Request By:
Ms. Naomi C. Richardson
Box 122
Sonora, Kentucky 42776
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
This is in answer to your letter of January 12 in which you relate that the city of Sonora, a city of the sixth class, has recently elected a new town board, a member of which is also the branch manager of the First Hardin National Bank of Elizabethtown in which funds of the city of Sonora are deposited. The question is raised as to whether or not this creates a conflict of interest.
The answer to your question would be in the negative. KRS 61.280 prohibits a member of the city council from being interested, directly or indirectly, in any contract with the city; however, the Court of Appeals has taken the position in the case of McCloud v. City of Cadiz, Ky. App., 548 S.W.2d 158 (1977), that the deposit of money by a city of the fifth or sixth class with a bank where certain city officers are directors does not violate the confidct of interest statute referred to. The court went further and pointed out that the statute was designed in part to protect the value of the goods and services received by the public whereas in a government regulated activity, such as banking, there can be no question as to the value received. There is, therefore, no opportunity for imposition on the public.
Also, cited in the McCloud case is the case of Commonwealth v. Withers, 266 Ky. 29, 98 S.W.2d 24 (1936), in which the court declared and we quote:
"However, the interest is not sufficient to disqualify the officer if the opportunity for self-benefit is a mere possibility or is so remote or collateral, such as being only a debtor, that it cannot be reasonably calculated to affect his judgment or conduct in the making of the contract or in its performance."
Under the circumstances, no conflict of interest would exist where a member of the board of trustees is also branch manager of a bank in which municipal funds are deposited.
The same rules would apply where the board member's wife [who is also the city tax collector] works for the bank in question.