The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1899-07-04
WHAT THEY MUST Do.
Commissioner BreidenthaI Lays
Down the Law to Building
Associations.

ASSOCIaLIOuSs
Bank Commissioner John w. Breiden-
thai has issued a circular letter to KAN
sas building and loan associations con
cerning the statements which these or
ganizations are required to make to the
department under the new law.
The usury laws are now applicable to
loan associations and the collection of
interest amounting to more then TO
per cent, deprives the association of
authority to negotiate new loans.
The commissioner has made the fol-
lowing rulings:
THAT soIvency, as applied to building
and loan associations, consists of hav-
ing assets equal, at their market value,
to the liabilities of the association, and
that the liability to a. stockholder is the
book value of his stock.
THAT an association, to continue bus-
mess, must be solvent. All others must
either make good the impairment OF
their assets, go into voluntary hquida-
ton or receivers will be appointed.
THAT all associations having unset
tied business, whether they expect to
continue in business or not, must make
the reports to this office required by law
until their affairs have been closed up.
THAT no class of stock, other than
permanent or guarantee stock, can
draw a fixed dividend, or rate of in
crease, but must be subject to the earn
ings of the association; hence, prepaid,
full-paid or deposit stock may draw a
certain percentage of the dividends
earned by the association, which per
centage may be payable in cash, but
can not draw a fixed dividend, as six
per cent or eight per cent. Any stock
drawing a fixed dividend is held to be a
deposit of money within the meaning of
the banking law, and the Issuing of
same would subject the association to
all its provisions.
THAT no contract or agreement can
= Hnf 0fraIi
stockholders, respecting the payment of
membership fees or expenses, which
will obviate the necessity of returning
to the stOckhOlder withdrawing after
one year ninety per cent of all money
paid to the association, and that all
payments made to agents, solicitors or
other representatives of an association
will be held and construed to be pay
1nents to the association within the
meaning of section 6 of the law.
THAT where fines, and particularly
accumulatlve lines are applied in such
manner as to be conhscatOry in their
effect upon the interest of the stock
holder the bylaws providing for same
will be held to be unlawful, in that
they are inequitable and unjust and un-
fair to the unfortunate stOckhOIder. The
law makes it the duty of the commits
siOner to ascertain that foreign assOcia-
tiOnS deal fairly with their stockholders
and provides that the bylaws of a for
eign association shall have no effect
until approved by him. He assumes
that home associations should also be
required to deal fairly with their stock
holders; hence this ruling.
THAT all certificates of stock issued
by an association must be accounted
for; that is to say, if the stock has been
Cancelled, certificate must be produced
or accounted for in a satisfactory man
ner; otherwise it will be held and con-
sidered to be liability of the asocia-
ton.
"An associations will be expected to
have all blank certificates now on hand
numbered cOnsecutiveIy, and, hereafter,
where a certificate is mutilated or can
celed, same must be preserved.
THAT holders of any and all classes
of stock, except permanent or guaran-
tee stock, are entitled to the privilege
of a loan, upon complying with the
provisions of the bylaws relating to
loans; that is to say, an association can
not designate one kind of stock as loan
stock and require a stockhOlder who
desires loan to exchange other classes
of stock therefor before he can obtain
loan
THAT an association may create a
expense fund of not to exceed ten per
cent of all money received by it,
THAT an association may create a
surplus, reserve or contingent fund
consisting of a. definite percentage of
its net earnings, such fund to be used
in charging off losses; the surplus if
any, in this fund to be distributed at
maturity of stock in an equitable man
ner.
THE commissioner of internal revenue
informs me that. the bonds of officers
of building and loan associations do not
require any revenue stamp. No official
report made to this office requires any
revenue stamp.
In conclusion, I urge the officers of
all associations to study the provisions
OF our law carefully, and avoid writing
this department whenever it is possible
to do so. The legislature, while it i'm
posed additional duties upon this de-
partment, did not provide any addi-
tional clerical force.
I am aware that our law is very de-
fect1Ve, and while / have repeatedly
recommended the passage of a law pro
viding supervision for loan associations
l am not the author of this law and am
in no way responsible for it's many de-
fects. Of one thing, however, I am con-
fdent, and that is, that it was the in
tent OF the members of the Iegisla t1lre
who voted for this law to provide eff
cient supervision for loan associations
with a view to protecting investors
therein and preventing the spoIiation
that has been practiced in the past As
an official charged with executing this
law. shall endeavor. as far as possible
to carry out what I conceive to be the
desire of the legislature, and feel CON
hdent that I will have the hearty co
operation Of every association in the
state which desires to do legitimate
business on a just and equitable plan -
RTED DEED rpnTrcm