FDIC Law, Regulations, Related Acts
4000 - Advisory Opinions
Insurance Coverage of Illinois Township Road District Funds
January 27, 1988
Roger A. Hood, Assistant General Counsel
This is in reference to your earlier correspondence seeking our opinion as to the status of funds of Illinois township road districts for purposes of federal deposit insurance.
You are advised that it is my opinion that deposits of a township road district would be separately insured from any deposits of the township in which it is located.
The status of township road districts as separate entities is not entirely free from doubt. The Illinois Attorney General's Opinion No. S-1083-May 12, 1976, states that township road districts are governmental entities separate and distinct from townships even though the board of township auditors has the authority to levy taxes for road purposes. The opinion noted that the Illinois Supreme Court in several cases held that the township board had no power or authority over roads in the township. The opinion also noted that, in giving the township board the authority to levy taxes for road purposes, the legislature did not intend to abolish township road districts as distinct governmental units. In Blazer v. Highway Commissioner of Marengo Tp., 93 Ill.App.2d 89, 235 N.E.2d 13 (App. Ct. 2 District 1968) the court recognized that an action for injuries and damage to an automobile allegedly suffered by reason of the negligence of a township highway commissioner in failing to maintain a road was properly brought against the office of highway commissioner of the township, and that the highway commissioner, as a quasi-public corporation, may be liable therefor.
The court said:
Our courts, on numerous occasions, have recognized a township highway commissioner as a quasi-public corporation, distinct and apart from the entity of the Town or Township. [citing cases]
On the other hand, the township board of auditors is the governing body of the township road district for purposes of the Social Security Enabling Act, and the township, not the township road district, has authority to levy taxes for road purposes.
In Eddings By Eddings v. Dundee Tp. Highway Commissioner Ill.App.2d, 478 N.E. 2d 288 (1985), the court considered the duty of care owned by the township to a jogger who was injured on a township road. The court drew no distinction between the township on the one hand and the township highway commissioner or the other. By implication the court recognized the township as the entity responsible for road maintenance, acting through its employee, the highway commissioner. In Bentley v. Saunemin Tp., 183 Ill.2d 10,413 N.E.2d 1242 (1980), the court recognized that the highway commissioner has the responsibility for maintaining township roads, but found that the township had breached its duty under the Highway Code of maintaining visibility of stop sign at an intersection. The township was held liable. Here again, by implication, the court recognized the highway commissioner as a township employee rather than as an employee of the township road district. It should also be noted that Ill. Ann. Stat. ch. 121, para 6-207 (Smith-Hurd 1960) provides that compensation of the highway commissioner, the district clerk and the district treasurer are paid from the general township funds, and that the highway commissioner is designated by Ill. Ann. Stat. ch. 121, para 6-112 (Smith-Hurd 1960) as an officer of the township where the road district is located.
Thus, neither the decided cases nor the Illinois statutes are totally consistent on the issue of the separate status of township road districts. It is unnecessary to resolve this issue, however, because a township road district meets the qualifications of a "principal department", as defined in Section 330.8(c) of FDIC's Regulations (12 C.F.R. 330.8(c)). Under that provision a principal department of a public unit is recognized as a separate political subdivision if its creation is expressly authorized by State statute, it exercises some function on government delegated to it by State statute, and it has funds which have been allocated to its exclusive use and control by statute or ordinance.
Township road districts are created pursuant to Ill. Ann. Stat. Ch. 121, para 6-102 (Smith-Hurd 1960). The duties of the highway commissioner of each road district are prescribed in Ill. Ann. Stat. ch. 121, paras. 6-201 to 6-201.19 and include road construction and maintenance, determination of tax levies, expenditure of road moneys, and hiring legal counsel. Ill. Ann. Stat. ch. 121, para. 6-801 (Smith-Hurd 1960) authorizes the highway commissioner to acquire lands and rights of way by purchase or eminent domain. These duties are long standing, recognized functions of government. Ill. Ann Stat. ch 121, para. 6-501 provides for the general tax levy for road purposes and states:
Such taxes when collected, shall be held by the treasurer of the district as the regular road fund of the district.
The taxes levied under this provision are proposed by the highway commissioner to the township board of trustees (formerly called the board of auditors), and, in whole or in part, certified to the county clerk where they are extended as road taxes against the taxable property of the road district.
Accordingly, the township road district meets the prescribed tests for a principal department to be recognized as a separate political subdivision and its time and savings deposits held by the same official custodian will be insured to the maximum amount of $100,000 separately from time and savings deposits of the township maintained by the same official custodian. Demand deposits will be similarly insured.