Request By:
Linda P. Sullivan, Esq.
Corporate Counsel
Lexington Fayette Urban County Government
Department of Law
200 East Main Street
Lexington, Kentucky 40507
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Thomas R. Emerson, Assistant Attorney General
Your letter concerns possible conflicts of interest of a retired pension fund member who serves simultaneously as a trustee on the city's retirement fund board and as president of the Retired Firefighters, Police Officers and Widows, Inc., an organization of retired police and fire fighters and their dependents.
Your specific questions are as follows:
(1) whether the retired fund member as trustee may vote on pension increases or similar matters, and
(2) whether he may serve as a trustee while simultaneously serving as an officer of the aforementioned Fund members organization.
Your Department has answered both of these questions in the negative, relying upon the
Urban County Government Charter and Commonwealth ex rel. Vincent v. Withers, 266 Ky. 29, 98 S.W.2d 24 (1936).
While the Withers case, supra , certainly sets forth the general principles and concepts relative to conflicts of interest of public officers, there are some factors present here which create an exception to the general rule.
KRS 67A.530, dealing with the Board of Trustees of the Urban County Police and Fire Fighters Retirement Fund, now provides for an eleven member board to operate the fund. Among the Board members are one retired member of the fund, the chiefs of the police and fire departments and two active members of each department.
The General Assembly has specifically provided that the retired members be represented by one person selected by retired fund members from a list of three nominees. This person has the same voting rights as the other ten board members. To deny the retired board member his right to vote would deny representation to all retired members as this person is representing the interests of all retired members and not just his own personal interests as a retiree.
In McQuillin Mun. Corp. (3rd Ed.), Vol. 4, § 13.35 the following appears in part:
In spite of the foregoing, apparently the interest of the council member is not always considered to disqualify him from voting. Where an administrative body has a duty to act upon a matter which is before it and is the only entity capable to act in the matter, the fact that the members may have a personal interest in the result of the action taken does not disqualify them to perform their duty.
In addition, in McQuillin Mun. Corp. (3rd Ed.), Vol. 4, § 13.35a it is stated:
So, it has been held that a member is not disqualified from voting on an ordinance establishing a sewer district because he owns property within the district. Likewise, the fact that a member would be benefited by a change in street grade or by any other street improvement does not disqualify him from voting on the proposition.
The situation you have presented raises the question of whether a public officer may vote on matters in which he has an interest and what type of interest must exist before the officer is disqualified from voting on those matters. There is no Kentucky statute specifically dealing with this problem.
In 62 C.J.S. Municipal Corporations, § 402, the following appears:
On the other hand, it has been held that personal interest does not disqualify members of the governing board from voting on matters as to which the body acts in a legislative capacity. Members have been held not disqualified where their interest is only as members of a class as contra-distinguished from personal interest, or because they would receive personal benefits as part of the community or of the locality to be improved . . . .
In connection with voting on public improvements, it is stated in 63 C.J.S., Municipal Corporations, § 1118, as follows:
The mere fact that a member of the council has signed a petition for an improvement will not prevent him from voting on the ordinance, nor is a member disqualified from voting by reason of the fact that he owns property in the improvement district . . . .
The term "conflict of interest" and a public officer's voting on a matter in which he has an interest are also discussed in 67 C.J.S., Officers, § 204:
As a general rule, the term 'conflict of interest' refers to a clash between public interest and the private pecuniary interest of the individual concerned, and there is a conflict of interest when a public officer votes on a matter in which he has a direct personal and pecuniary interest. The interest which disqualifies is a personal or private one, not such an interest as the public officer has in common with all other citizens. According to some authority, in order to constitute a disqualification, the personal pecuniary interest of the official must be immediate, definite, and capable of demonstration, and may not be remote, uncertain, contingent and speculative . . . .
The Court, in Preston v. Gillam, N.H., 184 A.2d 462 (1962), said it is a general rule of law that a conflict of interest exists when a public officer votes on a matter in which he has a direct personal and pecuniary interest. However, in all matters where his interest is the same as that of any other citizen, his right to vote cannot be questioned. Whether a conflict of interest exists is ordinarily factual and depends upon the circumstances of the particular case.
In connection with voting on a matter by a public official, the
Court, in Netluch v. Mayor and Council of the Borough of West Paterson, 130 N.J. Super. 104, 325 A.2d 517 (1974), said:
The person or private interest which disqualifies may be identified generally as one which is different from that which the public officer holds in common with members of the public.
Aldom v. Roseland, supra, at 507, 127 A.2d 190 . . . .
The question to be resolved is always whether the circumstances could reasonably be interpreted to show that they had the likely capacity to tempt the public officer to depart from his public duty. The public officer's personal advantage, pecuniary or otherwise, is one of the elements to be considered in determining whether a conflict of interest exists but it is not the only test. See
Katz v. Brandon, Conn., 245 A.2d 579 (1968).
In
Lenz v. Coon Creek Watershed District, Minn., 153 N.W.2d 209, 219 (1967), the Court said there is no settled general rule as to whether the personal interest of a public official will disqualify him from participating in proceedings in a decision-making capacity. Each case must be decided on the basis of the particular facts involved in that situation. Among the relevant factors to consider are: the nature of the pecuniary interest; the nature of he decision being made; the number of officials making the decision who are interested; the need, if any, to have interested persons make the decision; other means available, if any, that serve to insure that the officials will not act arbitrarily to further their selfish interests.
We have been unable to find any Kentucky case directly in point but we will cite several that may be of some interest in connection with the questions you have presented. In
City of Springfield v. Haydon, 216 Ky. 483, 288 S.W. 337 (1926), the city was concerned with the reconstruction of its streets. The Court, without elaboration, merely stated, "A councilman having an interest in the matter cannot vote on it." The Court also said in
Davis v. City of Jenkins, Ky., 238 S.W.2d 475 (1951), that a city officer cannot act in a matter affecting the public when he has a direct pecuniary interest in that matter.
In
Pursiful v. City of Harlan, 222 Ky. 658, 1 S.W.2d 1043 (1928), the city was concerned with the improvement of its streets. The Court said the proof established that a council member was anxious for the street improvement and that his property would be benefited by it. The lowering of the street grade resulted in the placement of dirt in front of the concilman's property but this was merely the nearest and most convenient place to place the dirt. The Court concluded that the councilman's interest was not enough to establish that he acted in a corrupt manner.
In
Hodge v. City of Princeton, 227 Ky. 481, 13 S.W.2d 491 (1929), the Court said that a councilman who was a dealer in sewer pipe, cement and other building materials was not disqualified from voting on an ordinance dealing with the construciton of sewers in the city as there was no evidence that the councilman was financially interested in the contract for the construction of the sewer system. The allegations against the councilman were too vague, uncertain, indefinite and nebulous to show any disqualfying interest.
Thus, in the opinion of this office, KRS 67A.530 gives the member of the Board representing the retired members the right to participate in and vote on matters before the Board affecting retirees. The retired Board member is authorized to represent his constituents, the retirees, and his interests are in common with that group. The fact that the retired Board member also serves as an officer of a private group representing retirees does not automatically disqualify him from membership on the Board of the pension and retirement fund.