CEO 76-73 -- April 16, 1976
CONFLICT OF INTEREST
CITY COUNCILMAN DIRECTOR OF A BANK DOING BUSINESS WITH CITY
To: (Name withheld at the person's request.)
Prepared by: Gene Rhodes
Although Florida Statute s. 112.313(3)(1975) prohibits a public officer from acting in his official capacity to purchase services for his agency from a business entity of which he is a director and from acting privately to sell services to his own agency, a partial exception to this mandate is created by the more specific s. 136.02(5)(1975). That provision states that a public officer's being a stockholder, officer, or director of a bank shall not prohibit his public agency from using such bank as a depository for funds so long as no favoritism is involved in the selection of the bank. Accordingly, a city, one of whose councilmen is director of a bank, is not prohibited from holding checking accounts and certificates of deposit with that bank. Loan transactions, however, would be prohibited. A local ordinance which specifically exempts banks from the prohibition against doing business with the city is invalid insofar as it conflicts with the state law. The Florida Supreme Court has ruled that state law is superior to local law. See Rinzler v. Carson, 262 So.2d 661 (Fla. 1972).
Does a prohibited conflict of interest exist where a city councilman additionally is a director of a bank with which the city has several checking accounts and certificates of deposit?
Your question is answered in the negative.
Your letter of inquiry advises us that the subject city councilman sits on the board of directors of a local bank. The city has several checking accounts and certificates of deposit with the subject bank, but currently has no outstanding loans there.
The Code of Ethics for Public Officers and Employees states in relevant part:
DOING BUSINESS WITH ONE'S AGENCY. -- No employee of an agency acting in his official capacity as a purchasing agent, or public officer acting in his official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or his spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to his own agency, if he is a state officer or employee, or to any political subdivision or any agency thereof if he is serving as an officer or employee of that political subdivision. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business. This subsection shall not affect or be construed to prohibit contracts entered into prior to:
(a) October 1, 1975.
(b) Qualification for elective office.
(c) Appointment to public office.
(d) Beginning public employment.
[Fla. Stat. s. 112.313(3)(1975).]
The first sentence of the above-quoted provision prohibits a public officer from acting in his official capacity to purchase services for his agency from a business entity of which he is a director. In a previous opinion of this commission, CEO 75-201, we advised that being a member of a voting body constitutes acting in one's official capacity relative to action taken by the body as a whole.
The second sentence of the above-quoted provision prohibits a public officer from acting in a private capacity to sell goods to his own agency. We have previously held that, where one is a director of a bank which does business with the director's public agency, that director is acting in a private capacity to sell to his agency. See CEO 76-12.
Hence, the above-quoted provision appears to prohibit a city councilman from holding that position while a bank of which he is a director is doing business with the city. However, we believe that consideration must be given to another chapter of the Florida Statutes which creates a partial exception to this holding. That chapter states in relevant part:
The fact that a county or municipal officer or member of a public board or body, including a county school officer and an officer of any district within a county is a stockholder or an officer or director of a bank will not bar such banks from qualifying as a depository of funds coming under the jurisdiction of any such county or municipal officer, provided it shall appear in the records of the state or county agency that the governing body of such agency has investigated and determined that such county officer or member of a public board or body as aforesaid has not favored such bank or banks over other qualified banks and that there is no violation of subsection (1). [Fla. Stat. s. 136.02(5)(1975).]
This language, in its specificity, must control over s. 112.313(3), which is only a general prohibition against conflicting employment. See 82 C.J.S. Statutes s. 34(b),(1953). However, it must be recognized that s. 136.02(5) applies only to a bank's acting as a depository of funds, and then only when the governing body of the agency has made an investigation and has determined that there has been no favoritism on the part of the public officer.
In our view, checking accounts should be treated as deposits for purposes of this statute, but s. 136.02(5) would not affect the prohibitions contained in s. 112.313(3) where they relate to loan transactions between the subject city and bank.
Your letter of inquiry further advises us that the City Charter of the City of ____ specifically exempts banks from the prohibition against doing business with the city. ____ Code s. 11. A careful reading of that provision leads us to the conclusion that the exemption to which you refer is intended only to exempt one from the provisions set forth in the code and is not a general exemption from other relevant laws. Moreover, even if the exemption were meant to operate as an exception to other relevant laws, state law would be superior to the local law. The Florida Supreme Court has expressed this view:
Municipal ordinances are inferior in stature and subordinate to the laws of the state. Accordingly, an ordinance must not conflict with any controlling provision of a state statute, and if any doubt exists as to the extent of a power attempted to be exercised which may affect the operation of a state statute, the doubt is to be resolved against the ordinance and in favor of the statute. A municipality cannot forbid what the legislature has expressly licensed, authorized or required, nor may it authorize what the legislature has expressly forbidden. [Emphasis supplied; Rinzler v. Carson, 262 So.2d 661 (Fla. 1972).]
Given this Supreme Court opinion, we must find that the provisions found in Fla. Stat. Ch. 112, part III (1975), take precedence over all contrary municipal ordinances.