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FOREIGN CORPORATION USUAL PLACE OF BUSINESS-COM-
MISSIONER OF CORPORATIONS.

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The words "usual place of business," in R. L., c. 126, § 4, which provides that every foreign corporation which has a usual place of business within the Commonwealth, or is engaged therein, permanently or temporarily, in the construction, erection, alteration or repair of a building, bridge, railroad, railway or structure of any kind, shall, before doing business in this Commonwealth, in writing appoint the Commissioner of Corporations and his successor in office to be its true and lawful attorney, include a foreign corporation which has executive offices within the Commonwealth where a considerable part of the management of the business of the company is carried on.

missioner of

1909

You have requested my opinion as to whether certain for- To the Comeign public service corporations for which the Stone & Webster Corporations. Management Association acts as general manager may be said November 5. to have usual places of business in this Commonwealth, and thus become subject to the provisions of chapter 126 of the Revised Laws.

A foreign public service corporation is subject to the provisions of this chapter if it "has a usual place of business in this Commonwealth" (section 4). The language quoted is the same as that used in R. L., c. 14, § 50, and in St. 1903, c. 437, § 58.

Under date of Oct. 26, 1908, I advised you that "the phrase 'usual place of business' used in the Revised Laws is broad enough to include corporations which had within this Commonwealth offices used solely for directors' meetings or transfer offices. . .", and that these words in section 58 of the business corporation act "are to be construed as they were to be construed under the earlier act." In this opinion I was interpreting the law relative to mining companies. I am, however, of opinion that the words "usual place of business" are to be construed in the same way in the section now under consideration as in the sections of the Revised Laws dealing with mining companies and in the statute dealing with business corporations. In my opinion, if the companies in question actually have executive offices here, at which offices a considerable part of the management of the companies' business is carried on, they have usual places of business here within the meaning of

To the Bank
Commissioner.

1909 November 11.

chapter 126 of the Revised Laws. Cf. People v. Horn Silver Mining Co., 105 N. Y. 76.

I do not attempt to pass upon the specific cases submitted, since each case must be determined upon its special facts.

SAVINGS BANKS AUTHORIZED INVESTMENTS FIRST MORT-
GAGES OF REAL ESTATE NOTES SECURED BY A MORT-
GAGE OF REAL ESTATE TO A TRUST COMPANY.

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Notes secured by a mortgage of a tract of land with buildings thereon to a trust company as trustee, as security for an issue of notes made by the owners of the property, of which the notes in question are a part, are not a legal investment for savings banks, since they do not constitute an investment in "first mortgages of real estate," within the provisions of St. 1908, c. 590, § 68, cl. 1, defining authorized investments for savings banks in this Commonwealth.

You ask my opinion as to whether it is lawful for a savings bank to invest in notes secured by a mortgage of a tract of land with buildings thereon to a trust company, as trustee, as security for an issue of notes made by the owners of the property of which the notes referred to are a part. These notes amount on the whole to less than 60 per cent. of the value of the real estate subject to the mortgage.

St. 1908, c. 590, § 68, cl. 1, which defines authorized investments for savings banks, is as follows:

First. In first mortgages of real estate located in this commonwealth not to exceed sixty per cent of the value of such real estate; but not more than seventy per cent of the whole amount of deposits shall be so invested. If a loan is made on unimproved and unproductive real estate, the amount loaned thereon shall not exceed forty per cent of the value of such real estate. No loan on mortgage shall be made except upon written application showing the date, name of applicant, amount asked for and security offered, nor except upon the report of not less than two members of the board of investment who shall certify on said application, according to their best judgment, the value of the premises to be mortgaged; and such application shall be filed and preserved with the records of the corporation.

At the expiration of every such loan made for a period of five or more

years not less than two members of the board of investment shall certify in writing, according to their best judgment, the value of the premises mortgaged; and the premises shall be revalued in the same manner at intervals of not more than five years so long as they are mortgaged to such corporation. Such report shall be filed and preserved with the records of the corporation. If such loan is made on demand or for a shorter period than five years, a revaluation in the manner above prescribed shall be made of the premises mortgaged not later than five years after the date of such loan and at least every fifth year thereafter. If at the time a revaluation is made the amount loaned is in excess of sixty per cent, or in the case of unimproved and unproductive real estate in excess of forty per cent, of the value of the premises mortgaged, a sufficient reduction in the amount of the loan shall be required, as promptly as may be practicable, to bring the loan within sixty per cent, or in the case of unimproved and unproductive real estate within forty per cent, of the value of said premises.

Savings banks cannot invest in any notes of the kind described unless such investment is authorized by clause 1 of the above section, which authorizes investments in "first mortgages of real estate located in this commonwealth, not to exceed sixty per cent. of the value of such real estate." The question is, therefore, whether the investment described is an investment in "first mortgages of real estate."

A similar question was considered by Attorney-General Knowlton. (1 Op. Atty.-Gen. 434.) St. 1894, c. 317, § 21, was then in force. It did not differ materially, so far as this question is concerned, from the present statute. In that opinion the then Attorney-General said:

I am of opinion, however, that the purchase of bonds by a savings bank, which are a portion of a larger number secured by a mortgage given by the obligor to a third person as trustee for the benefit of bondholders, is not a "loan upon mortgage," within the meaning of the statutes relating to savings banks. . . . "Loans upon first mortgages of real estate," as that expression is used in the statute, are loans made to an individual or a corporation upon the security of a mortgage given by the borrower to the savings bank. Certain rights attach to the holder of a mortgage which do not appertain to the holder of a bond secured by a mortgage in the hands of a trustee. It was, in my opinion, the intention of the statute to authorize savings banks to loan upon mortgages only

when the full and unrestricted rights of mortgagees are conferred upon the bank, to the end that the entire control and custody should be in the hands of the bank. (Page 435.)

In an opinion of Attorney-General Parker (2 Op. Atty.Gen. 593) the same provision of statute, then R. L., c. 113, § 26, cl. 1, was under consideration, and it was pointed out that in the case of an assignment of a mortgage to a savings bank the section contemplates one "which should have effect to vest in the latter (that is, the savings bank) the full and unrestricted rights of a mortgagee in the premises."

The general propositions stated in these opinions were clearly correct, and no reason appears for now departing from them.

It is true that certain of the specific objections existing in the case considered in the opinion of the Attorney-General first cited (1 Op. Atty.-Gen. 434) have been done away with. The trustee cannot require indemnity before foreclosing; he has no prior lien on the property for his charges; there is no express exemption from responsibility for the negligence of agents and the trustee has not discretion as to whether or not to foreclose. It is to be noticed, however, that any holder of a note may request foreclosure. The result is that some other person holding a note secured by the mortgage in question might insist upon foreclosure, although the bank did not wish it, and the bank could not prevent such foreclosure. The bank has not, then, entire control and custody as it would have in the case of a mortgage held by it directly.

It is not clear to me that it is contemplated to comply with the provisions of the first clause of section 68, which provides that "no loan on mortgage shall be made except upon written application showing the date, name of applicant, amount asked for and security offered, nor except upon the report of not less than two members of the board of investment who shall certify on said application, according to their best judgment, the value of the premises to be mortgaged." If this is not done, clearly the loan would not be one authorized by the statute. It is further provided in the second paragraph of the first clause of said section that at the expiration of every such loan there must

be a revaluation by the board of investment at intervals of not more than five years so long as they are mortgaged; and also that "If at the time a revaluation is made the amount loaned is in excess of sixty per cent of the value of the premises mortgaged, a sufficient reduction in the amount of the loan shall be required, as promptly as may be practicable, to bring the loan within sixty per cent. of the value of the premises."

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The deed of trust, a copy of which is submitted to me, makes no provision for such a contingency; and from a careful consideration of the statute I am of opinion that such a loan was not contemplated by the Legislature, but that the words 'so long as they are mortgaged to such corporation" mean a direct mortgage to the savings bank itself and not to a trustee. I am, therefore, of opinion that such an investment in the case described is not an investment in "first mortgages of real estate." As pointed out in the opinion first quoted, such forms of loans are becoming more frequent, and it may be that the Legislature will authorize savings banks to purchase them; but until such time comes I am of opinion that savings banks cannot legally invest therein.

TRUST COMPANY RESERVE TIME DEPOSIT.

An agreement in writing, payable thirty days after demand or notice, is a time deposit payable at a stated time, within the meaning of St. 1908, c. 520, § 8, which provides that "every trust company. . shall at all times have on hand as a reserve an amount equal to at least fifteen per cent of the aggregate amount of its deposits, exclusive of savings deposits and of time deposits represented by certificates or agreements in writing and payable only at a stated time."

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Commissioner. 1909

You request my opinion as to whether an agreement in writ- To the Bank ing, payable thirty days after demand or notice, is a time deposit payable at a stated time, and therefore exempt from the reserve requirements.

November 12.

St. 1908, c. 520, § 8, provides that:

Every trust company doing business within the commonwealth shall at all times have on hand as a reserve an amount equal to at least fifteen

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