GILLUM v. JOHNSON (1936)

The petitioner has filed an application for a rehearing, not for the purpose of reopening the case, but for the purpose of propounding two questions which, it is stated, should be further discussed. The first query is whether the withdrawal of moneys by the secretary of the treasury as required by section 904, paragraphs (a) and (b), of the Federal Social Security Act (42 U.S.C.A. § 1104 (a, b) would be in contravention of any provision of the State Constitution.

We think it would necessarily follow from what is stated in the opinion that the peremptory writ could not properly issue if any provision of the State Consitution would prohibit the investment of moneys in the unemployment trust fund for the benefit of that fund in the manner provided by the federal-state plan. We find nothing in the State Constitution to prevent the Legislature from providing, as here, that the funds deposited by the State Treasurer in a duly designated national bank within this state be invested in interest-bearing securities and in effect designating the Secretary of the Treasury as the one to select those securities, subject, however, to the restriction that the securities so selected and deposited must be interest-bearing obligations of the United States or obligations the payment of which as to both principal and interest is guaranteed by the United States. If we mistake not, the obligations so required are considered the highest form of security. When the deposits are so made, the book account of the state of California is set up and maintained and when the funds therein are invested by the Secretary of the Treasury the custody of the securities representing the investment would properly be subject to the order of the Secretary of the Treasury as the conservator of the fund for the benefit of this state.

The second query is whether under section 22 of article 4 of the State Constitution the warrant of the state controller is required to authorize the Secretary of the Treasury to withdraw moneys in the unemployment trust fund for the investment for the benefit of the fund. The section referred to governs the withdrawal of money from the State Treasury, that is, upon warrant of the controller. It is assumed that the money in the unemployment fund in the State Treasury will be withdrawn for deposit in the unemployment trust fund of the United States only upon the warrant of the controller. When that warrant has been issued, the constitutional section has been complied with and the controller has discharged his function. There is nothing in the opinion to indicate that the controller has any authority over these funds after they have left the State Treasury and have been deposited in a duly designated national bank. If they should thereafter find their way back into the State Treasury in the course of the administration of the state act, the requirements of section 22 of article 4 would undoubtedly again attach. But that question is not involved here.

The respondent controller has raised a question as to the form which his warrant should take in order to make the proper deposit in a designated national bank within this state. As we view it, this is primarily an administrative question. It should be sufficient to say, however, that any form would be satisfactory which would indicate generally that the deposit is made in a duly designated depositary of the United States within this state for the separate book account of the state of California in the unemployment trust fund of the United States, and subject to the order of the Secretary of the Treasury of the United States as provided by the Federal Social Security Act, 42 U.S.C.A. § 301 et seq., and the State Unemployment Reserves Act. Stats. 1935, p. 1226.

The petition for rehearing is denied.

PER CURIAM.