Alabama Advisory Opinions October 14, 1997: AGO 1998-007 (October 14, 1997)

AGO 1998-007.

Dear Mr. Bennett:

This opinion of the Attorney General is issued in response to your request.

1. Under ALA. CODE § 17-22A-7 (1975), is an expenditure of funds to pay attorneys' fees in litigation to determine whether a holdover officeholder continues in office until his successor is "elected and qualified," an ordinary and necessary expense, as defined in 26 U.S.C. 162(a) (as it existed on May 5, 1993) incurred by the holdover officeholder in connection with his duties as such and, therefore, an authorized use of excess funds held by his principal campaign committee?

2. Under ALA. CODE § 17-22A-7 (1975), is an expenditure of funds to pay attorneys' fees incurred in litigation to determine whether a holdover officeholder is entitled to benefits such as payment of the salary until his successor is "elected and qualified," an ordinary and necessary expense, as defined in 26 U.S.C. 162(a) (as it existed on May 5, 1993) incurred by the holdover officeholder in connection with his duties as such and, therefore, payable from funds held by his principal campaign committee?

Immediately following the 1994 general election, neither the incumbent Chief Justice of the Alabama Supreme Court nor his challenger could be certified as the winner of that election by the Secretary of State. After several months of litigation, a United States district court ordered that the election be certified and that the challenger be sworn into office. Roe v. Mobile County Appointing Board, et al. , 904 F.Supp. 1315 (U.S.D.C., S.D. Ala., 1995). Consequently, the challenger was awarded all benefits of the office of Chief Justice, nunc pro tunc , as of the date the inauguration would have occurred but for the litigation. This decision was affirmed by the Eleventh Circuit Court of Appeals. Roe v. State , 68 F.3d 404 (U.S.C.A., 11th Cir. 1995).

Prior to the resolution of the previously mentioned litigation, the incumbent Chief Justice, through legal counsel, filed a declaratory judgment action in state court asking that court to declare that the incumbent's term of office would continue until his successor was "elected and qualified." Specifically, the incumbent asked the state court to declare that he be allowed to continue to execute the office of Chief Justice of the Alabama Supreme Court and that he continue to receive all benefits of that office until such time that either he or the challenger be declared the winner of the election. The Alabama Supreme Court, in Hornsby v. Sessions , So. 2d (Ala. 1997), rendered its opinion on September 19, 1997.

Litigation was also commenced against the incumbent seeking to remove him from office. The attorney who represented the incumbent in the declaratory judgment action also participated in the defense of the action seeking to remove the incumbent from office.

The Fair Campaign Practices Act, codified at ALA. CODE §§ 17-22A-1, et seq ., (1975) (all cites are to the CODE), was amended by Act No. 97-651, effective October 1, 1997. Section 17-22A-7 authorizes candidates to use excess campaign contributions for certain purposes and, specifically, states:

(b) Notwithstanding any other provision of law, including, but not limited to, Section 13A-10-61, a candidate, public official, or principal campaign committee may only accept, solicit, or receive contributions:

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(4) For the purpose of paying all expenses associated with an election challenge including, but not limited to, quo warranto challenges.

In essence, the question presented is whether the then-incumbent Chief Justice may now use contributions which were received by his principal campaign committee to pay his attorney for legal fees incurred in connection with the declaratory judgment action. It is the opinion of this Office that the declaratory judgment action filed by the Chief Justice in this case is similar to and in anticipation of a quo warranto challenge which was subsequently filed. Accordingly, legal fees incurred in connection with the declaratory judgment action are expenses associated with an election challenge as provided in §17-22A-7(b).

Based upon this opinion, it is unnecessary to consider whether the expenditure of funds for legal fees are ordinary and necessary expenses incurred by an officeholder. Furthermore, no opinion is expressed with respect to the income tax consequences of the use of campaign funds to pay legal fees.

The payment of legal fees from funds held by the then- incumbent's principal campaign committee is an authorized use of such funds, pursuant to § 17-22A-7(b)(4), since the legal fees are associated with an election challenge.

I hope this opinion answers your questions. If this Office can be of further assistance, please contact Brenda F. Smith of my staff.

Sincerely,

BILL PRYOR

Attorney General

By: JAMES R. SOLOMON, JR.

Chief, Opinions Division

BP/BFS

B9/10.97/f