                             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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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




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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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