AGO 85-21.

• Court: North Dakota

North Dakota Attorney General Opinions 1985. AGO 85-21. OPINION 85-21Date Issued: May 22, 1985 (AGO 85-21) Requested by: William L. Strate, City Attorney Watford City, North Dakota- QUESTIONS PRESENTED - Whether it is mandatory that securities pledged by a financial institution as security for the repayment of a deposit of public funds by a public corporation pursuant to N.D.C.C. section 21-04-09 be delivered to a custodian financial institution, other than the depository financial institution, for safekeeping. Whether securities issued by a political subdivision of a state other than North Dakota are eligible to be pledged by a financial institution as security for the repayment of a deposit of public funds by a public corporation pursuant to N.D.C.C. section 21-04-09. III. Whether a financial institution may pledge securities as security for the repayment of a deposit of funds which are not public funds as defined in N.D.C.C. section 21-04-01(5). - ATTORNEY GENERAL'S OPINION - It is my opinion that it is not mandatory that securities pledged by a financial institution as security for the repayment of a deposit of public funds by a public corporation pursuant to N.D.C.C. section 21-04-09 be delivered to a custodian financial institution, other than the depository financial institution, for safekeeping. It is my further opinion that securities issued by a political subdivision of a state other than North Dakota are not eligible to be pledged by a financial institution as security for the repayment of a deposit of public funds by a public corporation pursuant to N.D.C.C. section 21-04-09. III. It is my further opinion that a financial institution may not pledge securities as security for the repayment of a deposit of funds which are not public funds as defined in N.D.C.C. section 21-04-01(5). - ANALYSES - I. N.D.C.C. section 21-04-09 allows a public corporation, under certain circumstances, to accept a pledge of securities from a financial institution as security for the repayment of a deposit of public funds and provides that securities so pledged "may be delivered to and held for safekeeping by any financial institution, other than the depository financial institution!. . .which. . .has been approved as a custodian. . .by the state auditor." (Emphasis supplied). The question here is whether the term "may" is permissive or mandatory. When initially enacted in 1939, N.D.C.C. section 21-04-09 contained this...