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CASE: Municipal employment contracts must be approved by the Governing Board in final form

Municipal employment contracts must be approved by the Governing Board of the entity in the final form

Court of Appeals decided an employment contract between a municipal corporation (hospital) and its CFO was unenforceable because the Board did not specifically approve the final agreement.

The case is Langlois v. Pemiscot Memorial Hospital, No. 26851 (Mo. App. S.D., January 24, 2006).

SUMMARY: The CFO of a municipal hospital sued because a promised bonus was not paid. It turned out that the Board had never approved the CFO’s final employment agreement. The Board had approved hiring the CFO and had approved the concept of a contract, but the final agreement was not completed at the time of the approval.

The Court decided that a statute, RSMO 432.070, forbids the enforcement of the CFO’s employment contract because the Board did not approve the final agreement. RSMO 432.070 applies to government entities and municipal corporations. In this case, the municipal corporation was a hospital.

And so, the CFO lost at the Appeals Court level. The CFO had won the case in the trial court, but the Court of Appeals decided the trial court had made an error of law and that the case should not have gone to the jury.

Here’s the statute in relevant part:

RSMO 432.070 – Contracts, execution of by counties, towns–form of contract–exception, city of St. Charles :

432.070. No county, city, town, village, school township, school district or other municipal corporation shall make any contract, unless the same shall be within the scope of its powers or be expressly authorized by law, nor unless such contract be made upon a consideration wholly to be performed or executed subsequent to the making of the contract; and such contract, including the consideration, shall be in writing and dated when made, and shall be subscribed by the parties thereto, or their agents authorized by law and duly appointed and authorized in writing . . . [snip]

MORAL: Make sure the appropriate Board of the municipal corporation specifically approves of your exact contract, and try to ensure that the MINUTES of the Board meeting contain as much detail about the approval as possible. I suggest you request that copy of your contract be made a part of the minutes.

Thanks to Missouri Courts Bulletin for the tip about this case.


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