Case ID: pa-d-c_17/html/0192-01.html
Source: Caselaw Access Project
Author: {"author": "Arnold, Deputy Attorney General,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Deposit of School Funds
    April 6, 1932.
   Arnold, Deputy Attorney General,

— You have stated to us the case of a school board whose funds are deposited in a trust company which has been unable to obtain a depository bond with individual or corporate sureties. You say that it has been suggested that the school funds be deposited in the trust department of the company, under the provisions of the Act of April 11, 1929, P. L. 512. You have asked us to advise you whether such a deposit would adequately protect both the school district and the individual members of the board.

The Act of April 11,1929, P. L. 512, is an amendment to the General Corporation Law of April 29,1874, P. L. 73. It deals with the fiduciary powers of trust companies. Prior to the amendment of 1929, trust companies were not permitted to use in their general business any funds held by them in fiduciary capacities. The Act of 1929 changed this to the extent of permitting trust funds awaiting investment or distribution to be used by the trust companies in their business, upon setting aside certain securities to protect the funds so employed. As we view it, the Act of 1929 deals solely with the administration of funds which trust companies hold as executor, administrator, trustee, guardian or in other fiduciary capacities. It has nothing to do with deposits or depositors.

If a school board were to enter into an agreement whereby the trust company would be created a trustee for the administration of the school funds, in such a manner as to bring the money within the terms of the Act of 1929, the school board would be surrendering control of its funds. This it could not lawfully do. Consequently, the Act of 1929 could not have any application to or be of any help in the situation you have described.

Therefore, we advise you that the Act of April 11, 1929, P. L. 512, does not furnish any authority for the deposit of school funds or any other funds in the trust departments of trust companies. Nor does it afford protection of any kind to school districts or school directors in respect to moneys on deposit. It has no application to such matters.

From C. P. Addams, Harrisburg, Pa.