January 25, 1980 Public Officers and Employees; Conflict of Interest; Social Services; Contract of County Social Services Department with Corporation in Which Board Member Has Pecuniary Interest;
Subject:
N.C.G.S. 14-234(a)
Requested By: Mr. Timothy W. Howard Attorney for Sampson County Department of Social Services
Question: Does a prohibited conflict of interest occur when a funeral home in which the chairman of the county board of social services holds a pecuniary interest enters into a contract with the county department of social services to provide funeral and burial services for a ward or juvenile under the jurisdiction or custody of the county department of social services?
Conclusion: A conflict of interest may exist, within the purview of N.C.G.S. 14-234(a), if a contract is made under the facts stated.
The acting director of a county department of social services serves as guardian for certain individuals pursuant to N.C.G.S. 35-1.34 and, as guardian, receives and disburses funds, including Social Security payments for his wards’ benefit.
In addition, the county department of social services has legal custody of certain juveniles for whom it serves as protective payee and makes disbursements for their benefit. The chairman of the county board of social services is a director of a funeral home and has a financial interest therein. The issue to be determined is whether a conflict of interest will arise under N.C.G.S. 14234(a) if the acting director of the county department of social services enters into a contract with the funeral home to provide funeral and burial services for wards of the acting director of juveniles under the custody of the county board of social services.
N.C.G.S. 14-234(a) reads, in pertinent part:
"If any person appointed or elected a commissioner or director to discharge any trust wherein the State or any county, city or town may be in any manner interested shall become an undertaker, or make any contract for his own benefit, under such authority, or be in any manner concerned or interested in making such contract, or in the profits thereof, either privately or openly, singly or jointly with another, he shall be guilty of a misdemeanor."
Any contract with the funeral home would be made by the acting director, and presumably, there would be no contract between the funeral home and the board of social services. The director would be acting in his official capacity in making such contracts, however, and the board of social services is in a position to exercise substantial control over the director.
Under N.C.G.S. 108-15(1) and N.C.G.S. 108-17, the county board of social services appoints the director of social services for the county. The salary of the director is determined by the county board of social services pursuant to N.C.G.S. 108-18. The director serves as executive officer of the board and acts as its secretary, as provided in N.C.G.S. 108-19(1). In an Opinion of the Attorney General to the Honorable J. Hayden Wiggs, appearing in 40 N.C.A.G. 561, the question was whether a conflict of interest, within the purview of N.C.G.S. 14-234, would arise if a corporation built and leased houses to a municipal housing authority when the mayor of the municipality was president and owner of the corporation. The facts, reasoning and conclusion of that Opinion are analogous to the situation presented here.
It was stated in that Opinion, copy of which is attached:
"Although the corporation would be contracting directly with the housing authority, it is noted that the housing authority is created by the governing body of the municipality. More importantly, the mayor appoints the members of the authority and has the power to remove them from office. (G.S. 157-4-G.S. 157-8.) Thus, indirectly the contract would be with the municipality. . . .
"In the absence of court decisions more directly in point with the facts presented, a definitive opinion cannot be expressed; however, the language of the cited cases indicate that the court may hold such a contract to be in violation of G.S. 14-234."
N.C.G.S. 14-234 has been amended since the date of the quoted Opinion, but none of the amendments exempt the matter under consideration from the application of the statute. As in the Opinion quoted above, it is concluded that the courts may hold the contract in question here to be in violation of N.C.G.S. 14-234(a).
Inquiry is also made, if a conflict exists, whether the conflict can be avoided by any steps short of resignation of the board member or non-participation of the funeral home in such contracts? In the light of the case law and previous opinions of this Office, no other alternatives come to mind. State v. Williams, 153 N.C. 595, quoted at length in the attached Opinion, should prove illuminating on this question.
Rufus L. Edmisten Attorney General
Henry T. Rosser Assistant Attorney General