Untitled Texas Attorney General Opinion ( 1972 )

Honorable Bob Bullock Opinion No. M- 1039
Secretary of State
Austin, Texas 78711
Honorable Clyde Slavln
County Attorney of Donley County
Clarendon, Texas 79226
Nonorable Jack K. Williams
President, Texas A & M University
College Station, Texas 77843
Honorable Robert S. CalGert
Comptroller of Public Accounts
Austin, Texas 78711
Honorable Charles R. Barden
Executive Secretary
Texas Air Control Board Re: Saope, constltutlonallty,
Austin, Texas 78751 and effect of House
Bill 203, 62nd Leg.,
Reg. Seas., 1971,
amending Articles
6252-9, V.C.S., the
Gentlemen: Texas Ethics Code.
We have received five opinion requests relating to the
scope, constitutionality, and effect of House Bill 2O3,1 .
amending Article 6252-9, Vernon’s Civil Statutesi?the Texas s
Ethics Code. We have concluded that House Bill 203 1s
unconstitutional in its entirety for reasons we will
hereinafter set forth in detail before passing upon
those questions which we hold remain governed by the valid
provisions of Article 6252-9, the original Texas Ethics
Code enacted in 1957$
‘Acts 1971, 62nd Leg., Reg. Sess,, ch. 962, pp,2906-12.
2Acts 1957, 55th Leg., ch. 100, p. 213-15.
-5073-
Hon. Bob Bullock, et al, page 2 (M-1039)
Two lnqulrles submitted by the Honorable Bob Bullock,
Secretary of State and by the County Attorney of Donley
County asked whether Sections 4(0 and 4(e) of House Bill
203 are constitutional. Section 1 (0) reads as follows:
"On or before the last Friday of April of
each calendar year, each elected state official
and appointed state official and each state
employee or legislative employee if such legls-
lative or state employee's annual salary from
the State of Texas exceeds $11,000, shall file
with the Secretary of State a financial state-
ment which shall be a public record covering
sources of income, acquisitions, investments,
and divestments obtained or consummated during
the preceding calendar year of the lndlvldual
filing the statement, and his spouse, and shall
be In the following form:
FINANCIAL STATEMENT
For the period to
Name
Address
Office or position in the government of the
State of Texas
For your information: The interests or items
required to be disclosed in this statement Include
those of yourself and your spouse. The term
business entity means any person, corporation,
firm, partnership, joint stock company,
receivership, trusteeship, or any other
entity recognized by law through which business
for profit may be conducted.
1. List of all sources of income to be ldentl-
fled by employer and/or if a person is self-
employed, by the nature of his business.
2. List of real property acquired or sold during
the reporting period.
-5074-
Hon. Bob Bullock, et al, page 3 (M-1039)
3. List of all stocks, bonds, or other commercial
paper acquired or sold during the reporting period.
4. List of all other assets acquired during
the reporting period.
5. List of all liabllltles originally incurred
durlng the reporting period to any institution
regulated or controlled by the State of Texas
or the Federal Government.
I swear that the Information
given above is true to
the best of my knowledge
and belief.
n
Date Signature
Sectlon4(e) reads as follows:
"If any person covered under this Act or such
person's spouse or a dependant 1s an officer,
agent,flnancial associate or member of, or owns
a substantial interest, directly or beneficially
in any activity which 1s subject to the juris-
diction of a regulatory agenCy of this State, a
record of such relationship or substantial
interest shall be made a matter of public record
by filing with the Secretary of State annually
by January jlst."
The Secretary of State further asked whether, if
Sections 4(o) and (e) are unconstitutional, he has any
duties under the provisions of Section 4(q) of Senate Bill
15, Acts 1971, 62nd Leg., 1st C.S., p, 3442, ch. 10.
Section 4(q) reads as follows:
"All political candidates for positions and
offices covered by this Act shall file with the
Secretary of State a financial statement which
-5075-
Hon. Bob Bullock, et al, page 4 (M-1039)
shall be a public record covering sources of
Income, acquisitions, investments, and dlvest-
ments obtained or consummated during the preceding
calendar year of the lndlvidual filing the state-
ment, and his spouse, and shall be in the form
prescribed in Subsection (0) of this section.
The financial statement shall be filed within
15 days after the filing deadline for the election
In which the lndlvidual is a candidate."
The caption of House Bill 203 gives no notice that any
ofthe persons covered by Its provisions are required to
file any kind of financial interest disclosure. It is
difficult to see how such detailed financial interest
disclosures as those immediately set forth above in Sections
4(e) and 4(o) could have been anticipated by a caption
which provided merely for "establishing standards of
conduct", "prohibiting certain acts", 'making procedures
In the State Ethics Commission", and "providing penalties".
The caption of Senate Bill 15 does declare that it relates
'to the filing of financial statements by candidates for
certain offices...." It falls to give any notice that
said financial statements shall embrace the assets belong-
ing to a candidate's spouse asls required by Section (q).
We therefore think that there has been no compliance with
Article III, Section 35 of the Texas Constitution, which
requires that the subject of all acts shall be stated in
the caption, and that these provisions must fall for this
reason.4
However, if such financial interest disclosures be
deemed ancillary or consistent with the prescribing of
-5076-
Hon. Bob Bullock, et al, page 5 (M-1039)
standards of conduct for persons covered by the Act, there
are other compelling reasons which necessitated holding
the foregoing sections of House Bill 203 unconstitutional.
A case squarely in point is City of Carmel-by-the-Sea
466 P.2d 225 (Callfornla 1970). The Court held
vlnva Id a similar financial lnterest public disclosure
statute directing every public official and candidate
to file as a public record a statement describing the
nature of his investmentsin excess of $lO,OOO.OO, as we11
as those owned by his spouse or a minor child. The court
recognized as in the public Interest proper legislative
concern about possible conflicts of interest between public
employment and private financial interests, but held that
the disclosures required by the statute were unconstitutionally
overbroad. At pages 230-31, the court said:
"The concept of personal liberties and funda-
mental human rights entitled to protection
against overbroad intrusion or regulation by
government is not limited to those expressly
mentioned in either the Bill of Rights or
elsewhere In the Constitution, but Instead
extends to basic values llmplIclt in the
concept of ordered liberty' (Palko v. State of
Connecticut (1937) 302 U.S. 319, 325, 58 S. Ct.
149, 152, 82 L. Ed. 288) and to 'the basic
clvll rights of man.' (Skinner v. State of
Oklahoma (1942) 316 u.s.,535, 541, 62 S.Ct,
1110, 1113, 86 L.Ed; $625.)...
"Certain of the protected rights and liberties
not specifically mentioned in the Constltulon
have been viewed as falling within the penumbra
or periphery of the Bill of Rights, and others
as being fundamental and basic personal rights
'retained by the peo le' within the meaning of
the Ninth Amendment.3 (Griswold, ;;pra,
484-485 of 381 U.S., at pp. 1681-1 2 of $4 :'I&.,
and at pp. 487-499, at pp" 1683-1690 of first
concurring 0pinlon.J * +
"As plaintiff city points out, the right of prl-
vacy concerns one's feelings and one's own peace
of mind (Fairfield v. American Photocopy etc. CO.
(1955) 138 Cal. App. 2d 82, 86, 291 P.2d 194), and
certainly one's personal financial affairs are
an essential element of such peace of mind.
-5077-
Hon. Bob Bullock, et al, page 6 (M-1039)
Moreover, personal financial affairs are clearly
more than the 'adjunct to the domestic economy'
referred to in Edwards, supra ( .11&g of 71 A.C.,
80 Cal. Rptr. 633, 458 P.2d 713P ; Instead they
would appear to constitute the primary supporting
pillar of that economy. In any event we are
satisfied that the protection of one's personal
financial affairs and those of his (or her)
spouse and children against compulsory public
disclosure is an aspect of the zone of privacy
which is protected by the Fourth Amendment and
which also falls within that penumbra of constl-
tutional rights into which the governmentmay not
intrude absent a showing of compelling need and
that the intrusion is not overly broad. &?/here
fundamental personal liberties are involved,
they may not be abridged by the States simply on
a showing that a regulatory statute has some
rational relationship to the effectuation of a
proper state purpose. "Where there is a
significant encroachment upon personal liberty,
the State may prevail only upon showing f sub-
ordinati% Interest which is compelling.
~I~tCitiO``,.~ The,law must be shown "necessary,
and not merely rationally related to , the accompllsh-
ment of a permissible state ,pollcy." BltationsJ'
(Griswold v. State of Connecticut,
479, 497, 85 s.ct. 1678, 1689). lT%%%a%~ %"'
legislative abridgement must be viewed in the
light of less drastic means for achieving the
same basic purpose.' Shelton v. Tucker,
suora, 364 U.S. 479, 81 S. Ct. 247, 252,
5 L. Ed. 2d 231.)"
The court held that the disclosures required by the
statutes were unconstitutionally overbroad and intruded into
irrelevant, private financial affairs of the parties covered
by the statute, and were In no way limited to such holdings
as might be affected by the duties or functions of a parti-
cular office. The court took cognizance of the fact that
a requirement of relevant disclosures of investments or
assets whlch.bear a relationship to the valid purpose of
preventing conflicts of interest on the part of public
officers and employees could be,and had been in many cases,
validly drawn. At pages 233-35, the court said:
-5078-
Han, Bob Bullock, et al, Page 7 (M-1039)
I,
*,. Those various enactments can be roughly
divided Into two categories. The first group
simply restricts public officials and employees
from entering into transactions which may cause
a conflict of Interests. The second group
requires an actual disclosure of any conflict
of interest relevant to the official duties
ofthe officer or employee. Fmphasis supplIedJ
***
"Thus although there are lndlvidual differences
between the disclosure laws discussed above,
there is clearly one common element in all of
them.. The regulations prohibiting conflicts
of interest and requiring the disclosure of
financial holdings are limited to only those
transactions norholdings which have some
relationship, direct or Indirect, to the official
duties of the public officer or employee. ..,
*++
'We are satisfied that in light of the principles
applicable to the constitutional rights here
involved, no overriding necessity has been
established which would justify sustaining a
statute having the broad sweep of the one now
before us, which, as stated, would Intrude
alike into the relevant and the irrelevant
private financial affairs of the numerous
public officials and employees covered by the
.
statute and is not limited to only such holdings
as might be affected by the duties or functions
of a particular public office. ...Furthermore.
the price which the state and the local agencies
of government would be expected to pay, should
the.constltutionalIty of such a statute be
sustained, in the exodus of competent officials
from public office and the displritlng effect
on the willingness of other competent citizens
to take on the burdens of public office, far
outweighs any legitimate public interest to
be served."
-5079-
.
Hon. Bob Bullock, et al, page a (M-1039)
It Is evident that Sections 4(e), (o), and (q) of
House Bill 203 and Senate Bill 15 are neither broad
prohibitions of conflicts of Interest nor requirements
of actual disclosure of such Interests as are per se in
conflict with the office or position held or sough=
Further, we think that the unconstitutionally broad
requirements of the financial and personal relation
disclosure provisions of Senate Bill 15 and of House
Bill 203 are such an integral part of the regulatory
scheme of House
^ Bill 203 as. to .eliminate
_ .any possible
^ .
severance 0s tnese unconstItuciona1 portions srom r;ne
balance of the bill. Texas Highway Commission v. El
Paso Bldg. & Const. Trades Council, 149 Tex. 457, 234 S.W.
d 85 (195 - Simmons v. Arnhlm, 110 Tex.309, 220 S.W.
26 (lz20); g?ntral Education Agency v. I.S.D. of City
of El Paso,>2 Tex. 5b, 254 S .W .2d 357 (1953).
We might be inclined to make a further effort In
this regard were we not faced with an additional unconstl-
tutional section. Section a of House Bill 203 provides
for the establishment of a State Ethics Commission which
IS t0 COnSiSt of three members of the Senate, elected by
the Senate; three members of the House of Representatives;
two persons appointed by the Chief Justice of the Supreme
Court of the State of Texas; two persons appointed by the
Presiding Judge of the Court of Criminal Appeals of the
State of Texas; and two persons appointed by the Chairman
of the State Judicial Qualiflcatlons Commission. Paragraph~s
(h) and (I) of Section 8 read as follows:
"(h) The commission shall have full investigatory
powers and subpoena powers; however, no subpoena
may be issued pertaining to any investlgatlon
until the commission adopts a resolution by a
majority vote of the members of the commission
defining the nature and,scope of the investigation.
"(I) Actions of the commission require the
concurrence of majority of the members, including
the concurrence of two members from the same
House when the action pertains to that House or
a member of that House."
-5080-
Hon. Bob Bullock, et al, page 9 (M-1039)
It Is evident from reading the foregoing that, In
the exercise of the Commission's full Investigatory
powers, the balance against a legislative investigation
or the investigation of a member or members of the
Legislature 1s weighted against such Investigations as
opposed to other Investigations authorized by the Act.
This is so because of the fact that the 12 members of the
Commission, six members are members of the Legislature,
who, by voting In unison, could prevent obtaining the
majority vote necessary to Institute a legislative
investigation or the investigation of a member or members
of the Legislature. Further, there Is the requirement
of the concurrence of two members of the same house
when the investigation pertains to that house or a
member thereof.
Although the foregoing Is only a possibility, it
amounts to a protection-not accorded others covered
by the provisions of the Ethics Code and Is therefore
violative of the equal protection clauses of both the
Federal and State Constitution. It clearly operates
unequally on members of the various classes within
the scope of the Act, and Is sufficient to render the
entire bill unconstitutional. It cannot be obliterated
from the Act since it goes to the enforcement of the Act,
Itself, and would leave no plan of operation for the
Ethics Commission which it purports to create. As a
result, it would be necessary to attempt a wholesale
rewriting of this portion of the state, a legislative
function which no court would undertake to do. Texas
Highway Commlsslon v. El Paso Bldg. & Const. Tramouncll,
49 Tex. 457, 234 S.W.2d 857 (1950).
Another reason for holding House Bill 203 unconstltutlonaI
Is that Its Section 4, 5 and 6 are wholly Invalid because
these penal provisions violate Articles 6 and 7 of the
Texas Penal Code, The new statute is vague, IndefInIte and
therefore void. Overt v. State, 260 S,W, 856 (1924);
Ex Parte Meadows, 109 S .W .2d 1661 (1937); S ortatorlum
v. State, 115 S.W.2d 483 (Tex.Clv.App. 3.93875isnE.).
The Comptroller of Public Accounts has asked three
questlons relating to Section 4(k) of House Bill 203, which,
in view of the Invalidity of 4(k), are governed by Section
3(i) of Article 6252-g as enacted In 1957. Section 3(i)
reads as follows:
-5081-
Hon. Bob Bullock, et al, page 10 (M-1039)
"No officer or employee of a state agency nor
any firm, association, corporation or other business
entity In which he Is a member, agent, or
officer, or In which he owns a controlling
interest, shall sell goods or services to any
person, firm, association or corporation yhlch
Is licensed by or regulated in any manner by
the state agency In which such officer or
employee serves."
The Comptroller's questions are the following:
"1. A is a large department store which Is
Issued a sales tax permit and a store tax
license by the Comptroller, and makes regular
sales tax reports and payments.
Can an employee of this department work for
A as a part-time sales clerk exercising no
degree of management?
2. B Is a gun shop which Is Issued a sale~s
tax permit, a store tax license and a pistol
dealers license by the Comptroller.
Can an employee of this department sell his
private gun to B?
3. C is a used car dealer whlch'is issued a
store tax license by the Comptroller.
Can an employee of this department sell his
private automobile to C?"
In deciding these questions, we note at the outset that
Texas is among many states that have enacted a wide
variety of statutes regulating specific public servants
In specific areas of potential conflict of public and
private Interests. Such statutes are valid where the
publlc'lnterest Is sufficient to justify the particular
requirement or prohibition, and there Is no unwarranted
-5082-
Hon. Bob Bullock, et al, page 11 (M-1039)
interference with fundamental individual rights or
constitutional guarantees of personal freedom.5
The common every day occurences typified by the
Comptroller's three submitted questions must have
arisen and been approved by the Comptroller In the absence
of any Conflict of public and private interests on Innumerable
occasions during the fourteen years.,hehas been charged
with the duty of complying with the provisions of the
Ethics Code. Since there has evidently been no doubt
as to the propriety of the types of employee actions
covered In the submitted questions prior to the 1971
amendment, we must assume that the conslstant departmental
construction has been to permit such activities absent
forbidden conflicts of Interest. We are In accord
with this departmental construction.
The general Declaration of Policy contained In
Section 1 of the 1957 Act declares that the public
servants covered by the Act shall have no Interest of
any kind, direct or Indirect, or engage In any
business transaction or professional activity, or
Incur any obligation of any nature which is In substantial
conflict with the proper discharge of his duties In the
public Interest. It announces that It is for the
Implementation of such policy and to strengthen the
faith and confidence of the people of Texas In their
government that the Code of Ethics Is enacted. It
states that the Code shall serve not only as a guide for
official conduct of the State's public servants, but
also as a basis for dlsclpline for Improper conduct.
5All men have certain basic or natural rights which
are inherent and Inalienable, are generally enumerated In
a Bill of Rights of life, and are protected against
Invasion of government or any branch thereof. 16 C.J.S.
975. Constitutional Law § 199. Rights of life, liberty
and property are Inherent rights merely reaffirmed In the
Constitution and restricted only as voluntarily surrendered
by the people and their government. 12 Tex. Jur. 2d 432,
Constitutional Law $ 85, Rhlne v. McKlnney, 53 Tex.
354 (1880).
-5083-
Hon. Bob Bullock, et al, page 12 (M-1039)
Eased primarily upon the Declaration of Policy as a declaration
of legislative intent, and predicated upon an initial fact
finding that In each of the submitted question8 there is no
conflict between public and private interests, we answer
all three questions in the affirmative.
In holding that anemployee of the Comptroller's
Department may work as a "part-time sales clerk exercising
no degree of management" in the employ of "a large depart-
ment store which Is issued a sales tax permit and a store
tax license by the Comptroller,..,", we realize that the
literal language of the prohibition of SecUon 3(l) prevents
the employee from selling his services to a business entity
subject to the Comptroller's regulations. We are cognizant
of the elementary rule of law that there Is no room for
construction of plain and unambiguous Xanguage In a
staute.7 Nevertheless, there are numerous well-established
exceptions to this rule; One of these Is that departure
from the literal meaning of a staute will be made where
such departure Is consistent with and essential to the
effectuation of legislative intent.8
We do not think that the..LeglslatureIntended to
absolutely prohibit State employees from holding any
addltlonal jobs with a business entity subject In any way
to regulation by the employing State agency. It Is
common knowledge that a State employee might need to
augment his Income by additional efforts on his part elther
to raise his standard of living, or, In some cases, even
6This office does not pass upon questions of fact.
7 53 Tex. Jur.2d 174, Statutes, 8 123, and authorities
cited therein.
State v. Delesdenler, 7 Tex. 76
(185`` ~%%I%% ttT?H b k R 1 I Texas and quoted
with akproxal the followl~or~to~ageul&~C6:
1 A thing which Is within the Intention of
the makers of a statute Is as much within the
statute as If It were within the letter;' 'and
a thing which Is within the letter of the
statute Is not within the statute unless It be
within the Intention of the makers.' (9 Bat.
Abr., 247.)"
-5084-
.
.
Hon. Bob Bullock, et al, page 13 (M-1039)
to exist. Certainly, it has never been the policy
of this State to discourage legitimate diligence and
Industry in Its citizens. It would be most unreasonable
to conclude that the Legislature Intended any such pro-
hibition where the second employment did not affect the
employee's compliance with the highest standard of ethics
In the proper discharge of his duties to the State. The
Legislature Is never presumed to Intend an unreasonable,
absurd or unjust result If the statute may be otherwise
construed; ard the courts will depart from the literal
Import when necessary to preserve legislative Intent,9
Likewise, under the above-stated rule, we hold that
the Legislature did not Intend for Section 3(i) to
prohibit the employee from selling a gun to a gun shop
holding a sales tax permit, a store tax license, and a
pistol dealer's license; nor from selling his car to a
used car 'dealerhaving a atore tax license. If additional
facts exist which lndlcate a conflict of Merest even
In such Isolated transactions, a contra result would,
of course, be reached.
Finally, the answers to all the Comptroller’s questions
are necessitated by the rule that a statute must be sustained
as constitutional wherever possible.10 If Section 3(l)
constituted a blanket prohibition against the right of the
Individual employee to work elsewhere or transact business
dealings with his own property, It would be blatantly
discriminatory as to him, and a denial of due process and
equal protection of the laws In violation of both the State
and Federal Constitutions. A statutory classification which
953 Tex. Jur. 2d 134-135, 187-189, 195-197, Statutes,
88 126, 134,,135, and authorities cited therein.
1053 Tex. Jur.2d 225-227, Statutes, B182, and authorities
cited therein. State v. City of Austin, 160 Tex. 348, 331
S.W.2d 737, 747 tl9bO).
-5085-
.- .
‘. .
Hon. Bob Bullock, et al, page 14 (M-1039)
singles out certain individuals, or classes of individuals,
and deals with them arbitrarily and unreasonably in a manner
unjustifiably different from other Individuals, has many
times been held In violation of the 14th Amendment to
the Federal Constitution, which specifically pertains to
the deprivation of life, liberty and property without due
process of law.11 And, generally, the term 'liberty"
as used In the Bill of Rights in arious state constitutions,
Including the Texas Constitution,12 Is as comprehensive
as the same term used In the due process clause of the
14th Amendment.I3 Many Texas cases recognize these
fundamental principles as preserved by our Bill of Rlghts.14
The Texas AIrControl Board asks whether its Board
members or employees may have dealings with companies regulated
by the Board. Texas Agricultural and Mechanical University
asks essentially the same questions about faculty members,
staff and employees of the University and Its various
services. These questions must first be determined by
the employing State agency in the manner heretofore
discussed In answering the questions submitted by the
Comptroller.
The same rule of reasonable analysis of the facts
pertaining to the QrOQOSed activity of any State Officer
or employee would apply to persons connected with Texas
Agricultural and Mechanical University, Texas Air Control
Board, Donley County Hospital Board Directors, or Notaries
Public. The employing State agency, or those to whom
supervision has been confided, must determine whether the
I116 C.J.S. 976, Const. Law, § 199.
12Art. I, Sec. 19.
%3 c, J. s. 988, Const. Law, § 202.
1412 Tex. Jur. 2a 432-434, Const. Law. $ 86-89.
-5086-
. -
. .’
Hon, Bob Bullock, etal, page 15 (M-1039)
facts of any particular case warrant a finding of fact
that the activities of an individual reflect a conflict
of interest under Section 3(l) of the 1957 statute.
-SUMMARY-
House Bill 203, 62nd Leg., 1971, Reg. Sess.,
and Senate Bill 15, 62nd Leg,, 1st C,S., 1971,
ch, 10, p. 3442, which sought to amend Article
6252-9, V,C,S. (Texas Ethics Code) are both
unconstitutional. The 1957 Ethics Code, as It
existed before these attempted amendments by the
62nd Legislature, Is In force as the law of
Texas, No financial interest disclosure
reports are required under existing law.
Under the 1957 Ethics Code, whether conflicts
of interest exist are fact determinations for
those who exercise validly delegated super-
visory powers*
Prepared by Roger Tyler and
Marietta McGregor Payne
Assistant ,Attorneys General
APPROVED:
OPINION COMMITTEE
Kerns Taylor. Chairman
W. E. Allen, Co-Chairman
Houghton Brownlee
Gordon Cass
Rex White
Bob Lattlmore
-5087-
. . .
Hon. Bob Bullock, et al, page 16 (M-1039)
SAM MCDANIEL
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
NOLA WHITE
First Assistant
-5088-