C,SAWFORD c. MAlRTIN AUBTIN.TEXAl3 78711 

A-x-l-ORNEY CI&NERAL 

November 2, 1970 

Honorable John F. Pettit 

County Attorney 

Val Verde County 

Del Rio, Texas 78840 

Opinion No. M-714 

Re: Whether acceptance by a city 

councilman of the position of 

executives director of a community action agency violates 

*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 acceptance by a Del Rio city councilman of the position of executive director of the Val Verde 

County Community Action Agency, a local anto-poverty agency 

established under the Economic Opportunity Act of 1964, 42 

U.S.C.A., Section 2781, et seq. 

The facts indicated in your request and the by-laws of 

the community action agency are as follows: 

Val Verde County is a sponsoring agency for the Val Verde 

County Community Action Agency, which was organized by the 

city, county, and School District as a non-profit corporation 

under the Texas Non-Profit Corporation Act, Article 1396, 

Vernon's Civil Statutes, for the purpose of enabling the parties carry out the purposes of the Economic Opportunity Act to 

eliminate the causes of poverty. This agency is governed by 

a board of directors, consisting of twenty-seven persons, including nine elected officials or their representatives from 

various political subdivisions of Val Verde County. The City 

of Del Rio has four places on the board, each place being held 

either by a councilman or a representative of a councilman. 

The By-Laws provide that four directors "shall be representatives 

of the City of Del Rio," and "shall be designated as such by" 

the city. The board of directors makes all policy decisions 

for the community action agency. According to the information 

provided in the opinion request, the Del Rio City Council makes 

L 

-3453- 
Honorable John F. Pettit, Page 2, (M- 714 ) 

decisions affecting the community action agency; and the community action agency makes 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 subcontractor of the community action agency in that the 

agency has by contract delegated to the city a commodities program. 

Recently the board of directors has 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 employment by the Community Action Agency (whose Board of 

Directors is composed of the City, County, Schools Districts, 

and other representatives of 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 commodities program contract, you have asked 

whether a violation of Article 373, Vernon's Penal Code, has 

occurred when a city councilman has accepted a salaried position with the community action agency. A second question concerns whether Article 988, Vernon's Civil Statutes, is violated, 

and if so, the effect that acceptance has 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 shall become in any manner pecuniarily interestedin any contracts made by 

such county, 

CFZherwise, 

city, or town, through its agents, 

for the constriiZEon or repair 

of any bridge, road, street, alley or house,, 

or any other work undertaken by such_county., 

city or town, or shall become interested in 

;i;ii; Fbdor proposal for such work or in the 

purchase or sale of anything made for or on 

account of such county, city, or town, or - 

who shall contract for or receive any money 

or property, or the representative of either, 

or any emolument or advantage whatsoever in 

consideration of such bid, proposal, contract, 

purchase or sale, he shall be fined notess 

-3454- 
,, . 

Honorable John F. P&tit, Page 3, (M- 714 ) 

than fifty nor more than five hundred dollars." 

(Emphasis added). 

The exact nature of the commodities program contract is 

not described in the opinion request, but there is no showing 

that the city councilman has received any pe+niary benefit 

from the contract between 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 

from matching local funds of the City and other political subdivisions and not from the commodities program contract. (See 

42 U.S.C.A., Sections 2812 and 2836)~. Article 373 prohibits 

city officials from having pecuniary 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 commissioner did not violate the penal provision by 

selling lumber to various lumber yards which in turn sold at 

least some of the material to the county, where no showing 

was made that the commissioner had any interest in the lumber 

when it was, sold to the county or any special agreement with 

the lumber yards. Attorney General's Opinion No. O-6044 (1944). 

In view of the facts you have submitted, we are of the opinion 

that the salary paid to the executive director is not strictly 

within the terms of Article 373, and a criminal violation of 

that statute is not indicated. This penal statue must receive 

a strict construction and cannot be extended beyond the plain 

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 construction work of the same 

nature previously described in the preceding phrases. See 54 

Tex.Jur.Zd 221-222, Statutes, Sets. 154 and 155. Furthermore, 

there are no facts before 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 pertinent part: 

“No member of the city council shall hold 

any other employment or office under the city 

government . . . unless herein otherwise provided. No member of the city council, or any 

IL 

-3455- 
. 

Honor&&e John F. Pettit, Page 4, (M- 714 ) 

other officer of the corporation, shall be 

directly or indirectly interested in any work, 

business or contract, the expense, price or 

consideration of 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 construction will 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 sound public 

policy" and "should be scrupulously -enforced." Delta Electrical 

Const. Co. v. City of San Antonio,, 437 S.W.Zd 602, 609 (Tax. 

Civ.App., 1969, error ref., n.r.e.). As observed by the Court, 

this statute broadly covers "any work, business or contract" 

which city councilmen must not be either "directly or indirectly 

interested in." The Court proceeded to hold the contract before it null and void, saying: 

"In McQuillin, Municipal Corporations, Vol. 

10, Sec. 29.97, p. 467, et seq., it is stated: 

'It is well settled that municipal officers 

cannot be interested in contracts of any character with the municipality. . . In many states '.~. 

and cities this has been adopted by statutory 

or charter provisions, 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 generally held that whenever a public officer 

enters into a contract, the execution of which 

may make it possible for his personal interests 

to become antagonistic to his faithful discharge 

of a public duty, such contract will be held 

void as against public policy. It is the 

existence of such interest which is decisive 

and not the actual effect or influence, if 

any of the interest: if there is a potential 

conflict, the.contract is invalid."' 

Applying the above rule to the employment by the Community 

Action Agency of any officer of the City, County, or School 

e- 

-3456- 
. . * 

Honorable John F. Pettit, Page 5, (M-714 ) 

District, we hold that the executive director, who is also an 

officer of the City, may not accept the employment as exe,cutive director since he,is interest, in the contract of employment, the e'xpense o,f which, at least in part, is payable from 

the city treasury. 

It appears that the city councilmen on the board of 

directors would be present to represent the interest of the 

city, but the executive director must.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 find himself having to carry out decisions in 

conflict with the city interests. The executive director 

also may be paid partly by city funds. Eighty percept of~the 

funds for operation of the aommunity,action agency 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. .Presumably the city.is' furnishing, or may be obligated 

to furnish, some portion of'.the local .funds for the agency. 

Thus the executive director is receivi@or can potentially 

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 the general rule that municipal contracts in which officers or employees of the 

city have a personal pecuniary interest are 

void . . . This rule is held to apply to members of the city council . . . 

"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 

. . . 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. 

c 

-345?- 
. . . 

Honorable John F. Pettit, Page 6, (M- 714 ) 

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-office prohibitions in Article 

XVI, Sections 12 and 40, Constitution of 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 acceptance of 

employment as executive director of the Community Action Agency, 

it is our opinion that since the contract of employment cannot be validly entered into so long as the executive director 

remains a council member, he has an election to choose which 

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 and may be ousted therefrom by appropriate legal 

action. 

SUMMARY 

A City Councilman is "interested in" his 

contract of employment by the Community Action 

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 the same time. 

C. MARTIN 

y General of Texas 

w 

-3458- 
. . . 

Honorable John F. Pettit. Page 7, (M- 714 ) 

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 

Executive Assistant 

NOLA WHITE 

First Amistant 

-3459-