Untitled Texas Attorney General Opinion ( 1970 )

AUBTIN.TEXAl3 78711
C,SAWFORD c. MAlRTIN
A-x-l-ORNEY CI&NERAL
November 2, 1970
Honorable John F. Pettit Opinion No. M-714
County Attorney
Val Verde County Re: Whether acceptance by a city
Del Rio, Texas 78840 councilman of the position of
executivesdirector of a com-
munity action agency violates
*Article 373, Vernon's Penal
Code, or Article 988, Vernon's
Dear Mr. Pettit: Civil Statutes.
You request our opinion as to the legal consequences
which result from the acceptance by a Del Rio city council-
man of the position of executive director of the Val Verde
County Community Action Agency, a local anto-poverty agency
established under the Economic Opportunity Act of 1964, 42
U.S.C.A., Section 2781, et seq.
The facts indicated in your request and the by-laws of
the community action agency are as follows:
Val Verde County is a sponsoring agency for the Val Verde
County Community Action Agency, which was organized by the
city, county, and School District as a non-profit corporation
under the Texas Non-Profit Corporation Act, Article 1396,
Vernon's Civil Statutes, for the purpose of enabling the part-
ies carry out the purposes of the Economic Opportunity Act to
eliminate the causes of poverty. This agency is governed by
a board of directors, consisting of twenty-seven persons, in-
cluding nine elected officials or their representatives from
various political subdivisions of Val Verde County. The City
of Del Rio has four places on the board, each place being held
either by a councilman or a representative of a councilman.
The By-Laws provide that four directors "shall be representatives
of the City of Del Rio," and "shall be designated as such by"
the city. The board of directors makes all policy decisions
for the community action agency. According to the information
provided in the opinion request, the Del Rio City Council makes
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Honorable John F. Pettit, Page 2, (M- 714 )
decisions affecting the community action agency; and the com-
munity action agency makes decisions affecting.the city council.
The City of Del Rio is a home rule city, and city council-
men are paid for their services. The city is a delegate agency
or subcontractor of the community action agency in that the
agency has by contract delegated to the city a commodities pro-
gram.
Recently the board of directors has hired one of the city
councilmen to serve as executive director of the community ac-
tion agency. The executive director is hired under a contract
of employment by the Community Action Agency (whose Board of
Directors is composed of the City, County, Schools Districts,
and other representatives of the public) for a term of one
year and is paid a salary and acts as the manager for the agency.
In view of the commodities program contract, you have asked
whether a violation of Article 373, Vernon's Penal Code, has
occurred when a city councilman has accepted a salaried posi-
tion with the community action agency. A second question con-
cerns whether Article 988, Vernon's Civil Statutes, is violated,
and if so, the effect that acceptance has on the office he holds
with the city.
Article 373, reads as follows:
"If any officer of any county, or of x
city or town shall become in any manner pecu-
niarily interestedin any contracts made by
such county, city, or town, through its agents,
CFZherwise, for the constriiZEon or repair
of any bridge, road, street, alley or house,,
or any other work undertaken by such_county.,
city or town, or shall become interested in
Fbid or proposal for such work or in the
;i;ii;
purchase or sale of anything made for or on
account of such county, city, or town, or
-
who shall contract for or receive any money
or property, or the representative of either,
or any emolument or advantage whatsoever in
consideration of such bid, proposal, contract,
purchase or sale, he shall be fined notess
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Honorable John F. P&tit, Page 3, (M- 714 )
than fifty nor more than five hundred dollars."
(Emphasis added).
The exact nature of the commodities program contract is
not described in the opinion request, but there is no showing
that the city councilman has received any pe+niary benefit
from the contract between the city and the community action
agency. However, the salary of the executive director appears
to be paid by the community action agency from funds furnished
through the Office of Economic Opportunity and to some extent
from matching local funds of the City and other political sub-
divisions and not from the commodities program contract. (See
42 U.S.C.A., Sections 2812 and 2836)~. Article 373 prohibits
city officials from having pecuniary interest in matters in
which the city is pecuniarily interested. Rigby v. State, 10
S.W. 760 (Tex.Civ.App., 1889). This office has held that a
county commissioner did not violate the penal provision by
selling lumber to various lumber yards which in turn sold at
least some of the material to the county, where no showing
was made that the commissioner had any interest in the lumber
when it was, sold to the county or any special agreement with
the lumber yards. Attorney General's Opinion No. O-6044 (1944).
In view of the facts you have submitted, we are of the opinion
that the salary paid to the executive director is not strictly
within the terms of Article 373, and a criminal violation of
that statute is not indicated. This penal statue must receive
a strict construction and cannot be extended beyond the plain
import of its terms. 52 Tex.Jur.Zd 304, Statutes, Sec. 198.
The phrase, "or any other work undertaken by such . . . city."
refers to other similar types of construction work of the same
nature previously described in the preceding phrases. See 54
Tex.Jur.Zd 221-222, Statutes, Sets. 154 and 155. Furthermore,
there are no facts before us to show that the executive direc-
tor received any money or thing of value as a consideration of
any contract entered into.
The next question concerns a civil statute, Article 988,
which places certain limitations on city councilmen. The
statute reads in pertinent part:
“No member of the city council shall hold
any other employment or office under the city
government . . . unless herein otherwise pro-
vided. No member of the city council, or any
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Honor&&e John F. Pettit, Page 4, (M- 714 )
other officer of the corporation, shall be
directly or indirectly interested in any work,
business or contract, the expense, price or
consideration of which is paid from the city
treasury, or by an assessment levied by an
ordinance or resolution of the city council
. . . .n
The rule of liberal construction will be applied to remedial
statutes, such as the above enactment, in order to effectuate
its purpose. 53 Tex.Jur.Zd 303, Statutes, Sec. 197. Likewi,se;
such a conflict of interest statute "rests upon sound public
policy" and "should be scrupulously -enforced." Delta Electrical
Const. Co. v. City of San Antonio,, 437 S.W.Zd 602, 609 (Tax.
Civ.App., 1969, error ref., n.r.e.). As observed by the Court,
this statute broadly covers "any work, business or contract"
which city councilmen must not be either "directly or indirectly
interested in." The Court proceeded to hold the contract be-
fore it null and void, saying:
"In McQuillin, Municipal Corporations, Vol.
10, Sec. 29.97, p. 467, et seq., it is stated:
'It is well settled that municipal officers
cannot be interested in contracts of any charac-
ter with the municipality. . . In many states '.~.
and cities this has been adopted by statutory
or charter provisions, which are, however,
mostly declaratory of the rule at common law
. . . Although under some statutes and char-
ters , such an agreement is voidable only, it
is generally held that whenever a public officer
enters into a contract, the execution of which
may make it possible for his personal interests
to become antagonistic to his faithful discharge
of a public duty, such contract will be held
void as against public policy. It is the
existence of such interest which is decisive
and not the actual effect or influence, if
any of the interest: if there is a potential
conflict, the.contract is invalid."'
Applying the above rule to the employment by the Community
Action Agency of any officer of the City, County, or School
e-
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Honorable John F. Pettit, Page 5, (M-714 )
District, we hold that the executive director, who is also an
officer of the City, may not accept the employment as exe,cu-
tive director since he,is interest,in the contract of employ-
ment, the e'xpenseo,f which, at least in part, is payable from
the city treasury.
It appears that the city councilmen on the board of
directors would be present to represent the interest of the
city, but the executive director must.carry out the instruc-
tions of the board of directors as a whole. Since the city
council members, can be outvoted on the board, the executive
director may find himself having to carry out decisions in
conflict with the city interests. The executive director
also may be paid partly by city funds. Eighty percept of~the
funds for operation of the aommunity,action agency aomes -from
the Office of Economic Opportunity, but the remainder comes
from local matching funds. 42 U.S.C.A., Section 2812. Staff
salaries are paid out of these funds. 42 U.S.C.A., Section
2836. .Presumably the city.is'furnishing, or may be obligated
to furnish, some portion of'.thelocal .funds for the agency.
Thus the executive director is receivi@or can potentially
receive city funds, even if indirectly. A violation of the
statute and public policy thus results, as stated in City.05
Edinburg v. Ellis, 59 S.W.Zd 99, 100 (Comm.App., 1933, opinion
approved), wherein the Court observed:
"It is the general rule that municipal con-
tracts in which officers or employees of the
city have a personal pecuniary interest are
void . . . This rule is held to apply to mem-
bers of the city council . . .
"The foregoing rule rests upon sound public
policy. Its object is to insure to the city
strict fidelity upon the part of those who re-
present it and manage its affairs. The rule
. . . should be scrupulously enforced. . i .I'
The very purpose of the rule is to avoid conflicting in-
terests, duties , pecuniary interests, and public policy. A
similar rule exists to prohibit public officers or employees
from serving in positions involving conflicting interests.
See Articles 6252-9 and 6252-9a, Vernon's Civil Statutes.
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Honorable John F. Pettit, Page 6, (M- 714 )
The question of whether the position of executive director
rises to the dignity of an office, which we doubt, so as to
become a violation of the dual-office prohibitions in Article
XVI, Sections 12 and 40, Constitution of Texas, becomes im-
material in view of the holding in City of Edinburg.v; Ellis,
supra.
With reference to the question of whether the City Council-
man's office has become vacated by reason of his acceptance of
employment as executive director of the Community Action Agency,
it is our opinion that since the contract of employment can-
not be validly entered into so long as the executive director
remains a council member, he has an election to choose which
position he desires to accept. If he resigns from the Council,
he may then negotiate a contract of employment as executive
director. If he does not resign, he may not continue in both
positions and may be ousted therefrom by appropriate legal
action.
SUMMARY
A City Councilman is "interested in" his
contractof employment by the Community Action
Agency of the City, County, and School District,
a part of the expense of which is payable from
the city treasury, and may not accept such em-
ployment so long as he remains a city council
member. Article 988, Vernon's Civil Statutes.
Such action is not in violation of Article 373,
Vernon's Penal Code, which is inapplicable.
The City Councilman must elect which posf-
tion he desires to hold and may be ousted from
the positions by appropriate legal action if
he attempts to continue to hold 0th positions
at the same time.
C. MARTIN
y General of Texas
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Honorable John F. Pettit. Page 7, (M- 714 )
Prepared by Roland Daniel Green, III
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
Houghton Brownlee
Ralph Rash
Harold Kennedy
J. C. Davis
MEADE F. GRIFFIN
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
NOLA WHITE
First Amistant
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