BUILDING AND LOAN ASSOCIATIONS
AN ACT in relation to Building and Loan Associations and regulating the business of such associations.
Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:
Section 1. This Act shall be known as the Building and Loan Association Act, and shall be applicable to all corporations specified in section two of this Act, and to such other persons, associations, co-partnerships or corporations who shall, by violating any of the provisions of this Act, become subject to the penalties provided herein; provided, that the provisions of this act shall not apply or have any relation to building and loan associations incorporated under the general corporation laws of this State which do not transact, or attempt to transact, business within the boundaries of this State.
Section 2. The provisions of this act shall apply to and be enforcible against all corporations, persons, firms, partnerships, associations, trustees or combinations of persons whatsoever, which or who transact, or attempt to transact, a building and loan business, or a business of like kind or character, or where, by its or their charter, constitution, by-laws, or by a declaration of trust, or other device, or by a contract or agreement the members or customers are required to pay regular installments to a common fund or series, from which fund or series loans are made to said members, customers, or to others for the purpose of building homes or buildings, purchasing building sites, paying off liens or debts against real estate, or for other purposes, within the boundaries of this State.
Section 3. Premiums, when used in this act, shall be taken to mean a sum paid by the borrower over and above the legal rate of interest charges for any loan. Fines, when used in this act, shall be taken to mean a penalty imposed for the non-payment of dues and interest when due. Membership fees, when used in this act, shall be taken to mean a fee to be paid by the stockholder upon subscribing for shares of stock.
Section 4. The power to collect premiums; fines and membership fees within the limits of this Act, or as permitted by any other law of this State, is hereby granted to building and loan associations; provided, that fines shall not be imposed against and collected from any one shareholder for more than six consecutive months at a greater rate than five cents per month for each dollar past due, and after the expiration of six months, at a greater rate than one-half of one per cent per month for each dollar past due. Any shareholder who shall be six months in arrears in the payment of his or her monthly dues may be required to withdraw any balance due such shareholder from the association. In the event of any shareholder refusing to accept settlement from the building and loan association, or in the event of a building and loan association not being able to locate any shareholder, such shareholder being six months or more in arrears, the building and loan association may deposit the amount due such shareholder to his or her credit in the Farmers' Bank of the State of Delaware.
Section 5. All premiums, fines and membership fees collected shall be uniform in respect to all shareholders or borrowers in any one building and loan association. The funds so collected by building and loan associations may be loaned to its stockholders and others upon bonds and mortgages against real estate, and upon such other sufficient security, including shares of its own capital stock, as the board of directors of any building and loan association may authorize.
Section 6. The withdrawal value paid in any one fiscal year to any shareholder of a building and loan association, after having paid all dues, interest, premiums, fines and membership fees due by him for a period of one year or more, shall be computed upon a uniform basis in respect to all such withdrawals in said fiscal year.
Section 7. The funds of a building and loan association, existing under the laws of this State, shall not be invested in any corporation stocks, provided, that nothing herein contained shall prevent a building and loan association from acquiring any corporation stocks to secure itself against loss of money owing to it by any borrower. Such stocks so acquired shall be sold within sixty days after the State Bank Commissioner may direct.
Section 8. When from the distribution of the profits of any building and loan association, the profits accruing to any series of stock shows that said series has matured according to the provisions of the by-laws of such association, such association shall not make any further investment of its funds until all of said matured series of stock shall have been paid the owners thereof. Such building and loan association shall allow such owners of matured stock interest at the rate of not less than five (5%) per centum per annum upon the matured value of such series of stock during the time after the first month that the same remain unpaid. In no case shall the retirement of said stock be deferred longer than for a period of twelve months after such stock shall have matured.
Section 9. No person, persons, firm, corporation or co-partnership shall engage in the business of a building and loan association, or a business like unto a building and loan association, within the limits of the State of Delaware until a license shall have been obtained as hereinafter provided.
Section 10. Every building and loan association created under the laws of this State, and doing business in this State, shall pay to the State Bank Commissioner, for the use of the State, at the time of filing its annual report, an annual license fee of five ($5.00) dollars. Every building and loan association created under the laws of any other State and doing business within the boundaries of this State shall pay to the State Bank Commissioner, for the use of the State; at the time of filing its annual report, an annual license fee of one hundred ($100.00)
Section 11. Every building and loan association existing under the laws of this State, or any other State, and doing business within the boundaries of this State shall annually at the end of its fiscal year furnish to the State Bank Commissioner a detailed statement of its condition at the close of its last fiscal year, giving a full, detailed statement showing the gross amount of dues, interest, premiums, fines, repayments and other funds received and collected by such association for the said fiscal year, and the amount of its earnings, and its aggregate assets and liabilities at the close of said fiscal year, and any other information that the said State Bank Commissioner may request, and which said statement shall be verified by the oath or affirmation of the president and secretary, duly administered by some person authorized by the laws of the State to administer oaths. Such report shall be made and forwarded to the State Bank Commissioner within sixty days from the date of the ending of such fiscal year.
Section 12. Every building and loan association doing business in this State which shall have assets consisting of investments in any other State, territory, or the District of Columbia, other than this State, shall, in the statement required by the foregoing section, enumerate such assets, stating the amount held by said association in each of the states, territories, or the District of Columbia, in which such assets are located; every building and loan association doing business in this State, created by the laws of any other state, territory, or the District of Columbia, shall, in addition to the detailed statement hereinbefore required of said association in this State, showing the interest, premiums, repayments and dues collected by said association within this State, set forth the amount of assets held by said association in this State, and the amount of liabilities due shareholders residing in this State.
Section 13. If it shall appear from the annual statement filed with the State Bank Commissioner, that a building and loan association is in a safe or solvent condition, and is transacting business in compliance with the law, then the Commissioner shall issue to such building and loan association a license authorizing said association to transact its business in this State for one year from the date thereof unless the Commissioner shall deem it necessary, for the protection of the shareholders of the association, or of the public, to sooner revoke the same, which he is empowered to do; and the Secretary of State is authorized to issue to the State Bank Commissioner suitable license blanks to be delivered to such building and loan association upon the payment of the annual license fee hereinbefore prescribed.
Section 14. The State Bank Commissioner may require annually at the end of its fiscal year the publication of a report by a building and loan association in one issue of a newspaper located within the county wherein such building and loan association has its office, showing in detail the assets and liabilities at the close of said fiscal year; and the expense of such publication shall be paid by the building and loan association.
Section 15. Every building and loan association doing business in this State, but created by the laws of any other state or territory shall, at the time of filing its annual statement, required under the provisions of this act, file with the State Bank Commissioner a certificate under its corporate seal and the hand of its president or head officer, attested by the secretary, designating the name and residence of some person or agent within this State upon whom service of process may be had.
Section 16. Proceedings may be instituted against any building and loan association doing business within the boundaries of this State, whenever it shall appear to the State Bank Commissioner that the affairs of any building and loan association are in an unsound condition because of illegal or unsafe investments, or that its liabilities exceed its assets, or that it is transacting business without authority or in violation of law; or that it is unsafe or inexpedient for such corporation to continue business ; and it shall be the duty of the Attorney General, on notice by the State Bank Commissioner, to institute such proceedings against the building and loan association as the nature of the case may require. For any of the reasons mentioned in this Section the State Bank Commissioner may forthwith take possession of such building and loan association's property and business and retain such possession until the termination *if [*so enrolled] the action or proceeding instituted by the Attorney General, or until the appointment of a receiver by due process of law.
Section 17. In the event of any building and loan association violating any of the provisions of this Act, or any law of the State, the State Bank Commissioner may revoke or withhold its license to do business.
Section 18. Every building and loan association organized under the laws of any other State, and every building and loan association hereafter organized under the laws of this State before beginning business within the boundaries of this State, shall file with the State Bank Commissioner a certified copy of its charter, constitution and by-laws, and of all amendments thereto. Said Commissioner shall carefully examine the same and if he finds that they provide a just and equitable plan for the management of the association's business he shall issue to such association a certificate of authority permitting it to begin business. But if he finds the provisions of said charter, constitution and bylaws to be impracticable, unjust, inequitable or oppressive to any class of shareholders he shall withhold his certificate of authority. It shall not be lawful for any association hereafter organized under the laws of this State, and doing business within the boundaries of this State, for the purpose above set forth, to transact any business except the execution of its articles of incorporation, the adoption of its constitution and by-laws and the election of directors and officers until it shall have procured the certificate of authority above provided for.
Section 19. It shall be lawful for a building and loan association to set aside in its treasury, out of its earnings, a contingent fund which shall be used only for the purpose of paying losses and necessary expense incurred in the maturing of any of its series of stock, and for the purpose of stabilizing and making equal, as near as may be, the time of maturity of all of said series; but said contingent fund shall at no time exceed two (2%) percentum of the amount due shareholders for dues paid in. The funds so set aside may be invested as other funds of the association.
Section 20. Any building and loan association willfully violating or failing to observe and comply with any of the provisions of this act shall be subject to and liable to pay a penalty of not less than one hundred ($100.00) dollars for each violation thereof, and for each failure to observe and comply with any of the provisions of this act. Such penalty may be collected in an action brought in the name of the State in any court having jurisdiction thereof. Any building and loan association which neglects or refuses for thirty (30) days after final judgment in any such action to pay and discharge the amount of such judgment shall have its authority to transact business in this State revoked by the State Bank Commissioner, and such revocation shall continue, and such building and loan association shall not again be authorized or permitted to transact business in this State until it shall have paid the amount of any such judgment, or until the same has been vacated or reversed.
Section 21. Every agent or officer of any building and loan association which shall not have obtained authority to do business in this State under the provisions of this act, or the authority of which shall have been revoked by the State Bank Commissioner, who shall solicit or carry on business for said association in this State shall be guilty of a misdemeanor and upon conviction thereof shall be fined not less than twenty-five ($25.00) dollars, and in default of payment of such be imprisoned for a term not exceeding thirty (30) days.
Section 22. Every building and loan association having an office or place of business in this State and transacting business in this State shall be subject to the supervision and examination of the State Bank Commissioner, and shall be examined by said Commissioner at least once in each year and oftener if the Commissioner shall deem it necessary.
On the occasion of every such examination, the said Commissioner shall in company with one or more of the officers of the corporation visited be given access to every part of the office or place of business visited and to the assets, securities, books and papers of the said corporation.
The examination made by the Commissioner as aforesaid shall be a thorough examination into the affairs of the corporation visited, its resources and liabilities, the investment of its funds, the mode of conducting its business, the safety and prudence of its management, the acts of its officers, Directors or Trustees, and its compliance or non-compliance with the provisions of its charter and by-laws and of the statutes of the State of Delaware; and, in connection with such examination, the said Commissioner shall have power to examine, under oath or affirmation, the officers, directors or trustees, and the employees, of the corporation, relative to its affairs, and, for this purpose, he is hereby authorized to administer oaths or affirmations; PROVIDED, that the said Commissioner, his Deputy, or Clerk, before proceeding with the examination of any corporation shall, if required, exhibit to the officers of the said Corporation satisfactory evidence of his authority to make such examination.
Provided, however that a building and loan association which shall be examined by a Certified Public Accountant, may be exempted from examination by the said Commissioner, and an examination by such Certified Public Accountant may be accepted by the said Commissioner as a sufficient compliance with the requirements of this Act with respect to examinations ; provided, that, in any case, a certified report of the examination made by a Certified Public Accountant, shall be filed in the office of the said Commissioner.
Any examination under this Act may be made by the State Bank Commissioner in person or by his Deputy, or his Clerk, or by special persons designated by him, when so authorized by the Commissioner and acting under his orders.
That the said State Bank Commissioner shall charge each corporation examined by him, or by his direction, and such corporation shall pay to the said Commissioner, twenty-five dollars on the first twenty-five thousand dollars of its assets, or fraction thereof, and two cents on each one thousand dollars of its assets over twenty-five thousand dollars, for each examination made by said Commissioner, and of each branch office maintained by such Corporation, such charges to be accounted for by said Commissioner as part of the receipts of his office.
Section 23. Nothing in this Act shall be construed to affect the legality of investments heretofore had, and nothing herein contained shall be deemed to impair the rights, privileges and powers of any corporation, heretofore organized, contained in its charter or certificate of incorporation, and vested rights acquired under the acts hereinafter repealed and actually existing and enjoyed shall not be divested or disturbed.
Section 24. All acts and parts of acts inconsistent with this act are hereby repealed.
Approved April 7, A. D. 1921.