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HILLMAN T. FRAZIER AND BILLY (BILL) F. KNOX v. THE STATE OF MISSISSIPPI

MARCH 04, 1987

HILLMAN T. FRAZIER AND BILLY (BILL) F. KNOX
v.
THE STATE OF MISSISSIPPI, BY AND THROUGH EDWIN LLOYD PITTMAN, ATTORNEY GENERAL OF THE STATE OF MISSISSIPPI DONALD N. LOGAN, JAMES D. NUNNALLY, MANUEL KILLEBREW, DOUGLAS L. ANDERSON, AND PERRIN H. PURVIS, INDIVIDUALLY AND IN THEIR OFFICIAL CAPACITIES AS PUBLIC OFFICERS AND PUBLIC SERVANTS v. THE STATE OF MISSISSIPPI, BY AND THROUGH THE MISSISSIPPI ETHICS COMMISSION, A STATE AGENCY; WALTER BROWN, BEN H. STONE, MARK G. HAZARD, EUGENE L. FAIR, NINA B. GOOLSBY, JOHN C. HENEGAN, AND ELIZABETH C. POWERS, INDIVIDUALLY AND IN THEIR OFFICIAL CAPACITIES AS MEMBERS OF THE MISSISSIPPI ETHICS COMMISSION



EN BANC.

HAWKINS, PRESIDING JUSTICE, FOR THE COURT:

The State through Edwin Lloyd Pittman brought an action for declaratory judgment in the chancery court of the First Judicial District of Hinds County against Hillman T. Frazier and Bill F. Knox, alleging they were in violation of Article 4, Section 109 of the Mississippi Constitution. The final decree of that court so found, and the defendants have appealed.

The State through the Mississippi Ethics Commission brought a separate action for declaratory judgment in the same court against Donald N. Logan, James D. Nunnally, Manuel Killebrew, Douglas L. Anderson and Perrin H. Purvis, likewise alleging they were in violation of the same section of the Constitution. The final decree of that court so found, and

 all defendants with the exception of Purvis have appealed.

 Also at issue in the chancery court was the constitutionality of certain statutes specifically authorizing the conduct in which the defendants were engaged, and the court found such statutes to be violative of the Constitution.

 In addition to declaratory relief the Ethics Commission in an amended complaint sought restitution from the defendants named in its suit, for compensation received from the state in violation of Section 109. The court denied restitution. The Ethics Commission has cross-appealed from this denial.

 We have consolidated these appeals, and the issues faced in each defendant's case, with the exception of Purvis, will be addressed. Mr. Purvis having refunded the State all funds with which he was charged with receiving in violation of Section 109, and having made no appeal, the decree as to him is final, and no issue as to him is before us.

 On this appeal we construe Section 109 and its application to six officials serving in various public offices, together with prohibited interest contracts each was alleged to have under 109. We likewise address the constitutionality of certain sections of Miss. Code Ann. 25-4-101, et seq. (Chapter 469, Laws of 1983).

 We further address whether the Ethics Commission had legal authority to maintain this action, and conclude it did.

 For the reasons set forth below, on direct appeal we affirm the chancery court as to the defendants Frazier, Knox, Anderson and Killebrew, and affirm in part and reverse in part as to Nunnally and Logan.

 We affirm on cross-appeal.

 FACTS

 HILLMAN T. FRAZIER

 Frazier was elected to the office of State Representative, 67th District of the Mississippi Legislature most recently on November 8, 1983, for a four-year term, and formally accepted membership in that body for this term in January, 1984. On April 17, 1984, Representative Frazier voted" yea "on Senate Bill 2985, which became law on May 14, 1984, as Chapter 209, Mississippi Laws, 1984. This bill was

 an act making an appropriation to the Board of Trustees of State Institutions of Higher Learning for disbursement by the Board to Jackson State University and other state institutions of higher learning for the fiscal year 1985 (July 1, 1984, through June 30, 1985).

 On June 19, 1985, Frazier entered into a contract of employment with Jackson State University as a Lecturer in the Department of Political Science for the June 3-July 28, 1985, period. As payment under this contract, Frazier received two checks totalling $2,484.84.

 On March 19, 1985, Representative Frazier voted" yea "on Senate Bill 2997, which became law on April 19, 1985, as Chapter 149, Mississippi Laws, 1985, and which likewise was an appropriation bill to the State Institutions of Higher Learning just as Senate Bill 2985, but for the fiscal year 1986.

 On September 16, 1985, Frazier entered into a contract of employment with Jackson State University in the same capacity for the September 3-December 16, 1985, period. As payment under this contract, Frazier received four checks totalling $6,986.00.

 BILL F. KNOX

 Knox was first elected as a Supervisor, District 2 of the Board of Supervisors of Panola County in 1979, and was re-elected on November 8, 1983, for a four-term, which he began serving January 2, 1984.

 On January 9, 1984, the Board of Supervisors of Panola County entered an order selecting the State Bank of Como, the Bank of Crenshaw and other Panola County banks as county depositories for the year 1984. On January 14, 1985, this Board again entered an order selecting these two banks and other Panola County banks as county depositories for the year 1985. Pursuant to these Board orders, for the period October, 1984 - August, 1985, $1,095.917.57 of Panola County public funds were deposited in the State Bank of Como, and $1,516,896.62 of Panola County public funds were deposited in the Bank of Crenshaw.

 Throughout 1984 Knox was president and chief executive officer of the Bank of Crenshaw, and chairman of its board of directors. On December 31, 1984, the Bank of Crenshaw was merged into the State Bank of Como, and continued to do business as the Bank of Crenshaw, a branch bank of the State of Como. Following the merger Knox remained president and

 chief executive officer of the Bank of Crenshaw, and was also the president, and bank security officer of the State Bank of Como, as well as a member of its board of directors. Knox was also a shareholder in the State Bank of Como, owning at least $200.00 of its capital stock. The record discloses no further information on the number of shares held by Knox, or percentage of stock ownership held by him in this bank.

 DONALD N. LOGAN

 Logan was principal at the Harper McGaughan Elementary School, a public school in the Long Beach Municipal Separate School District, a position he had held for a number of years, when he was elected as Alderman at Large of the city of Long Beach in a February, 1982, special election. He was re-elected in June, 1984, for a four-year term, and following his election he held both positions as school principal and alderman.

 On September 7, 1982, the Board of Aldermen of Long Beach entered a resolution fixing and levying an ad valorem tax of 25.00 mills on each dollar of assessed valuation of all taxable property in the district for 1982 for operation of district schools. On September 20, 1983, this Board entered a similar resolution levying an ad valorem tax of 25.00 mills on all taxable property in the district for 1983 for school operating expenses. On September 18, 1984, this Board entered a similar resolution levying an ad valorem tax of 28.70 mills on all taxable property in the district for 1984 for this purpose. On September 12, 1985, this Board entered a similar resolution levying an ad valorem tax of 31.95 mills on all taxable property in the district for 1985 for school operating expenses.

 The millage for school operating expenses mentioned above encompasses two ad valorem tax levies, a levy to support the minimum education program and a levy for the school district maintenance. The taxes collected from these levies are deposited to the credit of the school district, and from those funds Logan receives the local portion of his salary under his employment contract.

 Successive annual contracts of employ between Logan and the school district were executed as follows:

 May 19, 1983, with salary of $25,565 for 1983-84 school year;

 May 5, 1984, with salary of $25,565 for 1984-85 school year;

 June 27, 1985, with salary of $28,331 for 1985-86 school year.

 As to the 1982 school tax levy, under Miss. Code Ann. 37-57-3 (1972) and -57-35 (1972) (repealed 1983), upon receipt of a certified copy of the order of the board of trustees of the school district requesting the same, it was mandatory that the city board levy up to a maximum amount of 25 mills on the taxable property of the district. In addition to the statutory mandate, pursuant to a suit filed by the board of trustees of the school district against the city, the chancery court of the First Judicial District of Harrison County issued a final decree permanently enjoining the mayor and board of aldermen to annually levy the statutorily mandated tax, pursuant to a request of the board of trustees by appropriate resolution or order. Long Beach Municipal Separate School District v. City of Long Beach, Cause No. 77, 285 (Chancery Court, October 16, 1980). The portion of Logan's salary that came from the local tax, as opposed to state funds paid into the school district under the minimum education program, see Miss. Code Ann. 37-19-37 (Supp. 1985) and -19-39 (Supp. 1985), came from these mandatory levies.

 As to the 1983 school tax levy, under Miss. Code Ann. 37-57-105 (Supp. 1985), upon receipt of a certified copy of the order of the board of trustees of the school district requesting the same, it was mandatory that the city board levy up to a maximum amount of 28 mills on the taxable property in the district, in addition to the minimum education levy under Miss. Code Ann. 37-57-3. Under this mandate and the order of the school district, the city board levied 23.75 mills for the school district maintenance fund. Again, the portion of Logan's salary that came as a result of local taxation came from these mandatory levies paid into the district maintenance fund and minimum education fund.

 As to the 1984 school tax levy, the city board and school trustees were under the same law as in 1983. Under the order from the school district, the city board levied 27.45 mills for the school district maintenance fund. Again, the portion of Logan's salary resulting from local taxation came from levies it was mandatory for the city board to make.

 As to the 1985 school tax levy, under the order of the school district the city board levied 28 mills on the district's taxable property. In addition to the required 28 mills, under Miss. Code Ann. 37-57-105 (Supp. 1985), the city board levied an additional 3.95 mills for the school

 district maintenance fund, which was discretionary with the city board. *fn1 It was from this total 31.95 mill levy and the mandatory minimum education fund levy that the portion of Logan's salary resulting from local taxation was paid under his employment contract for that year.

 The record is silent as to the portion of Logan's total annual salary which came from state funds, and which portion came as a result of the local tax levies. The record contains only a factor-based salary schedule for principals adopted by the school district for the 1983-84 school year. As to that year we can only say that it appears local taxation constituted only a small portion of Logan's total salary. *fn2

 JAMES D. NUNNALLY

 Nunnally, a resident of Tippah County, was elected to the office of State Representative, 4th District of the Mississippi Legislature in 1971, and has been re-elected each succeeding election for a four-year term. He was elected to his present term in November, 1983, and formally accepted membership in that body for this term in January, 1984. On March 28, 1984, Representative Nunnally voted" yea "on House Bill No. 1172, which became law on May 8, 1984, as Chapter 165, Mississippi Laws, 1984. This Bill was an act making an appropriation to the State Department of Education for disbursement by the Department to the South Tippah County Consolidated School District, the Benton County School District, and other public school districts for support and maintenance during the fiscal year 1985 (July 1, 1984, through June 30, 1985). *fn3

 In 1984 Nunnally and the Benton County School District executed an employment contract whereby Nunnally was employed as a public school teacher at Ashland Middle School, at an annual salary of $15,575 for the 1984-85 school year. *fn4 During this time Nunnally's wife, Betty Jo Nunnally, was employed by South Tippah County Consolidated School District as a public school teacher at Pine Grove High School, at an annual salary of $15,565 for the 1984-85 school year.

 On February 28, 1985, Representative Nunnally voted" yea "on House Bill No. 1172, which became law on April 5, 1985, as Chapter 95, Mississippi Laws, 1985, and which likewise was an appropriation bill to the State Department of Education just as Chapter 165, Mississippi Laws, 1984, but for the fiscal year 1986.

 In addition to the appropriation bills, Representative

 Nunnally was a member of the Legislature when Senate Bill No. 2876 was enacted into law on March 19, 1985, as Chapter 351, Mississippi Laws, 1985. A portion of this act revised the teachers' salary schedule and increased the minimum education program allotment. See Miss. Code Ann. 37-19-7 (Supp. 1985) (codification of teacher salary increases). While the bill passed the House of Representatives on March 17, 1985, Nunnally abstained from voting. House Journal, 1985, at p. 550-51. *fn5

 In 1985 Nunnally entered into a contract of employment with the Benton County School District as a public school teacher for the 1985-86 school year at a salary of $17,975. Nunnally's wife entered into a similar contract with the South Tippah County Consolidated School District for the 1985-86 school year at a salary of $17,965.

 For the 1984-85 school year, the parties have stipulated that $15,325, all but $250 of Nunnally's salary, was paid from public funds appropriated by the Mississippi Legislature. As to the other employment contracts by Nunnally and his wife, the record does not disclose how much salary received by the Nunnallys was paid through the appropriation bills; however, Nunnally has stipulated that he and his wife receive" the majority "of their respective salaries from appropriated public funds.

 MANUEL KILLEBREW

 Killebrew was first elected as a Supervisor, District 4 of the Board of Supervisors of Quitman County on November 8, 1983, to a four-year term which he began serving January 2, 1984. At the time of his election and since he has been employed as a teacher in the Quitman County High School, a public school in the Quitman County School District. *fn6

 On September 21, 1984, the Board of Supervisors of Quitman County entered an order levying an ad valorem tax of 4.00 mills on each dollar of assessed valuation of all taxable property in the county for the minimum education program under Miss. Code Ann. 37-57-1, and 16.30 mills for the school district maintenance fund.

 On September 3, 1985, the Board of Supervisors entered a similar levy of 3.96 mills for the minimum education program under Miss. Code Ann. 37-57-1, and 19.87 mills for the school district maintenance fund.

 As to the 1984 school tax levy, the 4.00 mill levy was mandatory under Miss. Code Ann. 37-57-1, and the 16.30 mill

 levy was discretionary under Miss. Code Ann. 37-57-105 (Supp. 1985).

 As to the 1985 school tax levy, the 3.96 mill levy was likewise mandatory, and the 19.87 mill levy was discretionary under Miss. Code Ann. 37-57-1 (1972) and -57-105 (Supp. 1985). *fn7

 DOUGLAS ANDERSON

 Anderson was elected to the office of State Senator, 27th District of the Mississippi Legislature most recently on November 8, 1983, for a four-year term, and formally accepted membership in that body for this term in January, 1984. On March 29, 1984, Senator Anderson voted" yea "on Senate Bill 2985, which became law on May 14, 1984, as Chapter 209, Mississippi Laws, 1984. This bill was an act making an appropriation to the Board of Trustees of State Institutions of Higher Learning for disbursement by the Board to Jackson State University and other state institutions of higher learning for the fiscal year 1985 (July 1, 1984, through June 30, 1985). *fn8

 In the fall school term of 1984, Anderson entered into a contract of employment with Jackson State University as an Assistant Professor of Mathematics. The record does not contain this employment contract or its relevant terms. *fn9 On February 28, 1985, Senator Anderson voted" yea "on Senate Bill 2997, which became law on April 19, 1985, as Chapter 149, Mississippi Laws, 1985, and which likewise was an appropriation bill to the State Institutions of Higher Learning just as Senate Bill 2985, but for the fiscal year 1986.

 In the fall term of 1985, Anderson entered into a contract of employment with Jackson State University in the same capacity as in the previous fall 1984 period.

 PERRIN H. PURVIS

 Purvis was elected to the office of State Senator, 6th District of the Mississippi Legislature in 1963, and has been re-elected each succeeding election for a four-year term. He was elected to his present term on November 8, 1983, and formally accepted membership in that body for this term in January, 1984. On April 18, 1984, Purvis voted" yea "on House Bill No. 1184, which became law on May 8, 1984 as Chapter 170, Mississippi Laws, 1984. *fn10 This Bill was an act making an appropriation to the Tombigbee River Valley Water Management District for the support and maintenance of the

 Water Management District for the fiscal year 1985 (July 1, 1984, to June 30, 1985). On March 20, 1985, Purvis voted" yea "on House Bill No. 1169, which became law on April 17, 1985, as Chapter 145, Mississippi Laws, 1985, and which likewise was an appropriation bill to the Tombigbee River Valley Water Management District for the fiscal year 1985-86.

 Throughout 1984 and 1985 Purvis also served as president and a shareholder of P.I.A., Inc., a Mississippi corporation in the business of selling insurance.

 On April 25, 1985, the Board of Directors of the Water Management District gave notice to bidders by publication that bids for insurance coverage for the District would be accepted on May 8, 1985. P.I.A., Inc., entered such a bid, which was accepted by the Water Management District, and P.I.A. began providing insurance coverage for the District on May 8, 1985. As payment under this contract, P.I.A. received public funds appropriated by the Mississippi Legislature.

 Subsequent to the filing of this action by the Ethics Commission, P.I.A. cancelled the insurance contract with the Water Management District and refunded its commission earned under the contract.

 CONSTITUTION AND STATUTE

 At issue in this case is the proper interpretation of Article 4, Section 109 of the Mississippi Constitution of 1890, and whether certain portions of Miss. Code Ann. 25-4-105 (Supp. 1985) violate it. Section 109 reads:

 Section 109. No public officer or member of the legislature shall be interested, directly or indirectly, in any contract with the state, or any district, county, city, or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member, during the term for which he shall have been chosen, or within one year after the expiration of such term.

 Miss. Code Ann. 25-4-105 (Supp. 1985) is a part of Chapter 469, Laws of 1983, Miss. Code Ann. 25-4-101, et seq., a comprehensive legislative enactment dealing with conflicts of interest by public officials. The pertinent portions are as follows:

 25-4-101. Declaration of public policy.

 The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments.

 25-4-103. Definitions.

 The following definitions apply in this article unless the context otherwise requires:

 (a)" Authority "means any component unit of a governmental entity.

 * * * * *

 (h)" Government entity "means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

 * * * * *

 (j)" Material financial interest "means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other. Notwithstanding the foregoing, ownership of any interest of less than ten percent (10%) in a business or aggregate annual income of less than one thousand dollars ($1,000.00) from a business shall be deemed not be [sic] a material financial interest in such business.

 * * * * *

 (p)" Relative "means the spouse, child or parent.

 25-4-105. Certain actions, activities and business relationships prohibited or authorized; contracts in violation of section voidable.

 * * * * *

 (2) No public servant shall:

 (a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member. [Emphasis added]

 * * * * *

 (f) Be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member.

 (3) Notwithstanding the provisions of subsection (2) of this section, a public servant or his relative:

 (a) May be an officer or stockholder of banks or savings and loan associations or other such financial institutions bidding for bonds, notes or other evidences of debt or for the privilege of keeping as depositories the public funds of a governmental entity thereof or the editor or employee of any newspaper in which legal notices are required to be published in respect to the publication of said legal notices.

 (b) May be a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is an officer or employee or have a material financial interest in a business which is a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is an officer or employee where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

 * * * * *

 (h) May be employed by or receive compensation from an authority of the governmental entity other than the authority of the governmental entity of which the public servant is an officer or employee. *fn11

 The Legislature submitted to the electorate of this State at the general election held on November 6, 1984, a proposal to amend Section 109 as follows:

 Amend Section 109, Mississippi Constitution of 1890, to read as follows:

 Section 109. No public official or public employee shall be interested in any contract with the governmental entity of which he or she is a member. The term" entity "shall mean any governmental body vested with the authority to contract.

 No public official or public employee shall misuse his or her official position to obtain any pecuniary benefit for himself or herself or for any person or business with which he or she is associated.

 The Legislature may further regulate conduct by public officials and public employees and may create a commission composed of members appointed by each department of government to accomplish the intent of this section.

  This proposed amendment was rejected by the people.

  The Legislature again submitted to the electors of this State at an election held on June 2, 1986, the following proposed amendment to Section 109:

  Amend Section 109, Mississippi Constitution of 1890, to read as follows:

  " Section 109. (1) No public officer, member of the Legislature or public employee shall have any interest in any contract with the governmental level of which he is a member, or within one (1) year after the expiration of his term of office or employment, if such interest would improperly

  influence the performance of his official duties or official actions .

  (2) An improper influence would exist when a reasonably prudent public officer, member of the Legislature or public employee knows or has good reason to believe that the benefit or detriment in the subject matter in which he participates will impair his independent judgment or the faithful discharge of public duties in his official capacity.

  (3) An improper influence would not exist if the benefit or detriment in the subject matter which is under consideration would accrue to the public generally.

  (4) No public officer, member of the Legislature or public employee shall use his official position to obtain any pecuniary benefit for himself or for any person or for any business with which he is associated, other than those benefits as may be incidental to his office or accrue to the public generally.

  (5) The term "accrue to the public generally" in this section shall mean that the of the Leglslature or' public employee is affected by the subject contract, action or decision to no greater extent than any other member of the public, segment of `the public, or an industry, profession or occupation.

  (6) The Legislature shall provide civil or criminal penalties and other appropriate remedies for the violation of this section. The Legislature shall also provide by law for the further regulation and definition of lawful conduct, including proper public disclosure of pecuniary interests in official matters, by public officers, members of the Legislature or public employees. The Legislature may create a commission composed of members appointed by each department of government to accomplish the intent of this section. "[Emphasis added]

  This proposed amendment was also rejected by the electorate.

  THE ATTORNEY GENERAL'S SUIT

  On November 15, 1985, the State of Mississippi, through the Attorney General Edwin Lloyd Pittman filed a complaint in the chancery court of the First Judicial District of Hinds County against Frazier and Knox seeking a declaratory judgment under Rule 57, Mississippi Rules of Civil Procedure, that both defendants were in violation of Section 109, and that Miss. ...


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