Untitled Texas Attorney General Opinion ( 1962 )

THEATIYORNEYGENERAL
OF ?rExAs
AUSTIN 11, TEXAS
WILL W-N
A-l-l-0-cIwII&RAI. June 26, is362
Honorable J. W. Edgar Opinion No. WW- 1362
Commisrionerof Eduoation
Texas Eduoation Agenoy Rer Legality of purchasing
Austin, Texas bulk gaeollne by echo01
,: dlatrlcts from companies
whose .consigneesare
members of the school
Dear Dr. Edgar: board, an& related questions.
Your recent mXpe8t for an OPlnlOn on the above subjeot
matter reads in part aa .follow#:
“Recently sohool districts of this rtatr
have requested this Agenoy to obtain an opinion
from the Offloe of Attorney General oonoernlng
oontractlng,forbulk garollne and for eerviolng
:of sohool owned vehloles when one or more of
lte sohool board member8 are oonslgneer for
011 oompanles. The rituationa are generally
outlined in the following questions:
“I. May a rchool distriot ‘legallycon-
ttiot by negotiation or sealed bid proo&dure,
?or bulk ga8ollne needs of the dirtriot with
X or Y 011 companies where one or more member8
of the dlstrlot bohobl boaH# are OO.nUigneeB,
of the rival gabollne i’lxms. The bids arb
made by the how office of the oil oompanles
but the account 1s serviced bo looal dlatrl-
butors.
"2. May a sohdol district legally oon-
traot, by negotiation or aealed bid proaeduree,
for servicing of Its sohool vehioles (warrhlng,
greasing, oil changes, tire repair, eta.) with
a local retail rervloe station managed by a
person who is &mplbyed on:aalar&‘and .obmmls-
sion basis by the parent company and responsible
to Borneextent to the looal consignee of the
company. The consignee Is a member of the dls-
trict echo01 board. The company Is the actual
.
c-r. J. w. Edgar, page 2 W-1362)
owner of the station.
"In the first situation mentioned,,It
may be significantthat the home offloe of
the gasoline firm makes the quotation Con-
cerning the price of the gasoline. Consignee
is not Involved in arriving atethe price.
"In the second situation, it may be of
slgnlfioancethat very little material or
product Is Involved In vehicle servicing.
The majorscost Is labor of the manager and
his employees.
". . .
"A. F. McFarlane, President,Board of
Trustees, Del Rio IndependentSchool District,
Del Rio, Texas, stands ready to furnish any
additional Informationas may be needed for
purposes of this opinion."
During a telephone conversationwith this office on
June 7, 1962, Mr. McFarlane stated to us that the 011 company
consigneeswho also serve as members of the dlatrlot sohool
board would receive a commlssion in contraat situation No. 1,
If one of their respective companies were awarded the contract.
,Also; Mr. McFarlane stated that In contract situation No. 2,
the oonslgnee who supplies 011 products to.th&retail service
station would reoeive a sales commieslon on produots supplied
to the service station,
The sale of gasoline or other supplies to a school
district by a person who Is also a trustee of the school dis-
tsact Is void as $agalnstpublic policy. Attorney Qeneral's
Oplnlons O-078 19 9 , 0-1014 19 9) o-1589 (ig3g), 0-2306
t 21 and v-6 fi
3 9l&), copies of which are
!nl:%d”;:%~g OThle
’ conclusion lg based on the principle
of law that contdcts in whlah the offloial who made them may
have a personal interest, and oontraots giving an official a
personal ln,terestin any official act to be done by him, are
contrary to publSo polloy and void.
The fact’that no school district trustee acts lndl-
vldually as a oontraoting party in either oontraot situation
No. 1 or No. 2, Is immaterial...
*From Dillon on Munlcl al Corporations, th Edition,
5, and 1146 to 11z7, we quote
Volume 2, pages 1140, 1143 to 11fi
^ .
Dr. J. W. Edgar, page 3 (w-1362)
>j
as follows:
"It Is a well-establishedand salutary
doctrine that he who Is Intrusted with the
business of others cannot be allowed to make
such business an object of pecuniary profit
to himself. This rule does not depend on
reasoning teohnlcal In Its character,and Is
not local In Its applicat,lon.It la based
upon principles of reason, of morality, and
of public policy. It has Its foundation In
the very constitutionof our nature, for It
has authoritativelybeen declared that a
man cannot serve two masters, and Is recognized
and enforced wherever a well-regu.latedsys-
tem.of jurisprudenceprevails. . . .
"At common law and generally under
statutory enactment, It Is now established
beyond question that a contra& made by an
officer of a munlclpalltywith himself, or
In which he Is Interested, Is contrary to
I
public policy and,talnted with Illegality;
and this rule applies whether such officer
acts alone on behalf of the munlclpallty,
or as a member of a board or council. Neither:
the fact that a majority of the votes of a
council or board In favor of the oontract
are cast by disinterestedofficers, nor the
fact that the officer lntereuted did not
participate in the proceedings,necessarily
relle,vesthe contract from its vloe. The
fact that the Interest of the offending officer
In the Invalid contract Is Indirect and Is
very small Is Immaterial. . . .
n. . ."
"As said in City of Edlnburg v. Ellis, 59 S.W.2d 99
(1933), opinion by the Commission of Appeals:
(It Is the general rule that municipal
contracts In which offloers or employees of.
the city have a personal pecuniary Interest
are void.*"
According to the facts alleged In the first question.
the proposed contract for the purohase of gasoline is between
Dr. J. W. Edgar, page 4 (``-1362)
the school district and X or Y 011 company. The bids are to
be made by the home offices of the respective companies and
no relationshipto the school board Is given other than the
fact that one,or more of the trustees of the school board are
consignees of the rival companies. However, Mr. McFarland has
stated that the consignee or wholesaler whose company Is awarded
the contract for gasoline will receive a commlsslonbased on
the total volume of gasoline specified In the contract. The
trustee of the school district who Is also the consignee of
the company receiving the contract would consequentlyhave a
pecuniary Interest In the contract with the school district.
You are therefore advised that such contract Is void as against
public policy.
Under the facts stated In your second question, the
proposed contract Is between the school district and a local
company owned and operated service station. The local con-
signee or wholesaler who supplies this service station Is also
a member of the district school board. Although you state
that the servicing of school vehicles will not Involve the use
of a significantamount'of 011 products, nevertheless the
proper servicing of these vehicles will ~ecessarllyrequire
some use of such products. As stated previously, the consignee
who ~suppllesthis retail outlet with 011 products would receive
a sales commlsslon from the consignor company. In this situation
the trustee of the school dlstrlot who supplies this station
In the business capacity of an oil oompany consignee would
have a pecuniary Interest In the contract with the schools
district. You are ,thereforeadvised that such codtract would
be void as against public policy;
SUMMARY
A contract for the plrohase of bulk gasoline with
an oil company'whoseconsignee Is a member of.the
district school board would be void as against
public policy, because such consignee would receive
a oommlsslon on the basis of the volume of gasoline
specified In the contract.
A contract for servicing school district vehicles
with a service station which Is supplied by an oil
company consignee, who Is also a trustee of the
dlstrlot school board, would be void as against
public policy for the reason that such trustee
In his business capacity as a consigneewould
_ . .
Dr. J. W. Edgar, page 5 (``-1362)
receive a sales oommlsslon on products supplied
to the service station.
Very truly youra),
WILL WILSON
Attorney General of T&xas
AL 6iap#.& &ia!.+
By: I. Raymond Wllllams, Jr.
1RW:mkh Assistant
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Pat Bailey
Coleman Gay
Bob Patterson
REVIEWEDFORTHEA'M'ORNEYOENERAL
By: Leonard,Passmore