Court Opinion

ID: 3458654
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:26:45.51221+00
Date Added: 2024-06-11T13:43:55.523542
License: Public Domain

Dear Ms. Watson:
On behalf of the Madison Parish Police Jury you have asked an opinion of this office as to whether an exception exists in the Local Depositories Law, LSA R.S. 39:1211 et seq., so as to allow for the termination of the depository agreement if the fiscal agent turns down a loan request from the Police Jury and, if so, can a new fiscal agent be selected without going through a competitive bid process.
According to the opinion request, the Madison Parish Police Jury accepted bids from parish banks and selected a fiscal agent pursuant to the Local Depositories Law, LSA R.S. 39:1211 et seq. A contract was awarded that does not expire until December 31, 2004.  The Police Jury requested a loan from the fiscal agent but was turned down.  Another local bank has indicated a willingness to make the loan but only if the Police Jury places all of its deposits with the new bank as its new fiscal agent.  The Police Jury would like to terminate the existing depository agreement and enter into a new agreement with the fiscal agent who would make the requested loan and do so without going through the bid process required by the Local Depositories Law.
The Madison Parish Police Jury is a "depositing authority" as defined by LSA R.S. 39:1211 et seq. and as such is required to comply with all of its applicable provisions. These provisions set forth a specific process for the selection, use and security requirements of a fiscal agent for the deposit of funds by local depositing authorities.  There is no statutory provision contained in the Local Depositories Law that provides for early termination of an existing depository agreement due to the refusal of the fiscal agent to make a loan to the public entity.
There being no statutory provisions allowing for such early termination of the depository agreement the agreement itself must govern the rights and obligations of the parties.  The agreement forms the law between the parties and should be enforced so long as they do not contravene good morals or public policy.  C.C. Art. 1983.
It is therefore the opinion of our office that unless the depository agreement specifically provides for early termination due to the fiscal agent refusal to make a loan to the Police Jury or for some other valid and legal reason set forth therein the Police Jury is bound by the terms and conditions of the agreement. Should the agreement provide for early termination then the Police Jury must comply with the Local Depositories Law, LSA R.S. 39:1211 et seq., in obtaining a new fiscal agent.
It should be noted that LSA R.S. 39:1217.1 provides that a local depositing authority located in a parish with a population of less that one hundred thousand is exempt from the requirement of inviting bids for fiscal agency contracts.  Information provided our office indicates that the population of Madison Parish is well under the one hundred thousand threshold and therefore when the current fiscal agency contract expires or is terminated the Parish may, but is not required, to invite bids for its new fiscal agency contract.  Also see Attorney General Op. Nos. 96-457 and 92-397.
If you have any questions or comments, please do not hesitate to contact our office.
We trust this answers your inquiry,
Very truly yours,
                                   CHARLES C. FOTI, JR. ATTORNEY GENERAL
                               BY: ___________________________ RICHARD L. MCGIMSEY Assistant Attorney General
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