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HomeMy WebLinkAbout933 MerrimanSTATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 In Re: James F. Merriman File Docket: 93- 062 -C2 Date Decided: 06/23/94 Date Mailed: 06/30/94 Before: James M. Howley, Chair Daneen E. Reese, Vice Chair Roy W. Wilt Austin M. Lee Allan M. Kluger The Investigative Division of the State Ethics Commission received a complaint regarding a possible violation of the State Ethics Act, Act 170 of 1978 as added and amended by Act 9 of 1989. Written notice, of the specific allegation(s) was served at the commencement of the investigation. A Findings Report was issued and served, upon completion of the investigation, which constituted the Complaint by the Investigation Division. An Answer was filed and a hearing was waived. A consent agreement was submitted by the parties to the Commission for consideration which was subsequently approved. This adjudication of the Commission is hereby issued which sets forth the individual Allegations, Findings of Fact, Discussion, Conclusions of Law and Order. This adjudication is final and will be made available as a public document fifteen days after issuance. However, reconsideration may be requested which will defer public release of this adjudication pending action on the request by the Commission. A request for reconsideration, however, does not affect the finality of this adjudication. A reconsideration request must be received at this Commission within fifteen days of issuance and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code S21.29(b). The files in this case will remain confidential in accordance with Act 9 of 1989, 65 P.S. §408(h) during the fifteen day period and no one unless the right to challenge this Order is waived, may violate confidentiality by releasing, discussing or circulating this Order. However, confidentiality does not preclude discussing this case with an attorney at law. Any person who violates confidentiality of the Ethics Act is guilty of a misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than one year, 65 P.S. §409(e). Merriman, 93- 062 -C2 Page 2 r. ALLEGATION: That, James F. Merriman, as a public official /public employee, in his position of Treasurer for Radnor Township, Delaware County, violated the following provisions of the State Ethics Act (Act 170 of 1978) when he received compensation not provided for by law in the form of fees for tax certifications. Section 3. Restricted Activities. (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 5403(a). and that, James F. Merriman, as a public official /public employee, in his position of Treasurer for Radnor Township, Delaware County, violated the following provisions of the State Ethics Act (Act 9 of 1989) when he received compensation not provided for by law in the form of fees for tax certifications. Section 3. Restricted Activities (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 P.S. 5403(a). Section 2. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Conflict" or "conflict of interest" does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his Merriman, 93- 062 -C2 Page 3 II. FINDINGS: immediate family is associated. 65 P.S. 5402. 1. James F. Merriman was appointed to serve as Radnor Treasurer in May of 1981. 2. Merriman was elected to that position in November of served until December of 1993. 3. Merriman's duties as Treasurer, include in part: Township 1981 and a. Receiving all Township taxes, revenues, fines, fees, and all other money paid to, owed, or due the Township. b. Depositing funds promptly in the name of the Township in such depositories as the Board shall specify by ordinance. c. Maintaining records of receipts in accordance with the uniform classification of accounts established by the Administrative Code. d. Maintaining records of the deposits and accounts which shall be open to inspection and verification at any time by the Township Finance Director and the Board. e. Submitting such reports as are requested by the Board. 4. The Township Treasurer is authorized to collect such Township taxes as the Board shall direct by ordinance. Such ordinances shall set forth the procedures for the collection of the specified tax. The Treasurer is also authorized to collect County and school taxes levied within the Township subject to the applicable law and receive compensation for such collection. 5. Radnor Township's Home Rule Charter and Administrative Code provide that the Treasurer shall be compensated for work performed at an annual rate to be fixed by ordinance. 6. James Merriman also 'collected taxes for,the Radnor School District. 7. James Merriman's compensation for collecting Radnor School District taxes was set by resolution of the Radnor School District board of Directors at $12,000 a year. 8. During his term as Radnor Township Treasurer, James Merriman provided certifications to various businesses, abstract Merriman, 93- 062 -C2 Page 4 companies, realtors, banks and attorneys that taxes relating to specified real estate have or have not been paid. a. James Merriman charged a fee for such tax certifications. 9. James Merriman has provided tax certifications to companies and individuals requesting the information since taking office for a fee of $2.50 per year for each years certification that Township taxes were paid, and $2.50 per year for each years certification that School District taxes were paid. a. The fee was established on Mr. Merriman's estimate of the average cost and time involved to research and prepare each certification. 10. The Treasurer and part -time employees of the Treasurer's office have office space in the Township building and are not eligible for any Township pension or fringe benefit at Township expense. 11. In addition to the office space, the Township provides the Treasurer with a computer, office equipment and a full time employee (Finance Technician I1). 12. The Treasurer is obligated to pay for any additional expenses incurred in the operation of his office. a. The assumption of such expenses by Merriman reduced his net compensation as Treasurer. 13. James Merriman asserts that he incurred and paid from his personal funds the following expenses in addition to those paid for by the Township: 1988 1989 1990 1991 1992 ._.. 1993 Ex. clerical help $ 7,598.21 $ 8,517.55 $ 8,460.84 $ 9,014.72 $ 9,376.63 $ 7,790.73 Consult. $ 857.00 $ 2,171.38 $3,096.12 $ 1,737.56 $ 4,320.17 $ 5,864.00 Accounting Serv. $ 600.00 $ 295.00 $ 2,150.00 $ 1,430.00 $ 3,683.00 $ 1,985.00 Stationery, Printing & Postage $ 402.48 $ 939.79 $ 1,091.31 $ 1,209.69 $ 2,442.00 $ 3,114.90 Automobile Expense $ 5,215.37 $ 1,114.30 $ 2.121.31 $ 3,139.75 $ 1,485.60 $ 1,999.13 Total $14.673.06 $13,038.02 $16,919.32 $16,522.72 $21,307.40 $20,753.76 Merriman, 93- 062 -C2 Page 5 14. A portion of the above expenses were related to the issuance of tax certifications. 15. The expenses incurred by James Merriman for the operation of his office were paid from a bank account funded with the $20,000 a year compensation provided by from the Township and the $12,000 compensation provided by from the School District. a. Tax certification fees received by Merriman were not used to fund this account. 16. A majority of the certifications were for a four year period showing the payment, or lack of payment, of Township and School District taxes. 17. The fee for a four year certification amounted to $20.00. 18. Previous Treasurers have also provided tax certifications for a fee. 19. James Merriman provided the certification information on a form with the letterhead "Tax Certification - Treasurer of Radnor Township - 301 Iven Avenue, Wayne, PA 19087" and containing the signature James F. Merriman over the title "Township Treasurer ". 20. The information used to provide the tax certifications for the years 1990 to 1993 was retrieved from the Township computer located in the Treasurer's office at the Township Building during normal business hours. a. Information for prior years was contained in tax books located in the Treasurer's office. 21. James Merriman requested those seeking tax certifications to submit a self addressed, stamped envelope with the request. a. Most requestors complied with this request. 22. On January 23, 1989, a motion was introduced to the Board of Commissioners to increase the compensation from $15,000 to $20,000 a year, for the position of Treasurer. 23. The issue of the Treasurer charging and keeping the tax certification fees was discussed by the Commissioners at the January 23, 1989, meeting. a. No action was taken at that time by the Commissioners authorizing the charging of certification fees. 24. On February 14, 1989, the Radnor Township Commissioners passed Merriman, 93- 062 -C2 Page 6 Ordinance 89 -04 which set the compensation for the office of Treasurer. a. Compensation was fixed at $20,000 per year. b. The ordinance also provided that the Township pay such actual printing and postage expenses by the Treasurer in the performance of his duties, and that the Township provide adequate office space and equipment for the performance of these duties by the Treasurer. c. It was further provided that the Treasurer shall other compensation of any kind for the collection of Township moneys or for the performance of his Treasurer, provided that nothing prevents his commissions and compensation for the collection county and school district taxes. 25. Records provided by James Merriman indicate that he received the following payments for providing Tax Certifications: Year Township School District 1989 $ 3,440.00 $ 3,430.00 1990 $ 627.50 $ 627.50 1991 $ 3,842.50 $ 3,822.50 1992 $ 6,535.00 $ 6,505.00 1993 (Jan -Nov) $ 6,067.50 receive no or receipt duties as right to of state, Total $ 6,870.00 $ 1,255.00 $ 7,665.00 $13,040.00 $ 6,077.50 $12,145.00 a. The funds received by James Merriman for tax certifications were deposited into his personal bank account. b. The funds were not subject to a Township audit. 26. The primary election for the office of Treasurer was held in May of 1993. a. Merriman was the incumbent Treasurer at the time of the primary election but did hot run for the office. 27. On November 22, 1993, Commissioner Andrews introduced an ordinance which allows the Treasurer to collect fees for tax certifications. a. The motion was seconded by Commissioner Marks. 28. On December 7, 1993, Commissioner Andrews moved to adopt Ordinance 93 -22 and the motion was seconded by Commissioner Marks. Merriman, 93- 062 -C2 Page 7 a. The motion passed by a vote of 5 to 2. 29. Ordinance 93 -22 provided in part: a. That it has become a customary business practice in real estate closings to have a certification that the Township real estate taxes have been paid.- b. That the Township Treasurer estimates the cost of providing such certifications at $2.50 per year or a maximum of $7.50 for the past 3 years. c. That it has been a long standing practice in Radnor Township and other townships throughout Pennsylvania to permit the Treasurer to retain the fees in order to defer the cost of the certification. d. That the Board of Commissioners was aware of the practice and impliedly authorized it. e. That the Board of Commissioners believe a reasonable fee of $2.50 (for past year) to a maximum of $7.50 for three years should be charged and retained by the Treasurer. f. That the new ordinance should be applied prospectively and retroactively. g. The fee is to be paid to the Treasurer as reimbursement for his expenditure of labor, time and supplies. h. That all fees charged and retained by the Treasurer prior to the date of this ordinance are ratified and approved. 30. The School Board, by a vote of 5 to 3, voted to approve the following resolution which provided in part: a. That it has become common practice in real estate settlements to use a written certification as to payment of Radnor School District and Township real estate taxes. b. That the Township Treasurer has estimated the cost of his time, labor and supplies at $2.50 per year for the certifications. c. That it has been a long standing practice in Radnor Township and throughout Pennsylvania for the Treasurer to retain the fees to defer the costs of the certifications. d. That the School Board of Radnor Township was aware of the practice by the Treasurer to collect the fees and has not restricted on forbidden his retention of such fees. Merriman, 93- 062 -C2 Page 8 e. That such fees should be accessed to the parties requesting the certification. f. That the certification fees should be charged hereafter and that such practice should be ratified as to past certifications. g- III. DISCUSSION: That fees should be charged by the Tax Collector for the certification of real estate taxes. h. That the fees be paid to the Tax Collector as reinforcement for his expenditure of time, labor and supplies. i.. That the fees charged by the Tax Collector prior to this resolution be ratified and approved. 31. At the time that the Radnor School Board passed this resolution, James F. Merriman was no longer township treasurer. a. James Merriman was still tax collector for the school district at this time. 32. The township ordinance placed a cap of $7.50 on tax certifications. a. The school district resolution had no cap. 33. The fees charged by James Merriman for the provision of township tax certifications exceeded the $7.50 cap as follows: YEAR TOWNSHIP CERTIFICATIONS 1989 $ 827.50 1990 175.00 1991 937.50 1992 1,552.50 1993 1,495.00 Total $ 4,986.50 34. James Merriman believed that he was permitted to charge a fee for tax certifications. 35. James Merriman did not intend to violate the Public Official and Employee Ethics Law as a result of charging tax certification fees. As a Treasurer for Radnor Township, Delaware County, James F. Merriman, hereinafter Merriman, is a public official /employee as that term is defined under Act 9 of 1989. 65 P.S. §402. As such, his conduct is subject to the provisions of the Ethics Law and the restrictions therein are applicable to him. Merriman, 93- 062 -C2 Page 9 Initially, it is noted that Section 9 of Act 9 of June 26, 1989 provides, in part, as follows: This amendatory act shall not apply to violations committed prior to the effective date of this act, and causes of action initiated for such violations shall be governed by the prior law, which is continued in effect for that purpose as if this act were not in force. For the purposes of this section, a violation was committed prior to the effective date of this act if any elements of the violation occurred prior thereto. Since the occurrences in this case transpired both before and after the effective date of Act 9 (June 26, 1989), we must apply the provisions of both Act 170 of 1978 and Act 9 of 1989 to determine whether the Ethics Act was violated. Under Section 3(a) of Act 9 of 1989, a public official /employee shall not engage in conduct that constitutes a conflict of interest. Under Section 3(a), of Act 170 of 1978 quoted above, this Commission has determined that use of office by a public official to obtain a financial gain for himself or a member of his immediate family or a business with which he is associated which is not provided for in law transgresses the above provision of law. Thus, use of office by a public official to obtain financial gain which is not authorized as part of his compensation is prohibited by Section 3(a): Hoak /McCutcheon v. State Ethics Commission, 77 Pa. Commw. Ct. 529, 466 A.2d 283 (1983) ; Yacobet v. State Ethics Commission, 109 Pa. Commw. Ct. 432 531 A.2d 536 (1987). Similarly, Section 3(a) of the Ethics Act would prohibit a public official /employee from using public office to advance his own financial interests; Koslow v. State Ethics Commission, 116 Pa. Commw. Ct. 19, 540 A.2d 1374 (1988). We must decide whether Merriman violated Section 3(a) of Act 170 of 1978 or Act 9 of 1989 as to the allegation that he received tax certification fees without an ordinance authorizing such charges. Merriman was the Treasurer for Radnor Township, Delaware County from May 1981 to December, 1993 with duties consisting of collecting all taxes, revenues, fines, fees and other monies due the township. The treasurer is also authorized to collect county and school district taxes levied within the township. The treasurer is compensated annually by the township at a rate set by ordinance. Merriman provided tax certifications on a fee basis for businesses, abstract companies, realtors, banks and attorneys who requested a certified document stating that taxes had been paid as to a certain property. The fee charged by Merriman amounted to a charge of $2.50 for each yearly tax certification. Merriman, 93- 062 -C2 Page 10 Merriman did incur certain expenses in the operation of his office even though the township provided office space, equipment and a full time employee. These expenses, which included the tax certification services, reduced the compensation received by Merriman. Merriman was paid $20,000 a year from the township and $12,000.00 a year from the school district for his tax collection services. On February 14, 1989, the township commissioners adopted Ordinance 93 -22, with prospective and retroactive application, which allowed for tax certification fees at a rate of $2.50 per year with a cap of $7.50. The school board also adopted a resolution which ratified prior fees and which allowed a fee of $2.50 for tax certifications per year with no cap. A review of the record reflects that the total amount of fees received by Merriman for township tax certifications for the years 1989 through 1993 which exceeded the $7.50 cap amounted to $4,986.50. Fact Finding 33. In applying the provisions of Section 3(a) of Act 170 of 1978 and Act 9 of 1989 to the above facts, we must determine whether there was use of office on the part of Merriman to obtain a financial gain /private pecuniary benefit for himself as to the fees he collected for tax certifications. It is clear that there was a use of authority of office on the part of Merriman in that he, by virtue of his position of Treasurer, was able to exact these fees for tax certifications. Juliante, Order 809. The tax certification fees went to Merriman himself and hence the fees were a financial gain /pecuniary benefit. The singular question is whether the pecuniary benefit received by Merriman was private under Act 9 or a financial gain other than compensation provided by law under Act 170 of 1978. In order to make that determination, we must review both statutory and decisional law on this issue. The Local Tax Collection Law of 1945, F.L. 1050, Section 35, as amended, 72 P.S. 5511.35: "The tax collector in boroughs and townships of the second class shall receive, as compensation for the collection of county, institution district, borough and township taxes, salary, wages or a commission on all such taxes to be fixed by the respective taxing authorities levying such taxes, not exceeding five per centum of the amount collected. In the case of school district taxes, the commission or compensation of the tax collector shall be determined by the board of school directors, and the total cost of such collection shall be reported, annually to the Superintendent of Public Instruction, and shall be published in his report. For the collection of county, institution district, school district, borough and township taxes, the tax collector Merriman, 93- 062 -C2 Page 11 shall be allowed by the respective taxing authorities, actual and needful expenditures for printing, postage, books, blanks and forms." The above provision of law does allow compensation to a tax collector consisting of a percentage commission plus certain allowed expenditures. Nowhere does the law allow for charging for tax certifications. Unless tax certification fees are provided for by law, a tax collector may not receive such a financial gain. The concept that a tax collector may only receive compensation which is legislatively provided is well rooted in decisional law. See Rachael v. Forest Hills School District, 94 Pa. Commw. Ct. 130, 503 A.2d 472 1986: "...the right of a tax collector to receive the compensation annexed to his office is legislative, not contractual. Tarner v. Chambersburq Borough School District, 338 Pa. 417, 12 A.2d 106 (1940). Further, this Court has stated, in dealing with a state statute, that when a provision can be interpreted to benefit either a private party or the Commonwealth, it must be presumed that the legislature intended to favor the public interest." Id. at 476. A tax collector may not charge any fee unless it is specifically provided for by law. In Brown v. LeSuer, 149 Pa. Super. 192, 27 A.2d (1942), the mortgage holder of certain realty sought to pay the liens, including a 5% penalty, to prevent foreclosure. When the tax collector refused to accept the payment unless an additional 5% fee was paid to her as her commission, such payment was made under protest followed by a civil action to recover the 5% fee. The trial court found in favor of the mortgagee and the tax collector appealed. The Superior Court affirmed, holding that the tax collector had no authority to charge such a fee due to the lack of statutory authority: "It is well settled that one who demands payment of a tax must show statutory authority for the imposition and collection of the tax: Central Penna Lumber Co.'s App., 232 Pa. 191, 193, 81 A.204; Schmuck v. Hartman, 222 Pa. 191, 195, 70 A. 1091; and the principle applies equally well to one who seeks to collect a fee, commission or charge from the taxpayer for his services in effecting the collection of a tax lawfully imposed. Unless statutory authority for the collection of such fee, commission or charge from the taxpayer is shown he cannot be required to pay it: Com. v. Scott, 88 Pa. Superior Ct. 68, 71, reversed on another point in 287 Pa. 302, 135 A.225. A practice, even though long established, of collecting such unauthorized fee, commission or charge will not make it legal: Lawrence County v. Horner, 281 Pa. 336, 342, 126 A.783." Id. at 195, 196. Merriman, 93- 062 -C2 Page 12 In this case, the township had in place an ordinance allowing for tax certification fees of $2.50 per year with a $7.50 cap and the school district had a similar resolution without any cap. Therefore, to the extent that Merriman exacted fees beyond the $7.50 cap for township tax certifications, such was a financial gain other than compensation provided by law under Act 170 of 1978 and a private pecuniary benefit under Act 9. Accordingly, we find a technical violations of Act 170 of 1978 for the excess in the tax certification fees received up to June 26, 1989 and a technical violation of Act 9 of 1989 for such excess fees received after June 27, 1989. The amount of the financial gain and private pecuniary benefit totaled $4,986.50. We note that our decision in this case follows our prior precedent in Allen, Order 612 -R, wherein we determined that a tax collector violated Section 3(a) of Act 170 of 1978 when he received tax certifications which were not authorized in law so as to be a financial gain other than compensation provided for by law. See also Thee, Order 919. Merriman is ordered to make restitution of $4,986.50 through this Commission to Radnor Township within thirty (30) days of the date of issuance of this order. Compliance will result in the closing of this case with no further action by the Commission. Failure to comply will result in the initiation of an order enforcement action. ID. CONCLUSIONS OF LAW: 1. James F. Merriman as the Treasurer of Radnor Township, Delaware County was a public official subject to the provisions of Act 170 of 1978 as added and amended by Act 9 of 1989. A technical violation of Section 3(a) of Act 170 of 1978 occurred when Merriman received tax certification fees from January 1, 1989 to June 26, 1989 in excess of the $7.50 cap allowed by township ordinance in that such was a financial gain other than compensation provided by law. A technical violation of Section 3(a) of Act 9 of 1989 occurred when Merriman received tax certification fees from June 27, 1989 through 1993 in excess of the $7.50 cap allowed by township ordinance in that such was a private pecuniary benefit. 4. The financial gain and private pecuniary benefit received by Merriman amounted to $4,986.50. In Re: James F. Merriman File Docket: 93- 062 -C2 : Date Decided: 06/23/94 Date Mailed: 06/30/94 1. A technical violation of Section 3(a) of Act 170 of 1978 occurred when James F. Merriman as the Treasurer of Radnor Township, Delaware County received tax certification fees from January 1, 1989 to June 26, 1989 in excess of the $7.50 cap allowed by township ordinance in that such was a financial gain other than compensation provided by law. 2. A technical violation of Section 3(a) of Act 9 of 1989 when Merriman received tax certification fees from June through 1993 in excess of the $7.50 cap allowed by ordinance in that such was a private pecuniary benefit. 3. Merriman is directed within order to make restitution of Radnor Township. a. Compliance will result further action. b. Failure to comply will enforcement action. ORDER NO 933 JAMES M. HOWLEY, R occurred 27, 1989 township thirty (30) days of issuance of this $4,986.50 through this Commission to in the closing of this case with no result in the initiation of an order BY THE COMMISSION,