October 23, 1979
Mr. Dennis D. Evenson
Deuel County State's Attorney
Clear Lake, South Dakota 57226
Official Opinion No. 79-39
County Commissioner's personal interest in public contract
Dear Mr. Evenson:
You have requested an official opinion from this office in regard to the following factual situation.
FACTS:
One of the county commissioners for Deuel County is presently a director and a vice president of a mutual insurance company in Deuel County, South Dakota. The mutual insurance company is insuring 4-H buildings at the fairgrounds and the county is paying the premium on the buildings. The premium amounts to over $600.00 per year.
Based on the above facts, you have asked the following questions:
1. Where a member of the Board of County Commissioners is a director and a vice president of an insurance company from which insurance has been purchased for the county, is the insurance contract void?
2. If the answer to Question 1 is yes and the member of the Board of County Commissioners resigns as vice president and continues as a director of the insurance company, will the insurance still be void?
3. If the member of the Board of County Commissioners resigns as vice president and director of the mutual insurance company, is the insurance contract still void in view of the fact that the insured contract was renewed at the time that a member of the Board of County Commissioners was a director and vice president of the insurance company?
IN RE QUESTION NO. 1:
SDCL 6-1-1 provides:
It shall be unlawful 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 of any kind, the expense, price or consideration of which is paid from public funds or from any assessment levied by said county, municipality, township or school district, or in the purchase of any real or personal property belonging to the county, municipality, township or school district or which shall be sold for taxes or assessments or by virtue of legal process at the suit of such county, municipality, township or school district. Such contract shall be null and void from the beginning.
SDCL 6-1-1, cited above, states the general rule prohibiting local officials such as county commissioners from being involved in contracts with the public entity in which they hold office. As stated above, a contract entered into in violation of this provision is null and void from the beginning. Thus, the answer to your question would appear to be yes, the contract of insurance is null and void from the beginning.
In view of the limited facts presented, however, I believe I must qualify this statement by indicating that SDCL 6-1-2 does provide for certain exceptions from the above-cited general rule. In the brief fact situation presented I have nothing upon which to base any conclusion with respect to the possible application of the provisions of SDCL 6-1-2 to the contract you refer to. Consequently, I can express no opinion in this regard.
IN RE QUESTION NO. 2:
The answer to your question is yes. A contract null and void at the inception can not be later made valid by virtue of the mere resignation of the commissioner as vice president of the insurance company.
Further, it is my opinion in this regard that the interest of the commissioner as a director of the insurance company would be sufficient interest to invoke the restrictions of SDCL 6-1-1.
IN RE QUESTION NO. 3:
In my opinion the answer to your third question is yes. As stated in regard to Question No. 2, a contract which is void at the inception can not be reinstituted or made valid merely by the subsequent resignation of the commissioner from his conflicting position. If the conflict is removed and SDCL 6-1-1 would no longer prohibit the agreement, then I believe a new agreement could be validly entered into.
Respectfully submitted,
Mark V. Meierhenry
Attorney General
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