"The remaining seventy-five percent (75%) [of my estate] ... to the City of Sault Sainte Marie, Michigan, for the exclusive purpose of the expansion of its present recreation system, playgrounds, and parks, or the acquisition of new recreation sites as the City shall determine in its sole discretion, for the use and benefit of the people of Sault Sainte Marie, Michigan. I request, but not as a condition of this bequest, the City of Sault Sainte Marie, Michigan, erect a suitable marker in one of the recreation areas where the funds are expended acknowledging that the work has been accomplished through the gift of Augusta Hursley Seal...."

"Any city ... may receive, own, and enjoy any gift of real or personal property, made by grant, devise, bequest, or in any other manner, for economic and community development purposes ... or for public parks, grounds, cemeteries, public buildings, or other public purposes, whether made directly or in trust, subject to the conditions, limitations, and requirements provided in the grant, devise, bequest, or other instrument."

"shall, according to the terms of a Declaration of Trust of the City Commission, solely control the Trust principal which it shall not allow to be diminished; control the distribution of the Trust income; to determine how the Trust funds will be invested; and direct the City Treasurer in the deposit, withdrawal, investment and disbursement of the Trust monies and to exercise all other duties of a fiduciary of the Trust in compliance with a Declaration of Trust and applicable laws."

"[T]he Trust Fund shall not be a part of any other City funds except to the extent the Board of Trustees disburse Trust income to the City for purposes consistent with the terms of the Declaration of Trust and the City Commission shall not have control of the Trust."

Your question may be stated as follows:

Where a trust fund established by a city to preserve the principal of a substantial bequest to the city for expansion of its park and playground system has a board of trustees to manage the trust fund, are the investment powers of the board of trustees limited to those authorized for municipalities and their boards by MCL 129.91; MSA 3.843(1), or is the board of trustees also authorized by MCL 555.201; MSA 26.85, to invest in common stocks and other investments not authorized by MCL 129.91; MSA 3.843(1), but included in the instrument establishing the trust fund?

"Powers of Trustees. In the administration of this Trust, the Trustees shall have the following powers, in addition to and not in limitation of the Trustee's common law and statutory powers, subject to any limitations which may be imposed by the laws of the State of Michigan and by the City Charter of the City of Sault Ste. Marie, such powers to be exercised in a fiduciary capacity in accordance with the general standards of trust administration imposed upon trustees:

"(b) To direct investment and reinvestment of the trust property as follows:

(i) Until such time as the Beneficiary [the city] and/or the Trustees receive an Opinion of the Attorney General of the State of Michigan approving the investment and reinvestment guidelines set forth in subsection (b)(ii) below, the Trustees shall invest and reinvest all of the trust property in accordance with the provisions of section 129.91, of Mich.Comp.Laws Ann., P.A. 1943, No. 20, as may be amended from time to time.

(ii) If approved by an Opinion of the Attorney General of the State of Michigan, the Trustees shall invest and reinvest the trust property as follows:

(1) Seventy (70%) percent of the trust property shall be invested in accordance with the provisions of section 129.91, of Mich.Comp.Laws Ann., P.A. 1943, No. 20, as may be amended from time to time, or in corporate bonds having the highest rating given by Standard and Poors Corporation, in such amounts as determined by the Trustees in their sole discretion.

(2) Thirty (30%) percent of the trust property shall be invested by the Trustees in any property or investments, including but not limited to common stocks, preferred stocks, real estate, mortgages and mortgage participations, in compliance with all applicable laws, rules and regulations."

"(1) The legislative or governing body of a county, city, village, township, or special assessment district, or an agency, board, or commission of a county, city, village or township, by resolution, may authorize its treasurer or other chief fiscal officer to invest surplus funds belonging to and under the control of the political subdivision, special assessment district, or agency, board, or commission of a county as follows:

(a) In bonds and other direct obligations of the United States or an agency or instrumentality of the United States.

(b) In certificates of deposit, savings accounts, deposit accounts, or depository receipts of a bank which is a member of the federal deposit insurance corporation or a savings and loan association which is a member of the federal savings and loan insurance corporation or a credit union which is insured by the national credit union administration, but only if the bank, savings and loan association, or credit union complies with subsection (2).

(c) In commercial paper rated at the time of purchase within the 3 highest classifications established by not less than 2 standard rating services and which matures not more than 270 days after the date of purchase. Not more than 50% of any fund may be invested in commercial paper at any time.

(d) In United States government or federal agency obligation repurchase agreements.

(e) In bankers' acceptances of United States banks.

(f) In mutual funds composed of investment vehicles which are legal for direct investment by local units of government in Michigan.

"(2) A county, city, village, township, or special assessment district investing funds under subsection (1) shall not deposit or invest the funds in a bank, savings and loan association, or credit union which is not eligible to be a depository of surplus funds belonging to the state under section 5 or 6 of Act No. 105 of the Public Acts of 1855, as amended, being sections 21.145 and 21.146 of the Michigan Compiled Laws." (Emphasis added.)

"Trust funds received by any person or corporation acting in a trust or fiduciary capacity and available for investment shall be invested at the time and in the manner specified in and by the agreement, instrument, or order creating or defining the trust or other holding. In the absence of investment specifications or limtitations in the agreement, instrument, or order, trust property or funds shall within a reasonable time be invested in [authorized investments listed, including common stocks, bonds and mortgages]...."

"The state shall not subscribe to, nor be interested in the stock of any company, association or corporation, except that funds accumulated to provide retirement or pension benefits for public officials and employees may be invested as provided by law; and endowment funds created for charitable or educational purposes may be invested as provided by law governing the investment of funds held in trust by trustees and other state funds or money may be invested in accounts of a bank, savings and loan association, or credit union organized under the laws of this state or federal law, as provided by law."

"Reading these two sections together, the intent of the people is clear. A city may invest surplus funds until needed for current requirements only as provided by law. Moreover, a city may not subscribe to nor be interested in the stock of any company with the sole exception that funds accumulated to provide retirement and pension benefits for public officials and employees of the city may be invested as provided by law."