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,