Ohio Supreme Court Rules That Improper
Interest in a Contract By a Public Official
Does Not Render Contract Void

Maria J. Armstrong
Bricker & Eckler LLP
February 2007

Full text of the Ohio Supreme Court decision

On February 7th, 2007, the Ohio Supreme Court issued an Opinion holding that contracts issued in violation of R.C. 2921.42, which prohibits public officials from having an unlawful interest in a public contract, are not void. Morrow Cty. Airport Auth. v. Whetstone Flyers Ltd., 112 Ohio St.3d 419, 2007-Ohio-255. While noting that a public official who violates R.C. 2921.42 is subject to criminal felony prosecution, the Ohio Supreme Court held that such illegal action by a public official did not render the underlying contract void.

The case arose in 1981 when the Morrow County Airport Authority entered into a lease agreement with a private entity, Whetstone Flyers, to build and operate aircraft hangars on airport property. Max Craven was a member of the Airport Authority and signed the lease with Whetstone. He was also an owner Whetstone at the time. Ohio Revised Code Section 2921.42(A)(1) provides that a public official may not “authorize or employ the authority or influence of the office to secure authorization of any public contract in which he, a member of his family, or any of his business associates has an interest.” Ohio Revised Code Section 308.04 similarly provides that a member of an airport authority must take an oath that he “will not be interested directly or indirectly in any contract led by the regional airport authority.”

Craven acted in violation of both of R.C. 2921.42 and R.C. 308.04 when he signed a lease with his own company on behalf of the Airport Authority. Over 20 years later, in 2001, the Airport Authority notified Whetstone that its lease was void because of Craven’s illegal action and sought to take possession of the hangars. A court battle over the ownership of the hangars ensued and lasted until 2007 with this decision by the Ohio Supreme Court.

The Ohio Supreme Court concluded that the penalties set forth in R.C. 2921.42 and R.C. 308.04 did not include voiding the underlying contract. The Court further noted that the Morrow County Board of County Commissioners adopted a resolution in 1989 ratifying all of the agreements and contracts entered into by the Authority. Craven was not involved in that ratification by the County Commissioners. Thus, the Court found in favor of Whetstone and, despite Craven’s illegal actions, ruled that the lease was not void and that Whetstone could retain its airport hangars.