Montana Attorney General Opinion 15-422

Opinion No. 422 Building and Loan Associations- Stock, Cancellation of-Withdrawals- Home Owners' Loan Bonds. HELD: A solvent building and loan association has power to assign and transfer Horne Owners' Loan Bonds to a member in cancellation of its stock or outstanding contractual obligations "ithout considering the sequence of the order of registration for withdrawals. January 17, 1934. You hal'e submitted the following question: "Would it be legal for a building and loan association of Mon- tana to take Horne Owners' Loan Bonds and turn them to shareholders of their association without considering the se- quence of the order of registration for withdrawal':" We assume that this question is asked concerning solvent building and loan associations. No spe- cial facts are presented and our an- swer, therefore, must necessarily be general. The question of equality of treat- ment of members is not presented. It is the general rule that members in building and loan associations must be treated equally. (Sundheim on Build- ing and Loan Associations, (3rd. Ed.) sections 25, 158). The author, in sec- tion 25, supra, says: "Every member is entitled to the same rights and privi- leges als any other member, and this is true, whether he has assigned his shares to the association as security for a loan or not. 'L'he building asso- ciation idea implies absolute equality and mutuality among the members holding the same class of stock. In the absence of 'Statutory authority, there can be no preferential stockholders. All adl'antages and hurdens must be distributed as equally as possible among all classes of members • • "." Paragraph 8 of section 12, Chapter 292 OPINIONS OF 1'HE ATTOHNEY GENERAL 57, Laws of 1927, as amended by Chap- ter 11, Laws of 1933, provides for the registration of withdrawals by mem- bers and the payment to them in the order received of "all cash collections" with certain limitations. It will be ob- sen'ed that this section has to do with cash "ithdrawals, that is, to cases where a member has elected to with- draw and accept cash according to the terms of his contract and the provi- sions of the by-laws. It is my opinion that an attempt by a member to purchase from his asso- ciation home owners' loan bonds and to pay for the same by surrender of his stock or cancellation of his contract does not constitute a cash withdrawal within the meaning of the above men- tioned statute and that in the ahsence of express prohibjJion a solvent build- ing' and loan association has power to assign anel transfer home owners' loan honds to a member in ca ncella tion of its stock or outstanding contractual ob- liga tions. without considering the se- quence of the order of registration for withdrawals. See 9 C .. J. 953, Sec. 65, note 91.