Endowment Fund; Sale of Real Property; Disposition of Proceeds

Subject:

Requested By: Grace W. Wagoner University Property Officer

Question: Can the University of North Carolina at Chapel Hill sell real property which was acquired by deed of gift and turn the proceeds from the sale over to the endowment fund of the institution?

Conclusion: No. However, with the approval of the Governor and Council of State as provided in Chapter 146 of the General Statutes, title to the lands in question could be conveyed to the trustees of the endowment fund. The trustees could sell the property and retain the proceeds from the sale.

In December of 1973, certain lands were conveyed to the University of North Carolina at Chapel Hill by deed of gift. The University desires to sell this land and turn the proceeds over to the endowment fund of the University. An opinion has been requested with regard to whether the net proceeds from such a sale could be retained by the University for its use or if the funds would go into the General Fund pursuant to G.S. 146-30.

All sales of real property by the Board of Governors of the University of North Carolina are subject to the provisions of Chapter 146 of the General Statutes. G.S. 116-13. Under G.S. 146-30 as amended the proceeds of a sale of real property by the University would go into the General Fund. 46 N.C.A.G. 40; 46 N.C.A.G. 51. However, there appears to be one method by which the endowment fund could receive the proceeds from a disposition of this property.

G.S. 116-36, which relates to endownment funds, was rewritten by Chapter 506 of the 1977 Session Laws. G.S. 116-36(d) specifically authorizes the trustees of the endowment fund of each constituent institution of the University of North Carolina to receive and administer as part of the endowment fund property that may come to them from the Board of Governors. There are certain exceptions to this provision but they are not applicable to the present inquiry. G.S. 116-36(g) authorizes the trustees of the endowment funds to buy, sell, lend, exchange, lease, transfer or otherwise dispose of or acquire property, real or personal, and in so doing they are not subject to the provisions of Chapter 143 and 146 of the General Statutes.

Thus, the lands in question could be conveyed to the trustees of the endowment fund. Such a conveyance would be subject to the approval of the Governor and Council of State as provided in Chapter 146 of the General Statutes, and the deed of conveyance would have to be executed in the manner provided therein. See G.S. 116-13. Once title to the property is vested in the trustees of the endowment fund, the provisions of G.S. 146-30 would not be applicable to a sale of the

property. G.S. 116-36(g).

It should be noted that the above opinion applies only to lands donated to the University prior to June 8, 1977. G.S. 116-36(j), which became effective on that date provides:

"(j) Any gift, devise, or bequest of real or personal property to a constituent institution of the University of North Carolina or to the University of North Carolina or to the University of North Carolina Press shall be presumed, nothing to the contrary appearing, a gift, devise, or bequest, as the case may be, to the endowment fund of the respective institution or agency."

Nothing else appearing, this statute would automatically transfer title to lands acquired by gift, devise or bequest by a constituent institution, the University, or the University Press to the endowment fund of that institution or agency by operation of law. The disposition of such properties would be governed by G.S. 116-36 rather than Chapter 146 of the General Statutes.

We are of the opinion that the provisions of G.S. 116-36(j) would not apply to properties donated, devised or bequeathed to the University prior to June 8, 1977. There is nothing in this statute to indicate that the Legislative intent was for the statute to operate retroactively. Ordinarily, a statute will be given prospective effect only and will not be construed to have retroactive effect unless such intent is clearly expressed or arises by necessary implication from its terms. Housing Authority of Durham v. Thorpe, 271 N.C. 468, 157 S.E. 2d 147 (1967). Ordinarily, an intention to give a statute a retroactive operation will not be inferred. Smith v. Mercer, 276 N.C. 329, 172 S.E. 2d 489 (1970).

Rufus L. Edmisten Attorney General

Roy A. Giles, Jr. Assistant Attorney General