Building and loan associations In Michigan ['01 ch.17] the laws regarding building and loan associations have been revised. The changes are chiefly in minor details. The name assumed must not be such as to cause the public to confuse it with another association. The existence of the association can not exceed 30 years. At least 50 shares must be subscribed for before the articles are filed with the recording officer. The par value of the stock can not be less than $25 nor more than $200, payable at a rate not to exceed $2 a month. Advance payments may be made. By a two-thirds vote of all the shares the stock may be increased or the articles of association changed. Upon 30 days' notice a stockholder may withdraw with such interest or proportion of profits as the bylaws may provide, less fines and pro rata losses. On shares less than one year old there is deducted actual expenses, not to exceed 50c per share. The rate of interest or profits can not exceed the net earnings. Only one half of the amount received during the month can be applied to withdrawals unless the directors order otherwise. If the withdrawals exceed amount applicable to them, then they are paid. off in the order of application. Within 60 days after the death of a stockholder his stock must be paid off, but no fines can be charged that mature after the holder's death, unless his representatives have assumed the payments that would have been due if there had been no death. Not more than two thirds of the funds on hand is applicable to the payment of matured stock, unless the directors decide to draw on the remainder. If a purchaser of a loan neglects to furnish acceptable security within a month, he forfeits his loan and is chargeable with one month's interest, the premium and all expenses necessarily incurred. If there is a default in making payments, after a loan is perfected, for four months, the directors may order a foreclosure, in which event the value of the shares held by the borrower and upon which the loan is made must be credited on the decree at the time it is entered. A borrower may pay off his loan on 30 days' written notice; in which event he is charged with the loan, all arrears of interest, premiums and fines, and is credited with the withdrawal value of the shares pledged to secure the loan. The balance, when received, is in full satisfaction of the loan. If the premium has been deducted from the loan and loan tions in a gross sum, and the borrower repays the loan before the Building expiration of the tenth year from its date, credit is given for associaone tenth of the premium paid for every year. A loan may be paid off with a withdrawal of the shares pledged. Within 60 days after the 1st of July, each association makes a detailed report to the secretary of state, as of June 30, of the business it has transacted. Once a year this officer makes a full and complete examination of each association in the state. He is given power to compel a delivery of an association's books. If it appears that an association is unsound, or is doing illegal business, he gives notice to the board of directors; and if it is not made sound, or such practice is not discontinued, he takes possession of its books and assets, and if resisted the attorney general assists him. An examiner is appointed, who reports to the secretary of state, and within the next 15 days he lays the condition of the association before the stockholders, who by a two-thirds vote may go into liquidation and elect from one of their number a conservator. The conservator takes charge of the association's affairs, the resolution of dissolution, and his name is reported to the secretary of state, who thereupon publishes notice of such resolution. The publication works the dissolution of the corporation. If the shareholders refuse to go into liquidation, the attorney general brings suit for a receiver. If a stockholder is in arrears for 30 days, the board of directors, after notice, may declare a forfeiture of his stock; its withdrawal value is then paid the shareholder; but fines, interest and premiums can not be assessed to exceed 1% a month on each dollar in arrears. Once a year the gross earnings must be ascertained, and from this sum can only be deducted a sufficient amount to meet operating expenses. Of this balance, there is set aside 1% annually as a reserve fund, until it reaches 5% of the outstanding loans, at which point it must be maintained by annual appropriations from the earnings. After providing for the expenses and reserve fund, the remainder is apportioned among the shareholders as the bylaws may direct. Two or more associations may consolidate by a majority vote of the shareholders of each association upon such terms as the directors may agree upon. Shareholders not consenting to the consolidation are entitled to the with Building and loan associations drawal value of their stock; and if borrowers, may have such value applied to their loans. At an annual meeting, or meeting called for the purpose, an association by a two-thirds vote may go into liquidation and dissolve. It may sell its securities to other associations or to individuals, subject to the vested interest and rights of the borrowers. After adopting a resolution of liquidation, no more loans can be made or stock sold. The secretary of state makes an annual report concerning building associations. In Missouri an act ['01 p.93] prohibits the transfer of funds from one series to another, in order to mature the latter. The bylaws may permit interest not to exceed 8%, to be paid on money paid in advance. When an unpledged share reaches maturity, payments cease and the holder receives its maturing value and interest from date of maturity at not over 8%. Not more than one half of the funds in the treasury is applicable to withdrawals unless the directors consent. Unpledged shares may be retired, under rules, at any time; and after three years. from issue instalment shares may be retired, holders receiving full value less fines and their share of the losses. Borrowers, in addition to dues, pay stated interest; and in associations in which premiums are paid in instalments, they make the periodical payment of premiums agreed upon until the shares reach their ultimate value, when they are deducted from the loan and the latter canceled. The bylaws may provide that free shares shall not receive more than their face value, less the average premium paid by the borrowers up to date. When shares have reached their ultimate value, that fact must be reported to the superintendent of building and loan associations, and no stock shall be matured or money paid thereon without his consent and approval. If it appear that an association is insolvent, or is doing a fraudulent business, notice is given by the state supervising officer to the officers of the association; and if the association is not made solvent or does not cease such practices within 60 days, the supervisor may bring suit to enjoin such practice, and, if necessary, to secure the appointment of a receiver. An association can not cease to do business until all its stock matures unless all the stockholders consent thereto. All associations in process of liquidation are put in the charge and loan tions of the state supervisor. An association can not make a volun- Building tary assignment. If it be in a failing condition the officers of associathe association must place it in the hands of the state supervisor. If an assignment be attempted the state supervisor at once takes charge of the association; and if he thinks after an examination that it is solvent and can be placed in a condition to reassume business to the benefit and profit of its creditors and stockholders, he must proceed to conduct and manage its business. If it is insolvent and can not resume business profitably, he must bring suit to have himself appointed receiver, and proceed to wind it up. His fees can not exceed 5% of the assets. In North Dakota ['01 ch.46] the state examiner must examine each association twice a year, but may examine them as often as he sees fit. He has supervision over foreign associations. His fees for examination are fixed by statute. In Tennessee ['01 ch.44] all associations within 30 days after January 1 and July 1 must publish in a newspaper of the counties where they are respectively located a financial statement, according to a form prescribed by the state controller. In Michigan and Pennsylvania new statutes have been enacted concerning the right of foreign associations to do business in the state [Mich. '01 ch.18; Pa. '01 ch.124]. These statutes are of considerable length, and it is impossible to give a full résumé of them here. Each state requires a deposit of $100,000 of securities for the benefit of the stockholders and creditors within the state before the association can do business. The kinds of securities are prescribed. Securities for those on deposit may be substituted. To secure a certificate to do business, associations must file with a designated officer of the state a sworn statement of its financial condition, a certified copy of its charter or articles of association, and sworn copies of its bylaws, and in Michigan of all printed matter issued by it. In Michigan the securities are deposited with the secretary of state; in Pennsylvania with a trust company. In both states agreements must be filed with the secretary of state for service of process upon that officer, or upon a person designated, in suits against the association brought within the state. a judgment be obtained against an association in Michigan, the Insurance state treasurer, upon the order of the secretary of state, sells enough of the securities on hand to satisfy it, after 30 days' notice to the association. On May 1 each year an association in Pennsylvania pays a license fee of $100. In Michigan such associations are examined yearly by the secretary of state or state examiner, who may revoke an association's authority to do business, if it does not conduct its business according to law, or is financially unsound, or refuses to be examined. Notice of the revocation of authority is given to the home office and is also published in a newspaper of the state. In Pennsylvania, in case of insolvency or fraudulent practice the state commissioner reports that fact to the attorney general, who applies to the Common Pleas Court of Dauphin county, or to the judge in vacation, for an order to show cause why its authority should not be revoked. If the association is insolvent, or is doing a fraudulent business, its certificate to do business is revoked; if doing an illegal but not fraudulent business such certificate may be revoked. In case of revocation of authority the commissioner revokes the authority of all the association's agents to do business. In both states penalties are provided where an association or its agents attempt to transact business without authority. INSURANCE 1 FRANCIS HENDRICKS, NEW YORK STATE SUPERINTENDENT OF INSURANCE There were 168 laws passed in the various states in 1901 relating to insurance matters. Of this number less than a were of special moment, a large percentage of them being either unimportant amendments of the various insurance codes of the states or the adoption by some of the states of the settled practice of others. In the domain of fire insurance the new legislation was limited and unimportant. Indiana ['01 ch. 253] amended her code by prohibiting the issue of any fire insurance policy containing any clause requiring the insured to maintain a larger amount of insurance than that expressed in the policy, or making the insured liable as a coinsurer with the company issuing the policy, except it may be optional to accept 'See also Comparative Summary and Index, 1901, no. 4254–421. |