The Attornely General of Texas 

November 14. 1985 

JIM MAlTOX 

Attorney General 

P. 0. Box 12s4a 

Austl,,, TX. 7011% 2548 

512l4~1 

Tdex 9101(1741337 

Tetw#ef 512i47502@ 

714 J8olmon. suite 700 

wlu,lx. 7si32-4506 

214l742-2244 

Honorable Benjamin :Euresti, Jr. 

Cameron County Attmuey 

974 E. Barrison Strfeet 

Brownsville. Texas 78520 

Opinion No. JN-379 

BE?: Whether a school trustee 

violates article 988b, V.T.C.S., 

by discussing with school board 

its lawsuit against a bank in 

which he owns, stpck 

Dear Mr. Eutesti: 

You have.reqwasted an Attorney General Opinion on the application 

4224 Alberta Ave., Suite 180 of conflict of intrrest law to a school trustee. Where a trustee of a 

EtP&m,lx7llw=m schoul district owts ware theu $16,000 5.n non-voting stock of a bank 

91- that is involved in litigation with the school district, and such 

trustee abstains from voting for or against any matter pertaining to 

1001 Texas, Mt. 700 such lttigeticm. but does discuss the litigation with members of the 

t+ouston. TX770024111 board of trustees. bas the trcstee nevertheless violated the law 

71- regaxdiug public o:Cficials and conflicts of interest? 

aaa snxcway, suite 312 

Lt##J& TX l94cl-3479 

ww747423a 

4302 N. Tenth, Suite 6 

MoAllen. TX. 1850%155.5 

512m824547 

Pou state the the trustee ouns 400 shares of non-voting stock in 

a local bank uader s Gogh individual retir-t plan. The shares are 

valued at.$16,000. The bank in question along with other local banks 

seed the city and the school district in 1980. challenging the 

property tax valuation of their stocks. The suit wes amended to 

challenge valuatians made in subsequent years. It was settled in 

October 1984. 

200 Matll Ptuo Suite 4w 

During the course of this litigation. the trustee was a shareaal Antonlo. TX. 7aM52797 

holder in one of 1:b.e plaintiff banks. He was not named plaintiff in 

512f2254191 

any of the proceed:Lngs, although ae a trustee he was named defendant. 

You state that it nppears that this trustee abstained from voting for 

or against any matter pertaining to the tax litigation, although he 

An Equd OwXtULunitY/ may have discussed this matter with other trustees. We assume that 

Aftlmutive Aotl~n Emtkw any such discussions were held in compliance with the Open Heetings 

Act, article 6252-17. V.T.C.S., and do not consider the conflict of 

interest implicat:~oas of discussions held in violation of that 

statute. 

Article 988b, V.T.C.S., is relevant to this question. -IlliS 

statute be- efEective January 1, 1984, and does not apply to 

couduct occurring before that date. Seem Attorney General Opinion 

J'M-171 (1984). Ccmiuct prior to the effective date of article 988b. 

9 

p. 1731 
Eowrable Benjamin Euresti, Jr. - Page 2 (JM-379) 

I 

‘ 

V.T.C.S.. wss governed by ~:oumm law conflict of interest doctrines. 

The con5on law, in essence, barrsd school districts from contracting 

with any entity ia which a Ixustee had a pecuniary interest, no matter 

how small. Attorney General ~pinio~s MU-342 (1981); E-916 (1976); 

iv. Ellis, 59 S.W.2d 99 (Tex. Comm'n App. 

Delta Electric Construction Company V. City 

of San Antonio, 437 S.W.fi-602 (Tex. Civ. App. - San Antonio 1969. 

writ ref'd n.r.e.); Bexar County v. Wentworth, 378 S.W.2d 126 (TAX. 

Civ. App. - saa Antonio 19g4, writ ref'd n.r.e.); Meyers v. Walker, 

276 S.W. 305 (Tex. Civ. 1qp. - Eastland 1925, no writ); Attorney 

General Opinions JM-171 (1984); MW-179 (1980); M-1236 (1972). You 

have not informed us of'azy conduct prior to January 1, 1984 that 

would violate the cornon lm prohibition against contractual conflicts 

of interest. 

After January 1, 1984, the trustees were subject to ariicli 988b, 

V.T.C.S. See Attorney General Opinion JM-171 (1984). - 

Article 988b. V.T.C.S., provides ia part: 

Sectiou .I. In .this Act: 

th?) 

'Local public official' means a member of 

tw-rning ‘body . . . of any district 

(including a school district). . . . 

(2) 'Business entity' -8 a sole proprietorship, partnership, firm, corporation, holding 

company, joint-stock company. receivership, trust, 

or any other enthy recognized in law. 

Sec. 2. (a) A person has a substantial 

interest in a bur;iness if: 

(1) the interest is owaarship of 10 percent us 

more of the voting stock~or shares of the business 

entity or ownarsh~tp of $2,500 or more.of the fair 

market value of I:he.business entity. . . . 

. . . . 

Sec. 3. (a) Except as provided by Section 5 

of this Act, a Local public official commits an 

offense if he knowingly: 

(1) particip;ltes in a vote or decision on a 

matter involving a business entity in which the 

local public official has a substantial interest 

if it is reasoixzbly foreseeable that an action oo 

p. 1732 
Honorable Benjamin Euresti. Jr. - Page 3 (JM-379) 

the matter w0ttl.d confer an economic benefit to the 

business entity involved; 

. * . . 

(b) An offense under this section is a Class A 

misdemeanor. 

Sec. 4. If a local public official or a person 

related to ttiit official in the first or second 

degree by eitber affinity or consanguinity has a 

substantial interest in a business entity that 

would be pecc.liarly affected by any official 

action taken by the governing body, the local 

public official, before a vote or decision 0x1 the I 

matter, shall file an affidavit stating the nature 

and extent of the interest and shall abstain from 

further partid.pation in the matter. The affidavit must be filed with the official recordkeeper 

of the governmental entity. 

Sec. 5 [Esception for contracts for purchase 

of services or personal property where business 

ent%ty is only supplier within the jurisdiction 

~snd the only bidder on the coutract.] 

Sec. 6. The :?enalties and remedies provided by 

thLs article do mt limit coumon law remedies of 

tort, contract, a’r equity, including a suit for 

damages. irtjuwt:lcm, or msndaitus. The finding by 

a court of a violation under this article does not 

render an action of the' governing body voidable 

unless the uteaw:re that was the subject of. an 

.e action lavolvlng conflict of interest would not 

heve passed the gwerning body trLthout the vote of 

the person who vMLated this article. 

The trustee owns more than $2,500 in stock of a plaintiff bauk. 

His interest in the bank is a substantial interest within section 2(a) 

of article 988b, V.T.C.S. See Attorney General Opiniou JM-291 (1984). m-m 

You have informed us that the school trustee abstained from 

voting for or against an:i matter .pertainlng to the litigation, 

although ha may have discussed this matter with other members of the 

board of trustees. Section 3 of article 988b, V.T.C.S., prohibits a 

public official from knowingly participating in a vote or decision on 

a matter involving a businms entity in which he is substantially 

interested. In our opiuion, this provision reaches knowing participation in a decision by discustting it with other board members. 

p. 1733 
Honorable Benjamin Euresti, .Jr. - Page 4 (n-379) 

. 

A Massachusetts court discussed the term "participate" as it 

appeared in a conflict of :Laterest statute. Graham v. McGrail, 345 

N.E.2d 888 (Mass. 1976). The Massachusetts statute describes the 

prohibited participation j.n greater detail than does article 988b. 

V.T.C.S.; nonetheless, the court's discussion is pertinent to our 

question. 

The statute discussed in Graham v. McGrail, 345 N.E.2d 888 (Mass. 

1976) prohibited a nnmici~al employee from participating in a matter 

in which he or his inmedir,te family had a financial interest. Three 

school committee members had immediate family members who were school 

system employees. The three school committee members voted on the 

budget which set the compensation of school system employees, 

including their own farnil], members. Bach committee member abstained 

from particular budget decisions that affected his relative, but all 

attended work sessions and formal meetings on the budget. On 

occasion, a school committm member presided over a vote from which he 

disqualified himself because of his relative's financial interest. 

The Massachusetts statute ,?rohibited school committee members from 

participat[ing] . . . personally and substantially 

asa . . . municipal employee. through approval, 

disapproval,~ Cl!CiSion. recomendation, the 

rendering of advisce, investigation or othetise. 

345 N.E.2d at 891. The cou'rt stated: 

We agree with the judge that this definition 

eucompasses more than the act of voting. To 

preside over a 'vote is to participate in it, and 

it is clear that two of the individual defendants 

presided over some of the contested votes while 

purporting not to participate. Moreover, there is 

every Indication that during the 'work sessions' 

they participatr!d in other ways in the contested 

mstters . To participate in the formulation of a 

matter for vote is to participate in the matter. 

Ordinarily. the wise course for one who is 

disqualified from all participation in a matter is 

to leave the rotm. 

345 N.E.2d at 891-892. 

Section 3 of artic:Le 988b, V.T.C.S., prohibits conduct which 

includes, but is not liwlted to, formally recording a vote when the 

board takes official action. In particular, the language 

"participates in a . . . decision" indicates that the legislature 

intended the statute to reach more than merely casting a vote. Cf. 

V.T.C.S. art. 6252-9b, §l;(a) (state officer personally interestedin 

p. 1734 
Honorable Benjamin Euresti. Jr. - Page 5 (JM-379) 

decision pending before his board "shall not vote or otherwise 

participate in the deciriion?. Section 4 of article 988b, V.T.C.S.. 

which requires the interested public official to file an affidavit 

stating his interest, requirss him to "abstain from further 

participation in the O;itter." This provision is not limited to 

participation in the board's vote; it prohibits all participation. 

In our opinion, participation "in a vote or decision" in section 

3(a) of article 988b. V.T.C.S., includes deliberating with the board 

about the matter. A nar'rover interpretation of this language would 

undermine the legislature's effort to control conflicts of interest, 

in that a trustee with a personal interest in a matter could discuss 

it with board members ard influence the board's final action with 

impunity as long as he ab;rtained from the formal vote. 

I?e do not have suffLcient information to determine whether the 

school trustee has partic,ipated in a vote or decision of the board. 

You do not state with certainty that he even discussed the litigation 

with other trustees. OtiLy discussions which occurred after the 

January 1, 1984 effectiw date of article 988b. V.T.C.S.. would be 

subject to its prwiaious.~ Moreover , section 3(a)(l) also requires a 

showing that it is reasonably foreseeable that an action on the matter 

would confer an economic benefit on the business entity, and we have 

not been provided any facts on this question. 

You do not know whether the trustee filed the affidavit required 

by section 4 of article 98:%, V.T.C.S.; therefore we cannot express en 

opinion on wbether he vic'lated section 4 of article 988b. V.T.C.S. 

The penalty provision of article 988b. V.T.C.S., does not apply to 

v~olntions of section 4. Ilcd see Penal Code 139.01 (abuse of office). --- 

SUMMARY 

A school trustee who engages in school board 

deliberations lez.ding up to a vote or decision on 

a matter in which he is substantially interested 

has participated in a vote or decision of that 

matter within section 3(a)(l) of article 98813, 

V.T.C.S. 

JIM MATTOX 

Attorney General of Texas 

MARY KELLER 

Executive Assistant Attorney General 

p. 1735 
Honorable Benjamin Ruresti, Jr. - Page 6 (JM-379) 

ROBWT GRAY 

Special Aassistant Attorney General 

RICK GILPIN 

Chsirmsn, Opinion Comittee 

Prepsred by Susan L. Garris'm 

Assistant Attorney General 

APPROvgD: 

OPINION COMMITlZE 

Rick Gilpin, Chairman 

Colin Carl 

Susan Garrison 

Tony Gnillory 

Jim Moellinger 

JcMifer Riggs 

Nancy Sutton 

Sarah Uoelk 

p. 1736