The Honorable John E. Fitzgibbon Opinion NO. D-916 

County Attorney 

Webb County He: Whether a school 

P. 0. Box 577 district may contract with 

Laredo, Texas a company which employs a 

member of the school 

district's board of 

trustees. 

Dear Mr. Fitzgibbon: 

You have requested our opinion regarding whether a 

school district may contract with a'paper company which 

employs a member of the district's board of trustees. YOU 

state that the trustee works for the company in a managerial 

capacity but owns no stock. He has entered into an agreement 

with his employer that he will not receive any commission, 

bonus, or other remuneration based upon sales made by the 

company to the district, although he is paid a year-end 

bonus on the basis of other company sales. You inquire as 

to whether, in such circumstances, the school district may 

contract with the paper company. 

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: 

If a 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. Me ers v. Walker, 

276 S.W. 305, 307 (Tex. Z!ihpT -- Eastland 

1925, no writ). 

P- 3840 
The Honorable John E. Fitsgibbon - page 2 (H-916) 

See also City of Edinburq v. Ellis, 59 S.W.2d 99 (Tex. -- 

Comm'n App. 1933, holding approved). The principle of Meyers 

has long been held applicable to the members of a school 

district's board of trustees. Attorney General Opinions 

Nos. H-734 (19751, M-1236 (1972), WW-1362 (19621, O-2306 

(1940), O-1589 (1939), O-876 (1939). 

No Texas case or Attorney General Opinion has squarely 

determined, however, whether the principle applies to employees 

of a contractor, or whether it is limited to officers, directors, 

and substantial stockholders. In Attorney General Opinion 

o-2306, this office held that a school district trustee might 

receive compensation from a contractor for carpentry work 

performed by the contractor on a school district building, 

if at the time the contract was let, there was no agreement 

stween the contractor and the trustee as to the employment 

in question. On the other hand, this office stated in dicta 

in Attorney General Opinion M-1236 at 4, that "[wlhere the pecuniary 

interest of a public officer in a transaction is remote, as 

where . . . he is but a mere employee, rather than an 

officer or director . . . his interest is not one of such 

a degree that will render invalid the transaction in which 

his interest is involved." 

However, in Edward E. Gillen Co. 

183 N.W. 679, 68lm Kp. 1921), a RI 

sewerage commission was employed as the superintendent of 

a company which had contracted with the city. The 

Wisconsin Supreme Court held that, although the individual 

had no stock in the company and was not one of its officers, 

he had such an interest in the business and welfare of his 

company as would naturally tend to affect his judgment. If 

his company prospered, "his service and salary might be 

continued, and . . . he might be promoted." 

A California court has likewise held that a city councilman employed as a foreman of a company contracting with his 

city was sufficiently interested in the contract to render 

it void, if his interest was such "as would tend in any 

degree to influence him in making the contract . . . since 

upon the success of [the] business financially primarily 

depends the continued tenure of his position and the 

comoensation which he receives for oerformina the service 

required of him." 

Wheeler, 

Stockton Plumb& 6 suppl; Co. v. 

229 P. 1020, 1024 (Cal. Dist. Ct. App. 1924). 

Whenever the official's interest would "prevent him from 

exercising absolute loyalty and undivided allegiance to 

p. 3841 
The Honorable John E. Fitzgibbon - page 3 (H-916) 

the 

the 

best interest" of 

contract is void. 

the governmental entity he serves, 

Miller ;,,;;ty ofeMar;negeb~2 ;,:T 

519, 523 (Cal. Dist. Ct. App. 

& co. v. Moran, 293 P. 145, 146 (Cal. Gt.Ct. App.'1930). 

In PeoTe ex rel. 

me 

Pearsall v. Sperry, 145 N.E. 344, 345-46 

Sup.T9m the Supreme Court of Illinois, in holding 

that the employment of nine city council members by a 

company contracting with the city rendered the contract 

void, explained its rationale thus: 

They would be more than human if they 

could make the same fair and impartial 

contract with the contractor, as they 

could with another party with whom they had 

no relation by way of employment or otherwise. 

~n~~~~o~~~~~~p~~~~~~~i~~~~~~.:~27:92d 

; Byrne & Spee Csl Co. v. city of 

Louisville, 224 S.W. 883 CKy. Ct. App. 1920); contra, County 

~l;ur:aofs~yl~:.C~~pnryl~i5~lty of Grafton, 86 m24 

. 

It would appear, then, that the trend and weight of legal 

authority would oblige our Texas courts to hold that a 

school district should not contract with a company which 

employs a member of the district's board of trustees in a 

managerial capacity, even though the trustee d~erives no 

direct financial benefit from the contract. We do not 

address or question the language of Attorney General Opinion 

M-1236 (1972), which dealt with stock ownership. 

SUMMARY 

A school district should not contract with 

a company which employs a member of the 

district's board of trustees in a managerial 

capacity, even though the trustee derives 

no direct financial benefit from the contract. 

-Very truly yours, 

eneral of Texas 

P* 3842 
The Honorable John E. Fitzgibbon - page 4 (H-916) 

KENDALL, First Assistant 

Opinion Committee 

jwb 

p. 3843