AGLO 1976 No. 38.

Case DateJune 14, 1976
CourtWashington
Washington Attorney General Opinions 1976. AGLO 1976 No. 38. June 14, 1976[Orig. Op. Page 1]PRIVATEOFFICES AND OFFICERS -- STATE -- TREASURER -- PUBLIC FUNDS -- BANKS -- LIMITATION UPON PUBLIC FUNDS.(1) The limitation in RCW 39.58.130 upon public deposits with a particular bank or trust company applies to all funds, in the aggregate, deposited by a county treasurer rather than separately to the funds of each municipality served by such treasurer.(2) The protections of chapter 39.58 RCW extend to all public funds on deposit with qualified depositaries irrespective of the limitations of RCW 39.58.130 and without regard to the reasons attributable to the violation of the statutory restriction.Honorable Robert S. O'BrienState TreasurerLegislative BuildingOlympia, Washington 98504Cite as: AGLO 1976 No. 38Dear Sir: By letter previously acknowledged you have requested an opinion of this office on the following two questions involving chapter 39.58 RCW (commonly known as the public deposit protection act): 1. "Does the limitation on deposit of public funds by a treasurer to the total of capital, surplus and undivided profits of a bank or trust company refer to each fund which is maintained by a [county] treasurer for a municipal corporation or other jurisdiction, or must all such funds be aggregated for purposes of applying the limitation?" 2. "Where public funds on deposit by a single treasurer exceed the limitations of RCW 39.58.130, to what portion of such funds do the protections of chapter 39.58 RCW extend?" We answer these questions in the manner set forth in the following analysis. ANALYSIS Chapter 193, Laws of 1969, 1st Ex. Sess., now codified in part as chapter 39.58 RCW, substantially revised the law relating to the deposit and investment of public funds. By this act a comprehensive system was established for the protection of funds deposited by the state, municipal corporations or other political subdivisions with certain banking institutions within the state, defined by RCW 39.58.010(2) as "qualified public depositaries."(fn1) [Orig. Op. Page 2] Prior to the enactment of this new law the deposit of public funds was generally conditioned upon the furnishing of a surety bond by the depositary in an amount equal to the funds placed on deposit or, in the alternative, the segregation as collateral of defined securities with a market value equal to or exceeding the amounts deposited.(fn2) Earlier statutes also limited deposits by a public treasurer with a given depositary to a percentage of the paid-in capital and surplus of the depositary,(fn3) although such limitations had been removed from the statutes some years before the passage of chapter 193, supra.(fn4) The public deposit protection scheme of the 1969 legislation eliminated the bonding and full collateralization provisions of prior statutes. Instead, each depositary of public funds (qualified public depositary) is now required to segregate collateral only to the extent of that depositary's "maximum liability," defined by RCW 39.58.010(6) as ". . . a sum equal to five percent of all public deposits held by . . ." the depositary. The aggregate of the assets thus segregated by all such qualified public depositaries within the state, in turn, constitutes the fund from which a public depositor will be compensated (pursuant to procedures described in our response to your second question) for any loss of deposits by reason of a failure of the depositary.(fn5) Along with this change, however, the 1969 law reinstated the earlier concept of a specific limitation upon the amounts which a public treasurer may deposit with any one depositary. Thus, RCW 39.58.130 provides that: [Orig. Op. Page 3] "A treasurer as defined in RCW 39.58.010 is authorized to deposit in investment deposits in a qualified public depositary any public funds available for investment and secured by collateral in accordance with the provisions of this chapter, and receive interest thereon. The authority provided by this section is additional to any authority now or hereafter provided by law for the investment or deposit of public funds by any such treasurer: Provided, That in no case shall the deposit or deposits of public funds by any such treasurer in any one bank or trust company exceed at any one time in the aggregate the total of the capital, surplus, and undivided profits of such bank or trust company." (Emphasis supplied.) Question (1): Your first question involves this last quoted statute and asks: "Does the limitation on deposit of public funds by a treasurer to the total of capital, surplus and undivided profits of a bank or trust company refer to each fund which is maintained by a [county] treasurer for a municipal corporation or other jurisdiction, or must all such funds be aggregated for purposes of applying the limitation?" Before addressing this question directly some preliminary comments on this section and related definitions in chapter 39.58 RCW are warranted. The proviso in RCW 39.58.130 qualifies language which ostensibly refers to "investment deposits." Closer examination of the statute, however, reveals that the sentence immediately preceding the proviso deals with the general authority given to a public treasurer for the investment or deposit of public funds. Under recognized rules of construction the operation of a proviso is to be confined to the language which immediately precedes it and not to other portions of the statutory section in which the proviso is contained unless there is clear indication that such was the legislative intent. Bayha v. Public Utility District No. 1, 2 Wn.2d 85, 97 P.2d 614 (1939). Thus, the limitation contained in RCW 39.58.130 extends to the deposit of public funds generally and not simply to investment deposits. Next, we note that the term "deposit of public funds" is not specifically defined by statute. However, consideration of this phrase along with the term "public funds on deposit" [Orig. Op. Page 4] elsewhere in chapter 39.58 RCW(fn6) demonstrates that they are both used interchangeably with the term "public deposit" which, itself, is defined in RCW 39.58.010(1) to include: ". . . 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, including moneys held as trustee, agent, or bailee by the state, any county, city or town, or other political...

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