-, . . 

June 28, 1968 

Honorable Marie Winters Opinion No. M-252 

Firemen's Pension Commissioner 

Sam Houston Building Re: 

Austin, Texas 

Whether the making of investments in the name of 

a nominee and the payment 

of custodial fees are 

deemed to be within the 

provisions of Article 

pear Mrs. Winters: 6243e. V.C.S. 

You have requested the opinion of this office 

regarding the above question. In this connection you have 

provided certain facts, which are quoted in part as follows: 

"The Firemen's Pension Board of Amarillo 

has entered into a contract with a local bank 

for the 'custody, safekeeping, and handling of 

the funds and securities held by the Board of 

Trustees for the Firemen's Fund'. This contract 

permits the funds of the Firemen's Relief and 

Retirement Fund to be invested in the name of 

the bank's Nominee, . . . and further provides 

a custodial fee to be paid to the bank in the 

amount of $3,000.00 for the year 1968. 

"There is no provision in Section 3 of the 

Law for investments or funds to be held in any 

name other than the name of the Firemen's Relief 

and Retirement Fund Trustees. No other Pension 

Board has ever invested otherwise nor have they 

questioned the advice of this office that funds 

could not be invested in the name of the Pension 

Board Trustees. 

"It is also the opinion of this office that 

the fee of $3,000.00 to the bank for custody and _ 

safekeeping is not permitted by the Law. I have 

contacted other Boards with large sums of money 

to invest and no bank has charged them for the 

custody or handling of the funds." 

Section 3 of Article 6243e, Vernon's Civil Statutes, 

sets forth the powers and duties of a Board of Firemen's Relief and Retirement Fund Trustees. Included in these duties 

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Hon. Marie Winters, page 2 (M-252) 

are the receipt, handling and control, management and disbursement of the Firemen's Relief and Retirement Fund for the 

respective city or town. The city treasurer or chief financial 

officer is made a member of the Board of Trustees and treasurer 

thereof; that official's signature is one of those necessary to 

any disbursement made from the Fund; and he is made the custodian 

of the Firemen's Relief and Retirement Fund. 

Sections 23 and 23A of Article 6243e provide for the 

investment of Fund monies over and above the amounts needed 

for current demands. These sections identify the types of investments that may be considered for the Fund, and in Section 

23A(c), the following is stated: 

"In making each and all of such investments the Board shall exercise the judgment 

and care under the circumstances then prevailing which men of ordinary prudence, discretion, 

and intelligence exercise in the management of 

their own affairs not in regard to speculation 

but in regard to the permanent disposition of 

their funds, considering the probable income 

therefrom as well as the probable safety of 

their capital." 

Section 23B of Article 6243e authorizes the employment of professional investment counselors to assist the Board 

of Trustees in making investment decisions. 

The contract which you have submitted appears to be 

a departure from ordinary pension fund practice in this State. 

This contract is one of agency , whereby the contracting bank 

is to act as custodian for all the investment funds and securities of the Firemen's Relief and Retirement Fund. The bank 

executes buy and sell orders made by the Board of Trustees, 

purchasing securities in the name of a nominee. The books 

of the bank reflect at all times the interests actually owned 

by the Fund. For its administrative services, the bank makes 

a charge, and it is this charge which has occasioned this 

opinion request, because of doubt as to whether assets or income of the Fund may be used in making payment. 

A Firemen's Relief and Retirement Fund is a trust 

under the Texas Trust Act. See Article 7425d. Vernon's Civil 

Statutes; Bolen v. Board of Firemen, Policemen and Fire Alarm 

an Antonio, 308 S.W.2d 904 (Tex.Civ. 

ye1 v. Board of Firemen, Policemen 

and Fire Operators' Trustees.345 . W . 2d 456 (T ex.Civ.App., 

1961, error ref. n.r.e.1. Since Article 6243e, in establishing 

the various Firemen's Relief and Retirement Funds, did not 

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Hon. Marie Winters, page 3 (M-252) 

clearly set out all the terms and conditions for the mechanical 

operation of the Funds, we must look to the general law for 

guidance, which in this case is the Texas Trust Act. 

Under Article 7425b-16, Vernon's Civil Statutes, a 

trustee (or board of trustees) may hold assets in the name of 

a nominee, subject to certain conditions. For our purposes 

here, we assume that these conditions have been met. Also, 

under Article 7425b-36, the costs of trust administration are 

properly payable out of the income of the trust estate. Under 

Article 7425b-25H, trustees are empowered to hire agents reasonably necessary in the administration of the trust. 

While the Board of Trustees concerned here may seem 

to have involved themselves in quite elaborate investment procedures, it is our view that these procedures are generally within the scope of their authority in administering and investing 

the trust funds under their control. However, in connection 

with the cost of the bank service involved here, the attention 

of the trustees is particularly directed to Section 23A(c), 

quoted supra. In answer to your specific question, you are advised that it is the opinion of this office that the Board of 

Trustees involved may properly permit Fund investments to be 

made in the name of a nominee, and may pay the cost of an 

agency contract of the type described from the income of the 

Firemen's Relief and Pension Fund. 

SUMMARY 

Under the facts submitted a Board of Trustees 

of a Firemen's Relief and Retirement Fund may permit 

Fund investments to be made in the name of a nominee, 

and has the authority to use trust fund income to 

pay the costs of administering the investments of 

the trust. 

Prepared by Malcolm L. Quick 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Hawthorne Phillips, Chairman 

Kerns Taylor, Co-Chairman 

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Hon. Marie Winters, page 4 (M-252) 

W. 0. Shultz 

Tom Fortescue 

Harold Kennedy 

Rex White 

A. J. CARUBBI, JR. 

Executive Assistant 

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