November 30, 2009
Dear Charter Commission Members:
The following question has arisen: Can the city, by home rule amendment, adopt a
conflict of interest provision that is stricter than Tennessee’s Conflict of Interest Law found at
Tennessee Code Annotated, ' 12-4-101 et seq.
In my opinion, the answer is no for the reason that it would violate Article I, Section 8 of
the Tennessee Constitution.
There are actually two conflicts of interest general laws in Tennessee: Tennessee Code
Annotated, '' 12-4-101and 102, and Tennessee Code Annotated, '' 6-54-107 and 108.
If I am asked to do so, I will go into the distinction between the two statutes, but here I
will point only the following major differences:
Tennessee Code Annotated, '' 12-4-101 and 102:
- A municipal official found guilty of violating the first one shall forfeit all pay and
compensation arising from the illegal contract, therefor, forfeit his office, and be ineligible to
hold the same or similar position for ten years,
- The suit must be filed under the quo warranto statute (Tennessee Code Annotated, 2935-101 et seq.), and be brought with the consent of the district attorney general (with certain
extremely narrow exceptions).
Tennessee Code Annotated, '' 6-54-107 and 108:
- A municipal official found guilty of violating the second one shall forfeit the amount
paid under the illegal contract (the statute does not provide for removal from office),
- Any citizen of the municipality can prosecute the suit in his own name.
Article I, Section 8 of the Tennessee Constitution provides:
That no man shall be taken, or imprisoned, or disseized of his
freehold, liberties or privileges, or outlawed or exiled, or in any
manner destroyed or deprived of his life, liberty or property, but by
the judgment of his peers or the laws of the land.
In State v. Hamby, 63 S.W.2d 515 (1933), the question of whether a 1933 private act
applying only to Hamilton County by population bracket violated Article 1, Section 8. The
private act provided that it would be a misdemeanor, punishable by fine and imprisonment
for any member of the County Court or any person related within
the third degree to any member of the County Court or any person
related within the third degree to any member of the county court
to enter into any contract for the sale of property, rendering of any
service, furnishings of any supplies, or doing other things for a
consideration to be paid out of public funds of the County or any
public funds of the State disbursed by any officer or agent of the
County and over which the County Court may have jurisdiction.
[At 515]
The Tennessee Supreme Court held that the private act violated Article I, Section 8 of the
Tennessee Constitution, for several reasons:
- First, The term “law of the land” meant the general law.
- Second, “Both the words ’liberty’ and ’property’ in the foregoing section include the
right to make contracts.”
- Third, “It is true,” said the court that:
The right to contract is subject to curtailment, limitation, and
destruction, by the Legislature when done pursuant to “the law of
the land.” [Citation omitted by me.] .... The general rule is that the
Legislature cannot pass special acts, but there are certain
exceptions to this rule. [Citation omitted by me.] Classification
from a population basis is permissible where the classification is
based upon reason, is natural, and is not arbitrary and capricious.
[At 516]
- Fourth, even though some cases support private acts because they are based upon
reason, are natural and not arbitrary or capricious, said the court:
We are unable to perceive any justification for denying to the large
number of citizens of Hamilton county affected by this act their
constitutional right to contract when citizens similarly situated in
other counties of the state are not deprived of that privilege.
Conceding, as did the chancellor, that political nepotism is a
“hateful thing,” we are unable to say that it is more prevalent in
Hamilton county than in the other counties of the state, and if such
a law would improve political conditions in Hamilton county, such
a law wold likewise benefit the other counties of this state.... [At
516]
The plaintiff argued that Hamilton County was distinguished from other counties of the
state in a way that would support the private act by virtue of the fact that what is now Tenacious
Code Annotated, '' 12-4-1201 and 102 had been repealed as to Hamilton County in 1911. The
Court acknowledged that:
The question as to the validity of the attempted repeal of the
general law for the benefit of Hamilton County is not before us for
determination. But see Woodard v Brien, 82 Tenn. (14 Lea) 523.
[At 516]
Although the “validity of the attempted repeal of the general law for the benefit of
Hamilton County [was] not before us for determination,” the court’s advice or admonition to
“But see Woodard,” on that issue plainly telegraphed what it felt about the “attempted repeal.”
Woodard, is a 1884 case that held that a 1877 general law that applied only to Davidson and
Shelby counties by population brackets violated Article XI, Section 8 of the Tennessee
Constitution, the court explaining that:
By Article XI, section 8 of the Constitution, it is provided that the
Legislature shall have no power to suspend any law for the benefit
of any particular individual, nor to pass any law for the benefit of
any particular individual, nor to pass any law for the benefit of
individuals consistent with the general laws of the land, nor to pay
any law granting to any individual or individuals, rights, privileges,
immunities or exemptions other than such as may be, by law
extended to any member of the community who may be able to
bring himself within the provisions of such law....
The court reasoned that:
The act in question is so clearly a suspension of the general law for
the benefit of the two counties mentioned as to require no
argument to establish the proposition. “The Legislature may
suspend the operation of the general laws of the state; but when it
does so the suspension must be general, and cannot be made for
individual cases or for particular localities....” [At 520]
Again, as the Hamby court itself indicated, the question of whether the Legislature could
have repealed what is now Tennessee Code Annotated, '' 12-4-101 and 102 as to Hamilton
County was not before the court. For that reason, its reference to Woodard is not binding on the
court in this day. But the Tennessee Supreme Court in Hamby, by referring to Woodard, clearly
telegraphed that it would not abide the suspension of Tennessee’s Conflicts of Interest Law for a
local government, if it were faced with that question.
But a home rule charter containing conflicts of interest law stricter than the two
Tennessee Conflicts of Interest Laws, would run into problems under Article I, Section 8 of the
Tennessee Constitution. Although Hamby applied to a private act, it is clear that home rule cities
are subject to the Tennessee Constitution the same as are other cities, and that under Article I,
Section 8, the right to contract cannot be limited except by general law. A provision in the city’s
home rule charter that is more restrictive of the right of citizens to contract than is Tennessee’s
Conflicts of Interest Law found at Tennessee Code Annotated, ' 12-4-101 and 102, or of
Tennessee Code Annotated, '' 6-54-107 and 108 would not meet the requirement that the
restriction be accomplished by general law, and we need not even reach the question of whether
it would be a general law that is reasonable, natural and is not arbitrary and capricious. However,
with respect to the latter, I can think of no reason why the City could be distinguished from the
rest of the local governments of the state in the area of conflicts of interest.
Presumably, the City could ask the Legislature to exempt it from the application of
Tennessee’s two conflicts of interest laws, so that it could enact its own charter provision
governing conflicts of interest, but even if such an attempt succeeded, it could face a
challenge that the “suspension” of the general law as to it would violate Article XI, Section 8 of
the Tennessee Constitution. State v. Hamby’s reference to Woodard (and subsequent cases on
the suspension of general law) would support that challenge.
Sincerely,
Sidney D. Hemsley
Senior Law Consultant
SDH/