January 12, 1989 

Honorable Mike Driscoll 

Harris County Attorney 

1001 Preston, Suite 634 

Houston, Texas 77002 

OpiniOn No. JM-1006 

Re: Whether a county judge 

may simultaneously serve as 

a member of the board of 

directors of a corporation 

which does business with the 

county, and related questions 

(RQ-1506) 

Dear Mr, Driscoll: 

You ask the following questions regarding possible 

conflicts of interest of a county judge: 

In 

May a county judge [of Harris County] 

serve simultaneously as county judge and as a 

member of the Board of Directors of a private 

corporation which contracts or does business 

with Harris County, the Harris County Flood 

Control District and/or the Harris County 

Hospital District? 

Whether the county judge should file an 

affidavit of substantial interest regarding 

agenda items relating to his wife's employer, 

the City of Houston? 

answer to your first question,. it is our opinion 

that the activity you describe creates a conflict of 

interest contrary to public policy. Inasmuch as we have 

been informed by letter dated September 28, 1988, from the 

county judge that effective September 15, 1988, his wife has 

left her employment with the city, we find it unnecessary to 

address your second question. 

You state that the current county judge in Harris 

County was first elected to that position in 1975. In 

1988 he was elected to the board -of directors of Houston 

Industries, Inc. (HII), and consequently also serves on the 

board of directors of Houston Lighting and Power (HL&P), a 

p. 5173. 
Honorable Mike.Driscoll - Page 2 (JM-1006) 

wholly owned subsidiary of HII. In addition to HLLP, HI1 

is also the parent company of Utility Fuels, Inc.~ (coal 

supplier), Primary Fuels (oil and gas exploration), Innovative Controls, Inc. (outside lighting manufacturer), XBL 

Communications, Inc. (cable television supplier), and 

Houston Industries Finance, Inc. (purchaser of HL&P delinquent bills). 

Since his election to the board of directors, the judge 

has sold his stock in the company and has filed many 

naffidavits of substantial interest n disclosing his position 

with the companies. In his capacity as county judge, he has 

recused himself on many votes taken at county commissioners 

court meetings relating to business between the county and 

the companies.. The judge has also filed a letter with the 

corporation waiving "any and all present or future compensationiu including expense reimbursement during the time he 

serves both on the corporation boards and as a county judge. 

As detailed in your brief, there are frequent interactions between HLhP and the county. YOU state, "HL&P 

constructs, uses and maintains its lines and facilities on, 

over, and across virtually every Harris County road rightof-way." We need not recount the many types of interactions 

between the county and the company, but they include the 

county's payment of bills for electrical service: the 

acquisition of easements by both parties; the construction, 

relocation, repair, and maintenance of both roads and power 

lines; and the county's use of HL&P's light poles for 

traffic signals. 

In addition to his position on the HL&P board of 

directors, the county judge sits on the board of directors 

of a nonprofit corporation established to treat indigent and 

paying AIDS patients in the county. The county judge has 

informed us by letter, dated September 28, 1988, that' he 

will not receive any compensation for his services on the 

board of directors of the nonprofit corporation. In that 

same letter, the county judge poses the possibility that the 

county may contract with the nonprofit corporation, while 

you anticipate that the hospital district may contract with 

the corporation for the care of indigent AIDS patients in 

the county. We will respond to both possibilities. 

Public policy has long prohibited public officers from 

holding other positions, executing contracts, or engaging in 

private activities that conflict with their public duties. 

That policy has been engrafted in the Texas Constitution 

p. 5174 
Honorable Mike Driscoll - Page 3 (JM-1006) 

and statutes. See. e.cr., Tex. Const. art. III, gg 18, 22; 

V.T.C.S. art. 6252-933: Local Gov't Code, ch. 171, 5 81.002. 

The leading Texas case in this area of law is Mevers v. 

Walker, 276 S.W. 305 (Tex. Civ. App. - Eastland 1925, no 

writ). Although that case involved city officials who had a 

pecuniary interest in a contract, the court's restatement of 

the public policy behind such prohibitions is instructive to 

our current inquiry. The court said: 

These safeguards in letting 

not provided with the thought 

official was corrupt, but 

expenditure of public money, __. --_ 

contracts were 

that the public 

that, in the 

the strictest 

regulrement snoulc be followed. our rawmakers were wise in trying, not only to 

remove temptation, but to place the public 

official even above the suspicion of wrongdoing. The idea of keeping the public in the 

confidence of the official would bring cooperation and loyalty in the administration 

of government and enforcement of law, and 

these principles underlie the security of our 

government. 

Mevers v. Walker, suvra, at 307. 

That case was grounded in the common law prohibition on 

public officers' conflict of interest. However, in 1983 the 

legislature adopted a mechanism whereby a local public 

officer could hold an interest in a business entity, declare 

that interest, and recuse himself on matters concerning that 

business entity: thus allowing the remainder of the governing body to vote on and conduct business with that entity. 

Lot. Gov't Code, ch. 171. It has been suggested that 

chapter 171 allows the county judge to sit on the board of 

directors and recuse himself on county matters pertaining to 

the corporation. However, that chapter applies only when a 

local public official has a "substantial interest" in a 

business entity or real property, and l'substantial interest" 

is defined in exclusively financial and -familial terms. 

Lot. Gov!t Code § 171.002. The fact that the county judge 

has waived all compensation for his services to the corporation removes him from the purview of chapter 171. 

Section 81.002 of the Local Government Code requires 

that prior to undertaking the duties of office, county 

judges and county commissioners take an oath that they will 

not be directly or indirectly interested in any contract 

p. 5175 
Honorable Mike Driscoll - Page 4 (JM-1006) 

with or claim against the county, except as expressly 

authorized by law. It was that oath that provided the basis 

for the holding in another case where a county officer had 

no apparent interest in a questioned contract. Dexa Coun y 

v.Wentworth 378 S.W.2d 126 (Tex. Civ. App. - San rAntonio 

1964, writ r;f'd n.r.e.), involved a county commissioner who 

had contracted with a voting machine company to be its sole 

representative and salesman in the state except in his own 

county and would receive a commission on every machine sold 

in the state, except those sold to his own county. A 

taxpayer in the county brought suit to enjoin the sale of 

that company's voting machines to the county. The court 

said that the record was undisputed that the commissioner 

would receive no money from the sale of the machines to his 

county. In affirming the trial courtts grant of the 

injunction, the court said: 

[The commissioner] is obligated to give his 

best efforts to the carrying out of his 

appointment, and to render such services in 

connection therewith as may be reasonable and 

necessary. 

. . . . 

Under all of the circumstances, it is 

presumed that Ploch was not in a position to 

give to Bexar County his undivided loyalty 

and support in seeing to it that Bexar County 

got the very best deal possible in the 

purchase of 100 new voting machines, when he 

was at the same time obligated to use his 

best efforts to promote and exploit the sale 

of Shoup voting machines throughout the 

State, except in Bexar County. The fact that 

he was not to receive any money from such a 

sale in Bexar County would not prevent him 

from having an indirect interest in promoting 

and exploiting Shoup voting machines elsewhere in the State by a sale in Bexar County. 

Bexar Countv v. Wentworth, SYEIg, at 129. 

In that case, as in this inquiry, the ultimate interest 

of the county officer is unknown, and, superficially, his 

actions appear to be within the letter of the law. The 

county judge in the current instance is a director of a 

corporation and as such has a considerably larger interest 

in the private company than had the voting machine salesman. 

p. 5176 
Honorable Mike Driscoll - Page 5 (JM-1006) 

It is well. established in Texas law that an individual who 

sits on the board of directors of a corporation owes to that 

corporation the exacting duty of a fiduciary. E.q., State 

Hankina Bd. v. Vallev Nat'1 Ban&, 604 S.W.Zd 415 (Tex. Civ. 

APP. - Austin 1980, writ ref'd n.r.e.); Canion v. Texas 

Cvcle Suu~lv. Inc., 537 S.W.2d 510 (Tex. Civ. App. - Austin 

1976, writ ref'd n.r.e.): mtv-Universal Insurance Co. v. 

Maxwell, 101 S.W.2d 606 (Tex. Civ. App. - Austin 1937, writ 

dism'd). 

We believe the logic of the court in the 8exar County 

case extends to the question before us. The county judge of 

Harris County is not in a position to give to Harris County 

his undivided loyalty and support, when he is at the same 

time obligated to exercise the care of a fiduciary on behalf 

of the corporation. We conclude that public policy prohibits a county judge from sitting on the board of directors 

of a corporation that does business with that county. 

Our conclusion is buttressed by the public policy 

prohibition of dual agency. In Scott v. Kelso, 130 S.W. 610 

(Tex. Civ. App. 1910) the court opined: 

In all cases the principal is entitled to 

the best effort and unbiased judgment of his 

agent, and the law, for reasons founded in 

public policy, forbids the agent's assumption 

of a relation which affords temptations 

antagonistic to his duty. 

Scott v. Kelso, sunra, at 611. 

In Attorney General Opinion O-2929 (1942), this office 

relied on the quoted language to find that state employees 

had effectively resigned their public employment when they 

took positions in the private sector that were in direct 

competition with their public employment. Again in Attorney 

General Opinion H-1309 (1978), this office said "public 

policy severely limits the ability of a public entity to 

contract with a private entity when the same persons serve 

in management positions on both. Thus, while one person 

technically may serve in both capacities, the conflicts of 

interest thereby raised will often prevent him from acting 

in both capacities as a practical matter." Id. at 2. 

The same public policy applies to business dealings 

between the Harris County Flood Control District and HL&P or 

HII, and our conclusion is the same. The Harris County 

Flood Control District was created under Acts 1937 of the 

p. 5177 
Honorable Mike Driscoll - Page 6 (JM-1006) 

45th Legislature, chapter 360, at 714. Section 1 of that 

act establishes the district as wa governmental agency and 

body politic and corporatew and designates the commissioners 

court of Harris County as the governing body of the 

district. The county judge is still subjected to the same 

divided loyalty whether he is sitting as a member of the 

commissioners court or on the governing body of the flood 

control district. 

We reach the same conclusion in regard to contracts or 

other business dealings between the county and the nonprofit 

corporation established to treat AIDS patients. The fact 

that the corporation was established not for profit does not 

a'ffect the public policy considerations: the county judge 

has a fiduciary duty to the corporation, and there is no 

less opportunity for his public duty to conflict with his 

private interest. See. e a. 

JM-884 (1988): H-1309 (1978)' 

Attorney General 

; i-714 

Opinions 

(1970). In fact, we can 

hypothesize that his conflict may be greater in the case of 

a corporation in whose beneficial goals the public official 

strongly believes. 

The same considerations do not apply, however, to 

contracts between the AIDS corporation and the Hospital 

District. 

The Harris County Hospital District was established 

pursuant to article 4494n, V.T.C.S. The commissioners court 

appoints the board of managers of the district. V.T.C.S. 

art. 4494n, g 5B. The commissioners court must also approve 

the district's budget, & 5 8, and all contracts of the 

district. &L 5 5b. The commissioners court may prescribe 

purchasing and accounting practices of the district. Id. 

§ 6. 

Although, under the statute, the county commissioners 

court retains some responsibilities in regard to the 

hospital district, the district is a separate political 

subdivision of the state. Bexar Countv HOSD. Dist. v. 

Crosby, 327 S.W.2d 445 (Tex. 1959); Attorney General Opinion 

WW-886 (1960) . 

The commissioners court does not act as the governing 

body of the hospital district, which, under the facts 

presented, may have a continuing contractual relationship 

with the nonprofit corporation. We believe that a court 

would not, as a matter of law, find that a business transaction between the hospital district and the nonprofit 

corporation is invalid simply because of the county 'judgets 

p. 5178 
Honorable Mike Driscoll - Page 7 (JM-1006) 

L 

interest in the corporation. However, we also believe that 

should such a contract be questioned in a court of law, 

the court would examine it with the strict scrutiny to 

which transactions between corporations with interlocking 

directorships are subjected. m United Towina Co. v. 

PhilliDS, 242 F.2d 627 (5th cir.), cert. denied, 78 S.Ct. 

93 (1957); Stat 

S.W.2d 415 (Texe 

Bankina Bd. v. Vallev Nat'1 Bank, 604 

Civ. APP. - Austin 1980, writ ref'd 

n.r.e.). 

SUMMARY 

Public policy prohibits a county judge 

from simultaneously serving on the board of 

directors of a corporation that does business 

with the county, even where the county judge 

receives no compensation from the corporation. 

A county hospital district may contract or do 

business with a corporation on whose board of 

directors a county judge serves. 

Very truly you J 

JIM 

i-m 

MATTOX 

IAttorney General of Texas 

MARYKELLER 

First Assistant Attorney General 

MU MCCREARY 

Executive Assistant Attorney General 

JUDGE ZOLLIE STEAKLEY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Karen C. Gladney 

Assistant Attorney General 

p. 5179