AGO 1967 No. 25 - Jul 6 1967
DISTRICTS - WATER - INVESTMENT OF SURPLUS FUNDS.
A board of commissioners of a water district may, in its resolution authorizing the investment of surplus funds in a bank or savings and loan association, direct the county treasurer, as agent for the water district, to invest the funds in a specific bank or association designated in the resolution.
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July 6, 1967
Honorable Avery Garrett
State Representative, 47th District
4050 Langston Road
Renton, Washington 98055
Cite as: AGO 1967 No. 25
This is written in response to your request for our opinion on the following question:
Does the board of water commissioners of a water district have the authority to determine the specific bank or banks in which its surplus funds are to be invested?
We answer your question in the affirmative, for the reasons set forth in our analysis.
RCW 57.20.1601/ provides that:
"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 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, [[Orig. Op. Page 2]] 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."
Although you have also mentioned RCW 36.29.020 in your letter requesting our opinion, we do not believe that this general statute relative to the investment of municipal funds by a county or other municipal treasurer has any application to the specific question which you have asked. In AGO 61-62 No. 69, copy enclosed, we advised that § 1, chapter 254, Laws of 1961, subsequently codified as RCW 36.29.020, does not restrict or otherwise qualify the investment powers of the commissioners of a water district; rather, we advised, the only effect of the 1961 enactment upon the earlier (1959) enactment relating to the investment of water district funds was to subject certain water district investments made by a county treasurer, to the investment service fee provisions of the 1961 enactment.
Of course, as you are aware, RCW 36.29.020 was rather significantly amended by an act of the 1967 legislature (chapter 173, Laws of 1967) to provide for the investment of surplus municipal funds by a county treasurer, under direction of the county finance committee, in those instances where the governing body of a municipal corporation has taken no action pertaining to the investment of such funds. However, any questions pertaining to the interpretation of this provision, and its application to the investment of water district funds, are beyond the scope of this opinion. We are here only concerned with those water district fund investments which are made by a county treasurer in response to authorization and direction given him by a board of water district commissioners under the provisions of RCW 57.20.160, supra.
It is apparent that when a county treasurer invests water district funds in response to the authorization and direction of a board of water district commissioners, he does so as an agent for the water district. See, AGO dated December 3, 1948, to the Pierce county prosecuting attorney, copy [[Orig. Op. Page 3]] enclosed.2/ Accordingly, the county treasurer has only such authority as has been granted to him by his principal, the water district, acting through its board of commissioners.
From this it follows that where a board of water district commissioners, in its resolution authorizing the investment of surplus funds in a bank or savings and loan association, directs which specific bank or association the funds are to be invested in, the county treasurer is without authority to place the funds in any other institution. He can only place the funds in the institution specified in the commissioners' resolution.
It is notable that RCW 57.20.160, supra, permits a board of water commissioners, by resolution, not merely to authorize but, as well, to direct the county treasurer to deposit surplus funds of the district in banks, mutual savings banks, or savings and loan associations. This would seem to emphasize the legislature's intent that the county treasurer, in investing water district funds pursuant to a resolution, as agent of the water district, can only exercise the granted authority in the manner directed by the commissioners in their resolution.3/ As you have pointed out, where the legislature intended to permit a county treasurer to refuse to follow the directions of a board of water district commissioners, it carefully spelled out its intention by inserting the proviso which reads:
". . .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."
[[Orig. Op. Page 4]]
By way of contrast, where the legislature has been of a mind to permit the county treasurer, in investing municipal funds, to select the particular investment, it has shown itself fully capable of expressing this intent -as in the case of RCW 28.58.440, which now covers the investment of school funds, and provides:
"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 savings or time accounts in banks, trust companies and mutual savings banks which are doing business in this state, up to the amount of insurance afforded such accounts by the Federal Deposit Insurance Corporation, or in accounts in savings and loan associations which are doing business in this state, up to the amount of insurance afforded such accounts by the Federal Savings and Loan Insurance Corporation, or 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: . . ."4/ (Emphasis supplied.)
Accordingly, for the above reasons indicated, it is our opinion that a board of water district commissioners does have the authority to determine the specific bank or banks in which its surplus funds are to be invested, and if the board inserts such specific directions in its resolution promulgated under RCW 57.20.160, the county treasurer to whom the resolution is directed is bound thereby.
We trust the foregoing will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
PHILIP H. AUSTIN
Assistant Attorney General
*** FOOTNOTES ***
1/This RCW section codifies the provisions of § 16, chapter 108, Laws of 1969.
2/Though this opinion dealt with the liability of a county treasurer for deterioration in value of securities in which he had invested school district funds, pursuant to "authorization and direction" of a school board, and concluded that because of the agency relationship the treasurer was not liable, it is apparent that the analysis and conclusion are equally applicable here.
3/The verb "direct" is defined in Webster's New International Dictionary (2d ed.) page 737, as meaning "to give an order or instruction; to instruct authoritatively; . . ."
4/See, AGO 61-62 No. 69, supra, at page 8, for a discussion of the significance of this language with respect to the investment of school district funds (a) before, and (b) after its enactment in 1961 (§ 1, chapter 123, Laws of 1961).