85-4
Opinion 85-4
Cite as Idaho Op. Att'y Gen. No. 85-4
J I M JONES
A T T O R N E Y G E N E R A L
S T A T E O F I D A H O
OFFICE OF T H E A T T O R N E Y G E N E R A L
B O I S E 8 3 7 2 0
ATTORNEY G m W L OPINION NO.
85-4
TO: M r . William G. Hepp
Investment Manager
Endowment Fund Investment Board
STATEHOUSE MAIL
PER REQUEST FOR ATTORNEY GENERAL'S OPINION
TELEPHONE
1 2 0 8 1 3 3 4 - 2 4 0 0
Regarding:
Idaho Code $ 57-722(3)(b)
QUES TIONS PRESENTED :
1.
Whether Idaho Code $ 57-722(3) (b) i s c o n s t i t u t i o n a l ?
2.
What
a u t h o r i t y
does
t h e
S t a t e
T r e a s u r e r
have
a s
c u s t o d i a n o f the p u b l i c s c h o o l fund t o :
( a ) q u e s t i o n
the
investments
made
by
t h e
Board
through
i t s
Investment Manager who has been g r a n t e d d i s c r e t i o n a r y
a u t h o r i t y r e g a r d i n g i n v e s t m e n t s ; and (b) t o r e f u s e t o
open accounts as i n s t r u c t e d by t h e Investment Manager
f o r s e c u r i t i e s which c l e a r l y q u a l i f y f o r investment
p u r s u a n t
t o
Idaho
Code
57-722,
s p e c i f i c a l l y
s u b s e c t i o n s (3) (b) and (8) ?
M r . William G. Hepp
(
Investment Manager
Endowment Fund Investment Board
Page 2
CONCLUS IONS :
1.
Idaho Code
57-722(3) (b)
a u t h o r i z e s investment i n
money
market
mutual
funds
whose
assets
a r e
l i m i t e d
t o
o b l i g a t i o n s
o f
t h e
United
S t a t e s
o r
any
agency
o r
i n s t r u m e n t a l i t y t h e r e o f .
Such investments a r e c o n s t i t u t i o n a l l y
p e r m i t t e d , pr&ided
t h a t the money market mutual fund meets t w o
requirements.
F i r s t , i t must u n c o n d i t i o n a l l y guarantee f u l l
repayment o f p r i n c i p a l and i n t e r e s t a s r e q u i r e d by Idaho Const.
a r t .
I X ,
§
11.
Second,
t h e
s t a t e must
n o t
d i r e c t l y o r
i n d i r e c t l y
become
a
s t o c k h o l d e r
i n
any
a s s o c i a t i o n
o r
c o r p o r a t i o n .
These
d e t e r m i n a t i o n s
must
b e
made
on
a
case-by-case
b a s i s
following
review
o f
t h e
p a r t i c u l a r
- i n v e s t m e n t agreement and p r o s p e c t u s .
2 .
R e s p o n s i b i l i t y
f o r
c h o i c e
o f
l e g a l l y
permissible
investments i s v e s t e d i n t h e board.
The state t r e a s u r e r has a
c u s t o d i a l r e s p o n s i b i l i t y t o safeguard fund a s s e t s e n t r u s t e d t o
h e r c a r e .
Elis r e s p o n s i b i l i t y i s broad enough, a t a minimum,
t o r e f u s e
t o open
accounts
o r t r a n s f e r funds
f o r c l e a r l y
i l l e g a l investments .- As
t o i n v e s t n e n t s which t h e t r e a s u r e r ,
b e l i e v e s
a r e
p o s s i b l y
i l l e g a l ,
we
recommend
t h a t
t h e
t r a n s a c t i o n b e completed and t h a t leg-a1 r e s i s t a n c e , i f any, t o
a board r e q u e s t f o r investment b e l i m ~ t e d t o j u d i c i a l review of
t h e q u e s t i o n .
Q u e s t i o n 1
The q u e s t i o n p r e s e n t e d i s whether Idaho Code § 57-722(3) (b)
v i o l a t e s t h e Idaho C o n s t i t u t i o n .
Idaho Code
3 57-722(3) (b)
provides :
The board o r i t s investment manager(s) may,
and they a r e hereby a u t h o r i z e d t o , i n v e s t
t h e permanent endowment funds o f t h e s t a t e
o f Idaho i n t h e following manner and i n t h e
following investments o r s e c u r i t i e s and none
o t h e r :
(b)
Money market mutual
funds whose
a s s e t s a r e l i m i t e d t o o b l i g a t i o n s o f t h e
M r . W i l l i a m G. Hepp
(
Investment Manager
Endowment Fund Investment Board
Page 3
United
S t a t e s
o r
any
agency
o r
i n s t r u m e n t a l i t y t h e r e o f .
Idaho C o n s t i t u t i o n a r t . I X ,
11, sets f o r t h t h e primary
c o n s t i t u t i o n a l l i m i t a t i o n upon p e r m i s s i b l e investments o f t h e
permanent endowment funds.
That s e c t i o n provides:
The
permanent
endowment
funds
o t h e r
t h a n
funds
a r i s i n g
from
t h e
d i s p o s i t i o n
o f
u n i v e r s i t y
l a n d s belonging
t o
t h e s t a t e ,
s h a l l b e loaned on United S t a t e s ,
s t a t e ,
county,
c i t y , v i l l a g e ,
o r school d i s t r i c t
bonds
o r s t a t e w a r r a n t s o r on such o t h e r
investments a s may b e p e r m i t t e d by law under
such
r e g u l a t i o n s
a s
the
l e g i s l a t u r e
may
provide.
(Emphasis added)
The l e a d i n g c a s e construing t h i s s e c t i o n ' s l i m i t a t i o n s upon
investments i s Engelking v . Investment Board, 93 Idaho 217,
458 P.2d
213 (1969).
I n t h a t c a s e , t h e Idaho Supreme Court
h e l d t h a t $ 3 9(6) and 9(8) o f S. B . 1277 (S. L . , 1969), which
. p e r m i t t e d
purchase
o f
s t o c k and
conversion
o f
c o n v e r t i b l e
bonds, v i o l a t e d Idaho Const. a r t . V I I I , $ 2 , and a r t . I X , § 11.
I n c o n s t r u L n ~ Idaho Const. a r t . I X ,
11, t h e c o u r t found
.
-
t h a t
t h e l e g i s r a t u r e was
l i m i t e d
t o a u t h d r i z i n g
l o a n s
o f
endowment funds i n view o f t h e o p e r a t i v e v e r b " s h a l l b e loaned"
which i s used i n t h a t s e c t i o n .
I n d e f i n i n g l o a n , t h e c o u r t
h e l d :
I n t h i s s i t u a t i o n w e b e l i e v e t h e important
word "loan" must n o t b e l o o s e l y construed t o
I I
I I
i n c l u d e a l l types o f
investment .
I n s t e a d ,
1 1
I I
t h e word
l o a n ,
a s used i n Idaho Const. ,
a r t . I X ,
$ 11 and a s extended i n scope by
t h e 1968 amendment, must c a r r y t h e meaning
t h a t
t h e r e must
b e a
guarantee o f
f u l l
repayment o f p r i n c i p a l a s w e l l a s i n t e r e s t .
There must b e an unconditional promise t o
repay
t h e
p r i n c i p a l
sum
o r i g i n a l l y l e n t .
(emphas i s added)
93 Idaho a t 223.
M r . William G. Hepp
(
Investment Manager
Endowment Fund Investment Board
Page 4
The
c o u r t
i n
Engelking
a l s o
h e l d
t h a t
t h e
s t a t u t e
a u t h o r i z i n g purchases o f s t o c k and conversion o f c o n v e r t i b l e
bonds viol-ated
t h e express p r o v i s i o n o f a r t . V I I I ,
2 , t h a t
t h e
state
s h a l l
n o t
" d i r e c t l y
o r
i n d i r e c t l y
become
a
s t o c k h o l d e r i n any a s s o c i a t i o n o r c o r p o r a t i o n .
11
Thus, t h e c o u r t h a s e s t a b l i s h e d two requirements which must
b e m e t by any investment o f the Idaho Endowment Fund Investment
board.
F i r s t , t h e investment must b e a "loan, '' i. e. , t h e r e
must
b e
an
u n c o n d i t i o n a l
guarantee
o f
f u l l repayment
o f
p r i n c i p a l a s w e l l as i n t e r e s t .
Second,
t h e board must n o t
d i r e c t l y o r i n d i r e c t l y become a stockholder i n any a s s o c i a t i o n
o r c o r p o r a t i o n .
I n Engelking,
s u p r a ,
t h e c o u r t permitted
investment i n
c o n v e r t i b l e bonds provided t h a t t h e y were n o t converted i n t o
common s t o c k by the board.
Thus, - t h e f a c t t h a t a s e c u r i t y
i n c l u d e s a p o t e n t i a l f o r a p p r e c i a t i o n measured by the i n c r e a s e
i n v a l u e o f e q u i t y i n t e r e s t s i s n o t f a t a l , provided t h a t t h e
s e c u r i t y a l s o u n c o n d i t i o n a l l y guarantees t h e f u l l repayment o f
p r i n c i p a l and i n t e r e s t .
I n view of t h e numerous and varying p r o v i s i o n s included i n
f i n a n c i a l i n s t r u n e n t s o f f e r e d t o i n v e s t o r s , it i s necessary t o
determine compliance w i t h I d a h o ' s
c o n s t i t u t i o n a l l i m i t a t i o n s
upon
endowment
investments
on
a
case-by-case
b a s i s .
This
n e c e s s a r i l y r e q u i r e s a review o f t h e p a r t i c u l a r s e c u r i t y being
considered a s d e f i n e d by t h e terms o f t h e s e c u r i t y agreement
and p r o s p e c t u s .
Applying t h e Engelking d e c i s i o n t o money market mutual fund
i n v e s t m e n t s , w e b e g i n w i t h a d e f i n i t i o n o f money market mutual
fund drawn - from t h e D i c t i o n a r y o f Banking and Finance, John
Wiley & Sons, New York, 1982.
Tnerein, "money market fund1' i s
d e f i n e d i n t h e f i n a n c e c o n t e x t as:
. . . [ a ] n
i n v e s t ~ e n t v e h i c l e whose primary
o b j e c t i v e
i s
t o
make
h i g h e r - i n t e r e s t
s e c u r i t i e s a v a i l a b l e t o t h e average i n v e s t o r
who
wants
immediate
income
and
h i g h
investment
s a f e t y .
This
i s
accomplished
through
t h e purchase
o f
h i g h - y i e l d
money
market i n s t r u m e n t s , such a s U.
S. Government
M r . W i l l i a m G. Hepp
Inves tment Manager
Endowment Fund Investment Board
Page 5
s e c u r i t i e s ,
bank
c e r t i f i c a t e s
o f
d e p o s i t ,
and commercial paper.
pp. 335-335.
"I"Iutua1 fund" i s d e f i n e d a s :
. . . [ a ] n investment company which o r d i n a r i l y
s t a n d s ready t o buy back (redeem) i t s s h a r e s
a t t h e i r c u r r e n t n e t a s s e t v a l u e ; t h e v a l u e
o f t h e s h a r e s depends on t h e market v a l u e o f
t h e
f u n d ' s
p o r t f o l i o
s e c u r i t i e s
a t
t h e
t i m e .
Also,
mutual
funds
g e n e r a l l y
. .
c o n t i n u o u s l y o f f e r new s h a r e s t o i n v e s t o r s .
I 1 Investment company" i s d e f i n e d a s i n c l u d i n g "a company o r
t r u s t t h a t uses i t s c a p i t a l t o i n v e s t i n o t h e r companies . . .
I I
p . 288.
I n t h e con-text o f Idaho Code § 57-722(3)(b),
such a
company o r t r u s t would b e l i m i t e d t o investment i n f e d e r a l ,
-
-. o b l i g a t i o n s .
Thus, a money market mutual fund i s an investment company,
u t i l i z i n g a c o r p o r a t i o n o r t r u s t form o f o r g a n i z a t i o n , which
i n v e s t s i n h i g h - y i e l d money market instruments such as U.
S.
goverment
s e c u r i t i e s
and
w i l l redeem
i t s s h a r e s
a t t h e i r
c u r r e n t n e t asset v a l u e .
The d e f i n i t i o n o f money market mutual fund n e i t h e r includes
n o r excludes from
t h e d e f i n i t i o n funds which do o r do n o t
guarantee repayment o f p r i n c i p a l and i n t e r e s t .
It would n o t be
c o n t r a r y t o t h e d e f i n i t i o n t o provide a g u a r a n t e e o f repayment
o f p r i n c i p a l and some amount o f i n t e r e s t over a given period.
As
an example,
assume t h a t a money market mutual
fund
i n v e s t s i n f e d e r a l o b l i g a t i o n s w i t h an average m a t u r i t y o f 30
davs and an average annual i n t e r e s t r a t e o f 8%.
Also assume
t h > t
t h e fund
guvarantees
f u l l repayment
o f p r i n c i p a l plus
i n t e r e s t a t a minimum r a t e o f 4% p e r annum i f t h e s e c u r i t y i s
h e l d f o r 30 days.
The fund f u r t h e r a g r e e s t h a t t h e investment
can b e redeemed a t t h e n e t a s s e t v a l u e p e r s h a r e a t s t a t e d
times.
M r . William G. Hepp
(
Investment Manager
Endowment Fund Investment Board
Page 6
Such
an
investment
would meet
t h e d e f i n i t i o n o f money
market mutual
fund.
It would a l s o meet
t h e d e f i n i t i o n o f
I I loan" a s i n t e r p r e t e d by t h e Idaho Supreme Court i n Engelking,
supra.
Such an investment would b e comparable t o c o n v e r t i b l e
bonds which t h e c o u r t found p e r m i s s i b l e i n Engelking.
Like
c o n v e r t i b l e bonds, t h e r e i s an u n c o n d i t i o n a l promise t o repay
p r i n c i p a l and i n t e r e s t i f h e l d t o a p a r t i c u l a r d a t e i n t h e
f u t u r e .
Like
c o n v e r t i b l e bonds,
such
an
investment would
i n c l u d e a r i g h t t o convert the investment i n t h e event o f
a p p r e c i a t i o n above
t h e guaranteed
r e t u r n .
I n t h e c a s e o f
c o n v e r t i b l e bonds,
t h e c o u r t h e l d t h a t conversion t o common
s t o c k would
n o t b e p e r m i t t e d
s i n c e
t h e s t a t e would
upon
conversion own
s t o c k i n a c o r p o r a t i o n i n v i o l a t i o n o f Idaho
Const. a r t . V I I I ,
2.
Tnis problem i s n o t 'presented i n t h e
above example s i n c e upon redemption t h e s t a t e would r e c e i v e
c a s h r a t h e r t h a n s t o c k .
Such a
money
market mutual
fund
i n v e s t a e n t would b e c o n s t i t u t i o n a l .
I n view o f t h e i n g e n u i t y o f t h e s e c u r i t i e s i n d u s t r y i n
developing v a r i o u s investment i n s t r u m e n t s , t h e above example i s
n o t intended t o i n d z c a t e t h a t o n l y money market mutual funds s o
. s t r u c t u r e d meet
c o n s t i t u t i o n a l requirements.
R a t h e r , i t i s
intended t o p o i n t o u t t h a t money market mutual fund investments
a r e c o n s t i t u t i o n a l l y
p e r m i t t e d
v e h i c l e s
f o r
endowment
fund
investments
i f s t r u c t u r e d
s o
t h a t
t h e
s t a t e r e c e i v e s
an
u n c o n d i t i o n a l promise t o r e p a y p r i n c i p a l and i n t e r e s t .
When
a
s t a t u t e
i s
s u s c e p t i b l e
t o
a
c o n s t i t u t i o n a l
c o n s t r u c t i o n , t h a t c o n s t r u c t i o n must b e adopted.
Matter of
1979 Valuation o f
P a r c e l
No.
R23487550330,
104 Idaho 681,
662 P.2d 1125 (1983); S t a t e e x r e l . Kidwell v . U.S. Marketing,
I n c . , 102 Idaho 451, 631 P.2d 662 (1981) ; Nelson v . Marshall,
r ~ d a h o
726, 497 P. 2d 47 (1972) ; Leonardson v . Moon, 92 Idaho
796, 451 P.2d 542 (1969).
Accordingly, i t i s our opinion t h a t
a c o u r t faced w i t h a c h a l l e n g e t o Idaho Code
$
57-722(3) (b)
would r e a d t h a t s e c t i o n t o p r e s e r v e i t s c o n s t i t u t i o n a l i t y .
The
c o u r t would
c o n s t r u e
Idaho
Code
$
57-722(3) (b)
a s
a u t h o r i z i n g
investment
i n money
market
n u t u a l
funds
which
u n c o n d i t i o n a l l y guarantee repayment o f p r i n c i p a l and i n t e r e s t
and which i n v e s t i n f e d e r a l o b l i g a t i o n s .
We
have a l s o considered t h e q u e s t i o n whetner t h e form of
b u s i n e s s o r g a n i z a t i o n chosen by an investment company a f f e c t s
t h e above a n a l y s i s .
As
noted e a r l i e r , investment companies
M r . William G. Hepp
Investment Manager
Endowment Fund Investment Board
Page 7
i n c l u d e b o t h companies and t r u s t s which u s e t h e i r c a p i t a l t o
i n v e s t i n o t h e r companies o r f e d e r a l o b l i g a t i o n s .
I n p r a c t i c e ,
money
market mutual
funds
u t i l i z e e i t h e r t h e c o r p o r a t e o r
b u s i n e s s t r u s t form o f o r g a n i z a t i o n .
Business t r u s t s a r e a l s o
r e f e r r e d t o a s Massachusetts t r u s t s and common l a w t r u s t s .
It
i s our opinion t h a t t h e requirement o f an u n c o n d i t i o n a l promise
t o repay p r i n c i p a l and i n t e r e s t must b e provided whether t h e
money market mutual fund i s organized a s a c o r p o r a t i o n o r a
Massachusetts o r business t r u s t .
There i s a g r e a t d e a l o f c a s e l a w d e s c r i b i n g t h e n a t u r e and
a t t r i b u t e s o f Massachusetts o r b u s i n e s s t r u s t s (See, e. E..
Modern S t a t u s o f t h e I.iassachusetts o r Business T r u s t , -88 ~ L k 3 d
-
04.
The
ALR
a n n o t a t i o n
d i s c u s s e s
t h e
Massuchusetts
o r
b u s i n e s s t r u s t i n s u b s t a n t i a l l y more d e t a i l than can b e covered
h e r e i n .
However,
t h e following p o i n t s are p e r t i n e n t t o t h e
q u e s t i o n s
involved
i n t h i s o p i n i o n .
Summarizing t h e cases
d e f i n i n g such t r u s t s t h e a n n o t a t i o n s t a t e s :
From t h e following i l l u s t r a t i v e cases which
have undertaken t o d e f i n e a Massachusetts o r
b u s i n e s s
t r u s t
( a l s o known
as
common-law
t r u s t ) , i t may b e s a i d t h a t a b u s i n e s s t r u s t
i s an unincorporated b u s i n e s s o r g a n i z a t i o n
c r e a t e d by an instrument by which p r o p e r t y
i s t o b e h e l d and managed by t r u s t e e s f o r
t h e b e n e f i t and p r o f i t o f such persons as
may
b e
o r
may
become
t h e
h o l d e r s
o f
t r a n s f e r a b l e
c e r t i f i c a t e s
evidencing
t h e
b e n e f i c i a l i n t e r e s t s i n t h e t r u s t e s t a t e .
I n a d d i t i o n t o g e n e r a l agreement a s t o t h e b a s i c d e f i n i t i o n
o f Massachusetts
o r b u s i n e s s t r u s t s , t h e r e i s a l s o general
agreement t h a t such t r u s t s a r e v e r y d i f f e r e n t from t r a d i t i o n a l
t r u s t s .
For example, i n Morrissey v . Commissioner, 296 U.S.
344, 56 S.Ct. 289, 80 L.Ed.
263 ( l 9 3 5 ) , t h e U.
S. Supreme Court
pointed o u t t h a t i n b u s i n e s s t r u s t s t h e o b j e c t i s n o t t o hold
and conserve p a r t i c u l a r p r o p e r t y w i t h i n c i d e n t a l powers as i n
t h e t r a d i t i o n a l t r u s t .
R a t h e r , t h e b u s i n e s s t r u s t i s c r e a t e d
t o provide a medium f o r t h e conduct o f b u s i n e s s and t h e sharing
o f g a i n s .
S i m i l a r l y , i n J i m Walter I n v e s t o r s v. Empire Madison, I n c . ,
401 F.Supp. 425 (D.C. Ga. 1975), t h e c o u r t noted t h e following
a s s o c i a t i o n a l c h a r a c t e r i s t i c s o f a r e a l e s t a t e investment t r u s t
Mr. William G. Hepp
Investment Manager
Endowment Fund Investment Board
Page 8
organized under t h e b u s i n e s s t r u s t p r o v i s i o n s o f F l o r i d a law.
Tne
a s s o c i a t i o n a l c h a r a c t e r i s t i c s found included
c e n t r a l i z e d
c o n t r o l , b e n e f i c i a l s h a r e s , a d i s t i n c t l e g a l e x i s t e n c e provided
by
i t s
d e c l a r a t i o n
o f
t r u s t ,
l i m i t e d
l i a b i l i t y ,
p r o f i t
motivation, and t h e a b i l i t y o f s h a r e h o l d e r s t o remove t r u s t e e s
and
t o merge,
t e r m i n a t e ,
o r amend
t h e
t r u s t .
The
c o u r t
concluded
t h a t t h e o r g a n i z a t i o n d i s p l a y e d no
i n d i c i a of a
t r a d i t i o n a l t r u s t .
W e a r e aware o f no s t a t e s which t r e a t Massachusetts o r
b u s i n e s s t r u s t s i n t h e same manner a s t r a d i t i o n a l t r u s t s .
This
a p p a r e n t l y
r e s u l t s
f r o n
t h e
a s s o c i a t i o n a l
n a t u r e
o f
such
o r g a n i z a t i o n s
and
t h e b a s i c
d i f f e r e n c e s
i n purposes.
m e
a s s o c i a t i o n a l n a t u r e o f such o r g a n i z a t i o n s h a s l e d c o u r t s t o
c l a s s i f y Massachussetts
o r b u s i n e s s
t r u s t s a s c o r p o r a t i o n s ,
p a r t n e r s h i p s , o r unincorporated a s s o c i a t i o n s .
88 ALR 722-729.
S t a t e s which do n o t view Massachusetts o r b u s i n e s s t r u s t s a s
, c o r p o r a t i o n s
f r e q u e n t l y r e g u l a t e t h e n a s c o r p o r a t i o n s .
For
example, i n Swartz v. Sher, 344 Mass. 636, 184 NE2d 51 (1962),
it
was
h e l d
t h a t ,
although
a
1iIassachusetts
t r u s t
with
t r a n s f e r a b l e s h a r e s was n o t a c o r p o r a t i o n o r an e n t i t y a p a r t .
-- from t h e t r u s t e e s , t h e t r u s t was s u b j e c t t o r e g u l a t i o n as a
c o r p o r a t i o n and, as a p r a c t i c a l m a t t e r , b u s i n e s s t r u s t s c l o s e l y
resemble c o r p o r a t i o n s .
The c a s e s a l s o hold t h a t t h e i n d e n t u r e o r d e c l a r a t i o n of
t r u s t i s d e t e r m i n a t i v e o f t h e n a t u r e o f t h e o r g a n i z a t i o n and o f
t h e d e t a i l s o f i t s o p e r a t i o n .
88 ALR3d 730.
This underscores
t h e importance o f reviewing t h e d e c l a r a t i o n s o f t r u s t on a
case-by-case b a s i s i n d e t e r a i n i n g t h e n a t u r e o f a t r u s t i n a
p a r t i c u l a r
c a s e .
For
example,
i n
Koenig
v.
Johnson,
71 Cal.App.2d 739, 163 P. 2d 746 (194.5)) i t was h e l d t h a t t h e
d e c l a r a t i o n o f t r u s t i s t o b e looked t o i n determining whether
t h e o r g a n i z a t i o n thereby c r e a t e d i s an o r d i n a r y t r u s t o r a
b u s i n e s s t r u s t .
S i m i l a r l y , once i t i s determined t h a t a money market mutual
fund i s a b u s i n e s s t r u s t r a t h e r than an o r d i n a r y t r u s t , t h e
q u e s t i o n
whether
t h e
s e c u r i t i e s
i t
o f f e r s
c a r r y
an
unconditional promise t o repay p r i n c i p a l and i n t e r e s t should b e
determined w i t h r e f e r e n c e t o t h e s p e c i f i c terms o f t h e a c t u a l
o f f e r i n g which a r e included i n t h e o f f e r i n g ' s p r o s p e c t u s .
I n Idaho, t h e r e have been t h r e e supreme c o u r t c a s e s which
have considered b u s i n e s s t r u s t s .
Spotswood v . Morris, 12 Idaho
M r . William G. Hepp
Inves tment Manager
Endowment Fund Investment Board
Page 9
360. 85 P. 1094 (1906): S t a t e v . Coserove. 36 Idaho 2 7 8 . 210 P.
Spotswood, s u p r a , w a s an a c t i o n t o recover commissions f o r
procuring a purchase f o r an a l l e g e d s a l e o f r e a l e s t a t e .
The
p r o p e r t y involved had been conveyed i n t r u s t f o r a b u s i n e s s
a s s o c i a t i o n o r s y n d i c a t e c a l l e d t h e Denver Townsite Company.
One o f t h e i s s u e s r a i s e d was whether two o f t h e members of t h e
b u s i n e s s
a s s o c i a t i o n o r s y n d i c a t e could bind
t h e s y n d i c a t e
o t h e r than as s e t f o r t h i n t h e a r t i c l e s o f agreement.
A f t e r reviewing t h e agreement, t h e c o u r t concluded t h a t t h e
a s s o c i a t i o n
was
a
- form
-of
partners hi^
u n l i k e
a
normal
p a r t n e r s h i p .
I n i t s o p i n i o n , h e c o u r t >eproduced v i r t u a l l y
t h e e n t i r e agreement which r e f l e c t s t h e importance o f reviewing
t h e a c t u a l agreements involved i n determining t h e n a t u r e 02
such o r g a n i z a t i o n s and t h e l e g a l e f f e c t s r e s u l t i n g therefrom.
I n Cosgrove,
s u p r a ,
t h e
c o u r t
considered
t h e q u e s t i o n
whether a b u s i n e s s t r u s t o f t h e s t a t e o f Montana which s o l d one
-
u n i t o f i t s c a p i t a l s t o c k i n Idaho w a s s u b j e c t t o l d a h o l s Blue
Sky Law.
The c o u r t determined t h a t t h e b u s i n e s s t r u s t was a.n
I I a s s o c i a t i o n 1 ' and was, t h e r e f o r e , s u b j e c t t o t h e Blue Sky Law.
I n Edwards, s u p r a , t h e c o u r t considered whether g r a n t o r s of
a
q u i t c l a i m
deed
t o
a
b u s i n e s s
t r u s t were
e n t i t l e d
t o
c a n c e l l a t i o n o f t h e deed as a r e s u l t o f t h e f a i l u r e o f t h e
b u s i n e s s t r u s t t o f i l e a r t i c l e s o f i n c o r p o r a t i o n o r t o comply
w i t h r e p o r t i n g requirements upon c o r p o r a t i o n s .
The c a s e was
decided on grounds o f e s t o p p e l r a t h e r than t h e n a t u r e o f t h e
o r g a n i z a t i o n .
As
t o
t h e
n a t u r e
of
b u s i n e s s
t r u s t s ,
t h e
d e c i s i o n i s somewhat confusing.
Only J u s t i c e Budge s t a t e d t h a t
t h e t r u s t i s n o t t e c h n i c a l l y a n a s s o c i a t i o n o r l e g a l e n t i t y .
J u s t i c e s Givens and Koelsch found t h a t t h e b u s i n e s s t r u s t was
an
unincorporated
a s s o c i a t i o n
which
i s
a
l e g a l
e n t i t y .
J u s t i c e s Holden and M i l l e r (Dissenting) argued t h a t s i n c e t h e
t r u s t e x e r c i s e d powers and p r i v i l e g e s o f c o r p o r a t i o n s , i t was
r e q u i r e d t o f i l e a r t i c l e s o f i n c o r p o r a t i o n and conduct i t s
a f f a i r s i n Idaho a s a c o r p o r a t i o n .
The Idaho cases make i t c l e a r t h a t t h e n a t u r e and l e g a l
e f f e c t o f such t r u s t s must b e determined w i t h r e f e r e n c e t o t h e
p a r t i c u l a r agreements
involved.
It i s a l s o c l e a r from t h e
M r . William G. Hepp
Investment Manager
Endowment Fund Investment Board
Page 1 0
Idaho c a s e s t h a t a b u s i n e s s t r u s t w i l l b e t r e a t e d i n Idaho a s a
form o f b u s i n e s s o r g a n i z a t i o n and n o t a s a t r a d i t i o n a l t r u s t .
This i s c o n s i s t e n t w i t h t h e normal view o f b u s i n e s s t r u s t s as
d i s c u s s e d i n t h e ALR a n n o t a t i o n c i t e d p r e v i o u s l y .
The d i s t i n c t i o n b e a r s emphasizing .
T r a d i t i o n a l t r u s t s a r e
n o t viewed a s l e g a l e n t i t i e s . Consequently, investment i n a
f e d e r a l s e c u r i t y by a t r a d i t i o n a l t r u s t e e o f endowment funds
would b e viewed as a d i r e c t investment o f t h e endowment fund i n
f e d e r a l s e c u r i t i e s .
However, a b u s i n e s s t r u s t i s viewed by
Idaho and v i r t u a l l y a l l o t h e r s t a t e s as a b u s i n e s s e n t i t y .
As
such, Idaho would
follow t h e g e n e r a l r u l e t h a t c e r t i f i c a t e
h o l d e r s i n a conventional b u s i n e s s t r u s t s t a n d i n r e l a t i o n t o
t h e t r u s t much a s do s t o c k h o l d e r s t o a c o r p o r a t i o n i n t h a t t h e y
are n o t c r e d i t o r s o f t h e t r u s t b u t a r e r a t h e r e q u i t a b l e owners
o f p r o p o r t i o n a l i n t e r e s t s i n t r u s t a s s e t s and l i a b i l i t i e s .
88
ALR3d 737-739;
S e l e c t e d Investment Corp. v. Duncan, 260 F.2d
918 (Ca. 10 Okl. 1955), c e r t . d e n . 359 U.S. 914, 79 S.Ct. 584, 3
L.Ed.2d 576.
The same r u l e h a s even been found i n Massachusetts, one of,
- - t h e j u r i s d i c t i o n s . following t h e m i n o r i t y view t h a t b u s i n e s s
t r u s t s a r e n o t l e g a l e n t i t i e s .
I n ~ e n n e d ; v. Hodges, 215 Mass.
112, 102 N.E. 432 ( l g l 3 ) , i t was h e l d :
. . . [ t l h e s h a r e s i n t h e \Jestern Real E s t a t e
T r u s t ,
come
w i t h i n
t h e
same
r u l e .
The
t r u s t e e s a r e r e s i d e n t i n t h i s commonwealth
and
t h e i r home
b u s i n e s s
o f f i c e i s h e r e ,
where
o n l y
can
t h e
c e r t i f i c a t e s
b e
t r a n s f e r r e d
upon
s u r r e n d e r
and
new
c e r t i f i c a t e s i s s u e d .
Tile c e r t i f i c a t e h o l d e r
i s a t
l e a s t
t h e
owner
o f
an
undivided
e q u i t a b l e i n t e r e s t i n t h e p r o p e r t y h e l d by
t h e t r u s t e e s .
There i s on p r i n c i p l e i n t h i s
r e s p e c t
no
d i s t i n c t i o n
between
such
c e r t i f i c a t e and a c e r t i f i c a t e f o r s h a r e s o f
s t o c k i n a domestic c o r p o r a t i o n .
This i s
v i r t u a l l y decided by Kinney v. Treasurer and
Receiver Gen.,
207 Mass.
368, 371, 93 N.E.
586, 35 L.R.A.
(N.S.)
784, Ann.Cas.
1912A,
902; Peabody v . Stevens, 102 N.E. 435.
I n summary, t h e form o f b u s i n e s s o r g a n i z a t i o n chosen by a
money market mutual fund w i l l n o t a f f e c t t h e a p p l i c a t i o n o f
M r . William G. Hepp
Investment Manager
Endowment Fund Investment Board
Page 11
I d a h o ' s
c o n s t i t u t i o n a l
p r o v i s i o n s
regarding
investment
o f
endowment funds.
Idaho, a s most o t h e r s t a t e s , w i l l look t o t h e
substance
r a t h e r
than
form
o f
b u s i n e s s
o r g a n i z a t i o n
t o
determine t h e e s s e n t i a l n a t u r e t h e r e o f .
I f organized a s a
b u s i n e s s t r u s t , an o r g a n i z a t i o n w i l l b e t r e a t e d as a business
o r g a n i z a t i o n and n o t a s a normal t r u s t .
Tnis determination
w i l l b e made by reviewing t h e d e c l a r a t i o n o f t r u s t t o determine
t h e essence o f t h e arrangement.
Rights and o b l i g a t i o n s o f
s h a r e h o l d e r s
and
t h e
t r u s t
w i l l
b e
determined
from
t h e
agreements and documents d e f i n i n g t h o s e r i g h t s and o b l i g a t i o n s ,
i n c l u d i n g t h e d e c l a r a t i o n of t r u s t and prospectus.
To s a t i s f y
~ d a h o ' s c o n s t i t u t i o n a l requirements f o r endowment investments,
such
documents
must
u n c o n d i t i o n a l l y
guarantee
repayment
o f
- p r i n c i p a l and i n t e r e s t upon t h e endowment investments.
Question 2
The second q u e s t i o n posed concerns t h e a u t h o r i t y o f t h e
s t a t e t r e a s u r e r t o q u e s t i o n investments made by t h e board o r t o
r e f u s e
t o open accounts
o r t r a n s f e r funds
f o r investments
chosen by t h e board.
-.
The Idaho Supreme Court considered t h e r e s p o n s i b i l i t i e s of
t h e t r e a s u r e r and t h e l e g i s l a t u r e as t o t h e p u b l i c school fund
i n Moon v. Investment Board, 96 Idaho 140, 525 P.2d 335 I1
( 1 9 / 4 ) , and i t s conclusions t h e r e i n were r e a f f i r m e d i n Moon v.
Investment
Board,
97
Idaho
595,
548 P.2d
861 (1976-
i n t e r p r e t i n g Idaho Const. a r t . I X ,
3, i n t h e i n i t i a l c a s e ,
t h e
c o u r t
reviewed
t h e
r e p o r t e d
debate
a t
t h e
Idaho
C o n s t i t u t i o n a l Convention and h e l d :
Such
language
i n d i c a t e s
t h a t
t h e
C o n s t i t u t i o n a l Convention intended t h a t t h e
l e g i s l a t i v e branch o f t h e government should
have
c o n t r o l
over
t h e
investment
o f
t h e
school endowment
fund. ... This
does
n o t
c o n f l i c t w i t h t h e p r o v i s i o n t h a t t h e s t a t e
t r e a s u r e r
should b e t h e custodian o f
t h e
fund,
b u t b i f u r c a t e s
t h e r e s p o n s i b i l i t i e s
between
t h e
e x e c u t i v e
and
l e g i s l a t i v e
branches
o f government.
r e a s u r e r i s
and
t h e
t h e
custodian
o f
t h e
fund
l e g i s l a t u r e d i r e c t s by
law
how
t h e
fund
s h a l l b e i n v e s t e d , which, i n t h i s c a s e , was
M r . William G. Hepp
Investment Manager
.
Endowment Fund Investment Board
Page 1 2
accomplished
by
t h e
c r e a t i o n
o f
an
investment board.
A r t i c l e
I X ,
$
11,
a s
amended,
f u r t h e r
i n d i c a t e s
t h e
c o n s t i t u t i o n a l mandate
t h a t
t h e
l e g i s l a t u r e
i s
r e s p o n s i b l e
f o r
t h e
investment o f permanent endowment funds.
96 Idaho a t 144.
The
c o u r t d i d n o t d e f i n e i n d e t a i l t h e b i f u r c a t i o n of
r e s p o n s i b i l i t i e s between t h e t r e a s u r e r and t h e board.
However,
t h e
c o u r t ' s
c i t a t i o n
o f
72 Am.Jur.Zd,
S t a t e s ,
64
i n
f o o t n o t e 2 o f i t s d i s c u s s i o n l e n d s f u r t h e r i n s i g h t i n t o i t s
t h i n k i n g as t o t h e intended d i v i s i o n o f r e s p o n s i b i l i t i e s .
The Am-Jur. s e c t i o n c i t e d s t a t e s i n p e r t i n e n t p a r t :
Generally
speaking,
the
d u t y o f
a
s t a t e
t r e a s u r e r i s t o keep t h e moneys o f t h e s t a t e
and t o pay them o u t o n l y on r e g u l a r warrants
o r r e q u i s i t i o n s f o r l e g a l claims.
He i s n o t
a t r u s t e e o f moneys i n t h e s t a t e t r e a s u r y ,
b u t h o l d s
them o n l y as
t h e a g e n t o f t h e
s t a t e .
I f t h e r e i s any t r u s t , t h e s t a t e i s
t h e t r u s t e e , and u n l e s s i t can b e sued t h e
t r u s t e e cannot b e e n j o i n e d .
O r d i n a r i l y , i t
i s n o t intended t h a t payments
o u t o f t h e
p u b l i c funds should b e made on t h e judgaent
o f t h e p u b l i c t r e a s u r e r a l o n e o r t h e a u d i t o r
a l o n e .
The
a u d i t o r
examines
a s
t o
t h e
amounts and t h e performance o f t h e work. and
it would
seem
t h a t as
t o t h e f a c t s h i s
f i n d i n g i s s u f f i c i e n t
p r o t e c t i o n ,
i n t h e
absence o f any c o l l u s i o n - o r notice- o f fraud
t o t h e t r e a s u r e r .
However,
t h e a u d i t o r ' s
conclusion
as
t o
whether
a
claim
i s
a u t h o r i z e d o r provided f o r by law i s n o t
b i n d i n g on, nor i s i t a p r o t e c t i o n t o , t h e
t r e a s u r e r .
The s t a t e t r e a s u r e r may r e f u s e
t o obey a s t a t u t e commanding him t o i n d o r s e
[ s i c ] w a r r a n t s when t h e c o n s t i t u t i o n a l d e b t
M r . William G. Hepp
Investment Manager
Endowment Fund Investment Board
Page 1 3
l i m i t i s reached, a l t h o u g h t h e s t a t u t e i s i n
o t h e r r e s p e c t s
i n i t s g e n e r a l
p r o v i s i o n s
c o n s t i t u t i o n a l .
With r e g a r d t o t h e p u b l i c school fund, it i s a t r u s t fund
o f
t h e s t a t e and
t h e endowment
fund
investment board
i s
t r u s t e e .
The
t r e a s u r e r
i s
t h e
c u s t o d i a n
o f
t h e
fund.
Generally speaking, p r i n c i p l e s o f t r u s t law would apply t o t h e
d u t i e s o f t h e c u s t o d i a n and t h e t r u s t e e o f t h e t r u s t .
The
t r u s t e e i s r e s p o n s i b l e f o r t h e management o f t h e t r u s t fund.
The t r e a s u r e r
i s r e s p o n s i b l e a s custodian f o r t h e safekeeping
o f t h e assets o f t h e t r u s t fund.
The- c i t a t i o n p o i n t s o u t , i n t h e analogous
s i t u a t i o n o f
warrant
payments,
t h a t i t i s o r d i n a r i l y n o t intended t h a t
payments o u t o f p u b l i c funds should b e made on t h e judgment o f
t h e
t r e a s u r e r
a l o n e o r t h e a u d i t o r alone.
As
t o f a c t u a l
q u e s t i o n s such a s t h e amount o f a claim o r t h e performance of
work, t h e t r e a s u r e r i s e n t i t l e d t o r e l y on t h e a u d i t o r absent
n o t i c e o f c o l l u s i o n o r f r a u d i n v o l v i n g t h e claim.
--
However,
as
t o
t h e
q u e s t i o n
o f
whether
a
claim
i s
a u t h o r i z e d o r provided f o r by l a w , t h e a u d i t o r ' s determination
i s n o t binding on t h e t r e a s u r e r .
The t r e a s u r e r i s t o pay out
s t a t e funds "only on r e g u l a r w a r r a n t s o r r e q u i s i t i o n s f o r l e g a l
claims" and i s n o t r e q u i r e d t o make
s t a t u t o r i l y authorized
payments
t h a t would
v i o l a t e
c o n s t i t u t i o n a l
p r o v i s i o n s .
By
analogy, t h e t r e a s u r e r ' s c u s t o d i a l r e s p o n s i b i l i t i e s should n o t
b e s o narrowly construed a s t o e l i m i n a t e a l l safeguards f o r t h e
fund .
N e i t h e r
should
t h e
t r e a s u r e r ' s
c u s t o d i a l
r e s p o n s i b i l i t i e s b e s o b r o a d l y construed a s t o f r u s t r a t e t h e
b o a r d ' s c o n t r o l over t h e investment o f t h e fund.
Likewise, t h e
b o a r d ' s
a u t h o r i t y should b e
i n t e r p r e t e d b r o a d l y enough
t o
provide f o r e f f e c t i v e i n v e s t n e n t o f funds b u t n o t s o broadly a s
t o e l i m i n a t e t h e safekeeping r e s p o n s i b i l i t i e s o f t h e custodian.
The
Am. J u r .
c i t a t i o n
i n d i c a t e s
t h a t
t h e
t r e a s u r e r ,
a s
c u s t o d i a n o f t h e fund, has some a u t h o r i t y t o r e f u s e t o open
accounts o r t o t r a n s f e r funds f o r i l l e g a l investments.
A t a
minimum,
t h e t r e a s u r e r may r e f u s e t o permit investments t h a t
a r e c l e a r l y u n c o n s t i t u t i o n a l .
Dn t h e o t h e r hand, r e f u s a l t o
permit c l e a r l y l e g a l inves t n e n t s would f r u s t r a t e t h e board ' s
c o n s t i t u t i o n a l
c o n t r o l
over
investments .
Between
t h e s e
extremes, e x i s t i n g c a s e law does n o t d e f i n i t i v e l y answer t h e
q u e s t i o n o f t h e t r e a s u r s r ' s r e s p o n s i b i l i t y when faced with a
M r . William G. Hepp
Inves tment Manager
Endowment Fund Investment Board
Page 14
r e q u e s t
t o
open
an
account
t h e
t r e a s u r e r
b e l i e v e s
i s
unauthorized by t h e cons t i t u t i o n .
A procedure
along
t h e
following l i n e s would
appear t o
provide a r e a s o n a b l e approach t o t h e problem.
Tile t r e a s u r e r
should n o t i f y t h e board o f l e g a l q u e s t i o n s s h e h a s regarding
any
p a r t i c u l a r
investment.
The
board
should
review
t h e
q u e s t i o n s and n o t i f y t h e t r e a s u r e r whether t h e board wishes t o
proceed w i t h t h e investment.
Such a procedure should r e s o l v e
most problems, assuming s u b s t a n t i a l d i s c u s s i o n w i t h t h e l e g a l
a d v i s o r s t o t h e t r e a s u r e r and t h e board.
I n those cases i n
which t h e r e remains a s u b s t a n t i a l doubt as t o t h e l e g a l i t y o f
an investment,
t h e p a r t i e s could submit t h e quesion t o t h e
a t t o r n e y g e n e r a l
f o r a
formal opinion.
A l t e r n a t i v e l y ,
t h e
t r e a s u r e r might wish t o s e e k j u d i c i a l c l a r i f i c a t i o n o f t h e
q u e s t i o n when s h e has s u b s t a n t i a l doubts a s t o t h e l e g a l i t y o f
an investment which t h e board d e c i d e s t o make.
We
would recommend that t h e t r e a s u r e r r e f u s e t o open an
account o r t r a n s f e r funds f o r an investment only i n extreme
c a s e s i n which it appears c l e a r t o h e r on t h e b a s i s of legal,
-. a d v i c e
t h a t
t h e
inves tmen t
i s
unauthorized.
This
recommendation i s made f o r s e v e r a l r e a s o n s .
It i s c l e a r t h a t
t h e r e s p o n s i b i l i t y f o r t h e c h o i c e o f investments i s v e s t e d i n
t h e l e g i s l a t u r e and
t h e board.
L i a b i l i t y f o r l o s s e s upon
s t a t u t o r i l y
unauthorized
investments
would
b e
t h e
r e s p o n s i b i l i t y o f t h e board r a t h e r than t h e t r e a s u r e r (Attorney
General Opinion 79-8).
L i a b i l i t y f o r l o s s e s upon authorized
investments
and
presumably
upon
s t a t u t o r i l y a u t h o r i z e d b u t
u n c o n s t i t u t i o n a l
investments
would
impose
a
c o n s t i t u t i o n a l
l i a b i l i t y which t h e l e g i s l a t u r e would b e r e q u i r e d t o s a t i s f y
pursuant t o Idaho Const. a r t . I X , ?j 3 , and Idaho Code $ 57-724.
If
a
procedure
such
as
t h a t
recommended
above
i s
implemented by t h e t r e a s u r e r and t h e b o a r d , we would recommend
t h a t t h e board
g i v e t h e
t r e a s u r e r
some
advance n o t i c e of
proposed money market fund investments o r o t h e r new investments
d i f f e r i n g s i g n i f i c a n t l y from t h o s e p r e v i o u s l y u t i l i z e d .
For
example, when t h e board r e q u e s t s l e g a l a d v i c e from i t s counsel
a s t o t h e l e g a l i t y o f a proposed investment, i t could n o t i f y
t h e
t r e a s u r e r
t h a t
t h e
board
w i l l
b e
c o n s i d e r i n g
t h e
investment.
Such n o t i c e would f a c i l i t a t e t h e review process.
The above procedural recommendations a r e intended only a s
one p o s s i b l e o u t l i n e o f procedures t o advance common i n t e r e s t s
M r . W i l l i a m G. Hepp
Investment Manager
Endowment Fund Investment Board
Page 1 5
i n safeguarding t h e fund and i n providing f o r t h e maintenance
o f t h e p u b l i c schools.
The board and t h e t r e a s u r e r a r e i n t h e
b e s t p o s i t i o n t o determine whether o t h e r procedures w i l l b e
more r e s p o n s i v e t o t h e needs o f t h e p a r t i e s o r more conducive
t o improved long-term working r e l a t i o n s h i p s .
P u b l i c
school
endowment
funds
nay
c o n s t i t u t i o n a l l y
be
i n v e s t e d i n money narke t mutual funds which i n v e s t exclus i v e l y
i n f e d e r a l o b l i g a t i o n s , provided t h e money market mutual fund
u n c o n d i t i o n a l l y
guarantees
f u l l repayment
o f
p r i n c i p a l
and
i n t e r e s t and provided t h e s t a t e does n o t d i r e c t l y o r i n d i r e c t l y
become a s t o c k h o l d e r i n any a s s o c i a t i o n o r c o r p o r a t i o n .
The
d e t e r m i n a t i o n must b e made on a case-by-case b a s i s following
review of t h e p a r t i c u l a r i n v e s t n e n t agreement and prospectus.
R e s p o n s i b i l i t y f o r choice o f investments i s v e s t e d i n t h e
board and t h e board i s r e s p o n s i b l e f o r making investments which
a r e l e g a l l y p e r m i t t e d .
The s t a t e t r e a s u r e r has a c u s t o d i a l
r e s p o n s r b i l i t y t o safeguard fund a s s e t s e n t r u s t e d t o h e r care.,
.. This r e s p o n s i b i l i t y i s broad enough, a t a minimum, t o r e f u s e t o
open
accounts
o r
t r a n s f e r
funds
f o r
c l e a r l y
i l l e g a l
investments .
As
t o inves tments which t h e t r e a s u r e r b e l i e v e s
a r e p o s s i b l y i l l e g a l , we would recommend t h a t t h e t r a n s a c t i o n
b e completed and t h a t l e g a l r e s i s t a n c e , i f any, t o a board
r e q u e s t f o r investment b e l i m i t e d t o j u d i c i a l review o f t h e
q u e s t i o n .
F i n a l l y , w e recoinmend
t h a t t h e board and t h e t r e a s u r e r
j o i n t l y develop procedures designed t o promote t h e a b i l i t y o f
b o t h t h e board and t h e t r e a s ~ r e r t o e f f e c t i v e l y c a r r y o u t t h e i r
r e s p o n s i b i l i t i e s .
AUTHORITIES CONS IDEE2ED :
Idaho C o n s t i t u t i o n a r t . VIII, § 2
Idaho C o n s t i t u t i o n a r t . I X , § 3
Idaho Cons t i t u t i o n a r t . I X , 5 11
Idaho Code 3 57-724
3s 9(6) and 9(8) of S. B. 1277 (S. L . , 1969)
72 Am.Jur.2d, S t a t e s , § 64
M r . William G. Hepp
Investment Manager
Endowment Fund Investment Board
Page 1 6
Modern
S t a t u s
o f
t h e Massachusetts
o r Business
T r u s t ,
88 ALR3d 704
D i c t i o n a r y o f Banking and Finance, John Wiley & Sons, New
York, 1982
A t t o r n e y General Opinion No. 79-8
Edwards v . Belknap, 66 Idaho 639, 166 P.2d 451 (1946)
Engelking v. Investment Board, 93 Idaho 217, 458 P.2d 213
(1969)
J i m Walter I n v e s t o r s , v.
Ernpire Madison, I n c . , 401 F.Supp.
425 (D.C. G a . 1975)
~ e n n e d ~
v. ~ o d ~ e s , ~
215 Mass. 112, 102 N.E. 432 (1913)
Kinney v.
T r e a s u r e r
and
R e c e i v e r Gen.,
207 Mass.
368,
93 N.E. 586 (1912)
Leonardson v. Moon, 92 Idaho 796, 451 P. 2d 542 (1969)
Matter o f 1979 V a l u a t i o n o f P a r c e l No.
R23487550330, 104
Idaho 681, 662 P.2d 1125 (1983)
Moon v . ~ n v e s t m e n t Board, -96 1daho 140, 525 P. 2d 335(1974)
Moon v . Investinent Board, 97 Idaho 595, 548 P - 2d 861 (1976) .'
Morrissey v .
Commissioner,
296 U.S.
344,
56 S.Ct.
289,
8 0 L.Ed. 263 (1935)
Nelson v. ~ a r s h a l l , 94 Idaho 726, 497 P.2d 47 (1972)
S e l e c t e d Investment Corp. v . Duncan, 260 F.2d 918 ( C a .
1 0
Okla.
1 9 5 8 ) ,
c e r t . d e n .
359
U.S.
914,
79
S.Ct.
584.
Spotswood v. M o r r i s , 1 2 I d a h o 360, 85 P. 1094 (1906)
S t a t e v. Cosgrove, 36 Idaho 278, 210 P. 393 (1922)
S t a t e e x r e l . Kidwell v. U.S.
Marketing, I n c . , 102 Idaho
451, 631 P.2d 662 (1981)
- -
DATED t h i s 2 0 '-day
o f J u n e , 1985.
ATTORNEY GENERAL
M r . William G. Hepp
[\
Investment Manager
Endowment Fund Investment Board
Page 1 7
ANALYSIS BY:
JOHN J. MCMAHON
Chief Deputy Attorney General
DAVID G. HIGH
Deputy Attorney General
Chief, Business A f f a i r s and
S t a t e Finance Division
cc: Idaho Supreme Court
Supreme Court Library
Idaho S t a t e Library