A Huron business association offered to donate a heating system for the State Fair Hippodrome, paying for installation and getting nothing in return except the chance to rent the building later like anyone else. Can the State accept the gift, and what's the proper process?

Plain-English summary

A nonprofit association of businessmen in Huron offered the South Dakota State Fair Board a substantial gift: installation of a heating system for the Hippodrome on the State Fair Grounds. The donors proposed five conditions, all designed to make the gift unencumbered. The association would pay full cost of equipment and installation. The State Engineer would have to approve the equipment and supervise installation. Upon installation, the equipment would become irrevocably state property and a fixture of the building. No consideration would flow back to the donor. And the State Fair Board would retain complete jurisdiction over use and rental of the Hippodrome, with no booking priority given to the donor.

The State Fair Board asked the AG whether the State could accept the gift, whether any further conditions were needed, and what the proper acceptance process was.

The AG said the state could accept the gift and no further conditions were necessary. He regarded the gift under the stated conditions as absolute and unencumbered. SDC 1960 Supp. 55.1102 governed gifts to the state. Under that statute, the Governor received gifts and reported them to the State Board of Finance, which could accept or reject. Acceptance vested title in the state.

The AG laid out the recommended administrative steps:

1. Prepare a gift document describing the equipment and incorporating the five conditions, executed by the donor association.

2. Have the donor association obtain the State Engineer's approval of the equipment and proposed installation method before executing the gift document, and attach a copy of that approval.

3. Have the State Fair Board approve and agree to accept the gift, with a copy of the Board's approval attached.

4. Submit the gift document with all attachments to the Governor.

5. The Governor reports the gift to the State Board of Finance.

6. If the Board accepts, the gift becomes final.

7. Only then should actual installation proceed.

The AG expressly recommended completing the approvals and State Board of Finance decision before any actual installation.

Currency note

This opinion applied SDC 1960 Supp. 55.1102 in 1968. Check current South Dakota law before using its acceptance procedure for a proposed gift today.

What the opinion meant at the time

For the State Fair Board, the AG recommended approving the gift and attaching a copy of that approval to the gift document. The State Board of Finance then had to decide whether to accept or reject it.

For the Huron association, the AG found the stated conditions adequate without further restrictions. He recommended obtaining the State Engineer's approval before signing the gift document.

For another proposed gift to the state, the quoted statute describes the Governor's receipt and report to the State Board of Finance for acceptance or rejection. The AG's approval of this heating-equipment gift rested on its stated conditions; the opinion did not decide whether different terms would be acceptable.

The association offered to pay the full installation cost and receive no consideration or rental priority. Those terms were part of the gift the AG described as absolute and unencumbered.

For the State Engineer, the proposed equipment and method of installation were subject to examination, supervision, and approval. The AG recommended obtaining that approval before the association executed the gift document.

Common questions

Q: What if the donor had insisted on a plaque or naming credit?
A: The opinion did not address plaques or naming credit. It approved the described gift, whose terms gave the donor no consideration or rental priority. It did not decide whether an acknowledgment would change the result.

Q: Could the gift have been rejected even if all conditions were met?
A: Yes. The quoted statute assigned the State Board of Finance the decision to accept or reject a gift reported by the Governor. The opinion did not predict how the board would decide.

Q: What if the heating equipment turned out to be defective after installation?
A: Under the donor's third condition, the equipment became irrevocably state property and a fixture of the building once installed. The opinion dealt only with whether and how the state could accept the gift; it did not address warranty, repair, or who would bear the cost of a later defect.

Q: Did the State Fair Board need to consult anyone besides the State Engineer before approving?
A: The AG recommended State Engineer approval of the equipment and installation method, followed by State Fair Board approval attached to the gift document. The document would then go to the Governor for reporting to the State Board of Finance. The opinion did not specify other reviewers.

Q: Why did the Governor have to be involved at all?
A: The quoted statute directed the Governor to receive gifts to the state and report them to the State Board of Finance for acceptance or rejection. The AG recommended following that sequence for this gift.

Q: When should installation begin if the State Fair Board approves this gift?
A: The AG recommended sending the gift document and approvals to the Governor, who would report the gift to the State Board of Finance. He said the board's acceptance or rejection, and the other approvals, should be completed before any actual installation. The association's offer placed the installation expense on the association.

Background and statutory framework

The State Fair Board described an offer from a nonprofit association of Huron businessmen to install heating equipment in the Hippodrome at its own expense. The request said heating would permit year-round rental of the building, including possible rentals to the donor. The proposed terms reserved control of use and rental to the Fair Board and gave the donor no priority.

The AG quoted SDC 1960 Supp. 55.1102: the Governor was directed to receive gifts to the state and report them to the State Board of Finance, whose acceptance would pass title to the state. The AG considered this proposed gift absolute and unencumbered under its stated terms. His recommended approvals and acceptance sequence was to be completed before installation.

Citations and references

Statutes:

• SDC 1960 Supp. 55.1102 (gifts to the state; Governor and State Board of Finance procedure)

Source

• Landing page: https://atg.sd.gov/OurOffice/OfficialOpinions/opinionhtml.aspx?id=1716

Original opinion text

Fair Board. Acceptance of a gift by the State

You have requested an opinion on the following factual situation:

"The South Dakota State Fair Board has advised me that a nonprofit association of businessmen in the City of Huron has offered to present to the State a gift consisting of the installation of heating equipment for the Hippodrome on the State Fair Grounds. "It is my understanding that this offer would include the following conditions and premises:

1. That equipment sufficient and necessary to heat the Hippodrome building would be installed at the sole expense of the association.

2. That the equipment as well as the installation thereof would be subject to the examination, supervision, and approval of the State Engineer.

3. That upon installation, the gift would be irrevocably and unconditionally the sole property of the state of South Dakota and a fixture of the building in which it had been installed.

4. That no conditions, premises, or consideration of any character would be given by the State Fair Board or the state of South Dakota to the donor therefor.

5. That sole and complete jurisdiction with respect to the use and rental of the Hippodrome building would remain the jurisdiction of the State Fair Board and that no priority with respect to such use or occupancy would be given either directly or indirectly to the donor as a result of their proposed gift.

"It goes without saying that the installation of the heating equipment in the Hippodrome building would be a valuable asset and would permit the utilization of this structure throughout the entire year by means of lease agreements entered into by the State Fair Board. Lessees requesting periodic rental of the building would, undoubtedly, include the proposed donor."

You have asked the following question:

"May the State of South Dakota accept the proposed gift under the terms and conditions hereinbefore set forth?"

You have also requested advice on the following:

"If it is your belief that the imposition of further conditions or restrictions might cause such a gift to be proper and legal, I would likewise appreciate your indication as to the nature of such additional conditions or restrictions.

"In the event it might be your opinion that such a gift could be legally accepted by the state of South Dakota, would you kindly advise the exact and formal manner by which such acceptance should be made."

SDC 1960 Supp. 55.1102 reads as follows:

"Whenever any grant, devise, bequest, donation, or gift, or assignment of money, or chose in action, of any property real or personal, shall be made to this state, the Governor is directed to receive the same, and shall report the same to the State Board of Finance for acceptance or rejection; and when the State Board of Finance shall accept the same, the title thereto shall pass to the state, and the state may, when necessary, commence proceedings for the recovery of such property."

Under the conditions and premises you have set forth, it would appear that the gift of the heating equipment to the State of South Dakota is absolute without any encumbrances whatever, therefore, it is my opinion that the State of South Dakota may accept such gift.

It is also my opinion that conditions you have set forth are adequate and that no further conditions or restrictions are necessary.

It is recommended that a document be prepared setting forth the description of the equipment included in the gift with the conditions set forth above included in such document with such document executed by the Association.

It is also recommended that such Association obtain approval of the equipment of the proposed method of installation from the State Engineer prior to executing the gift document. A copy of such approval should be attached to the gift document.

It is also recommended that the State Fair Board approve and agree to accept the gift and a copy of their approval be attached to the gift document.

After the approval is accomplished, then the proposed gift with the approvals attached should be submitted to you, and you should then report the same to the State Board of Finance for acceptance or rejection. If the State Board of Finance accepts such gift, then such gift would become final. All of this should be accomplished before any actual installation is made.