This Advisory Opinion concerns the following issue as formulated from
facts and/or circumstances furnished by a requestor. The Commission approved
this opinion on May 12, 2000, basing its approval solely on the facts and
circumstances stated herein.
May a county supervisor's spouse be employed by a corporation that
leases the county-owned hospital?
State law restricts the Mississippi Ethics Commission to interpreting
and issuing opinions on Sections 25-4-101
through 25-4-119,
1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi
Constitution of 1890. Therefore, this opinion does not address the Mississippi
laws outside the Commission's jurisdiction nor the governmental entity's
internal rules and regulations.
The pertinent conflict of interest laws to be considered here are:
Constitutional Section 109 states:
"No public officer or member of the legislature shall be interested,
directly or indirectly, in any contract with the state, or any district,
county, city, or town thereof, authorized by any law passed or order made
by any board of which he may be or may have been a member, during the term
for which he shall have been chosen, or within one year after the expiration
of such term."
Code Section 25-4-103(c),
(e), (f)(i)(ii), (g)(i)(v), (h), (o), (p)(i)(ii)(iii) and (q) states:
"(c) 'Business' means any corporation, partnership, sole proprietorship,
firm, enterprise, franchise, association, organization, holding company,
self-employed individual, joint stock company, receivership, trust or other
legal entity or undertaking organized for economic gain, a nonprofit corporation
or other such entity, association or organization receiving public funds.
(e) 'Compensation' mean money or thing of value received, or to be received,
from any person for services rendered.
(f) 'Contract' means:
(i) Any agreement to which the government is a party; or
(ii) Any agreement on behalf of the government which involves the payment
of public funds.
(g) 'Governmental' means the state and all political entities thereof,
both collectively and separately, including but not limited to:
(i) Counties.
(v) Any department, agency, board, commission, institution, instrumentality,
or legislative or administrative body of the state, counties or municipalities
created by statute, ordinance or executive order including all units that
expend public funds.
(h) 'Governmental entity' means the state, a county, a municipality
or any other separate political subdivision authorized by law to exercise
a part of the sovereign power of the state.
(o) 'Public funds' means money belonging to the government.
(p) 'Public servant' means:
(i) Any elected or appointed official of the government;
(ii) Any officer, director, commissioner, supervisor, chief, head, agent
or employee of the government or any agency thereof, or of any public entity
created by or under the laws of the State of Mississippi or created by
an agency or governmental entity thereof, any of which is funded by public
funds or which expends, authorizes or recommends the use of public funds;
or
(iii) Any individual who receives a salary, per diem or expenses paid
in whole or in part out of funds authorized to be expended by the government.
(q) 'Relative' means the spouse, child or parent."
Code Section 25-4-105(2)
states:
"(2) No public servant shall be interested, directly or indirectly,
during the term for which he shall have been chosen, or within one (1)
year after the expiration of such term, in any contract with the state,
or any district, county, city or town thereof, authorized by any law passed
or order made by any board of which he may be or may have been a member."
Pertinent facts and circumstances provided by the requestor, absent
identifying data, are set forth as follows and considered a part of this
opinion.
I am writing this letter on behalf of a newly-elected member of the
Board of Supervisors. On August 20, 1990, the County Board of Supervisors
entered into a lease agreement with Corporation A leasing the real and
personal property comprising the County Hospital to Corporation A. In May
1995, Corporation A was authorized to sublease the hospital to Corporation
B. Supervisor "A" is a newly elected member of the County Board of Supervisors.
His wife is employed by Corporation B as a nurse at the County Hospital
and has been since 1993. The lease contract with Corporation B expires
September 30, 2000 and the Board is considering entering into a new lease
agreement with Corporation B.
Please advise whether the County may extend the lease agreement with
Corporation B. If so, please advise if the Supervisor must recuse himself
from any discussions or voting regarding the continuation of the lease
in the future. Also, advise of any potential liability of the other Board
members if the lease with Corporation B is extended.
Based solely on the facts and circumstances presented by the requestor,
the Commission's opinion is as follows.
Constitutional Section 109 and Code Section 25-4-105(2),
both cited above, prohibit a county supervisor from having an interest,
direct or indirect, in any contract authorized by the board of supervisors
of which he is a member during his term and for one year thereafter.
In Frazier v. State, 504 So. 2d 675, (Miss.
1987), the Mississippi Supreme Court set forth the four elements for applying
the prohibition imposed by Constitutional Section 109. The four elements
are:
1. Is there a governmental contract with the state,
county, municipality or district?
2. Does the public officer have an interest, direct
or indirect, in the contract?
3. Is the contract authorized by a law passed or order made by a board or public body
of which the public officer is a
member?
4. Was the authorizing law or order passed during
the public officer's term or within one
year after the expiration (or termination) of such term?
Also, in Frazier, supra, the Mississippi
Supreme Court held a public official has an indirect prohibited
interest in a contract in which the public official's spouse has a direct
interest for purposes of Constitutional Section 109 and Code Section 25-4-105(2).
When and if the board of supervisors enter into a new lease contract
for the county hospital with Corporation B which is the employer of the
newly elected supervisor's spouse, the newly elected supervisor will be
in violation of Constitutional Section 109 and Code Section 25-4-105(2)
as all four of the elements set forth above will have been satisfied.
The requestor is cautioned to advise the board member that a recusal
or an abstention will not prevent a violation of Constitutional Section
109 and Code Section 25-4-105(2).
Even without a board member's vote, the authorization by the member's board
nonetheless results in a contract in which the board member has a prohibited
interest.(1)
The requestor is advised that the members of the board of supervisors
who knowingly enter into a contract in violation of the state conflict
of interest laws are subject to "a separate civil action" for "violating
the provisions of this article for recovery of damages suffered as a result
of such violation" as set forth in Code Section 25-4-113.
Also, the requestor is cautioned to advise the members of the board
of supervisors to remain keenly aware of the following well established
legal principles regarding acts by governmental boards that violate the
state constitution and state law.
At common law and generally under statutory
enactment, it is now established beyond question that a contract made by
an officer of a governmental entity with himself, or in which he is interested,
is contrary to public policy and tainted with illegality; and this rule
applies whether such officer acts alone on behalf of the governmental entity,
or as a member of a board and any such direct or indirect interest in the
subject matter is sufficient to taint the contract with illegality. [Frazier,
supra]
A contract is illegal and void because
it violated Mississippi conflict of interest law §25-4-105(2)
as well as the Mississippi Constitution. [Towner v. Moore ex rel. Quitman
County School District, 604 So.2d 1093 (Miss.1992) and Hinds Community
College District, et al. v. Muse, 725 So 2d. 207 (Miss.1998).]
Acts of governmental boards which do not
come clearly within the powers granted, or which are expressly prohibited
by the Constitution, are void. [Golding
v. Salter, 107 So.2d 348, 234, Miss. 567 (Miss. 1958)]
Ronald E. Crowe
Executive Director
1. See Waller v. Moore, 604 So. 2d 265 (Miss. 1992), wherein the Mississippi Supreme Court said, "Waller argues that his negative vote on hiring his wife insulated him from the violations and liabilities . . . There is no such provision exempting him from the prohibition of Section 109 and 25-4-105(2). It is his interest in his wife's contract, not his vote, that is prohibited."