Honorable Bevington Reed Opinion No. M-751 Coordinating Board Texas College and Re: May Odessa College conUniversity System tract with aprivate corpoP. 0. Box 12788, Capitol Station ration, where amember Austin, Texas 78711 ofits Board of Regents is aminority stockholder and President of such corporation, where the benefits derived from such contract are placed in a scholarship Dear Dr. Reed: fund?

Your request for anopinion presents the following facts:

“In approximately 1952, Del-Tex, Inc. placed vending machines on the campus of Odessa College. These machines were placed there with the permission of the College Administration.

“The College requested, and Del-Tex, Inc. paid, 30% ofthe gross for cold drinks and 10%ofthe gross for candy and coffee sold into the General Fund of Odessa College.

“There was nowritten contract entered into at that time, and there has been no subsequent written contract entered into.

“In the early 1960’s, Del-Tex, Inc. no longer operated the vending machines, but the operation of Del-Tex was taken over by West Texas Vending, Inc. , which is partly owned by Del-Tex, Inc.

“In 1960, the Board of Regents of Odessa College directed
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the Business Managrr of the College to deposit all sums received from the vending company into the Odessa College General Scholarship Fund rather than depositing it into the General Fund ofthe College. The administration ofthe College awards scholarship funds to worthy students from the proceeds it receives from the vending machine company.

“In 1967, the President of Del-Tex, Inc., who owns no stock in Del-Tex, and receives nobonus from any sales made by Del-Tex, became amember of the Board of Regents. This same regent is President ofWest Texas Vending, Inc., and owns about 20%of the stock.

“There are at this time three other vending machine companies which have vending machines on the campus of Odessa College. The companies owning the vending machines pay apercentage oftheir gross receipts into the same scholarship fund. None ofthe vending machine companies have written contracts, and it is the understanding between all ofthe vending machine companies and the College that they can be asked to take their machines from the campus at any time, or they may voluntarily take the machines from the campus atany time.

“There is no restriction on the number ofvending machine companies which are allowed tohave machines on the campus. Any vending machine company can place machines on the campus merely by obtaining permission ofthe administration. Itwould be expected, however, that any vending machine company desiring to place vending machines on the campus would be required to pay apercentage afthe proceeds into the Scholarship Fund. ” From the above stated set offacts we must determine ifthis is a contract entered into by Odessa Junior College, acting by and through its
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Board of Rcagcnts and West Texas Vending Machine Corrpany; and if so, would such contract be inviolation ofthe public policy by reason ofa member ofthe Board of Regents being aminority stockholder (20%) and President of West Texas Vending Machine Company.

Even though the proceeds derived from the vending machines are used for aworthy purpose (Scholarship Fund), the Board of Regents has control of such funds as indicated inthe facts submitted.

It appears from the facts submitted that there is an express oral contract between Odessa College and West Texas Vending Machine Company in view ofthe fact that the college has authorized the vending machine companies toplace their vending machines in the college buildings or on campus, for which locations the college receives 30%ofthe gross on cold drinks and 10%ofthe gross on candy and coffee from the vending machine companies.

Black Law Dictionary, 4th Edition, defines an express contract as follows:

“An express contract is an actual agreement ofthe parties, the terms ofwhich are openly uttered in distinct and explicit language, either orally or in writing. 2Bl. Comm. 443 and other authorities cited. ” From the cases cited, it is clear that amember of the Board of Regents is apublic official. Inthe case ofSchurz v. Telfer, 74S.W. 2d 327 (Tex. Civ. App. 1934, nowrit) the Court held that aschool trustee of acounty common school district was acounty officer. Also see Buchanan v. Graham, 81S.W. 1237, 1239, (Ct. ofApp. 1904).

The Legislature has not defined conflict of interest in the context ofthe facts presented. However, in Attorney General’s Opinion No. O-1589 (1939) this office held:

“It is well settled in Texas that if apublic official directly or indirectly has apecuniary interest in a contract, nomatter how honest he may be, and although he may not be influenced by the interest, such

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These authorities are determinative ofour answer. This office has heretofore so considered this principle oflaw inAttorney General Opinion No. M-625 (1970). See also 43Am. Jur. 107, Public Officers, Sec. 300, and cases cited. Until the Legislature sees fit to modify this common law principle, which Texas has adopted, acourt is without authority to uphold the contract before us. SUMMARY Odessa College cannot lawfully enter into a contract with avending machine company where a member of its Board of Regents is the President and a stockholder ofthe vending machine company, since this would be inviolation ofthe public policy ofthe State ofTexas forbidding public officials who have a pecuniary interest in acontract from contracting with entities inwhich they have apecuniary interest. Yours very truly,

Prepared by John H. Banks Assistant Attorney General APPROVED: OPINION COMMITTEE Kerns Taylor, Chairman W.E. All-n, Co-Chairman John Reese Dick Chote Harriet Burke Ed Esquivel
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Meade F. Griffin Staff Legal Assistant Alfred Walker Executive Assistant Nola White First Assistant

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