Is it a conflict of interest for a county commissioner to run a company that wins a contract from a community center the county helped create?

Plain-English summary

A community mental health center jointly created by Galveston and Brazoria counties needed a new phone system. It took competitive bids and picked the lowest one, from a Galveston company called J & J Telecommunications. The hitch: that company's president happened to be a Galveston county commissioner, and its vice president was his son. A state representative asked the Attorney General whether that arrangement was an illegal conflict of interest.

The Attorney General said no. The key fact was that the community center is its own separate unit of government, run by its own board of trustees, not by the counties. The counties' only role is appointing trustees and chipping in money; they do not run the center's day-to-day business or pick its vendors. So the Attorney General assumed the commissioner had nothing to do with awarding the phone contract.

From there, each legal theory fell away. The statute that makes a commissioner swear off contracts "with the county" did not apply, because this contract was with the center, not the county. The general conflict-of-interest law did not apply, because that law targets an official who takes part in the vote, and this commissioner did not. And the old common-law rule against an agent serving two masters did not apply, because there was no real clash between his job as commissioner and his job running the company. Since there was no problem with the commissioner himself, there was certainly no problem with his son being vice president.

Currency note

This opinion was issued in 1993. 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. The community center statutes have been recodified (former article 5547-203 is now in Health and Safety Code chapter 534), and Local Government Code conflict-of-interest provisions have been amended since 1993; confirm current law before relying on anything described here.

Background and statutory framework

The Gulf Coast Mental Health/Mental Retardation Community Center was established by Galveston and Brazoria counties under former article 5547-203, V.T.C.S. (now Health & Safety Code §§ 534.001, 534.003). Its trustees are appointed by the two commissioners courts from qualified voters, none of whom were members of the commissioners courts, though section 534.083 permits such appointments. After seven competitive bids, the center's board awarded a telephone-system contract to the low bidder, J & J Telecommunications, Inc., whose president was a Galveston county commissioner and whose vice president was that commissioner's son.

The Attorney General analyzed the question under Local Government Code section 81.002 and chapter 171, and the public policy against dual agency. A community center is administered by its own board of trustees (Health & Safety Code § 534.008) and is a unit of government separate from the counties (§ 534.001(c)), with no statutory role for a county in its functions beyond appointing trustees (§§ 534.002, 534.003) and contributing funds (§ 534.019). The AG therefore presumed the commissioner did not participate in awarding the contract.

Section 81.002 requires a commissioner to swear not to be interested in a contract with or claim against the county. Because the contract was between the center and the corporation, not the county, section 81.002 did not apply. Chapter 171's core provision, section 171.003, bars a local public official from participating in a vote or decision on a matter involving a business entity in which the official has a substantial interest; the AG concluded it did not apply because the commissioner did not participate in the center's decision. Finally, the common-law dual-agency doctrine, stated in Scott v. Kelso (the principal is entitled to the agent's best, unbiased judgment, and public policy forbids the agent from assuming a relation that tempts him against that duty), did not apply because the AG found no antagonism between the commissioner's duty to the county and his management of a corporation in contractual privity with the center. Because there was no conflict from his own management, the AG concluded a fortiori there was none from his son's role as vice president.

Citations

• Local Gov't Code § 81.002 (commissioner's oath not to be interested in a contract with or claim against the county)
• Local Gov't Code § 171.001 (definition of "local public official"); § 171.003 (bar on participating in a vote or decision involving a business entity in which the official has a substantial interest)
• Health & Safety Code § 534.001 (community center status; (c) separate unit of government); § 534.003 (appointment of trustees); § 534.008 (community center administered by its board of trustees); § 534.083 (commissioners court members may be appointed trustees)
• Scott v. Kelso, 130 S.W. 610, 611 (Tex. Civ. App. 1910, no writ) (dual-agency doctrine)

Common questions

Was it a conflict for the commissioner's company to win the contract?
Under this opinion, no. The Attorney General concluded there was no conflict of interest where a person serves simultaneously as a county commissioner and as a manager of a corporation that contracts with a community center created by the county, given that the commissioner did not participate in the award.

Why didn't the county conflict-of-interest oath apply?
Local Government Code section 81.002 covers a contract with or claim against the county. The Attorney General concluded it did not apply because this contract was between the community center and the corporation, not the county.

Why didn't chapter 171 apply?
Chapter 171 bars an official from participating in a vote or decision on a matter involving a business entity in which the official has a substantial interest. The Attorney General concluded it did not apply because the commissioner did not participate in the center's decision to award the contract.

Did the son's role as vice president create a problem?
No. The Attorney General concluded that because there was no conflict from the commissioner's own management of the corporation, there was a fortiori no conflict arising from his paternal relationship to the corporation's vice president.

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0244
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1993/dm0244.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

August 12, 1993

Honorable Tom Craddick
Chair
Ways and Means Committee
Texas House of Representatives
P.O. Box 2910
Austin, Texas 78768-2910

Opinion No. DM-244

Re: Whether there is a conflict of interest where a person serves simultaneously as a county commissioner and a manager of a corporation with which a community center created by that county has entered into a contract (RQ-536)

Dear Representative Craddick:

Your request for an opinion informs us that the Gulf Coast Mental Health/Mental Retardation Community Center ("Gulf Coast Center") is seeking to purchase a new telephone system. The Gulf Coast Center is a community center established by the counties of Galveston and Brazoria pursuant to former article 5547-203, V.T.C.S. (now sections 534.001 and 534.003 of the Health and Safety Code). All the trustees of the Gulf Coast Center have been appointed by the commissioners courts of Galveston and Brazoria from among qualified voters residing in those counties pursuant to section 534.003 of the Health and Safety Code ("the code"). None of the trustees have been members of the commissioners courts of those counties, although section 534.083 expressly permits such appointments.

After receiving seven bids for the telephone system in a competitive-bidding process, the Gulf Coast Center's board of trustees has awarded the contract to the low bidder, J & J Telecommunications, Inc. of Galveston. J & J Telecommunications, Inc. is a corporation whose president happens to be a county commissioner of Galveston and whose vice president is the son of that commissioner.

You ask us whether the contract between the community center and J & J Telecommunications, Inc. is permissible in spite of the commissioner's relationships with one of the counties that created the Gulf Coast Center and the corporation that is in contractual privity with the community center. We will consider this question in light of section 81.002 and chapter 171 of the Local Government Code and the public policy against dual agency.

For the purposes of the following discussion it is important to note that the Gulf Coast Center, as a community center, is administered by its board of trustees, Health & Safety Code § 534.008, and that there is no statutory provision for a county's involvement in any function of a community center other than in the appointment of trustees under sections 534.002 and 534.003 and in the contribution of property to the center under section 534.019, "to administer the community center's programs and services." We therefore presume that the county commissioner did not participate in the decision to award the contract to J & J Telecommunications, Inc. Furthermore, the Gulf Coast Center, as a community center, is a unit of government separate from the counties of Brazoria and Galveston:

(c) A community center is:

(1) a state agency, governmental unit, and unit of local government, as defined and specified by Chapters 101 and 102, Civil Practice and Remedies Code; and

(2) a local government, as defined by Section 3, The Interlocal Cooperation Act (Article 4413(32c), Vernon's Texas Civil Statutes).

Health & Safety Code § 534.001(c); see Attorney General Opinion M-1266 (1972) at 5 (commissioners court has no authority "to change by resolution a community center into a county department").

Section 81.002 of the Local Government Code requires a county commissioner upon entering office to swear that he or she is not interested in a contract with or claim against the county except:

(1) a contract or claim expressly authorized by law, or

(2) a warrant issued to the . . . commissioner as a fee of office.

Because the contract between the Gulf Coast Center and J & J Telecommunications, Inc. is not a "contract with or claim against the county" (emphasis added), we conclude that section 81.002 is inapplicable to this transaction.

Chapter 171 of the Local Government Code also governs conflicts of interest of county commissioners. Section 171.001 defines "local public official" in part as "a member of the governing body . . . of any . . . county." The heart of chapter 171 is section 171.003, which prohibits, among other things, a local public official's "participat[ion] in a vote or decision on a matter involving a business entity in which the official has a substantial interest" in certain circumstances. We conclude that chapter 171 does not apply to the Gulf Coast Center's decision to award the contract to J & J Telecommunications because the county commissioner did not participate in that decision.

Finally, we are of the opinion that the doctrine of dual agency does not apply to the commissioner as a member of a county governing body and a manager of a corporation with which a community center created by that governing body has entered into a contract. The doctrine was stated as follows in Scott v. Kelso, 130 S.W. 610, 611 (Tex. Civ. App. 1910, no writ): "In all cases the principal is entitled to the best effort and unbiased judgment of his agent, and the law, for reasons founded in public policy, forbids the agent's assumption of a relation which affords temptations antagonistic to [t]his duty." We find here no antagonism between the county commissioner's duty to the county and his management of a corporation that is in contractual privity with the Gulf Coast Center.

Because we have concluded that there is no conflict of interest arising from the commissioner's management of the corporation in question, a fortiori there is no conflict of interest arising from the less direct involvement of the commissioner with the corporation by virtue of his paternal relationship to the corporation's vice president.

SUMMARY

There is no conflict of interest where a person serves simultaneously as a county commissioner and a manager of a corporation with which a community center created by that county has entered into a contract.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Attorney General for Litigation

RENEA HICKS
State Solicitor

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by James B. Pinson
Assistant Attorney General