Opinion 99 - 7


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

FOREIGN FIRE INSURANCE TAXES -- Particular Uses (in general) -- Recipients (when fire district treasurer is proper recipient)

INSURANCE LAW, §§9104, 9105: Assuming there is no special act providing otherwise, a fire district treasurer would be the proper recipient of foreign fire insurance tax moneys if the fire district fire department has no treasurer. Except as provided by special act, foreign fire insurance tax moneys may be expended for any purpose, other than an illegal purpose or a purpose contrary to public policy, which the members of the fire department or company, as the case may be, determine to be for the benefit of the fire department or company.

This is in response to your letter asking whether foreign fire insurance tax moneys are payable to a fire district. You also inquire as to the purposes for which such moneys may be spent.

The distribution and use of foreign fire insurance tax moneys is governed generally by Insurance Law, §§9104 and 9105. These sections state that except as provided in a "special law",(1) foreign fire insurance tax moneys must be paid to the treasurer or other fiscal officer of the fire department or, "if such fire department does not have a treasurer or other fiscal officer then to the fiscal officer of the authorities having jurisdiction and control of the fire department" (Insurance Law, §§9104[a][1]-[3], 9105[d][2][B]-[D]). In a multi-company fire department, the treasurer or fiscal officer receiving the foreign fire insurance tax moneys must, in turn, distribute the amount received to the companies constituting the fire department (Insurance Law, §§9104[a][4], 9105[d][2][E]). Each fire department or fire company that receives foreign fire insurance tax moneys must use them for the benefit of the department or company, as determined by the membership of the department or company (Insurance Law, §§9104[f][1], 9105[d][3]), although a fire company in a multi-company fire department is not precluded from paying all or a part of its foreign fire insurance tax moneys to the fire department of which it is part (see Insurance Law, §§9104[f][1], 9105[d][3][A]). The provisions of sections 9104 and 9105 may not be changed, modified or amended by any charter, local law, ordinance, resolution or regulation (see Insurance Law, §§9104[g], 9105[e]).

In the case of a fire district fire department, the fire district treasurer would be "the fiscal officer of the authorities having jurisdiction and control of the fire department" for purposes of Insurance Law, §§9104 and 9105 (see Not-For-Profit Corporation Law, §1402[e][1]; Town Law, §§176[10],[11]; 176-b; 177). Accordingly, assuming there is no special act providing otherwise, a fire district treasurer would be the proper recipient of foreign fire insurance tax moneys if the fire district fire department does not have its own treasurer.(2) In such cases, the fire district treasurer should account for the moneys in the district's trust and agency fund (Office of the State Comptroller, Financial Information for Fire District Officials, Chapter 2, Uniform System of Accounts for Fire Districts, Trust and Agency Fund, p 2-T-8; see General Municipal Law, §36).

With respect to the purposes for which such moneys may be spent, section 9104 and 9105, as noted, provide that these moneys must be used for the benefit of the fire department or company, as determined by the membership of the department or company. In discussing this provision, this Office has expressed the opinion that, except as provided by special act, foreign fire insurance tax moneys may be expended for any purpose, other than an illegal purpose or a purpose contrary to public policy, which the members of the fire department or company, as the case may be, determine to be for the benefit of the fire department or company (see e.g., 1995 Opns St Comp No. 95-14, p 29, may be used to purchase a computer, and for ceremony to dedicate new firehouse and fire apparatus; 1989 Opns St Comp No. 89-16, p 34, may be used for publication of fire department or company newsletter; 1987 Opns St Comp No. 87-88, p 130, loans to volunteer firefighters not proper use; 1982 Opns St Comp No. 82-10, p 12, direct cash payments to firefighters not proper use; 1981 Opns St Comp Nos. 81-49 and 146, pp 51 and 151, respectively, may be used for land for firefighters' park and installation dinner; 1979 Opns St Comp No. 79-627, p 120, may be used for fund-raising expenses of firefighters' association). We have also concluded that the treasurer having custody of foreign fire insurance tax moneys should not permit such moneys to be expended for a purpose that the treasurer, in good faith, believes to be illegal or improper, even if the expenditure has been approved by a majority of the membership, because the treasurer could be held liable for the expenditure of such moneys for an illegal or improper purpose (Opn No. 95-14, supra; Opn No. 89-16, supra; 1981 Opns St Comp No. 81-389, p 426; see also Opn No. 87-88, supra; Opn No. 82-10, supra; Opn Nos. 81-49 and 146, supra; Opn No. 79-627, supra; 1979 Opn St Comp No. 79-680, p 138). Each proposed expenditure must be examined on a case-by-case basis, applying the above principles.

Therefore, assuming there is no special act providing otherwise, a fire district treasurer would be the proper recipient of foreign fire insurance tax moneys if the fire district fire department has no treasurer. Except as provided by special act, foreign fire insurance tax moneys may be expended for any purpose, other than an illegal purpose or a purpose contrary to public policy, which the members of the fire department or company, as the case may be, determine to be for the benefit of the fire department or company.

October 8, 1999
Lewis E. Watson, Chair
Ringgold Fire District

1. Typically, such special laws are acts of the State Legislature incorporating an exempt volunteer firefighters' benevolent association and authorizing that association to receive and expend foreign fire insurance tax moneys. For purposes of this opinion, we assume no special act is applicable.

2. For purposes of this opinion, we need not discuss the circumstances under which the office of treasurer may be established for a fire district fire department.