Opinion 92-6

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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.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 -- Family Relationships (spouse of town highway department clerk repairing highway equipment) -- Powers and Duties (checking accuracy of invoices prior to approval by town officer)

GENERAL MUNICIPAL LAW, §§800[2],[3], 801, 803: A clerk in a town highway superintendent's office, whose duties include checking invoices for accuracy, would not have an interest prohibited by article 18 of the General Municipal Law if the highway superintendent were to award contracts for the repair of town highway equipment to the clerk's spouse.

You ask whether a clerk in the highway superintendent's office would have a conflict of interest if the superintendent were to award contracts for the repair of town highway equipment to the clerk's husband who owns a repair shop. The clerk's duties include keeping records of all highway purchases and checking all invoices for accuracy. We assume for purposes of this opinion that the total consideration payable under all such contracts in any fiscal year will exceed $100 and that the repair shop is operated as a sole proprietorship.

General Municipal Law, article 18 (§800 et seq.) contains provisions of law relative to conflicts of interest of municipal officers and employees (see General Municipal Law, §800[4],[5]). A municipal officer or employee is deemed to have an interest in the contracts of his or her spouse, except a contract of employment (General Municipal Law, §800[3][a]). For this purpose, a "contract" includes any express or implied claim, account or demand against or agreement with a municipality (see General Municipal Law, §800[2]). An interest in a contract 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 authorize or approve payments thereunder; (b) audit bills or claims under the contract; or (c) appoint an officer or employee who has any such duties (General Municipal Law, §801), and if none of the exceptions contained in article 18 are applicable (see General Municipal Law, §802).

If an officer or employee has an interest in any actual or proposed contract that is not prohibited under the provisions of article 18, General Municipal Law, §803 nonetheless generally requires that the nature and extent of the interest be disclosed in writing as soon as the officer or employee has knowledge of the actual or prospective interest. The written disclosure must be 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[2]).

Based on the foregoing provisions, the clerk is deemed to have an "interest" in contracts between the town and her husband (General Municipal Law, §800[3][a]). Since none of the exceptions in General Municipal Law, §802 appear to be applicable, that interest is prohibited if the clerk has any of the powers and duties specified in General Municipal Law, §801 (see General Municipal Law, §801).

Highway Law, §142[2] provides that all tools, implements and other highway equipment "shall be under the control of the highway superintendent and be cared for by him at the expense of the town". We have previously interpreted this provision as authorizing the highway superintendent, within budgetary appropriations, to make expenditures for the repair of highway equipment without prior town board approval, subject to competitive bidding requirements (see 25 Opns St. Comp 1969, p 336; cf. General Municipal Law, §104-b, requiring town boards to adopt policies and procedures for the procurement of goods and services when competitive bidding is not required). Payment for any repair services authorized by the highway superintendent may be made only upon the submission to the town board or, if the town has established the office of town comptroller, to the comptroller, of an itemized voucher accompanied by a statement of the superintendent that he approves the claim and that the services were actually rendered (see Town Law, §118). These statutory functions of the highway superintendent clearly constitute section 801 powers and duties.

The clerk's duties, however, are limited to record keeping and reviewing invoices for accuracy prior to approval by the highway superintendent. Thus, although the clerk may assist the highway superintendent in performing his section 801 powers and duties, those functions are performed by the superintendent and not the clerk. Moreover, in view of the ministerial nature of the clerk's duties and her status as a subordinate of the superintendent, we do not believe that the clerk's functions can be properly characterized as the power or duty to negotiate, prepare, authorize or approve the contracts or payment thereunder. Therefore, it is our opinion that the clerk's interest in the repair contracts would not be prohibited. The clerk, however, would be required to disclose her interest in those contracts in accordance with section 803.

Although the clerk would not have an interest prohibited by article 18, we note that General Municipal Law, §806(1) requires the town to have a code of ethics setting forth for the guidance of its officers and employees standards of conduct reasonably expected of them. A code of ethics may regulate or prescribe conduct which is not expressly prohibited by article 18, and may provide for the prohibition of conduct (id.). Therefore, the town's code of ethics should be examined to determine whether it contains any pertinent provisions.

Further, 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; see also Cahn v Planning Board of the Town of Gardiner, 157 AD2d 252, 557 NYS2d 488). Thus, the highway superintendent should avoid even the appearance that contracts for the repair of town highway equipment and vehicles are awarded on the basis of favoritism, rather than in the best interests of the town. Therefore, if the repair contracts are not subject to competitive bidding (see General Municipal Law, §103), the town board's procurement policies and procedures should require the solicitation of competition through quotations or proposals for the repair work (see General Municipal Law, §104-b[2][b]; see also General Municipal Law, §104-b[2][d],[e]).

Finally, although it may not be illegal, the award of highway contracts to the clerk's husband would weaken the internal controls of the highway department because the highway superintendent's approval of payment under the contracts would be based, in part, on the clerk's review of the accuracy of her husband's invoices. To ensure the maintenance of the town's existing system of internal controls, we believe that either the highway superintendent or an employee other than the clerk should review the accuracy of the clerk's husband's invoices.

March 9, 1992
Edward Young, Highway Superintendent
Town of Catskill