Summary
In Schenectady Illuminating Co. v. Schenectady County, 88 Misc. 226, 151 N.Y.S 830, it was held that a contract made by a county board of supervisors for the necessary purchase of Mazda lamps at their fair market value, with a corporation of which a member of the board was a stockholder, officer and director, was illegal under the statute above quoted.
Summary of this case from State v. RobinsonOpinion
December, 1914.
Naylon Robinson, for plaintiff.
Arthur S. Golden, for respondent.
This is an application on behalf of the Schenectady Illuminating Company, a New York corporation, for a peremptory writ of mandamus to compel the board of supervisors of Schenectady county to convene, audit and allow a claim which the relator holds against the county of Schenectady. All the allegations in the petition are admitted. The Mazda lamps were purchased at the fair market price; they were necessary; there was no fraud and no intentional wrong done; the amount involved is trivial, is justly due and must be paid unless the transaction offends against the law. Penal Law, § 1868. Though Mr. Pierson was the superintendent of the county buildings and authorized to purchase these lamps, he was the agent of the board and the board still had full authority to purchase such lamps; though there was an auditor, he was the creature of the board of supervisors, who had the full final power to audit, and this power it could not delegate. People v. Neff, 191 N.Y. 210.
When the claim was presented, the audit was refused solely under said section 1868, which, so far as it affects this proceeding, is as follows: A public officer authorized to make any contract in his official capacity, or to take part in making any such contract, who voluntarily becomes interested individually in such contract, directly or indirectly, is guilty of a misdemeanor.
It follows that a contract made under such circumstances as would render the public officer guilty of a misdemeanor is illegal. The statute must be strictly construed to prevent the vice it was aimed at. Beebe v. Supervisors of Sullivan County, 64 Hun, 377; affd., 142 N.Y. 631; Heughes v. Board of Education, 37 A.D. 182; Matter of Taxpayers, 27 id. 365. This is the principle of the common law. Smith v. City of Albany, 61 N.Y. 445.
The board of supervisors of Schenectady county was authorized to make the contract in question. Mr. Carr as a member of the board was a public officer, authorized in his official capacity to make the contract — buy the lamps and audit and allow the bill therefor. If he was directly or indirectly interested in the contract it is illegal and payment thereof cannot be enforced. Smith v. City of Albany, 61 N.Y. 444. The real question at issue, therefore, is whether or not Mr. Carr was interested directly or indirectly in the contract within the meaning of this statute. The stock of the Schenectady Illuminating Company is owned by the General Electric Company, except that single shares have been issued to individuals to qualify them to act as directors. Mr. Carr was such a stockholder and an officer and director of the Schenectady Illuminating Company. He also is in the employ of the General Electric Company. In his positions in the Illuminating Company he represents the General Electric Company. He was its agent. This section recognizes the infirmity of human nature and was designed to guard against the danger to the public from a conflict between individual interest and official duty. People ex rel. Spaulding v. Supervisors, 66 A.D. 117. The contract is unenforceable, not because a public officer has failed in his duty, but because he has some interest in conflict with his duty. The interest referred to is not necessarily a money interest, nor is it an interest sufficiently large to induce a man generally honest to disregard his duty. It may be indirect. It is such an interest as is covered by the moral rule; no man can serve two masters whose interests conflict. Smith v. City of Albany, supra. Too great refinement of reasoning must not be indulged to uphold a contract against this provision of the law on the ground that the interest is so little or so indirect. In this case there is no suggestion that Mr. Carr was in anywise influenced, or took any action, or was concerned at all in the matter.
It seems to me that Mr. Carr was indirectly interested in this contract. Whether or not any dividends were declared by the Schenectady Illuminating Company is not material. He was a stockholder and an officer, and every stockholder and officer is interested in the business of his company. Nearly all the stock was held by the General Electric Company, which is his employer at a considerable salary. If the question were whether or not Mr. Carr had been or would be influenced in his acts as a public officer by such interest, the court's acquaintance with him would insure a finding that he could not be so influenced. But the statute must be strictly construed and I think the facts bring the case within the statute. To hold otherwise is to decide the case on the degree of indirect interest of the officer in the contract — is to decide it on the question whether the officer was in fact influenced and because thereof the public has suffered wrong. I do not understand that such consideration enters into the decision.
The parties have frankly stated that the case is contested for the sole purpose of procuring a holding from the court as a guide to the public officers of the county.
Ordered accordingly.