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Call Now: 904-383-7448Every municipal corporation and the officer or officers of any municipal corporation in this state who are charged with the custody of funds raised in pursuance of Article IX, Section V, Paragraph VI of the Constitution of this state are required, under the direction of the mayor and council of the municipal corporation or a duly constituted and authorized committee of the same, to invest, within six months from their collection, all sums collected by the municipal corporation under the requirements of such paragraph of the Constitution, for the purpose of paying the principal of the bonded indebtedness of the municipal corporation, which sums are not actually payable on such principal within 12 months from the date of collection thereof. Such sums may be invested in valid outstanding bonds of such municipal corporation or of some other municipal corporation in this state of equal or larger size, which bonds have been duly validated in accordance with law, or in county bonds of this state which have been duly validated, or in valid outstanding bonds of this state or of the United States. The officer or officers of the municipal corporation shall keep such funds so invested in such bonds, with the privilege of changing the investment from one character of the bonds named to another from time to time as the mayor and council may direct, until such time before the maturity of outstanding obligations as may be necessary to dispose of the same in order to meet such obligations at maturity.
(Ga. L. 1910, p. 100, §§ 1, 2; Code 1933, §§ 87-701, 87-702; Ga. L. 1983, p. 3, § 57.)
- For note discussing and comparing the prudent man rule and the legal list rule in trustee investment, see 15 Mercer L. Rev. 530 (1964).
Under this section, the municipality is "required" to invest the funds as stipulated. No discretion is left to the municipal authorities. Century Indem. Co. v. Fidelity & Deposit Co., 175 Ga. 834, 166 S.E. 235 (1932) (see O.C.G.A. § 36-38-1).
Law with regard to investment of sinking funds of municipality differs from that in case of funds held by county treasurer. Century Indem. Co. v. Fidelity & Deposit Co., 175 Ga. 834, 166 S.E. 235 (1932).
- If the fund is loaned to a bank on a time certificate, by the municipal officers, such contract of loan is illegal and void, as contrary to this section, and will not preclude the municipality from taking steps, before the maturity of such certificate, to compel the bank to turn over the certificate to the city, such bank being the designated depository of the funds of the city, and having knowledge that the fund so loaned is the sinking fund of the city. Hogansville Banking Co. v. City of Hogansville, 156 Ga. 855, 120 S.E. 604 (1923) (see O.C.G.A. § 36-38-1).
- When a sinking fund, collected by taxation for the purpose of retiring bonded indebtedness, is deposited in a bank in violation of the provisions of this section, no effectual contract exists between the bank and the municipality as a depositor. The municipality cannot attempt to legalize the attempted contract by a later ratification. Town of Douglasville v. Mobley, 169 Ga. 53, 149 S.E. 575 (1929) (see O.C.G.A. § 36-38-1).
Cited in Union Banking Co. v. City of Douglas, 175 Ga. 82, 165 S.E. 54 (1932); Union Banking Co. v. City of Douglas, 177 Ga. 637, 171 S.E. 131 (1933).
- 64A C.J.S., Municipal Corporations, §§ 2184, 2185.
- Liability of officer for loss of sinking fund through failure of bank, 25 A.L.R. 1358.
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