This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
CONFLICTS OF INTEREST -- Legal Services (law partner of village mayor hired as village attorney)
GENERAL MUNICIPAL LAW, §800(3); VILLAGE LAW, §4-400(1)(c): If a law partner of a village mayor is appointed to the position of village attorney, the mayor does not have an "interest" in the employment contract within the meaning of General Municipal Law, §800(3) if the mayor's partner is hired independently of the partnership and is paid directly as an individual so that none of the compensation goes into the partnership. Nevertheless, the village's code of ethics should be consulted, and it should be noted that courts have held contracts to be improper in certain circumstances even when there is no literal violation of the conflicts of interest statute.
This is in reply to your letter stating that the village is considering appointing a law partner of the village mayor to fill a vacancy in the position of village attorney. We are informed that it is not contemplated that the partner or the law firm would be retained as an independent contractor, but rather, that the partner will be engaged as an employee of the village. It is also anticipated that the salary to be drawn by him will be paid to him personally, and not to the law firm. You ask whether, under these circumstances, the appointment of the mayor's law partner would result in a prohibited conflict of interest under article 18 of the General Municipal Law.
Article 18 of the General Municipal Law (§§800, et seq.) contains the provisions of law which relate to conflicts of interest of municipal officers and employees. Pursuant to General Municipal Law, §800(3), a municipal officer or employee has an interest in any contract with his or her municipality if the officer or employee receives a direct or indirect pecuniary or material benefit as a result of that contract. In addition, regardless of whether an officer or employee receives a direct or indirect pecuniary benefit from a contract, an officer or employee is deemed to have an interest in any contract of a partnership of which the officer or employee is a member (General Municipal Law, §800[b]). That interest is prohibited if the officer or employee, individually or as a member of a board, has the power or duty to: (a) negotiate, prepare, authorize or approve the contract or approve payments thereunder; (b) audit bills or claims under the contract; or (c) appoint an officer or employee who has any such powers or duties (General Municipal Law, §801), and none of the exceptions contained in Article 18 are applicable (see General Municipal Law, §802). Any contract willfully entered into in which there is a prohibited interest is null, void and unenforceable (General Municipal Law, §804) and any officer or employee who willfully or knowingly violates the provisions of Article 18 may be guilty of a misdemeanor (General Municipal Law, §805). We also note that, if an officer or employee has an interest in a contract that is not prohibited under the provisions of Article 18, General Municipal Law, §803 nonetheless generally requires that the interest be disclosed in writing and included in the official record of the governing board's proceedings. Disclosure is not required under section 803 in the case of an interest in a contract which is not prohibited under subdivision two of section 802 (General Municipal Law, §803).
In accordance with the above provisions of Article 18, the mayor, as a partner, would be deemed to have an interest in any contract of his law firm. Further, he would have an interest in any contract of a member of the law firm if the consideration under the contract is paid into the partnership and if, under the terms of the partnership, he would share in the moneys received under the contract (23 Opns St Comp, 1967, p 589; 1980 Opns St Comp No. 80-164, unreported; 1981 Opns St Comp No. 81-40, p 41). Those interests would be prohibited because the mayor clearly would have section 801 functions in connection with those contracts (see, e.g., Village Law, §§4-400, 4-412, 5-524).
However, you have stated that it is proposed that the mayor's partner will be hired, independent of the partnership, as an employee of the village and that all compensation will be paid directly to him individually. Under these circumstances, therefore, it would appear that the mayor would not have an interest in the employment contract between the village and his law partner. Nonetheless, we suggest that the village's code of ethics be consulted to ascertain whether it contains any pertinent provisions which may be more restrictive than Article 18 (see General Municipal Law, §806).
We also note that the courts of this State have held public officials to a high standard of conduct and, on occasion, have negated certain actions which, although not violating the literal provisions of Article 18 of the General Municipal Law, violate the spirit and intent of the statute, are inconsistent with public policy, or suggest self-interest, partiality or economic impropriety (see e.g. Zagoreos v Conklin, 109 AD2d 281, 491 NYS2d 358; Matter of Tuxedo Conservation and Taxpayers Association v Town Board of the Town of Tuxedo, 69 AD2d 320, 418 NYS2d 638; Conrad v Hinman, 122 Misc 2d 531, 471 NYS2d 521). Although this Office cannot predict whether a court in a given situation would view the hiring of the mayor's law partner as village attorney as being contrary to public policy, we nonetheless suggest that the village consider the possible consequences of a judicial review of the mayor's exercise of the power of appointment (see Village Law, §4-400[c]) under circumstances where its exercise might appear to be tainted by self-interest or partiality.
June 20, 1988
John E. Gillies, Esq., Village Attorney
Village of Farmingdale