Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1902-12-10
ARE ILLEGAL.
Attorney General Rules Against
Home Buyers" Associations.
It They Do Business in Maine Must
Comply With the Law.
Bank Examiner TimberIake Will Pro.
coed Against Such Companies.

An association known as the New
Home Buyers Association,
having its headquarters in Boston, has
sought to do business in this State.
Hon. F. Z. Timberlake, State bank eX-
believed the association was
the law of Maine which pro-
vides how loan and building assOcia-
tons Of other states may be permitted
to carry on business in this State. This
law was passed in 1891, and was in
tended to hit the famous Granite State
Provident Association, at that time do
ing an immense business in Maine, and
which afterwards met with a most dis
astrous ending for the supplemented
stockholders who invested in it.
This law provides that the bank ex-
aminer may authorize any loan and
building association or corporation
duly established under the laws of an
other state to carry on such business
in this State. but said association or
corporation shall not transact such
business in this State unless it shall
first deposit with the State treasurer,
the sum of $4,000 and thereafter a sum
equal to Is per cent. of the deposits
made in such association or corporation
by citizens of the State, the amount of
percentage of deposits SO required to
be determined from time to time by the
Bank examiner: or in lieu thereof the
whole or any part of said sum may
consist of any of the securities in
which savings banks may invest, as
regulated in Section 100 of Chapter Al,
n MI
thereof. at their par value. and the said
deposits shall be held in trust by said
treasurer for the protection and indem
nifty Of the residents IF the State with
whom such associations or corporations
respectively have done or may transact
business. Said moneys or property
shall be paid out or disposed of only
on the order of some court of compe-
tent jurisdiction, made on due notice
to the creditors and shareholders of
such association or corporation as the
court shall prescribe. For the purpose
of ascertaining the business and finan-
cial condition of any such association
or corporation doing or desiring to do
such business. said bank examiner
may make examinations of such asso-
Citations or corporations. at such times
and at such places as said bank eX-
aminer may desire, the expense of such
examinations being paid by the assoc
citation or corporation examined, and
may also require returns to be made
in such form and at such times as he
may elect. The violation of this law
carries a penalty of $1,000. to be en-
forced by injunction issued by II justice
of the supreme judicial court or jus
ticc of a superior court.
When Mr.. Timberlake learned that
some foreign home buyers associations
were seeking business in this State, he
determined that they came under the
provisions of the above law. To statis-
fly himself that his judgment was well
founded he requested the attorney gem
eral Of the State, Hon. George NJ. Seid-
ers. to give his opinion as to their right
to do business in Maine. This opinion
was received, yesterday, and is as fol-
lows:
Portland. Me- Dec. 6. 1902.
Hon. F. f. Timberlake, Bank Examin-
err. Augusta. Me.
Dear Sir: In answer to your official
inquiry whether or not the New Eng
land Home Buyers Association of Bos-
ton, Mass. being an association for the
accumulation of funds from its MEM
bers for the purpose of buying and i'm
proving real estate or building homes
for its members. and similar associa-
lions whether incorporated or not. can
operate within this State without COM
plying with the provisions set out in
Chapter 80. Section 2. of the Public
Laws of 1891. I submit the following
opinion.
Said New England Home Buyers
Association is based on "A trust agree
ment between certain individuals. res
idents of Massachusetts. The prop
erty of the association. however ac-
uuired. is held and controlled by a
board of trustees. The beneficiary in
terests in said association are held and
controlled by board of stockholders.
for il is provided under said trust
agreement. that the trustees therein
named thereby declare that all moneys
and other property. rights and inter-
ests of whatever description. conveyed
or transferred to them or acquired by
them as aforesaid. are and are to be
held by them for account of said
shareholders, their assigns and legal
in the proportions
shown by the number of shares set
against their respective names. and
are to be managed and administered
upon the trusts. in the manner follow
ing. ETC. The shareholders herein
named are parties to the trust deed
and reap the profits of the business.
From further inspection of the
trust agreement herein referred to. it
appears that this association is no
more nor less than a copartnership. 1t
has never been Incorporated. hence we
will treat it on the ground of its le
gal status: to wit, that of a co-part-
nerShip.
section s. which section relates to
the powers conferred upon the trustees.
nroyides. among other things. that the
trustees shall have no power TO bind
the shareholders personally by any
contract.e or implied. or by any
ACT neglect or default: that neither
trustees nor shareholders shall be per-
sonaIlv liable on any such contract or
for any such act, neglect or default.
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