Request By:
Honorable Marvin R. O'Koon
General Counsel
Department for Human Resources
Commonwealth of Kentucky
275 East Main Street
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
This is in answer to your letter of November 17 in which you present the following facts and question:
"This is a request for an opinion concerning whether or not a conflict of interest will exist if a milk inspector for the Department for Human Resources, Bureau for Health Services, enters into a certain business arrangement regarding the operation of a manufacturing dairy farm.
"KRS Ch. 217C directs the Department for Human Resources to provide for uniform state standards and requirements for milk and milk products (217C.010). Pursuant to the provisions of KRS 217C.040, the Secretary for Human Resources has adopted statewide regulations relating to: (1) Grade A milk and milk products; and (2) Manufacturing milk and milk products. . . .
"The employe in question is presently a Grade A milk inspector and owns a 257 acre farm. His residence is located just across the road from the farm. He is presently considering leasing the farm to a tenant for the purpose of operating a manufacturing milk producer dairy. The tenant will provide the equipment and dairy cattle, with the employe providing the premises, including the dairy barn. The income from the proposed manufacturing milk operation will be divided on a fifty-fifty basis.
"It should be emphasized that the employe's present responsibilities do not include the inspection of manufacturing milk producers. However, his job description does provide for the 'inspection of dairy farms, processing plants and sample collection of fluid milk (i.e., Grade A milk and milk products) and/or milk for manufacturing purposes and enforcement relating to inspections and surveillance of processors and producters * * *.'
"The employe in question has never been assigned the responsibility for the inspection of manufacturing milk producers; however, circumstances could conceivably arise in the future which would require him to inspect manufacturing milk producers in the area in which he resides.
". . . Each milk inspector, therefore, serves a certain designated area.
"Under the circumstances described herein, would the employe in question be involved in a conflict of interest if he entered into the business arrangement herein described?"
In response to your question and based on the facts presented, we do not believe that a conflict of interest would exist, provided that the employe in question is not permitted to inspect or supervise the inspection of the production of milk on his farm as such would be against public policy. Referring to the case of
Arms & Short v. Denton, 212 Ky. 43, 278 S.W. 158 (1925), we quote the following excerpt therefrom:
"Public policy is defined to include and embrace all acts or contracts which tend clearly to injure the public health, the public morals, the public confidence in the purity of the administration of the law, or to undermine that sense of security of individual rights, whether of personal liberty or of private property, which any citizen ought to feel. 6 R.C.L. 712. The same text says:
"'It is no doubt correct to say that, while public policy forbids the enforcement of an illegal or immoral contract, it is equally insistent that those which are lawful and contravene none of its rules shall be enforced, and not held invalid on a bare suspicion of illegality.'"
Also referring to the case of
Commonwealth ex rel. Vincent 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. 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.
Byrne & Speed Coal Co. v. City of Louisville, 189 Ky. 346, 224 S.W. 883;
Douglas v. Pittman, 239 Ky. 548, 39 S.W. (2d) 979. Furthermore, it is not material that the self-interest is only indirect or very small."
Under the circumstances, we find no statutory or common law conflict of interest involved in your question, unless, as we said initially, the Department for Human Resources permits the employe in question to inspect or supervise the inspection of the production of milk on the farm that he has leased to a tenant but from which he receives one-half of the profits. In other words, we see no legal objection to the Department permitting the inspector to perform his duties under Chapter 217C KRS, et al, so long as he has no supervision directly or indirectly over the inspection of the milk produced from his farm. To avoid any question on this matter, we suggest that he not be assigned to any part of the area or district in which his farm is located as established under the statewide program.