Could the Connecticut Bar Foundation invest lawyer trust account interest in the state investment fund?

Plain-English summary

In June 1993, Connecticut’s AG concluded that the Connecticut Bar Foundation could not invest Interest on Lawyers’ Trust Account (IOLTA) money in the treasurer’s Short-Term Investment Fund. The Foundation administered the IOLTA program by judicial appointment, but it remained a private nonprofit corporation. The statute listed the funds and entities eligible to use the state investment pool, and the Foundation was not among those named.

The AG also considered the catchall for state “agencies, instrumentalities and political subdivisions.” He said the Foundation was not an agency merely because it administered a program established by law. It had not been created as a government body or substantially supported by the state treasury, so it was not an instrumentality. It also lacked the territory, local-government function and self-government powers associated with a political subdivision. Because it fit none of the authorized categories, its IOLTA funds could not enter the pool under the statutes then in force.

Treasury officials at the time

The opinion confined STIF participation to the statutory categories and excluded the Foundation despite its public-interest work.

Bar Foundation administrators at the time

The Foundation’s appointment to administer IOLTA did not turn the private corporation into a state body eligible for this investment fund.

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could the Bar Foundation use Connecticut’s Short-Term Investment Fund for IOLTA money?
A: No. The AG said the Foundation was not listed among eligible entities and did not fit the statute’s government-entity category.

Q: Did running a court-appointed IOLTA program make the Foundation a state agency?
A: The AG said no. Its private nonprofit status and lack of statutory creation kept it outside the agency and instrumentality categories he examined.

Q: Was the Foundation a political subdivision of Connecticut?
A: No. It had none of the local-government traits the AG identified, such as a defined territory or subordinate self-government.

Background and statutory framework

Conn. Gen. Stat. § 3-27a established STIF, while § 3-27b identified participating entities. The AG read their specific enumeration and general government-entity language together. The IOLTA program was established under a separate statute, but that did not expand the investment fund’s eligibility list.

Citations and references

Statutes: Conn. Gen. Stat. § 3-27a; Conn. Gen. Stat. § 3-27b.

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/1993-formal-opinions/honorable-joseph-m-suggs-jr---office-of-the-treasurer---1993010-formal-opinion-attorney-general-of-c

Original opinion text

Honorable Joseph M. Suggs, Jr. , Office of the Treasurer , 1993-010 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

June 8, 1993

Honorable Joseph M. Suggs, Jr.

State Treasurer

Office of the Treasurer

55 Elm Street

Hartford, CT 06106-1773

Dear Mr. Suggs:

This letter responds to the March 25, 1993, inquiry of Assistant Treasurer Lawrence A. Wilson wherein he asked whether the Connecticut Bar Foundation, Inc. may invest Interest On Lawyers' Trust Account ("IOLTA") funds in the State's Short-Term Investment Fund ("STIF").

The Connecticut Bar Foundation, Inc. ("CBF") is a nonprofit corporation incorporated under the laws of this state. We have been informed by the judicial department that the CBF is the organization appointed by the judges of the Superior Court to administer the program established under Conn. Gen. Stat. § 51-81c(a) for the use of interest earned on lawyers' clients' funds accounts. See Conn. Gen. Stat. § 51-81c(b) and Rules of Professional Conduct, Rule 1.15(d)(4)(A), (C)(5).

STIF is established under Conn. Gen. Stat. § 3-27a. It is an investment fund administered by the State Treasurer. Participation in STIF is determined by statute. Conn. Gen. Stat. §§ 3-27a and 3-27b authorize participation in the fund by specific entities. They are: the general fund, the state bond funds, the state special transportation fund, the local bridge revolving fund, the educational excellence trust fund, the residential property tax revaluation relief fund, the municipal abandoned vehicle trust fund, trust funds administered by the Treasurer, all other such funds the moneys of which by law the Treasurer is responsible for investing, the Connecticut Housing Finance Authority, the Connecticut Student Loan Foundation and all agencies, instrumentalities and political subdivisions of the State.

Since the CBF is not specifically named in the foregoing statutes, our analysis therefore focuses on the phrase "all agencies, instrumentalities and political subdivisions of the state" as provided in Conn. Gen. Stat. § 3-27b. We conclude for the following reasons, however, that CBF does not fall within any of these categories.

As a private, nonprofit corporation, established under Connecticut's corporation law, the CBF cannot be said to be an agency of the State. Likewise, the CBF is not an instrumentality of the State. Commissions and boards created by statute may be considered to be instrumentalities of the State. See, e.g., BV Engineering v. Univ. of Calif., 657 F. Supp. 1246, 1247 (C.D. Cal. 1987). Instrumentalities are characterized as governmental bodies possessing a large degree of dependence upon the State's fisc for their establishment, maintenance and operation. See Boggs v. Board of Ed. of Clay County, 244 S.E.2d 799, 802 (W.Va. 1978). CBF is not created by statute nor does it depend to "a large degree upon the State's fisc..." Id. at 802.

Lastly, we conclude that the CBF possesses none of the attributes of a political subdivision of the State. In Norwalk v. Daniele, 143 Conn. 85, 119 A.2d 732 (1955), the history of the phrase "the state or any subdivision thereof" was discussed. The court concluded at page 88:

The word "state" means "a body of people occupying a definite territory and politically organized under one government." McLaughlin v. Poucher, 127 Conn. 441, 447, 17 A.2d 767; see also Terry v. Olcott, 4 Conn. 442, 445. On this theory, the subdivision of a state would be a body of people less in number than the total number in the state, politically organized, and occupying a part of the territorial area of the state - hence a city, borough or town.

Accord, State v. Chiarizio, 8 Conn. App. 673, 688, 514 A.2d 370 (1986); State ex rel. Maisano v. Mitchell, 155 Conn. 256, 263, 231 A.2d 539 (1967).

The attributes which are generally regarded as distinctive of a political subdivision are that it exists for the purpose of discharging some function of local government, that it has a prescribed area, and that it possesses authority for subordinate self-government through officers selected by it. See Sachem's Head Property Owners' Assn. v. Guilford, 112 Conn. 515, 517, 152 A. 877; State ex rel. Malkin v. McMahon, 88 Conn. 461, 463, 469, 91 A. 445; 1 McQuillin, Municipal Corporations (3d Ed.) § 2.07.

Dugas v. Beauregard, 155 Conn. 573, 578, 236 A.2d 87 (1967). The CBF does not have these attributes of a political subdivision.

We are guided by the maxim of statutory construction which states "expressio unius est exclusio alterius." In other words, where the legislation expresses something affirmatively, that which is not expressed is to be excluded. See State v. Ovitz, 217 Conn. 648, 654, 588 A.2d 127 (1991) citing 2 A.J. Sutherland, Statutory Construction (4th Ed. Sands 1984) § 47.23. Because the statutes regulating STIF, Conn. Gen. Stat. §§ 3-27a and 3-27b, specifically set forth the entities which may lawfully participate in STIF, the fact that CBF is not specifically mentioned and that CBF does not come within the meaning of the phrase "all agencies, instrumentalities and political subdivisions of the state," clearly means that the CBF is ineligible to invest IOLTA funds in STIF.

We trust this answers your question.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

William J. Prensky

Assistant Attorney General

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