Request By:
Honorable Thomas M. Bertram, II
Attorney at Law
317 Second Street
Vanceburg, Kentucky 41179
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
This is in response to your letter of January 25, in which you relate the following facts and question:
"Recently the Mayor and City Council of the City of Vanceburg addressed a question to me as to whether there is any conflict of interest or incompatibility when the superintendent of utilities serves on the board of directors of a local bank. The utilities spoken of herein is the Vanceburg Utility Company, which is owned and operated by the City of Vanceburg."
The conflict of interest statute governing cities of the fourth class, to which Vanceburg belongs, is KRS 61.270. This statute prohibits any officer of the city from being directly or indirectly interested in any contract with the city. However, in the case of Tuggle v. Marsie, 231 Ky. 650, 21 S.W.2d 1022 (1929), it was held that this statute applies only to the mayor and the members of the city legislative body. Irrespective of the fact that the conflict of interest statute would not apply to the superintendent of the city utility company, the Court has gone so far as to declare that there would be no conflict of interest in any event where the city has selected a bank as the depositor of its funds which has as one of its director or stockholders, a city officer. The case in question is McCloud v. City of Cadiz, Ky. App., 548 S.W.2d 158 (1977).
Aside from the above, the superintendent of the utility company would not appear to hold a city office but merely a form of employment and therefore have no direct or indirect interest in the matter, even if the city went so far as to borrow money from the bank, which we have held to constitute a violation under the referred to statute and common law principle governing conflicts of interest. See OAG 79-482.
Thus, on the basis of the information submitted, we are of the opinion that no conflict of interest or incompatibility exists where a superintendent of the city utility serves on a board of directors of a local bank in which we assume municipal funds are deposited.