Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1895-09-20

bnOer IDlS CONSTRUCTIVE, III would be BIOS
sible for such an association receiving but
| s25, 900 in profits, and losing $50, 600 on
| its loans, to charge the loss against the
capital dues, and thus show gain of
| S25, 600, while the business taken as a
whole would actually result in net loss
of S25, 600. This Is not in harmony with
my views and is repugnaut to the uni
versal practice of financial corp ora tions
and is not accepted by competent au-
thority as the proper legal construction
OF the membership contract. l believe
the deductions from assets should be
charged against the undistributed profits
until they are absorbed and The balance
stand as an impairment.
There Is provision in the blank appli
cation used by this association which
reads as follows: Third: l hereby agree
that in any distribution of the profits or
surplus the principles and methods
which may be adopted by said association
for such distribution, and its determine
ton of the amount belonging to any GER
tifcat9 which may be issued under this
application, shall be and are hereby rati-
fed and accepted. " Under the authority
of that provision, it has been the custom
of the secretary to apportton all the
profits twice year in his estimated
maturity table to the outstanding shares
more than thirty-slx months old
The total number of shares outstanding
and in force are &C. 900, and the number
three years old or more, to which divi-
dends are apportloned, is about 1000.
BY this method, the entire surplus Of the
association is apportioned to less than ONT
sixth of the total shares outstanding; and
it Is by this distribution of its profits that
the association bases its claim to be able
to mature its shares in about eight years.
In this connection, l would respectfully
call your attention 10 the report of Mr..
d. P. Fackler of New York, consulting
actuary, a copy of which is attached
hereto.
The ratification and acceptance referred
to above, refers, Of course, to a legal dis
tribution, as authority cannot be delegated
e. do an act which is Illegal and its rati-
tication or acceptance, If illegal, would in
no wise estop the member from assuming
his legal rights. Also equity will in
terfere to prevent unjust discrimination
10 distributing profits" And further
more, this Is merely method used by the
secretary In preparing table showing
early maturity Of shares.
Mutually being the basis of the scheme
on which all building and loan associa-
tions operate, this treatment of profits Is
not acquiesced in by me, as I believe that
there should be credited to each share its
proportionate part of the earnings without
regard to age and this opinion is CON
firmed by the report of Mr.. Fackler,
above referred to, a consulting actuary OF
apI- N 1p6o oh hA
of the commissioners, examined the
methods of apportioning profits employed
by the association.
The attention Of the commissioners was
specially called to the creation of the per
manent Guaranty shareholders fund, So
called, of 500, 10000, established by vote
IF the thirty shareholders present. (about
one half CT whom were officers and agents
at q meeting of the association held Oh
May 18th, 1895, at the office of the aSso-
citation in Manchester.
1t was provided by this vote as follows
"A permanent guaranty shareholders
fund, not exceeding two hundred thou
sand dollars, is hereby established, in
which fund, preferred shares of par
value of one hundred dollars each, to the
amount of one hundred thousand dollars
may be issued, for cash paid in, and com
mon shares to the amount Of one hundred
thousand dollars may be issued for such
purposes and upon such terms and condi-
lions as may be determined by the direc-
tors of the association.
The said fund, TO the amount Of said
one hundred thousand dollars in cash
shall be kept and maintained as guar
anGy fund for the payment of all the legal
liabilities of the association, i'll case of
any insut1ciency of i5s assets.
All moneys received by the association
for expenses, the rate per cent. of which
per share shall continue as now in force,
and all earnings of the permanent guar
anty shareholders fund shall be credited
to said fund and the entire expenses of
the association shall be charged to and
paid from said fund, provided that the
total compensation Of the officers and
managers of the association, as fixed by
the board of directors shall not for any
three months after the first year exceed
sixty per cent. Of the sum paid as di0i
dends to the shareholders in said fund for
the preceding three months. Moneys re
ceived or paid for legal expenses, taxes
and commissions for purchase or sale of
mortgages shall not he charged against or
credited to said fund The cash assets
of said fund may be invested and the
earnings Their, of appoftioned thereto in
the same manner as the funds of the gen
eral shareholders of the association
All moneys to the credit Of the said
fund in excess of one hundred thousand
dollars, on the first days of January,
April, July and October in each year,
shall be paid to the sharehC lders thereof,
as follows, viz:
To the preferred shareholders in said
fund dividend not exceeding eight per
cent and the balance thereof, less the
amount paid to Withdrawing share
holders, pro rata to the common share
| holders All the preferred shares s,
withdrawn and paid for shall be the prop
erty O. the common shareholders and may
be rcsold at not less than par and the pro
ceeds of such resale distributed to the
| common shareholders.
In case of a general distribution Of
assets, the legal liabilities of the associa-
ton to its creditors and general share
holders shall have preference and priority
upon all the property of the association,
including the amount in said fund, ard
the preferred shareholders in said fund