C,SAWFORD c. MAlRTIN AUBTIN.TEXAl3 78711

A-x-l-ORNEYCI&NERAL November 2,1970

Honorable John F. Pettit CountyAttorney Val Verde County Del Rio, Texas 78840 Opinion No. M-714
Re: Whether acceptanceby a city councilman of theposition of executives

director of a community action agencyviolates *Article 373,Vernon's Penal Code, or Article 988,Vernon's Dear Mr. Pettit: Civil Statutes.
You request our opinion as to the legal consequences which result from the acceptanceby a Del Rio city councilman **of** the position of executive director of theVal Verde County CommunityAction Agency, a local anto-povertyagency establishedunder the Economic Opportunity Act of 1964, 42 U.S.C.A., Section 2781, et seq. The facts indicated inyour request and the by-laws of the community action agency are as follows:
Val Verde County is a sponsoring agency for theVal Verde County CommunityAction Agency, which was organizedby the city, county, and School District as a non-profit corporation under the TexasNon-Profit CorporationAct, Article 1396, Vernon's Civil Statutes, for the purpose of enabling theparties carry out thepurposes of the Economic OpportunityAct to eliminate the causes of poverty. This agency is governed by a board of directors, consistingof twenty-sevenpersons, includingnine elected officialsor their representativesfrom various political subdivisionsof Val Verde County. The City of Del Rio has fourplaces on the board, each place being held either by a councilman or a representativeof a councilman. The By-Laws provide that four directors "shallbe representatives of the City of Del Rio," and "shallbe designated as such by" the city. The board of directorsmakes all policy decisions for the community action agency. According to the information provided in the opinion request, the Del Rio City Councilmakes

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decisions affecting the community action agency; and the community action agencymakes decisions affecting.the city council.
The City of Del Rio is a home rule city, and city councilmen are paid for their services. The city is a delegate agency or subcontractorof the community action agency in that the agency has by contractdelegated to the city a commoditiesprogram. Recently theboard **of** directorshas hired one of the city councilmen to serve as executive director of the community action agency. The executive director is hired under a contract of employmentby the CommunityAction Agency (whoseBoard of Directors is composed of the City, County, Schools Districts, and other representativesof the public) for a term of one year and is paid a salary and acts as the manager for the agency.
In view of the commoditiesprogram contract,you have asked whether a violation of Article 373,Vernon's Penal Code, has occurredwhen a city councilmanhas accepted a salariedposition with the community action agency. A secondquestion concernswhether Article 988,Vernon's Civil Statutes, is violated, and if so, the effect that acceptancehas on the office he holds with the city. Article 373, reads as follows:
"If any officer of any county, or of x city or town shallbecome in anymanner pecuniarily interestedin any contractsmade by such county, CFZherwise, city, or town, through its agents,

for the constriiZEonor repair of any bridge, road, street, alley or house,, or any other work undertakenby such_county., city or town, or shall become interested in ;i;ii; Fbd or proposal for suchwork or in the purchase or sale of anythingmade for or on account of such county, city, or town, or - who shall contract for or receive any money or property, or the representativeof either, or any emolument or advantagewhatsoever in considerationof such bid, proposal, contract, purchase or sale, he shall be finednotess

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than fifty nor more than five hundred dollars." (Emphasisadded).
The exact nature of the commoditiesprogram contract is not described in the opinion request, but there is no showing that the city councilmanhas received any pe+niary benefit from the contractbetween the city and the community action agency. However, the salary of the executive director appears to be paid by the community action agency from funds furnished through the Office of Economic Opportunity and to some extent frommatching local funds of the City and other political subdivisions and not from the commoditiesprogram contract. (See 42 U.S.C.A., Sections 2812 and 2836)~.Article 373prohibits city officials fromhavingpecuniary interest in matters in which the city is pecuniarily interested. Rigby v. State, 10 S.W. 760 (Tex.Civ.App.,1889). This office has held that a county commissionerdid not violate thepenal provisionby selling lumber to various lumberyards which in turn sold at least some of the material to the county,where no showing was made that the commissionerhad any interest in the lumber when itwas,sold to the county or any special agreementwith the lumberyards. Attorney General's Opinion No. O-6044 (1944). In view of the factsyou have submitted,we are of the opinion that the salarypaid to the executive director is not strictly within the terms **of** Article 373, and a criminalviolation of that statute is not indicated. This penal statuemust receive a strict constructionand cannot be extended beyond theplain import of its terms. 52 Tex.Jur.Zd 304, Statutes, Sec. 198. The phrase, "or any other work undertaken by such

. . . city." refers to other similar types of constructionwork of the same nature previously described in the precedingphrases. See 54 Tex.Jur.Zd 221-222, Statutes, Sets. 154 and 155. Furthermore, there are no factsbefore us to show that the executive director received any money or thing of value as a consideration of any contract entered into.
The next question concerns a civil statute,Article 988, which places certain limitations on city councilmen. The statute reads in pertinentpart:

“No member of the city council shall hold any other employment or office under the city government

. . . unlessherein otherwiseprovided. No member of the city council, or any

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other officer of the corporation, shall be directly or indirectly interested in anywork, business or contract, the expense,price or considerationof which is paid from the city treasury,or by an assessment levied by an ordinance or resolution of the city council

n

. . . . The rule of liberal constructionwill be applied to remedial statutes, such as the above enactment, in order to effectuate its purpose. 53 Tex.Jur.Zd 303, Statutes, Sec. 197. Likewi,se; such a conflict of interest statute "rests upon soundpublic policy" and "shouldbe scrupulously-enforced." Delta Electrical Const. Co. v. City of SanAntonio,,437 S.W.Zd 602, 609 (Tax. Civ.App., 1969, error ref., n.r.e.). As observed by the Court, this statute broadly covers "anywork, business or contract" which city councilmenmust not be either "directlyor indirectly interested in." The Court proceeded to hold the contract before it null andvoid, saying:

"InMcQuillin,Municipal Corporations,Vol. 10, Sec. 29.97,p. 467, et seq., it is stated: 'It is well settled thatmunicipal officers cannot be interested in contracts of any character with the municipality.

. . In many states '.~. and cities thishas been adoptedby statutory or charterprovisions,which are, however, mostly declaratory of the rule at common law

. . .Although under some statutes and charters, such an agreement is voidable only, it is generallyheld thatwhenever a public officer enters into a contract, the execution of which may make it possible for his personal interests to become antagonistic to his faithfuldischarge of a public duty, such contractwill be held void as against publicpolicy. It is the existence of such interestwhich is decisive and not the actual effect or influence, if any of the interest: if there is a potential conflict, the.contractis invalid."' Applying the above rule to the employmentby the Community Action Agency of any officer of the City, County, or School

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District,we hold that the executive director,who is also an officer of the City, may not accept the employment as exe,cutive director sincehe,is interest, in the contract of employment, the e'xpense o,fwhich, at least in part, is payable from the city treasury.
It appears that the city councilmen on theboard of directorswould be present to represent the interest of the city, but the executive directormust.carry out the instructions of the board of directors as a whole. Since the city council members,can be outvoted on the board, the executive director may findhimself having to carry out decisions in conflictwith the city interests. The executive director alsomay be paid partly by city funds. Eighty percept of~the funds for operation of the aommunity,actionagency aomes-from the Office of Economic Opportunity, but the remainder comes from local matching funds. 42 U.S.C.A., Section 2812. Staff salaries are paid out of these funds. 42 U.S.C.A., Section 2836. .Presumablythe city.is'furnishing,or may be obligated to furnish, someportion of'.thelocal.fundsfor the agency. Thus the executive director is receivi@or canpotentially receive city funds,even if indirectly. A violation of the statute and public policy thus results, as stated in City.05 Edinburg v. Ellis, 59 S.W.Zd 99, 100 (Comm.App.,1933, opinion approved),wherein the Court observed:

"It is thegeneral rule thatmunicipal contracts inwhich officers or employees of the city have a personal pecuniary interest are void

. . .This rule is held to apply tomembers of the city council

. . . "The foregoing rule rests upon sound public policy. Its object is to insure to the city strict fidelity upon thepart **of** those who represent it and manage its affairs. The rule

. . . should be scrupulously enforced.

. i .I' The very purpose of the rule is to avoid conflicting interests, duties,pecuniary interests, and public policy. A similar rule exists to prohibit public officers or employees from serving in positions involving conflicting interests. See Articles 6252-9 and 6252-9a,Vernon's Civil Statutes.

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The question of whether the position of executive director rises to the dignity of an office,which we doubt, so as to become a violation of the dual-officeprohibitions in Article XVI, Sections 12 and 40, Constitutionof Texas, becomes immaterial in view of the holding in City of Edinburg.v; Ellis, supra. With reference to the question of whether the City Councilman's office has become vacated by reason of his acceptanceof employment as executive director of the CommunityAction Agency, it is our opinion that since the contract of employment cannot be validly entered into so long as the executive director remains a councilmember, he has an election to choosewhich position he desires to accept. If he resigns from the Council, he may then negotiate a contract of employment as executive director. If he does not resign, he may not continue in both positions andmay be ousted therefromby appropriate legal action.

SUMMARY

A City Councilman is "interested in" his contract of employmentby the CommunityAction Agency of the City, County, and School District, a part of the expense of which is payable from the city treasury, and may not accept such employment so long as he remains a city council member. Article 988,Vernon's Civil Statutes. Such action is not in violation of Article 373, Vernon's Penal Code,which is inapplicable.
The City Councilman must elect which posftion he desires to hold and may be ousted from the positions by appropriate legal action if he attempts to continue to hold 0th positions at thesame time.

C. MARTIN y General of Texas

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Prepared by Roland Daniel Green, III Assistant Attorney General
APPROVED: OPINION COMMITTEE
Kerns Taylor, Chairman **W.** E. Allen, Co-Chairman Houghton Brownlee Ralph Rash Harold Kennedy J. C. Davis

MEADE F. GRIFFIN Staff Legal Assistant
ALFRED WALKER ExecutiveAssistant
NOLA WHITE First Amistant

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