Did interest earned on a Texas prosecutor's hot-check fund stay in that fund or go to county general revenue?

Texas AG Opinion JM-632: Hot-Check Fund Interest

Plain-English summary

A criminal district attorney asked whether bank interest earned on a prosecutor's article 53.08 hot-check fund belonged to that special fund or to the county's general revenue fund.

JM-632 concluded that the interest had to be credited to county general revenue. It reasoned that the hot-check fund did not have enough characteristics of a trust fund. The prosecutor administered it for limited office expenses, but no trustee held it for an identified beneficiary group.

The opinion distinguished statutory spending restrictions from a true trust. It treated the article 53.08 fund as a statutory county fund and concluded that depository interest did not become part of its principal.

Currency note

This opinion was issued in 1987. 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.

Subsequent treatment

The official landing page labels JM-632 "Modified by JC-0062." Source: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0632

JC-0062 retained the severance result:

"Because section 113.021(c) of the Local Government Code severs the interest from statutory special funds belonging to the county, we conclude that interest on a prosecutor's hot-check fund must be severed and applied to the benefit of the county as a whole. We thus concur with Attorney General Opinion JM-632 (1987)."

It also limited what it decided about the destination:

"The county's general fund is a permissible beneficiary, but we need not consider here whether it is the sole permissible beneficiary."

JC-0062 replaced JM-632's trust-fund rationale with a county-ownership analysis:

"In our opinion, the critical issue in determining whether interest may be severed from the principal of a fund created by statute under section 113.021 of the Local Government Code depends not upon whether the fund is held in trust, but whether the fund belongs to the county."

It concluded, "To the extent the reasoning of Attorney General Opinion JM-632 is inconsistent with this opinion, it is modified." Source for the JC-0062 quotations: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0062

Common questions

What did JM-632 say should happen to the interest?

It said the interest should be deposited in the county's general revenue fund rather than credited to the prosecutor's hot-check fund.

Why did JM-632 say the hot-check fund was not a trust fund?

The prosecutor administered the fund, but the statute did not appoint a trustee, impose an additional fiduciary duty, or identify a specific beneficiary group comparable to other statutory trusts.

Did JC-0062 overrule the result?

No. It concurred with severing the interest and using it for the county's benefit, but modified the legal reasoning.

Did JC-0062 require the general fund as the only destination?

No. It called the general fund permissible and expressly declined to decide whether it was the sole permissible beneficiary.

Background and statutory framework

Article 53.08 authorized prosecutors to collect fees for processing qualifying bad checks and required the fees to be deposited in a county-treasury special fund. The prosecutor controlled expenditures for office salaries and expenses but could not supplement the prosecutor's own salary.

JM-632 compared that arrangement with statutes governing sales-tax, transit, unemployment, and firefighter-retirement funds. It concluded that spending restrictions alone did not establish a trust.

JC-0062 later explained that article 53.08 had been renumbered as Code of Criminal Procedure article 102.007 and that Local Government Code section 113.021(c) expressly governed severance of the interest.

Citations and references

Statutes:

• V.T.C.S. articles 1709 and 1709a
• Texas Code of Criminal Procedure article 53.08
• Later treatment: Texas Local Government Code section 113.021(c) and Code of Criminal Procedure article 102.007(f)

Cases:

• Board of Managers of the Harris County Hospital District v. Pension Board of the Pension System for the City of Houston, 449 S.W.2d 33 (Tex. 1969)
• Woods v. Reilly, 218 S.W.2d 437 (Tex. 1949)
• Devon v. City of San Antonio, 443 S.W.2d 598 (Tex. Civ. App. - Waco 1969, writ ref'd)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0632
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1987/jm0632.pdf
• Subsequent opinion: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0062

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

February 18, 1987

Honorable Barry L. Macha
Criminal District Attorney
Courthouse
Wichita Falls, Texas 76301

Opinion No. JM-632

Re: Disposition of interest earned on "hot check" fund administered by a criminal district attorney

Dear Mr. Macha:

Interest generated by the deposit of county money is deposited in the county treasury pursuant to articles 1709 and 1709a, V.T.C.S., the latter of which specifically provides that "[s]uch deposit of funds in the county treasury shall not in any wise change the ownership of any fund so deposited. . . ." V.T.C.S. art. 1709a, § 2(a). Article 53.08 of the Texas Code of Criminal Procedure authorizes a county attorney, a district attorney, or a criminal district attorney to collect a fee if his office collects and processes a check whose issuance constitutes an offense under either sections 32.41, 31.03, or 31.04 of the Penal Code. You wish to know whether the interest earned by the deposit of the money in this so-called "hot check" fund accrues to the credit of the fund itself or to the credit of the county's general revenue fund. We conclude that the funds created by article 53.08 do not bear sufficient indicia of a trust to require the accrual of any depository interest earned by the fund to be credited to the fund itself. We conclude that such interest must be credited to the county's general revenue fund.

Subsection (e) of article 53.08 of the Code of Criminal Procedure sets forth the following:

(e) Fees collected under this article shall be deposited in the county treasury in a special fund to be administered by the county attorney, district attorney, or criminal district attorney. Expenditures from this fund shall be at the sole discretion of the attorney, and may be used only to defray the salaries and expenses of the prosecutor's office, but in no event may the county attorney, district attorney, or criminal district attorney supplement his or her own salary from this fund. Nothing in this Act shall be construed to decrease the total salaries, expenses, and allowances which a prosecuting attorney's office is receiving at the time this Act takes effect.

Opinions issued by this office consistently have maintained that interest earned by the monies deposited by political subdivisions and held in trust becomes part of the principal and, consequently, part of the money that generated the interest. See Attorney General Opinions JM-566, JM-549, JM-539 (1986); JM-323, JM-321, JM-306, JM-300 (1985); MW-82 (1979); H-1040 (1977); M-408 (1969). Cf. Attorney General Opinions MW-338 (1981); H-1107 (1977). These opinions indicate that, in order to be characterized as trust funds, the funds in question should reflect, among other things, (1) that they are administered by a trustee or trustees or by someone "in trust"; (2) that the funds neither are granted, in this instance, to the county in its sovereign capacity nor collected for the general operation of the county, and (3) that they are to be spent and invested for specific, limited purposes and for the benefit of a specific group of individuals.

Unlike, for example, the funds created under articles 1066c, 1118x, 1118y, 5221b-7, and 6243e, V.T.C.S. (which govern the local sales and use tax, metropolitan rapid-transit authorities, regional transportation authorities, unemployment compensation, and firefighters' relief and retirement, respectively), the funds created under article 53.08 of the Code of Criminal Procedure are not to be governed by a trustee or by any public officer "in trust." The monies are "administered by the county attorney, district attorney, or criminal district attorney," language that is in no material way different from that which reposes in the comptroller the responsibility to perform all functions incident to the administration of the bingo tax, see article 179d, § 24, V.T.C.S., the banking franchise tax, see article 266e, §§ (a), (d), V.T.C.S., and the mixed beverage tax, see section 205.03, Alcoholic Beverage Code. See Attorney General Opinion JM-566 (1986). Article 53.08 of the Code of Criminal Procedure does provide that "expenditures from this fund shall be at the sole discretion of the attorney" administering the fund, see Attorney General Opinion JM-313 (1985), but this language is intended to carve out an exception to the statutory provisions which confer such authority generally to the commissioners court. Such language does not impose any additional fiduciary duty on the administering attorney over and above that which normally devolves upon public officers.

It is true, of course, that article 53.08 of the Code of Criminal Procedure does not specify that the funds are granted to the county for its general operation in the way that the statutes governing the bingo tax, the banking franchise tax, and the mixed beverage tax do. See Attorney General Opinion JM-566 (1986). Rather article 53.08 specifies that expenditures from the fund

may be used only to defray the salaries and expenses of the prosecutor's office, but in no event may the county attorney, district attorney, or criminal district attorney supplement his or her own salary from the fund.

See Attorney General Opinion JM-313 (1985). But the language so limiting the funds differs in no material way from language typically found in the Appropriations Act directing the expenditure of state funds.

And finally, article 53.08 does not specify that the funds be held for a specific or identifiable group of individuals or recipients in the way in which the statutes governing the local sales and use tax, metropolitan rapid transit authorities, regional transportation authorities, unemployment compensation, and firefighters' relief and retirement do. See Attorney General Opinions JM-539 (1986); JM-306 (1985); MW-82 (1979). Article 53.08 specifies only that the funds are expended for particular purposes in language that, again, differs in no material way from language typically found in the Appropriations Act directing the expenditures of state funds. See, e.g., Board of Managers of the Harris County Hospital District v. Pension Board of the Pension System for the City of Houston, 449 S.W.2d 33 (Tex. 1969); Woods v. Reilly, 218 S.W.2d 437 (Tex. 1949); Devon v. City of San Antonio, 443 S.W.2d 598 (Tex. Civ. App. - Waco 1969, writ ref'd); Attorney General Letter Advisory No. 5 (1973).

We conclude that the funds created pursuant to article 53.08 of the Code of Criminal Procedure do not bear sufficient indicia to warrant calling them trust funds; rather, they are more accurately denominated statutory funds. Accordingly, we conclude that such funds are not entitled to be credited with interest earned by deposit of its monies; article 1709, V.T.C.S., requires that such interest be credited to the general revenue funds of the respective counties.

SUMMARY

The interest earned by the deposit of money received pursuant to article 53.08 of the Code of Criminal Procedure, the so-called "hot check" fund, must be deposited in the general revenue funds of the respective counties pursuant to article 1709, V.T.C.S.

JIM MATTOX
Attorney General of Texas

JACK HIGHTOWER
First Assistant Attorney General

MARY KELLER
Executive Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Jim Moellinger
Assistant Attorney General