State ex rel. Smith v. Bohannan, No. 8841

• Court: Supreme Court of Arizona
• Writing for the Court: PER CURIAM
• Citation: 101 Ariz. 520,421 P.2d 877
• Parties: STATE of Arizona ex rel. Darrell F. SMITH, The Attorney General, Petitioner, v. Robert C. BOHANNAN, Jr., Respondent.
• Decision Date: 21 December 1966
• Docket Number: No. 8841

Page 877

421 P.2d 877 101 Ariz. 520 STATE of Arizona ex rel. Darrell F. SMITH, The Attorney General, Petitioner,
v.
Robert C. BOHANNAN, Jr., Respondent. No. 8841. Supreme Court of Arizona, In Banc. Dec. 21, 1966.
Rehearing Denied Jan. 17, 1967.

[101 Ariz. 521]

Page 878

Darrell F. Smith, Atty. Gen., Philip M. Haggerty, Sp. Counsel, for petitioner.

Lewis, Roca, Scoville, Beauchamp & Linton, John P. Frank, and Thomas A. Latta, Phoenix, for respondent.

PER CURIAM.

This is an original proceeding in quo warranto filed in this Court in the name of the State of Arizona out of the relation of Darrell F. Smith, Attorney General, against Robert C. Bohannan, Jr., a member of the State Board of Public Welfare. Jurisdiction was accepted on September 27, 1966, pursuant to Article 6, § 5, subsec. 1, Constitution of Arizona, A.R.S. and after the filing of briefs submitted for decision on November 22, 1966.

By statute, a state official is prohibited from having an interest directly or indirectly in any purchase made by a board of which he is a member.

'A. Members of the legislature or state, county, city, town or precinct officers shall not be interested directly or indirectly in any contract or in any sale or purchase made by them in their official capacity, or by any body or board of which they are a member.' A.R.S. § 38--446.

The facts admitted in this Court establish that from January 1, 1961, to March 12, 1962, respondent was president and a director of the Associated Mortgage and Investment Company, an Arizona corporation, and also a member of the Arizona State Retirement Board; that during this time Arizona Mortgage and Investment Company sold mortgages in an amount in excess of three million dollars to the Arizona State Retirement Board as investments for the state retirement fund.

[101 Ariz. 522]

Page 879

It is, we believe, accepted without dissent that public officers must have no personal interest in transactions with the government which they represent. The rule is most aptly stated in Stockton Plumbing and Supply Co. v. Wheeler, 68 Cal.App. 592, 229 P. 1020:

'The principle upon which public officers are denied the right to make contracts in their official capacity with themselves or to be or become interested in contracts thus made is evolved from the self-evident truth, as trite and impregnable as the law of gravitation, that no person can, at one and the same time, faithfully serve two masters representing diverse or inconsistent interests with respect to the service to be performed.' 68 Cal.App. 592, 601, 229 P. 1020, 1024.

This Court said in Williams v. State, 83 Ariz. 34, 315 P.2d 981:

'In order that he (the public officer) act only for and on behalf of the state's interest, it is imperative that he have no personal interest that might clash or conflict with that of the state. * * * Public policy requires that personal interests not exist as a possible factor influencing a public official in the performance of his duties.'

We also said in removing by quo warranto an attorney general of this state for official misconduct:

'The object of the removal of a public officer for official misconduct is not to punish the officer, but to improve the public service. The public interest demands that public affairs be administered by officers upon whom rests no stigma * * * of any offense involving a violation of their official duties.' State ex rel. De Concini v. Sullivan, 66 Ariz. 348, 359, 188 P.2d 592, 599.

As a member of the State Retirement Board, it was respondent's obligation to invest the funds of the state retirement system, A.R.S. § 38--743, and, in doing so, to pass upon the desirability of investments in order to insure the solvency of the retirement system. As president and a director of Associated Mortgage, it was his duty to further the interest of the corporation and to actively work for its financial betterment.

Respondent, as president and director of Associated Mortgage and Investment Company and as a member of the Arizona State Retirement Board, was obviously representing diverse and inconsistent interests since the interest of one must necessarily be sacrificed to the interest of the other.

By § 38--447, A.R.S., an officer who violates § 38--446 is subject to certain penalties.

'An officer or person prohibited by the laws of this state from making or being interested in contracts, or from becoming a vendor or purchaser at sales, or from purchasing evidences of indebtedness, who violates any provision of such laws, shall be punished by a fine of not more than one thousand dollars or by imprisonment in the state prison for not more than five years, and is forever disqualified from holding any office in this state.' A.R.S. § 38--447.

The Arizona Legislature did not consider the violation of § 38--446 as a trivial or minor infraction. Punishment by imprisonment in the state penitentiary makes the offense a felony.

Respondent urges that § 38--447 has no application because there must be some benefit to him resulting in a profit before a violation of the law exists. We do not pause long in contemplation of this point. It is conduct which May be detrimental to the interests of the state which the statute seeks to prohibit.

But were it otherwise, respondent's personal profit is clearly evident. The records of the State Retirement Board, of which we take...