St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1890-02-21
Attorney General Clapp De-
eides the Long Dispute
in Its Favor.
Nothing Illegal Shown In Its
Business Methods and
Investments.
The Company Is Not Insolvent
and No Reason to Proceed
Against 1t.
If Any Blame Is to Be Laid
in the Matter, IT'S on
the Law.

Attorney General Clapp has fled an
| opinion in which he declares there is no
| ground for procedure against the Amer
| lean Building and Loan association. For
several days past it has been the gen.
eral belief that such would be mis- find
ing, and that belief was verified in his
| opinion. which was yesterday addressed
to the public examiner, containing the
| 70 flowing:
| THE ATTORNEY GENERALS VIEW.
| In advising you as TO the legal status
! of this association, desire to call attell-
ton to the law governing this associa-
| ton, so far as the same applies to the
| subject matter under consideration.
| Section 10 of chapter 236 of the General
Laws OF 1889. being. commonly known
| as the bui ding and loan association act,
after assuming to confer upon the pub
| lie examiner the authority conferred
| upon him over banks, contains the 1Ol-
| lowing proviso: provided he shall
| not have the power to suspend the
| operation of any such association, ex-
cept in the manner provided in the next
succeeding SECTION" Section 20 provides
that if it shall appear to the public
| examiner from any examination or from
| any report made by the association,
ter or the law, or is nducting its bust
ness IN all unsafe, unauthorized or dis
honest manner, the examiner will make
| all order requiring conformity to the
law. If such association refuses to COM
| ply with the order, or when 1t snail APP
| pear to the examiner that it is unsafe or
lneXpedient for the association to con-
tinue the transaction of business, he
shall communicate the fact to the at
NH &c MI nri1 nd IN
institute proceedings as against an in
solvent corporation, or such other pro-
ceeding as the occasion may require.
The first question to be determined is.
does the fact that the public examiner
deems it unsafe or ineXpdient to con-
tinue business of Itself constitute a
ground of proceeding? That is, could
the attorney general apply to the court
| upon
THE MERE ALLEGATION
that the public examiner deemed it I'M
safe or inexpedient, or would he be
obliged to present to the court by prop
or allegations the facts upon which the
conclusions of the examiner were based.
Clearly he would have to accept the
latter course, for it cannot be main
taiued that under the law he could sue
ceSStully institute proceedings upon
the mere allegation that 1t appeared to
| the examiner that it was unsafe or in
eXpedient for the association to continue
business" accompanied by the facts
| supporting such conclusion. This being
the case. the attorney general must, in
the preparation OF the case. examine
the facts reported by the examiner; not
that he should examine the affairs of
the association, for that d ty devolveS
| upon the examiner. but he must exam
| inc the facts reported 10 him by the eX-
| aminer, with a view OF determining
| wnat facts shall be presented to tue
| court, and whether all the facts consti-
| tute in law the basis of any proceeding.
| Without reviewing i'm detail the report
| submitted to my office. it is enough to
| say that it appears that 1S4,550.S5 has
| BEEN collected as an expense fund in
| addition to fees paid 10y shareholders
| direct to agents; that by charging this
| expense fund to the receipts shows a
deficiency of s74. 7lS2S, and that
| NO CLAIM OF INSOLVENCY
| is made further than that by SO charg
ing the expense fund deficiency az
| pears; but it appears that prior to the
| law of 1889, the association reserved
| S1.20 per year per share for expense
| fund. and since that law went into
| effect 81 per share, and this being al
| lowed by the terms of the law, while
| sound business principles would sug-
| gest an economical use of the expense
| fund, that the surplus might go to gen
| eral profits. yet. as a strict matter of
| law, the association might receive and
| apply for expenses the sum allowed 10y
| law; consequently the sum so collected
| could not be treated as a legal liability,
| and, if deducted from the amounts
charged the association. it appears the
association has a surplus. This be ng
the case. and no other suggestion of in
| sOlvrncy appearing, it is plain no pro-
| ceedings could be sustained based upon
| the ground of insolvency. 1t appears
| that in August, 1889. the association in
vested large sum in the stock of an in
| surance Company under circumstances
| it is claimed a violation of law: that this
was afterwards put in the form of q
loan
| SECURED ON REAL ESTATE
| in the vicinity of st. Paul, the borrow
| erS taking the amount of stock required
by law, the association taking in addi-
| ton to a first mortgage a second mort
| gage upon certain real estate. L am OF
the opin OH, had the first part of this
transaction been known to the stock
| holders, they might have interfered by
| legal proceedings: but it is too clear for
argument that at this time it affords no
| ground for proceeding on the part of
the state-whatever doubt might for
merly have existed on this point having
been recently decisively settled liy the
supreme court of this state. 1t fur
| ther appears that you deemed it unsafe
or ineXpedirnt for this company to con-
tinue business by reason of the percent
| aye the expense bears to the amount
| of business transacted; but while
this might warrant you in the eX-
ercse of sound Judgment in reaching
| such conclusions. yet If the amount re
tanned by the association for expenses
was not in excess of the amount allowed
by law, it would afford no ground for
legal proceedings. There may be an
apparent incongruity in the law. if so,
it is the fault of the law. 1t must be
conceded either that your conclusion in
matter of this character is final. and of
itself sffords a ground Of proceeding
and no one seriously contends thatai
does. or such conclusion is the subject
of review bv the courts, and if subject
to review, then facts must be alleged
and it must appear that the acts COM
planned of are in law sufficient ground
for legal proceedings. L am Of the
opinion that no proceedings could be
successfully instituted based upon the
facts set forth in the report before me.
EXAMINER KENYoF SMILES.
Public Examiner Kenyon was seen
by GLOBE reporter shortly after the
receipt of the opinion.
will you prepare anything in reply?"
"Think not"
Have you anything to say in con-
nection with the casep"
Nothing to say, but question to
| ask: Will the attorney generals Opin-
ion aid the American in paying the
money it has received from its stock
holders?''
HEARD IN MINNEAPOLIS.
When the news was received at the
association'S Office in the Bank of Com
MERGE building. Minneapolis, there was
a scene of joy unbOunded, in which
everybody joined. There is a large
amount of clerical help employed at this
Office, and for some weeks past gloomy
cloud ls,s been hanging over their
| heads and the vnung ladies aud gentle.