September 28, 1977

Mr. Thomas C. Todd, State Superintendent 
Division of Elementary and Secondary Education 
State Office Building No. 3 
Pierre, South Dakota 57501

Official Opinion No. 77-82

Interest of school board member in public contract for school supplies

Dear Mr. Todd:

You have requested an official opinion from this office based on the following factual situation:

FACTS: 

Mr. “X” has been elected a school board member of “Y” school district.  Mr. “X” will be employed on a part-time basis as a salesman for the “A” Implement Company selling farm machinery to farmers.  “A” Implement Company also sells supplies and parts to “Y” school district and may submit bids on school buses.  “X” will participate in a commission on the machinery he sells to farmers but will not participate in any commission on other sales of the company.  Mr. “X’s” only status with the “A” Implement Company is that of a part-time employee.

Based on the above factual situation, you have asked the following question:

QUESTION: 

May the “A” Implement Company continue to do business with “Y” school district after the employment of Mr. “X”?

The continued business relationship between “A” Implement Company and “Y” school district is dependent on whether Mr. “X's” involvement with both entities constitutes a direct or indirect interest in any contracts between such entities.  This is a result of SDCL 6-1-1 which makes it 
    
[U]nlawful for any officer of a county, municipality, township or school district who has been elected or appointed, to be interested, either by himself or agent, in any contract entered into by said county, municipality, township or school district, either for labor or services to be rendered, or for the purchase of commodities, materials, supplies or equipment.

Such direct or indirect interest subjects the public officer to a possible misdemeanor penalty under SDCL 3-16-7.

In Official Opinion 77-80, also issued to you, I have discussed at some length both the rationale for and the status of the law on “conflict of interest” statutes.  Therefore, for purposes of this opinion it shall be sufficient to state that the determination of a conflict of interest is strictly a factual one which the courts, and not this office, must conclusively make.  Ayres v. Junek, 247 N.W.2d 488 (S.D. 1976).  However, based upon the factual situation you have presented, it is my opinion that Mr. “X's” employment by “A” Implement Company does not necessarily create a statutory conflict of interest with his position as school board member of “Y” district for the following reasons.

The general language of SDCL 6-1-1 is modified by the provisions of SDCL 6-1-2 which states four sets of conditions to which SDCL 6-1-1 is not applicable.  Subdivision (4) of SDCL 6-1-2 provides the following exception: 
    
(4)  Any contract with any firm, association, corporation, or cooperative association for which competitive bidding is required by law, and where more than one such competitive bid is submitted.

Therefore, assuming the facts establish that any contract between “Y” school district and “A” Implement Company is awarded on competitive bids; more than one bid is submitted; and there is no fraud or deceit in the transaction, I am of the opinion that subdivision (4) may apply and permit such contract. My predecessors have similarly interpreted specific factual situations.  1963- 64 AGR 292, 1967-68 AGR 81.

Given a different set of facts, another of the exceptions of SDCL 6-1-2 may be applicable, or perhaps none of them would apply. However, subject to the above qualifications and assumptions it is my opinion that company “A,” by virtue of SDCL 6-1-2(4) is not prohibited from doing business with “Y” school district.

Respectfully submitted,

William J. Janklow
Attorney General

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