Request By:
Mr. Hamilton B. Simms
City of Springfield
Springfield, Kentucky 40069
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
This is in answer to your letter of February 2 in which you, on behalf of the city of Springfield [a city of the fourth class under the councilmanic form of government], relate that the city has a separate sewer and water commission, composed of three (3) members, which acts independently of the city, with its funds deposited in a separate account from that of the city funds. Recently, the sewer and water the sewer and water board advertised for bids to purchase a new pickup truck. Bids were submitted by a member of the sewer and water board and also by a member of the city council. The water board member's bid was the lowest. Following a protest by a third bidder, the city council member withdrew his bid but the water and sewer board member refused to do so. Under the circumstances, you raise the following questions:
"(1) Would a member of the Sewer and Water Commission come under the provisions of KRS 61.270? If not, would there still be a common law conflict of a board member bidding on the contract?
"(2) Is it permissible to re-advertise or should the bid be awarded to the lowest valid bid -- in this instance, the protesting car dealer?"
In response to your initial question, KRS 61.270, which appears to prohbit all city officers from being interested, directly or indirectly, in any contract with the city, has been held to apply only to the mayor and members of the city council in the case of
Tuggle v. Marsee, 231 Ky. 650, 21 S.W.2d 1022 (1929). As a consequence, this statute would apply to the city councilman but not to the member of the sewer and water board though he would be considered a municipal officer since the water and sewer commission, though governed by an independent commission, would nevertheless constitute an agency of the city.
On the other hand, we believe that a common law conflict of interest would exist which would prohibit the execution of a contract for the equipment in question by a member of the water and sewer board and said board for the following reasons.
In the case of
Neisius v. Henry, 142 Neb. 29, 5 N.W.2d 291, it was held that express contracts are unenforceable on ground of public policy, even in absence of statute or charter provision.
Next referring to McQuillin's Municipal Corporations, Vol. 10, § 29.97, we find the general rule expressed as follows:
". . . it is generally held that whenever a public officer enters into a contract the execution of which may make is possible for his personal interests to become antagonistic to his faithful discharge of a public duty, such contract will be held void as against public policy. . . ."
Also, referring to the case of
Commonwealth v. Withers, 266 Ky 29, 98 S.W.2d 24 (1936), we find the Court of Appeals stating that:
"It is a salutary doctrine that he who is intrusted with the business of others cannot be allowed to make such business an object of profit to himself. This is based upon principles of reason, of morality, and of public policy. These are principles of the common law and of equity which have been supplemented and made more emphatic by the foregoing and other statutory enactments.
Nunemacher v. City of Louisville, 98 Ky. 334, 32 S.W. 1091, 17 Ky. Law Rep. 933. In their application and operation it is impossible to lay down any definite rules defining the nature of the interest of the officer, or indicating the line between that which is proper and that which is unlawful. In general, the disqualifying interest must be pecuniary or proprietary by which he stands to gain or lose something. . . . Furthermore, it is not material that the self-interest is only indirect or very small."
In response to your second question, the sewer and water board is an agency of the city and would be required to advertise for bids pursuant to KRS 424.260 where the contract involved more than $2500. Since the city councilman has withdrawn his bid, which was proper, we believe that the board could either reject the board member's bid as being illegal for the reasons cited above and award the contract to the remaining bidder, or it could, under the circumstances, reject all bids and readvertise where all bids were not found to be satisfactory. Reference 40 Am.Jur., Public Works and Contracts, § 49.