             TIHIEAITORNEYGENERAI~
                      OF' TEXAS
                          AUSTIN.     TgxAs         78711




                                 July 1.     1975


The Honorable Patrick C. Batchelor                   Opinion   No.   H-   638
Criminal District Attorney
Navar ro County                                      Re:   May a person elected city
Corsicana.  Texas  75110                             commissioner     remain pecuniarily
                                                     interested  in a contract previously
                                                     entered into with the city whereby
                                                     the city sells water to him for re-
                                                     sale to rural customers?

Dear Mr.   Batchelor:

       You have requested our opinion regarding whether an officer of a city
may purchase water from the city for further distribution to rural clients
when the contract involved was entered into before he took office.

        Article  373 of the former Penal Code was repealed by Acts 1973, 63rd
Wit.,  ch.  399,  p. 991, § 3(a), eff. .January 1, 1974. We presume your question
concerns a fact situation which arose prior to the effective date of the repeal.

       Article   373 provided    in part:

                 If any officer of any county, or of any city or town
                 . . . shall become interested  . . . in the purchase
                 or sale of anything made for o’r on account of such
                 county, city or town, . . , he shall be fined not less
                 than fifty nor more than five hundred dollars.

        The penal code article,   prior to its repeal,   was long complemented   by
a civil statute, article 988, V. T. C. S . , which ,remains in effect. Article 988
reads in part:

                 No member of the city council,        or any 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,   nor be the surety of any peraon having a con-
                 tract, work or business with said city, for the performance
                 of which security may be required,          nor be the surety on the
                 official bond of any city officer.




                                      p.    2807
The Honorable     Patrick   C.   Batchelor     - Page 2   (H-638)




           Both statutes were discussed by the court         in City   of Edinburg    v.   Ellis,
59 S. W.    Zd 99, 100 (Tex. Comm.    1933):

                    It is the~getieral, iule that,municipal..coritracts     in
              which office’+8 or kmployeis       of tlie: city have a personal
              interest are void . . . This rule is held to apply to mem-
              bers of the city council.      It has long been the public policy,
              of the state to prohibit officers     of a city from having a pei-
              sonal pecuniary, interest in contracts with the city and.this
              policy is specifically     &pressed     in both the penal and civil
              statutes.   See article 373, Penal Code, and article 988, R.
              C. S. 1925.    Article   373 provides that if an officer of,a city
              or town shall become in any manner pecuniarily            interested
              in any contracts made by such city or town, or shall be-
              come interested     in the purchase or sale of anything made
              for or on account of such city or town, he shall be subject
              to a fine.   Article 988 also provides that no member of the
              city council or any other officer of a corporation          shall be
              directly or indirectly     interested in any contract,     considera-
              tion of which is paid from the city treasury.

                    The foregoing rule rests upon sound public policy.      Its
              object is to insure to the.city strict fidelity upon the part of
              those who represent    it and manage its affairs.   The rule
              prohibiting public officers from being interested    in public con-
              tracts should be scrupulously    enforced.

         A public official must avoid a position where his private pecuniary in-
terest might conflict with his public duty.   In explaining why a cotipty judge could
not receive payment for acting as attor+y,,for    the county to enforce a contract
and collect indebtedness’ due,     the Supreme Court of Texas observed       in Ehlinger
v. Clark, 8 S. W. 2d 666,674    (Tex. Sup. 1928), that the county judge, as a member
of the commissioners     court was charged with insisting that contractors     with the
county properly perform their contracts,     and “if, after an attorney was employed,
it should be found that the attorney was not performing     his duties in a competent or
faithful manner,  it would become the duty of the commissioner,@’      court, presided
over by the county judge, to relieve such attorney of his duty and employ another. ”

         Similarly, in the situation your office has described,   it could become the
duty of the city commission     to demand that the person contracting with the city
(the city commissioner)     perform his contractual  obligations to the city in a manner
other than he was willing or able to do.    In such an event the involved commissioner
could find his private pecuniary interests and his public duty to be in conflict.    Or
his attitude toward the water policy of the city could be affected by his peculiar
personal pecuniary    interest.




                                      p;     2808
The Honorable     Patrick   C.   Batchelor.      -,.Page    3   (H-638)



           The court in Meyers v. Walker,           276 S. W. 305 (Tex. Civ. App. --
Eastland 1925, no writ) applied the predecessors               of the foregoing  statutes
to a contract of the City of Lamesa,            and in doing so observed that contracts
in their nature calculated to influence the actions of public officers             - and the
effect of which is to influence them one way or the other - are against public
policy.      We believe article 988, V. T. C. S., condemns such pecuniary influences
and interests whether they arise from contracts which were originally                  valid but
have become the source of potential conflict,             or arise from those which were in-
valid in their inception because of an existing potential conflict.             The pernicious
effect is the same.         As noted in Delta Electr%        Construction  Co. V. City of San
Antonio, 437 S. W. 2d 602, 609 (Tex. Civ. App. -- San Antonio 1969, writ ref.,
 n. r. e. 7 . llriti is the existence of such interest which is decisive and not the
actual effect or influence,        if any, .of the ‘interest        . “See Knippa v.
Iron Works,         66 S. W. 322 (Tex. Civ. App. 1902, no writ); Bexar County v. H
        .    . 2d 126 (Tex.    Civ.App.    -- San Antonio 1964, wirt ref’d.      n,

        Former    penal code article 373 spoke prospectively:     “If any officer . . .
shall become . . . interested    . . . “Article 988, V. T. C. S., speaks in the present.
“No members.     . . shall be directly or indirectly interested.    . . . ” The first is
to be strictly construed as    penal statute while a rule of liberal constuction will
be applied to the second in order to effect its remedial purpose.       Attorney  General
Opinion M-714 (1970).

        Because the contract arose prior to the election of the’city commissioner,
we do not believe former’article   373 would be applicable to the situation described,
but in our opinion, the continued pecuniary    interest of the commissioner   in the
contract after he took office would bring the matter within the proscription    of
article 988, V. T. C. S. --And see V. T. C.S.,  articles 5973, 5974;Penal   Code $ 39. 01.

                                   SUMMARY

                 It is a violation of article 988, V. T. C. S., but not
                 former penal code article 373, for a person elected
                 city commissioner     to remain pecuniarily   ‘interested
                 in a contract previously    entered into by him with the
                 city whereby the city sells water to him ,for resale
                 to rural customers.

                                                       Very      truly yours,
                                                       A




                                                           Attorney   General   of Texas




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The Honoiable   Patrick   C.   Batchelor   - Page 4     (H-638)




Opinion   Committee

jad




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