Montana Attorney General Opinion 16-367

Opinion No. 367. Building and Loan Associations- Federal Home Loan Bank, Borrowing From-State Superintendent of Banks HELD: (1) A Montana building and loan association may borrow money in excess of 20 per cent of its assets from the Federal Home Loan Bank. (2) A Montana building and loan association may not pledge and hy- pothecate any of its assets to secure loans from the Federal Home Loan Bank without the consent of the State Superintendent of Banks. October 29, 1936. Hon. Frank H. Johnson Superintendent of Banks The Capitol You ask for a construction of Sub- division 12 of Section 6355.13, R. C. M.1935. This statute, which authorizes the borrowing of money by building and loan associations under certain limi- tations, was amended in 1933, by add- ing to the statute as it then existed the following: "also to borrow money from the Federal Home Loan Bank upon such terms as may now or here- after be required by the Federal Home Loan Bank, and to execute the promissory note of the corporation therefor, and to pledge or hypothe- cate any of the assets of the corpora- tion to secure the repayment of said loan, with interest, in accordance with the Federal Home Loan Bank Act, and the rules and regulations adopted or to be adopted thereunder." Prior to such amendment building and loan associations would have had the authority to borrow from the Fed- eral Home Loan Bank under the re- quirements of such prior statute. The amendment could only have becn in- tended to remove a limitat:on or lim- itations as contained in such prior statute. In other words, it must have been intended by such amendment that loans might be made from the Federal Home Loan Bank under dif- ferent conditions than from other creditors. The language is ambigu- ous. You inquire: "I. Is a Montana building and loan association authorized to bor- row money in excess of 20 per eent of its assets from the Federal Home Loan Bank?" This requirement is in the first sentence of the statute as amended. We conclude that it was the intent of the legislature to remove this lim- itation in relation to loans from the Federal Home Loan Bank. "2. Is a Montana building and loan association authorized to pledge and hypothecate any of its assets to secure loans frc:m the Federai Home Loan Bank without the con- sent of the Superintendent of Banks?" In both sentences of this statute the approval of the Superintendent of Banks is required. ""'Ie therefore con- clude that a Montana building and loan association may not pledge and hypothecate any of its assets to se- cure loans from the Federal Home Loan Bank without the consent of the Superintendent of Banks.