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AGLO 1973 No. 42 - March 28, 1973
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Slade Gorton | 1969-1980 | Attorney General of Washington

OFFICES AND OFFICERS ‑- COUNTY ‑- CLERKS ‑- PUBLIC DEPOSITS ‑- COUNTY CLERKS' TRUST FUNDS ‑- QUALIFIED PUBLIC DEPOSITARY

Funds held in trust for litigants by a county clerk under RCW 36.48.080, when deposited with a "qualified public depositary" under chapter 193, Laws of 1969, Ex. Sess., are encompassed within the definition of "public deposits" is § 1 (1) of this 1969 act, as recently amended by § 8, chapter 126, Laws of 1973.

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                                                                  March 28, 1973

Honorable Robert V. Graham
State Auditor
Legislative Building
Olympia, Washington 98504                                                                                                               Cite as:  AGLO 1973 No. 42

Dear Sir:

            This is written in response to your previously acknowledged request for an opinion of this office on a question relating to the deposit security for certain trust funds held by county clerks.  We paraphrase your question as follows:

            Are funds held in trust for litigants by a county clerk under RCW 36.48.080, when deposited with a "qualified public depositary" under chapter 193, Laws of 1969, Ex. Sess., encompassed within the definition of "public deposits" in § 1 (1) of this 1969 act, as recently amended by § 8, chapter 126, Laws of 1973?

            We answer this question in the affirmative.

                                                                     ANALYSIS

            By chapter 40, Laws of 1933, Ex. Sess., the legislature made provision for the deposit and protection of both public funds and litigants' trust funds which are in the custody of the several county clerks also serving as clerks of the various superior courts throughout the state.1/   Section 1 of this act, now codified as RCW 36.48.080, provided that:

            "The county clerks of all the counties of the state shall deposit all funds in their custody, as clerk of the superior court of their respective counties, in one or more banks as they may elect."

             [[Orig. Op. Page 2]]

            Section 2, currently codified as RCW 36.48.090, then stated that:

            "Whenever any person has in his custody as clerk of the superior court any funds held in trust for any litigant or for any purpose, they shall be deposited in a separate fund designated 'clerk's trust fund,' and shall not be commingled with any public funds, and in case any interest is paid upon a fund so deposited, it shall be paid to the beneficiary of such trust upon the termination thereof."

            And finally, § 3 of this 1933 act (codified as RCW 36.48.100) provided until 1969 for the security of these deposits of funds by clerks as follows:

            "Upon depositing any public or trust funds the clerk shall demand and the depositary bank shall furnish to the clerk, a surety bond, to be approved by the clerk and the prosecuting attorney of said county, in a sufficient amount to equal the maximum deposit of the clerk with such depositary, conditioned for the prompt and faithful payment of said deposits upon demand, said surety bond shall not be canceled during the time for which it has been written by the surety company:  Provided, That the depositary may deposit with the county clerk in lieu of the surety bond herein provided for, securities to be approved by said county clerk and the prosecuting attorney of said county, of a market value in an amount not less than the amount of the maximum funds deposited:  Providedfurther, That all depositaries which have qualified for insured deposits under the Federal Deposit Insurance Act (12 United States Code Annotated, page 264) or any acts amendatory, supplemental, or substituted therefor, shall not be required to furnish bonds or securities, except for so much of said fund deposited not insured under the Federal Deposit Insurance Act."

            In 1969, however, this latter section was expressly repealed by § 30 (13), chapter 193, Laws of 1969, Ex. Sess., ‑ a comprehensive measure establishing a new system for securing those funds of the state or local governmental bodies  [[Orig. Op. Page 3]] which are deposited within any "qualified public depositary"; i.e., as defined in § 1 (2) of the act,

            ". . . a state bank or trust company or national banking association located in this state which receives or holds public deposits and segregates eligible collateral for public deposits as described in section 5 of this 1969 amendatory act;"

            Whereas before, individual depositaries of such funds were each required to segregate and pledge securities held by them in values sufficient to collateralize all public funds deposited with them, the essence of this new system is one of pooling a limited amount of segregated and pledged securities to cover any loss of public funds deposited with any of them which qualify by coming within the above definition.  The question which you have raised with respect to this legislation is whether deposits of clerks' trust funds under RCW 36.48.090, supra, are now protected by this new security device ‑ in lieu of the protection previously afforded to them under RCW 36.48.100.

            Section 2, chapter 193,supra, spells out the scope of this new form of protection as follows:

            "On and after the effective date of this act, all public deposits in qualified public depositaries, including investment deposits, shall be protected against loss, as provided in this 1969 amendatory act."

            From this it will be seen that the ultimate issue raised by your request is whether funds held in trust for litigants by a county clerk under RCW 36.48.080, when deposited with a "qualified public depositary" under chapter 193, are encompassed within the definition of "public deposits" as this latter term is also defined in this act.

            As originally enacted in 1969, this term was defined by § 1 (1) of the act as meaning:

            ". . . moneys of the state or of any county, city or town, or other political subdivision of the state or any commission, committee, board or officer thereof or any court of the state deposited in any qualified public depositary;"

             [[Orig. Op. Page 4]]

            While it was, perhaps, arguable that this definition was sufficiently broad to cover the private funds of litigants held in trust by a superior court clerk, fairly persuasive arguments could also be made in support of a contrary conclusion on the ground that the act, read in its entirety, only applied to public funds.  Accordingly, following our initial receipt of your opinion request we drafted and sent to the Public Depositary Protection Commission for its consideration and possible submission to the legislature an amendment designed to clarify this point.  This proposed amendment simply added to the above definition of "public deposit" the following additional language:

            ". . . including moneys held as trustee, agent or bailee by the state, any county, city or town, or other political subdivision of the state, or any commission, committee, board or office thereof or any court of the state, when deposited in any qualified public depositary;"

            We are pleased to advise you that this amendment, as included within the provisions of House Bill No. 397, was passed by the current session of the legislature and signed into law by the governor earlier this month.  See, § 8, chapter 126, Laws of 1973, copy enclosed.  Because this measure contained an emergency clause, it took immediate effect upon being thus signed by the governor, and is now law.

            Based upon this amendment it is our opinion that funds held in trust for litigants by a county clerk under RCW 36.48.080, supra, when deposited with a "qualified public depositary" under chapter 193, Laws of 1969, Ex. Sess., as amended, are within the definition of "public deposits" for the purposes of this deposit security act.2/   Accordingly we may at this time answer your question, as above paraphrased, in the affirmative.

             [[Orig. Op. Page 5]]

            We trust that the foregoing will be of some assistance to you.

Very truly yours,

SLADE GORTON
Attorney General


PHILIP H. AUSTIN
Deputy Attorney General

                                                         ***   FOOTNOTES   ***

1/See, Wash. Const., Article IV, § 26, which provides that "The county clerk shall be by virtue of his office, clerk of the superior court."

2/In addition to amending the definition of "public deposits" to make clear the status of clerks' trust funds thereunder, we should also note that by § 6 of this 1973 amendatory act the legislature amended RCW 36.48.080, supra, to conform.  By this section the legislature deleted the phrase "banks as they may elect" and replaced it with "qualified public depositaries as provided in chapter 39.58 RCW, as now or hereafter amended."

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