Montana Attorney General Opinion 15-525

Opinion No. 525 Banks and Banking-PoweI's of- Pledging Assets and Security- Public Funds-InsUl'ed De- posits-Cities and Towns- -Counties. HELD: State banks have authority to pledge assets to secure state, coun- ty and city funds except as limited by Chapter 23. Laws of the Extraordinary Session, H)33, relating to county, city and town funds guaranteed or insured according to law. May 3, 1934. You haye submitted a letter from P. C. Kivilin, Receiver of the First National Bank of Conrad, and request that we render an opinion in regard OPIXIOXS OI!' THE ATTORNEY GE~ERA.L 357 to the power of state banks in the State of Montana, to pledge their assets as security for the deposits of the state and its political subdivisions. The Act of June 25, 1030, chap. 604, 46 Stat. at L. 809, U. S. C. A. title 12. §OO, amends §45 of the Kational Bank Act of 1864 by adding thereto the fol- lowing: "A.ny association may, \lIJon the deposit with it of public money of a State 01' any political subdivision thereof, gh-e s.ecurity for the safekeep.. ing and prompt payment of the money so depositcrl, of the same kind as is authorized hy the law of the State in which such association is located in the case of other lIanking institutions in the state." In l\farion Y. Sneeden. 2m U. S. 2U2, 78 I,. Ed. 787 the Supreme Court of the United States held that since hanks organi7ktl under the laws of Illinois, do not possess the power of pledging assets to secure the deposit of public moneys of a political sub- division of the state. the national hanks under the Act of June 25, 1930, do not have such power. You are advised, however, that statc hanks of Montana have power to pledge the assets of the bank as se- curity for state funds, as weUas county and cit~- funds. The authority to pledge assets to secure county and city funds is expressly given by Section 4767 R.. C. l\L 1H21 as amended b~' Chapter 89. Laws of 1H23, Chapter 137, Laws of 1!l25, Chapter 134, Laws of 1027, Chapter 4H. Laws of 1H20, Chap- ter 23, Laws of 1!l33-34 I~xtraordinary Session. The only limitation is in the last named chapter which recites: •.• " • Provided, however, that said hoard of county commisSioners, City or town council may require security for only such portion of deposits as is not guaranteed or insured according to h1\v." The authority to pledge assets to se- cure state funds is given by Section 182, R. C. M. 1921, as amended by Chapter 180, Laws of 1929. In regard to state funds it will be noted that there is no such limitation as is pro- "Wed in Chapter 23, Laws of 1933-34 relating to county. city and town funds.