Request By:
Caryl G. Alloway
Professional Academic School Systems, Inc.
820 Lane Allen Road
Lexington, Kentucky 40504
Opinion
Opinion By: Robert F. Stephens, Attorney General; Nancy S. Marksberry, Assistant Attorney General
This is in response to your request for an opinion concerning membership on the Kentucky Real Estate Commission. You state that you are the principal officer and an instructor of an independent commercial school which specializes in courses required by the Real Estate Commission. You ask whether a conflict of interest would exist if you serve on the Real Estate Commission and continue as owner or instructor of the school.
Assuming you otherwise qualify for membership on the Real Estate Commission, hereinafter referred to as "Commission," we see no conflict of interest from serving on the Commission and continuing to own or instruct in an independent commercial school, provided neither you nor the school enters into a contractual obligation with the Commission.
A member of the Commission is a public officer or employee, as defined by KRS 61.094. A statutory conflict of interest would exist if either you or your school enters into a contract with the Real Estate Commission. We direct your attention to KRS 61.096(2), which expressly prohibits the direct or indirect interest of any public officer in any contract for the performance of work concerning matters which he may be called upon to act or vote. An example of such prohibited action would be the Commission contracting with the school to conduct continuing education seminars in the real estate field. See also Commonwealth v. Withers, 266 Ky. 29, 98 S.W.2d 24, 25 (1936), in which the Court reasoned:
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. 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 disqulifying interest must be pecuniary or proprietary by which he stands to gain or lose something. Falling within the principle are contracts with firms in which the member of the municipal body is a partner or a corporation of which he is an officer, or sometimes only a stockholder or employee. Furthermore, it is not material that the self-interest is only indirect or very small. (Citations omitted.)
Clearly, the direct or indirect existence of any pecuniary or proprietary interest between yourself and the Commission would be improper.
In addition to the possible statutory conflict of interest, a common law conflict of interest would exist from the subordinate position of your contracting school to your position on the Commission which must approve the contract. Hermann v. Lampe, 175 Ky. 109, 194 S.W. 122 (1917), held that a similar situation gives rise to a presumption that the two positions could not be executed with impartiality and honesty and would be contra to public policy.
In summary, we conclude that no conflict of interest exists in the simultaneous holding of membership on the Real Estate Commission and acting as principal officer of an independent commercial real estate school, provided no contractual interest exists between either the member or the school and the Commission.