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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.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 (publication of newsletter)

INSURANCE LAW, §§9104, 9105: Except as otherwise provided by a special act, the members of the fire department or, in the case of a multi-company fire department, the members of each company, must determine how foreign fire insurance tax moneys are to be used for the benefit of the department or company. However, the treasurer having custody of these moneys should not permit expenditures for illegal or improper purposes. Should the members decide to use these moneys to pay for the publication of a fire department or company newsletter, the moneys may be expended by the treasurer for that purpose.

You ask whether foreign fire insurance tax moneys may be expended to pay for the publication of a fire department newsletter.

Sections 9104 and 9105 of the Insurance Law, as amended by chapter 293 of the Laws of 1988, govern the use of foreign fire insurance tax moneys except as otherwise provided in any special law. Typically, such special laws are acts of the State Legislature incorporating an exempt volunteer firemen's benevolent association and authorizing that association to receive and expend foreign fire insurance tax moneys.

Sections 9104 and 9105 provide that the foreign fire insurance tax moneys of a fire department consisting of a single company must be used for the benefit of the department, as determined by the members of the department. Sections 9104 and 9105 also provide that the foreign fire insurance tax moneys of a multi-company fire department must be turned over to the companies comprising the department and used for the benefit of each company, as determined by the members of the company. This requirement, however, does not preclude a company from paying all or a portion of the tax to the fire department of which it is part.

Prior to the enactment of the 1988 legislation, we concluded in a series of opinions that foreign fire insurance tax moneys could not be expended for illegal purposes or purposes contrary to public policy (see e.g. 1987 Opns St Comp No. 87-88, p 130; 1982 Opns St Comp No. 82-10, p 12; 1981 Opns St Comp Nos. 81-49 and 146, pp 51 and 151, respectively; 1979 Opns St Comp No. 79-627, p 120). We also concluded that the treasurer having custody of foreign fire insurance tax moneys should not permit such moneys to be expended for a purpose which 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 conceivably be held liable for the expenditure of such moneys for an illegal or improper purpose (1981 Opns St Comp No. 81-389, p 426; see also Opn No. 87-88, supra; Opn 82-10, supra; Opn Nos. 81-49 and 146, supra; Opn 79-627, supra; 1979 Opn St Comp No. 680, p 138). We believe that these conclusions continue to be valid because the 1988 legislation did not change the general purpose for which foreign fire insurance tax moneys can be expended, nor did that legislation absolve treasurers having custody of such moneys from liability for permitting illegal or improper expenditures.

Thus, except where there is a special act of the State Legislature incorporating an exempt volunteer firemen's benevolent association and authorizing that association to receive and expend foreign fire insurance tax moneys, such 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. The treasurer having custody of the moneys, however, should not permit the moneys to be used for what he or she, in good faith, believes to be an illegal or improper purpose.

On the other hand, if a firemen's benevolent association has been created by special act and is authorized to receive payments of foreign fire insurance moneys, the moneys may be expended only in the manner prescribed by the special act (see e.g. 1983 Opns St Comp No. 83-120, p 151; 1981 Opns St Comp No. 81-328, p 357). Generally, such special acts provide that such moneys may only be used for the care and relief of indigent or disabled firemen; however, if a special act is applicable in a particular situation, the act should be carefully reviewed to determine exactly what it provides.

With respect to the expenditure of foreign fire insurance tax moneys in this instance, the members of the fire department or, if the company is part of a multi-company fire department, the members of this company must determine how these moneys are to be used for the benefit of the department or company. Should the members decide to use those moneys to pay for the publication of a fire department newsletter, it is our opinion that the moneys may be expended by the treasurer for that purpose.

April 18, 1989
Sandra Henry, Secretary
Breesport Volunteer Fire Company