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OPINION OF THE JUSTICES of the Supreme Judicial Court given
Under the Provisions of Section 3 of Article VI of
the Constitution.
Supreme Judicial Court of Maine.
Questions Propounded by the Governor on Jan. 16, 1975.
Answered Jan. 24, 1975.
Jan. 24, 1975.
Questions were propounded by the governor to the Justices of the
Supreme Judicial Court relating to possible incompatibility and conflict of interest on
the part of a nominee to a state office. The Justices of the Supreme Judicial Court were
of the opinion that the nominee's continuing relationship with a national bank, while
serving as State Commissioner of Finance and Administration, would result in
incompatibility of positions or conflict of interest unless he severed all of his existing
relationships to such bank, which relationships included those of president and a
director, paid consultant, use of automobile maintained by the bank, stockholder, and
unpaid consultant.
Questions answered.
January 16, 1975
To the Honorable Justices of the Supreme Judicial Court:
Under and by virtue of the authority conferred upon the Governor by the
> Constitution of Maine, Article VI, Section 3, being advised and believing that the
questions contained herein are important questions of law and that it is a solemn
occasion,
I, James B. Longley, Governor of Maine, submit the following statement
of facts and questions and respectfully ask the opinion of the Justices of the Supreme
Judicial Court thereon:
STATEMENT OF FACTS
Whereas, by virtue of > Title 5, Section 287 of the Maine revised
Statutes Annotated, the Commissioner of Finance and Administration is a state official
appointed by the Governor with the advice and consent of the Council to serve a term
co-terminus with the Governor, and
Whereas, on the Third day of January, 1975, the Governor posted the
Appointment of John D. Robinson, subject to the approval of the Executive Council, as
Maine's Commissioner of Finance and Administration, and
Whereas, John D. Robinson is President of the First National Bank of
Farmington, a federally chartered institution, and under an arrangement with the bank, the
nominee would remain as a Director of the bank and also serve as a paid consultant to the
bank. The nominee would continue to hold the position of bank President, although another
individual would be named to the position of Chief Executive Officer of the institution.
The nominee would remain a stockholder of the bank, and
Whereas, on the 16th day of January, 1975, the Council tabled the
confirmation of said Appointment in order that there be further resolved the question of
incompatibility and conflict of interest on the part of said John D. Robinson as raised by
an Attorney General's Advisory Opinion under date of January 8, 1975, and
Whereas, on the 16th day of January, 1975, the Governor has withdrawn
said nomination pending receipt of an Advisory Opinion from the Justices of the Supreme
Judicial Court of Maine on the questions raised by said Attorney General's Opinion as to
incompatibility and conflict of interest, and
Whereas, the Governor therefore has occasion to consider and act upon
such Advisory Opinion of the Justices, the within request for which being in the exercise
of the Executive powers vested in him by the Constitution and laws of the State.
Therefore I respectfully request an answer to the following questions:
QUESTIONS OF LAW
1. Whether the nominee's continuing relationship with the Farmington
Bank as aforesaid, while serving as State Commissioner of Finance and Administration,
would result in either an incompatibility of positions or conflict of interest?
2. If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the bank as President?
3. If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the Bank as Director?
4. If the answer to Question No. 1 is yes, would the same
incompatibility of position or conflict of interest maintain if the nominee were to sever
his relationship with the Bank as Stockholder?
5. If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the Bank as Stockholder by the execution of a voting trust by the
terms of which the nominee would have no beneficial or voting rights thereunder while in
State service?
6. If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the Bank as Paid Consultant to the Bank, not acting in a managerial
or administrative capacity but advising on broad policy matters?
7. If the answer to Question No. 1 is yes, would the same
incompatibility of position or conflict of interest maintain if the nominee were to sever
his relationship with the Bank as unpaid consultant to the Bank, not acting in a
managerial or administrative capacity but advising on broad policy matters?
8. If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the Bank by the use of an automobile furnished and maintained by the
Bank?
9. If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the Bank by virtue of any combination of the above?
Respectfully,
(s) James B. Longley
James B. Longley
Governor
JBL:bh
ANSWERS OF THE JUSTICES
To the Honorable James B. Longley, Governor of Maine:
In compliance with the provisions of > Section 3 of Article VI of
the Constitution of Maine, we, the undersigned Justices of the Supreme Judicial Court,
have the honor to submit the following answers to the questions propounded on January 16,
1975.
We commence with a comprehensive summarizing statement of principles to
assist understanding of the reasons which induce us to answer the questions propounded as
well as those supporting our answers.
1. 'Solemn Occasion'
It has long been recognized that it is the ultimate prerogative, and
responsibility, of each Justice of the Supreme Judicial Court to determine whether within
the meaning of Article VI, Section 3, of the Constitution of Maine there is a
'solemn occasion' giving rise to the constitutional obligation of the Justices
'. . . to give their opinion upon important questions of law, . . . when required by the
Governor . . ..'
See: Opinion of the Justices, Me., 281 A.2d 321, 322 (1971).
[1] Clearly, a 'solemn occasion' is absent when, in the discharge
of the responsibility in ordinary course to nominate persons for appointments to public
offices, a Governor becomes concerned with questions as to legal aspects of the
qualifications, or disqualifications, of one or more persons whom the Governor is merely
considering for nomination. In such situations the prospective gubernatorial action is at
a stage yet too tentative, hypothetical and abstract to have achieved the 'live gravity'
necessary for the existence of a 'solemn occasion.' See: Opinion of the Justices,
134 Me. 510, 513, 191 A. 487, 488 (1936); Opinion of the Justices, Me., 260 A.2d
142, 146 (1969); Opinion of the Justices, Me., 281 A.2d 321, 324 (1971).
[2] The circumstances described in the Statement of Facts reveal,
however, that gubernatorial action-nomination of John D. Robinson to the office of
'Commissioner of Finance and Administration'-has already taken place as well as action by
the Executive Council-the tabling of the confirmation of the nomination
'in order that there be . . . resolved the question of incompatibility and conflict of
interest on the part of said John D. Robinson as raised by an Attorney General's . . .
Opinion . . ..'
The legal issues presented have thus been crystallized as incident to a
context sufficiently developed to render the questions no longer merely hypothetical or
highly likely to eventuate as academic. Before us is an actual and live controversy the
adversarial overtones of which are amply manifested.
Further, the 'Statement of Facts' asserts that the nomination of John
D. Robinson for appointment as Commissioner of Finance and Administration has been
withdrawn
'pending receipt of an Advisory Opinion from the Justices of the Supreme Judicial Court of
Maine on the questions raised . . .',
with the consequence that
'the Governor . . . has occasion to consider and act upon such Advisory Opinion of the
Justices, . . ..'
This means to us that John D. Robinson will again be nominated for
appointment as Commissioner of Finance and Administration should an Opinion of the
Justices be forthcoming advising that without 'incompatibility (of office)' and 'conflict
of interest' John D. Robinson may maintain all, or any, of the relationships to the First
National Bank of Farmington described in the 'Statement of Facts.'
In their entirety, the foregoing circumstances present us with an
actual and live controversy within which the Governor has responsibility to take action as
focused directly and immediately upon the renomination of a particular person to a public
office. These are
'matters . . . of instant, not . . . future, concern; things of live gravity' (p. 324)
sufficient, as repeatedly acknowledged in prior Opinions of the
Justices (above mentioned), to constitute the 'solomn occasion' required by Article
VI, Section 3, of the Constitution of Maine.
2. The Questions
We interpret the questions propounded as designed to ascertain whether
particular relationships of John D. Robinson with the First National Bank of Farmington
existing either singly or in particular combinations concurrently with his holding the
public office of 'Commissioner of Finance and Administration' will entail 'either an
incompatibility of positions or conflict of interest.'
[3] Since we have under scrutiny only Mr. Robinson's
relationships to a private institution rather than to some public office other than that
of Commissioner of Finance and Administration, we confront no issues concerning an
'incompatibility of positions' as that concept has legal significance separate and apart
from the substantive content embodied in the legal doctrine of 'conflict of interests.'
Principles relating to 'incompatibility of positions' as a legal concept independent of
'conflict of interests', have applicability only when each of the positions under
assessment for 'incompatibility' is 'a public office.'
[4] Turning to the strict 'conflict of interests' problem, we deem it
appropriate to delineate the nature of the 'interest' established when an individual
assumes the public office of 'Commissioner of Finance and Administration' since this is
the basic underlying interest against which all other interests are measured to determine
whether a 'conflict of interests' in violation of law arises.
Tuscan v. Smith, 130 Me. 36, 153 A. 289 (1931), quoting from
Lesieur v. Inhabitants of Rumford, 113 Me. 317, 93 A. 838 (1915), states that persons
holding a public office become subject, relative to the powers and duties of that office,
to
'. . . obligations as trustees for the public (which) are established as a part of the
common law, fixed by the habits and customs of the people.' (p. 46 of 130 Me., p.
294 of 153 A.)
The plenary scope of this 'legal trust' concept as applicable to the
holding of public office is further clarified in Lesieur v. Inhabitants of Rumford, supra,
as follows:
'It is well established as a general rule that one acting in a fiduciary relation . . . is
required to exercise perfect fidelity to his trust, . . ..' ( 113 Me. p. 320, 93A. p.
839);
and, hence,
'(t)he law requires of . . . (public officers) perfect fidelity in the exercise of . . .
(the powers and duties of their officer), . . . whatever has a tendency to prevent their
exercise of such fidelity is contrary to the policy of the law, and should not be
recognized as lawful . . ..' (emphasis supplied) (113 Me. p. 321, 93 A. p. 839)
As acknowledged in Tuscan v. Smith, supra, however:
'No definite rule can be given indicating the line of demarcation between that which is
proper and that which is unlawful.' ( 130 Me. p. 46, 153 A. p. 294)
For this reason, questions concerning whether there is a 'conflict of
interests' violative of law are not susceptible of generalized answers. Essentially, each
case will be 'law' only unto itself.
With this in mind we answer the questions propounded and emphasize that
our answers are without generalized import and relate strictly and narrowly to the
particular duties and powers of the Commissioner of Finance and Administration as affected
by the special relationships with the First National Bank of Farmington which it is
contemplated that Mr. Robinson will maintain while he is Commissioner of Finance and
Administration.
By explicit statutory provisions the Commissioner of Finance and
Administration, or his subordinates within that department, must participate in approving
various activities of the State Treasurer pertaining directly to banking institutions. The
concurrence of the Commissioner, or of the State Controller who is a subordinate of the
Commissioner and, therefore, not independent of him, is required by 5 M.R.S.A. s 135
before excess Treasury moneys may be withdrawn from banking (or other) institutions for
investment elsewhere. Under 5 M.R.S.A. s 138 similar approval is required by the
Commissioner of Finance and Administration for the investment of permanent State funds
held in trust. This statute also requires the Commissioner's approval before the State
Treasurer may enter into contracts or agreements with specified banking institutions for
the custodial care and servicing of certain State securities. By 5 M.R.S.A. s 139 it
is mandated that the Commissioner approve actions of the State Treasurer relating to
contracts or agreements with banking institutions for the 'custodial care and servicing of
the securities belonging to any trust fund created from funds derived or that may be
derived from the sale and lease of lands reserved for public uses.'
In each of the above instances the Commissioner of Finance and
Administration, or his designates, are required by statute to be necessary participants in
the supervision of recurring activities of the State Treasurer directly affecting banking
institutions and important to proper administration of the State's financial affairs.
Moreover, since in these matters the participation by the Commissioner,
or some person who is not independent of him, is indispensable, the Commissioner, or his
designate, lacks opportunity to step aside and allow other independent persons to perform
the duties involved as a means of avoiding the conflicts of interests actually occurring
when action must be taken.
Additionally, the Commissioner of Finance and Administration has
statutory authority to supervise, as his subordinates, the State Controller and the State
Tax Assessor in the exercise of various duties which they have affecting banks and
banking. Indeed, the Commissioner may personally exercise these powers should the
Controller or Tax Assessor be absent 'from the State, or form his official duties, or in
the event of a vacancy in the position.' 5 M.R.S.A. s 283.
Among such powers are:
(1) the Tax Assessor may 'summon before him and examine on oath . . .
any officer of any corporation', and he may compel such officer to produce for inspection
all pertinent records and documents. > 36 M.R.S.A. s 51. Officers of banks are subject
to the exercise of this power;
(2) the State Tax Assessor has authority to 'direct proceedings,
actions and prosecutions' stemming from alleged violations of the laws governing taxation
and assessment of property. 36 M.R.S.A. s 384.
Banking institutions are subject to this power; and
(3) the Controller is required to 'charge off' accounts receivable
deemed, for practical purposes, to be uncollectable, and as to this power the statute
expressly describes as among such accounts receivable 'all taxes for the assessment or
collection of which the State is responsible.' 5 M.R.S.A. s 1504. Franchise taxes owed by
a banking institution are within the scope of this 'charge off' function.
By virtue of the totality of duties and powers above delineated the
office of Commissioner of Finance and Administration has sufficiently close relationship
in material respects to the regulation of banking institutions to cause the holder of the
office to become a trustee owing the legal obligation of fidelity to promote the public
interest underlying the public regulation of banks.
This public interest, insofar as banks are in competition one with
another, is that the regulation of banks be administered in accordance with law fairly,
impartially and without favoritism.
Each of the relationships of Mr. Robinson with the First National Bank
of Farmington, if maintained while Mr. Robinson is Commissioner of Finance and
Administration, must be held, according to acknowledged attitudes 'fixed by the habits and
customs of the people' (see: Tuscan v. Smith, supra,) to be inconsistent with the
discharge of a full fidelity to the public interest that all banks be regulated under law
fairly, impartially and without favoritism.
The conflict of interests results because some of the relationships
(president and director) create special legal fiduciary obligations owing by Mr. Robinson
to the bank; others (paid consultant, use of an automobile maintained by the bank and
stockholder) > (FN1) involve direct pecuniary interests of Mr. Robinson in the bank
(not 'de minimis') which cause him to have a personal stake in the continuing good
fortunes of the bank; and still another (unpaid consultant), by the very nature of the
services involved in counselling, entails a loyalty of Mr. Robinson to the bank being
counselled and generates in the bank correlative expectation that such loyalty exists.
We, therefore, answer the questions, as presented to us seriatim, as
follows:
QUESTION NO. 1: Whether the nominee's continuing relationship with the
Farmington Bank as aforesaid, while serving as State Commissioner of Finance and
Administration, would result in either an incompatibility of positions or conflict of
interest?
ANSWER: We answer in the affirmative.
QUESTION NO. 2: If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the bank as President?
ANSWER: We answer in the affirmative.
QUESTION NO. 3: If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the Bank as Director?
ANSWER: We answer in the affirmative.
QUESTION NO. 4: If the answer to Question No. 1 is yes, would the same
incompatibility of position or conflict of interest maintain if the nominee were to sever
his relationship with the Bank as Stockholder?
ANSWER: We answer in the affirmative.
QUESTION NO. 5: If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the Bank as Stockholder by the execution of a voting trust by the
terms of which the nominee would have no beneficial or voting rights thereunder while in
State service?
ANSWER: We answer in the affirmative.
QUESTION NO. 6: If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the Bank as Paid Consultant to the Bank, not acting in a managerial
or administrative capacity but advising on broad policy matters?
ANSWER: We answer in the affirmative.
QUESTION NO. 7: If the answer to Question No. 1 is yes, would the same
incompatability of position or conflict of interest maintain if the nominee were to sever
his relationship with the Bank as unpaid consultant to the Bank, not acting in a
managerial or administrative capacity but advising on broad policy matters?
ANSWER: We answer in the affirmative.
QUESTION NO. 8: If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the Bank by the use of an automobile furnished and maintained by the
Bank?
ANSWER: We answer in the affirmative.
QUESTION NO. 9: If the answer to Question No. 1 is yes, would the same
incompatibility of positions or conflict of interest maintain if the nominee were to sever
his relationship with the Bank by virtue of any combination of the above?
> [5] ANSWER: We answer this question by summarizing the net effect
of our answers. We are of the opinion that if Mr. Robinson should become Commissioner of
Finance and Administration, there would be a conflict of interests in violation of law
unless he severed all of the relationships with the First National Bank of Farmington
which are described in the questions.
Dated at Portland, Maine, this 24th day of January, 1975.
Respectfully submitted:
ARMAND A. DUFRESNE, Jr.
RANDOLPH A. WEATHERBEE
CHARLES A. POMEROY
SIDNEY W. WERNICK
JAMES P. ARCHIBALD
THOMAS E. DELAHANTY
. Whenever the ownership of stock by Mr. Robinson, or a voting trust of stock owned by Mr.
Robinson, is under discussion, we assume that the amount owned is sufficient to give Mr.
Robinson a 'financial interest (in the First National Bank of Farmington) . . . (which) is
. . . appreciable and substantial.'