Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1993, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1993
CHAPTER 257-S.F.No. 1129
An act relating to financial institutions; regulating
institutions, deposits, rates and charges, enforcement
provisions; modifying the definition of insurance
premium finance licensee; amending Minnesota Statutes
1992, sections 45.025, by adding a subdivision;
46.044; 46.045, by adding a subdivision; 46.048,
subdivision 1; 46.09; 47.0156; 47.096; 47.20,
subdivision 4a; 47.52; 47.54, subdivision 4; 47.55,
subdivision 1; 47.56; 47.58, subdivision 1; 48.04;
48.05; 48.09; 48.194; 48.24, subdivisions 1, 7, and 8;
48.61, subdivisions 2, 3, and 4; 48.64; 48.86; 49.35;
49.36, subdivisions 1 and 4; 51A.02, subdivision 43;
52.04, subdivision 1, and by adding a subdivision;
52.12; 53.03, subdivision 5; 53.04, by adding a
subdivision; 53.09, by adding a subdivision; 56.10;
56.12; 56.131, subdivision 1; 56.155, subdivision 1;
59A.02, subdivision 3; 80A.14, subdivisions 4 and 9;
82B.03, subdivision 2; 300.20, subdivision 2; 300.21;
336.4-104; and 540.08; proposing coding for new law in
Minnesota Statutes, chapter 56; repealing Minnesota
Statutes 1992, sections 46.048, subdivision 2; and
48.24, subdivision 4.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1992, section 45.025, is
amended by adding a subdivision to read:
Subd. 10. [ALTERNATIVE COMPLIANCE.] In lieu of complying
with the provisions of this section with respect to any deposit
or certificate of deposit, a depository institution defined in
section 19(b)(1)(A)(i)-(vi) of the Federal Reserve Act, United
States Code, title 12, section 461, or a deposit broker defined
in section 29(g) of the Federal Deposit Insurance Act, United
States Code, title 12, section 1831f(g), may comply with the
requirements of the Federal Truth in Savings Act and
regulations, notwithstanding whether or not that act or those
regulations apply to the deposit or certificate of deposit.
Sec. 2. Minnesota Statutes 1992, section 46.044, is
amended to read:
46.044 [CHARTERS ISSUED, CONDITIONS.]
Subdivision 1. [CHARTERS ISSUED, CONDITIONS.] If (1) the
applicants are of good moral character and financial integrity,
(2) there is a reasonable public demand for this bank in this
location, (3) the organization expenses being paid by the bank
do not exceed those allowed by section 46.043, (4) the probable
volume of business in this location is sufficient to insure and
maintain the solvency of the new bank and the solvency of the
then existing bank or banks in the locality without endangering
the safety of any bank in the locality as a place of deposit of
public and private money, (5) the commissioner of commerce is
satisfied that the proposed bank will be properly and safely
managed, and (6) the commissioner is satisfied that the capital
funds required pursuant to section 48.02 are available and the
commissioner may accept any reasonable demonstration including
subscription agreements supported by current financial
statements, and (7) the applicant, if it is an interstate bank
holding company, as defined in section 48.92, has provided
developmental loans as required by section 48.991, and has
complied with the net new funds reporting requirements of
section 48.93, the application must be granted; otherwise it
must be denied. In case of the denial of the application, the
commissioner of commerce shall specify the grounds for the
denial. A person aggrieved, may obtain judicial review of the
determination in accordance with chapter 14.
Subd. 2. [EXPIRATION AND EXTENSION OF ORDER.] If a bank
charter is not activated within 18 months from the date of the
order, the approval order automatically expires. Upon request
of the applicant prior to the automatic expiration date of the
order, the commissioner may grant reasonable extensions of time
to the applicant to activate the facility as the commissioner
deems necessary. The extensions of time shall not exceed a
total of an additional 12 months. If the commissioner's order
is the subject of an appeal in accordance with chapter 14, the
time period referred to in this section for activation of the
bank charter and any extensions shall begin when all appeals or
rights of appeal from the commissioner's order have concluded or
expired.
Sec. 3. Minnesota Statutes 1992, section 46.045, is
amended by adding a subdivision to read:
Subd. 4. [DEPOSIT INSURANCE.] In any case where Minnesota
Statutes require, either generally or by reference to a specific
program, that deposits in any financial institution be insured,
the requirement shall be deemed satisfied if the deposits are
insured in the requisite amount by an agency of the federal
government insuring deposits.
Sec. 4. Minnesota Statutes 1992, section 46.048,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENT.] Whenever a change in the
outstanding voting stock of a banking institution will result in
control or in a change in the control of the banking
institution, the person acquiring control of the banking
institution shall file notice of the proposed acquisition of
control with the commissioner of commerce at least 60 days
before the actual effective date of the change. As used in this
section, the term "control" means the power to directly or
indirectly direct or cause the direction of the management or
policies of the banking institution. A change in ownership of
capital stock that would result in direct or indirect ownership
by a stockholder or an affiliated group of stockholders of less
than 25 percent of the outstanding capital stock is not
considered a change of control. If there is any doubt as to
whether a change in the outstanding voting stock is sufficient
to result in control or to effect a change in the control, the
doubt shall be resolved in favor of reporting the facts to the
commissioner. The commissioner shall use the criteria
established by the Financial Institution Regulatory and Interest
Rate Control Act of 1987 1978, United States Code, title 12,
section 1817(j), and the regulations adopted under it, when
reviewing the acquisition and determining if the acquisition
should or should not be disapproved.
Sec. 5. Minnesota Statutes 1992, section 46.09, is amended
to read:
46.09 [DEPARTMENT OF COMMERCE EXAMINERS OR EMPLOYEES NOT TO
MAINTAIN INTEREST IN SUPERVISED INSTITUTIONS.]
Subdivision 1. [PROHIBITION.] No person who is an examiner
of financial institutions or other officer of the department of
commerce directly responsible for the supervision of financial
institutions shall be interested, either directly or indirectly,
as a stockholder, director, officer, trustee, assignee,
employee, or otherwise, in a bank, savings bank, trust company,
financial institution, or corporation holding the stock of any
such corporation within this state, or which carries on a
banking business within this state, either directly or
indirectly, or through an affiliated group or chain bank
operating within this state. The provisions of this subdivision
do not apply to the commissioner of commerce.
Subd. 2. [EXCEPTIONS.] Officers and examiners of the
department of commerce referred to in subdivision 1 may:
(1) maintain a demand or trust account in any financial
institution;
(2) maintain a savings, time or share account in any
financial institution;
(3) transact business with any national bank, federally
chartered savings and loan association or federally chartered
credit union;
(4) transact business with any financial institution or
licensee subject to the examination by the commissioner of
commerce to the extent the transaction is on the same terms,
conditions and to the same extent available to all other
customers of the financial institution or licensee.
Subd. 3. [LOANS AND CREDIT ADVANCES.] The exceptions
created in subdivision 2 do not include a loan or advance of
credit from a financial institution or licensee subject to
examination by the commissioner of commerce. A transaction not
specifically exempt by subdivision 2, clauses (1) to (3), is
subject to disclosure to the commissioner of commerce upon
request to determine if a conflict of interest exists or
interest contemplated by subdivision 1.
Subd. 4. [APPLICATION.] This section applies to those
employees, examiners, and officers of the department of commerce
who are directly responsible for the examination and supervision
of financial institutions or licensees.
Sec. 6. Minnesota Statutes 1992, section 47.0156, is
amended to read:
47.0156 [CLOSING EFFECTING A PERMANENT CESSATION OF
BUSINESS.]
The permanent closing of a financial institution as defined
in section 47.015 or 47.0151 for purposes, or with a result,
other than authorized in sections 47.015 to 47.0155 is unlawful
unless at least 60 90 days' written notice is given to the
commissioner.
Sec. 7. Minnesota Statutes 1992, section 47.096, is
amended to read:
47.096 [TIME DEPOSITS; NOTICE OF AUTOMATIC RENEWAL.]
If a deposit for a term of one year or more, including a
savings certificate and a certificate of deposit, is
automatically renewable by its own terms if not redeemed at a
specified redemption date, the financial corporation receiving
the deposit shall give mailed written notice to the owner or
holder of the deposit not less than 30 days prior to the
redemption date. The written notice shall be sent to the last
known address of the owner or holder as filed with the financial
corporation, shall state the date of the automatic renewal and
shall state any penalty diminution of interest or other
consequences to the owner or holder arising out of the failure
to redeem prior to automatic renewal. In lieu of complying with
the provisions of this section, a financial corporation may
comply with the requirements of the Federal Truth in Savings Act
and regulations, notwithstanding whether or not that act or
those regulations apply to the deposit.
Sec. 8. Minnesota Statutes 1992, section 47.20,
subdivision 4a, is amended to read:
Subd. 4a. [MAXIMUM INTEREST RATE.] (a) No conventional or
cooperative apartment loan or contract for deed shall be made at
a rate of interest or loan yield in excess of a maximum lawful
interest rate in an amount equal to the Federal National
Mortgage Association posted yields on 30-year mortgage
commitments for delivery within 60 days on standard conventional
fixed-rate mortgages published in the Wall Street Journal for
the last business day of the second preceding month plus four
percentage points.
(b) On or before the last day of each month the
commissioner of commerce shall determine, based on available
statistics, the maximum lawful rate of interest for conventional
or cooperative apartment loans or contracts for deed for the
next succeeding month as defined in paragraph (a), and shall
cause the maximum lawful rate of interest to be published in a
legal newspaper in Ramsey county on or before the first day of
each month or as soon thereafter as practicable and in the state
register on or before the last day of each month; the maximum
lawful rate of interest to be effective on the first day of that
month.
(1) The maximum lawful interest rate applicable to a
cooperative apartment loan or contract for deed at the time the
loan or contract is made is the maximum lawful interest rate for
the term of the cooperative apartment loan or contract for
deed. Notwithstanding the provisions of section 334.01, a
cooperative apartment loan or contract for deed may provide, at
the time the loan or contract is made, for the application of
specified different consecutive periodic interest rates to the
unpaid principal balance, if no interest rate exceeds the
maximum lawful interest rate applicable to the loan or contract
at the time the loan or contract is made.
(c) The maximum interest rate that can be charged on a
conventional loan or a contract for deed, with a duration of ten
years or less, for the purchase of real estate described in
section 83.20, subdivision 13, is three percentage points above
the rate permitted under paragraph (a) or 15.75 percent per
year, whichever is less. This clause is effective August 1,
1992.
(2) (d) Contracts for deed executed pursuant to a
commitment for a contract for deed, or conventional or
cooperative apartment loans made pursuant to a borrower's
interest rate commitment or made pursuant to a borrower's loan
commitment, or made pursuant to a commitment for conventional or
cooperative apartment loans made upon payment of a forward
commitment fee including a borrower's loan commitment issued
pursuant to a forward commitment, which commitment provides for
consummation within some future time following the issuance of
the commitment may be consummated pursuant to the provisions,
including the interest rate, of the commitment notwithstanding
the fact that the maximum lawful rate of interest at the time
the contract for deed or conventional or cooperative apartment
loan is actually executed or made is less than the commitment
rate of interest, provided the commitment rate of interest does
not exceed the maximum lawful interest rate in effect on the
date the commitment was issued. The refinancing of (a): (1) an
existing conventional or cooperative apartment loan, (b) (2) a
loan insured or guaranteed by the secretary of housing and urban
development, the administrator of veterans affairs, or the
administrator of the farmers home administration, or (c) (3) a
contract for deed by making a conventional or cooperative
apartment loan is deemed to be a new conventional or cooperative
apartment loan for purposes of determining the maximum lawful
rate of interest under this subdivision. The renegotiation of a
conventional or cooperative apartment loan or a contract for
deed is deemed to be a new loan or contract for deed for
purposes of clause (1) paragraph (b) and for purposes of
determining the maximum lawful rate of interest under this
subdivision. A borrower's interest rate commitment or a
borrower's loan commitment is deemed to be issued on the date
the commitment is hand delivered by the lender to, or mailed to
the borrower. A forward commitment is deemed to be issued on
the date the forward commitment is hand delivered by the lender
to, or mailed to the person paying the forward commitment fee to
the lender, or to any one of them if there should be more than
one. A commitment for a contract for deed is deemed to be
issued on the date the commitment is initially executed by the
contract for deed vendor or the vendor's authorized agent.
(3) (e) A contract for deed executed pursuant to a
commitment for a contract for deed, or a loan made pursuant to a
borrower's interest rate commitment, or made pursuant to a
borrower's loan commitment, or made pursuant to a forward
commitment for conventional or cooperative apartment loans made
upon payment of a forward commitment fee including a borrower's
loan commitment issued pursuant to a forward commitment at a
rate of interest not in excess of the rate of interest
authorized by this subdivision at the time the commitment was
made continues to be enforceable in accordance with its terms
until the indebtedness is fully satisfied.
Sec. 9. Minnesota Statutes 1992, section 47.52, is amended
to read:
47.52 [AUTHORIZATION.]
(a) With the prior approval of the commissioner, any bank
doing business in this state may establish and maintain not more
than five detached facilities provided the facilities are
located within the municipality in which the principal office of
the applicant bank is located; or within 5,000 feet of its
principal office measured in a straight line from the closest
points of the closest structures involved; or within 100 miles
of its principal office measured in a straight line from the
closest points of the closest structures involved, if the
detached facility is within any municipality in which no bank is
located at the time of application or if the detached facility
is in a municipality having a population of more than 10,000, as
determined by the commissioner from the latest available data
from the state demographer, or if the detached facility is
located in a municipality having a population of 10,000 or less,
as determined by the commissioner from the latest available data
from the state demographer, or for municipalities located in the
seven-county metropolitan area from the metropolitan council,
and all the banks having a principal office in the municipality
have consented in writing to the establishment of the facility.
(b) A detached facility shall not be closer than 50 feet to
a detached facility operated by any other bank and shall not be
closer than 100 feet to the principal office of any other bank,
the measurement to be made in the same manner as provided
above. This clause shall not be applicable if the proximity to
the facility or the bank is waived in writing by the other bank
and filed with the application to establish a detached facility.
(c) Any bank is allowed, in addition to other facilities,
one drive-in or walk-up facility located between 150 to 1,500
feet of the main banking house or within 1,500 feet from a
detached facility. The drive-in or walk-up facility permitted
by this clause is subject to clause (b) and section 47.53.
Sec. 10. Minnesota Statutes 1992, section 47.54,
subdivision 4, is amended to read:
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 qualified newspaper
published in the municipality in which the proposed detached
facility is to be located, and if there is no such newspaper,
then at the county seat of the county in a qualified newspaper
likely to give notice in the municipality in which the proposed
detached facility 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 detached facility.
If an application is contested and a hearing is granted, 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 commissioner of commerce to be
deposited in the general fund, must be paid by the applicant and
50 percent equally by the intervening parties.
Sec. 11. Minnesota Statutes 1992, section 47.55,
subdivision 1, is amended to read:
Subdivision 1. [BANKING FACILITIES IN OPERATION PRIOR TO
MAY 1, 1971.] A bank may retain and operate one detached
facility as it may have had in operation prior to May 1, 1971
without requirement of approval hereunder, provided that its
function is limited as provided in section 47.53 and its
location conforms with the provisions of section 47.52. A bank
having such a retained detached facility shall be limited to
operating two five additional detached facilities.
Sec. 12. Minnesota Statutes 1992, section 47.56, is
amended to read:
47.56 [TRANSFER OF LOCATION.]
The location of a detached facility may be transferred to
another location, subject to the same procedures and approval as
required hereunder for establishing a new detached facility,
except that the relocation of a detached facility within a
municipality of 10,000 or less population shall not require
consent of other banks required in section 47.52.
Sec. 13. Minnesota Statutes 1992, section 47.58,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] For the purposes of this
section, the terms defined in this subdivision have the meanings
given them.
(a) "Reverse mortgage loan" means a loan:
(1) Made to a borrower wherein the committed principal
amount is paid to the borrower in equal or unequal installments
over a period of months or years, interest is assessed, and
authorized closing costs are incurred as specified in the loan
agreement;
(2) Which is secured by a mortgage on residential property
owned solely by the borrower; and
(3) Which is due when the committed principal amount has
been fully paid to the borrower, or upon sale of the property
securing the loan, or upon the death of the last surviving
borrower, or upon the borrower terminating use of the property
as principal residence so as to disqualify the property from the
homestead credit given in chapter 290A.
(b) "Lender" means any bank subject to chapter 48, credit
union subject to chapter 52, savings bank organized and operated
pursuant to chapter 50, savings and loan association subject to
chapter 51A, or any insurance company as defined in section
60A.02, subdivision 4. "Lender" also includes any federally
chartered bank supervised by the comptroller of the currency or
federally chartered savings and loan association supervised by
the federal home loan bank board or federally chartered credit
union supervised by the National Credit Union Administration, to
the extent permitted by federal law.
(c) "Borrower" includes any natural person holding an
interest in severalty or as joint tenant or tenant-in-common in
the property securing a reverse mortgage loan.
(d) "Outstanding loan balance" means the current net
amount of money owed by the borrower to the lender whether or
not that sum is suspended pursuant to the terms of the reverse
mortgage loan agreement or is immediately due and payable. The
outstanding loan balance is calculated by adding the current
totals of the items described in clauses (1) to (5) and
subtracting the current totals of the item described in clause
(6):
(1) The sum of all payments made by the lender which are
necessary to clear the property securing the loan of any
outstanding mortgage encumbrance or mechanics or material
supplier's lien.
(2) The total disbursements made by the lender to date
pursuant to the loan agreement as formulated in accordance with
subdivision 3.
(3) All taxes, assessments, insurance premiums and other
similar charges paid to date by the lender pursuant to
subdivision 6, which charges were not reimbursed by the borrower
within 60 days.
(4) All actual closing costs which the borrower has
deferred, if a deferral provision is contained in the loan
agreement as authorized by subdivision 7.
(5) The total accrued interest to date, as authorized by
subdivision 5.
(6) All payments made by the borrower pursuant to
subdivision 4.
(e) "Actual closing costs" mean reasonable charges or sums
ordinarily paid at the time of closing for the following,
whether or not retained by the lender:
(1) Any insurance premiums on policies covering the
mortgaged property including but not limited to premiums for
title insurance, fire and extended coverage insurance, flood
insurance, and private mortgage insurance.
(2) Abstracting, title examination and search, and
examination of public records related to the mortgaged property.
(3) The preparation and recording of any or all documents
required by law or custom for closing a reverse mortgage loan
agreement.
(4) Appraisal and survey of real property securing a
reverse mortgage loan.
(5) A single service charge, which service charge shall
include any consideration, not otherwise specified in this
section as an "actual closing cost," paid by the borrower to the
lender for or in relation to the acquisition, making,
refinancing or modification of a reverse mortgage loan, and
shall also include any consideration received by the lender for
making a commitment for a reverse mortgage loan, whether or not
an actual loan follows the commitment. The service charge shall
not exceed one percent of the bona fide committed principal
amount of the reverse mortgage loan.
(6) Charges and fees necessary for or related to the
transfer of real property securing a reverse mortgage loan or
the closing of a reverse mortgage loan agreement paid by the
borrower and received by any party other than the lender.
Sec. 14. Minnesota Statutes 1992, section 48.04, is
amended to read:
48.04 [INCREASE AND REDUCTION OF CAPITAL.]
No increase or reduction of the capital of any such bank
banking institution shall be valid until the entire new capital
has been paid in cash, and certified to the commissioner under
oath of the president, vice-president, or cashier. The
commissioner shall thereupon issue a certificate of that fact
and of approval thereof. No reduction of the surplus of
any such bank banking institution shall be valid until such
reduction has been approved by the commissioner of commerce. No
reduction shall affect the liability of any stockholder for any
indebtedness incurred prior thereto.
Sec. 15. Minnesota Statutes 1992, section 48.05, is
amended to read:
48.05 [CAPITAL NOT TO BE WITHDRAWN; DIVIDENDS.]
No portion of the capital or surplus of any such bank
banking institution shall ever be withdrawn by any person or in
any way, either in dividends or otherwise, except upon reduction
as provided by law. No dividend on common stock shall be made
except as provided in section 48.09.
Sec. 16. Minnesota Statutes 1992, section 48.09, is
amended to read:
48.09 [DIVIDENDS; SURPLUS.]
At the end of each dividend period, after deducting all
necessary expenses, losses, amounts receivable more than one
year overdue and not well secured, interest, and taxes due or
levied, all of the remaining net profits for the period shall be
set aside as a surplus fund, if the surplus fund of such bank
the banking institution is not then equal to one-fifth of the
capital stock. If the surplus fund is more than one-fifth of
the capital stock, ten percent of the remaining net profits for
the period shall be set aside as a surplus fund until it equals
50 percent of the capital stock. The directors may then declare
a dividend of so much of the remainder as they may think
expedient, subject to the commissioner's approval. When in any
way impaired the surplus fund shall be raised to this percentage
in like manner.
Sec. 17. Minnesota Statutes 1992, section 48.194, is
amended to read:
48.194 [INSTALLMENT SALES CONTRACTS; LOANS.]
A person may enter into a credit sale or service contract
for sale to a state or national bank doing business in this
state, and a bank may purchase and enforce the contract under
the terms and conditions set forth in section 51A.385,
subdivision subdivisions 2 and 5 to 13. A state bank or
national bank may extend credit pursuant to the terms and
conditions set forth in section 51A.385.
Sec. 18. Minnesota Statutes 1992, section 48.24,
subdivision 1, is amended to read:
Subdivision 1. The total liabilities to any such bank, as
principal, guarantor or endorser of any individual, including
the liabilities of any corporation or limited liability company
which the individual owns or controls a majority interest, any
partnership, unincorporated association, limited liability
company, or corporation, including the liabilities of the
several members of a partnership or an unincorporated
association and including the liabilities of the general
partners but not the limited partners of a partnership, and in
case of a corporation or limited liability company of all
subsidiaries thereof in which such corporation or limited
liability company owns or controls a majority interest, shall
never exceed 20 percent of its capital actually paid in cash and
of its actual surplus fund, except that obligations not to
exceed 25 percent of said capital and surplus to any one
borrower shall not be included as liabilities for the purposes
of this section, but shall be liabilities of the borrowers,
provided they are secured by not less than a like amount of any
one of the various types of obligations of the United States or
which are fully guaranteed as to principal and interest by the
United States, and providing that such bonds or obligations have
a market value of at least ten percent in excess of the amount
loaned thereon at the time each loan is made.
For the purpose of this section the members of a family
living together in one household, if borrowed funds are to be
used in the conduct of a common enterprise, shall be regarded as
one person and the total liabilities of the members of the
family shall be limited as herein provided. The endorser or
guarantor of any obligation which is exempt from loaning limits
according to the provisions of this section shall also be exempt
from such loaning limits to the extent of the amount of
liability on such obligations for the purposes of this section
but shall be liable thereon. Individual extensions of credit
which result in liabilities of individuals or, corporations, or
limited liability companies exceeding the limitations set forth
in this section shall be construed to conform to the provisions
of this subdivision upon reduction in an amount sufficient to
reduce the total liability to not more than the legal amount,
but until paid in full shall not exempt the officer or employee
of the bank from being personally liable to the bank for the
amount of the original excess portion of the loan as set forth
in subdivision 8.
Sec. 19. Minnesota Statutes 1992, section 48.24,
subdivision 7, is amended to read:
Subd. 7. Obligations of any person, copartnership, limited
liability company, 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, 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. 20. Minnesota Statutes 1992, section 48.24,
subdivision 8, is amended to read:
Subd. 8. When a bank shall allow any individual,
partnership, limited liability company, unincorporated
association, or corporation, or any officer or director of the
bank, to become indebted to it, directly or indirectly, in
excess of the amount, exclusive of interest permitted by the
laws of this state, the officer or employee of the bank
willfully permitting or approving the loan shall be guilty of a
gross misdemeanor and, in addition thereto, shall be personally
liable to the bank for the amount of the loan in excess of the
statutory limit.
Sec. 21. Minnesota Statutes 1992, section 48.61,
subdivision 2, is amended to read:
Subd. 2. Any such bank or trust company may invest not to
exceed two five percent of its capital and surplus in shares of
stock in small business investment companies organized under the
provisions of the small business investment act of 1958.
Sec. 22. Minnesota Statutes 1992, 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 of the banks or bank holding companies is restricted to
(1) owned exclusively by bank holding companies or banks, and (2)
at least 51 percent of the voting stock is owned or controlled
by bank holding companies or banks authorized to do business in
the state of Minnesota.
Sec. 23. Minnesota Statutes 1992, section 48.61,
subdivision 4, is amended to read:
Subd. 4. Any such bank or trust company may make equity or
debt investments in limited partnerships, limited liability
companies, corporations, or projects designed primarily to
promote community welfare, such as the rehabilitation or
development of economically depressed residential, commercial,
or industrial areas. A bank or trust company investment in any
one limited partnership, limited liability company, corporation,
or project shall not exceed two five percent of its capital and
surplus and its aggregate investment in all such limited
partnerships, limited liability companies, corporations, or
projects shall not exceed five ten percent of its capital and
surplus.
Sec. 24. Minnesota Statutes 1992, section 48.64, is
amended to read:
48.64 [DEPOSITS OF TRUST FUNDS.]
Any person, firm, or corporation appointed by a court of
competent jurisdiction as representative of the estate of a
deceased person, or as guardian, or any trustee of a
firefighters' relief association, or any referee, receiver, or
trustee appointed by a court of record in this state, may
deposit funds for safekeeping and disbursing, unless otherwise
directed by the court, in any bank, credit union, if the
beneficial owner is a member, or trust company, however
organized, the deposits of which are insured, in whole or in
part, by the Federal Deposit Insurance Corporation an agency of
the federal government insuring deposits, to the extent that the
funds so deposited are fully insured.
Sec. 25. Minnesota Statutes 1992, section 48.86, is
amended to read:
48.86 [TRUST FUNDS; INVESTMENT OF ACCUMULATIONS.]
Any amount not less than $500 received by any trust company
as executor, administrator, guardian, or other trustee, or by
order of court, not required for the purposes of such trust, or
not to be accounted for within one year, it shall invest as soon
as practicable in authorized securities either then held by it
or specially procured by it; and the income, less its proper
charges, shall become part of the trust estate, and the net
accumulations thereon shall be likewise invested, accounted for,
and allowed in the settlement of such trust.
Except as may be otherwise provided in the governing will,
trust agreement, court order or other instrument, any amount in
a trust account may be invested in certificates of deposit,
share certificates, or savings accounts in any bank or banks, or
credit union, if the beneficial owner is a member, provided that
such certificates of deposit, share certificates, or savings
accounts are fully insured by the federal deposit insurance
corporation an agency of the federal government insuring
deposits and receive the prevailing rate of interest on such
certificates or savings accounts.
Sec. 26. Minnesota Statutes 1992, section 49.35, is
amended to read:
49.35 [CONSOLIDATION OR MERGER AGREEMENT.]
The respective boards of directors of the consolidating or
merging corporations may, by the majority vote of all of the
members of each board, make or authorize to be made between the
corporations a written agreement, in duplicate, for the
consolidation or merger of the corporations. The agreement
shall specify each corporation to be a party to the transaction,
and shall prescribe the terms and conditions thereof; the mode
of carrying it into effect; the authorized capital stock of the
consolidated or surviving corporation, which shall not exceed
the aggregate authorized capital stock of all of the
corporations that are a party thereto; the name of the
consolidated or surviving corporation, which may be the name, in
whole or in part, of any corporation which is a party to the
agreement, and shall specify the city in which it shall have its
principal place of business. It shall name the persons who
shall constitute the board of directors of the consolidated or
surviving corporation, but the number and qualifications of
these persons shall be in accordance with the statutes relating
to the number and qualifications of directors of that class of
corporation.
Sec. 27. Minnesota Statutes 1992, section 49.36,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENTS.] This consolidation or
merger agreement and certified copy of the proceedings of the
meetings of the respective boards of directors, at which the
making of the agreement was authorized, must be submitted to the
commissioner of commerce for approval with a fee of $250 payable
to the commissioner of commerce. The fee must be paid in equal
parts by the parties to The agreement, and it shall not be
effective until so approved by the commissioner. The
commissioner shall take action after the documents are
submitted, and is entitled to further information from any party
to the transaction as may be requested by the commissioner, or
as may be obtained upon a hearing directed by the commissioner.
Sec. 28. Minnesota Statutes 1992, section 49.36,
subdivision 4, is amended to read:
Subd. 4. [NOTICE OF ACQUISITION.] The successor bank shall
give reasonable notice of the acquisition to each of the
depositors and creditors of an acquired bank or savings
association within 30 days after the order is activated. If
detached facilities are to be closed as a result of transactions
authorized by this section, adequate notice shall be provided by
the bank prior to closing, unless the commissioner has acted to
prevent the probable failure of the bank or savings association.
Sec. 29. Minnesota Statutes 1992, section 51A.02,
subdivision 43, is amended to read:
Subd. 43. [ORGANIZATION.] "Organization" means a
corporation, government or governmental subdivision or agency,
trust, estate, partnership, joint venture, cooperative, limited
liability company, or association.
Sec. 30. Minnesota Statutes 1992, section 52.04,
subdivision 1, is amended to read:
Subdivision 1. A credit union has the following powers:
(1) to offer its members and other credit unions various
classes of shares, share certificates, deposits, or deposit
certificates;
(2) to receive the savings of its members either as payment
on shares or as deposits, including the right to conduct
Christmas clubs, vacation clubs, and other thrift organizations
within its membership. Trust funds received by a real estate
broker or the broker's salespersons in trust may be deposited in
a credit union;
(3) to make loans to members for provident or productive
purposes as provided in section 52.16;
(4) to make loans to a cooperative society or other
organization having membership in the credit union;
(5) to deposit in state and national banks and trust
companies authorized to receive deposits;
(6) to invest in any investment legal for savings banks or
for trust funds in the state and, notwithstanding clause (3), to
invest in and make loans of unsecured days funds (federal funds
or similar unsecured loans) to financial institutions insured by
an agency of the federal government and a member of the Federal
Reserve System or required to maintain reserves at the Federal
Reserve;
(7) to borrow money as hereinafter indicated;
(8) to adopt and use a common seal and alter the same at
pleasure;
(9) to make payments on shares of and deposit with any
other credit union chartered by this or any other state or
operating under the provisions of the federal Credit Union Act,
in amounts not exceeding in the aggregate 25 percent of its
unimpaired assets. However, payments on shares of and deposit
with credit unions chartered by other states are restricted to
credit unions insured by the National Credit Union
Administration. The restrictions imposed by this clause do not
apply to share accounts and deposit accounts of the Minnesota
corporate credit union in United States central credit union or
to share accounts and deposit accounts of credit unions in the
Minnesota corporate credit union;
(10) to contract with any licensed insurance company or
society to insure the lives of members to the extent of their
share accounts, in whole or in part, and to pay all or a portion
of the premium therefor;
(11) to indemnify each director, officer, or committee
member, or former director, officer, or committee member against
all expenses, including attorney's fees but excluding amounts
paid pursuant to a judgment or settlement agreement, reasonably
incurred in connection with or arising out of any action, suit,
or proceeding to which that person is a party by reason of being
or having been a director, officer, or committee member of the
credit union, except with respect to matters as to which that
person is finally adjudged in the action, suit, or proceeding to
be liable for negligence or misconduct in the performance of
duties. The indemnification is not exclusive of any other
rights to which that person may be entitled under any bylaw,
agreement, vote of members, or otherwise;
(12) upon written authorization from a member, retained at
the credit union, to make payments to third parties by
withdrawals from the member's share or deposit accounts or
through proceeds of loans made to such member, or by permitting
the credit union to make those payments from the member's funds
prior to deposit; to permit draft withdrawals from member
accounts, but a credit union proposing to permit draft
withdrawals shall notify the commissioner of commerce, in the
form prescribed, of its intent not less than 90 days prior to
authorizing draft withdrawals. The board of directors of a
credit union may restrict one class of shares to the extent that
it may not be redeemed, withdrawn, or transferred except upon
termination of membership in the credit union;
(13) to inform its members as to the availability of
various group purchasing plans which are related to the
promotion of thrift or the borrowing of money for provident and
productive purposes by means of informational materials placed
in the credit union's office, through its publications, or by
direct mailings to members by the credit union;
(14) to facilitate its members' voluntary purchase of types
of insurance incidental to promotion of thrift or the borrowing
of money for provident and productive purposes including, but
not limited to the following types of group or individual
insurance: Fire, theft, automobile, life and temporary
disability; to be the policy holder of a group insurance plan or
a subgroup under a master policy plan and to disseminate
information to its members concerning the insurance provided
thereunder; to remit premiums to an insurer or the holder of a
master policy on behalf of a credit union member, if the credit
union obtains written authorization from the member for
remittance by share or deposit withdrawals or through proceeds
of loans made by the members, or by permitting the credit union
to make the payments from the member's funds prior to deposit;
and to accept from the insurer reimbursement for expenses
incurred or in the case of credit life and accident and health
insurance within the meaning of chapter 62B commissions for the
handling of the insurance. The amount reimbursed or the
commissions received may constitute the general income of the
credit union. The directors, officers, committee members and
employees of a credit union shall not profit on any insurance
sale facilitated through the credit unions;
(15) to contract with another credit union to furnish
services which either could otherwise perform. Contracted
services under this clause are subject to regulation and
examination by the commissioner of commerce like other services;
(16) in furtherance of the twofold purpose of promoting
thrift among its members and creating a source of credit for
them at legitimate rates of interest for provident purposes, and
not in limitation of the specific powers hereinbefore conferred,
to have all the powers enumerated, authorized, and permitted by
this chapter, and such other rights, privileges and powers
incidental to, or necessary for, the accomplishment of the
objectives and purposes of the credit union;
(17) to rent safe deposit boxes to its members if the
credit union obtains adequate insurance or bonding coverage for
losses which might result from the rental of safe deposit boxes;
(18) notwithstanding the provisions of section 52.05, to
accept deposits of public funds in an amount secured by
insurance or other means pursuant to chapter 118 or section
9.031 or other applicable law and to receive deposits of trust
funds provided that either the provider or the beneficial owner
of the funds is a member of the credit union accepting the
deposit;
(19) to accept and maintain treasury tax and loan accounts
of the United States and to pledge collateral to secure the
treasury tax or loan accounts, in accordance with the
regulations of the Department of Treasury of the United States;
(20) to accept deposits pursuant to section 149.12,
notwithstanding the provisions of section 52.05, if the deposits
represent funding of prepaid funeral plans of members;
(21) to sell, in whole or in part, real estate secured
loans provided that:
(a) the loan is secured by a first lien;
(b) the board of directors approves the sale;
(c) if the sale is partial, the agreement to sell a partial
interest shall, at a minimum:
(i) identify the loan or loans covered by the agreement;
(ii) provide for the collection, processing, remittance of
payments of principal and interest, taxes and insurance premiums
and other charges or escrows, if any;
(iii) define the responsibilities of each party in the
event the loan becomes subject to collection, loss or
foreclosure;
(iv) provide that in the event of loss, each owner shall
share in the loss in proportion to its interest in the loan or
loans;
(v) provide for the distribution of payments of principal
to each owner proportionate to its interest in the loan or
loans;
(vi) provide for loan status reports;
(vii) state the terms and conditions under which the
agreement may be terminated or modified; and
(d) the sale is without recourse or repurchase unless the
agreement:
(i) requires repurchase of a loan because of any breach of
warranty or misrepresentation;
(ii) allows the seller to repurchase at its discretion; or
(iii) allows substitution of one loan for another;
(22) in addition to the sale of loans secured by a first
lien on real estate, to sell, pledge, discount, or otherwise
dispose of, in whole or in part, to any source, a loan or group
of loans, other than a self-replenishing line of credit;
provided, that within a calendar year beginning January 1 the
total dollar value of loans sold, other than loans secured by
real estate or insured by a state or federal agency, shall not
exceed 25 percent of the dollar amount of all loans and
participating interests in loans held by the credit union at the
beginning of the calendar year, unless otherwise authorized in
writing by the commissioner;
(23) to designate the par value of the shares of the credit
union by board resolution;
(24) to exercise by resolution the powers set forth in
United States Code, title 12, section 1757, as amended through
August 1, 1985 December 31, 1992. Before exercising each power,
the board must submit a plan to the commissioner of commerce
detailing implementation of the power to be used;
(25) to offer self-directed individual retirement accounts
and Keogh accounts and act as custodian and trustee of these
accounts if:
(1) all contributions of funds are initially made to a
deposit, share or share certificate account in the credit union;
(2) any subsequent transfer of funds to other assets is
solely at the direction of the member and the credit union
exercises no investment discretion and provides no investment
advice with respect to plan assets; and
(3) the member is clearly notified of the fact that
National Credit Union Share Insurance Fund coverage is limited
to funds held in deposit, share or share certificate accounts of
National Credit Union Share Insurance Fund-insured credit unions.
Sec. 31. Minnesota Statutes 1992, section 52.04, is
amended by adding a subdivision to read:
Subd. 2a. A person may enter into a credit sale or service
contract for sale to a state or federal credit union doing
business in this state, and a credit union may purchase and
enforce the contract under the terms and conditions set forth in
section 51A.385, subdivisions 2 and 5 to 13.
Sec. 32. Minnesota Statutes 1992, section 52.12, is
amended to read:
52.12 [CAPITAL; ENTRANCE FEES; UNION TO HAVE LIEN.]
The capital of a credit union includes shares, share
certificates, any special class of shares, undivided earnings,
reserves, and any entrance or membership fees. The credit union
shall have a lien on the shares and deposits of a member for any
sum due to the credit union from the member, or for any loan
endorsed by that member. In addition to any other statutory
right of setoff or lien and subject to any contractual
provision, if any party to an account is indebted to a credit
union, the credit union has a right to setoff against any
account in which the party has or had immediately before death a
present right of withdrawal. A credit union may, at its
discretion, charge an entrance or annual membership fee if
authorized by the bylaws.
Sec. 33. Minnesota Statutes 1992, section 53.03,
subdivision 5, is amended to read:
Subd. 5. [PLACE OF BUSINESS.] Not more than one place of
business may be maintained under any certificate of
authorization issued subsequent to the enactment of Laws 1943,
chapter 67, pursuant to the provisions of this chapter, but the
department of commerce may issue more than one certificate of
authorization to the same corporation upon compliance with all
the provisions of this chapter governing an original issuance of
a certificate of authorization. To the extent that previously
filed applicable information remains unchanged, the applicant
need not refile this information, unless requested. The filing
fee for a branch application shall be $500 and the investigation
fee $250. If a corporation has been issued more than one
certificate of authorization, the corporation shall allocate a
portion of capital stock to each office for which a certificate
has been issued, in order to comply with the capital
requirements of sections 53.02 and 53.05, clause (2), which
sections are applicable to each office and the capital allocated
thereto in the same manner as if each certificate had been
issued to a separate corporation. An industrial loan and thrift
corporation with deposit liabilities may change one or more of
its locations upon the written approval of the commissioner of
commerce. A fee of $100 must accompany each application to the
commissioner for approval to change the location of an
established office. An industrial loan and thrift corporation
that does not sell and issue thrift certificates for investment
may change one or more locations by giving 30 days' written
notice to the department of commerce which shall promptly amend
the certificate of authorization accordingly. No change in
place of business of a company to a location outside of its
current trade area or more than 25 miles from its present
location, whichever distance is greater, shall be permitted
under the same certificate unless all of the applicable
requirements of this section have been met.
Sec. 34. Minnesota Statutes 1992, section 53.04, is
amended by adding a subdivision to read:
Subd. 5a. A person may enter into a credit sale or service
contract for sale to an industrial loan and thrift company
operating under this chapter in this state, and an industrial
loan and thrift company may purchase and enforce the contract
under the terms and conditions set forth in section 51A.385,
subdivisions 2 and 5 to 13.
Sec. 35. Minnesota Statutes 1992, section 53.09, is
amended by adding a subdivision to read:
Subd. 4. The commissioner may honor requests from
interested parties for interpretive opinions in connection with
the administration of this chapter. No provision of this
chapter or of any other chapter to which this chapter refers
which imposes any penalty shall apply to any act done or not
done in conformity with any written interpretive opinion of the
commissioner, notwithstanding that such written interpretive
opinion may, after such act or omission, be amended or rescinded
or be determined by judicial or other authority to be invalid
for any reason.
Sec. 36. Minnesota Statutes 1992, section 56.10, is
amended to read:
56.10 [EXAMINATIONS.]
Subdivision 1. For the purpose of discovering violations
of this chapter or securing information lawfully required by the
commissioner hereunder, the commissioner may, at any time,
either personally or by a person or persons duly designated,
investigate the loans and business and examine the books,
accounts, records, and files used therein, of every licensee and
of every person who shall be engaged in the business described
in section 56.01, whether the person shall act or claim to act
as principal or agent, or under or without the authority of this
chapter. For that purpose the commissioner and a duly
designated representative shall have free access to the offices
and places of business, books, accounts, papers, records, files,
safes, and vaults of all such persons. The commissioner and all
persons duly designated shall have authority to require the
attendance of and to examine, under oath, all persons whomsoever
whose testimony the commissioner may require relative to the
loan or the business or to the subject matter of any
examination, investigation, or hearing.
Each licensee shall pay to the commissioner such amount as
may be required under section 46.131, and the commissioner may
maintain an action for the recovery of such costs in any court
of competent jurisdiction.
Subd. 2. The commissioner may honor requests from
interested parties for interpretive opinions in connection with
the administration of this chapter. No provision of this
chapter or of any other chapter to which this chapter refers
which imposes any penalty shall apply to any act done or omitted
to be done in conformity with any written interpretive opinion
of the commissioner, notwithstanding that such written
interpretive opinion may, after such act or omission, be amended
or rescinded or be determined by judicial or other authority to
be invalid for any reason.
Sec. 37. Minnesota Statutes 1992, 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 a prefabricated building; or
(2) the proceeds of the loan are used in whole or in part
to satisfy the balance owed on a contract for deed.
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 or arranging for settlement
and closing of real estate secured loans by an unrelated
qualified closing agent at a location other than the licensed
location.
Sec. 38. Minnesota Statutes 1992, section 56.131,
subdivision 1, is amended to read:
Subdivision 1. [INTEREST RATES AND CHARGES.] (a) On any
loan in a principal amount not exceeding $35,000 or 15 percent
of a Minnesota corporate licensee's capital stock and surplus as
defined in section 53.015, if greater, a licensee may contract
for and receive interest, calculated according to the actuarial
method, not exceeding the equivalent of the greater of any of
the following:
(1) the total of: (i) 33 percent per year on that part of
the unpaid balance of the principal amount not exceeding $750;
and (ii) 19 percent per year on that part of the unpaid balance
of the principal amount exceeding $750; or
(2) 21.75 percent per year on the unpaid balance of the
principal amount.
(b) On any loan where interest has been calculated
according to the method provided for in paragraph (a), clause
(1), interest must be contracted for and earned as provided in
that provision or at the single annual percentage rate computed
to the nearest 1/100 of one percent that would earn the same
total interest at maturity of the contract as would be earned by
the application of the graduated rates provided in paragraph
(a), clause (1), when the debt is paid according to the agreed
terms and the calculations are made according to the actuarial
method.
(c) Loans may be interest-bearing or precomputed.
(d) To compute time on interest-bearing and precomputed
loans, including, but not limited to the calculation of
interest, a day is 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 loans, a licensee
may charge interest at the rate of 1/365 of the agreed annual
rate for each actual day elapsed.
(e) With respect to interest-bearing loans:
(1) Interest must be computed on unpaid principal balances
outstanding from time to time, for the time outstanding. Each
payment must be applied first to the accumulated interest and
the remainder of the payment applied to the unpaid principal
balance; provided however, that if the amount of the payment is
insufficient to pay the accumulated interest, the unpaid
interest continues to accumulate to be paid from the proceeds of
subsequent payments and is not added to the principal balance.
(2) Interest must not be payable in advance or compounded.
However, if part or all of the consideration for a new loan
contract is the unpaid principal balance of a prior loan, then
the principal amount payable under the new loan contract may
include any unpaid interest which has accrued. The unpaid
principal balance of a precomputed loan is the balance due after
refund or credit of unearned interest as provided in paragraph
(f), clause (3). The resulting loan contract is deemed a new
and separate loan transaction for all purposes.
(f) With respect to precomputed loans:
(1) Loans must be repayable in substantially equal and
consecutive monthly installments of principal and interest
combined, except that the first installment period may be more
or less than one month by not more than 15 days, and the first
installment payment amount may be larger than the remaining
payments by the amount of interest charged for the extra days
and must be reduced by the amount of interest for the number of
days less than one month to the first installment payment; and
monthly installment payment dates may be omitted to accommodate
borrowers with seasonal income.
(2) Payments may be applied to the combined total of
principal and precomputed interest until the loan is fully
paid. Payments must be applied in the order in which they
become due.
(3) When any loan contract is paid in full by cash, renewal
or refinancing, or a new loan, one month or more before the
final installment due date, a licensee shall refund or credit
the borrower with the total of the applicable charges for all
fully unexpired installment periods, as originally scheduled or
as deferred, which follow the day of prepayment; if the
prepayment is made other than on a scheduled payment date, the
nearest scheduled installment payment date must be used in the
computation; provided further, if the prepayment occurs prior to
the first installment due date, the licensee may retain 1/30 of
the applicable charge for a first installment period of one
month for each day from the date of the loan to the date of
prepayment, and shall refund or credit the borrower with the
balance of the total interest contracted for. If the maturity
of the loan is accelerated for any reason and judgment is
entered, the licensee shall credit the borrower with the same
refund as if prepayment in full had been made on the date the
judgment is entered.
(4) If an installment, other than the final installment, is
not paid in full within ten days of its scheduled due date, a
licensee may contract for and receive a default charge not
exceeding five percent of the amount of the installment, but not
less than $4.
A default charge under this subdivision may not be
collected on an installment paid in full within ten days of its
scheduled due date, or deferred installment due date with
respect to deferred installments, even though a default or
deferral charge on an earlier installment has not been paid in
full. A default charge may be collected at the time it accrues
or at any time thereafter.
(5) If the parties agree in writing, either in the loan
contract or in a subsequent agreement, to a deferment of wholly
unpaid installments, a licensee may grant a deferment and may
collect a deferment charge as provided in this section. A
deferment postpones the scheduled due date of the earliest
unpaid installment and all subsequent installments as originally
scheduled, or as previously deferred, for a period equal to the
deferment period. The deferment period is that period during
which no installment is scheduled to be paid by reason of the
deferment. The deferment charge for a one-month period may not
exceed the applicable charge for the installment period
immediately following the due date of the last undeferred
payment. A proportionate charge may be made for deferment for
periods of more or less than one month. A deferment charge is
earned pro rata during the deferment period and is fully earned
on the last day of the deferment period. Should a loan be
prepaid in full during a deferment period, the licensee shall
make or credit to the borrower a refund of the unearned
deferment charge in addition to any other refund or credit made
for prepayment of the loan in full.
(6) If two or more installments are delinquent one full
month or more on any due date, and if the contract so provides,
the licensee may reduce the unpaid balance by the refund credit
which would be required for prepayment in full on the due date
of the most recent maturing installment in default. Thereafter,
and in lieu of any other default or deferment charges, the
single annual percentage rate permitted by this subdivision may
be charged on the unpaid balance until fully paid.
(7) Following the final installment as originally scheduled
or deferred, the licensee, for any loan contract which has not
previously been converted to interest-bearing under clause (6),
may charge interest on any balance remaining unpaid, including
unpaid default or deferment charges, at the single annual
percentage rate permitted by this subdivision until fully paid.
(8) With respect to a loan secured by an interest in real
estate, and having a maturity of more than 60 months, the
original schedule of installment payments must fully amortize
the principal and interest on the loan. The original schedule
of installment payments for any other loan secured by an
interest in real estate must provide for payment amounts that
are sufficient to pay all interest scheduled to be due on the
loan.
Sec. 39. Minnesota Statutes 1992, section 80A.14,
subdivision 4, is amended to read:
Subd. 4. [BROKER-DEALER.] "Broker-dealer" means any person
engaged in the business of effecting transactions in securities
for the account of others or for that person's own account.
"Broker-dealer" does not include:
(1) an agent;
(2) an issuer;
(3) a trust company; or
(4) a bank, savings institution, savings and loan
association, credit union:
(i) acting for the account of others, provided that such
activities are conducted in compliance with such rules as may be
adopted by the commissioner;
(ii) acting for its own account; or
(iii) acting in a fiduciary capacity pursuant to the powers
and privileges described by sections 48.36 to 48.49 or United
States Code, title 12, section 92(a);
(5) a person who has no place of business in this state if
that person effects transactions in this state exclusively with
or through (i) the issuers of the securities involved in the
transactions, (ii) other broker-dealers, or (iii) banks, savings
institutions, trust companies, insurance companies, investment
companies as defined in the Investment Company Act of 1940,
pension or profit sharing trusts, or other financial
institutions or institutional buyers, or to broker-dealers,
whether the purchaser is acting for itself or in some fiduciary
capacity; or
(6) other persons not within the intent of this subsection
whom the commissioner by rule or order designates.
Sec. 40. Minnesota Statutes 1992, section 80A.14,
subdivision 9, is amended to read:
Subd. 9. [INVESTMENT ADVISER.] "Investment adviser" means
any person who, for compensation, engages in the business of
advising others, either directly or through publications,
writings or electronic means, as to the value of securities or
as to the advisability of investing in, purchasing, or selling
securities, or who, for compensation and as a part of a regular
business, issues or promulgates analyses or reports concerning
securities. "Investment adviser" does not include:
(1) a bank, savings institution, credit union, or trust
company;
(2) a lawyer, accountant, engineer, or teacher whose
performance of these services is solely incidental to the
practice of that person's profession;
(3) a broker-dealer whose performance of these services is
solely incidental to the conduct of the business as a
broker-dealer and who receives no special compensation for them;
(4) a publisher of any newspaper, news column, newsletter,
news magazine, or business or financial publication or service,
whether communicated in hard copy form, or by electronic means,
or otherwise, that does not consist of the rendering of advice
on the basis of the specific investment situation of each
client; or
(5) other persons not within the intent of this subdivision
as the commissioner may by rule or order designate.
Sec. 41. [56.132] [INSTALLMENT SALES CONTRACTS.]
A person may enter into a credit sale or service contract
for sale to a licensee under this chapter doing business in this
state, and a licensee may purchase and enforce the contract
under the terms and conditions set forth in section 51A.385,
subdivisions 2 and 5 to 13.
Sec. 42. Minnesota Statutes 1992, section 56.155,
subdivision 1, is amended to read:
Subdivision 1. [AUTHORIZATION.] No licensee shall,
directly or indirectly, sell or offer for sale any insurance in
connection with any loan made under this chapter except as and
to the extent authorized by this section. The sale of credit
life and credit accident and health insurance is subject to the
provisions of chapter 62B, except that the term of the insurance
may exceed 60 months if the term of the loan exceeds 60 months.
Life, accident, and health insurance, or any of them, may be
written upon or in connection with any loan but must not be
required as additional security for the indebtedness. If the
debtor chooses to procure credit life insurance or credit
accident and health insurance as security for the indebtedness,
the debtor shall have the option of furnishing this security
through existing policies of insurance that the debtor owns or
controls, or of furnishing the coverage through any insurer
authorized to transact business in this state. A statement in
substantially the following form must be made orally, except for
loans by mail pursuant to section 56.12, and provided in writing
in bold face type of a minimum size of 12 points to the borrower
before the transaction is completed for each credit life and
accident and health insurance coverage sold:
CREDIT LIFE INSURANCE AND CREDIT DISABILITY INSURANCE
ARE NOT REQUIRED TO OBTAIN CREDIT. YOU MAY BUY ANY
INSURANCE FROM ANYONE YOU CHOOSE OR YOU MAY USE EXISTING
INSURANCE.
The licensee shall disclose whether or not the benefits
commence as of the first day of disability and shall further
disclose the number of days that an insured obligor must be
disabled, as defined in the policy, before benefits, whether
retroactive or nonretroactive, commence. In case there are
multiple obligors under a transaction subject to this chapter,
no policy or certificate of insurance providing credit accident
and health benefits may be procured by or through a licensee
upon more than one of the obligors. In case there are multiple
obligors under a transaction subject to this chapter, no policy
or certificate of insurance providing credit life insurance may
be procured by or through a licensee upon more than two of the
obligors in which case they shall be insured jointly. The
premium or identifiable charge for the insurance must not exceed
that filed by the insurer with the department of commerce. The
charge, computed at the time the loan is made for a period not
to exceed the full term of the loan contract on an amount not to
exceed the total amount required to pay principal and charges,
may be deducted from the proceeds or may be included as part of
the principal of any loan. If a borrower procures insurance by
or through a licensee, the statement required by section 56.14
must disclose the cost to the borrower and the type of
insurance, and the licensee shall cause to be delivered to the
borrower a copy of the policy, certificate, or other evidence
thereof, within a reasonable time. No licensee shall decline
new or existing insurance which meets the standards set out in
this section nor prevent any obligor from obtaining this
insurance coverage from other sources. Notwithstanding any
other provision of this chapter, any gain or advantage to the
licensee or to any employee, affiliate, or associate of the
licensee from this insurance or the sale or provision thereof is
not an additional or further charge in connection with the loan;
nor are any of the provisions pertaining to insurance contained
in this section prohibited by any other provision of this
chapter.
Sec. 43. Minnesota Statutes 1992, section 59A.02,
subdivision 3, is amended to read:
Subd. 3. [LICENSEE.] "Licensee" means a person licensed by
the commissioner to engage in the business of insurance premium
financing. The term does not include a person in the business
of insurance premium financing exclusively financing premiums
for business, agricultural, or corporate purposes.
Sec. 44. Minnesota Statutes 1992, section 82B.03,
subdivision 2, is amended to read:
Subd. 2. [LICENSE NOT REQUIRED.] (a) An officer or
employee of a corporation, partnership, or other business entity
may act as a real estate appraiser without obtaining a license
under this chapter if the corporation, partnership, or other
business entity in which the person is employed or is an officer
has an interest in the real estate that is the subject of the
appraisal as owners, lenders, investors, or insurers.
(b) An Notwithstanding licensure under this chapter any
appraisal conducted by a person exempt under this subdivision is
only subject to the guidelines for real estate appraisal
policies and review procedures of the Federal Deposit Insurance
Corporation, the Federal Savings and Loan Insurance Corporation
Office of Thrift Supervision, the Federal Reserve Board, the
Farm Credit Administration, the National Credit Union
Administration, or the comptroller of the currency, if the
appraisal was conducted only within the scope and purpose of
this subdivision.
(c) If a real estate appraisal is made by a person who is
exempt from licensing under this subdivision, the person for
whom the appraisal is conducted must be given written notice
that the appraisal was not conducted by a licensed appraiser,
and the appraisal report must clearly state that it was
conducted by an interested party and not by a licensed real
estate appraiser.
Sec. 45. Minnesota Statutes 1992, section 300.20,
subdivision 2, is amended to read:
Subd. 2. [VACANCIES.] If the certificate of incorporation
or the bylaws so provides, a vacancy in the board of directors
may be filled by the remaining directors. Not more than
one-third of the members of the board may be so filled in any
one year except any number may be appointed to provide for at
least three directors until any subsequent meeting of the
stockholders.
Sec. 46. Minnesota Statutes 1992, section 300.21, is
amended to read:
300.21 [OFFICERS.]
Every domestic corporation, except when otherwise specially
provided, must have a president, secretary, and treasurer, and
may have one or more vice-presidents and other officers, as its
certificate of incorporation or bylaws may provide. The time
and manner of their election and their respective duties must be
prescribed in the certificate of incorporation or in the bylaws.
Only one president of record may act on behalf of the
corporation; however, additional officers may be titled
president for purposes of empowering those additional officers
to function as managing officers of detached facilities of banks.
Sec. 47. Minnesota Statutes 1992, section 336.4-104, is
amended to read:
336.4-104 [DEFINITIONS AND INDEX OF DEFINITIONS.]
(a) In this article, unless the context otherwise requires:
(1) "Account" means any deposit or credit account with a
bank, including a demand, time, savings, passbook, share draft,
or like account, other than an account evidenced by a
certificate of deposit;
(2) "Afternoon" means the period of a day between noon and
midnight;
(3) "Banking day" means the that part of a any day,
excluding Saturday, Sunday, and holidays, on which a bank is
open to the public for carrying on substantially all of its
banking functions;
(4) "Clearinghouse" means an association of banks or other
payors regularly clearing items;
(5) "Customer" means a person having an account with a bank
or for whom a bank has agreed to collect items, including a bank
that maintains an account at another bank;
(6) "Documentary draft" means a draft to be presented for
acceptance or payment if specified documents, certificated
securities (section 336.8-102) or instructions for
uncertificated securities (section 336.8-308), or other
certificates, statements, or the like are to be received by the
drawee or other payor before acceptance or payment of the draft;
(7) "Draft" means a draft as defined in section 336.3-104
or an item, other than an instrument, that is an order;
(8) "Drawee" means a person ordered in a draft to make
payment;
(9) "Item" means an instrument or a promise or order to pay
money handled by a bank for collection or payment. The term
does not include a payment order governed by article 4A or a
credit or debit card slip;
(10) "Midnight deadline" with respect to a bank is midnight
on its next banking day following the banking day on which it
receives the relevant item or notice or from which the time for
taking action commences to run, whichever is later;
(11) "Settle" means to pay in cash, by clearinghouse
settlement, in a charge or credit or by remittance, or otherwise
as agreed. A settlement may be either provisional or final;
(12) "Suspends payments" with respect to a bank means that
it has been closed by order of the supervisory authorities, that
a public officer has been appointed to take it over, or that it
ceases or refuses to make payments in the ordinary course of
business.
(b) Other definitions applying to this article and the
sections in which they appear are:
"Agreement for electronic presentment," section 336.4-110
"Bank," section 336.4-105
"Collecting bank," section 336.4-105
"Depositary bank," section 336.4-105
"Intermediary bank," section 336.4-105
"Payor bank," section 336.4-105
"Presenting bank," section 336.4-105
"Presentment notice," section 336.4-110
(c) The following definitions in other articles apply to
this article:
"Acceptance," section 336.3-409
"Alteration," section 336.3-407
"Cashier's check," section 336.3-104
"Certificate of deposit," section 336.3-104
"Certified check," section 336.3-409
"Check," section 336.3-104
"Good faith," section 336.3-103
"Holder in due course," section 336.3-302
"Instrument," section 336.3-104
"Notice of dishonor," section 336.3-503
"Order," section 336.3-103
"Ordinary care," section 336.3-103
"Person entitled to enforce," section 336.3-301
"Presentment," section 336.3-501
"Promise," section 336.3-103
"Prove," section 336.3-103
"Teller's check," section 336.3-104
"Unauthorized signature," section 336.3-403
(d) In addition, article 1 contains general definitions and
principles of construction and interpretation applicable
throughout this article.
Sec. 48. Minnesota Statutes 1992, section 540.08, is
amended to read:
540.08 [INJURY TO CHILD OR WARD; SUIT BY PARENT OR
GUARDIAN.]
A parent may maintain an action for the injury of a minor
son or daughter. A general guardian may maintain an action for
an injury to the ward. A guardian of a dependent, neglected, or
delinquent child, appointed by a court having jurisdiction, may
maintain an action for the injury of the child. If no action is
brought by the father or mother, an action for the injury may be
brought by a guardian ad litem, either before or after the death
of the parent. Before a parent receives property as a result of
the action, the parent shall file a bond as the court prescribes
and approves as security therefor. In lieu of this bond, upon
petition of the parent, the court may order that the property
received be invested in securities issued by the United States,
which shall be deposited pursuant to the order of the court, or
that the property be invested in a savings account, savings
certificate, or certificate of deposit, or share certificate, in
a bank, savings and loan association, or trust company, credit
union in which either the depositor or beneficiary is a member,
or an annuity or other form of structured settlement, subject to
the order of the court. A copy of the court's order and the
evidence of the deposit shall be filed with the court
administrator. Money or assets in an account established by the
court under this section are not available to the minor child or
the child's parent or guardian until released by the court to
the child or the child's parent or guardian. No settlement or
compromise of the action is valid unless it is approved by a
judge of the court in which the action is pending.
Sec. 49. [REPEALER.]
Minnesota Statutes 1992, sections 46.048, subdivision 2;
and 48.24, subdivision 4, are repealed.
Sec. 50. [EFFECTIVE DATE.]
Sections 1 to 17, 21 and 22, 24 to 28, 30 to 37, 39 to 42,
and 44 to 49, are effective the day following final enactment.
Section 6 is effective October 1, 1993, and section 43 is
effective June 1, 1993. Sections 18, 19, 20, and 29 are
effective retroactive to January 1, 1993. Section 23 is
effective the day following final enactment, except that the
changes relating to limited liability companies are effective
retroactive to January 1, 1993.
Presented to the governor May 15, 1993
Signed by the governor May 19, 1993, 8:23 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes