Tennessee § 12-4-101 - Personal interest of officers prohibited.

§ 12-4-101. Personal interest of officers prohibited.

It is unlawful for any officer, committee member, director, or other person whose duty it is to vote for, let out, overlook, or in any manner to superintend any work or any contract in which any municipal corporation, county, state, development district, utility district, human resource agency, or other political subdivision created by statute shall or may be interested, to be directly interested in any such contract. “Directly interested” means any contract with the official personally or with any business in which the official is the sole proprietor, a partner, or the person having the controlling interest. “Controlling interest” includes the individual with the ownership or control of the largest number of outstanding shares owned by any single individual or corporation. This subdivision (a)(1) shall not be construed to prohibit any officer, committee person, director, or any person, other than a member of a local governing body of a county or municipality, from voting on the budget, appropriation resolution, or tax rate resolution, or amendments thereto, unless the vote is on a specific amendment to the budget or a specific appropriation or resolution in which such person is directly interested. Subdivision (a)(1) shall also apply to a member of the board of directors of any not-for-profit corporation authorized by the laws of Tennessee to act for the benefit or on behalf of any one (1) or more counties, cities, towns and local governments pursuant to title 7, chapter 54 or 58. Subdivision (a)(2)(A) shall not apply to any county with a metropolitan form of government and having a population of four hundred thousand (400,000) or more, according to the 1980 federal census or any subsequent federal census. It is unlawful for any officer, committee member, director, or other person whose duty it is to vote for, let out, overlook, or in any manner to superintend any work or any contract in which any municipal corporation, county, state, development district, utility district, human resource agency, or other political subdivision created by statute shall or may be interested, to be indirectly interested in any such contract unless the officer publicly acknowledges such officer's interest. “Indirectly interested” means any contract in which the officer is interested but not directly so, but includes contracts where the officer is directly interested but is the sole supplier of goods or services in a municipality or county. This section shall apply to a member of the board of directors or officer of any nonprofit corporation required under § 8-44-102 to conduct all meetings of its governing body as open meetings. Acts 1869-1870, ch. 92, § 1; Shan., § 1133; Code 1932, § 1874; Acts 1977, ch. 102, § 1; T.C.A. (orig. ed.), § 12-401; Acts 1983, ch. 388, §§ 4, 6; 1984, ch. 831, § 1; 1986, ch. 765, §§ 1-3; 1988, ch. 908, §§ 4, 5; 1989, ch. 366, §§ 1-3; 1998, ch. 774, § 1; 2006, ch. 923, § 4; 2013, ch. 403, § 71; 2016, ch. 1072, § 5. Compiler's Notes. Former title 12, ch. 3 and ch. 4, part 1 were recodified by Acts 2013, ch. 403, §§ 8-70, effective July 1, 2013. The following table of disposition lists the sections in former ch. 3 and ch. 4, part 1, indicating the location of the same or similar provisions, if any. This section shall not apply in counties having the following populations, according to the 2000 federal census or any subsequent federal census, nor to municipalities located within such counties: Many of the casenotes listed below are from cases decided prior to the 1986 amendment to this section adding subsection (c). Although the addition of this subsection may affect the continued validity of some of the notes, the notes have been set out for historical reference purposes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement. Acts 2013, ch. 403, § 83 provided that the act, which amended this section, shall apply to contracts entered into or renewed on and after July 1, 2013. Cross-References. Certification of funds available, § 9-4-5113 . Distributing and posting solicitations and responses electronically, § 12-3-1004 . Employment of licensed architects and engineers, § 62-2-302 . Improvements constructed with convict labor, § 41-22-102 . Public buildings, accessibility for physically handicapped, title 68, ch. 120, part 2. Textbooks. Tennessee Jurisprudence, 7 Tenn. Juris., Contracts, §§ 11, 47, 117; 21 Tenn. Juris., Public Officers, § 4. Law Reviews. Local Government Law — 1961 Tennessee Survey (Eugene Puett), 14 Vand. L. Rev. 1335. Attorney General Opinions. Applicability, OAG 88-37, 1988 Tenn. AG LEXIS 37 (2/23/88). Applicability to lobbyists, OAG 90-73, 1990 Tenn. AG LEXIS 73 (7/27/90). Direct and indirect conflicts of interest, OAG 93-73, 1993 Tenn. AG LEXIS 73 (12/28/93). Utility district contract with manager, OAG 94-104, 1994 Tenn. AG LEXIS 105 (9/9/94). County commissioners adopting County Financial Management System of 1981, OAG 97-166, 1997 Tenn. AG LEXIS 183 (12/16/97). Dual membership on city council and hospital board, OAG 98-004, 1998 Tenn. AG LEXIS 4 (1/5/98). County commissioner's association with nonprofit corporation seeking county ambulance contract, OAG 98-0109 (6/11/98). County or school board employee serving on county legislative body, OAG 98-0112, 1998 Tenn. AG LEXIS 112 (6/16/98). Utility board employee serving as mayor or city council member, OAG 98-0130, 1998 Tenn. AG LEXIS 129 (7/27/98). Reimbursement for state judge's rental and other expenses of office owned by judge, OAG 98-162, 1998 Tenn. AG LEXIS 162 (8/24/98); OAG 98-0163, 1998 Tenn. AG LEXIS 163 (8/24/98). Conflicts of interest involving downtown development entities and directors, OAG 99-043, 1999 Tenn. AG LEXIS 56 (2/25/99). Conflict of interest of volunteers in district attorney general's office, OAG 99-085, 1999 Tenn. AG LEXIS 85 (4/6/99). Volunteer created no conflict of interest in district attorney general's office, OAG 99-122, 1999 Tenn. AG LEXIS 131 (5/28/99). Constable serving as deputy sheriff, OAG 99-160, 1999 Tenn. AG LEXIS 148 (8/19/99). Contract funded by federal grant, conflict of interest, OAG 99-185, 1999 Tenn. AG LEXIS 213 (9/17/99). School board member, conflict of interest, OAG 99-209, 1999 Tenn. AG LEXIS 189 (10/20/99). Emergency dispatchers — conflicts of interest, OAG 99-219, 1999 Tenn. AG LEXIS 179 (11/4/99). Right to work law, union rules and fines, conflicts of interest, remedies, OAG 99-231, 1999 Tenn. AG LEXIS 225 (12/15/99). General sessions judge serving as Trenton City judge, OAG 00-043, 2000 Tenn. AG LEXIS 43 (3/13/00). Legislator as state employee, OAG 00-064, 2000 Tenn. AG LEXIS 65 (4/3/00). An attorney who works for the Tennessee department of correction may engage in the practice of law outside the department of correction, OAG 00-111, 2000 Tenn. AG LEXIS 113(6/20/00). Assuming a construction manager is not a public official or officer, there is no conflict of interest under T.C.A. § 12-4-101(a)(1) for a construction manager who performs services for a county board of education to also bid on, contract to perform, and/or be awarded construction work on school building projects the individual was hired to supervise, OAG 00-117, 2000 Tenn. AG LEXIS 119 (7/5/00). An assistant district attorney general who has a financial interest in a probation agency, or would otherwise derive personal benefit from the business of the agency, should not participate in prosecutions involving defendants who are seeking probation, have been placed on probation, or where probation is being revoked, OAG 00-137, 2000 Tenn. AG LEXIS 138 (8/24/00). A county commissioner who was a bookkeeper for the county board of education did not have a conflict of interest that required abstention from a vote regarding the adoption of the county financial management system of 1981, OAG 00-180, 2000 Tenn. AG LEXIS 183 (11/22/00). T.C.A. § 12-4-101 did not prohibit a county and the county school board from purchasing items from a business owned by an individual whose spouse was employed by the county school board as a teacher as the teacher presumably was not part of the decision-making process regarding the purchases, OAG 00-181, 2000 Tenn. AG LEXIS 184 (11/22/00). A county commissioner can be an employee of the county highway commission, so long as the commissioner observes the voting rules set out in T.C.A. § 12-4-101(c) , OAG 01-084, 2001 Tenn. AG LEXIS 75 (5/23/01). Although both the sheriff and a constable within a county were required to serve civil process, an individual holding both offices would not violate T.C.A. § 12-4-101(a) for that reason alone, as it was unlikely that a court would conclude that the duty of a sheriff or a constable to serve civil process was “work” or a “contract” within the meaning of the statute and as neither sheriff nor a constable controls the other's duty to serve civil process, OAG 02-012, 2002 Tenn. AG LEXIS 13 (1/18/02). Assuming the school board has no authority to vote for, let out, overlook, or superintend a contract with the county sheriff's department for counseling services, T.C.A. § 12-4-101(a) does not prohibit a member of the school board from entering into such a contract, OAG 02-128, 2002 Tenn. AG LEXIS 133 (11/25/02). Except for the narrow exception of a county commissioner in T.C.A. § 12-4-101(c)(1) , a violation of the general conflict of interest statute or T.C.A. § 5-21-121(a) has no effect on the validity of an official's vote, OAG 02-128, 2002 Tenn. AG LEXIS 133 (11/25/02). The exclusion of human resource agencies from the potential conflict of interest disclosure of a grant proposal for child care broker services does not violate the equal protection provisions of the United States or Tennessee constitutions, OAG 03-013, 2003 Tenn. AG LEXIS 9 (1/30/03). Members of a county board of commissioners serving on the board of directors of a non-profit corporation are not prohibited from voting on a contract to sell county property to the corporation, even if the sale is for less than fair market value, OAG 03-120, 2003 Tenn. AG LEXIS 138 (9/24/03). If members of a county board of commissioners serving on the board of directors of a non-profit corporation the commissioners have a pecuniary interest in the sale of county assets to the corporation, they must disclose that interest, OAG 03-120, 2003 Tenn. AG LEXIS 138 (9/24/03). Legislator's conflict of interest: lottery advertising, OAG 04-002, 2004 Tenn. AG LEXIS 2 (1/06/04). Sale of land owned by a county commissioner to the county highway department, which will not purchase such land without county commission approval, provided he abstains from voting on the transaction and states his interest, is prohibited under T.C.A. § 12-4-101(a)(1) , but violation of the statute is not a crime, OAG 04-016, 2004 Tenn. AG LEXIS 16 (2/05/04). T.C.A. § 12-4-101(a)(1) prohibits a county commissioner from voting on or supervising a contract for the sale of his or her land, OAG 04-016, 2004 Tenn. AG LEXIS 16 (2/05/04). Under T.C.A. § 12-4-102 , an officer who enters into a contract in violation of this section must forfeit compensation under the contract; a suit to enforce this provision is a quo warranto action that ordinarily must be brought by the district attorney general, OAG 04-016, 2004 Tenn. AG LEXIS 16 (2/05/04). An officer who is directly interested in a contract in violation of T.C.A. § 12-4-101(a)(1) is to be dismissed from office and is ineligible to serve in the same or similar position for ten years, OAG 04-016, 2004 Tenn. AG LEXIS 16 (2/05/04). Under subsection (b) of this section, a member of the county financial management committee must disclose his or her indirect interest when voting on contracts that affect his or her spouse's employment contract with the county, especially such matters as the spouse's compensation, but the statute does not require abstention, OAG 05-017, 2005 Tenn. AG LEXIS 17 (2/03/05). Legislator as president of the Tennessee Professional Fire Fighters Association, OAG 05-126, 2005 Tenn. AG LEXIS 128 (8/22/05). Direct appropriation grant to corporation for which legislator is president, OAG 05-169, 2005 Tenn. AG LEXIS 171 (11/3/05). Applicability of statutes pertaining to public purchasing and public contracting, and governing general contractors, to housing authorities established by municipalities or counties pursuant to T.C.A. §§ 13-20-101 et seq., OAG 05-170, 2005 Tenn. AG LEXIS 172 (11/21/05). It does not present any conflict of interest for an instructor at the fire service and codes academy to serve on the commission on fire fighting personnel standards commission, OAG 06-114, 2006 Tenn. AG LEXIS 149 (7/19/06). T.C.A. § 12-4-101(a)(1) would not prohibit an incumbent commissioner from voting for herself in a decision under T.C.A. § 2-8-111 , OAG 06-132, 2006 Tenn. AG LEXIS 149 (8/16/06). Conflicts of interest involving state and county election commissions, OAG 06-159, 2006 Tenn. AG LEXIS 179 (10/9/06). Service on the board of the Tellico Reservoir Development Agency by a state representative, OAG 07-036, 2007 Tenn. AG LEXIS 38 (3/26/17). Company that employs a state legislator may seek to enter into contracts with the state, OAG 08-192, 2008 Tenn. AG LEXIS 237 (12/29/08). State legislator contracting with non-profit state grant recipient: use of state grant funds. OAG 10-02, 2010 Tenn. AG LEXIS 2 (1/14/10). Citizen school board member conflicts of interest. OAG 10-46, 2010 Tenn. AG LEXIS 46 (4/12/10). Four Lake Regional Industrial Development Authority: appointing executive director. OAG 10-55, 2010 Tenn. AG LEXIS 55 (4/23/10). Conflict of interest of county commissioner also employed or formerly employed by a county department. OAG 11-50, 2011 Tenn. AG LEXIS 52 (6/16/11). Conflict of Interest -- Member of County Board of Education. OAG 12-04, 2012 Tenn. AG LEXIS 108 (11/9/12). Conflicts of interest: joint economic and community development boards. OAG 12-09, 2012 Tenn. AG LEXIS 10 (1/20/12). Same individual serving as county finance director and member of school board. OAG 12-19, 2012 Tenn. AG LEXIS 19 (2/22/12). Human resource agency board member conflict of interest. OAG 12-37, 2012 Tenn. AG LEXIS 37 (3/19/12). County commission meetings: quorum and majority vote requirements; requirements as to particular type of space or facility for meetings. OAG 12-109, 2012 Tenn. AG LEXIS 113 (12/14/12). Algood city administrator serving as Algood city police chief. OAG 13-63, 2013 Tenn. AG LEXIS 64 (8/9/13). County commissioner voting on county school system budget. OAG 13-89, 2013 Tenn. AG LEXIS 90 (11/12/13). Teacher elected to serve on local school board by which teacher is employed may not retain employment as a teacher. OAG 14-53, 2014 Tenn. AG Lexis 55 (5/1/14) The “sole supplier” exception in T.C.A. § 12-4-101 (b) applies only when a county official is the sole supplier located in the county. Under the general rule established by Tennessee courts, the doctrine of quantum meruit does not apply if an official contracts with the county in violation of T.C.A. § 12-4-101 . OAG 16-19, 2016 Tenn. AG LEXIS 20 (5/18/2016). A member of the Underground Storage Tanks and Solid Waste Disposal Control Board is a state official. While state officials are treated as “state employees” for some purposes, state officials are not treated as “state employees” for the purpose of procuring a public contract. If a contractor has an employee or subcontractor who serves as a member of the Underground Storage Tanks and Solid Waste Disposal Control Board, the contractor may respond to a request for proposal or a request for qualifications to provide services under a contract with a state agency whose services are not overseen by the Board when the Board member does not have a duty “to vote for, let out, overlook, or in any manner superintend any work or any contract” in which the state agency is interested. The contractor may not contract with a state agency if the Board member has a duty “to vote for, let out, overlook, or in any manner superintend any work or any contract” in which the state agency is interested and the Board member is “directly interested” in the contract). The only exception is the “sole supplier” provision. If the Board member is “directly interested” in the contract but is the sole supplier of the services in a municipality or county, the Board member is treated as being only “indirectly interested” in the contract. In that instance, for the contract to be valid, the Board member must publically acknowledge his or her interest. OAG 18-20, 2018 Tenn. AG LEXIS 19 (4/23/2018).