If a North Carolina county wants to buy office space for its public hospital and the seller is a corporation in which one of the hospital's trustees (not a county commissioner) holds a one-third interest, does G.S. § 14-234 make that purchase illegal?

Plain-English summary

Catawba County commissioners were considering buying office space for Catawba Memorial Hospital. The seller was a corporation in which Dr. Joel B. Miller, one of the hospital's trustees, owned a one-third interest. Dr. Miller was not a county commissioner, and the commissioners planned to set an offer after two certified appraisals. The AG was asked whether the purchase implicated G.S. § 14-234, the public-contract conflict statute.

The AG said no on those facts. The county commissioners, not the hospital trustees, would purchase the property. Dr. Miller was not a commissioner. The opinion also said he would not participate in commission decisions about the purchase.

The opinion drew two clear boundaries. A commissioner who owned the property would violate the statute by contracting with the board. Dr. Miller would also violate it if the hospital trustees, instead of the commissioners, purchased the property. The AG did not condition that second example on Dr. Miller voting or otherwise participating. Nor did it say recusal would cure it.

Currency note

This opinion applied G.S. § 14-234 to a proposed transaction in 1994. Check the current statute and the actual purchasing body's role for a present public contract.

Background and statutory framework

G.S. § 14-234, as quoted in the opinion, addressed a commissioner or director entrusted with a matter in which a county was interested who made a contract for personal benefit or was concerned or interested in making it or in its profits. The AG applied the statute by asking which public body would make the purchase and whether the interested person was a member of that body.

The opinion was limited to the proposed county purchase. It recorded planned appraisals as a fact, not as a legal requirement or a substitute for the conflict analysis.

Common questions

Did the hospital trustee's ownership interest bar the county commissioners' purchase?

The AG said no under G.S. § 14-234 because Dr. Miller was not a county commissioner and the commissioners, not the trustees, were the purchasers.

What if a county commissioner owned the property?

The opinion said a commissioner would violate the statute if he entered a sale contract with his own board for property he owned.

What if the hospital trustees bought it instead?

The AG said Dr. Miller would then violate the statute. The opinion did not add a participation condition or say recusal would cure that hypothetical.

Did the opinion require two appraisals?

No. It said the commissioners planned to use two certified appraisals to set their offer; it did not present them as a requirement of G.S. § 14-234.

Source

• Landing page: https://ncdoj.gov/opinions/conflict-of-interest-related-to-proposed-purchase-of-real-property/

Citations

• G.S. § 14-234

Original opinion text

June 10, 1994

Charles D. Dixon Patrick, Harper & Dixon Attorneys at Law

P.O. Box 218 Hickory, North Carolina 28603

RE: Advisory Opinion: Potential Conflict of Interest Related to Proposed Purchase of Real Property by Catawba County Board of Commissioners for Catawba Memorial Hospital; G.S. 14-234

Dear Mr. Dixon:

We have received your letter dated May 27, 1994, in which you request our opinion regarding whether a purchase of real estate for Catawba Memorial Hospital by the Catawba County Board of Commissioners violates G.S. 14-234 if the real estate is owned by a corporation in which a hospital trustee has an interest.

The facts, as set out in your letter, are that the County Commissioners are considering the purchase of condominium office space near Catawba Memorial Hospital to house the Hospital's Business Services Department. The office space is owned by Fairgrove Church Road Realty, Inc. Dr. Joel B. Miller, one of the hospital's eleven trustees, owns a one third interest in this corporation. The commissioners plan to determine the price they will offer for the property after it has been appraised by two certified real estate appraisers. Dr. Miller is not a commissioner, and will not participate in any Commission decisions regarding the purchase of the property.

G.S. 14-234 provides: "If any person appointed or elected a commissioner or director to discharge any trust wherein . . . any county . . . may be in any manner interested shall become an undertaker, or make any contract for his own benefit, under such authority, or be in any manner concerned or interested in making such contract, or in the profits thereof, either privately or openly, singly or jointly with another, he shall be guilty of a misdemeanor." Clearly, if a commissioner were the owner of the property in question, he would be in violation of this statute if he entered into a contract of sale with the board. Likewise, Dr. Miller would be in violation of the statute if it were the hospital trustees and not the commissioners which were purchasing the property. However, since neither is the case, it is our opinion that no violation of G.S. 14-234 is implicated.

Please let us know if you have additional questions or if this Office can be of further assistance to you in this matter.

Ann Reed Senior Deputy Attorney General