## THEATIYORNEYGENERAL

WILL W-N A-l-l-0-cIwII&RAI. 

## OF ?rExAs

AUSTIN 11, TEXAS
June 26, is362

HonorableJ. W. Commisrionerof Texas Eduoation Austin, Texas ,:
Dear Dr. Edgar: Edgar Eduoation Agenoy Opinion No. WW- 1362

Rer Legality of purchasing bulk gaeollneby echo01 dlatrlcts from companies whose .consignees are members of the school board, an& related questions.
Your recent mXpe8t for an OPlnlOn on the above subjeot matter reads in part aa .follow#:

“Recently sohool districtsof this rtatr have requested this Agenoy to obtain an opinion from the Offloe of Attorney General oonoernlng oontractlng,for

bulk garollne and for eerviolng :ofsohool owned vehloles when one or more of lte sohool board member8 are oonslgneerfor 011 oompanles. The rituationaare generally outlined in the following questions:
“I. May a rchool distriot ‘legallyconttiot by negotiationor sealed bid proo&dure, ?or bulk ga8ollne needs of the dirtriotwith X or Y 011 companieswhere 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 servicedbo looal dlatrlbutors. "2. May a sohdol district legally oontraot, by negotiationor 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 .obmmlssion basis by the parent company and responsible to Borne

extent to the looal consigneeof the company. The consignee Is a member of the dlstrict echo01 board. The company Is the actual

.c-r. J. w. Edgar, page 2 W-1362)

owner of the station.
"In the first situationmentioned,, It may be significantthat the home offloe of the gasoline firm makes the quotationConcerning the price of the gasoline. Consignee is not Involved in arriving ate the price.
"In the second situation,it may be of slgnlfioancethat very little material or product Is Involved In vehicle servicing. The majors

cost 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 additionalInformationas purposes of this opinion." may be needed for
During a telephoneconversation with this office on June 7, 1962, Mr. McFarlane stated to us that the 011 company consignees

who also serve as members of the dlatrlot sohool board would receive a commlssionin contraat situationNo. 1, If one of their respectivecompanieswere awarded the contract. ,Also;Mr. McFarlane stated that In contract situationNo. 2, the oonslgneewho supplies 011 products to.th&retail service stationwould reoeive a sales commieslonon produots supplied to the service station,

The sale of gasoline or other supplies to a school districtby a person who Is also a trustee of the school distsact Is void as $agalnst public policy. Attorney Qeneral's Oplnlons O-078 19 9 , !nl:%d”;:%~g O ’

t 21 0-1014 19 9)

and v-6 3 fi 9 o-1589 (ig3g), 0-2306 l&), copies of which are Thle conclusionlg based on the principle of law that contdcts in whlah the offloialwho made them may have a personal interest,and oontraotsgiving an officiala personal ln,terest in any officialact to be done by him, are contrary to publSo polloy and void.

The fact’thatno school district trustee acts lndlvlduallyas a oontraotingparty in either oontraot situation No. 1 or No. 2, Is immaterial...

*From Dillon on Munlcl Volume 2, pages 1140, 1143 to 11 5, fi al Corporations,zth Edition, and 1146 to 11 7, we quote^

.

Dr. J. W. Edgar, page 3 (w-1362)

>j

as follows:

"It Is a well-established and salutary doctrine that he who Is Intrustedwith the business of others cannot be allowed to make such business an object of pecuniaryprofit 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 principlesof reason, of morality,and of public policy. It has Its foundation In the very constitutionof our nature, for It has authoritatively been declared that a man cannot serve two masters, and Is recognized and enforcedwherever a well-regu.latedsystem.of jurisprudence prevails.

. . . "At common law and generally under statutory enactment, It Is now established beyond question that a contra& made by an officer of a munlclpallty with himself, or In which he Is Interested,Is contrary to public policy and,talntedwith 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 lntereuteddid not participatein the proceedings,necessarily relle,ves

the contract from its vloe. The fact that the Interest of the offendingofficer 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 Commissionof 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 

# IDr. 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 respectivecompaniesand no relationshipto the schoolboard Is given other than the fact that one,

or more of the trusteesof the schoolboard are consigneesof the rival companies. However, Mr. McFarlandhas stated that the consigneeor wholesalerwhose company Is awarded the contract for gasolinewill receive a commlsslonbased on the total volume of gasoline specifiedIn the contract. The trustee of the school districtwho Is also the consigneeof the company receiving the contractwould consequently have a pecuniary Interest In the contractwith the school district. You are thereforeadvised 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 consignee or wholesalerwho supplies this service station Is also a member of the district school board. Althoughyou state that the servicingof schoolvehicleswill not Involve the use of a significantamount'of 011 products,neverthelessthe proper servicingof these vehicleswill ~ecessarllyrequire some use of such products. As stated previously,the consignee who ~supplles

this retail outlet with 011 productswould receive a sales commlsslonfrom the consignorcompany. In this situation the trustee of the school dlstrlotwho supplies this station In the business capacity of an oil oompany consigneewould have a pecuniary Interest In the contractwith the schools district. You are ,therefore advised that such codtractwould be void as against public policy;

SUMMARY
A contract for the plrohase of bulk gasoline with an oil company'whoseconsigneeIs a member of.the district school board would be void as against public policy, because such consigneewould receive a oommlsslonon the basis of the volume of gasoline specified In the contract.
A contract for servicingschool district vehicles with a service stationwhich Is suppliedby 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 capacityas a consigneewould_ . .

Dr. J. W. Edgar, page 5 (~~-1362)

receive a sales oommlsslonon products supplied to the service station. Very truly youra),
WILL WILSON Attorney General of T&xas

By: AL 6iap#.& &ia!.+ I. Raymond Wllllams, Jr. Assistant 1RW:mkh APPROVED: OPINION COMMITTEE
W. V. Geppert, Chairman Pat Bailey Coleman Gay Bob Patterson REVIEWEDFORTHEA'M'ORNEYOENERAL By: Leonard,

Passmore