# TIHIEAITORNEYGENERAI~ OF'TEXAS 

### AUSTIN. TgxAs 78711

July 1. 1975
The Honorable Patrick C. Batchelor Criminal District Attorney Navar ro County Corsicana. Texas 75110 Opinion No. H- 638 Re: May aperson elected city commissioner remain pecuniarily interested ina contract previously entered into with the city whereby the city sells water tohim for resale to rural customers? Dear Mr. Batchelor:

You have requested our opinion regarding whether an officer ofa 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Article 373 ofthe former Penal Code was repealed by Acts 1973, 63rd Wit., ch. 399, p. 991, §3(a), eff.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 afact situation which arose prior to the effective date ofthe repeal.

Article 373 provided inpart:

Ifany officer ofany county, or of any city or town

. . . shall become interested
. . . inthe purchase or sale of anything made for o’ron 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 inpart: No member ofthe 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 ofwhich is paid from the city treasury, or by an assessment levied by an ordinance or resolution ofthe city council, nor be the surety of any peraon having a contract, work or business with said city, for the performance ofwhich security may be required, nor be the surety onthe official bond ofany city officer.

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

Both statutes were discussed by the court in City of Edinburg v. Ellis, 59S.W. Zd99, 100 (Tex. Comm. 1933): Itis the~getieral, iule that,municipal..coritracts in which office’+8 or kmployeis oftlie:city have apersonal interest are void
. . . This rule is held to apply tomembers ofthe city council. Ithas long been the public policy, ofthe state toprohibit officers of a city from having a peisonal pecuniary, interest in contracts with the city and.this policy is specifically &pressed inboth the penal and civil statutes. See article 373, Penal Code, and article 988, R. C.S. 1925. Article 373 provides that ifan officer of,a city or town shall become inany manner pecuniarily interested in any contracts made by such city or town, or shall become interested inthe purchase or sale of anything made for or on account of such city or town, he shall be subject to afine. Article 988 also provides that no member ofthe city council or any other officer of a corporation shall be directly or indirectly interested in any contract, consideration ofwhich 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 inpublic contracts should be scrupulously enforced. A public official must avoid aposition where his private pecuniary interest 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 ofTexas observed in Ehlinger v. Clark, 8S.W. 2d 666,674 (Tex. Sup. 1928), that the county judge, as a member ofthe 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, itwould become the duty ofthe commissioner,@’ court, presided over by the county judge, to relieve such attorney ofhis duty and employ another. ”

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

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

The court inMeyers v. Walker, 276 S.W. 305 (Tex. Civ. App. -- Eastland 1925, nowrit) applied the predecessors ofthe foregoing statutes to a contract ofthe City ofLamesa, and in doing so observed that contracts intheir nature calculated to influence the actions ofpublic officers - and the effect ofwhich 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 ofpotential conflict, or arise from those which were invalid intheir inception because of an existing potential conflict. The pernicious effect is the same. As noted inDelta Electr% Construction Co. V. City ofSan Antonio, 437 S.W. 2d 602, 609 (Tex. Civ. App. -- San Antonio 1969, writ ref.,

7 llriti is the existence of such interest which is decisive and not the n.r. e. . actual effect or influence, ifany, .ofthe ‘interest
. “See Knippa v. Iron Works, 66 S.W. 322 (Tex. Civ. App. 1902, nowrit); 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 inthe present. “No members.
. . shall be directly or indirectly interested.
. . .” The first is tobe strictly construed as penal statute while a rule ofliberal constuction will be applied to the second inorder to effect its remedial purpose. Attorney General Opinion M-714 (1970).

Because the contract arose prior to the election ofthe’city commissioner, we donotbelieve former’article 373 would be applicable to the situation described, but inour opinion, the continued pecuniary interest ofthe commissioner inthe 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 Itis aviolation 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

p. 2809The Honoiable Patrick C. Batchelor - Page 4 (H-638)

Opinion Committee jad

p, 2810