Honorable Mike Todd State Representative 333 West Court Street Paragould, AR 72450
Dear Representative Todd:
This official opinion is in response to your letter in which you ask the following two questions:
1. Does Act 35 of 1979 allow rural fire districts to borrow money under Ark. Stat. Ann. 20-912?
2. Does the limit of $50,000 in Ark. Stat. Ann. 20-912 pertain to the sum of all notes owed by the district?
The answer to your first question is yes. Ark. Stat. Ann. 20-912 (1985 Cum Supp.) provides as follows:
In order to acquire equipment and to do the work, the Board may issue the negotiable notes of the district signed by the members of the Board and bearing a rate of interest not exceeding eight percent (8%) per annum, and may pledge and mortgage a portion of the future annual benefit assessments as collected for the payment thereof.
Therefore, in order to acquire equipment and to do the work, the Board does have the authority to issue negotiable notes. A "note" is defined in the Uniform Commercial Code in Ark. Stat. Ann. 85-3-104 (1961 Addendum), as follows:
(2) A writing which complies with the requirements of this section is:
(d) A "note" if it is a promise other than a certificate of deposit.
In order for a note to be negotiable it must be in writing and contain the following requirements.
(1) Any writing to be a negotiable instrument within this article [chapter] must:
(a) Be signed by the maker or drawer; and
(b) Contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by this article [chapter]; and
(c) Be payable on demand or at a definite time; and
(d) Be payable to order or to bearer.
In response to your second question, Ark. Stat. Ann. 20-912 (1985 Cum. Supp.), provides as follows:
No district created hereunder shall have notes outstanding at any one time in excess of fifty thousand dollars ($50,000).
Since the above provision of Ark. Stat. Ann. 20-912 (1985 Cum. Supp.), providers that notes shall not be in excess of fifty thousand dollars ($50,000) it would appear that in answer to your second question that the fifty thousand dollars ($50,000) limit applies to the sum of all notes.
The foregoing opinion which I hereby approve was prepared by Assistant Attorney General Rick D. Hogan.