OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTINHonorable ClaudeA. Wllllame,~ Page 2

**We are**  informedby letter from the State Treasurer that separatebook aooounts are maintained upon all of the various funds administeredby the State Treasurer,but the funds themselvesare oommlngled.

After the various State depoeltoriea are seleoted by reason of theirhaving qualifiedunder **our ttatutet,**  Artiale 2632, Vernon'sRevised Clvll Statutes,providesh&v the fundsmay be depositedby the Treasurer. Artlolt 2532, supra, mada ln part **as** follows:

*Afterthe dtpositorlerhave qualified aa provided in the preotdlng ortiolte, it ahall be the duty of the Treasurer to depoalt the fundsbelonging to the State In suah dtpoaltories,an far as praotioal on a fair peroantage basis, and shall at all timea keep euoh funds equitably jxorated inproportion to the amount whioh taoh la entitled to rsoeive by drawingwarrants alternately thereon, or by apportioning the warrants 80 drawn."
The offloe of the Trtaturer now handles all of tit funda plaotd in itshand6 In the namemanner, inoluding the Gtnrral Fund, the various apeoial fund6 and **the** trust funds, rush ae eaoheat funda and unemployment ooapentationfunds. J The office of the Trtaaurerhas cainted **out to**  us that should that offloe be required to maintain rpparatebm aooounte for the Various fund@, that whop nbank cenda in a group of warrants **to the**  **FrtasUWr for**  payme+ and theatwarrmtt ware drawn on mare **than one**  **fund, tht**  Stats **Treaturtr** would be required to draw at many drafts in payatnt of the warrant am there were funds agalnmt rhleh the rarrantr were lrsue&

Subrequent to the tnaetmant of the State depository laws mentioned above, the 44th Legislature enaottd the Ttxar Unemployment CompensationAot ,whioh bar been amendedby the 46th and 40th Seesions of tho Ltgialature. The 47th Leglela**turt** amended Beotion 9 of the **lot** in some reaptots,but rtenaottd the rtatute ortaflng thla fund ar found in 8. B. 4O@. ArtloLa 5931-b. Vernon(aRerl8td 01~11 Statutst, Beotlon 7, nor reads in part-i?tbfollowmtHonorable Claude A. WIlliamis, Page 3

asto. 9. (a) E&ablIshment and oontrol: There Is hereby emtablltahed~ae a swnd, separateand apart from all pub110 monies or funds of thin rtate an Unemployment CompensatLon Fund,whioh ahallbe administeredby the oommltslon txolutlvtly for the purpoetr of this aot

. . .WStotIon (b)Aooountr and deposltrr The State Treaaurtr ahallbe treaaurtrand tiuatodlan of the fund, who 8hall admlnlettr euoh fund In aooordanoewith the dlrtotiont of the oonuuleelon

The Treasurer rhallmaintainwlthin~tht &d'thrtt ttparate aooounta: (1)a oltarlng aooount, (2)an unemployment trust fund aooount, and (3)a benefit aooount. All monies payable to the fund, upon reotlpt thereofby the commission, ehallbe forwardrd to the Treasurer,who &all lmmediately deposit them in the olearlng aooount in-tie after olearmoe thereof,all othermonies oltarlngbdount ahallbe Immediatelyde- l posited with the Seoretary of the Treasury of the United State8 of Amtrloa to the oredit of the aooowt of this State In the UnemploymentTrust Fund

,.-. .monies In the oltaring and benefit6 aooountsmay be depoaltedby the Treaaurtr, under the dlTtotIan of the oommlselon, In any bank or pub110 depoaItory,inwhIoh general fund8 of the state maybe depomlttd.

. . . The fitattTrgaaurer &all be lirble, on his offlolal bond, for the faithful ptrformanoe of his duties In oonneetlon with the Unemployment Compensation Fundprovided under this**Aot.** Suoh llablllty on the offlolalbond ah&l1be eff’eotlve Immediatelyupon the enaotmtnt of thie provlalon, and such llabllIty shall exist In addition to the liability of any separatebond existent on the efftotlve date of thleprovielon, **or** whloh may be given In the future

. All ~*UIO reoovertd for lorate euetalned by the fund ehallbe depoelfed therein.*
These ttatuttt havlrq been enacted after the enaotment of the Btatc depprltory laws Rnd In view of the express language of the leglalaturt that the unemployment fundbe gstabllnhed ae a speolal fund, separateand apart from all.

Honorable ClaudeA. Williams, Page 4

public monies or funds of thle State that 1s in itself suffloient evidenoe of the Intention of the legislature that the' Treasurer of this State Is authorized to handle these funds a8 dlreotedby the oommleslon and not In aocordanotwith the general laws of the State upon the deposit of State funds.

After the Informalmeeting attended by representatives of the Soolal Security Board; representatives of the Texas Employment ComptnratlonCommlsslon, members of the Treasurer'8offloe and a member of the Attorney C+eneral's offloe, the Supreme Court of Texas deoided and rendered Its opinion In the oate of Friedman v. Amerloan Surety Company of N&w York, 161 S. W. (2d)670. At page 580 of this oplnIon the court said:

*Themoney hart Involved Is not the property of ths state In any oapaolty,but Is a trust fund tobe held out of the State Treasury,but In the hands of the State Treasurer as Trustee, for the benefit of a olaes of employeeswhose employers pay It In by virtue of a tax levied, the tax being In the nature of an exolse tax."
The Supreme Cowt thus raid that these funds were to be held out of the treatury. It evidently understood fully the tffeot of that language for It also said that the Treasurerwas only'tht Trustee of the monies.

In the FrIedman oate the court followed Its opinion in the oaet of Manlon v. Lockhart, 114 S. W. (2d)217. There the oourt held that the funds were trust fund6 tobe held by the Treasureras ourtodlan. The epeoiflo dtslgnatlon of the unemployment fundsby the ltgitlature and the admonitionas to the tetablIehmentof a separate fund to be held apart from all pub110 monies of this etate olearlydifferentiates thesemonies from the general and speolal funds of the state.

The letter of Mr. llltohell attaohed toyour request directs our attention to Section 303 (a) of the Soolal Seourlty Aot. We see no reason to consider the appllcatlon Of thisHonorable Claude A. Willlams, Page 5

etatute for we have no Information that the Texas Unemployment Co~ptneatlonCommleslonhas fAlled to complywith Ite requirement.

We notlot that Seotlon Q(b) ae enactedby the 47th Regular Strzlon of the Lkglelature oontalns the ?ollow+ng languaget
'Allmoneys in this fund ehallbe depoalttd, admlnlzteredand disbursed, In the samemanner and under the ,eameoondltlonsand requirements at la provided by Law for other sptolal fundr In the State Treaeury.* This language wae not In the Aot until thin aatndment beaame effeotlveApril 24, 1941. We do not believe that 'It wae the 'Intentionof the Leglelature to alter the oharaoter of the unemployment funds at thle timeby thle language. On the kentrary,we believe that It wae Intended to advise the Treaeurtr .touze the zame zafeguarda In prottotlng these funds ae Ie used with statefunds. In view of **the** other language uetd In catting up this fund It dose not appear to uz that there waz an Intention that the unemployment,monIeebe oommlngledwith epeolal or general ?unds.o? the State.

'Aeexaminationof the deolelon In the Friedman oaze and of thepe*tlntnt statutee Imprtsseaupon UE the aonoluelon thz> the State Trtaeurtr Ie authorized **and** dIreote$ to tztabllrh \ -bank aom for unemployment oempWiha- \ tlon fundr. We realize the extra burden thiswill plaeo upon ~-_-j the Txqtqr, but It Is one IHpoeedby the Leglslaturo.

APPROVED AU@ 16; 1941 (Signed)Gerald C. Mann **Yours. vtrr**  truly
ATTORNEY GXNr;BAL **OF** TEXAE

ATTORNEY '3EiNEBAL OT TEXAS
MiIIreJ 4)WOVED OPINION COYMITTEL By BWB Chairman By (Signed]Yorrle Hodges Norris Hodges Aseletant

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