Request By:
Mr. Carlos B. Pope
Administrator, Boone Manor
117 Shelby Street
Barbourville, Kentucky 40906
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter asking whether a conflict of interest exists if a member of the fiscal court serves on the board of directors of a nursing home.
On August 3, 1971, the Knox County Fiscal Court adopted a resolution to undertake the construction of a geriatric facility which would be leased to Knox Housing, Inc., a nonprofit corporation. On September 1, 1971, a "lease agreement" was entered into between Knox County (lessor) and Knox Housing, Inc. (lessee) for a term of thirty years, after which time the bonded indebtedness will be paid off and the county will own the facility debt free. Knox Housing, Inc. was not created by county government and its staff members are not county employes. The county issued bonds, the facility was constructed and Knox Housing, Inc. commenced operating the facility in August of 1972 as Boone Manor Nursing Home. The facility is operated by a board of directors consisting of ceven members who are not appointed by the fiscal court.
KRS 61.220 provides as follows:
"(1) Any member of the fiscal court who becomes interested, directly or indirectly, in any contract for work to be done or material to be furnished for the county or any district thereof, or who becomes interested in any claim against the county or state shall be fined not less than five hundred (500) nor more than five thousand dollars ($5,000) for each offense.
(2) If any county judge/executive or justice is, by the same act, guilty of a violation of this section and KRS 61.210, he shall be punished as provided in KRS 61.210."
The purpose of KRS 61.220 is set forth in Knox Fiscal Court v. Davis, 267 Ky. 155, 101 S.W.2d 409, 413 (1936) as follows:
". . . Clearly the statute was intended to prevent members of the fiscal court from entering into contracts with the county for the salutary purpose of protecting the county 'against the sinister influences and purposes of its fiscal agencies who might for the purpose of gain enter into contracts much to their own advantage and greatly to the detriment of the county.'"
From the information set forth in your letter it would seem that KRS 61.220 is not applicable to the situation presented. It does not appear that the fiscal court member would be acquiring an interest in a contract with the county or in a claim against the county. Furthermore, the lease between the county and the nonprofit corporation was executed in 1971 and if a conflict of interest is to occur in connection with a governmental officer who has an interest in an organization contracting with the governmental entity he represents, the interest must exist when the contract is made. If at the time the contract is made no officer has a pecuniary interest in it, the contract is valid and it will not be invalidated because an officer acquired an interest before he assumed his office or after he left his office. See Collinsworth v. City of Catlettsburg, 236 KY. 194, 32 S.W.2d 982 (1930).
There is a possibility that a practical or common law incompatibility may exist. We direct your attention to the case of Hermann v. Lampe, 175 Ky. 109, 194 S.W. 122, 126 (1917), where the Court said in part:
"'The inconsistency, which at common law makes offices incompatible, does not consist in the physical impossibility to discharge the duties of both offices; but rather in a conflict in interest, as where the incumbent of one office has the power to remove the incumbent of another, or to audit the accounts of another, or to exercise a supervision over another, as in the case of a judicial officer and his subordinate ministerial officer.'"
* * *
"'Offices are said to be incompatible and inconsistent so as to be executed by the same person: First. When from the multiplicity of business in them, they cannot be executed with care and ability; or second, when, their being subordinate and interfering with each other, it induces a presumption that they cannot be executed with impartiality and honesty. '"
In Polley v. Fortenberry, 268 Ky. 369, 105 S.W.2d 143, 144 (1937), the Court said:
". . . The two employments not being incompatible under the Constitution or statute, the case turns on whether the two offices or employments are incompatible under the common law. As said in Barkley v. Stockdell, 252 Ky. 1, 66 S.W.2d 43, 44, 'Aside from any specific constitutional or statutory prohibitions, incompatibility depends on the character and relation of the offices and not on the matter of physical inability to discharge the duties of both of them. The question is whether one office is subordinated to the other, or the performance of one interferes with the performance of the duties of the other, or whether the functions of the two are inherently inconsistent or repugnant, or whether the occupancy of both offices is detrimental to the public interest. '"
As we said in OAG 76-662, copy enclosed, whether a common law incompatibility or conflict of interest exists is a matter for the courts to resolve. To avoid a conflict of interest problem and a common law incompatibility, the person holding both positions would have to demonstrate that he can perform the requirements of his governmental office with the necessary care and ability and impartiality and honesty. The positions cannot be so related that one is subordinated to the other; the performance of the nongovernmental position cannot interfere with the performance of the public office, and the public interest cannot be compromised because of the holding, concurrently, of the two jobs.
In conclusion, it is our opinion that there appears to be no statutory incompatibility or conflict of interest where a member of the fiscal court serves concurrently on the board of directors of a nonprofit corporation managing a geriatric facility which it has leased from the fiscal court. It is possible, however, that a common law incompatibility or conflict of interest might exist in that, for example, the lessor's interest and the lessee's interest may not always be compatible and under the proposed appointment the same person would be concurrently representing both the lessor and the lessee. Whether a common law incompatibility or conflict of interest exists is a matter to be resolved by a court of law.