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Opinions' on this subject ·makes it apparent that
<br />the assumption of office by someone who has a
<br />personal financial interest in a city contract pre-
<br />viously entered into often poses borderline ques-
<br />tions about possible violation of conflict of interest
<br />statutes in the course of performance of the
<br />contract. In doubtful cases of this kind, the person
<br />faced with a possible conflict of interest situation
<br />may find it advisable to secure legal advice before
<br />assuming municipal office or continuing to hold
<br />office should questions arise later.
<br />
<br /> Officers Affected by Conflict of Interest Provisions
<br />
<br /> The general unlawful interest statute, M.S.
<br />47'I.87 ff., has no application to officers who are
<br />not authorized' to take part in the making of
<br />contracts with the city. Therefore, it does not pre-
<br />vent the treasurer, assessor, the clerk in an optional
<br />plan statutory city, and other like officers from
<br />entering into contracts with the city. The law
<br />prohibits a member of an independent utilities
<br />commission from being-interested in contracts
<br />entered into by the commission; it does not
<br />prevent the commission member from having an
<br />interest in a contract entered into by the council.'
<br />'Similarly, a council member may have an interest
<br />in a contract with the utilities commission but
<br />not in one made by the council.
<br />
<br /> The clerk'in' a standard plan statutory city or
<br />in a home rule city having a similar plan of govern-
<br />rr:ent is a member of the council but occupies a
<br />peculiar position. He is subject to the official in-
<br />terest statutes and may not be interested in a con-
<br />tract with the council (A.G. Op., 470, LMC 130d,'
<br />June 9, 1967); however, the council is allowed to
<br />impose duties on the .clerk in addition to those
<br />~signed to him by statute and it may fix his
<br />compensation, taking into account the duties it
<br />has imposed upon him.
<br />
<br />" Since the fixing of elective officers' com-
<br />pensation is not a matter of contract, that subject
<br />is discussed in Part II. .
<br />
<br /> Many home rule charters contain provisions
<br />preventing any officer or. employee from being
<br />interested in a contract with the city. Such a
<br />provision evidendy applies to every municipal
<br />officer or employee whether or not he or she has
<br />a part in the making of a contract. 'However, in
<br />a city where the mayor is not a member of the
<br />council and has no part in the making of contracts,
<br />a charter provision that "no person who is directly
<br />or indirectly interested in any contract with the
<br />city or any department 'or institution thereof
<br />sha~l be qualified to be elected or shall hold the
<br />office of alderman or any elective or appointive
<br />office in said city" does not apply to a contract
<br />of insurance negotiated by the council with the
<br />b~-nk of which the mayor is vice-president, a
<br />sa!aried officgr, and a minor stockholder. (A.G.
<br />
<br />-5-
<br />
<br />Op., LMC 130d, Feb. 28, 1944'.) The Attorney
<br />General reasoned that if it were held otherwise, the
<br />council could, under the. charter, oust thc mayor
<br />merely by entering into a contract with a company
<br />in which the mayor was interested atthough the
<br />.mayor might be unaware that such agreement had
<br />even been proposed. The charter provision should
<br />not therefore invalidate the contract. This ruling
<br />must be limited to the special circumstances
<br />involved; a different conclusion would clearly be
<br />reached if a contract were to be made directly
<br />with the mayor by the council
<br />
<br />Validity of Contracts with Relatives of City Officials
<br />
<br /> The official interest laws do not specifically
<br />mention relationship as constituting financial
<br />interest. The courts of other states generally have
<br />held that family relationship itself has no dis-
<br />qualifying effect on the making of a contract.
<br />(See annotation in 74 A.L.R. 792.)Thus in
<br />~. City of~ock£org, 306 111. App. 443, 28 N.E.
<br />2d 748 (1940}, .the fact that relatives of an
<br />alderman were employed by the successful bidder
<br />was held insufficient by itself to disqualify him
<br />from voting on the contract. There must be proof,
<br />the court said, that the councilman had a financial
<br />interest. Similarly in £ewick ~: Gla:ier, 116 Mich.
<br />493, 74 N.W. 716 (18,98), it was held.that the
<br />fact that a village trustee was the father of the
<br />contractor of a village waterworks system would
<br />not disqualify him from acting on the proposed.
<br />contract. - ·
<br />
<br /> Cases dealing with non-contract situations
<br />and mentioned in Part ii of this memorandum
<br />are to the same effect, in none of them has the
<br />mere fact of family relationship other than that
<br />of husband and wife resulted in a disqualifyin~
<br />interest. ' '
<br />
<br /> While it is easier to find that a council member
<br />has a personal financia~ interest, in a contract
<br />with 'the member's spouse, it has sometimes
<br />been held that the husband-wife relationship
<br />alone does not make the contract, invalid, in
<br />at least two cases, state supreme courts have held
<br />that a school board is not precluded from appoint-.
<br />lng the wife of one of its members to teach school
<br />as long as under state law (as in Minnesota M.S.
<br />519J02), the wife's earnings are her own property.
<br />(Thompson v. District Board, 252 Mich. 629,233
<br />N.W. 439,.74 A.L.R. 790, 1930; Board of £ducation
<br />v. Boal, 104 Ohio 482, 135 N.E. 540, 1922.) The
<br />Minnesota statute forbidding officials from having
<br />a personal financial interest in contracts is similar
<br />to those construed in the two cases cited. See,
<br />however, the contrary cases of Haislip ~. IVhite,
<br />124 W. Va. 633, 22 S.E. 9d 361 {1942);Beakley
<br />v. City of Bremerton, 5-Wash. 2d 670, 105
<br />['ac. 2d 40 (1940). The situation is different
<br />in states whe:e husband and wife's earnidgs are
<br />community property~ and the interest of each in
<br />
<br />
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