Case Name: Attorney General Mike MOORE and the Mississippi Ethics Commission, ex rel., Chickasaw County, Mississippi v. Derwood McCULLOUGH
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1993-11-04
Citations: 633 So. 2d 421
Docket Number: No. 91-CA-0079
Parties: Attorney General Mike MOORE and the Mississippi Ethics Commission, ex rel., Chickasaw County, Mississippi v. Derwood McCULLOUGH.
Judges: Before DAN M. LEE, P.J., and BANKS and SMITH, JJ.
Reporter: Southern Reporter, Second Series
Volume: 633
Pages: 421–430

Head Matter:
Attorney General Mike MOORE and the Mississippi Ethics Commission, ex rel., Chickasaw County, Mississippi v. Derwood McCULLOUGH.
No. 91-CA-0079.
Supreme Court of Mississippi.
Nov. 4, 1993.
Rehearing Denied March 17, 1994.
Michael C. Moore, Atty. Gen., Larry E. Clark, Asst. Atty. Gen., Jackson, for appellants.
Grady F. Tollison, Jr., Tollison Austin & Twiford, Oxford, Kenneth M. Burns, Okolo-na, Mary Marvel Fyke, Jackson, for appellee.
Before DAN M. LEE, P.J., and BANKS and SMITH, JJ.

Opinion:
SMITH, Justice, for the Court:
A complaint was brought by Attorney General Mike Moore and the Mississippi Ethics Commission against Derwood McCullough, Chancery Clerk of Chickasaw County, in the Second Judicial District of Chickasaw County, alleging a violation of Mississippi Code Annotated Section 25-4-105(3)(a). That section of the Ethics in Government laws prohibits a public servant from being a contractor, subcontractor or vendor with the governmental entity of which he is a member. The lower court sustained McCullough's motion to dismiss, finding the transaction in question did not violate the cited code section.
Appellants submit the trial court erred in sustaining the motion to dismiss as the ruling was based on four erroneous findings. After considering each assignment of error we affirm, finding that Issue I is dispositive of the case.
FACTS
On July 14 and 21, 1988, the Chickasaw County Board of Supervisors, acting through their Chancery Clerk, Derwood McCullough, advertised in a newspaper, The Okolona Messenger, for a piece of equipment, specifically, a used front-end loader. In the advertisement, the board reserved the right to acquire the equipment in any one of three ways: (1) to purchase it in installments under the provisions of Miss.Code Ann.Seetion 19-13-17 (1972), and, when the amount of notes provided for by that section was known, to accept public bids for the sale of the notes; (2) to effect a lease-purchase of the equipment under the provisions of Miss. Code Ann.Seetion 31-7-13 (1972), or (3) to pay cash for the equipment.
On August 1, 1988, the board unanimously accepted the bid of Mississippi Road Supply Company on a lease-purchase basis for $70,-000 plus 8% interest over a 60-month term, resulting in a monthly payment by the county of $1,419.35. On September 6, 1988, a contract entitled "Lease-Purchase Agreement" to that effect was executed by Mississippi Road Supply Company and the Board of Supervisors of Chickasaw County. On that same day, Mississippi Road Supply Company assigned the Lease-Purchase Agreement to M & H Loans. Appellee concedes that M & H Loans was in effect Der-wood McCullough; McCullough thus purchased the instrument for its face value, $70,-000.
M & H Loans received monthly payments of $1,419.35 from Chickasaw County under the agreement from October, 1988, through March, 1990. These payments amounted to $25,548.30, of which $7,392.84 was interest. Appellants sued to recover the interest payments as a pecuniary benefit obtained in violation of Miss.Code Ann.Seetion 25-4-103(a). Taking these facts as true, the trial court dismissed the action, finding the assignment of the Lease-Purchase Agreement to Derwood McCullough did not amount to a violation of Section 25-4-103(a).
I. DID THE TRIAL COURT ERR IN sustaining McCullough's motion TO DISMISS THE SUIT BASED ON ITS FINDING THAT THE ASSIGNMENT OF THE LEASE-PURCHASE CONTRACT TO M & H LOANS, McCullough's business, did not COME WITHIN THE PROHIBITION OF SECTION 25-L-103(a)?
LAW
Following the assignment of the lease-purchase contract to M & H Loans, McCullough was charged with a violation of Section 25-4-105(3)(a), Mississippi Code of 1972, which provides:
(3) No public servant shall:
(a) Be a contractor, subcontractor, or vendor with the governmental entity of which he is a member, or have a material financial interest in any business which is a contractor, subcontractor, or vendor with the governmental entity of which he is a member.
Appellants argue that because the contract was immediately assigned to M & H Loans, the effect was to substitute M & H Loans for Mississippi Road Supply Company as the original contracting party with Chickasaw County. Although there have been few decisions analyzing the application of Section 25-4-103, we are not persuaded that the assignment of the lease-purchase contract to McCullough in the instant case was prohibited by that statute. Several factors aid us in reaching this conclusion.
First, there is no authority for the view that an assignment of a contract to a public servant's business violates the statute. Appellants urge the Court to so hold because to hold otherwise "would allow public servants to do business with themselves at will by going through another company first." While we agree that transactions of the type in question may give an appearance of impropriety, the fact remains that McCullough did not violate the clear language of the statute; neither McCullough himself nor his business, M & H Loans, could be termed to be a contractor, subcontractor or vendor with Chickasaw County.
Further, the question arises whether McCullough as a chancery clerk could even be properly classified a "member" of the governmental entity involved in the present transaction — the Board of Supervisors of Chickasaw County. A review of the ease of Attorney General Mike Moore and the Mississippi Ethics Commission v. William Jackson Renick, Cause No. 2138, Circuit Court of Benton County, Mississippi, November 9, 1990, is helpful on this point. The facts showed that the defendant, Renick, was a member of the Benton County Board of Supervisors, which participated in activities leading to the establishment of a furniture manufacturer, Benton Inc., being located in the county. Thereafter Renick and another individual formed a partnership for the purpose of hauling goods by truck. The partnership entered into a contract with the new company, Benton Inc., to do their hauling; this agreement was entered into with the approval of the Benton County Board of Supervisors, including official matters voted upon by Renick himself.
A civil action was brought against Renick charging violations of Miss.Code Ann.Sections 25-4-105(1) and (2). These sections prohibit a public servant from using his official position to obtain pecuniary gain for himself and from being interested directly or indirectly in any contract with the county approved by a board of which he is a member. Renick is currently on appeal before this Court. Its value in the case sub judice comes from an excerpt of the oral argument before this Court on June 8, 1993. Interestingly, the Attorney General's Office was represented by the same counsel in both Renick and the instant proceedings against Derwood McCullough. The Court propounded questions to counsel for the Attorney General's Office on whether a chancery clerk was considered a "member" of his governmental entity in the application of Section 25-4-101 et. seq. of the Ethics in Government statutes:
The Court: How far does this reach, like the chancery clerk who maybe has some responsibilities in issuing the bonds, in fact if they issue the bonds, or in preparing the deed for that matter? Would that mean the chancery clerk couldn't be an on-line worker in the furniture factory?
Attorney General's Office: No, sir, the chancery clerk's duties would be purely ministerial . and the chancery clerk would not be a member of the board which authorized the bond issue, (emphasis added)
The Court: And so a purely ministerial employee would not have any problem? Attorney General's Office: No, sir, that would require again the clerk to be a member of the board or the group that authorized the contract, (emphasis added)
Confusion abounds when a comparison of the above statements with appellants' arguments in the case at bar is undertaken. Appellants first took the position before this Court that the "purely ministerial" duties a chancery clerk performs do not elevate his status to that of "member" of his governmental entity. In direct contradiction to that view, the Attorney General's Office emphatically concludes in the ease sub judice that it is "beyond question that Chancery Clerk Derwood McCullough is a member of the Chickasaw County governmental entity at the time" of the questioned transaction. The two views are not capable of being reconciled and it is for this Court to end further debate on this question. We hold that a public servant with purely ministerial duties and with no power to vote on matters considered by the governmental entity with which he is associated, is not considered a "member" of that entity as the term is applied in Section 25-4-101 et. seq. of the Ethics in Government laws. McCullough, as chancery clerk of a county board of supervisors, is a prime example of an employee who is not to be considered a member of that governmental entity in the application of Section 25-4-105(3)(a). "Employee" is not a classification synonymous with "member."
We are bound to agree with the determination of the lower court that no violation of Section 25-4-105(3)(a) took place in the assignment of the lease-purchase contract to McCullough's business. We note that the United States filed an indictment against McCullough charging embezzlement and conspiracy based on this same transaction, wherein McCullough's motion to dismiss was granted and the charges dismissed. See U.S. v. McCullough, 760 F.Supp. 101 (N.D.Miss.1991). The district court addressed the identical issue of "whether the purchase of the lease/purchase agreement by McCullough's loan company, M & H Loans, and subsequent acceptance by McCullough as part owner of M & H Loans of the lease payments from Chickasaw County . constitute a violation of the laws of the State of Mississippi," as stated in Section 25^á-105(3)(a). The court reviewed the language of the statute and stated:
Since this court has analyzed the state statute and McCullough's actions at length, this court feels constrained to interject in this opinion that it finds no conflict between M & H Loans' purchase of the lease agreement and Section 25-4-105, Miss. Code Ann. (1972), for the reason that the state statute clearly provides that the public official shall not be a '... contractor with the county . or have a material financial interest in a business which is a contractor . with the county .' McCullough, through M & H Loans, did neither of those two acts. For the government to attempt to interpret Section 25-4-105 so as to make a prosecutable offense out of defendant's acts is overreaching and beyond the intent of the writers of this statute.
Id., at 102, 103.
As a final matter, we are of the opinion that while Section 25-4-105(3)(a) clearly does not prohibit transactions of the type under consideration, the result might have been entirely different had this action been brought under Section 25-4-105(3)(e). That section provides:
(3) No public servant shall:
(c) Be a purchaser, direct or indirect, of any claim, certificate, warrant or other security issued by or to be paid out of the treasury of the governmental entity of which he is an officer or employee.
There is no question but that the lease-purchase contract was a "security" and while McCullough is not a "member" of the board of supervisors, he is most definitely an "employee."
CONCLUSION
The decision of the lower court to dismiss this action based on the conclusion that no violation of Section 25 — 4—105(3)(a) occurred was not in error. Appellants' additional assignments of error are based upon their position to the contrary. As such, discussion of these issues is not presented. We recognize the potential for a negative public perception of any dealings between its servants and associated governmental entities. We conclude only that the appellee in the case at bar was not guilty as charged.
JUDGMENT IS AFFIRMED.
DAN M. LEE, P.J., and PITTMAN and BANKS, JJ., concur.
SULLIVAN, J., dissenting with separate written opinion joined by McRAE, J.
McRAE, J., dissents with separate written opinion joined by SULLIVAN, J.
HAWKINS, C.J., PRATHER, P.J., and JAMES L. ROBERTS, Jr., J., not participating.