Office of the Revisor of Statutes
Minnesota Session Laws - 1987, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1987
CHAPTER 349-H.F.No. 291
An act relating to financial institutions; regulating
incorporations and operations of banks; requiring
prior written approval by the commissioner for certain
lease arrangements; requiring certain securities to be
deposited with the state treasurer; requiring approval
of certain insider agreements; providing penalties
against certain lenders; regulating transfer and
closing of deposit accounts; regulating real estate
holdings by a bank; providing for exclusions to
certain usury limits; regulating acquisitions by bank
holding companies; revising the definition of feeder
livestock loans for bank lending limit purposes;
authorizing the commissioner to borrow money to
satisfy obligations of certain closed institutions;
authorizing indirect investments in eligible
securities for state banks; regulating bank or trust
company investments; regulating claims against
liquidated institutions; providing for the
organization of credit unions; regulating interest and
dividends paid on deposits; regulating industrial loan
and thrifts; regulating interstate branch banking;
providing for the submission of certain reports;
modifying the maximum allowable interest rate on
certain loans used to satisfy the balances owed on
contracts for deed; regulating consumer credit
transaction contracts; requiring the periodic
examination of debt prorate companies; modifying the
examination requirement for safe deposit companies and
insurance premium finance companies; regulating motor
vehicle installment sales; regulating bank
applications; regulating electronic financial
terminals and unauthorized use of financial
transaction cards; amending Minnesota Statutes 1986,
sections 46.041; 46.042; 46.07, subdivision 2; 46.131,
subdivision 9; 47.10, subdivision 3, and by adding a
subdivision; 47.204, subdivision 1; 47.205,
subdivisions 2 and 4; 47.69, subdivision 3; 48.055,
subdivision 5; 48.15, subdivision 2; 48.21; 48.24,
subdivision 7; 48.51; 48.61, subdivisions 3 and 5;
48.92, subdivision 10; 48.97, subdivision 2; 48.98,
subdivision 1; 48.99, subdivision 1; 49.04,
subdivision 1; 49.05, by adding a subdivision; 49.24,
subdivision 5; 51A.58; 52.01; 52.02, subdivision 3;
52.09, subdivision 2; 52.18; 53.04, subdivisions 3a
and 5; 53.05; 53.09, subdivision 2; 55.095; 55.15;
56.12; 59A.06, subdivision 3; 168.66, subdivisions 3,
4, 5, 9, 10, and 11; 168.705; 168.71; 168.72,
subdivisions 1 and 4; 168.73; 168.74; 325G.04, by
adding a subdivision; 325G.36; 332.29, subdivision 1;
proposing coding for new law in Minnesota Statutes,
chapters 46 and 47; repealing Minnesota Statutes 1986,
sections 48.60 and 55.13.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
SUPERVISORY CLARIFICATION ACT
Section 1. Minnesota Statutes 1986, section 46.042, is
amended to read:
46.042 [NOTICE AND HEARING, WHEN NOT GIVEN.]
The commissioner of commerce may dispense with the notice
and hearing provided for by section 46.041 if application is
made for the incorporation of a new bank to take over the assets
of one or more existing banks or if the application contemplates
the reorganization of a national bank into a state bank in the
same locality, or where the application is made for the
incorporation of a new bank in the same locality coincidental
with the closing of an existing bank by the commissioner or
federal authorities. This section does not increase the number
of banks in the community affected.
Sec. 2. Minnesota Statutes 1986, section 46.07,
subdivision 2, is amended to read:
46.07 [RECORDS.]
Subd. 2. [CONFIDENTIAL RECORDS.] The commissioner shall
divulge facts and information obtained in the course of
examining financial institutions under the commissioner's
supervision only when and to the extent required or permitted by
law to report upon or take special action regarding the affairs
of an institution, or ordered by a court of law to testify or
produce evidence in a civil or criminal proceeding, except that
the commissioner may furnish information as to matters of mutual
interest to an official or examiner of the federal reserve
system, the federal deposit insurance corporation, the federal
savings and loan insurance corporation, the national credit
union administration, comptroller of the currency, a legally
constituted state credit union share insurance corporation
approved under section 52.24, the issuer of a commitment for
insurance or guarantee of the certificates of an industrial loan
and thrift company approved under section 53.10, or state and
federal law enforcement agencies. The commissioner shall not be
required to disclose the name of a debtor of a financial
institution under the commissioner's supervision, or anything
relative to the private accounts, ownership, or transactions of
an institution, or any fact obtained in the course of an
examination thereof, except as herein provided. For purposes of
this subdivision, a subpoena is not an order of a court of law.
These records are classified confidential or protected nonpublic
for purposes of the Minnesota government data practices act and
their destruction, as prescribed in section 46.21, is exempt
from the provisions of chapter 138 and Laws 1971, chapter 529,
so far as their deposit with the state archives.
Sec. 3. Minnesota Statutes 1986, section 46.131,
subdivision 9, is amended to read:
Subd. 9. These assessments or fees shall be paid by the
institution examined within 20 days after a statement of the
amount has been submitted to the institution examined by the
commissioner of commerce and, if not so paid, shall bear
interest at the discount rate charged member banks for borrowing
from the Federal Reserve Bank of interest provided for by
section 549.09. The penalty shall be payable to the
commissioner on request.
Sec. 4. [46.34] [CERTAIN SECURITIES DEPOSITED WITH THE
STATE TREASURER.]
All securities required or permitted by law to be assigned
to and deposited with the commissioner of commerce for any
purpose must, after the effective date of this section, be
assigned to and deposited with the state treasurer, who shall
give a receipt therefor. This receipt must be filed with the
commissioner, in lieu of the securities, and in this case
neither the commissioner nor the commissioner's bonding agents
are responsible for the safekeeping of these securities. The
state treasurer shall perform all the duties with regard to the
safekeeping of these securities which the commissioner is now
required to perform. The state treasurer is subject to the same
obligations and under the same liability, with reference to the
safekeeping of these securities, as the commissioner. The state
treasurer shall accept, release, surrender, and permit
substitutions of securities assigned to and deposited with the
state treasurer under the provisions of Laws 1923, chapter 155,
upon order of the commissioner.
Sec. 5. Minnesota Statutes 1986, section 47.10,
subdivision 3, is amended to read:
Subd. 3. [LEASEHOLD PLACE OF BUSINESS; APPROVAL OF CERTAIN
LEASE AGREEMENTS.] No bank, trust company, savings bank, or
building and loan association may acquire property and
improvements of any nature for its place of business by lease
agreement if the lessor has an existing direct or indirect
interest in the management or ownership of the bank, trust
company, savings bank, or building and loan association unless
approved without prior written approval by the commissioner.
This includes subsequent amendments and associated personal
property leases leasehold improvements.
Sec. 6. Minnesota Statutes 1986, section 47.10, is amended
by adding a subdivision to read:
Subd. 4. [APPROVAL OF CERTAIN INSIDER AGREEMENTS.] No
bank, trust company, savings bank, or savings association may
purchase or sell real property, personal property, improvements
or equipment of a value of $25,000 or more if the purchaser or
seller other than the bank, trust company, savings bank, or
savings association has an existing direct or indirect interest
in the institution without prior written approval by the
commissioner.
Sec. 7. Minnesota Statutes 1986, section 47.204,
subdivision 1, is amended to read:
Subdivision 1. [NO USURY LIMITS.] Notwithstanding any law
to the contrary, no limitation on the rate or amount of
interest, discount points, finance charges or other charges
shall apply to a loan, mortgage, credit sale or advance which
would have been exempt from the laws of this state pursuant to
Public Law Number 96-221, title V, part A, section 501, as
amended as of June 2, 1981, but for section 47.203 and which is
made in this state after June 2, 1981 and before August 1, 1987.
Sec. 8. Minnesota Statutes 1986, section 47.205,
subdivision 2, is amended to read:
Subd. 2. [ASSIGNMENT OR SALE OF MORTGAGE LOANS.] If the
servicing of mortgage loans financing one-to-four family owner
occupied residences located in this state is sold or assigned to
another person:
(1) the selling lender shall notify the mortgagor of the
sale no less more than ten days after the actual date of
transfer. The notification must include the name, address, and
telephone number of the person who will assume responsibility
for servicing and accept payments for the mortgage loan and the
notification must also include a detailed written financial
breakdown, including but not limited to, interest rate, monthly
payment amount, and current escrow balance;
(2) the purchasing lender shall issue corrected coupon or
payment books, if used, and shall provide notification to the
mortgagor within 20 days after the first payment to the
purchasing lender is due, of the name, address, and telephone
number of the person from whom the mortgagor can receive
information regarding the servicing of the loan, and shall
inform the mortgagor of any changes made regarding the mortgage
escrow accounts or servicing requirements including, but not
limited to, interest rate, monthly payment amount, and current
escrow balance; and
(3) the purchasing lender shall respond within 15 business
days to a written request for information from a mortgagor. A
written response must include the telephone number of the
company representative who can assist the mortgagor.
Sec. 9. Minnesota Statutes 1986, section 47.205,
subdivision 4, is amended to read:
Subd. 4. [PENALTIES.] If a lender fails to comply with the
requirements of subdivisions 2 and 3, the lender is liable to
the mortgagor for $500 per occurrence, in addition to actual
damages caused by the violation. In addition, the lender is
liable to the mortgager for $500 per occurrence if the violation
of subdivision 2 or 3 was due to the lender's failure to
exercise reasonable care.
Sec. 10. Minnesota Statutes 1986, section 47.69,
subdivision 3, is amended to read:
Subd. 3. Every financial institution using an electronic
financial terminal shall maintain reasonable procedures to
minimize losses from unauthorized withdrawals from its
customers' accounts by use of an electronic financial terminal.
After a customer makes a bona fide deposit or payment at an
electronic financial terminal and has received a receipt, any
loss due to theft or other reason shall not be borne by the
customer; provided, loss due to the nonpayment or dishonor of a
check, or other order for payment, deposited at an electronic
financial terminal shall be governed by the applicable
provisions of chapter 336. A financial institution shall be
liable for all unauthorized withdrawals unless the unauthorized
withdrawal was (a) (1) due to the negligent conduct or the
intentional misconduct of the operator of an electronic
financial terminal or that operator's agent in which case the
operator of an electronic financial terminal or the agent shall
be liable, or (b) (2) due to the loss or theft of the customer
machine readable card in which case the customer shall be
liable, subject to a maximum liability of $50, for those
unauthorized withdrawals made prior to the time the financial
institution is notified of the loss or theft. The limitation on
liability contained in clause (2) is effective only if the
issuer is notified of unauthorized charges contained in a bill
within 60 days of receipt of the bill by the person in whose
name the card is issued. For purposes of this subdivision,
"unauthorized withdrawal" means a withdrawal by a person other
than the customer who does not have actual, implied, or apparent
authority for such withdrawal, and from which withdrawal the
customer or a member of the customer's family or household
receives no benefit.
Sec. 11. [47.77] [TRANSFER OF ACCOUNTS PROHIBITED; NOTICE
ON CLOSING.]
(a) No financial institution shall initiate a transfer of a
deposit account to another deposit account bearing different
identification information without sending at least 30 days
prior notice to at least one of the deposit account holders at
the last known address on file with the financial institution.
If the new account is subject to different terms, the financial
institution must obtain the written consent of at least one of
the deposit account holders before the new terms become
effective.
(b) No financial institution shall initiate a closure of a
deposit account without first sending at least one of the
deposit account holders a notice of intent to close the deposit
account. The notice must be sent to the deposit account
holder's last known address on file with the financial
institution at least 30 days before the financial institution
closes the deposit account; except that, if the financial
institution has reasonable suspicion to believe that account is
being used in connection with a check-related fraud or other
crime or that funds will not be available to pay items drawn on
the account, the notice may be sent the same day as the account
is closed.
(c) As used in this section, the following terms have the
meanings given them. "Deposit account" means a contract of
deposit of funds between a depositor and a financial
institution, and includes a checking account, savings account,
certificate of deposit share account, and other like
arrangement. "Financial institution" means any organization
authorized to do business under state or federal laws relating
to financial institutions, including, without limitation, banks
and trust companies, savings banks, savings and loan
associations, industrial loan and thrift companies, and credit
unions.
Sec. 12. Minnesota Statutes 1986, section 48.055,
subdivision 5, is amended to read:
Subd. 5. Any preferred stock issued by a state bank shall
be part of its capital stock structure, and the terms "capital
stock" or "capital" in any laws of this state pertaining to
state banks shall be deemed to also include and apply to
preferred stock, except that only stock issued with or having
succeeded to voting rights shall qualify a director under the
provisions of section 48.06.
Sec. 13. Minnesota Statutes 1986, section 48.15,
subdivision 2, is amended to read:
Subd. 2. The department of commerce may, by majority vote
of its members, which shall include the affirmative vote of the
commissioner of commerce, may authorize banks organized under
the laws of this state to engage in any banking activity in
which banks subject to the jurisdiction of the federal
government may hereafter be authorized to engage by federal
legislation, ruling, or regulation. The commission may not
authorize state banks as defined by section 48.01, to engage in
any banking activity prohibited by the laws of this state.
Sec. 14. Minnesota Statutes 1986, section 48.21, is
amended to read:
48.21 [REAL ESTATE; RESTRICTIONS ON HOLDING.]
Subdivision 1. A bank may purchase, carry as an asset, and
convey real estate only:
(1) As provided for in section 47.10;
(2) If acquired through foreclosure of a mortgage given to
it in good faith as security for loans made by or money due to
it;
(3) If conveyed to it in satisfaction of debts previously
contracted in good faith in the course of its dealings;
(4) If acquired by sale on execution or judgment of a court
in its favor; or
(5) If reasonably necessary to mitigate or avoid loss on a
loan or investment theretofore made.
Real estate acquired under clauses (2) to (5) shall be
carried as an asset only in accordance with rules the
commissioner prescribes.
Subd. 2. Real estate owned by a bank as a result of
actions authorized in clauses (2) to (5) of subdivision 1 and
subsequently sold to any buyer on a contract for deed may not be
considered creating a liability to a bank for purposes of
section 48.24.
Subd. 3. Notwithstanding any rules of the commissioner to
the contrary, if real estate owned by a bank pursuant to clauses
(2) to (5) of subdivision 1 is not sold or otherwise disposed of
within the maximum period established by rule by the
commissioner, the bank may write off any remaining balance at a
rate not less than one-fifth of that balance each subsequent
calendar year.
Sec. 15. Minnesota Statutes 1986, section 48.24,
subdivision 7, is amended to read:
Subd. 7. Obligations of any person, co-partnership,
association or corporation in the form of notes or drafts
secured by shipping documents or instruments transferring or
securing title covering feeder livestock which is free from all
other encumbrances, when the market value of the livestock
securing the obligation at the time of the making of the loan is
not less than 115 percentum of the face amount of the notes
covered by such documents, shall be subject under this
subdivision to a limitation of 20 percent of capital and surplus
in addition to 20 percent of capital and surplus as included in
provisions of subdivision 1. Feeder livestock loans as referred
to in this subdivision is defined to include only obligations
secured by liens or giving title to cattle, sheep, goats, or
hogs or poultry being fattened for market, but excluding dairy
cattle, milk goats, poultry used for production of eggs, or
barnyard or work animals.
Sec. 16. Minnesota Statutes 1986, section 48.51, is
amended to read:
48.51 [DEMAND DEPOSITS DEFINED.]
For the purpose of this section and section 48.50, all
deposits are payable on demand except:
(1) Those deposits which are evidenced by a negotiable or
nonnegotiable instrument which provides on its face that the
amount of the deposit is payable:
(a) on a certain date, specified in the instrument, not
less than 14 days after the date of the deposit; or (b) at the
expiration of a specified period not less than 14 days after the
date of the instrument; or (c) upon written notice to be given
not less than 14 days before the date of repayment.
(2) Those deposits which may not be withdrawn within 14
days of the making thereof.
(3) Those deposits which may not be withdrawn within 14
days of the giving of notice of an intended withdrawal.
(4) Those deposits in which the above 14-day minimums are
in conflict with instruments authorized by the depository
institutions deregulation committee's regulations authorized by
title II, Depository Institutions Deregulation and Monetary
Control Act of 1980, Public Law Number 96-221 federal law or
regulations.
Sec. 17. Minnesota Statutes 1986, section 48.61,
subdivision 3, is amended to read:
Subd. 3. The bank or trust company may invest not to
exceed ten percent of its capital and surplus in shares of stock
in any banks or bank holding companies wherein the ownership of
stock in the banks or bank holding companies is restricted
to bank holding companies or banks authorized to do business in
the state of Minnesota.
Sec. 18. Minnesota Statutes 1986, section 48.61,
subdivision 5, is amended to read:
Subd. 5. In the absence of an express provision to the
contrary, whenever any statute, rule, charter, trust indenture,
authorizing resolution, or other instrument governing the
investment of funds of a banking institution, as defined in
section 48.01, subdivision 2, directs, requires, authorizes, or
permits direct investment in certain obligations of the United
States or obligations, the payment of the principal of and
interest on which is unconditionally guaranteed by the United
States, investment in these obligations may be made either
directly or in the form of securities of, or other interests in,
an investment company (1) registered under the Federal
Investment Company Act of 1940, whose shares are registered
under the Federal Securities Act of 1933, and (2) whose
investments are limited to these obligations and repurchase
agreements fully collateralized by these obligations, if the
repurchase agreements are entered into only with those primary
reporting dealers that report to the Federal Reserve Bank of New
York and with the 100 largest United States commercial banks.
Investment company shares authorized pursuant to this
subdivision shall Shares of investment companies whose
portfolios contain investments which are subject to limits under
other state law or rule as direct investments may only be held
in an amount not in exceed excess of 20 percent of the banks'
capital stock and paid in surplus in each such investment
company. These obligations shall be carried at the lower of
cost or market on the banks' books and adjusted to market on a
quarterly basis.
Sec. 19. Minnesota Statutes 1986, section 48.92,
subdivision 10, is amended to read:
Subd. 10. [EQUITY CAPITAL.] "Equity capital" means the sum
of common stock, preferred stock, and paid in surplus, reserves
for loss loans and undivided profits.
Sec. 20. Minnesota Statutes 1986, section 48.97,
subdivision 2, is amended to read:
Subd. 2. [INVESTMENT; REPORTING REQUIREMENTS.] Each
financial institution located in this state owned by an
interstate bank holding company shall fully and accurately
disclose in an annual report to the commissioner of commerce for
each calendar year the dollar value and volume of loans by zip
code or census tract beginning with the year ending December 31,
1987, approved in the previous year in nonreal estate commercial
and farm lending categories established by the commissioner.
Lending categories must be delineated in sufficient detail to
evaluate the lender's loan performance. Loan categories may
include: demand or accrual notes, installment loans, equipment
loans, inventory or accounts receivable loans, small business
administration loans, and FmHA guaranteed loans. Housing loans
must be disclosed statewide in the same manner and form as
required by the Federal Home Mortgage Disclosure Act. The
annual report must also disclose by zip code or census tract the
dollar value and volume of deposits received during the previous
year. The annual report must also disclose information by the
categories required in section 48.991 demonstrating that
developmental loans of a sufficient quantity are being made.
The report must be accompanied by a copy of the most recent
disclosures required under the Federal Community Reinvestment
Act and the most recent Quarterly Statement of Income and
Conditions.
Sec. 21. Minnesota Statutes 1986, section 48.98,
subdivision 1, is amended to read:
Subdivision 1. [PUBLIC INFORMATION.] Notwithstanding the
Minnesota government data practices act, chapter 13, and
consistent with federal law, the commissioner shall make
available to the public at reasonable cost copies of all
applications, including supporting documents and any other
information required to be submitted to the commissioner.
Sec. 22. Minnesota Statutes 1986, section 48.99,
subdivision 1, is amended to read:
Subdivision 1. [APPLICATION CRITERIA FOR APPROVAL.]
Pursuant to the present requirement of the United States Code,
title 12, section 1842(d) and notwithstanding any other
provision of state law, a reciprocating state bank holding
company, or any subsidiary of the a bank holding company, may
acquire a bank located in this state where the commissioner has
determined that a merger, consolidation, or purchase of assets
and assumption of liabilities is necessary and in the public
interest to prevent the probable failure of a bank or is made
for the incorporation of a new bank in the same locality
coincidental with the closing of an existing bank by the
commissioner or federal authorities and does not increase the
number of banks in the community affected. The acquisition is
subject to the prior written approval of the commissioner of an
application submitted under this section and after the following
considerations:
(1) the financial and managerial resources of the applicant;
(2) the future prospects of the applicant and the state
bank or its subsidiary whose assets, interest in, or shares it
will acquire;
(3) the financial history of the applicant;
(4) whether the acquisition or holding may result in undue
concentration of resources or substantial lessening of
competition in this state;
(5) the convenience and needs of the public of this state;
and
(6) whether the acquisition or holding will strengthen the
financial condition of the state bank.
Sec. 23. Minnesota Statutes 1986, section 49.04,
subdivision 1, is amended to read:
Subdivision 1. [COMMISSIONER TAKING POSSESSION; GROUNDS
FOR; RIGHTS OF THIRD PARTIES.] When it shall appear to the
commissioner that any financial institution has violated its
charter, or any law of the state, or is conducting its business
in an unsafe or unauthorized manner, or that its capital is
impaired, or if it or any of its controlling officers shall
refuse to submit its books, papers, and concerns to the
inspection of the commissioner, or any duly authorized
assistant, or if any of its officers shall refuse to be examined
upon oath touching its concerns, or if it shall suspend payment
of its obligations, or furnish reason for the commissioner
concluding that it is in an unsound or unsafe condition to
transact the business for which it was organized, or that it is
unsafe and inexpedient for it to continue business, or if it
shall neglect or refuse to observe a proper order of the
commissioner, the commissioner may forthwith take possession of
its property and business including forfeiture of its
certificate of authorization and retain this possession until it
shall resume business or its affairs be finally liquidated, as
herein provided. On taking possession of the property and
business of any such financial institution, the commissioner
shall forthwith give notice of that fact to any and all
financial institutions or other corporations, associations,
partnerships, and individuals holding, or in possession of, any
of its assets. No financial institution or other corporation,
association, partnership, or individual knowing of such taking
possession by the commissioner, or notified, as aforesaid, shall
have a lien or charge for any payment, advance, or clearance
thereafter made, or liability thereafter incurred against any of
the assets of the financial institution of whose property and
business the commissioner shall have taken possession, as
aforesaid. The financial institution may, with the consent of
the commissioner, resume business upon such conditions as may be
approved by the commissioner. Upon taking possession of the
property and business of the financial institution, the
commissioner is authorized to collect moneys due to it and to do
such other acts as are necessary to conserve its assets and
business, and shall proceed to liquidate the affairs thereof, if
in the commissioner's opinion it cannot safely resume business,
as hereinafter provided.
Sec. 24. Minnesota Statutes 1986, section 49.05, is
amended by adding a subdivision to read:
Subd. 7. [COMMISSIONER MAY BORROW MONEY.] With respect to
a banking institution which is or may be closed on account of
inability to meet the demands of its depositors or by action of
the commissioner or of a court or by action of its directors,
or, in the event of its insolvency or suspension, the
commissioner may borrow from the Federal Deposit Insurance
Corporation and furnish any part or all of the assets of the
institution to the corporation as security for a loan from
same. The order of a court of record of competent jurisdiction
shall be first obtained approving this loan. The commissioner
or receiver or liquidator appointed by the commissioner upon the
order of a court of record of competent jurisdiction may sell to
the corporation any part or all of the assets of the institution.
The provisions of this subdivision shall not be construed
to limit the power of any banking institution, or the
commissioner, to pledge or sell assets in accordance with any
other law of this state.
Sec. 25. Minnesota Statutes 1986, section 49.24,
subdivision 5, is amended to read:
Subd. 5. [REJECTION OF CLAIMS; ACTIONS; LIMITATIONS.] If
the commissioner doubts the justice or validity of any claim,
the commissioner may reject the same in whole or in part and
serve notice of such rejection upon the claimant, either by mail
or personally. An affidavit of the service of such notice made
according to law shall be filed with the commissioner. An
action upon a claim so rejected must be brought within 60 days
after such service and the filing of proof thereof. The venue
of such action shall be in the county in which such financial
institution had its principal place of business prior to
liquidation, and such action shall be brought jointly against
the financial institution and the commissioner or receiver or
liquidator appointed by the commissioner as statutory liquidator
thereof. Any person having a claim against such financial
institution which is not presented and filed within the time
fixed in the notice to creditors may thereafter present the same
and the commissioner shall allow or reject the same in whole or
in part and give notice of any rejection, as hereinbefore
provided. Suit on any such claim not filed within the time
fixed by the notice which is rejected must be brought within 30
days after the service and filing of proof of such rejection.
Any claim not filed within the time fixed in the notice to
creditors but later received and filed as by this section
provided and duly allowed, shall participate and share in such
dividends only as shall be paid from the proceeds of those
assets remaining undistributed at the time of filing of such
claim, and any claim not filed prior to the declaration of a
final dividend shall be barred. No action shall be commenced
against any such financial institution after possession of the
business and property thereof has been taken by the commissioner
on any claim until such claim has been filed with and rejected,
in whole or in part, by the commissioner. As to any action
pending at the time the commissioner takes possession of the
business and property of such financial institution which has
been stayed by order of the court, a claim may be filed for the
subject matter of said action. If the claim be allowed, the
action shall terminate and be dismissed without costs and
disbursements, but, if rejected in whole or in part, the stay
order shall be vacated, and the action may continue. No
interest shall be allowed or paid on any deposit or other claim
from and after the closing of the financial institution and the
taking over of the same by the commissioner for purposes of
liquidation.
Sec. 26. Minnesota Statutes 1986, section 51A.58, is
amended to read:
51A.58 [INTERSTATE BRANCHING.]
An association, whether or not the subsidiary of a savings
and loan holding company, may, by acquisition, merger, purchase
and assumption of some or all of the assets and liabilities, or
consolidation, establish or operate branch offices in any
reciprocating state, and a savings and loan association
chartered in the any reciprocating state may establish or
operate branch offices in this state by acquisition, merger,
purchase, and assumption of some or all of the assets or
liabilities or consolidation. A savings and loan holding
company with its headquarters in this state may acquire by
direct or indirect ownership or control the voting shares of a
savings and loan holding company, savings and loan association,
or savings bank located in any reciprocating state, and a
savings and loan holding company with its headquarters in a
reciprocating state, may acquire by direct or indirect ownership
or control the voting shares of a savings and loan holding
company, a savings and loan association, or savings bank located
in this state, and may acquire and merge with a savings and loan
holding company with its headquarters in this state. For the
purposes of this section, "reciprocating state" is: (1) a state
that authorizes the establishment of branch offices in that
state by an association located in this state, and the
acquisition of savings and loan associations and savings banks
located in that state by a savings and loan holding company with
its headquarters in this state, under conditions no more
restrictive than those imposed by the laws of Minnesota as
determined by the commissioner of commerce; and (2) limited to
the states specifically enumerated as reciprocating states in
section 48.92, subdivision 7.
The commissioner of commerce shall adopt rules to provide
that procedural requirements equivalent to those contained in
sections 48.90 to 48.991 apply to reciprocal interstate
branching and acquisitions by savings and loan associations.
Sec. 27. Minnesota Statutes 1986, section 52.01, is
amended to read:
52.01 [ORGANIZATION.]
Any seven residents of the state may apply to the
commissioner of commerce for permission to organize a credit
union.
A credit union is a cooperative society, incorporated for
the two-fold purpose of promoting thrift among its members and
creating a source of credit for them at legitimate rates of
interest for provident purposes.
A credit union is organized in the following manner:
(1) The applicants execute, in duplicate, a certificate of
organization by the terms of which they agree to be bound, which
shall state:
(a) the name and location of the proposed credit union;
(b) the names and addresses of the subscribers to the
certificate and the number of shares subscribed by each;
(2) The applicants submit the following in the form
prescribed by the commissioner of commerce:
(a) a statement of the common bond of the proposed credit
union;
(b) the number of potential members;
(c) the geographic dispersion of the potential members;
(d) evidence of interest, including willingness of
potential members to assume responsibility for leadership and
service;
(e) a two-year forecast of probable levels of assets,
shares and deposits, and income and expense;
(f) the availability of other credit union services to the
potential members;
(g) other information the commissioner requires;
(3) They next prepare and adopt bylaws for the general
governance of the credit union consistent with the provisions of
this chapter, and execute them in duplicate;
(4) The certificate and the bylaws, both executed in
duplicate, are forwarded to the commissioner of commerce with a
$100 application fee;
(5) The commissioner of commerce shall, within 60 days of
the receipt of the certificate, the information required by
paragraph (2), and the bylaws, and a commitment for insurance of
accounts as required by section 52.24, subdivision 2, determine
whether they comply with the provisions of this chapter, and
whether or not the organization of the credit union in question
would benefit its members, be economically feasible, and be
consistent with the purposes of this chapter;
(6) Thereupon the commissioner of commerce shall notify the
applicants of the decision. If it is favorable, the
commissioner shall upon receipt of a commitment for insurance of
accounts as required by section 52.24, subdivision 2, issue a
certificate of approval, attached to the duplicate certificate
of organization, and return them with the duplicate bylaws to
the applicants. If it is unfavorable, the applicants may,
within 60 days after the decision, appeal for a review in a
court of competent jurisdiction;
(7) The applicants shall thereupon file the duplicate of
the certificate of organization, with the certificate of
approval attached thereto, with the secretary of state, who
shall make a record of the certificate and return it, with a
certificate of record attached thereto, to the commissioner of
commerce for permanent records; and
(8) Thereupon the applicants shall be a credit union
incorporated in accordance with the provisions of this chapter.
In order to simplify the organization of credit unions, the
commissioner of commerce shall prepare approved forms of
certificate of organization and bylaws, consistent with this
chapter, which may be used by credit union incorporators for
their guidance, and on written application of seven residents of
the state, shall supply them without charge with a blank
certificate of organization and a copy of the form of suggested
bylaws.
Sec. 28. Minnesota Statutes 1986, section 52.02,
subdivision 3, is amended to read:
Subd. 3. [APPROVAL.] Amendments to the certificate of
organization or bylaws must be approved by the commissioner of
commerce before they become operative. The commissioner shall
not unreasonably withhold approval if the amendments do not
violate any provision of this chapter or other state law. In
any event, the commissioner shall approve or disapprove the
proposed amendment within 60 days of the date the proposed
amendment is submitted to the commissioner by the credit union.
In case of disapproval the credit union shall have the right to
appeal to a court of competent jurisdiction within the time
limits stated in section 52.01, clause (5) (6). In case any
amendment to the certificate of organization is adopted, the
resolution, containing a full text of the amendment and verified
by its president or treasurer and approved by the commissioner
of commerce, shall be recorded in the office of the secretary of
state.
Sec. 29. Minnesota Statutes 1986, section 52.09,
subdivision 2, is amended to read:
Subd. 2. [PARTICULAR DUTIES.] The directors shall manage
the affairs of the credit union and shall:
(1) act on applications for membership. This power may be
delegated to a membership chair who serves at the pleasure of
the board of directors and is subject to its rules. An
application must contain a certification signed by the
membership chair or a member of the board showing the basis of
membership;
(2) determine interest rates on loans and on deposits. The
interest period on deposits may be on a daily, monthly,
quarterly, semiannual or annual basis, and may be paid on all
deposits whether or not the deposits have been withdrawn during
the interest period. Interest may be computed on a daily
basis. At the discretion of the board of directors, interest
need not be paid on deposit accounts of less than $10;
(3) fix the amount of the surety bond required of all
officers and employees handling money;
(4) declare dividends and transmit to the members
recommended amendments to the bylaws;
(5) fill vacancies in the board and in the credit committee
until successors are chosen and qualify at the next annual
meeting;
(6) limit the number of shares and deposits which may be
owned by a member, not to exceed ten percent of the outstanding
shares and deposits, or $2,000, whichever is larger, and the
maximum individual loan which can be made with and without
security, including liability indirectly as a comaker,
guarantor, or endorser to ten percent of outstanding shares and
deposits. The ten percent share and deposit limitation is not
applicable to the Minnesota corporate credit union, or to credit
unions insured by the National Credit Union Administration;
(7) have charge of investments including loans to members,
unless a credit committee is established pursuant to section
52.08 or paragraph (13) of this subdivision;
(8) fix the salaries of the treasurer and other employees,
which must be on a fixed monthly or annual basis, in dollars
(not percentage);
(9) designate the depository institution in which the funds
of the credit union will be deposited;
(10) authorize the officers of the credit union to borrow
money from any source, as provided in section 52.15;
(11) with the permission of the commissioner of commerce,
suspend any member of the credit committee or supervisory
committee if it deems this action necessary to the proper
conduct of the credit union, and call the members together to
act on the suspension within a reasonable time after the
suspension. The members at the meeting may, by majority vote of
those present, sustain the suspension and remove the committee
members permanently or may reinstate the committee members;
(12) provide financial assistance to the supervisory
committee in carrying out its audit responsibilities;
(13) if the bylaws so provide and no credit committee has
been elected pursuant to section 52.08, appoint a credit manager
or a credit committee of not less than three members; and
(14) to establish different classes of shares.
Sec. 30. Minnesota Statutes 1986, section 52.18, is
amended to read:
52.18 [DIVIDENDS.]
The directors of a credit union may, on a daily, monthly,
quarterly, semiannual, or annual basis as its board of directors
may determine, declare and pay a dividend from net earnings or
accumulated net undivided profits remaining after statutory
reserve has been set aside, which dividend may be paid on all
shares whether or not they have been withdrawn during the
dividend period. Dividends may be computed on a daily basis.
The board of directors may classify its share accounts according
to character, amount and duration and declare dividends which
may be at variable rates with due regard to the conditions that
pertain to each class of shares, or pay no dividend at all. A
dividend shall be uniform within a classification. At the
discretion of the board of directors dividends may not be
declared or paid on share accounts of less than $10. Shares
which become fully paid up during a dividend period shall be
entitled to a proportional part of the dividend calculated from
the first day of the month following the payment in full. For
the purpose of this section, shares which become fully paid up
by the fifteenth day of any month may be treated as being paid
up from the first day of the month.
Sec. 31. Minnesota Statutes 1986, section 53.04,
subdivision 3a, is amended to read:
Subd. 3a. (a) The right to make loans, secured or
unsecured, at the rates and on the terms and other conditions
permitted licensees under chapter 56. Loans made under the
authority of section 56.125 must be in amounts in compliance
with section 53.05, clause (7). All other loans made under the
authority of chapter 56 must be in amounts in compliance with
section 53.05, clause (7), or 56.131, subdivision 1, paragraph
(a), whichever is less. The right to extend credit or lend
money and to collect and receive charges therefor as provided by
chapter 334, or in lieu thereof to charge, collect, and receive
interest at the rate of 21.75 percent per annum, including the
right to contract for, charge, and collect all other charges
including discount points, fees, late payment charges, and
insurance premiums on the loans to the same extent permitted on
loans made under the authority of chapter 56, regardless of the
amount of the loan. The provisions of sections 47.20 and 47.21
do not apply to loans made under this subdivision, except as
specifically provided in this subdivision. Nothing in this
subdivision is deemed to supersede, repeal, or amend any
provision of section 53.05. A licensee making a loan under this
chapter secured by a lien on real estate shall comply with the
requirements of section 47.20, subdivision 8.
(b) Loans made under this subdivision at a rate of interest
not in excess of that provided for in paragraph (a) may be
secured by real or personal property, or both. If the proceeds
of a loan made after August 1, 1987 are used in whole or in part
to satisfy the balance owed on a contract for deed, the rate of
interest charged on the loan must not exceed the rate provided
in section 47.20, subdivision 4a. If the proceeds of a loan
secured by a first lien on the borrower's primary residence are
used to finance the purchase of the borrower's primary
residence, the loan must comply with the provisions of section
47.20.
(c) A loan made under this subdivision that is secured by
real estate and that is in a principal amount of $7,500 or more
and a maturity of 60 months or more may contain a provision
permitting discount points, if the loan does not provide a loan
yield in excess of the maximum rate of interest permitted by
this subdivision. Loan yield means the annual rate of return
obtained by a licensee computed as the annual percentage rate is
computed under Federal Regulation Z. If the loan is prepaid in
full, the licensee must make a refund to the borrower to the
extent that the loan yield will exceed the maximum rate of
interest provided by this subdivision when the prepayment is
taken into account.
(d) An agency or instrumentality of the United States
government or a corporation otherwise created by an act of the
United States Congress or a lender approved or certified by the
secretary of housing and urban development, or approved or
certified by the administrator of veterans affairs, or approved
or certified by the administrator of the farmers home
administration, or approved or certified by the federal home
loan mortgage corporation, or approved or certified by the
federal national mortgage association, that engages in the
business of purchasing or taking assignments of mortgage loans
and undertakes direct collection of payments from or enforcement
of rights against borrowers arising from mortgage loans, is not
required to obtain a certificate of authorization under this
chapter in order to purchase or take assignments of mortgage
loans from persons holding a certificate of authorization under
this chapter.
Sec. 32. Minnesota Statutes 1986, section 53.04,
subdivision 5, is amended to read:
Subd. 5. The right, with the consent of the department of
commerce, to (1) sell and issue for investment certificates of
indebtedness, under any descriptive name, which may bear
interest, if any, as their terms provide, and which may require
the payment to the company of amounts, from time to time as
their terms provide, and permit the withdrawal of amounts paid
on them, in whole or in part, from time to time, and the credit
of amounts thereon upon conditions set forth therein; and (2)
receive savings accounts or savings deposits. No certificate of
indebtedness shall have a surrender value which is less than the
total amount paid to the company therefor.
Sec. 33. Minnesota Statutes 1986, section 53.05, is
amended to read:
53.05 [POWERS, LIMITATION.]
No industrial loan and thrift company may do any of the
following:
(1) carry demand banking accounts; use the word "savings"
unless the institution's investment certificates, savings
accounts, and savings deposits are insured by the federal
deposit insurance corporation and then only if the word is not
followed by the words "and loan" in its corporate name; use the
word "bank" or "banking" in its corporate name; operate as a
savings bank;
(2) have outstanding at any one time certificates of
indebtedness, savings accounts, and savings deposits, exclusive
of those held by the company, as security for loans made by it
of more than seven times the sum of the contributed capital and
appropriated reserves of the company until July 1, 1985, or the
date an industrial loan and thrift company obtains a commitment
for insurance or guarantee of accounts acceptable to the
commissioner as required by section 53.10, whichever is earlier,
and thereafter 15 times the sum of contributed capital and
appropriated reserves of the company;
(3) accept trusts, except as provided in section 47.75,
subdivision 1, or act as guardian, administrator, or judicial
trustee in any form;
(4) deposit any of its funds in any banking corporation,
unless that corporation has been designated by vote of a
majority of directors or of the executive committee present at a
meeting duly called, at which a quorum was in attendance;
(5) change any allocation of capital made pursuant to
section 53.03 or reduce or withdraw in any way any portion of
the contributed capital and appropriated reserves without prior
written approval of the commissioner of commerce;
(6) take any instrument in which blanks are left to be
filled in after execution;
(7) lend money in excess of ten 15 percent of its
contributed capital and appropriated reserves to a person
primarily liable. "Contributed capital and appropriated
reserves" means the total of the company's contributed capital
and appropriated reserves at all its authorized locations.
If a loan has been made to a person primarily liable and
payments have been made on a certificate of indebtedness
securing it, the amount of the payments may be added to the
limitation contained in this clause for the purpose of
determining whether additional loans may be made to that person;
or
(8) issue cashier's checks pursuant to section 48.151,
unless and at all times the aggregate liability to all creditors
on these instruments is protected by a special fund in cash or
due from banks to be used solely for payment of the cashier's
checks.
Sec. 34. Minnesota Statutes 1986, section 53.09,
subdivision 2, is amended to read:
Subd. 2. [REPORT TO COMMISSIONER.] (1) Each industrial
loan and thrift company shall annually on or before the first
day of February file a report with the commissioner stating in
detail, under appropriate heads, its assets and liabilities at
the close of business on the last day of the preceding calendar
year. This report shall be made under oath in the form
prescribed by the commissioner and published once, at the
expense of the industrial loan and thrift company, in a
newspaper of the county of its location, and proof thereof filed
immediately with the commissioner of commerce.
(2) Each industrial loan and thrift company which holds
authority to accept accounts pursuant to section 53.04,
subdivision 5, shall in place of the requirement in clause (1)
submit the reports and make the publication required of state
banks pursuant to section 48.48.
(2) (3) Within 30 days following a change in controlling
ownership of the capital stock of an industrial loan and thrift
company, it shall file a written report with the commissioner
stating in detail the nature of such change in ownership.
Sec. 35. Minnesota Statutes 1986, section 55.15, is
amended to read:
55.15 [APPLICATION.]
This chapter shall not be held or construed as limiting,
restricting, or in any way affecting the operation or management
of safe deposit boxes or vaults, or a safe deposit business, by
any savings bank, bank, or trust company. If any bank, savings
bank, or trust company elects to transact the business of a safe
deposit company under the provisions of this chapter, it shall
so notify the commissioner of commerce and thereafter the
provisions of sections 55.02 and 55.10 to 55.13 55.12 shall
apply to such safe deposit business and said bank, savings bank,
or trust company shall have the benefit thereof. The provisions
of sections 55.03 to 55.09 and the provisions of section 55.095
shall not apply to a bank, savings bank, or trust company
carrying on the business of a safe deposit company.
Sec. 36. Minnesota Statutes 1986, section 56.12, is
amended to read:
56.12 [ADVERTISING; TAKING OF SECURITY; PLACE OF BUSINESS.]
No licensee shall advertise, print, display, publish,
distribute, or broadcast, or cause or permit to be advertised,
printed, displayed, published, distributed, or broadcast, in any
manner any statement or representation with regard to the rates,
terms, or conditions for the lending of money, credit, goods, or
things in action which is false, misleading, or deceptive. The
commissioner may order any licensee to desist from any conduct
which the commissioner shall find to be a violation of the
foregoing provisions.
The commissioner may require that rates of charge, if
stated by a licensee, be stated fully and clearly in such manner
as the commissioner may deem necessary to prevent
misunderstanding thereof by prospective borrowers. In lieu of
the disclosure requirements of this section and section 56.14, a
licensee may give the disclosures required by the federal
Truth-in-Lending Act.
A licensee may take a lien upon real estate as security for
any loan exceeding $2,700 in principal amount made under this
chapter. The provisions of sections 47.20 and 47.21 do not
apply to loans made under this chapter, except as provided in
this section. No loan secured by a first lien on a borrower's
primary residence shall be made pursuant to this section if the
proceeds of the loan are used to finance the purchase of the
borrower's primary residence, unless:
(1) the proceeds of the loan are used to finance the
purchase of a manufactured home; or
(2) the proceeds of the loan are used in whole or in part
to satisfy the balance owed on a contract for deed. The rate of
interest charged on such a loan made after August 1, 1987, shall
not exceed the rate provided in section 47.20, subdivision 4a.
If the proceeds of the loan are used to finance the
purchase of the borrower's primary residence, the licensee shall
consent to the subsequent transfer of the real estate if the
existing borrower continues after transfer to be obligated for
repayment of the entire remaining indebtedness. The licensee
shall release the existing borrower from all obligations under
the loan instruments, if the transferee (1) meets the standards
of credit worthiness normally used by persons in the business of
making loans, including but not limited to the ability of the
transferee to make the loan payments and satisfactorily maintain
the property used as collateral, and (2) executes an agreement
in writing with the licensee whereby the transferee assumes the
obligations of the existing borrower under the loan
instruments. Any such agreement shall not affect the priority,
validity or enforceability of any loan instrument. A licensee
may charge a fee not in excess of one-tenth of one percent of
the remaining unpaid principal balance in the event the loan is
assumed by the transferee and the existing borrower continues
after the transfer to be obligated for repayment of the entire
assumed indebtedness. A licensee may charge a fee not in excess
of one percent of the remaining unpaid principal balance in the
event the remaining indebtedness is assumed by the transferee
and the existing borrower is released from all obligations under
the loan instruments, but in no event shall the fee exceed $150.
A licensee making a loan under this chapter secured by a
lien on real estate shall comply with the requirements of
section 47.20, subdivision 8.
No licensee shall conduct the business of making loans
under this chapter within any office, room, or place of business
in which any other business is solicited or engaged in, or in
association or conjunction therewith, if the commissioner finds
that the character of the other business is such that it would
facilitate evasions of this chapter or of the rules lawfully
made hereunder. The commissioner may promulgate rules dealing
with such other businesses.
No licensee shall transact the business or make any loan
provided for by this chapter under any other name or at any
other place of business than that named in the license. No
licensee shall take any confession of judgment or any power of
attorney. No licensee shall take any note or promise to pay
that does not accurately disclose the principal amount of the
loan, the time for which it is made, and the agreed rate or
amount of charge, nor any instrument in which blanks are left to
be filled in after execution. Nothing herein is deemed to
prohibit the making of loans by mail.
Sec. 37. Minnesota Statutes 1986, section 325G.04, is
amended by adding a subdivision to read:
Subd. 3. For purposes of subdivisions 1 and 2,
"unauthorized use" means a use by a person other than the
customer who does not have actual, implied, or apparent
authority for the use.
Sec. 38. Minnesota Statutes 1986, section 325G.36, is
amended to read:
325G.36 [WAIVERS VOID.]
Subdivision 1. Any provision of a consumer contract which
waives or attempts to waive any provision of sections 325G.29 to
325G.36 is void.
Subd. 2. Any provision of a consumer credit transaction
contract which waives or attempts to waive any provision of
section 325G.22 is void.
Sec. 39. Minnesota Statutes 1986, section 332.29,
subdivision 1, is amended to read:
Subdivision 1. The commissioner may from time to time
shall examine the books and records of every licensee hereunder
and of any person engaged in the business of debt prorating
service as defined in section 332.13 at least once every 18
calendar months. The commissioner once during any calendar
year, may require the submission of an audit prepared by a
certified public accountant of the books and records of each
licensee hereunder. If the licensee has, within one year
previous to the commissioner's demand, had an audit prepared for
some other purpose, this audit may be submitted to satisfy the
requirement of this section. The commissioner may investigate
any complaint concerning violations of sections 332.12 to 332.29
and may require the attendance and sworn testimony of witnesses
and the production of documents.
Sec. 40. [REPEALER.]
Minnesota Statutes 1986, sections 48.60 and 55.13, are
repealed.
Sec. 41. [EFFECTIVE DATE.]
Sections 1, 2, 4, 12, 13, 14, 15, 16, 18, 19, 20, 21, 22,
23, 25, 26, 27, and 28 are effective the day following final
enactment. Sections 3 and 39 are effective July 1, 1987.
ARTICLE 2
REGULATORY REDUCTION ACT
Section 1. Minnesota Statutes 1986, section 55.095, is
amended to read:
55.095 [DUTIES OF COMMISSIONER OF COMMERCE.]
Every safe deposit company is at all times under the
supervision and subject to the control of the commissioner of
commerce. The commissioner's examiners shall visit at least
once each year each commissioner may at any time examine a
licensed safe deposit company licensed by the commissioner to
ascertain whether the safe deposit company is complying with the
provisions of this chapter and whether its methods and systems
are in accordance with law and designed to protect the property
of persons doing business with it. For each examination the
commissioner shall charge the actual expenses of examination.
If the commissioner of commerce determines that the safe deposit
company is violating the provisions of this chapter, any law of
the state, or has engaged or the commissioner has reason to
believe that a licensee is about to engage in an unlawful,
unsafe, or unsound practice in the conduct of its business, the
commissioner may proceed pursuant to sections 46.24 to 46.33 or
serve notice on the safe deposit company of intention to revoke
the license, stating in general the grounds therefor and giving
reasonable opportunity to be heard. If for a period of 15 days
after the notice, the violation continues, the commissioner of
commerce may revoke the license and take possession of the
business and property of the safe deposit company and maintain
possession until the time the commissioner permits it to
continue business, or its affairs are finally liquidated. The
liquidation must proceed pursuant to sections 49.04 to 49.32.
Sec. 2. Minnesota Statutes 1986, section 59A.06,
subdivision 3, is amended to read:
Subd. 3. The commissioner shall may at any time make an
examination of the affairs, business, office and records of each
licensee at least once each year. Each licensee shall pay to
the commissioner the actual costs of examination as well as
amounts required under section 46.131, and the commissioner may
maintain an action for the recovery of such costs in any court
of competent jurisdiction.
Sec. 3. Minnesota Statutes 1986, section 168.66,
subdivision 3, is amended to read:
Subd. 3. "Retail installment sale" means any sale
evidenced by a retail installment contract wherein retail buyer
agrees to buy and retail seller agrees to sell a motor vehicle
at a time sale price payable in one or more installments with
the payment of a finance charge.
Sec. 4. Minnesota Statutes 1986, section 168.66,
subdivision 4, is amended to read:
Subd. 4. "Retail installment contract" means any
agreement, entered into in this state, evidencing a retail
installment sale of a motor vehicle, other than for the purpose
of resale, when purchased primarily for personal, family or
household use, pursuant to which title to, or a lien upon the
motor vehicle is retained by the retail seller as security for
the retail buyer's obligation. This term includes a mortgage,
conditional sale contract, or any contract for the bailment or
leasing of a motor vehicle by which the bailee or lessee
contracts to pay as compensation for its use a sum substantially
equivalent to the time retail installment sale price of the
motor vehicle and by which it is agreed that the bailee or
lessee is bound to become, or has the option of becoming, the
owner of such motor vehicle for no additional consideration or
for nominal additional consideration. "Retail installment
contract" does not include any agreement, entered into in this
state, evidencing an installment sale of a motor vehicle
purchased primarily for use in business. For purposes of this
subdivision, "business" means a commercial or industrial
enterprise which is carried on for the purpose of active or
passive investment or profit.
Sec. 5. Minnesota Statutes 1986, section 168.66,
subdivision 5, is amended to read:
Subd. 5. "Motor vehicle" means any device propelled or
drawn by any power other than muscular power, in, upon, or by
which any person or property is, or may be transported or drawn
upon a highway, excepting building and road construction
equipment not subject to motor vehicle registration fees,
snowmobiles, three-wheel off-road vehicles, boat, snowmobile,
and other utility trailers, farm tractors, and agricultural
machinery not designed primarily for highway transportation, but
which may incidentally transport persons or property on a public
highway, or any other device which may not be lawfully operated
upon a highway at the time of sale.
Sec. 6. Minnesota Statutes 1986, section 168.66,
subdivision 9, is amended to read:
Subd. 9. "Cash sale price" means the price at which the
seller would in good faith sell to the buyer, and the buyer
would in good faith buy from the seller, the motor vehicle which
is the subject matter of the retail installment contract, if
such sale were a sale for cash, instead of a retail installment
sale. The cash sale price may include any taxes, charges for
delivery, servicing, repairing or improving the motor vehicle,
including accessories and their installation, and any other
charges agreed upon between the parties. The cash price may not
include a documentary fee or document administration fee in
excess of $25 for services actually rendered to, for, or on
behalf of, the retail buyer in preparing, handling, and
processing documents relating to the motor vehicle and the
closing of the retail sale.
Sec. 7. Minnesota Statutes 1986, section 168.66,
subdivision 10, is amended to read:
Subd. 10. "Time sale price" "Total of payments" means the
amount which the buyer contracts to pay under a retail
installment contract, excluding any down payment.
Sec. 8. Minnesota Statutes 1986, section 168.66,
subdivision 11, is amended to read:
Subd. 11. "Time price differential" means the amount by
which the seller's total time sale price exceeds the aggregate
of the cash sale price, "Finance charge" means any charge
payable directly or indirectly by the buyer and imposed directly
or indirectly by the seller as a condition of the extension of
credit under a retail installment contract, and includes a time
price differential. The term does not include the cost of any
insurance and other benefits included in the retail installment
contract and any other permissible cost or expense incidental to
the retail installment sale or any charge of a type payable in a
comparable cash transaction, or any taxes, fees, or charges that
actually are or will be paid to public officials or government
agencies for determining the existence of or for perfecting,
releasing, or satisfying a security interest. The term also
does not include premiums for insurance against loss of or
damage to property, or against liability arising out of the
ownership or use of property if the insurance coverage may be
obtained from a person of the buyer's choice.
Sec. 9. Minnesota Statutes 1986, section 168.705, is
amended to read:
168.705 [EXAMINATIONS, SPECIAL INVESTIGATIONS, COSTS.]
For the purpose of discovering violations of sections
168.66 to 168.77 or securing information lawfully required by
the administrator hereunder, the administrator may, at any time,
either personally or by a person or persons duly designated by
the administrator, investigate the conditional sales contracts
and business related to the conditional sales contracts and
examine the books, accounts, records, and files used therein, of
every licensee and of every person who shall be engaged in the
business of a sales finance company, whether the person shall
act as principal or agent, or under or without the authority of
sections 168.66 to 168.77. For that purpose, the administrator
and the administrator's duly designated representative shall
have free access to the offices and places of business, books,
accounts, papers, records, files, safes, and vaults of all these
persons. The administrator and all persons duly designated by
the administrator shall have authority to require the attendance
of and to examine, under oath, all persons whomsoever whose
testimony the administrator may require relative to the
conditional sales contract or the business or to the subject
matter of any examination, investigation, or hearing.
The administrator shall may make an examination of the
affairs, business, office, and records of each licensee at least
once every two calendar years. Each licensee shall pay to the
administrator an amount as may be required under section 46.131,
and the administrator licensees as often as considered
necessary. The administrator may assess a fee covering the
necessary costs of an examination or special investigation under
this section, section 168.69, or reports filed under section
168.706. The fee is payable to the administrator on the
administrator's request for payment. The administrator may
maintain an action for the recovery of the costs in any court of
competent jurisdiction.
Sec. 10. Minnesota Statutes 1986, section 168.71, is
amended to read:
168.71 [RETAIL INSTALLMENT CONTRACTS.]
(a) (1) Every retail installment contract shall be in
writing, shall contain all the agreements of the parties, shall
be signed by the retail buyer and seller, and a copy thereof
shall be furnished to such retail buyer at the time of the
execution of the contract.
(2) No provisions for confession of judgment or power of
attorney therefor contained in any retail installment contract
or contained in a separate agreement relating thereto, shall be
valid or enforceable.
(3) The holder of a precomputed retail installment contract
may, if the contract so provides, collect a delinquency and
collection charge on each installment in arrears for a period
not less than ten days in an amount not in excess of five
percent of each installment or $5, whichever is the less. In
addition to such delinquency and collection charge, the retail
installment contract, whether interest-bearing or precomputed,
may provide for the payment of attorneys' fees not exceeding 15
percent of the amount due and payable under such contract where
such contractis referred to an attorney not a salaried employee
of the holder of the contract for collection plus the court
costs.
(4) Unless written notice has been given to the retail
buyer of actual or intended assignment of a retail installment
contract, payment thereunder or tender thereof made by the
retail buyer to the last known holder of such contract shall be
binding upon all subsequent holders or assignees.
(5) Upon written request from the retail buyer, the holder
of the retail installment contract shall give or forward to the
retail buyer a written statement of the dates and amounts of
payments and the total amount unpaid under such contract. A
retail buyer shall be given a written receipt for any payment
when made in cash.
(b) The retail installment contract shall contain the
following items:
(1) The cash sale price of the motor vehicle which is the
subject matter of the retail installment contract;
(2) The total amount of the retail buyer's down payment,
whether made in money or goods, or partly in money or partly in
goods;
(3) The difference between items one and two;
(4) The charge, if any, included in the transaction for any
insurance and other benefits not included in clause (1),
specifying the types of coverage and benefits taxes, fees, and
charges that actually are or will be paid to public officials or
government agencies, including those for perfecting, releasing,
or satisfying a security interest if such taxes, fees, or
charges are not included in clause (1);
(5) Principal balance, which is the sum of item three and
item four;
(6) The amount of the time price differential finance
charge;
(7) The time balance total of payments payable by the
retail buyer to the retail seller and the number of installment
payments required and the amount of each installment expressed
in dollars or percentages, and date of each payment necessary
finally to pay the time balance total of payments which is the
sum of item five and item six.
Provided, however, that said items one to seven inclusive
need not be stated in the terms, sequence or order set forth
above and that additional items may be included which serve to
explain the calculations involved in determining the stated time
balance to be paid by the retail buyer. Provided further, that
clauses (6) and (7) may be disclosed on the assumption that all
scheduled payments under the contract will be made when due.
In lieu of the above clauses, the retail seller may give
the retail buyer disclosures which satisfy the requirements of
the Federal Truth-In-Lending Act in effect as of the time of the
contract, notwithstanding whether or not that act applies to the
transaction.
(c) Every retail seller or sales finance company, if a
charge for insurance on the motor vehicle is included in a
retail installment contract shall within 30 days after execution
of the retail installment contract send or cause to be sent to
the retail buyer a policy or policies or certificate of
insurance, which insurance shall be written by a company
authorized to do business in this state, clearly setting forth
the amount of the premium, the kind or kinds of insurance and
the scope of the coverage and all the terms, exceptions,
limitations, restrictions and conditions of the contract or
contracts of the insurance. The buyer of a motor vehicle under
a retail installment contract shall have the privilege of
purchasing such insurance from an agent or broker of the buyer's
own selection and selecting an insurance company mutually
acceptable to the seller and the buyer; provided, however, that
the inclusion of the cost of the insurance premium in the retail
installment contract when the buyer selects the agent, broker or
company, shall be optional with the seller.
(d) Any sales finance company hereunder may purchase or
acquire from any retail seller any retail installment contract
on such terms and conditions as may be mutually agreed upon
between them.
(e) An acknowledgment by the retail buyer of the delivery
of any such copy or notice as required in subsection (a) of this
section contained in the body of the statement or contract shall
be conclusive proof of delivery in any action or proceeding by
or against any assignee of a retail installment contract.
Sec. 11. Minnesota Statutes 1986, section 168.72,
subdivision 1, is amended to read:
Subdivision 1. (a) The time price differential finance
charge authorized by sections 168.66 to 168.77 in a retail
installment sale may not exceed the following simple interest
annual percentage rates:
Class 1. Any motor vehicle designated by the manufacturer
by a year model of the same or not more than one year prior to
the year in which the sale is made - $10 per $100 18 percent per
year.
Class 2. Any motor vehicle designated by the manufacturer
by a year model of two or three years prior to the year in which
the sale is made - $11 per $100 19.75 percent per year.
Class 3. Any motor vehicle not in Class 1 or Class 2 - $13
per $100 23.25 percent per year plus a flat charge of $3 for
each retail installment sale.
(b) The time price differential finance charge must be
computed on the principal balance outstanding from time to time
as originally determined under section 168.71, clause (b) and
must be computed at the rate indicated on contracts payable in
successive monthly installment payments substantially equal in
amount extending for a period of one year. For purposes of this
subdivision and section 168.73, contracts payable in successive
monthly installment payments include those where the first
installment is scheduled for not less than 15 days nor more than
one month and 15 days from the date of the contract. On
contracts providing for installment payments extending for a
period less than or greater than one year, the time price
differential must be computed proportionately.
(c) When a retail installment contract provides for unequal
or irregular installment payments, the time price differential
is at the effective rate provided in clause (a) hereof, having
due regard for the irregular schedule of payment Retail
installment contracts may be interest-bearing or precomputed,
and fixed-rate or variable rate. For precomputed retail
installment contracts, the finance charge may be calculated in
advance on the assumption that all scheduled payments will be
made when due and the effect of prepayment in full is governed
by section 168.73. To compute time for the purpose of
calculating interest under this section and section 168.73, a
day may be considered 1/30 of a month when calculation is made
for a fraction of a calendar month. A year is 12 calendar
months. A calendar month is that period from a given date in
one month to the same numbered date in the following month, and
if there is no same-numbered date, to the last day of the
following month. When a period of time includes a whole month
and a fraction of a month, the fraction of a month is considered
to follow the whole month. In the alternative, for
interest-bearing retail installment contracts, a retail seller
may charge finance charges not to exceed 1/365th of the simple
interest annual percentage rate permitted in this section for
each actual day elapsed from the date of the retail installment
contract through and including the date of payment in full.
(d) (c) The time price differential finance charge is
inclusive of all charges incident to investigating and making
the contract, and for the extension of the credit provided for
in the contract and no fee, commission, expense or other charge
whatsoever may be taken, received, reserved or contracted for
except taxes, fees, and charges that actually are or will be
paid to public officials or government agencies for determining
the existence of or for perfecting, releasing, or satisfying a
security interest, and except as provided in sections 168.66 to
168.77.
Sec. 12. Minnesota Statutes 1986, section 168.72,
subdivision 4, is amended to read:
Subd. 4. A sale of a manufactured home made after July 31,
1983, is governed by the provisions of subdivision 1 for
purposes of determining the lawful time price differential
finance charge rate, except that the maximum time differential
finance charge for a class I manufactured home may not exceed $8
per $100 14.5 percent per year. A retail installment sale of a
manufactured home that imposes a time price differential rate
that is greater than the rate permitted by this subdivision is
lawful and enforceable in accordance with its terms until the
indebtedness is fully satisfied if the rate was lawful when the
sale was made.
Sec. 13. Minnesota Statutes 1986, section 168.73, is
amended to read:
168.73 [PREPAYMENT IN FULL, REFUND CREDITS, ALLOWANCE.]
Notwithstanding the provisions of any retail installment
contract to the contrary, any retail buyer may pay in full at
any time before maturity the debt of any retail installment
contract and without penalty. In so paying such debt a
precomputed retail installment contract in full, the retail
buyer shall receive a refund credit thereon for such
anticipation of payments. For contracts with substantially
equal scheduled monthly payments remaining after the date of
prepayment in full, the refund must be calculated for all fully
unexpired monthly payment periods following the date of payment
in full. For all other contracts, the refund must be calculated
as of the date in the month following prepayment which
corresponds to the original contract date. The amount of such
refund shall represent at least as great a proportion of the
time price differential after first deducting from such time
price differential be calculated according to the actuarial
method, less an acquisition cost of $15, as the sum of the
periodic time balances after the month in which date prepayment
is made, bears to the sum of all the periodic time balances
under the schedule of payments in the original contract which
may be deducted from the refund so calculated.
Where the amount of the credit for anticipation of payment
is less than $1, no refund need be made.
The actuarial method means the method of allocating
payments on a contract between the principal amount and finance
charge at the contract rate charged under section 168.72,
whereby a payment is applied first to the accumulated finance
charge and then to the unpaid principal balance based on the
original terms of the contract and based on the assumption that
all payments are made on the due date as originally scheduled or
deferred.
Sec. 14. Minnesota Statutes 1986, section 168.74, is
amended to read:
168.74 [EXTENSION OF SCHEDULES, PAYMENTS.]
The holder of a precomputed retail installment contract,
may, upon written agreement with the retail buyer, extend
the schedules scheduled due date, or defer the schedules
scheduled payment of all or part of any installment payment or
payments, or renew the balance of such contract. In any such
case the holder may restate the amount of the installments and
the time schedule therefor, and collect as a refinance charge
for such extension, deferment or renewal, a flat service fee not
to exceed $5 and a total additional charge not exceeding an
amount equal to one percent per month the simple interest annual
percentage rate under the original retail installment contract
calculated on the respective descending balances computed from
the date of such extension, deferment or renewal.
Sec. 15. [EFFECTIVE DATE.]
Sections 1, 2, 5, and 9 of this article are effective July
1, 1987. Sections 6, 7, 8, 10, 11, 12, and 14 are effective
January 1, 1988. Section 13 is effective January 1, 1988, and
applies to contracts entered into on or after that date.
ARTICLE 3
APPLICATION PARITY ACT
Section 1. Minnesota Statutes 1986, section 46.041, is
amended to read:
46.041 [BANK APPLICATIONS.]
Subdivision 1. [FILING; FEE; HEARING PUBLIC INSPECTION.]
The incorporators of a bank proposed to be organized under the
laws of this state shall execute and acknowledge a written
application in the form prescribed by the commissioner of
commerce. The application must be signed by two or more of the
incorporators and request a certificate authorizing the proposed
bank to transact business at the place and in the name stated in
the application. The applicant shall file the application with
the department with a $1,000 filing fee and a $500 investigation
fee. The fees must be turned over by the commissioner to the
state treasurer and credited to the general fund. Thereupon the
applicant shall within 30 days of the receipt of the form
prescribed by the commissioner, publish a notice of the filing
of the application in a newspaper published in the municipality
in which the proposed bank is to be located, and if there is no
such newspaper, then at the county seat of the county in which
the bank is proposed to be located. The notice shall be in the
form prescribed by the commissioner and, in addition to the
publication, the applicant shall mail a copy of the notice by
certified mail to every bank located within three miles of the
proposed location of the bank. If an application is contested,
50 percent of an additional fee equal to the actual costs
incurred by the department of commerce in approving or
disapproving the application, payable to the state treasurer and
credited by the treasurer to the general fund, must be paid by
the applicant and 50 percent equally by the intervening
parties The application file must be public, with the exception
of financial data on individuals which is private under the
Minnesota government data practices act.
Subd. 2. [UNCONTESTED NOTICE OF FILING APPLICATION
APPROVAL ORDER; PUBLICATION.] If no objection is received by the
commissioner within 21 days after the publication and mailing of
the notices, the commissioner may issue an order approving the
application without a hearing if it is found that the applicant
meets the conditions in section 46.044. Otherwise the
commissioner must deny the application Upon notice of acceptance
of an application as complete in all respects for filing, the
applicant shall within 30 days of the receipt of the form
prescribed by the commissioner, publish a notice of the filing
of the application, in a newspaper published in the municipality
in which the proposed bank is to be located, and if there is no
such newspaper, then at the county seat of the county in which
the bank is proposed to be located. The notice must be in the
form prescribed by the commissioner and, in addition to the
publication, the applicant shall mail a copy of the notice by
certified mail to every bank located within three miles of the
proposed location of the bank.
Subd. 3. [OBJECTIONS; COMMENTS, REQUESTS FOR HEARING.] If
the application is contested, the commissioner shall fix a time,
within 60 days after the filing of the objection for a hearing,
and the record of the hearing shall be considered by the
commissioner in deciding whether or not the application shall be
granted. A notice of the hearing must be published in the form
prescribed by the commissioner in some newspaper published in
the municipality in which the proposed bank is to be located,
and if there is no such newspaper, then at the county seat of
the county in which the bank is proposed to be located. The
notice shall be published once, at the expense of the
applicants, not less than 30 days prior to the date of the
hearing. At the hearing the commissioner shall consider the
application and hear the applicants and such witnesses as may
appear in favor of or against the granting of the application of
the proposed bank. The hearing shall be conducted by the
commissioner in accordance with the provisions of sections 14.01
to 14.70 Within 21 days after the notice of application has been
published, any person may submit to the commissioner either or
both written comments on an application and a written request
for a hearing on the application. The request must state the
nature of the issues or facts to be presented and the reasons
why written submissions would be insufficient to make an
adequate presentation to the commissioner. Comments challenging
the legality of an application should be submitted separately in
writing.
Written requests for hearing must be evaluated by the
commissioner who may grant or deny the request. A hearing must
generally be granted only if it is determined that written
submissions would be inadequate or that a hearing would
otherwise be beneficial to the decision-making process. A
hearing may be limited to issues considered material by the
commissioner.
If a request for a hearing has been denied, the
commissioner shall notify the applicant and all interested
persons stating the reasons for denial. Interested parties may
submit to the commissioner with simultaneous copies to the
applicant additional written comments on the application within
14 days after the date of the notice of denial. The applicant
shall be provided an additional seven days after the 14-day
deadline has expired within which to respond to any comments
submitted within the 14-day period. A copy of any response
submitted by the applicant shall also be mailed simultaneously
by the applicant to the interested parties. The commissioner
may waive the additional seven-day comment period if so
requested by the applicant.
Subd. 4. [HEARING.] In any case in which the commissioner
grants a request for a hearing, the commissioner shall fix a
time for a hearing conducted pursuant to chapter 14 to decide
whether or not the application will be granted. A notice of the
hearing must be published by the applicant in the form
prescribed by the commissioner in a newspaper published in the
municipality in which the proposed bank is to be located, and if
there is no such newspaper, then at the county seat of the
county in which the bank is proposed to be located. The notice
must be published once, at the expense of the applicants, not
less than 30 days prior to the date of the hearing. At the
hearing the commissioner shall consider the application and hear
the applicants and witnesses that appear in favor of or against
the granting of the application of the proposed bank. If an
application is contested, 50 percent of an additional fee equal
to the actual costs incurred by the department of commerce in
approving or disapproving the application, payable to the state
treasurer and credited by the treasurer to the general fund,
must be paid by the applicant and 50 percent equally by the
intervening parties.
Subd. 5. [APPROVAL, DISAPPROVAL, AFTER HEARING.] If, upon
the hearing or upon other information submitted, it appears to
the commissioner that the application should be granted, the
commissioner shall, not later than 90 days after the hearing,
and after the applicants have otherwise complied with the
provisions of law applicable to the organization of a bank,
including the provisions herein contained, make and file in the
commissioner's office a written order directing the issuance of
a certificate of authorization as provided by law. If the
certificate of authorization is not activated within a period of
12 months from date of issuance, the commissioner may upon
written notice to the applicants request a new hearing. If the
commissioner decides that the application should not be granted,
the commissioner shall deny the application and make a written
order to that effect, file it in the commissioner's office, and
forthwith give notice thereof by certified mail to one of the
incorporators named in the application for the proposed bank,
addressed to the incorporator at the address stated in the
application. Thereupon the commissioner shall refuse to issue
the certificate of authorization to the proposed bank.
Sec. 2. [EFFECTIVE DATE.]
This article is effective the day following final
enactment, and applies to pending applications at that time if
any notice of the filing of the application has not been fully
published.
Approved June 1, 1987
Official Publication of the State of Minnesota
Revisor of Statutes