Dear Honorable Winn,
The Attorney General has received your request for an official opinion asking, in effect:
1. Does an unlawful conflict of interest arise where a bank loans money to a public trust when the vice-president of the bank is the father-in-law of a member of the Board of Trustees?
2. Does an unlawful conflict of interest arise where a contract is entered into between a municipality and a bank (for other than depository services) when the president of the bank is the father-in-law of a member of the city council?
3. Does an unlawful conflict of interest arise where a city council approves the issuance of revenue bonds of a public trust when the president of the bank acting as the registrar/paying agent on the bond issue is the father-in-law of a member of the city council?
"The receiving, directly or indirectly, by any officer of the State or of any county, city, or town, or member or officer of the Legislature, of any interest, profit, or perquisites, arising from the use or loan of public funds in his hands, or moneys to be raised through his agency for State, city, town, district or county purposes shall be deemed a felony."
Trustees of public trusts are considered to be public officials. Stateex rel. Cartwright v. Oklahoma Industries Authority,
Without question a bank receives a profit from loaning out money and collecting interest. The bank stockholders and potentially the officers and employees of the bank itself may also profit directly or indirectly from such loans. While it is theoretically possible that an individual could profit or be interested in the financial gain of one's father-in-law, the existence of such a family relationship does not, in and of itself, establish such interest. The bank loan to the public trust as outlined in your opinion request would only be improper if a member of the Board of Trustees would directly or indirectly profit from said loan or if he or she had a direct or indirect interest in the loan transaction pursuant to Okla. Const. Article
Title 21 Ohio St. 344 (1981) provides as follows:
"Every public officer, being authorized to sell or lease any property, or make any contract in his official capacity, who voluntarily becomes interested individually in such sale, lease or contract, directly or indirectly, is guilty of a misdemeanor."
The language of this statute is not appreciably different than the constitutional language quoted above. To be in violation of this statute would require some direct or indirect pecuniary interest in the transaction. Whether such interest exists is also a question of fact.
There is also a specific conflict of interest statute for public trustees. 60 Ohio St. 178.8 (1981). This statute provides in part:
"A conflict of interest shall be deemed to exist in any contractual relationship in which a trustee of a public trust, or any for profit firm or corporation in which such trustee or any member of his or her immediate family is an officer, partner, principal stockholder, shall directly or indirectly buy or sell goods or services to, or otherwise contract with such trust."
This statute affects the financial interest of some family members as well as the trustees themselves. It is limited, however, to the trustee's "immediate family." The Wisconsin Supreme Court defined this term inLewandowski v. Preferred Risk Mutual Insurance Co.,
" `Immediate family' commonly is understood to mean persons who are related by blood, adoption or marriage and are living together in the same household unit."
146 N.W.2d at 507 .
In that case a person's married sister living in a different household was held not to be a part of that person's "immediate family." See also, A.G. Opin. No. 81-070 (May 18, 1981). The interest of a father-in-law would not violate 60 Ohio St. 178.8 (1981) unless the trustee and father-in-law were living together in the same household unit. Whether a person is a part of a public trustee's immediate family is, therefore, a question of fact.
Title 21 Ohio St. 355 (1981) provides as follows:
"It shall be unlawful for any member of any . . . city council . . . to furnish, for a consideration any material or supplies for the use of said . . . city. . . ."
Section 21 Ohio St. 355 seems to require a more direct interest in a contract before the prohibition arises. Whether such a direct pecuniary interest exists, however, is also a question of fact. The prohibitions of 355 are not automatically triggered simply because a family relationship exists between a member of the city council and a person or company which contracts with the city.
Title 62 Ohio St. 371 (1981) provides as follows:
"No . . . city council . . . in this state shall make any contract with any of its members, or in which any of its members shall be directly or indirectly interested; and all contracts made in violation of this section shall be wholly void."
This section also does not prohibit all contracts between a city and family members of a member of the city council. The member of the city council must be directly or indirectly interested in the contract itself. A previous Attorney General ruled that 62 Ohio St. 371 (1981) and 21O.S. 344 (1981) did not prohibit a municipality from purchasing real property from the brother of a member of the city council unless the city council member was directly or indirectly interested in the contract. A.G. Opin. No. 79-267 (September 28, 1979). Whether such an interest exists is a question of fact.
If a city were a charter city under the Constitution and laws of Oklahoma, such city may have charter provisions concerning conflicts of interest. State statutes and the Constitution itself would control overless restrictive charter provisions of a municipality. A.G. Opin. No. 78-285 (December 28, 1978). The charter or ordinances of a municipality may contain more stringent conflict-of-interest provisions than State laws. A.G. Opin. No. 79-267, supra.
In the typical revenue bond issue of a public trust, the contract with a bank acting as a registrar/paying agent is between the bank and the public trust and the municipality is not a party to the contract. The mere fact that the city council must approve any debt created by the public trust does not mean that the city council takes action on every other contract entered into by the public trust for the issuance of the bonds. The provisions of Okla. Const. Article
It is, therefore, the official opinion of the Attorney Generalthat:
1. Whether an unlawful conflict of interest arises where a bank loans money to a public trust when the vice-president of the bank is the father-in-law of a member of the Board of Trustees of the public trust, pursuant to Okla. Const. Article
X , Section11 and 21 O.S. 344 (1981), is a question of fact dependent on the existence of an indirect or direct interest or indirect or direct profit in the transaction on the part of the public trustee. The interest must be of a financial or pecuniary nature. For the conflict to arise under 60 Ohio St. 178.8 (1981) the public trustee's father-in-law would have to be a member of the "immediate family," i.e., a member of the same household, the determination of which is also a question of fact.2. Whether an unlawful conflict of interest arises where a contract is entered into between a municipality and a bank where the president of the bank is the father-in-law of a member of the city council, pursuant to Okla. Const. Article
X , Section11 , 21 Ohio St. 344 (1981) and 62 Ohio St. 371 (1981) depends on whether the city council member has a direct or indirect pecuniary interest in the transaction or direct or indirect profit in the transaction, the determination of which is a question of fact. The interest must be of a financial or pecuniary nature. Title 21 Ohio St. 355 (1981) would require a direct pecuniary interest in the transaction for a conflict to exist, the determination of which is also a question of fact.3. No unlawful conflict of interest arises under Okla. Const. Article
X , Section11 or 62 Ohio St. 371 (1981) when a city council approves the issuance of revenue bonds of a public trust and the president of the bank which is acting as the registrar/paying agent on the bond issue is the father-in-law of a member of the city council, since this contract is with the public trust and not the city council.
MICHAEL C. TURPEN, ATTORNEY GENERAL OF OKLAHOMA
THOMAS L. SPENCER, ASSISTANT ATTORNEY GENERAL