OFFICES AND OFFICERS ‑- COUNTY TREASURER ‑- INVESTMENT OF MUNICIPAL FUNDS ‑- EFFECT OF CHAPTER 123, LAWS OF 1961, AND CHAPTER 254, LAWS OF 1961.
(1) The investment service fee payable to the county treasurer under chapters 123 and 254, Laws of 1961, can be imposed only upon investments authorized by governing bodies of municipal corporations subsequent to the effective dates of the acts.
(2) Chapter 123, Laws of 1961, does not amend § 1, chapter 29, Laws of 1945 (cf. RCW 28.51.120) to allow investment income from school building fund investments to be credited to any other fund than the building fund of the district, nor to permit the county treasurer, rather than the board of directors of a school district, to select the type of investment in which building funds may be invested.
(3) The provisions of chapters 123 and 254, Laws of 1961, require payment of the specified investment service fee on school district building fund investments, after termination of the investment when the interest or earnings becomes available to the district.
(4) Chapter 123, Laws of 1961, is by its terms applicable to school districts only. The only effect of chapter 254, Laws of 1961, upon the investment powers and duties of water districts is the requirement that the investment service fee be charged against water district fund investments made by the county treasurer in savings and loan associations and in short term United States government securities.
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October 3, 1961
Honorable Cliff Yelle
Cite as: AGO 61-62 No. 69
By letter, previously acknowledged, you have requested the opinion of this office concerning the effect of Senate Bill 295 (chapter 123, Laws of 1961) and House Bill 363 (chapter 254, Laws of 1961), upon the existing investment statutes of the various political subdivisions of this state. We paraphrase your specific questions as follows:
[[Orig. Op. Page 2]]
1. Do these statutes apply to any investments authorized by the governing bodies of the various political subdivisions prior to the effective dates of the statutes?
2. What is the effect of these statutes upon § 1, chapter 29, Laws of 1945 (cf. RCW 28.51.120) authorizing and prescribing procedures for investing school district building funds?
3. What is the effect of these statutes upon RCW 57.20.160, relating to investments of water district funds?
We answer question 1 in the negative, questions 2 and 3 in the manner set forth in our analysis.
Senate Bill 295 (chapter 123, Laws of 1961) adds a new section to Title 28 RCW. Section 1 provides as follows:
"The county treasurer, or the trustee, guardian, or any other custodian of any school fund shall, when authorized to do so by the board of directors of any school district, invest or reinvest any school funds of such district in any obligations, securities, certificates, notes, bonds, or short term securities or obligations, of the United States. The county treasurer shall have the power to select the particular investment in which said funds may be invested. All earnings and income from such investments shall inure to the benefit of any school fund designated by the board of directors of the school district which such board may lawfully designate: PROVIDED, That any interest or earnings being credited to a fund different from that which earned the interest or earnings shall only be expended for instructional supplies, equipment or capital outlay purposes. This section shall apply to all funds which may be lawfully so invested or reinvested which in the judgment of the school board are not required for the immediate necessities of the district.
"Five percent of the interest or earnings, with a minimum of ten dollars or maximum of fifty dollars, on any transactions authorized by each resolution of the board of school directors shall be paid as an investment service fee to the office of county treasurer when such investment is terminated and the interest or earnings becomes available to the school district."
[[Orig. Op. Page 3]]
Similarly, Senate Bill 363 (chapter 254, Laws of 1961), consisting of one section, amends an existing statute (RCW 36.29.020) to permit municipal funds in the hands of the county treasurer, or other treasurer, ". . . to be invested . . . in savings and loan associations . . . or in any short term United States government securities. . . ." The statute, as amended, ends with the following proviso:
". . . PROVIDED, Five percent of the interest or earnings, with a minimum of ten dollars or maximum of fifty dollars, on any transactions authorized by each resolution of the governing body shall be paid as an investment service fee to the office of county treasurer or other municipal corporation treasurer when such investment is terminated and the interest or earnings become available to the governing body."
(1)Prospective vs. retrospective operation.
From reading the above‑quoted language of both statutes on the subject of the investment service fee, it is clear that both are to operate upon certain identifiable subject matter; to wit, ". . . on any transactions authorized by each resolution . . ." of the board or other governing body having the power to authorize investment. The statutes are both silent on the question of which such authorizing resolutions are included; that is, whether the statutes include such resolutions passed previous to, or only those passed subsequent to, the effective dates of the acts.
The only object of construing a legislative act is to ascertain the meaning and intention of the legislature. Cory v. Nethery, 19 Wn. (2d) 326, 142 P. (2d) 488 (1943). In arriving at the intent of the legislative body, the first resort of the courts is to the context and subject matter of the legislation, because the intention of the lawmaker is to be deduced, if possible, from what it said. Hatzenbuhler v. Harrison, 49 Wn. (2d) 691, 306 P. (2d) 745 (1957);Driscoll v. Bremerton, 48 Wn. (2d) 95, 291 P. (2d) 642 (1955).
Where the language of a statute is plain, free from ambiguity, and devoid of uncertainty, there is no room for construction, since the meaning will be discovered from the wording of the statute itself. State v. Houck, 32 Wn. (2d) 681, 203 P. (2d) 693 (1949). Legislative intent, if not expressed in some appropriate manner, has no legal existence. State ex rel. Gebhardt v. Superior Court, 15 Wn. (2d) 673, 131 P. (2d) 943 (1942). The same case expresses the further important rule that the legislature is presumed to know the principles of statutory construction.
Such a rule of statutory construction, directly in point here, concerns the prospective and retrospective operation of statutes. An [[Orig. Op. Page 4]] enlightening discussion of the rule is found inPape v. Dept. Labor & Ind., 43 Wn. (2d) 736, 740, 741, 264 P. (2d) 241 (1953), as follows:
"Laws may operate either prospectively or retrospectively, or both. A prospective law is one which is to operate in the future‑- that is, is applicable only to cases arising after its enactment. A retrospective law is one which is made to operate upon some subject, contract, or crime which existed before the passage of the law. 3 Bouvier's Law Dictionary (Rawle's Third Rev.), 2754 and 2950. A retrospective law, in the legal sense, is one which takes away or impairs vested rights acquired in the existing laws, or creates a new obligation and imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past. 50 Am.Jur. 492, Statutes, § 476.
"The question whether a statute operates retrospectively, or prospectively only, is one of legislative intent. In determining such intent, the courts have evolved a strict rule of construction against a retrospective operation, and indulge in the presumption that the legislature intended statutes or amendments thereto to operate prospectively only. 50 Am.Jur. 495, Statutes, § 478. It is not necessary, however, that the statute expressly state that it shall operate retrospectively, if such intention can be obtained from the purpose and method of its enactment."
See, also, in this regardHammack v. Monroe St. Lbr. Co., 54 Wn. (2d) 224, 339 P. (2d) 684 (1959); Fay v. Allied Stores Corp., 43 Wn. (2d) 512, 262 P. (2d) 189 (1953); Moran v. Seattle, 179 Wash. 555, 38 P. (2d) 391 (1934);Sterrett v. White Pine Sash Co., 176 Wash. 663, 30 P. (2d) 665 (1934); 2 Sutherland, Statutory Construction, (3rd ed.), §§ 2201-2212. These authorities point out that retrospective operation, if not expressed, must be clearly implied.
In our opinion, there is nothing in either of the two statutes in question clearly indicating that a retrospective operation was intended or, in other words, that they were intended to apply to existing investments authorized by resolutions adopted prior to the effective dates of the statutes. To hold otherwise would be to say that the statutes were to apply to investments authorized by resolutions passed not only days, weeks or months, but also years prior to [[Orig. Op. Page 5]] the effective dates of the acts. We would have to consider the possible impairment of vested or other contractual rights of bondholders, where the resolutions in question might have pledged investment earnings toward payment of the bonds. As to the rights of municipalities themselves, we would have to presume the legislature considered the effect upon the financial structure, where bonds were issued on the expectation of total utilization of investment income, either for bond redemption, or in considering amounts of excess levies to be made, or both.
In speaking of the impairment of existing rights as a reason for denying retrospective operation in doubtful cases, the supreme court of this state has said on several occasions that the rule is not limited to cases where the "existing rights" therein referred to are vested rights. SeeGillis v. King County, 42 Wn. (2d) 373, 255 P. (2d) 546 (1953), and cases cited therein, includingMoran v. Seattle, supra.
InMoran v. Seattle, supra, the court was asked to construe as prospective or retrospective, a statute limiting a city's lien for utility services to not more than "four months' charges due or to become due nor for any charges which have been due for more than four months." The court held the act prospective in operation. The court's reasoning was that to hold the act retrospective would be to affect adversely the rights of the city which had extended credit to consumers on the strength of the prior law, and that the statute should not be given such construction where not clearly indicated by the legislature. This case is significant because it holds, in effect, that the rights of municipalities, as well as private rights, are to be considered in construing statutes as prospective or retrospective.
The only indication by the legislature as to any particular time when either of the two statutes with which we are here concerned should take effect is the emergency clause attached to chapter 123, supra. This would import no particular significance other than that the legislature intended that particular statute to take into its scope any investments of school funds that might be authorized in the months intervening between the time the statute was passed and the time when the act would normally take effect. The legislature being presumed by law to be familiar with the rules of statutory construction, should be presumed to have known that retrospective application would not be given without express or clearly implied direction to that effect. A legislative intention not expressed in some appropriate manner has no legal existence. State ex rel. Gebhardt v. Superior Court, supra.
(2) and (3)Effect of chapters 123 and 254 on RCW 28.51.120.
Concerning your second question, as to the effect of these new statutes upon a previous statute authorizing the investment of school district building funds, we understand the question to have two parts, as follows:
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(a) Is the previous statute, § 1, chapter 29, Laws of 1945, (cf. RCW 28.51.120) amended by implication to authorize investment income from building fund investments to be credited to any other fund or to change investment procedures otherwise?
(b) Is the statute so amended as to require the investment service charge to be imposed upon building fund investments?
As to both questions, it is the general rule that special acts are not presumed to be amended or repealed by a general act. State ex rel. Wenatchee Etc. Dist. v. Banker, 179 Wash. 343, 37 P. (2d) 1115 (1934). In fact, the presumption is against amendments or repeals by implication, and such amendments or repeals are not favored. State v. Becker, 39 Wn. (2d) 94, 234 P. (2d) 897 (1951). This is particularly true where the prior statute relates to a particular class or subject, and the latter act is general. Pullen v. Morgenthau, 73 F. (2d) 281. A general act does not, as a general rule, supersede a special act unless such is the plain legislative intent even when the acts may contain somewhat inconsistent provisions. Spokane & Eastern Tr. Co. v. Spokane County, 173 Wash. 699, 22 P. (2d) 656 (1933). InPeople v. Breyer, 139 Cal.App. 547, 34 P. (2d) 1065, 1066 (1934), the California court stated the rule as follows:
"It is the general rule that where the general statute standing alone would include the same matter as the special act, and thus conflict with it, the special act will be considered as an exception to the general statute whether it was passed before or after such general enactment. Where the special statute is later it will be regarded as an exception to or qualification of the prior general one; and where the general act is later the special statute will be considered as remaining an exception to its terms unless it is repealed in general words or by necessary implication. [citations omitted] . . ."
See, also,State v. Becker, supra; 2 Sutherland, Statutory Construction,supra, § 5204, p. 541; 50 Am. Jur. Statutes, § 561.
Applying these rules, it is first our opinion that the previously enacted statute, § 1, chapter 29, Laws of 1945 (cf. RCW 28.51.120), is a special act, containing special authorization for the investment, and provisions for investment and accounting procedures, of the building fund only. In so far as the special act is inconsistent with the terms of the later general act, the special act would control in the absence of clear legislative intent to the contrary.
[[Orig. Op. Page 7]]
True, the terms of chapter 123, supra, specify that it is to apply to "any school fund" and "all funds which may be lawfully so invested or reinvested." However, this indicates no clear direction that the general act should apply to funds for which earlier special and inconsistent provisions were made. Applying the rules discussed above, the general act would apply to the building fund only where not inconsistent with the provisions of § 1, chapter 29, Laws of 1945,supra.
That statute provides as follows:
"The Board of Directors of any school district of the State of Washington which now has, or hereafter shall have, funds in the building fund of the district in the office of the County Treasurer which in the judgment of said Board are not required for the immediate necessities of the district, may invest and reinvest all, or any part, of such funds in United States securities, as hereinafter specified after and pursuant to a resolution adopted by the Board, authorizing and directing the County Treasurer, as ex officio the treasurer of said district, to invest or reinvest, said moneys or any designated amount thereof in United States securities and specifying the type or character of the United States securities in which said moneys shall be invested: Provided, That nothing herein authorized, or the type or character of the securities thus specified, shall have in itself the effect of delaying any program of building for which said funds shall have been authorized. Said funds and said securities and the profit and interest thereon, and the proceeds thereof, shall be held by the County Treasurer to the credit and benefit of the building fund of the district in his said office. If in the judgment of the Board it shall be necessary to redeem or to sell any of the purchased securities before their ultimate maturity date, the Board may, by resolution, direct the County Treasurer to cause such redemption to be had at the 'Redemption Value' of said securities or to sell said bonds and securities at not less than market value and accrued interest. The foregoing 'securities' shall include United States Bonds, federal Treasury Notes and Treasury Bonds and United States Certificates of Indebtedness and other federal securities which may, during the life of this statute, come within the terms of this act."
[[Orig. Op. Page 8]]
The provision requiring the board of directors to specify the types of securities to be acquired is inconsistent with the provision of chapter 123,supra, authorizing their selection by the county treasurer. Likewise, the provision that investment income "shall be held by the County Treasurer to the credit and benefit of the building fund of the district" is inconsistent with the provision of chapter 123 that "All earnings and income from such investments shall inure to the benefit of any school fund designated by the board of directors of the school district which such board may lawfully designate" unless the phrase "which such board may lawfully designate" is construed in and of itself to adopt the requirement of § 1, chapter 29, Laws of 1945,supra.
In any event, in those two instances, at least, the special provisions of § 1, chapter 29, Laws of 1945,supra, are controlling and chapter 123,supra, in no way changes the requirements thereof.
As to the provisions of both chapters 123 and 254, supra, on the subject of an investment service fee, there would appear to be no such inconsistency or conflict. They require such payment only upon termination of the investment, and when the interest or earnings becomes available to the district. In effect, then, this charge is imposed upon investment earnings after the termination of the trust in favor of the building fund. There is no question of inconsistency; rather, we have merely several statutes complementing each other. One of them (§ 1, chapter 29, Laws of 1945, supra) is a special statute on investment and investment procedures, which is silent on the subject of an investment service fee, applicable to only the building fund of a school district. The others, (chapters 123 and 254, supra) are general statutes prescribing an investment service fee on investments of all school district funds by the county treasurer. These statutes, not being inconsistent on that point, should be harmonized and read together so as to give effect to each and constitute one complete law in so far as possible. State v. Houck, supra; Lindsey v. Superior Court, 33 Wn. (2d) 94, 204 P. (2d) 482 (1949). We conclude, therefore, that the investment service fee is payable on building fund investments, as well as investments of other school district funds by the county treasurer.
(4)Effect of chapters 123 and 254, supra, on RCW 57.20.160.
Regarding water districts, the applicable statute is RCW 57.20.160, which reads as follows:
"Whenever there shall have accumulated in any general or special fund of a water district moneys, the disbursement of which is not yet due, the board of water commissioners may, by resolution, authorize and direct the [[Orig. Op. Page 9]] county treasurer to deposit or invest such moneys in banks, mutual savings banks, or savings and loan associations in an amount in each institution no greater than the amount insured by any department or agency of the United States government, the federal deposit insurance corporation, or the federal savings and loan insurance corporation, or to invest such moneys in direct obligations of the United States government: Provided, That the county treasurer may refuse to invest any district moneys for a period shorter than ninety days, or in an amount less than five thousand dollars, or any moneys, the disbursement of which will be required during the period of investment to meet outstanding obligations of the district."
Chapter 123,supra, is by its terms applicable to school districts and has obviously no application to water districts. Therefore, it will be excluded from present consideration.
As to the effect of chapter 254, supra, the rules of statutory construction discussed above are again applicable, particularly as regards general and special statutes pertaining to the same subject matter, and the question of legislative intent.
It will be noted that the earlier statute just quoted, contains special authority for investment of water district funds in a range of investments wider than those authorized by the terms of the later general statute, chapter 254,supra; to wit, in banks and mutual banks as well as savings and loan associations (with certain limitations), and in direct obligations of the United States government not limited to short term securities.
The complex questions to be resolved, then, are: (a) whether chapter 254,supra, has any application at all to water districts and (b) if so, whether it supersedes the earlier statute and thus restricts the investment powers of a water district; (c) whether the new chapter has application to water districts to the extent of imposing an investment service fee on all investments of water district funds by the county treasurer, or (d) to the extent of imposing an investment service fee on only those investments specifically authorized by chapter 254, Laws of 1961.
In our opinion, parts (a) and (d) should be answered affirmatively and parts (b) and (c) should be answered in the negative.
We cannot conclude that the later act applying to all municipal corporations generally, has no application at all to water districts, [[Orig. Op. Page 10]] without doing violence to the rule requiring that effect be given to both statutes in so far as they are consistent with each other. Nor can we conclude that the later general act entirely supersedes or repeals, by implication, the earlier act on the special subject of water district investments in view of the further extension of the rule requiring the special provisions of the earlier act to be given effect as exceptions to the general provisions of the later act.
We conclude, therefore, that both RCW 57.20.160, supra, and chapter 254, Laws of 1961, supra, are applicable to investments of water district funds by county treasurers, but that the provisions of the later statute apply only in so far as they are not inconsistent with the provisions of the earlier act. Accordingly, in our opinion, chapter 254, supra, does not restrict the kind of investments which can be made as to water district funds.
As to parts (c) and (d), the proviso of chapter 254, supra, constitutes an incidental requirement not found in the previous statute, RCW 57.20.160, supra. However, there is no necessary inconsistency between the two statutes on that point, which would make the proviso inapplicable at all to water district fund investments.
The problem is again one of determining legislative intent, as to how broadly the proviso is to be construed; i.e., whether it operates only upon investments authorized by chapter 254, supra, or upon all investments of water district funds by county treasurers.
According to authorities, the appropriate function of a proviso is to restrain or modify the enacting clause, and not to enlarge it, or confer a power; but where from the language employed it is apparent that the legislature intended a more comprehensive meaning, it must be construed to enlarge the scope of the act, or to assume the function of an independent enactment. SeeMcKenzie v. Mukilteo Water District, 4 Wn. (2d) 103, 114, 102 P. (2d) 251 (1940).
Accordingly, the logical purpose of the proviso of chapter 254,supra, would be to modify the section of which it is a part, to provide reimbursement to the county treasurer's office for his costs of performing the services authorized in that section. There is nothing in the language employed in the proviso indicating that the legislature intended it to have a more comprehensive meaning, and to impose the investment service fee upon other investments, unless the phrase "any transactions" therein is to have that effect.
Initially, however, that phrase must be related back to and narrowed by the preceding terms of the section to conform to the clear legislative intent that the service fee be charged upon investments, rather than upon some other kind of municipal transaction. By the same token, the scope of the phrase "any transactions" must be limited [[Orig. Op. Page 11]] to the specific investments authorized in that section because there are no others mentioned to which it can relate. There is, therefore, no clear basis for extending the proviso to operate on any investments made by the county treasurer, other than those specified in chapter 254,supra.
While we are reluctant to conclude that the legislature intended to place the burden of an investment service fee only upon certain kinds of investments and not upon others that might be utilized by the same district, nevertheless we are not at liberty to indulge in mental gymnastics in order to arrive at some other result not clearly intended by the legislature itself. Chapter 254,supra, was undoubtedly enacted for the primary purpose of granting investment powers to municipal corporations which previously had no such specific authority. It should be noted furthermore that the original bill (H.B. 363) contained very broad authority in general terms for investment of municipal funds. However, an amendment subsequently adopted reduced the newly granted authority to permit making only those investments now specifically mentioned in chapter 254,supra. The legislature might have felt, as a reason for enacting the proviso of the new chapter, that treasurers had been burdened sufficiently with duties of performing gratis investment services; that any new duties of that kind required to be performed for municipalities should be accompanied by a requirement that the treasurer's office receive sufficient additional funds for that purpose. As an incidental matter the language of the requirement is sufficiently broad, and consistent with legislative intent, to include the same investments previously authorized for some municipalities. However, in our opinion, it is not sufficiently broad to include other types of investments.
This conclusion may appear to be somewhat inconsistent with the earlier conclusion of this opinion regarding the funds of school districts. This is so, however, only because the wording of chapter 123, supra, upon which that conclusion was based, sufficiently expresses a legislative intention to include all of the investments authorized by § 1, chapter 29, Laws of 1945, supra, and more.
Construing, then, RCW 57.20.160, supra, and chapter 254, supra, together, and giving effect to both statutes in so far as possible, we conclude that the new chapter does no more than require the imposition of an investment service fee, in the prescribed amount, upon investments of water district funds in savings and loan associations and in short term United States government obligations. No further enlargement or limitation is placed upon the previous special statute.
In summary, our conclusions are as follows:
1. The investment service fee prescribed by chapters 123 and 254, Laws of 1961, can be imposed only upon investments authorized by [[Orig. Op. Page 12]] resolution enacted subsequent to the effective dates of those chapters.
2. Chapter 123, Laws of 1961, does not amend § 1, chapter 29, Laws of 1945 (cf. RCW 28.51.120), expressly or by implication, to allow investment income from building fund investments to be credited to any fund other than the building fund of the district, nor to permit the county treasurer, rather than the board of directors of a school district, to select the type of investments into which building funds may be invested.
3. The provisions of chapters 123 and 254, Laws of 1961, require payment of the specified investment service fee on school district building fund investments, after termination of the investment when the interest or earnings becomes available to the district.
4. Chapter 123, Laws of 1961, is by its terms applicable to school districts only. The only effect of chapter 254, Laws of 1961 upon the investment powers and duties of water districts, is the requirement that the investment service fee be charged against water district fund investments made by the county treasurer in savings and loan associations and in short term United States government securities.
We trust that this information will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
ROBERT F. HAUTH
Assistant Attorney General