Court Opinion

ID: 4133917
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:43:43.408873+00
Date Added: 2024-06-11T14:31:40.088978
License: Public Domain

Honorable    Bevington   Reed                     Opinion   No.    M-751
Coordinating    Board
Texas College     and                             Re:     May Odessa College        con-
         University   System                              tract with a private     corpo-
P. 0. Box 12788, Capitol Station                          ration,   where a member
Austin,   Texas 78711                                     of its Board of Regents      is
                                                          a minority    stockholder    and
                                                          President    of such corpora-
                                                          tion, where the benefits
                                                          derived   from such contract
                                                          are placed in a scholarship
Dear   Dr.     Reed:                                      fund?

         Your     request   for   an opinion   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%
         of the gross for cold drinks and 10% of the gross for
         candy and coffee   sold into the General Fund of Odessa
         College.

         “There   was no written 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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        Honorable   Bevington   Reed,   page   2   (M-751)

                the Business    Managrr     of the College    to deposit
                all sums received      from the vending company in-
                to the Odessa College       General   Scholarship    Fund
                rather than depositing      it into the General    Fund
                of the College.     The administration      of the 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    no bonus from
                any sales made by Del-Tex,       became    a member   of
                the Board of Regents.     This same regent is President
                of West 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 vend-
                ing machines    pay a percentage     of their gross receipts
                into the same scholarship      fund.   None of the vending
                machine   companies    have written    contracts,     and it is
                the understanding    between all of the 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
                at any time.

                “There   is no restriction    on the number of vending
                machine    companies     which are allowed    to have machines
                on the campus.      Any vending machine       company can
                place machines     on the campus merely       by obtaining
                permission    of the administration.      It would be expected,
                however,    that any vending machine       company desiring
                to place vending machines       on the campus would be re-
                quired to pay a percentage       af the proceeds   into the
                Scholarship    Fund. ”

                 From the above stated set of facts we must determine   if this is a
        contract   entered into by Odessa Junior College, acting by and through its

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    Honorable    Brvington      Reed,      page    3   (M-751)

    Board of Rcagcnts and West Texas Vending Machine            Corrpany; and if so,
    would such contract   be in violation    of the public policy by reason of a
    member    of the Board of Regents     being a minority   stockholder  (20%) and
    President   of West Texas Vending Machine        Company.

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

             It appears    from the facts submitted    that there is an express      oral
    contract   between Odessa College      and West Texas Vending Machine           Com-
    pany in view of the fact that the college     has authorized     the vending ma-
    chine companies      to place their vending machines       in the college  buildings
    or on campus,     for which locations   the college    receives   30% of the gross
    on cold drinks and 10% of the 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    of the
            parties,  the terms of which are openly uttered in
            distinct and explicit   language,   either orally or in
            writing.   2 Bl. Comm.      443 and other authorities    cited.             ”

             From the cases cited,       it is clear that a member  of the Board of
    Regents   is a public official.    In the case of Schurz v. Telfer,   74 S.W.2d
327 (Tex. Civ. App. 1934, no writ) the Court held that a school trustee        of
    a county common      school district    was a county officer.  Also see Buchanan
    v. Graham,     81 S.W. 1237, 1239, (Ct. of App. 1904).

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

            “It is well settled in Texas that if a public official
            directly  or indirectly has a pecuniary  interest    in a
            contract,   no matter how honest he may be, and al-
            though he may not be influenced    by the interest,    such

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Honornblc       Brvington   Reed,   page   4        (M-751)

          These authorities   are determinative     of our answer.    This office
has heretofore    so considered    this principle  of law in Attorney    General
Opinion No. M-625 (1970).        See also 43 Am. Jur. 107, Public Officers,
Sec. 300, and cases cited.       Until the Legislature    sees fit to modify this
common law principle,       which Texas has adopted,      a court is without
authority   to uphold the contract    before  us.

                                      SUMMARY

                     Odessa College      cannot lawfully    enter into a
            contract   with a vending machine      company where a
            member     of its Board of Regents     is the President     and
            a stockholder     of the vending machine      company,    since
            this would be in violation     of the public policy of the
            State of Texas forbidding      public officials   who have a
            pecuniary    interest   in a contract from contracting      with
            entities  in which they have a pecuniary        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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            Honorable   Bevington   Reed,   page   5   (M-751)

            Meade F. Griffin
            Staff Legal Assistant

            Alfred   Walker
            Executive   Assistant

            Nola White
            First Assistant

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