SCHOOL DISTRICTS ‑- DIRECTORS ‑- BENEFICIAL INTEREST IN CONTRACTS

SCHOOL DISTRICTS ‑- DIRECTORS ‑- BENEFICIAL INTEREST IN CONTRACTS

A school district may not legally purchase water from a private water company owned by a member of the district school board.

                                                                  - - - - - - - - - - - - -

                                                               September 7, 1954

Honorable John C. Merkel
Prosecuting Attorney
Kitsap County
307 Dietz Building
Bremerton, Washington                                                                                                              Cite as:  AGO 53-55 No. 311

Dear Sir:

            We are in receipt of your letter requesting an opinion on the following question:

            May a school district purchase water, at rates fixed by the Public Service Commission, from a private water company owned by a member of the district school board?

            Our answer must be in the negative.

                                                                     ANALYSIS

            The statute violated is RCW 28.58.290, which reads as follows:

            "It shall be unlawful for any school director to have any pecuniary interest, directly or indirectly, in the purchase of school sites or in the erection of schoolhouses or in the warming, ventilating, furnishing, repairing or insuring thereof,or to be in any manner interested or connected with the furnishing of supplies for the maintenance of schools, or to receive  [[Orig. Op. Page 2]] or accept any compensation or reward for services rendered as director or be employed for hire by the district or by any person having a contract with the district:  * * *" (Emphasis supplied)

            We believe that in construing this statute the case of Mumma v. Town of Brewster, 174 Wash. 112, is determinative of the present inquiry.  That case dealt with a different statute, relating to officers of cities and towns, but the references to the furnishing of supplies and prohibition on both direct and indirect interests are similar.  That case involved the furnishing of power to a town by a company which had as its employee the mayor of the town.  At pages 115-117, the court there said:

            "In order to fall under the ban of the statute, there must be (1) a contract for or the furnishing of supplies for the use of the town in which (2) an officer of the town is directly or indirectly interested.

            "Passing without comment that portion of the findings indicating that the trial court held there was here no contract and also the findings as to the necessity of the town to obtain these supplies from the Washington Water Power Company, it would seem evident that still there was a furnishing of supplies within the meaning of the statute, even though the rates and charges therefor were fixed by the board of public works."

            The court then went on to find that the official was not "interested" in the transaction because he was only a salaried employee with the company, but even this relationship is expressly prohibited by RCW 28.58.290.

            The conclusion in theMumma case, supra, that the matter of rates being fixed by the Public Service Commission is not controlling is supported by Gantenbien v. Pasco, 71 Wash. 635.  Nor can an exception for necessity be implied from the broad and positive statute.  Miller v. Sullivan, 32 Wash. 115.

            Although the question of whether a director gains pecuniary benefit from a particular transaction is usually one of fact, Directors of School District 302 v.  [[Orig. Op. Page 3]] Libby, 135 Wash. 233, it is our opinion that under the situation presented it is obvious that the director, as owner of the water company, falls within the provisions of the statute.

Very truly yours,

DON EASTVOLD
Attorney General

THOMAS A. SWAYZE, JR.
Assistant Attorney General