum standards prescribed by the Arkansas Fire Protection Services Board.”15 Certified fire departments are given certain statutory benefits, including workers compensation and limited civil liability.16

This office has long opined that there are several types of “volunteer fire departments”: (1) private, nonprofit corporations collecting membership fees or dues; (2) fire-protection districts that access local benefits to be collected with ad valorem taxes under either A.C.A.
§§ 14-284-101 et seq. or §§ 14-284-201 et seq., or suburban fire-improvement districts that access local benefits to be collected with ad valorem taxes under A.C.A. § 14-92-201, et seq.; (3) county-created fire departments under A.C.A. § 14-20-108(c); or (4) county- created subordinate-service districts under §§ 14-14-708 and -709.17

10
Bean v. Humphrey, 223 Ark. 118, 123–25, 264 S.W.2d 607, 609–10 (1954); see also Ark. Att’y Gen. Ops. 2006-219, 2006-066, 2001-127, 1998-108. 11 State Bd. of Workforce Educ. & Career Opportunities v. King, 336 Ark. 409, 418, 985 S.W.2d 731, 735 (1999). 12 Maddox v. State, 220 Ark. 762, 762–64, 249 S.W.2d 972, 972–73 (1952).
13
Id., 220 Ark. at 764, 249 S.W.2d at 973; see also Ark. Att’y Gen. Ops. 2017-044, 1995-390.
14
A.C.A. § 20-22-802(4).
15
Id. § 20-22-802(2); see also id. §§ 20-22-806 (fire department certification requirements), 20-22-807 (authorizing “certified fire departments and their firefighters” to “do all acts reasonably necessary to extinguish fires and protect life and property from fire”). 16 A.C.A. §§ 20-22-808 (limited liability), 20-22-809 (workers’ compensation).
17
E.g., Ark. Att’y Gen. Ops. 2022-013, 2008-134, 2004-294, 2001-351, 1999-346, 1997-377, 1996-114.
The Honorable David Wallace, State Senator
The Honorable Jimmy Gazaway, State Representative
Opinion No. 2023-076
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If the Gepp Volunteer Fire Department is form two, three, or four, and is certified, then it is my opinion that the members of the Department’s board hold “public offices” for purposes of the usurpation statutes. But if the department is instead a private, nonprofit corporation that simply receives county funding, and is not certified, it is less clear. Based on the information you have provided, the Gepp Volunteer Fire Department itself is established by statute as a domestic nonprofit corporation under the Arkansas Nonprofit Corporation Act of 1993,18 but it is unclear whether the department and its board has statutorily set powers and duties, compensation, and authorization to exercise some sort of sovereign power.19 Ultimately, I lack sufficient information to definitively conclude whether the members of the Department’s board occupy a “public office.”

When a person entitled to the office or franchise does not file a timely lawsuit, the next question is whether the “public office” in question is a county office—for which the prosecuting attorney may bring the statutory usurpation action. Based on the information provided here, it appears that the Department is a private, non-profit corporation that receives funding from the county. But no evidence has been provided indicating whether the Department was created by or governed by the county. In my opinion, based on the information you have provided me, the Department’s board members do not occupy a “county office” for purposes of the usurpation statutes.

If a statutory usurpation claim is successful, a court could, in addition to removing the usurper from the office or franchise, require the usurper to surrender “books and papers,” and “all other things pertaining to the office or franchise”—such as authority and control over a government entity’s bank account containing public funds.20

2. Quo Warranto. The ancient, common-law writ of quo warranto—meaning “by what
   warrant,” or “by what authority”21—may also be used to remove an usurper from office.22

18
A.C.A. §§ 4-33-101, et seq.
19
See, e.g., Ark. Att’y Gen. Op. 2017-116 (opining that certain positions—water boards, public facilities board, airport commissions, and fire protection service board—were “public offices” because the “Code establishes the powers and duties of each position, sets the compensation—or lack thereof—for each position, and establishes the terms of office”). I also lack any evidence that the Board members here are required to take an oath. But if they are “public officers,” the Arkansas Constitution, art. 19, § 20, provides that “all…officers…, before entering on the duties of their respective offices, shall take and subscribe to the…oath.” 20 A.C.A. § 16-118-105(b)(4)(B); see also Revis v. Harris, 219 Ark. 586, 589–90, 243 S.W.2d 747, 749–50 (1951) (holding that a municipal judge who held that position unlawfully and without authority must return money received during that time). 21 BLACK’S LAW DICTIONARY 1508 (11th ed. 2019).
22
E.g., Anderson v. State ex rel. Crain, 266 Ark. 192, 193, 583 S.W.2d 14, 15 (1979); BLACK’S LAW DICTIONARY 1858 (11th ed. 2019) (defining “usurper” as “[o]ne who takes another’s power or position without any right to do so”). The Honorable David Wallace, State Senator The Honorable Jimmy Gazaway, State Representative Opinion No. 2023-076 Page 6

Although this remedy is not statutory, one may bring such a common-law claim independent of the above statutory usurpation procedure because the usurpation statute is “in lieu” of the common-law writ of quo warranto.23 But, unlike the statutory procedure, only the state, and not a private individual or entity, may bring a writ of quo warranto.24 “[T]he prosecuting attorney as the representative of the State is authorized to maintain actions in the nature of proceedings quo warranto to oust any and all persons from offices to which they are not eligible.”25 For writs of quo warranto, “whether or not the office…[is] a county office within the meaning of the usurpation statutes is immaterial.”26

If a quo warranto claim is successful,27 a court could remove the usurper from the office. While “quo warranto is not a remedy which excludes resort to other remedies,”28 the “relief which may be granted in a quo warranto proceeding should be determined from the pleadings and evidence.”29

3. Illegal exaction. Under this state’s constitution, Arkansas citizens also may file a lawsuit
   to recover misused or mishandled public funds, and to protect tax money from being spent by ineligible office holders:30 “Any citizen of any county, city or town may institute suit, in behalf of himself and all others interested, to protect the inhabitants thereof against the

23
A.C.A. § 16-118-105(a); see also State ex rel. Robinson v. Jones, 194 Ark. 445, 108 S.W.2d 901, 903 (1937) (“We are of the opinion that, independent of this statute, the prosecuting attorney as the representative of the State is authorized to maintain actions in the nature of proceedings quo warranto.”). 24 See, e.g., Pederson v. Stracener, 354 Ark. 716, 720, 128 S.W.3d 818, 820 (2003); Moody v. Lowrimore, 74 Ark. 421, 86 S.W. 400, 402 (1905) (noting that such a “remedy must be prosecuted by the state”); Ramsey v. Carhart, 27 Ark. 12, 14 (1871) (holding that a quo warranto “was not, nor is it now designed or used as a remedy, at law, by which individuals may contest the right to an office”) (emphasis in original). 25 Jones, 194 Ark. at 445, 108 S.W.2d at 903 (1937); see also Ark. Att’y Gen. Op. 2012-122 (“A petition for a common law writ of quo warranto may be filed by a prosecuting attorney seeking on behalf of the state to remove to remove a person from office if they are ineligible to hold the office.”). 26 Jones, 194 Ark. at 445, 108 S.W.2d at 903.
27
See Ark. Sup. Ct. R. 1-2(a)(3) (providing that “Petitions for quo warranto…directed to the state, county, or municipal officials” must be filed in the Arkansas Supreme Court); but see Louisiana & Nw. R. Co. v. State, 75 Ark. 435, 88 S.W. 559, 562 (1905) (holding that the writ of quo warranto, “as an original proceeding,” is “abolished by the Code”). 28 McKenzie v. Burris, 255 Ark. 330, 336–37, 500 S.W.2d 357, 362 (1973).
29
17 MCQUILLIN MUN. CORP. § 50:20 (3d ed.); see generally Standard Oil Co. of Indiana v. State of Missouri ex inf. Hadley, 224 U.S. 270, 283–85 (1912) (applying Missouri law). 30 See also White v. Hankins, 276 Ark. 562, 563–64, 637 S.W.2d 603, 605 (1982) (holding that, because the Highway Commission is responsible for expending tax money, a citizen may bring an illegal-exaction claim challenging an unlawful appointment of a commissioner to the Commission); Ark. Att’y Gen. Op. 2008-012 (listing cases concerning illegal-exaction claims in usurper situations). The Honorable David Wallace, State Senator The Honorable Jimmy Gazaway, State Representative Opinion No. 2023-076 Page 7

enforcement of any illegal exactions whatever.”31 Such a legal action is typically called an “illegal exaction” claim.32 When a public official “misapplies funds (even in good faith) for a purpose or in a manner not authorized by law, the citizen may challenge the illegal exaction.”33

If an illegal exaction claim is successful, several remedies are available.34 For instance, in addition to removing an ineligible office holder,35 a court could enjoin signatories over a bank account from using or exercising authority over funds in the account,36 issue a declaratory judgment declaring that the signatories over a bank account do not have lawful authority to exercise such authority over public funds,37 require those exercising authority over the bank account to reimburse or refund public funds being unlawfully held,38 or require an accounting of the bank account containing public funds.39

31
Ark. Const. art. 16, § 13; see also Ark. Att’y Gen. Op. 2020-058 (opining that “[t]his broad constitutional provision covers almost any misuse or mishandling of public funds…[and] is self-executing and imposes no terms or conditions upon the right” of a citizen “to institute an action to prevent or remedy the misapplication of public funds”). 32 E.g., Pogue v. Cooper, 284 Ark. 105, 107, 679 S.W.2d 207, 208 (1984) (an illegal-exaction action permitted to challenge improper use of the government’s personal property). Courts have granted various remedies in illegal-exaction cases, including declaratory judgments, see, e.g., Jones v. Clark, 278 Ark. 119, 122, 644 S.W.2d 257, 259 (1983), injunctions, see, e.g., Buonauito v. Gibson, 2020 Ark. 352, 5–6, 609 S.W.3d 381, 385 (2020), or an accounting and reimbursement, see, e.g., Munson v. Abbott, 269 Ark. 441, 450, 602 S.W.2d 649, 654–55 (1980). 33 Howard W. Brill & Christian H. Brill, Taxpayer Lawsuits, 1 ARK. LAW OF DAMAGES § 22:7 (2023); see also Hartwick v. Thorne, 300 Ark. 502, 506, 780 S.W.2d 531, 533 (1989) (holding that, for an illegal-exaction claim, “[n]either fraud nor bad faith must be shown”). 34 See, e.g., Jackson v. Munson, 288 Ark. 57, 58–59, 701 S.W.2d 378, 379–80 (1986) (indicating that a party may bring an illegal action claim even if other remedies are available or sought). 35 See, e.g., White, 276 Ark. at 564, 637 S.W.2d at 605 (holding that a citizen could challenge the eligibility of someone appointed to the state highway commissioner under an illegal exaction suit). 36 Buonauito, 2020 Ark. at 5–6, 609 S.W.3d at 385 (noting that a court may enjoin a state entity from using funds for highway construction in violation of state law); Starnes v. Sadler, 237 Ark. 325, 329–31, 372 S.W.2d 585, 587–88 (1963) (enjoining two public officials from serving unlawfully on a board). 37 See, e.g., A.C.A. § 16-111-101 (authorizing courts to “declare rights, status, and other legal relations”).
38
Massongill v. Cnty. of Scott, 337 Ark. 281, 286, 991 S.W.2d 105, 108 (1999) (holding that public officials must refund payments made illegally); City of Jacksonville v. Venhaus, 302 Ark. 204, 211, 788 S.W.2d 478, 482 (1990) (directing that the illegally obtained “residual funds be returned pro rata”). 39 E.g., Tedford v. Mears, 258 Ark. 450, 456–57, 526 S.W.2d 1, 5 (1975); see also A & P’s Hole-In-One, Inc. v. Moskop, 38 Ark. App. 234, 239, 832 S.W.2d 860, 863 (1992) (defining “an accounting” as “an equitable remedy designed to provide a means for compelling one…to render an account of his actions and for the recovery of any balance found to be due”); but see Starnes v. Sadler, 237 Ark. 325, 331, 372 S.W.2d 585, 588 (1963) (holding that “appellants should not be required to account for funds receive for services rendered The Honorable David Wallace, State Senator The Honorable Jimmy Gazaway, State Representative Opinion No. 2023-076 Page 8

Assistant Attorney General William R. Olson prepared this opinion, which I hereby approve.

Sincerely,

TIM GRIFFIN
Attorney General

and expenses incurred” because “there is nothing in the record to justify a find that appellants have acted with any fraudulent intent, or that they have even appreciated the possibly of their holding illegal offices”).