JIM MAl-fOX 

Attorney General 

Supreme Court Building 

P. 0. Sax 12548 

AUstln. TX. 78711.2S4S 

512/4752501 

Telex 910/874-1287 

Telecopier 512/47502SS 

714 Jackson, Suits 700 

Dallas. TX. 75202.4508 

214”42-8944 

4824 Albma Ave.. Suite lS0 

El Paso. TX. 799052793 

915l533.34B4 

11 Texas, Suite 7W 

~ston. TX. 77002.3111 

713r223aSea 

5% Broadway, Suite 312 

Lubbock. TX. 79401~3479 

8081747-5238 

4349 N. Tenth. Suite B 

McAllen, TX. 7SSOl~lSSS 

5121882-4547 

MO Main Plaza. Suite 400 

San Antonlo. TX. 782052797 

512/2254191 

An Equal OpportunityI 

Affirmative Actlon Employer 

The Attorney General of Texas 

June 18, 1984 

Honorable Michael J. Siamang Opinion No. ~~-171 

Lee County Attorney 

P. 0. Box 236 Re: Whether a member 

._ 

of a city 

Giddlngs. Texas 78942 council may be employed by a 

corporation doing business with 

the city 

Dear Mr. Simang: 

You ask whether a member of the Giddings city council may 

continue to serve on the council while he is employed by a corporation 

that does business with the city. We conclude that there is no legal 

impediment to his serving, but that the contract entered into between 

the city and the general contractor would be void as contravening 

public policy. 

You inform us that a member of the Giddings city council is also 

the vice-president of a local corporation which sells, repairs, and 

maintains air conditioning units. lie receives a salary from the 

corporation and participates in its profit sharing program, but he 

owns no stock in the corporation. The corporation was employed as a 

subcontractor by a corporation which was itself employed by the city 

as the general contractor in the construction of the new Giddlngs city 

jail.. The corporation’s employment and the awarding of the general 

contract to the general contractor were based upon competitive bids. 

You state that the council member has received no direct financial 

benefit from this contract, although the corporation does perform 

maintenance work on the units installed In accordance with warranties 

given with the units. The council member himself has performed no 

work on any of the units involved, and there is no maintenance 

contract for the units between the city and the corporation. Giddings 

became a home-rule city effective January 1, 1982. The council member 

who is the subject of this request assumed office In April, 1982. The 

city council awarded the contract in July, 1982. 

Article 988, V.T.C.S., which prohibited, inter alia, a member of 

a city council from being “directly or indirectly interested in any 

work, business or contract . . .” the consideration for which is paid 

by city funds, was repealed and replaced by a new article 988b, 

V.T.C.S., effective January 1, 1984. The now-repealed article 988 

reached only general law cities. Woolridge v. Folsom, 564 S.W.2d 471 

(Tea. Civ. App. - Dallas 1978, no writ). The new statute reaches 

other political subdivisions including home rule cities, in addition 

p. 750 
Honorable Michael J. Sfsnaang - Page 2 (JM-171) 

to general law cities. Because the contract at Issue was entered into 

prior to the effective date of the new statute, we need not address 

whether, under the new statute, the contract would involve the council 

member in a conflict of interest. Rather, we must determine whether 

the contract violates public policy. We conclude that it does. 

We must first determine whether the council member would benefit 

If the city were to contract directly with the firm of which the 

council member is vice-president. If he would so benefit, we must 

then determine whether the fact that the firm was a sub-contractor 

rather than a general contractor, would effectively remove the council 

member from the reach of the conflict-of-interest prohibition. We 

first conclude that, in this instance, the council member would 

benefit sufficiently were the city to contract directly with the firm 

of which he is vice-president so ss to bring him within the ambit of 

the conflict-of-interest prohibition. 

The factual situation in the instant request is very much 

analogous to the one presented in Attorney General OpLnion R-916 

(1976). That opinion addressed whether a school district may contract 

with a paper company which employed a member of the district’s board 

of tmstees. The trustee worked for the company in a managerial 

capacity but owned no stock. Re entered into an agreement with his 

employer which provided that he would not receive any coaasission, 

bonus, or other remuneration based upon sales made by the company to 

the district, although he was paid a year-end bonus on the basis of 

other company sales. In concluding that entering into such a contract 

was Impermissible. this office declared: 

It is well established that, even in the 

absence of a statute, the public policy of the 

state prohibits transactions which involve a 

conflict of interest on the part of public 

officials . . . . 

Attorney General Opinion H-916 (1976). 

Attorney General Opinion R-916 then quotes language from a 

relevant Texas court opinion: 

If s public official directly or indirectly has 

a pecuniary interest in a contract, no matter how 

honest he may be, and although he may not be 

influenced by the interest, such a contract so 

made is violative of the spirit and letter of our 

law, and is against public policy. Meyers v. 

Walker, 276 S.W. 305, 307 (Tex. Civ. App. - 

Eastland 1925, no writ). 

If an employee of a corporation can be held to benefit when the 

company for which he is employed contracts with a political 

p. 751 
Honorable Michael J. Siamang - Page 3 (JM-171) 

subdivision, the governing body of which he is a member, then a 

fortiori an officer of such a corporation may be said to benefit. It 

caonot be disputed that, even if the council member received no direct 

compensation from the city’s cootrsct with the general contractor, he 

would certaiolv benefit at least iodirectlv when the firm of which he 

is vice-president prospers. As the court-declared in Delta Electric 

Construction Co. v. City of San Antonio, 437 S.W.2d 602. 609 (Ter. 

Civ. App. - San Antonio 1969, writ ref’d 0.r.e.). 

[i]t is the existence of such interest which is 

decisive and not the actual effect or influence, 

if any[.] of the interest . . . . 

See Beaar County v. Wentworth, 378 S.W.2d 126 (Tex. Civ. App. - San 

Antonio 1964, writ ref’d n.r.e.); Kolppa v. Stewart Iron Works, 66 

S.U. 322 (Tex. Civ. ADD. 1902. no writ): Attorney General Opinions 

MW-155, MI&124 (1980);’ MW-34 .(1979); B-734, R-849, H-638 (1975). 

Relying on Attorney General Opinion E-916 and the authorities cited 

above, we conclude that the conflict of interest prohibition is 

triggered when a member of the governing body of a political 

subdivision, in this instance a member of a city, council, is an 

officer or employee of a firm seeking to do business with that 

political subdivision. 

It has been suggested that. since the couocll member Is an 

officer of a sub-contractor, as opposed to the generalcontractor, his 

vote on such a contract affects only the general cootractor and oot 

the sub-contractor and that this effectively removes him from any 

conflict-of-interest prohibition. In Attorney General Opinion O-2306 

(1940), this office concluded that a trustee of a school district 

could receive compensation from a contractor performing a construction 

contract for the district g there was no agreement between the 

contractor and the trustee at the time when the district entered into 

the contract with the contractor. This office therein declared: 

Under the facts set out in your letter, we 

assume that the contractor is an independent 

contrsctor. This being tme, the will of the 

school board is represented only as to the result 

of the work and the contractor is left to 

determine the manner and means Involved in the 

performance of said contract. 

If, at the time the contract in question was 

let. there was oo egreement. express or implied, 

between the contractor and the school’trustee with 

reference to the employment in question, It would 

appear that the trustee in question has no such 

pecuniary interest in the contract as to make it 

void under the public policy doctrine. (Emphasis 

added). 

p. 752 
Honorable Michael J. Simmang - Page 4 (~~-171) 

Conversely, we conclude that if there were an agreement at the time 

the contrsct between the general contractor and the city wss let, 

whether express or implied, between the general cootractor and the 

firm for which the council member served as vice-president, as to the 

sale, repair, or maintenance of air conditioning units, the council 

member would have a pecuniary interest in the contract so as to make 

it void under the rule set out in City of Edinburg v. Ellis. 59 S.W.2d 

99 (Tex. Comm'n App. 1933.. holding approved). See Attorney General 

Opinions MW-155 (1980); MW-34 (1979). If, on theother hand, there 

were no agreement between the general contractor and the firm for 

which the couocll member served as vice-president at the time the 

contract between the general contractor and the city was let, the 

council member would not have a pecuniary interest in the contract. 

This is a factual determination which we are not empowered to make. 

You also ask whether the member of the council may continue to 

serve if there Is such s conflict. There is no provision in either 

constitutional. statutory, or case law which would provide for an 

automatic vacancy in the council position in the situation which you 

describe. If a vacancy is to be crested, it can only occur through 

resignation or removal from office as provided by law. 

SUMMARY 

A city council, may not contract with a general 

contrsctor which has previously contracted with a 

sub-contractor employing a member of the city 

council as an officer, if the firm employing the 

member acts as a subcontractor on the city job. 

The affected member of the city council does not 

automatically vacate his office in the event that 

the city council so contracts. 

JIM HATTOX 

Attorney General of Texas 

TOM GREEN 

First Assistant Attorney General 

DAVID R. RICRARDS 

Executive Assistant Attorney General 

Prepared by Jim Moellinger 

Assistant Attorney General 

p. 753 
Ronorable Michael J. Simmeng - Page 5 (JM-171) 

APPROVED: 

OPINION COMMITTEE 

Rick Gilpin, Chairman 

Jon Bible 

Colln Carl 

Sussn Garrison 

Jim Moellinger 

Nancy Sutton 

p. 754