Can a county buy land from a company partly owned by a county official?

Plain-English summary

Drew County had received a proposal from University Center, Inc., to sell real estate to the county. A quorum court member and the county treasurer were part-owners of University Center. State Senator Eddie Cheatham asked the AG four questions: in general, can a county buy real estate from a county official; specifically, can Drew County do it here; would it become legal if a licensed appraiser set fair market value and the conflicted officials abstained from the vote; and does the waiver provision in Ark. Code Ann. § 14-14-1202(c)(2) cover real-estate purchases.

AG Leslie Rutledge reframed the questions around what the officials, not the county, may do. The Arkansas county ethics code at § 14-14-1202(a)(1) makes the holding of public office "a public trust." § 14-14-1202(a)(3) bars officials from using their office to advance their personal economic interest. § 14-14-1202(c)(1)(A)(i) flatly prohibits county officers and employees from being "interested, either directly or indirectly, in any contract or transaction made, authorized, or entered into on behalf of the county." Violation is a misdemeanor punishable by up to $1,000 in fines and removal from office (§ 14-14-1202(d)(3)). Being a part-owner of the selling corporation is being interested in the transaction. The officials cannot lawfully participate in the sale, which means the county cannot lawfully do the deal under the proposed structure.

The waiver provision (§ 14-14-1202(c)(2)) lets the quorum court approve, in unusual circumstances, county purchases "directly or indirectly from quorum court members, county officers, or county employees" but expressly says "goods or services." Real property is not goods or services. The AG applied expressio unius est exclusio alterius (Chem-Ash, Venhaus): the express designation of one thing implies the exclusion of another. The waiver does not reach real estate. The AG also added that under § 14-14-805(13), quorum courts cannot create a more-stringent local procedure to do what state law prohibits.

Currency note

This opinion was issued in 2016. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why does the AG focus on the officials rather than the county?
Because the statute (Ark. Code Ann. § 14-14-1202) regulates the conduct of county officers and employees. The county itself does not have the statutory disability; its officials do, and if they cannot lawfully participate, the transaction cannot lawfully happen through them.

What does "interested, either directly or indirectly" mean here?
Being a part-owner of the selling corporation is being indirectly interested in the proceeds of the sale to the county. The plain language of § 14-14-1202(c)(1)(A)(i) covers that.

Does abstaining from the vote fix the problem for real estate?
Not under this analysis. The waiver provision, which would have allowed an abstain-vote-and-disclose protocol, applies only to purchases of goods or services. Real estate is not goods or services.

Why does the waiver only cover goods and services?
The statute's text expressly uses those words and only those words. Under expressio unius est exclusio alterius, the express designation implies the exclusion of other categories. Chem-Ash, Inc. v. Arkansas Power & Light Co., 296 Ark. 83 (1988), and Venhaus v. Hale, 281 Ark. 390 (1946), state the rule.

Could Drew County's quorum court adopt its own local ordinance to allow the purchase under safeguards?
No. Under Ark. Code Ann. § 14-14-805(13), quorum courts cannot legislate "contrary to the general laws of the state." If state law prohibits the transaction, county legislation cannot authorize it.

What is the penalty for a county official who proceeds anyway?
A misdemeanor under Ark. Code Ann. § 14-14-1202(d)(3), punishable by up to $1,000 in fines and removal from office.

Background and statutory framework

The county ethics code begins with a public-trust declaration (Ark. Code Ann. § 14-14-1202(a)(1) (Repl. 2013)) and a general prohibition on using office to advance personal economic interest or that of family or associates (§ 14-14-1202(a)(3)). The operational rules of conduct at § 14-14-1202(c)(1)(A)(i) bar interest in any county contract or transaction. § 14-14-1202(d)(3) makes violation a misdemeanor punishable by a fine of up to $1,000 and removal from office.

The waiver mechanism (§ 14-14-1202(c)(2)) is limited and procedural. Subsection (A)(i) lets the quorum court, by ordinance, permit purchases from interested officials "due to unusual circumstances." Subsections (B) and (C) require non-participation in the vote and a county-judge affidavit. The statute's text refers to "goods or services" throughout, and the AG read that as a deliberate limit.

The interpretive canon expressio unius est exclusio alterius (Chem-Ash, Inc. v. Arkansas Power & Light Co., 296 Ark. 83 (1988); Venhaus v. Hale, 281 Ark. 390 (1946)) and the plain-meaning rule (MacSteel Div. of Quanex v. Arkansas Okla. Gas Corp., 363 Ark. 22 (2005)) support reading "goods or services" as excluding real property.

§ 14-14-805(13) (Repl. 2013) prohibits quorum-court legislative acts "contrary to the general laws of the state," foreclosing local workarounds.

Citations

Statutes: Ark. Code Ann. §§ 14-14-1202(a)(1), 14-14-1202(a)(3), 14-14-1202(c)(1)(A)(i), 14-14-1202(c)(2), 14-14-1202(c)(2)(A), 14-14-1202(c)(2)(B), 14-14-1202(c)(2)(C), 14-14-1202(d)(3), 14-14-805(13) (Repl. 2013).

Cases: MacSteel Div. of Quanex v. Arkansas Okla. Gas Corp., 363 Ark. 22, 210 S.W.3d 878 (2005); Chem-Ash, Inc. v. Arkansas Power & Light Co., 296 Ark. 83, 751 S.W.2d 353 (1988); Venhaus v. Hale, 281 Ark. 390, 663 S.W.2d 930 (1946).

Secondary: Black's Law Dictionary (10th ed. 2014).

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2016-010
May 18, 2016
STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE
The Honorable Eddie Cheatham
State Senator
2814 Ashley 239
Crossett, AR 71635-8824
Dear Senator Cheatham:
This is in response to your request for my opinion concerning a potential real
estate purchase by Drew County. As background for your questions, you state:
Drew County, Arkansas has received a proposal from University
Center, Inc., to sell real estate to the county. Two county officials-
one a quorum court member and the other the county treasurer-are
part owners in University Center, which is the seller corporation.
In light of the foregoing background information, you pose the following
questions:

1. Generally, under Arkansas law, can a county purchase real estate
   from a quorum court member or other elected county official?
2. Under Arkansas law, can the county purchase the real estate in
   this situation?
3. Assuming a licensed appraiser appraised the property, a fair
   market value is established, and a county resolution is voted on
   by the quorum court with the parties involved abstaining from
   the vote, is it legal for the county to purchase the real estate?
   323 CENTER STREET, SUITE 200 · LJTTLE ROCK, ARKANSAS 72201
   TELEPHONE (501) 682-2007 · FAX (501) 682-8084
   ARKANSASAG.GOV The Honorable Eddie Cheatham
   State Senator
   Opinion No. 2016-010
   Page 2
4. Is the waiver provision in Ark. Code Ann. § 14-14-1201(c)(2)
   applicable to county purchases of real estate?
   RESPONSE
   Although your questions ask what the county may do, the relevant statute (cited in
   your fourth question) is directed toward the action(s) of county officers and
   employees. Addressed from that perspective, it is my opinion that the answer to
   Questions 1 and 2 is "no." A quorum court member or other elected county
   official cannot lawfully enter into such a purchase contract. Furthermore, the
   protocol suggested in Question 3 and the materially similar waiver provision
   found in Ark. Code Ann. § 14-14-1202( c )(2) would be unavailing, as the statutory
   waiver provision only applies to county purchases of goods or services, not real
   property.
   DISCUSSION
   Question 1: Generally, under Arkansas law, can a county purchase real estate
   from a quorum court member or other elected county official?
   Question 2: Under Arkansas law, can the county purchase the real estate in this
   situation?
   While you have asked these questions in terms of what may the county do, in my
   opinion the more relevant issue concerns what the county officials involved may
   do. It is from this perspective that I address these questions.
   The county government officers and employees ethics code, Ark. Code Ann. § 14-
   14-1202, begins by stating: "The holding of public office or employment is a
   public trust created by the confidence which the electorate reposes in the integrity
   of officers and employees of county government."1 Furthermore, the statute
   states, as a general matter:
   [A county] officer or employee may not use his or her office, the
   influence created by his or her official position, or information
   gained by virtue of his or her position to advance his or her
   individual personal economic interest or that of an immediate
   1 Ark. Code Ann.§ 14-14-1202(a)(l) (Repl. 2013). The Honorable Eddie Cheatham
   State Senator
   Opinion No. 2016-010
   Page 3
   member of his or her family or an associate, other than advancing
   strictly incidental benefits as may accrue to any of them from the
   enactment or administration of law affecting the public generally. 2
   To this end, the ethics code provides certain rules of conduct for county
   government officers and employees. Those rules state, in pertinent part, that an
   officer or employee of county government shall not:
   Be interested, either directly or indirectly, in any contract or
   transaction made, authorized, or entered into on behalf of the county
   or an entity created by the county, or accept or receive any property,
   money, or other valuable thing for his or her use or benefit on
   account of, connected with, or growing out of any contract or
   transaction of a county.3
   Violation of the rules of conduct is considered a misdemeanor, and is punishable
   by a fine of up to $1,000 and removal from office.4
   The first rule in statutory construction is to read a statute just as it is, giving the
   words their ordinary and usually accepted meaning in common language. When
   the language of the statute is plain and unambiguous, there is no need to resort to
   rules of statutory construction.5 In my view, the prohibited conduct under section
   14-14-1202 is plain and unambiguous.
   According to the facts provided, Drew County and a corporation called University
   Center, Inc., are considering entering into an agreement for University Center to
   sell real property to the county. You further state that the county treasurer and a
   Quorum Court member are "part owners" of University Center. It seems clear that
   these ownership positions would make these county officials "interested," either
   directly or indirectly, in a transaction between the county and the company. It
   2 Id. at §14-14-1202(a)(3).
   3 Id. at § 14-14-1202(c)(l)(A)(i). This prohibition, however, can be waived under certain
   circumstances, pursuant to Ark. Code Ann. § 14-14-1202( c )(2). This portion of the statute is
   discussed more fully infra.
   4 Id. at§ 14-14-1202(d)(3).
   5 See MacStee/ Div. of Quanex v. Arkansas Okla. Gas Corp., 363 Ark. 22, 30, 210 S.W.3d 878,
   882-83 (2005). The Honorable Eddie Cheatham
   State Senator
   Opinion No. 2016-010
   Page 4
   necessarily follows that section 14-14-1202 prohibits these officials from entering
   into such an agreement under these facts.
   Question 3: Assuming a licensed appraiser appraised the property, a fair market
   value is established, and a county resolution is voted on by the quorum court
   with the parties involved abstaining from the vote, is it legal for the county to
   purchase the real estate?
   Question 4: Is the waiver provision in Ark. Code Ann. § 14-14-120J(c)(2)
   applicable to county purchases of real estate?
   The protocol described in your third question resembles, in material respects, the
   "waiver provision" provided by statute and referenced in your fourth question. I
   will therefore address these questions together. The so-called waiver provision
   found in Ark. Code Ann. § 14-14-1202(c)(2) is clear in applying only to county
   purchases of goods or services:6
   (i) If the quorum court determines that it is in the best interest of the
   county, the quorum court may by ordinance permit the county to
   purchase goods or services directly or indirectly from quorum court
   members, county officers, or county employees due to unusual
   circumstances.
   (ii) The ordinance permitting the purchases must specifically define
   the unusual circumstances under which the purchases are allowed
   and the limitations of the authority. 7
   One rule of statutory construction holds that, absent indications to the contrary, the
   express designation of one thing in a statute may properly be construed to mean
   6 "Goods" are generally defined as "[t]angible or movable personal property other than money."
   BLACK'S LAW DICTIONARY 808 (10th ed. 2014). "Service" denotes an intangible commodity in
   the form of human effort, such as labor, skill, or advice. Id. at 1576.
   7 Ark. Code Ann. § 14-14-1202(c)(2)(A) (emphasis added). See also Ark. Code Ann.§§ 14-14-
   1202(c)(2)(B) ("Any quorum court member having any interest in the goods or services being
   considered under these procedures shall not be entitled to vote upon the approval of the goods or
   services.") and 14-14-1202(c)(2)(C) ("If goods or services are purchased under these procedures,
   the county judge must file an affidavit .... ") (emphases added). The Honorable Eddie Cheatham
   State Senator
   Opinion No. 2016-010
   Page 5
   the exclusion of another (expressio unius est exclusio alterius).8 And as the
   italicized portion of the statute above makes plain, this waiver provision applies
   only to the expressly designated purchases of goods or services, not to real
   property.9
   Sincerely,
   ~ :::>~
   LESLIE RUTLED~E..~
   Attorney General
   8 See Chem-Ash, Inc. v. Arkansas Power & Light Co., 296 Ark. 83, 751 S.W.2d 353 (1988);
   Venhaus v. Hale, 281 Ark. 390, 663 S.W.2d 930 (1946).
   9 Nor, in my opinion, could a county enact a more stringent and transparent set of procedures for
   itself to grant a waiver to county officials allowing a transaction that state law clearly does not
   permit the officials to enter into. See Ark. Code Ann. § 14-14-805(13) (Rep!. 2013) ("Each
   county quorum court in the State of Arkansas exercising local legislative authority is prohibited
   the exercise of ... [a]ny legislative act contrary to the general laws of the state.").