PRIOR PRINTER'S NO. 1649 PRINTER'S NO. 1904
No. 1258 Session of 2002
INTRODUCED BY HOLL, WAGNER, ERICKSON, COSTA, LEMMOND, MOWERY AND
THOMPSON, JANUARY 10, 2002
SENATOR ARMSTRONG, BANKING AND INSURANCE, AS AMENDED,
APRIL 16, 2002
AN ACT
1 Amending the act of May 15, 1933 (P.L.565, No.111), entitled "An
2 act relating to the powers and duties of the Department of
3 Banking and the Secretary of Banking in exercising
4 supervision over, and taking possession of and conducting or
5 liquidating the business and property of, corporations,
6 associations, and persons receiving deposits or otherwise
7 transacting a banking business, corporations acting as
8 fiduciaries, and building and loan associations; providing
9 for the payment of the expenses of the Department of Banking
10 by supervised corporations, associations, or persons, and
11 appropriating the Banking Department Fund; authorizing the
12 Department of Banking, under certain circumstances, to
13 examine corporations, associations, or persons affiliated, or
14 having business transactions with supervised corporations,
15 associations or persons; authorizing appeals to the Supreme
16 Court, and prescribing and limiting the powers and duties of
17 certain other courts and their prothonotaries, registers of
18 wills, recorders of deeds, and certain State departments,
19 commissions, and officers; authorizing certain local public
20 officers and State departments to collect fees for services
21 rendered under this act; providing penalties; and repealing
22 certain acts and parts of acts," making extensive changes to
23 modernize and update the law.
24 The General Assembly of the Commonwealth of Pennsylvania
25 hereby enacts as follows:
26 Section 1. Section 2A of the act of May 15, 1933 (P.L.565,
27 No.111), known as the Department of Banking Code, amended
1 October 5, 1978 (P.L.1133, No.266), is amended to read:
2 Section 2. Definitions.--A. The following terms shall be
3 construed in this act to have the following meanings, except in
4 those instances where the context clearly indicates otherwise:
5 "Department." The Department of Banking of this Commonwealth.
6 "Secretary." The Secretary of Banking of this Commonwealth,
7 or his duly authorized deputy or representative.
8 "Corporation." A corporation or a joint stock association,
9 organized under the laws of this Commonwealth, of the United
10 States, or of any other state, territory, foreign country, or
11 dependency.
12 "Person." An individual, or an unincorporated association,
13 including a partnership, a limited partnership, or any other
14 form of unincorporated enterprise owned by two or more
15 individuals.
16 "Licensee." A corporation, person or any other type of
17 business entity required to be licensed by, registered with or
18 partially exempt from being licensed by the Department of
19 Banking under any law of this Commonwealth.
20 "Credit union." A Pennsylvania State-chartered credit union.
21 "Institution." A corporation or a person, as defined in this
22 section, or other type of business entity, including, but not
23 limited to, a mutual holding company, which is subject to the
24 supervision of the department. The term does not include credit
25 unions or licensees unless specifically stated otherwise.
26 "Court." The court of common pleas of the county in which the
27 corporation or person has its principal or only place of
28 business in this Commonwealth; or, where an institution of which
29 the secretary is receiver is concerned, the particular court in
30 which the certificate of possession, as defined later in this
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1 act, is filed; or the Commonwealth Court where specified in this
2 act.
3 "Prothonotary." The prothonotary of such court.
4 "Written." This includes printed, typewritten, engraved,
5 lithographed, photographed, photostated, telephotographed.
6 "Public body of the United States." The Federal Deposit
7 Insurance Corporation [or the Federal Savings and Loan Insurance
8 Corporation,] or any other agency or instrumentality of the
9 United States which insures deposits of an institution.
10 * * *
11 Section 2. Sections 4, 6 and 8 of the act are amended to
12 read:
13 Section 4. Advertisements, Publications, or Notices in
14 Newspapers.--A. Unless expressly provided otherwise, any
15 advertisement, publication, or notice in a newspaper, required
16 by this act, shall be published once [a week for three
17 successive weeks] (1) in a newspaper of general circulation in
18 the county, as defined by [the Newspaper Advertising Act,
19 approved the sixteenth day of May, one thousand nine hundred
20 twenty-nine (Pamphlet Laws, one thousand seven hundred eighty-
21 four), its supplements and amendments,] 45 Pa.C.S. § 101
22 (relating to definitions) published in the city, borough, or
23 township in which the principal place of business of the
24 institution is located; and (2) in first-class counties, also in
25 the legal newspaper, if any, published within the county, as
26 defined by [the Newspaper Advertising Act] 45 Pa.C.S. § 101.
27 If there is no newspaper of general circulation published in
28 the city, borough, or township, then the advertisement,
29 publication, or notice shall be inserted in a newspaper of
30 general circulation in the county, published at the county seat.
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1 If no newspaper of general circulation in the county is
2 published at the county seat, then such advertisement,
3 publication, or notice shall be inserted in the newspaper of
4 general circulation published nearest to the city, borough, or
5 township in which the principal place of business of such
6 institution is located and within the county. If there is no
7 newspaper of general circulation published within the county,
8 then the advertisement or notice shall be inserted in the
9 newspaper of general circulation published nearest to such city,
10 borough, or township in an adjoining county.
11 B. Any proof of publication required by this act shall be in
12 accordance with the requirements set forth in the definition of
13 proof of publication contained in [the Newspaper Advertising
14 Act] 45 Pa.C.S. § 101.
15 Section 6. Fees.--Except as otherwise specifically provided
16 in this act, any prothonotary or recorder of deeds, and any
17 State department, board, commission, or officer, other than the
18 [Department of Banking] department or its employes, shall be
19 entitled to receive for services performed, as required by this
20 act, such fees as it lawfully charges for such similar services.
21 Section 8. Fees for Copies and Certifications by
22 Department.--A. The department may[, by general rule or
23 regulation,] prescribe and charge reasonable fees for any copy
24 of a book, account, report, or other paper or record filed in
25 its offices or under its control, and for any certification
26 thereof, authorized or required by law.
27 B. The following apply to methods of payment:
28 (1) Whenever the department is authorized to impose or
29 accept payment for an application fee, examination fee,
30 assessment fee, fine, copy fee, certification fee or any other
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1 fee or charge of any kind whatsoever, the department may receive
2 such payment by any means, including by wire transfer, credit
3 card, debit card, or other similar device.
4 (2) The department may permit such payment to be made using
5 any medium, including telephone, facsimile transmission, wire
6 transmission, electronic mail, World Wide Web site, or any other
7 method related to any transmission mechanism including the
8 Internet.
9 (3) The department may enter into any agreement in order to
10 implement this subsection.
11 (4) The department may increase any fee, assessment, fine or
12 charge of any kind whatsoever, including any licensing fee
13 stated in section 603-A of the act of April 9, 1929 (P.L.177,
14 No.175), known as "The Administrative Code of 1929," in order
15 for the department to implement this subsection, without any
16 increased cost to the department.
17 Section 3. Section 15 of the act, amended October 5, 1978
18 (P.L.1133, No.266), is amended to read:
19 Section 15. Act Not Applicable to Credit Unions.--Except
20 where otherwise expressly provided, this act does not apply to,
21 and does not affect any act relating to, credit unions as
22 defined in [the act of September 20, 1961 (P.L.1548, No.658), as
23 amended, known as the "Credit Union Act."] 17 Pa.C.S. (relating
24 to credit unions).
25 Section 4. Section 201 of the act, amended July 2, 1935
26 (P.L.525, No.202), is amended to read:
27 Section 201. Corporations and Persons Subject to Supervision
28 of Department.--The department shall have the power to
29 supervise--
30 A. (1) All corporations and persons which are authorized to
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1 receive or which do receive in this Commonwealth money on
2 deposit or for safe-keeping, or which are authorized to engage
3 or which do engage in this Commonwealth in a banking business,
4 and all corporations which are authorized to act or which do act
5 in this Commonwealth as trustees, guardians, executors,
6 administrators, or in other fiduciary capacities, including, but
7 not limited to, banks, bank and trust companies, trust
8 companies, private banks, savings banks, [and mutual savings
9 funds;] savings associations, branches, agencies, or
10 representative offices of foreign banks in this Commonwealth,
11 mutual holding companies, and interstate banks, but not
12 including hotels or clubs which receive money from guests or
13 members for temporary safe-keeping, express, steamship, or
14 telegraph companies which receive money for transmission, and
15 attorneys at law, real estate agents, and attorneys in fact, who
16 are not engaged in the business of receiving moneys in this
17 Commonwealth for deposit or for transmission but receive and
18 transmit moneys only as an incident to their general business or
19 profession, brokers licensed under the laws of this
20 Commonwealth, holding membership in a lawfully constituted
21 brokerage exchange, who do and have authority to do only such
22 banking as is incidental to their brokerage business;
23 (2) [All building and loan associations authorized to
24 transact or transacting business in this Commonwealth;
25 (3)] All national banking associations, incorporated under
26 the laws of the United States and located within this
27 Commonwealth, which are authorized to act or which do act in
28 this Commonwealth as trustees, guardians, executors,
29 administrators, or in any other fiduciary capacities, to the
30 extent to which supervision by State authorities is or may be
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1 permitted under the laws of the United States.
2 [However, when] B. If any [corporation] INSTITUTION subject <--
3 to the supervision of the [Department of Banking shall also
4 engage] department, including any credit union, also engages in
5 a title insurance business, a mortgage guarantee business, or
6 any other business subject to the supervision of the Insurance
7 Department, then such [branch of its] business shall not be
8 subject to the supervision or examination authority of the
9 [Department of Banking] department except to the extent
10 necessary to determine the condition of the corporation SAFETY <--
11 AND SOUNDNESS OF THE INSTITUTION.
12 Section 5. Section 202 of the act, amended July 3, 1957
13 (P.L.463, No.259), is amended to read:
14 Section 202. General Scope of Supervision; Exercise of
15 Discretion.--A. In addition to the powers and duties provided
16 for in this act, the department shall exercise any power and
17 fulfill any duty imposed upon it by any other law of this
18 Commonwealth. Except where otherwise specifically provided, the
19 department shall enforce and administer all laws of this
20 Commonwealth which relate to any institution, and shall exercise
21 such general supervision over institutions as will afford the
22 greatest possible safety to depositors, other creditors, and
23 shareholders thereof, [insure] ensure the safe and sound conduct
24 of the business of such institutions, conserve their assets,
25 maintain the public confidence in such institutions and protect
26 the public interest.
27 B. Whenever under this act, discretion is vested in the
28 department or any board thereof as to whether, or the manner in
29 which, to exercise a power or fulfill a duty, the department [or
30 board] shall, after such examination or investigation as it
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1 shall deem appropriate under the circumstances, exercise such
2 discretion in such a manner as it shall deem necessary to
3 [insure] ensure the safe and sound conduct of the business of
4 any institution subject to its supervision, conserve its assets,
5 maintain public confidence in the business of such institutions
6 and protect the public interest and the interest of depositors,
7 other creditors and shareholders thereof.
8 C. The department may promulgate such rules and regulations
9 as it deems necessary and appropriate to administer this act.
10 D. The department may issue statements of policy and
11 interpretive letters as it deems necessary and appropriate to
12 administer this act or any other statute within the department's
13 jurisdiction to administer or enforce. An interpretive letter <--
14 does not have the force of law and is not a rule or order. An
15 interpretive letter is an administrative construction of a
16 department statute or regulation and is entitled to great weight
17 if the construction is reasonable and does not conflict with the
18 statute or regulation.
19 Section 6. Section 204 of the act is amended to read:
20 Section 204. Assessment of Expenses of Department upon
21 Institutions.--A. All the expenses of the department, including
22 those enumerated in this act or otherwise authorized by law,
23 shall be charged to and paid by all institutions, including
24 licensees, in such equitable amounts, at such times, and in such
25 manner as the department shall, by general rule or regulation,
26 prescribe. The expenses incurred by the department in connection
27 with any examination or investigation, whether regular or
28 special, including a proportionate part of the salary of any
29 examiner or other employe of the department [engaged in such
30 examination or investigation, and all counsel assigned by the
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1 Department of Justice at the request of the Department of
2 Banking to an examination or investigation,] or third-party
3 expenses, including attorneys retained by the department, may be
4 assessed by the [Department of Banking] department upon the
5 particular institution examined or investigated.
6 B. The department shall give written notice to each
7 institution, including licensees, of the amount lawfully charged
8 against it under the provisions of this act. The institution
9 shall pay the amount of such assessment to the department within
10 [thirty] sixty days after [such] the invoice date on the notice.
11 If payment is not made by any institution or licensee within
12 [such thirty-day] the sixty-day period, the department[, through
13 the Department of Justice,] may assess a maximum penalty fee of
14 one hundred fifty dollars ($150.00) for that sixty-day period
15 and each successive thirty-day period of delinquency. In
16 addition, the department, through the Office of Attorney General
17 or its authorized designee may institute an appropriate action
18 at law for the amount lawfully assessed against such
19 institution, together with any additional costs incurred by the
20 Department of Banking or the [Department of Justice] Office of
21 Attorney General or its authorized designee by virtue of such
22 failure to pay.
23 Section 7. Section 302 of the act, amended July 6, 1984
24 (P.L.634, No.129), is amended to read:
25 Section 302. Disclosure of Information Forbidden; Penalty;
26 Exceptions.--A. (1) [Neither] This section applies to matters
27 relating to institutions, credit unions and licensees. (2)
28 Neither the secretary, nor any deputy, examiner, clerk, or other
29 employe of the department, shall publish or divulge to anyone
30 any information contained in or ascertained from any examination
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1 or investigation made by the department, or any letter, report,
2 or statement sent to the department, or any other paper or
3 document in the custody of the department, except when the
4 publication or divulgement of such information is made by the
5 department pursuant to the provisions of this act [or of any
6 other law of this Commonwealth], or when the production of such
7 information is required by subpoena or other legal process of a
8 court of competent jurisdiction, or when it is used in deciding
9 whether to prosecute or in prosecutions or other court actions
10 instituted by or on behalf of or at the suggestion of the
11 department, or when it pertains to referring for investigation
12 and possible prosecution a criminal or civil matter or
13 administrative matter to any Federal, State or local law
14 enforcement or any Federal or State banking regulatory agencies,
15 or when the department provides information to any Federal or
16 State banking, insurance or securities regulatory agencies when
17 the information pertains to an enforcement concern including a
18 consumer complaint or a final order issued by the department, as
19 may be necessary or appropriate as determined in the discretion
20 of the secretary. (3) The service of a subpoena upon the
21 secretary, deputy, examiner, clerk or other employe of the
22 department shall not be construed as requiring such person to
23 disclose any information, but such person shall have all the
24 rights and privileges as any other subpoenaed party to object to
25 production of information on the same basis as provided in the
26 Rules of Civil Procedure, statute [law], regulation or common
27 law. The department may condition the release of such
28 information on an order from a court of competent jurisdiction
29 protecting the information from general disclosure to the
30 public. The department retains and may exercise any and all
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1 remedies at law and in equity to quash a subpoena. (4) Any
2 privileges available to Federal financial institution regulators
3 under Federal statute, regulation or common law shall be
4 available to the department. (5) The department may provide to
5 any person, Federal, State or local government agency the
6 following information regarding licensees, to the extent that
7 the department has such information in its possession: whether
8 and for what time period a person's license is current,
9 suspended or revoked pursuant to a final order issued by the
10 department; whether and for what time period an individual is or
11 has been suspended or prohibited from working for or otherwise
12 participating as a licensee pursuant to a final order issued by
13 the department. (6) The department may condition the release of
14 subpoenaed information on an order from a court of competent
15 jurisdiction protecting the information from general disclosure
16 to the public. (7) If the department is subpoenaed for report
17 of examination information, the department may refuse to release
18 the requested information for reasons of safety and soundness or
19 if the department requests and is denied a protective order or
20 if the department requests and is denied redaction of the report
21 of examination to protect the privacy of persons not involved in
22 the litigation, as the secretary deems necessary and appropriate
23 under the circumstances.
24 B. A violation of the provisions of this section by the
25 secretary, or by any deputy, examiner, clerk, or other employe
26 of the department, shall be sufficient ground for his removal
27 from office. In addition the secretary, deputy, examiner, clerk,
28 or other employe [committing] who willfully or knowingly commits
29 such violation shall be deemed guilty of a misdemeanor, and
30 shall, upon conviction thereof, be subject to imprisonment for a
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1 period not exceeding one year, or a fine not exceeding one
2 thousand dollars, or both.
3 Section 8. Section 303 of the act, amended or added October
4 5, 1978 (P.L.113, No.266), and July 6, 1984 (P.L.634, No.129),
5 is amended to read:
6 Section 303. Conflicts of Interest; Penalty.--A. For
7 purposes of this section, "institution" shall [mean: a <--
8 Pennsylvania State-chartered or licensed bank, [mutual] savings <--
9 bank, bank and trust company, trust company, private bank,
10 savings [and loan] association, [consumer discount company, <--
11 motor vehicle sales finance company, licensed self-financing
12 installment seller of motor vehicles, licensed collector-
13 repossessor, money transmitter, pawnbroker] mutual holding <--
14 company, licensee INCLUDE A LICENSEE or credit union. <--
15 B. Except as provided in subsection E, neither the
16 [Secretary of Banking] secretary, nor any officer or employe of
17 the department, nor any deputy receiver or employe of the
18 [Secretary of Banking] secretary, as receiver, shall receive any
19 sum of money or any property as a gift or loan or otherwise,
20 directly or indirectly from any institution or from any officer,
21 director or employe thereof. This subsection shall not apply to
22 loans to employes of the [Department of Banking] department who
23 function in a clerical or nondecision making capacity with
24 regard to institutions, including, but not limited to, clerks,
25 typists and stenographers.
26 C. Neither the [Secretary of Banking] secretary, nor any
27 officer or employe of the department, nor any deputy receiver or
28 employe of the [Secretary of Banking] secretary as receiver,
29 shall hold any office or position in, have any direct or
30 indirect pecuniary interest in, or direct or indirectly own
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1 shares or securities issued by an institution, except that the
2 [Secretary of Banking] secretary or any department employe or
3 officer may continue to own shares or securities issued by an
4 institution which are owned by [him] the secretary on the date
5 of his appointment, or by department employes or officers on the
6 date of commencement of employment with the department, and all
7 shares or securities distributed by the institution and received
8 by [him] any of them on account of the shares or securities so
9 owned subject to the penalty provisions of this section. ALL <--
10 PERSONS SUBJECT TO THIS SUBSECTION SHALL PROVIDE THE DEPARTMENT
11 WITH WRITTEN NOTICE OF HIS OR HER OWNERSHIP OF ANY SUCH SHARES
12 OR SECURITIES PRIOR TO OR UPON HIS OR HER COMMENCEMENT OF
13 EMPLOYMENT WITH THE DEPARTMENT. Notwithstanding the foregoing,
14 the department may impose terms on the employe or officer,
15 including, but not necessarily limited to, requiring the employe
16 or officer to place into a blind trust, sell or divest of such
17 securities as a condition of obtaining or continuing employment
18 with the department, provided such sale or divestment is deemed
19 to be reasonably necessary under the circumstances, OR TO RECUSE <--
20 HIMSELF OR HERSELF FROM BEING INVOLVED IN ANY DEPARTMENT
21 DECISION THAT PERTAINS SOLELY TO THE INSTITUTION OF WHICH HE OR
22 SHE OWNS SHARES OR SECURITIES.
23 D. In the event of such ownership of shares or securities by
24 the [Secretary of Banking] secretary, he shall disclose the
25 ownership, amount and date of acquisition of such shares or
26 securities in writing to the Secretary of the Commonwealth
27 immediately after his appointment and shall not during his term
28 of office participate in any decision or take any action
29 concerning an institution in which he owns such shares or
30 securities other than actions or decisions generally applicable
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1 to institutions or classes of institutions. In the event of
2 disqualification of the [Secretary of Banking] secretary from
3 participation in any decision or action for such reason, all
4 authority vested in him by law shall, for the purpose of such
5 decision or action, be exercised by the [senior deputy Secretary
6 of Banking] secretary.
7 E. The prohibitions of subsections B and C shall not apply
8 to:
9 (1) A first lien mortgage loan or home equity loan upon the
10 home of the [Secretary of Banking] secretary, an officer or
11 employe of the department, a deputy receiver or an employe of
12 the [Secretary of Banking] secretary as receiver, or a motor
13 vehicle loan, in any and all such mortgage loans or motor
14 vehicle loans where such loan is granted upon the same terms and
15 in the same manner as provided by law for mortgage loans or
16 motor vehicle loans granted by such institutions. All persons
17 subject to this subsection shall provide the department with
18 written notice of the motor vehicle loan ANY LOAN REFERENCED IN <--
19 THIS SUBSECTION and its terms within thirty days of receiving
20 the loan. NOTWITHSTANDING THE FOREGOING, THE DEPARTMENT MAY <--
21 IMPOSE TERMS ON THE EMPLOYE OR OFFICER, INCLUDING, BUT NOT
22 NECESSARILY LIMITED TO, REQUIRING SUCH PERSON TO RECUSE HIMSELF
23 OR HERSELF FROM BEING INVOLVED IN ANY DEPARTMENT DECISION THAT
24 PERTAINS SOLELY TO THE INSTITUTION FROM WHICH HE OR SHE RECEIVED
25 A LOAN.
26 (2) A deposit account with an institution, provided that
27 such account shall not be intentionally overdrawn[; except that
28 an examiner assigned to the examination of savings associations
29 shall not have a savings account in any State-chartered savings
30 association.] and the secretary, department employe or officer
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1 does not participate in any vote as a shareholder or member of
2 such institution.
3 F. A violation of the prohibitions of this section by the
4 [Secretary of Banking] secretary, an officer or employe of the
5 department, a deputy receiver or an employe of the [Secretary of
6 Banking] secretary as receiver shall constitute sufficient
7 ground for removal from office. In addition, any such person who
8 willfully or knowingly commits such violation shall be guilty of
9 a misdemeanor and shall, upon conviction thereof, be subject to
10 imprisonment for a period not exceeding one year, or a fine not
11 exceeding one thousand dollars ($1,000.00), or both; and shall
12 be subject to a further fine equal to the amount of money or
13 value of the property which such individual has directly or
14 indirectly received in violation of this section.
15 Section 9. Section 401 of the act, amended July 6, 1984
16 (P.L.634, No.129), is amended to read:
17 Section 401. Examinations of Institutions.--[A. The
18 department shall examine all institutions thoroughly at least
19 once every two calendar years, and more frequently if it deems
20 such action necessary or advisable to safeguard the interests of
21 depositors, other creditors, or shareholders of such
22 institutions. This examination shall include a complete review
23 of the property, assets, and resources of the institution; the
24 loans and discounts made by it and the collateral deposited with
25 it as security for such loans; the mode of conducting its
26 affairs; the investment of its funds; the interest taken in its
27 affairs by its officers, directors, and employes if a
28 corporation, or by its employes and the partners or individuals
29 owning it if a person; its compliance with the law, and with the
30 terms of its charter or license if it has either; and any other
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1 matters, bearing any relation to its condition, which the
2 department shall prescribe.
3 The department may also make special examinations or
4 investigations of any institution at any time the department
5 deems such action necessary or advisable, to protect depositors,
6 other creditors or shareholders thereof.]
7 B. The department, when requested in writing by [a person
8 subject to its supervision, or by the board of directors or the
9 holders of a majority of the shares of capital stock of a
10 corporation subject to its supervision, shall] an owner of all
11 or part of an institution, credit union or licensee, including a
12 shareholder, partner or member, or a director or officer of an
13 institution, credit union or licensee subject to its
14 supervision, may at the department's discretion examine or
15 investigate the affairs and condition of such institution.
16 However, this provision shall not be construed to mean that such
17 person, directors, or shareholders shall have any greater right
18 to require the department to disclose to them the results of any
19 such examination or investigation than they have in the case of
20 any regular examination or investigation.
21 C. The department, upon the receipt of notice from the
22 Insurance Commissioner that he has become receiver of a
23 corporation or person, any branch of the business of which is
24 subject to the supervision of the [Department of Banking]
25 department, [shall] may examine or investigate the affairs and
26 condition of such institution in order to determine whether any
27 action should be taken by the [Department of Banking]
28 department, pursuant to the provisions of this act.
29 D. Examinations or investigations shall be made by the
30 secretary, or by qualified examiners or other qualified employes
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1 designated for that purpose by the secretary or by his duly
2 authorized deputy, and empowered, in writing, by the department
3 to make examinations or investigations of institutions,
4 including credit unions and licensees who may be assessed
5 charges to cover the department's costs of such examinations and
6 investigations.
7 E. In the case of an institution which is a member of a
8 Federal Reserve Bank or any other institution including a credit
9 union, the department may, in its discretion, accept the
10 examinations or reports made [under the Federal Reserve Act]
11 pursuant to the requirements of applicable Federal law in lieu
12 of those required by this act[.] or any other act of this
13 Commonwealth. The department may accept Federal application
14 forms from applicants for charter or other approvals or
15 nonobjections of the department under the statutes administered
16 by the department in lieu of department forms when the
17 department deems such acceptance appropriate.
18 F. In connection with any examination or investigation
19 authorized by this act or any other law, the department shall
20 have, in addition to the authority provided by any other law,
21 power to issue subpoenas requiring the attendance of, or the
22 production of pertinent books [and papers by], papers,
23 electronic data or information of any kind which is in any form,
24 by, the officers, directors, agents, employes, or members,
25 respectively, of any corporation or person, including a credit
26 union or licensee, which the department is authorized, under the
27 provisions of this act or any other law of this Commonwealth, to
28 examine. The department shall have power to issue subpoenas to
29 any other person or entity of any kind whatsoever, provided that
30 the information from such person or entity is necessary for the
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1 enforcement of this act or any other law within the jurisdiction
2 of the department. The department shall also have the power to
3 question such witnesses under oath or affirmation, and to
4 examine such books and papers.
5 Any witness who refuses to obey a subpoena issued under this
6 section, or who refuses to be sworn or affirmed, or to testify,
7 or who is guilty of any contempt after summons to appear, may be
8 punished as for contempt of court, and, for this purpose, an
9 application may be made to Commonwealth Court or any court of
10 common pleas within whose territorial jurisdiction the offense
11 was committed, for which purpose such court is hereby given
12 jurisdiction.
13 Section 10. Section 402 of the act, amended July 2, 1935
14 (P.L.525, No.202), is amended to read:
15 Section 402. Examination of Corporations or Persons
16 Affiliated with Institutions.--[A. The Department of Banking]
17 The department shall have the power to supervise, regulate,
18 examine, limit, or prohibit the activities of corporations or
19 persons affiliated with institutions, including credit unions,
20 to the same extent as such activities of corporations or persons
21 affiliated with national banking associations, Federal savings
22 associations or Federal credit unions, or with members of a
23 Federal Reserve Bank, are, or shall be, supervised, regulated,
24 examined, limited, or prohibited by general law, [or] by Federal
25 statutes or by regulations issued by any Federal authority
26 pursuant to law, but in no event shall the department's
27 examination and enforcement authority over affiliates be less
28 than is permissible for banking institutions under the act of
29 November 30, 1965 (P.L.847, No.356), known as the "Banking Code
30 of 1965," savings associations under the act of December 14,
20020S1258B1904 - 18 -
1 1967 (P.L.746, No.345), known as the "Savings Association Code
2 of 1967," or credit unions under 17 Pa.C.S. (relating to credit
3 unions).
4 [B. For the purpose of determining the condition of, and
5 obtaining full information about, an institution, the department
6 may examine and investigate the property, assets, books, papers,
7 and affairs of any corporation or person affiliated with such
8 institution. A corporation or person shall be deemed to be
9 affiliated with an institution for the purposes of this section
10 if--
11 (1) It is owned directly or indirectly by such institution;
12 or
13 (2) It owns directly or indirectly such institution; or
14 (3) It is owned directly or indirectly by the same person or
15 corporation which owns directly or indirectly such institution;
16 or
17 (4) The election of a majority of its board of directors is
18 controlled directly or indirectly by any instrumentality,
19 agency, or arrangement that controls directly or indirectly the
20 election of a majority of the board of directors of such
21 institution; or
22 (5) A majority of its directors are also directors of such
23 institution; or
24 (6) Members of its board of directors constitute a majority
25 of the board of directors of such institution; or
26 (7) Substantially all of its principal executive officers
27 constitute a majority of the board of directors of any such
28 institution, or comprise all or substantially all of the
29 executive officers of any such institution; or
30 (8) Its board of directors is composed of executive officers
20020S1258B1904 - 19 -
1 of any such institution; or
2 (9) It dominates or controls, in whole or in part, the
3 business or policy of such institution, either by contract or
4 otherwise.
5 Provided, however, that the department shall not have power
6 to examine any corporation or person as an affiliated
7 corporation or person under this section, unless--(1) it either
8 directly or indirectly owns or is owned by an institution; or
9 (2) the institution within the preceding two-year period had
10 investments in, or outstanding loans secured, in whole or in
11 part, by shares of stock or securities of, such corporation or
12 person, which have no readily ascertainable market value.
13 For the purposes of this section, the ownership of more than
14 fifty per centum of the total number of shares, voted upon at
15 the last meeting of the shareholders of a corporation for the
16 election of its directors, shall be deemed to be ownership of
17 such corporation.
18 Shares of stock, held in the name of a nominee of any
19 corporation, for the benefit of such corporation, shall be
20 deemed to be shares owned or controlled by the corporation.]
21 Section 11. Section 403 of the act, amended July 29, 1941
22 (P.L.583, No.247) and August 14, 1963 (P.L.863, No.44), is
23 amended to read:
24 Section 403. Reports to Department; Publication;
25 Penalties.--A. Every institution[, except building and loan
26 associations, shall send to the department at least twice each
27 year, and more frequently if the department shall so order, a
28 complete report of its condition, exhibiting in detail, under
29 appropriate headings, the resources and liabilities of the
30 institution, and shall also send to the department at least once
20020S1258B1904 - 20 -
1 each year, and more frequently if the department shall so order,
2 a complete report of its earnings setting forth in detail all
3 items of income and expense. Every building and loan association
4 shall send such reports to the department once each year, unless
5 the department orders more frequent reports.] shall maintain
6 copies of the complete reports of its condition in such form and
7 as of such dates as may be required by the department, and
8 publish copies or compilations thereof to the extent required by
9 Federal law.
10 The department may also require special reports on the
11 condition of, or any particular facts concerning, any
12 institution at any time the department deems it necessary or
13 advisable for the protection of the depositors, other creditors,
14 or shareholders thereof. The manner of delivery of such reports
15 or special reports may include such electronic or other type of
16 technologically advanced delivery as may be permitted by the
17 department.
18 B. The form of all reports, the information to be contained
19 in them, and the date on which they shall be due shall be
20 prescribed by the department. The reports shall be verified by
21 the oath or affirmation of the president, cashier, secretary,
22 treasurer, or other managing officer of a corporation, or by one
23 of the firm in the case of a partnership or other unincorporated
24 association, or by the banker if an individual or in such other
25 manner as may be provided by the department. In the case of a
26 corporation, the report shall also be attested as correct by the
27 signatures of at least three of its directors or trustees or in
28 such other manner as may be provided by the department.
29 [C. Every institution, except building and loan
30 associations, shall publish during each year, in a newspaper or
20020S1258B1904 - 21 -
1 newspapers in the manner provided by this act, abstract
2 summaries of any two of its reports of condition designated for
3 this purpose by the department, and shall send proof of such
4 publication to the department. Such publication shall be
5 required only once in a newspaper of general circulation, and,
6 in first class counties, once in a legal newspaper. If there is
7 no newspaper of general circulation published at the city,
8 borough or township in which the principal place of business of
9 such institution is located, such publication may be inserted in
10 a newspaper of general circulation published nearest to such
11 city, borough or township, and within the same county. Building
12 and loan associations shall not be required to publish any
13 abstract summaries of reports.
14 D. The department shall furnish to anyone requesting it,
15 upon payment of a reasonable fee to be fixed by the department,
16 an abstract summary of any report then in its possession of any
17 building and loan association subject to its supervision,
18 showing the assets, liabilities, receipts, and disbursements of
19 such building and loan association.]
20 E. (1) Any institution which fails to make or publish any
21 report, or to furnish any proof of publication, in accordance
22 with the provisions of this section, shall pay to the department
23 a penalty of one hundred dollars for each day after the time
24 fixed by the department for filing such report, making such
25 publication, or furnishing such proof of publication, but the
26 department may, in its discretion, relieve any institution from
27 the payment of such penalty, in whole or in part, if good cause
28 be shown to it for the failure of such institution to file or
29 publish the report or to furnish proof of publication thereof.
30 [If an institution] (2) Notwithstanding any licensing statute
20020S1258B1904 - 22 -
1 to the contrary, if a licensee licensed under any respective
2 licensing statute within the department's jurisdiction to
3 enforce fails to notify the department in writing received by
4 the department within ten days of relocating the licensee's
5 licensed office that the licensee has relocated such licensed
6 office to a location stated by the licensee, then the licensee
7 shall pay to the department a fine up to a maximum of two
8 thousand dollars ($2,000.00) per violation for failing to timely
9 notify the department of such change of licensed office
10 location. For the purposes of this subsection, the term
11 "licensing statute" means any State law pursuant to which the
12 department may grant a license.
13 (3) If an institution or licensee fails to pay a penalty
14 from which it has not been relieved, the department may, through
15 the [Department of Justice] Office of Attorney General or its
16 authorized designee, maintain an action at law to recover it,
17 together with any additional costs incurred by the department or
18 the Office of Attorney General or its authorized designee.
19 Section 12. Section 404 of the act is amended to read:
20 Section 404. Disclosure of Information.--A. The department
21 may divulge to an institution, or to any officer, or any
22 director [or trustee], trustee or attorney thereof, any
23 information contained in or ascertained from an examination or
24 investigation of such institution made by the department.
25 Reports of examination issued by the department remain the sole
26 property of the department. A report of examination issued by
27 the department to an institution is strictly confidential. Any
28 copy of a report of examination is and shall remain the property
29 of the department and is furnished to the institution, subject
30 to the express condition that it shall be returned to the
20020S1258B1904 - 23 -
1 department immediately upon a request from the secretary. If a
2 subpoena or other legal process is received calling for
3 production of such a report of examination, or any portion
4 thereof, the department shall be notified immediately by the
5 institution. Under no circumstances shall the institution or any
6 of its directors, trustees, officers, or employes make copies of
7 the report of examination or any portion thereof available to
8 any organization or person who is not officially connected with
9 such institution as a director, trustee, officer, attorney or
10 employe without the prior written approval or nonobjection of
11 the department. Notwithstanding the foregoing, an institution
12 may disclose the existence and contents of an order or other
13 enforcement action issued to it by the department to the extent
14 required by applicable Federal securities law or State
15 securities law.
16 B. The department, on the written request or consent of any
17 institution, authorized in the case of corporations by
18 [resolution of its board of directors, or its board of trustees,
19 as the case may be] the president or senior executive officer of
20 the institution, may discuss with any person or persons selected
21 by the department, or selected by such institution and approved
22 by the department, any matters relating to the financial
23 condition of such institution.
24 C. The department, by itself and in its reasonable
25 discretion for regulatory or enforcement purposes, or on the
26 written request or consent of any institution, authorized in the
27 case of corporations by [resolution of its board of directors,
28 or its board of trustees, as the case may be] the president or
29 senior executive officer of the institution, may furnish to the
30 Federal Reserve Board, to the Federal Reserve Bank of the
20020S1258B1904 - 24 -
1 district in which the place of business of any institution is
2 located, or to any agency or instrumentality of the United
3 States government, or of the Commonwealth of Pennsylvania, or
4 any other supervisor of financial institutions in another state,
5 any information in its possession relating to such institution.
6 D. The department may, from time to time, with the approval
7 of the Governor, cause to be published a summary of the
8 condition of institutions under its supervision, containing such
9 information in relation to such institutions as in its judgment
10 is desirable.
11 E. [This section shall not] Neither this section nor any
12 other statute or regulation shall be construed to require the
13 department to publish or divulge any such information under this
14 section, when in the opinion of the department such publication
15 or divulgement is undesirable.
16 F. The department may enter into such cooperative,
17 coordinating and information-sharing agreements with any other
18 Federal and State banking, insurance or securities regulatory
19 agencies or do so by, with and through any trade association of
20 such agencies, with respect to any examination, supervision,
21 enforcement, criminal referral, consumer complaints or any other
22 regulatory matters related to institutions, including credit
23 unions, trust companies and licensees, as may be reasonably
24 necessary or appropriate, as determined in the discretion of the
25 secretary. The department may enter into joint examinations or
26 joint enforcement actions with any other Federal or state
27 banking regulatory agency, or any insurance or securities
28 regulatory agency having concurrent jurisdiction over any person
29 or entity lawfully or unlawfully engaging in the business of a
30 depository institution, trust company, credit union or licensee,
20020S1258B1904 - 25 -
1 as may be reasonably necessary and appropriate in the discretion
2 of the secretary.
3 G. This section also applies to credit unions and licensees.
4 Section 13. The act is amended by adding a section to read:
5 Section 405. Criminal History Record Information.--A. For
6 the purposes of this section, a "covered individual" has the
7 following meanings:
8 (1) Any individual or owner of a sole proprietorship that
9 initially applies to the department for any kind of a covered
10 license under a licensing statute or any individual that
11 controls such an individual or sole proprietorship, or any
12 branch office manager or other employe of such an individual or
13 sole proprietorship who will engage in activity that will be
14 subject to a licensing statute, provided that such activity is
15 not solely activity known as back office or clerical work.
16 (2) Any individual who owns thirty per centum or more of any
17 type or class of stock or other ownership interest in a business
18 corporation that initially applies to the department for a
19 covered license under a licensing statute, or, with respect to a
20 trust company, ten per centum of such stock or other ownership
21 interest, or any chief executive officer, president, chief
22 financial officer, chief operating officer, corporate secretary,
23 corporate treasurer, or other senior level executive of such
24 business corporation, or any junior level executive of such
25 business corporation that participates in the conduct of such
26 business corporation's affairs that are related to such business
27 corporation's activity in Pennsylvania, or any branch office
28 manager or other employe of such business corporation who will
29 engage in activity that will be subject to a licensing statute,
30 provided that such activity is not solely activity known as back
20020S1258B1904 - 26 -
1 office or clerical work.
2 (3) Any individual with any kind of ownership or membership
3 interest in a noncorporate entity that initially applies to the
4 department for a covered license under a licensing statute, or
5 any officer of any business corporation or noncorporate entity
6 with any kind of ownership or membership interest in another
7 noncorporate entity, or any branch office manager or other
8 employe of a noncorporate entity that applies to the department
9 for a license under a licensing statute who will engage in
10 activity that will be subject to a licensing statute, provided
11 that such activity is not solely activity known as back office
12 or clerical work.
13 B. For the purposes of this section, a "covered license"
14 means a mortgage broker license or limited mortgage broker
15 license under the act of December 22, 1989 (P.L.687, No.90),
16 known as the "Mortgage Bankers and Brokers and Consumer Equity
17 Protection Act," a secondary mortgage broker license under the
18 act of December 12, 1980 (P.L.1179, No.219), known as the
19 "Secondary Mortgage Loan Act," a consumer discount company
20 license used only in the capacity of a broker that is not
21 originating loans under the act of April 8, 1937 (P.L.262,
22 No.66), known as "The Consumer Discount Company Act," a money
23 transmitter license under the act of September 2, 1965 (P.L.490,
24 No.249), referred to as the Money Transmission Business
25 Licensing Law, a check casher license under the act of February
26 18, 1998 (P.L.146, No.22), known as the "Check Casher Licensing
27 Act," a pawnbroker license under the act of April 6, 1937
28 (P.L.200, No.51), known as the "Pawnbrokers License Act," a
29 collector-repossessor license under the act of June 28, 1947
30 (P.L.1110, No.476), known as the "Motor Vehicle Sales Finance
20020S1258B1904 - 27 -
1 Act," or the articles of incorporation of a trust company under
2 the act of November 30, 1965 (P.L.847, No.356), known as the
3 "Banking Code of 1965."
4 C. For the purposes of this section "national criminal
5 history record information" means criminal history records
6 maintained by the Federal Bureau of Investigation Criminal
7 Justice Information Services Division consistent with the act of
8 October 25, 1972 (Public Law 92-544, 86 Stat. 1115).
9 D. For the purposes of this section, "non-corporate entity"
10 means an association, joint venture or joint stock company,
11 partnership, limited partnership, limited partnership
12 association, nonprofit corporation, professional corporation or
13 any other group of individuals, however organized.
14 E. For the purposes of this section, "licensing statute"
15 means the "Mortgage Bankers and Brokers and Consumer Equity
16 Protection Act," the "Secondary Mortgage Loan Act," the
17 "Consumer Discount Company Act," the "Motor Vehicle Sales
18 Finance Act," the Money Transmission Business Licensing Law, the
19 "Check Casher Licensing Act," the "Pawnbrokers License Act," any
20 other statute pursuant to which the department may grant a
21 license or the "Banking Code of 1965" only insofar as it relates
22 to the business of a trust company.
23 F. (1) In connection with any initial application submitted
24 to the department for a covered license under a licensing
25 statute, a covered individual shall submit his or her
26 fingerprints to the department or to such other international,
27 Federal, State or local government agency, or designee thereof,
28 selected by the department, including the Pennsylvania State
29 Police and the Federal Bureau of Investigation, in order for the
30 department to receive criminal history record information from
20020S1258B1904 - 28 -
1 any international, Federal, State or local government agency, or
2 designee thereof, including criminal history record information
3 from the Pennsylvania State Police or national criminal history
4 record information from the Federal Bureau of Investigation. The
5 department shall send or receive such criminal history record
6 information or national criminal history record information to
7 or from the Pennsylvania State Police, the Federal Bureau of
8 Investigation or any other international, Federal, State or
9 local government agency, or designee thereof, in a manner that
10 is satisfactory to the department. National criminal history
11 record information received by the department shall be handled
12 or maintained in accordance with Federal Bureau of Investigation
13 policy.
14 (2) Any individual who was not a covered individual at the
15 time an application for a covered license was submitted to the
16 department, but who later occupies a position that would have
17 made that person a covered individual at the time an application
18 for a covered license was submitted to the department, shall
19 comply with all of the requirements of paragraph (1) at the time
20 an application to renew an existing covered license is submitted
21 to the department, or, with regard to a trust company, at any
22 time designated by the department.
23 G. During the initial or renewal license application
24 process, the department may deem the license application as
25 incomplete and therefore not commencing the review period stated
26 in the respective licensing statutes if the department has not
27 received evidence from the applicant that national criminal
28 history record information and other criminal history record
29 information required under this section has been requested from
30 the Federal Bureau of Investigation for national criminal
20020S1258B1904 - 29 -
1 history record information, or the Pennsylvania State Police or
2 any other international, Federal, State or local governmental
3 agency or designee thereof for criminal history record
4 information.
5 H. Notwithstanding any other law to the contrary, the
6 department may suspend its processing and consideration of any
7 initial or renewal license application submitted to the
8 department under a licensing statute unless and until the
9 department receives any and all national criminal history record
10 information from the Federal Bureau of Investigation, criminal
11 history record information from the Pennsylvania State Police,
12 or criminal history record information from any other
13 international, Federal, State or local government agency
14 responsible for such recordkeeping. If the department does not
15 receive the criminal history record information, including
16 national criminal history record information, required under
17 this section, then the department may deny the initial or
18 renewal license application.
19 I. Notwithstanding subsections G and H, the department's
20 approval or denial of a covered license application under a
21 licensing statute without the department receiving criminal
22 history record information or national criminal history record
23 information regarding covered individuals as required under this
24 section shall not prohibit the department from taking any action
25 authorized by law including suspension or revocation of such a
26 license. The department may deny a covered license application,
27 or suspend or revoke a covered license based on the contents of
28 criminal history record information, or the untimely receipt or
29 failure to provide criminal history record information, pursuant
30 to this section, any licensing statute and other applicable law
20020S1258B1904 - 30 -
1 including 18 Pa.C.S. Ch. 91 (relating to criminal history record
2 information).
3 J. The cost of any criminal history record information,
4 including national criminal history record information, obtained
5 by the department pursuant to this section shall be paid by the
6 initial or renewal license applicant or the individual whose
7 criminal history is being checked. Such cost shall be paid in
8 such manner and monetary amount as required jointly and
9 severally by the Pennsylvania State Police, Federal Bureau of
10 Investigation, the department or any other applicable
11 international, Federal, State or local governmental agency or
12 designee thereof.
13 Section 14. Section 501B and C of the act, amended July 1,
14 1981 (P.L.178, No.52), are amended to read:
15 Section 501. Orders by Department.--* * *
16 B. Whenever it shall appear to the department that an
17 attorney, officer, or employe of an institution, and in the case
18 of an incorporated institution, a director or trustee thereof,
19 shall have continued to violate any law relating to such
20 institution, or shall have continued unsafe or unsound practices
21 in conducting the business of such institution, after having
22 been warned by the department to discontinue such violations of
23 law or such unsafe or unsound practices, the department may
24 issue an order directing such attorney, officer, employe,
25 director, or trustee to appear on the day fixed in such order
26 before the department and show cause why he should not be
27 removed from his office or position and such office or position
28 declared vacant. A copy of such order shall be sent to the
29 institution of which such person is an attorney, officer,
30 employe, director, or trustee.
20020S1258B1904 - 31 -
1 The office or position of any attorney, officer, employe,
2 director, or trustee, so ordered by the department to appear,
3 who does not appear on the day fixed in such order, shall,
4 unless the date for his appearance shall previously have been
5 extended by the department, upon such failure to appear, be
6 declared vacant.
7 On the day fixed in the department's order such attorney,
8 officer, employe, director, or trustee shall be heard, in person
9 or by counsel, by the department. If, after such hearing, it
10 shall appear to the department that such attorney, officer,
11 employe, director, or trustee has not shown cause why he should
12 not be removed from his office or position and such office or
13 position declared vacant, the department shall, within sixty
14 days of such hearing, issue an order directing the institution
15 to remove such attorney, officer, employe, director, or trustee
16 from his office or position, and declare such office or position
17 vacant. A copy of such order shall be sent to the attorney,
18 officer, employe, director, or trustee so removed.
19 The department shall set forth in its order the date upon
20 which any such removal and declaration of vacancy shall become
21 effective.
22 If the institution, of which such person, ordered by the
23 department to appear is an attorney, officer, employe, director,
24 or trustee, is an interstate bank or is a member of a Federal
25 Reserve Bank, the Federal Deposit Insurance Corporation[,] or
26 the Federal Home Loan Bank, [or the Federal Savings and Loan
27 Insurance Corporation,] the department may notify such Federal
28 Reserve Bank, Federal Deposit Insurance Corporation, Federal
29 Home Loan Bank, [or Federal Savings and Loan Insurance
30 Corporation,] or other bank supervisory agencies having
20020S1258B1904 - 32 -
1 jurisdiction over an interstate bank, as the case may be, of its
2 order directing such attorney, officer, employe, director, or
3 trustee to appear before the department and of its decisions
4 issued in such a case. At such hearing, any duly authorized
5 representative of such Federal Reserve Bank, Federal Deposit
6 Insurance Corporation, Federal Home Loan Bank or [Federal
7 Savings and Loan Insurance Corporation] other bank supervisory
8 agencies having jurisdiction over such interstate bank, as the
9 case may be, may appear as a witness [against such attorney,
10 officer, employe, director, or trustee].
11 Except as [herein] otherwise specifically provided in this
12 act, the proceedings of the department and its decisions
13 regarding institutions shall not be published or divulged to
14 anyone.
15 Any attorney, officer, employe, director, or trustee, who is
16 removed from his office or position as provided in this section,
17 shall thereafter be disqualified from acting as an attorney,
18 officer, employe, director, or trustee of any institution in
19 this Commonwealth, for such period as the department shall
20 prescribe.
21 C. In connection with any hearing or investigation
22 authorized by this act or by any other law, the department shall
23 have, in addition to the authority provided by any other law,
24 power to issue subpoenas, requiring the attendance of or the
25 production of pertinent books [and], papers, electronic data or
26 information of any kind in any form, by the officers, directors,
27 agents, employes, or members, respectively, of any corporation
28 or person which the department is authorized under the
29 provisions of this act or any other law of this Commonwealth to
30 examine. The department shall also have power to issue subpoenas
20020S1258B1904 - 33 -
1 to any other person or entity of any kind whatsoever provided
2 that the information from such person or entity is necessary for
3 the enforcement of this act or any other law within the
4 jurisdiction of the department. The department may, upon
5 application of the attorney, officer, employe, director, or
6 trustee to be heard, subpoena such witnesses as are set forth in
7 such application. The department shall also have the power to
8 question such witnesses under oath or affirmation, and to
9 examine such books and papers. In the event that a person fails
10 to comply with a subpoena for documents or testimony issued by
11 the department, the department may request an order from the
12 Commonwealth Court requiring the person to produce the requested
13 information.
14 Any witness who refuses to obey a subpoena, issued under this
15 section, or who refuses to be sworn or affirmed or to testify,
16 or who is guilty of any contempt, after summons to appear, may
17 be punished as for contempt of court, and for this purpose, an
18 application may be made to the Commonwealth Court or to any
19 court of common pleas, within whose territorial jurisdiction the
20 offense was committed, for which purpose such court is hereby
21 given jurisdiction.
22 * * *
23 Section 15. Section 502 of the act is amended to read:
24 Section 502. Enforcement of Department's Order by Court.--
25 Whenever [an institution] a person, institution, credit union,
26 licensee or other entity of any kind whatsoever shall not comply
27 with the terms of an order of the department which has been
28 properly issued under the circumstances, pursuant to this act or
29 any other law, the department, upon notice to the [institution,
30 may, through the Department of Justice, petition the court of
20020S1258B1904 - 34 -
1 common pleas, either of Dauphin County, or of the county in
2 which the institution has its principal or only place of
3 business,] person, institution, credit union, licensee or entity
4 may, in addition to the authority provided by any other law,
5 through the Office of Attorney General, petition the
6 Commonwealth Court for an order directing the institution to
7 obey the order of the department within such period as shall be
8 fixed by the court. Upon the filing of such petition, the court
9 shall allow a rule to show cause why it should not be granted.
10 Whenever, after a hearing upon the merits, it shall appear that
11 the order of the department was lawfully issued, the court shall
12 grant the petition of the department.
13 Section 16. Section 503 of the act is amended to read:
14 Section 503. Quo Warranto or Injunction Proceedings.--[A.
15 When any corporation subject to the supervision of the
16 department (1) has not had its capital, surplus, or expense fund
17 paid in as required by law, or (2) has not in any manner
18 exercised at least one of the powers conferred upon it by its
19 articles of incorporation within two years after the issuance of
20 its certificate of incorporation by the Department of State, or
21 (3) has formerly exercised any of its corporate powers but for a
22 period of two years has not exercised at least one of them, the
23 department shall notify the Department of Justice of these
24 facts, and the Department of Justice may then proceed by quo
25 warranto against such corporation, in the manner provided by
26 law, to oust it from its corporate powers and privileges.]
27 B. When any institution violates any provision of its
28 articles of incorporation, and refuses to obey a lawfully issued
29 order of the department that it cease such violation, the
30 department may notify the [Department of Justice] Office of
20020S1258B1904 - 35 -
1 Attorney General of these facts, and the [Department of Justice]
2 Office of Attorney General may then institute quo warranto
3 proceedings against such corporation or other type of
4 institution, in the manner provided by law.
5 [C. When any person subject to the supervision of the
6 department has not, for a period of two years, done any act in
7 pursuance of its banking powers, the department shall notify the
8 Department of Justice of these facts, and the Department of
9 Justice may then proceed against such person by the method
10 provided by law to enjoin it permanently from doing a banking
11 business in this Commonwealth.]
12 C. The department may maintain an action in Commonwealth
13 Court or any other court of competent jurisdiction for an
14 injunction or other process against any person to restrain and
15 prevent the person from engaging in any activity violating this
16 act or any other statute or regulation within the department's
17 jurisdiction to administer or enforce.
18 D. This section pertains to institutions and credit unions.
19 Subsection C is applicable to institutions, credit unions and
20 licensees.
21 Section 17. Sections 504, 601 and 604 of the act are amended
22 to read:
23 Section 504. Taking of Possession by Department.--A. The
24 department may take possession as receiver, which throughout
25 this act includes the authority to act as conservator, of the
26 business and property of any institution subject to its
27 supervision whenever it shall appear to it that such
28 institution--
29 (1) Is violating its articles of incorporation, any order of
30 the court issued upon application of the department, any cease
20020S1258B1904 - 36 -
1 and desist or similar order of the department, or any law of the
2 Commonwealth regulating its business; or
3 (2) Is conducting its business in an unsafe manner; or
4 (3) Is in an unsafe or unsound condition to transact its
5 business; or
6 (4) In the case of a corporation, has an impairment of its
7 capital below the minimum required by law or by its articles of
8 incorporation; and in the case of a person, has not made good a
9 depreciation in the value of the bonds or securities deposited
10 with the department below the minimum required by law; or after
11 due examination of the corporation or person, is determined to
12 be insolvent; or has a substantial dissipation of assets or
13 earnings due to any violation of any statute or regulation, or
14 any unsafe or unsound practice; or
15 (5) Has suspended payment of its obligations, without
16 authority of law[, and in the case of a building and loan
17 association, has not, for a period of one year after due demand
18 or notice by a shareholder, paid any matured share or any
19 withdrawal]; or is likely to be unable to pay its obligations or
20 meet its depositors' demands in the normal course of business;
21 or
22 (6) Has refused to submit its records and affairs to, or its
23 officers or directors have refused to be examined upon oath or
24 affirmation concerning its affairs by, the secretary, or any
25 other duly authorized examiner, in connection with any lawful
26 examination or investigation; or
27 (7) Requests the department, by its board of directors or
28 its board of trustees in the case of a corporation, and, in the
29 case of a person, by its individual owner or owners, to take
30 possession for the benefit of depositors, other creditors, and
20020S1258B1904 - 37 -
1 shareholders[.]; or
2 (8) Has assets less than its obligations to its creditors
3 and others, including members of the institution.
4 [B. Before taking possession, the department shall conduct a
5 hearing before the department and the Department of Justice,
6 which may be attended only by, and notice of which shall be
7 given only to, the officers and directors of the corporation, or
8 the officers and individual owner or owners of the person. After
9 such hearing, the department may, if it first procures the
10 consent of the Department of Justice, take possession:
11 Provided, however, That whenever immediate action shall be
12 necessary in order to protect the interests of the depositors,
13 other creditors, or shareholders of an institution, it may take
14 possession without conducting a hearing and without the approval
15 of the Department of Justice.]
16 B. NOTWITHSTANDING ANY PROVISION OF THIS ACT, IF ANY OF THE <--
17 CONDITIONS IN SUBSECTION A APPEAR TO BE MET, THEN BEFORE TAKING
18 POSSESSION, THE DEPARTMENT SHALL HAVE FULL AUTHORITY TO TAKE ANY
19 ACTION IT DEEMS APPROPRIATE IN ANTICIPATION OF TAKING POSSESSION
20 OF AN INSTITUTION, INCLUDING, BUT NOT LIMITED TO, SEEKING AND
21 CONTACTING POTENTIAL ACQUIRERS OF PART OR ALL OF THE INSTITUTION
22 THAT MAY BE TAKEN INTO POSSESSION, AND OBTAINING QUALIFIED
23 AGENTS OR SEEKING AND CONTACTING POTENTIAL SUCCESSOR TRUSTEES TO
24 ADMINISTER FIDUCIARY ACCOUNTS.
25 C. In addition, whenever the secretary in his official
26 capacity is appointed receiver by any court of equity, as
27 provided by law, the department shall take possession of the
28 business and property, and the secretary shall act as receiver,
29 of the institution in the same way and with the same rights and
30 limitations as when the department takes possession in the
20020S1258B1904 - 38 -
1 customary manner provided by this act.
2 Section 601. Taking Over Possession by Secretary as
3 Receiver.--Whenever the department takes possession of the
4 business and property of an institution, including a foreign
5 bank office licensed by the department, the secretary shall, by
6 operation of law, simultaneously take over such possession from
7 the department and become receiver of such institution, subject
8 to the provisions of this act. His official title, when thus in
9 possession of the business and property of an institution, shall
10 be receiver of such institution. The secretary may act as
11 receiver without bond.
12 Section 604. Certificates of Possession; Filing; Title To
13 and Liens Against Real Property; Supplements to Certificate of
14 Possession to Surrender or Transfer Receivership.--A. The
15 secretary, upon taking possession of the business and property
16 of an institution as receiver, shall forthwith, under the seal
17 of the department, prepare in duplicate a certificate, to be
18 known as the certificate of possession, setting forth that he
19 has become receiver of the institution. It shall state the name
20 of the deputy receiver whom the secretary, pursuant to the
21 provisions of this act, appoints to take charge of the affairs
22 of the institution, and shall set forth the duties which he
23 delegates to such deputy receiver. If the secretary does not
24 appoint a deputy receiver prior to the date of the filing of the
25 certificate of possession, or if he appoints a new deputy
26 receiver or an additional one, or if he adds to the duties of
27 the deputy receiver, he shall prepare, in duplicate, and file a
28 supplement to the certificate of possession.
29 B. The secretary shall file the original certificate of
30 possession and the original of any supplement thereto in his
20020S1258B1904 - 39 -
1 office in Harrisburg, and the duplicate certificate of
2 possession and the duplicate of any supplement thereto in the
3 office of the prothonotary. The certificate of possession filed
4 in the prothonotary's office, and any supplement thereto, shall
5 be listed in the judgment index in the name of the institution
6 as defendant and of the secretary as plaintiff.
7 C. [In addition the secretary shall, as soon as possible,
8 file a certified copy of the certificate of possession, and of
9 any supplement thereto, in the office of the recorder of deeds
10 in each county in the Commonwealth, or with the proper official
11 in any other state or country, in which any real property shall
12 be situated which belongs to the institution or title to which
13 is in its name, or upon which there is a mortgage or other lien
14 which belongs to the institution or title to which is in its
15 name. Such copy shall be recorded in the current deed book, and
16 shall be indexed in the grantors' index in the name of the
17 institution and in the grantees' index in the name of the
18 secretary, or it shall be filed, indexed, or registered by
19 whatever other method is provided by the law of the particular
20 county, state, or country in which such real property is
21 located.] The certificate of possession filed with the
22 prothonotary shall constitute valid evidence that any real
23 property owned by or upon which there is a lien which belongs to
24 the institution has come into possession of the receiver as of
25 the date specified therein.
26 D. The receiver shall file with the prothonotary a
27 supplementary certificate of possession stating when the
28 receiver has transferred or surrendered possession of the
29 institution to another entity, and stating the entity's name,
30 address and telephone number.
20020S1258B1904 - 40 -
1 Section 18. Section 606 of the act, amended October 5, 1978 <--
2 (P.L.1133, No.266), is amended to read:
3 [Section 606. Power of Courts to Appoint Receivers.--Except
4 as hereinafter provided, no court shall appoint anyone but the
5 secretary as receiver of an institution. Whenever any court, at
6 the instance of a depositor, shareholder, or other person
7 entitled by law to institute such proceedings, shall determine
8 that a receiver should be appointed, for any reason whatsoever,
9 it shall appoint the secretary as such receiver.
10 When thus appointed receiver by a court, the secretary shall
11 serve in the same manner and with the same limitations, and he
12 shall have the same rights, powers, and duties, as when he
13 becomes receiver by operation of law and without appointment by
14 any court. No court shall impose upon the secretary as receiver
15 any duties or restrictions which are in conflict with the
16 provisions of this act.
17 In any proceeding for the appointment of a receiver of an
18 institution whose deposits or shares are insured by a public
19 body of the United States, the court shall upon the
20 recommendation of the secretary (whether or not the department
21 is a party) appoint said body or its administrator as receiver.
22 If said public body or its administrator accepts the appointment
23 it or he shall have all the rights, powers and duties of the
24 secretary as receiver, under this act and other applicable law.
25 The public body or its administrator may act as receiver without
26 bond.]
27 SECTION 18. SECTION 606 OF THE ACT IS REPEALED. <--
28 Section 19. Sections 607, 608, 701, 702 and 703 of the act
29 are amended to read:
30 Section 607. Taking of Possession upon Request of
20020S1258B1904 - 41 -
1 Institution.--No institution shall make a general assignment of
2 its business and property for the benefit of its creditors by
3 the appointment of an assignee or a trustee, or otherwise. In
4 lieu of the power to make an assignment for the benefit of
5 creditors, an institution may request the department to take
6 possession in the regular manner provided by law. In such cases,
7 the department [shall] may take possession or may take other
8 action deemed appropriate in its discretion, and the secretary
9 [shall] may take over such possession and become receiver, in
10 the same manner and subject to the same provisions of this act
11 as when the department takes possession of the business and
12 property of an institution without the request of such
13 institution[.], unless the secretary determines that the Federal
14 Deposit Insurance Corporation or other appropriate banking
15 agency should take possession and such agency agrees to do so.
16 Section 608. Surrender of Possession; Special Liquidations
17 and Reorganizations.--[A.] The secretary may, upon conditions
18 approved by him, surrender possession of an institution of which
19 he has taken possession as receiver, at any time prior to final
20 liquidation and distribution, under the following circumstances:
21 (1) He may surrender possession to the institution itself
22 when he finds it to be in a safe and sound condition to resume
23 its business;
24 (2) He may surrender possession to the institution itself
25 when he is without funds to liquidate its business and property.
26 In such case, the secretary shall first accord to the
27 shareholders, and the depositors or other creditors of the
28 institution, a period of not less than two weeks in which to
29 advance sufficient funds for the secretary to liquidate the
30 business. Where such funds are advanced, they shall be
20020S1258B1904 - 42 -
1 considered an expense of administration and shall be given the
2 same preference in the distribution of assets as any other
3 expenses of administration. Where possession has been
4 surrendered to an institution under such circumstances, the
5 institution may not conduct any business except the liquidation
6 of the assets. In the distribution of any moneys realized by the
7 institution on its assets, it shall follow the same order and
8 preference as is established by this act for distribution by the
9 secretary of the assets of an institution of which he is in
10 possession as receiver. Upon the approval of his account by the
11 court, and upon the filing of the supplement to the certificate
12 of possession, pursuant to the provisions of this section, the
13 secretary shall be relieved of all duties with reference to such
14 institution. However, if the department shall deem it advisable
15 to resume possession of the institution at any time, it may do
16 so in the same manner as is provided for the taking possession
17 of any institution, in which case the secretary shall again take
18 over possession and become receiver, with all the rights,
19 powers, and duties granted to, or imposed upon the secretary, as
20 receiver, by this act.
21 (3) He may surrender to the institution itself, or to any
22 other corporation or person, possession of all or part of the
23 business, property, moneys, credits, or other assets of the
24 institution of which he is in possession as receiver to permit
25 to be carried into effect a special plan of liquidation,
26 reorganization, or rehabilitation which has been approved by the
27 court and by (a) depositors and other creditors of the
28 institution, to whom is due [ninety per cent] a majority in
29 amount, regardless of the number, of the claims stated in
30 writing by the secretary to be due to depositors and other
20020S1258B1904 - 43 -
1 creditors of such institution, and (b) the holders of a majority
2 of the shares of stock of such institution, if a corporation,
3 except that in the case of a [building and loan] savings
4 association, the approval of the holders of eighty per cent of
5 the shares of stock of such corporation shall be required.
6 However, the secretary shall not authorize any decrease of
7 capital by a corporation affected by the provisions of this
8 section, except upon compliance by such corporation with the
9 provisions of law as to such decrease.
10 [B. Whenever the secretary shall surrender possession under
11 the provisions of this section, he shall forthwith, under the
12 seal of the department, prepare in duplicate a supplement to the
13 certificate of possession, setting forth in detail all the
14 conditions and purposes of such surrender. He shall file the
15 original of such supplement in his office in Harrisburg and the
16 duplicate in the office of the prothonotary, where it shall be
17 indexed in a manner which will, in so far as necessary, satisfy
18 the prior record of the certificate of possession. He shall also
19 file a certified copy of such supplement in the office of the
20 recorder of deeds in each county in the Commonwealth, or with
21 the proper official in any other state or country, in which any
22 real property so surrendered, or any real property upon which
23 there shall be a mortgage or other lien so surrendered, shall be
24 situated.
25 C. Whenever the secretary shall, under the provisions of
26 this section, surrender possession of the entire business and
27 property of an institution of which he is in possession as
28 receiver, he shall file in the court an account, which shall
29 correspond to any other final account which he is required by
30 this act to file. Such account shall be subject to exceptions by
20020S1258B1904 - 44 -
1 shareholders, or depositors, or other creditors, and to
2 confirmation by the court, in the same manner as is provided by
3 this act for any account filed by the secretary as receiver.]
4 Section 701. Status of Secretary as Receiver.--A. Except as
5 otherwise provided in this act, the secretary, when he has taken
6 possession of the business and property of an institution, shall
7 be responsible to the court in which the certificate of
8 possession is filed[, and not to any other court]. His rights, <--
9 powers, and duties shall be those of a general receiver
10 appointed by any court of equity in this Commonwealth, except as
11 such rights, powers, and duties are increased or limited by the
12 provisions of this act. The secretary as receiver may act as a
13 conservator of the institution. He shall be vested, in his
14 official capacity, with all the rights, titles, privileges,
15 powers, and duties of such institution[;] and of any
16 shareholder, member, accountholder, depositor, officer or
17 director of such institution with the title or the right to
18 possession of all property to which the institution has title or
19 the right to possession, including debts due, and liens and
20 other security therefor and title to the books, records and
21 assets of any previous legal custodian of such institution; and
22 with the institution's rights of action or redemption. This
23 shall be so whether such property and debts due, such liens or
24 other security therefor, or such rights of action or redemption,
25 are held in the name of such institution, or in the name of some
26 other corporation or person. He shall have power to execute in
27 his name, as receiver, any instrument incident to the exercise
28 of any power granted to or any duty imposed upon him as receiver
29 of such institution.
30 The secretary shall be the representative of the creditors of
20020S1258B1904 - 45 -
1 the institution and shall be entitled, as such, to have vacated
2 and set aside, for the benefit of the creditors, any judgment,
3 execution, attachment, sequestration, payment, pledge,
4 assignment, transfer, conveyance, or encumbrance, which could
5 have been avoided by any of the creditors, or by which one
6 creditor is given an unlawful preference over another.
7 B. The secretary may prescribe such regulations as he
8 determines to be appropriate regarding the conduct of a
9 receivership.
10 C. The secretary may, as receiver: (i) exercise all powers
11 and authorities, including all incidental powers as shall be
12 necessary to carry out his enumerated duties; and (ii) take any
13 action which the secretary determines is in the best interests
14 of the institution, its depositors, owners, shareholders,
15 creditors, trust accounts or the Commonwealth of Pennsylvania.
16 Section 702. Appointment of Deputy Receivers, Counsel,
17 Independent Receivers and Other Assistants.--A. The secretary
18 may appoint one or more official agents, to be known as deputy
19 receivers, to assist him in the management, reorganization,
20 consolidation, liquidation, or distribution of the assets and
21 affairs of any institution, OR ADMINISTRATION OF FIDUCIARY <--
22 ACCOUNTS of which he has taken possession as receiver. The
23 secretary may delegate to each deputy receiver any duty imposed
24 upon, or any right or power granted to, him as receiver. The
25 secretary may also employ such other assistants as he deems
26 necessary, including such deputy attorneys general, special
27 deputy attorneys general, assistant deputy attorneys general, or
28 other attorneys as may be appointed by the [Department of
29 Justice] Office of Attorney General and assigned to the
30 secretary for the handling of any legal business pertaining to
20020S1258B1904 - 46 -
1 the affairs or property of such institution. The secretary may
2 also retain to assist him in the management, reorganization,
3 consolidation, liquidation, or distribution, any officer or
4 other employe of the institution of which he has taken
5 possession.
6 B. (1) On request of the secretary, the court in which the
7 receivership proceeding is pending may appoint an independent
8 receiver, including any appropriate governmental entity, to
9 handle the receivership proceedings consistent with the
10 provisions of this act and may require a suitable bond of the
11 independent receiver. The appointed independent receiver shall
12 have the same status and incidental powers provided to the
13 secretary as receiver in section 701.
14 (2) If an independent receiver is appointed, the secretary
15 is discharged as receiver from any liability for the acts
16 thereafter of the independent receiver but shall remain a party
17 to the receivership proceeding with the right to terminate such
18 independent receiver upon petition to and approval by the court
19 and, with standing to initiate, contest or participate in any
20 actions involving or related to the receivership at the
21 discretion of the secretary. The views of the secretary are
22 entitled to deference if not contrary to the plain meaning of
23 this article.
24 Section 703. Exercise of Discretion by Secretary.--A.
25 Whenever, under this act, discretion as to whether, or the
26 manner in which, to exercise a power or fulfill a duty is vested
27 in the secretary in possession of an institution as receiver, he
28 shall, after such examination or investigation as shall seem
29 appropriate under the circumstances, take such action as he
30 deems to the best interests of the depositors or other
20020S1258B1904 - 47 -
1 creditors[, and, in the case of building and loan associations,
2 also of the shareholders of such institution].
3 B. The words "the best interests of the estate," whenever
4 used in this act, shall be construed to refer to the best
5 interests of the depositors or other creditors[, and in the case
6 of building and loan associations, also of the shareholders of
7 such institution].
8 Section 20. Section 704 of the act, amended October 5, 1978
9 (P.L.1133, No.266), is amended to read:
10 Section 704. Suspension or Continuation of Business.--The
11 secretary is authorized, upon taking possession of the business
12 and property of an institution as receiver, to continue or to
13 suspend the business for such period as he may deem necessary to
14 enable him to determine whether to surrender such possession to
15 the institution, to authorize a merger or consolidation, to seek
16 bids for the purchase of assets and assumption of liabilities of
17 the institution by any State or Federal institution [whose
18 principal place of business is located in Pennsylvania], to
19 liquidate the affairs of such institution, to organize a new
20 institution or to take such other action [as is] authorized by
21 law which is in the best interests of the estate. During such
22 period, he shall take any action he deems necessary to conserve
23 the assets and business, or to protect the best interests of the
24 estate. In addition, the secretary may enter into agreements,
25 conditional or otherwise, for the purchase of assets and
26 assumption of liabilities of the institution and take related
27 actions prior to and in reasonable anticipation of such
28 institution being placed into receivership by the secretary or
29 other banking agency.
30 Section 21. Sections 705, 710A and 711A of the act are
20020S1258B1904 - 48 -
1 amended to read:
2 Section 705. Determination to Liquidate; Filing of
3 Supplemental Certificates Upon Determination to Liquidate
4 Institution.--The secretary shall, within six months after the
5 date on which he takes possession of any institution as
6 receiver, determine whether or not to liquidate the business and
7 property and distribute the assets of the institution. If he
8 shall determine to liquidate, he shall forthwith, under the seal
9 of the department, prepare, in duplicate, a supplement to the
10 certificate of possession, setting forth this fact. He shall
11 file the original supplement in his office in Harrisburg and the
12 duplicate in the office of the prothonotary. He shall then
13 proceed to liquidate the affairs of the institution with as much
14 dispatch as shall appear to be expedient under the
15 circumstances.
16 Section 710. Notice to Holders of Assets; Power of Court to
17 Order Transfer.--A. Upon becoming receiver of any institution,
18 the secretary shall forthwith give notice in writing of such
19 fact to all corporations and persons having custody or
20 possession of any assets or other property which the institution
21 of which he is receiver owns or to which it has the right to
22 possession or custody for any purpose whatsoever. Such notice
23 shall be given at the addresses which appear for such
24 corporations and persons upon the records of the institution or,
25 if none appear there, then at their last known addresses.
26 However, if it shall appear to be in the best interests of the
27 institution, the court may order the secretary to substitute a
28 single advertisement in a newspaper or newspapers, for the
29 individual notice to the corporations and persons.
30 * * *
20020S1258B1904 - 49 -
1 Section 711. Sale of Assets Repledged by Institution;
2 Repledge after Possession.--A. Where assets belonging to
3 others, shall be pledged or given as collateral by an
4 institution of which the secretary subsequently takes possession
5 as receiver, and the pledgee has actual knowledge at the time of
6 the pledge that the assets are not assets of the institution,
7 such pledgee shall not forfeit or sell any such collateral or
8 pledged assets, after the secretary has taken possession,
9 without the written permission of the secretary, any provision
10 in any collateral note or agreement to the contrary
11 notwithstanding; but if the secretary refuses such permission,
12 the pledgee may, after notice to the secretary, petition the
13 court for leave to sell such assets. The court may, after giving
14 the pledgee and the secretary an opportunity to be heard, grant
15 such leave, or it may make such other order as it deems to be in
16 the best interests of all parties concerned.
17 However, if the assets so pledged by any such institution are
18 accompanied by the obligation of the corporation or person
19 owning them, the pledgee shall have the power to exercise all
20 the rights, powers, and privileges contained in such obligation
21 held by such pledgee, including the sale of the assets.
22 * * *
23 Section 22. Section 712B and D of the act, amended July 2,
24 1935 (P.L.525, No.202), are amended to read:
25 Section 712. Liens, Judgments, and Executions; Assignments
26 of Claims.--* * *
27 B. In the case of an institution, of which the secretary has
28 taken possession, [which, at the time of possession, was a
29 member, in the case of a bank, bank and trust company, or
30 savings bank of the Federal Deposit Insurance Corporation, and
20020S1258B1904 - 50 -
1 in the case of a building and loan association of the Federal
2 Savings and Loan Insurance Corporation,] the claims of
3 depositors[, and of shareholders of a building and loan
4 association,] shall be subrogated in favor of the Federal
5 Deposit Insurance Corporation [or the Federal Savings and Loan
6 Insurance Corporation, as the case may be,] to the extent that
7 the Federal Deposit Insurance Corporation [or the Federal
8 Savings and Loan Insurance Corporation] makes available,
9 pursuant to applicable laws of the United States, for payment,
10 the claims of such depositors [or such shareholders]: Provided,
11 That the rights of such depositors [or of such shareholders,] to
12 participate in and receive dividends or other distributions upon
13 that portion of their claims not made available for payment[,]
14 shall not be affected by such subrogation. When the claims of
15 depositors [or of shareholders] have been made available for
16 payment, in whole or in part, by the Federal Deposit Insurance
17 Corporation [or the Federal Savings and Loan Insurance
18 Corporation, as the case may be], the secretary shall file a
19 partial or final account, in the manner required by this act, of
20 his administration of the business and property of the
21 institution.
22 * * *
23 D. No execution or attachment, pending or otherwise, shall
24 respectively issue, or be proceeded with, against any property,
25 moneys, or assets, owned by, or legally in the custody or
26 possession of, an institution of which the secretary is in
27 possession as receiver. [, except that an execution may be
28 permitted by special leave of the court. In lieu of the right to
29 issue an attachment against money or property belonging to
30 others, which is legally in the custody or possession of such
20020S1258B1904 - 51 -
1 institution, a.] A plaintiff may proceed as follows: He may give
2 written notice of his claim to the secretary, or to the deputy
3 receiver of such institution, and he shall thereafter present
4 proof in the regular manner provided by this act for the proof
5 of the claim, which he is attempting to attach. After the filing
6 of the regular account of the secretary, the court shall
7 adjudicate the matter as in the case of other disputed claims.
8 [Where two or more plaintiffs attempt to attach the same claim
9 in this manner, the order in which they shall take, as among
10 themselves, shall be determined by the order in which written
11 notice of their claims was received by the secretary.]
12 Section 23. Section 715 of the act, amended May 26, 1949
13 (P.L.1842, No.546), is amended to read:
14 Section 715. Surrender or Transfer of Burdensome Assets.--
15 The secretary may, with leave of court, surrender to the
16 institution of which he is receiver any real estate which
17 appears to be burdensome and of no advantage to the estate. He
18 may likewise, with leave of court, convey title to any other
19 holder of a mortgage or a lien against property in his
20 possession, where it shall appear that to continue to hold such
21 property is burdensome and of no advantage to the estate.
22 The secretary shall give notice to the depositors or other
23 creditors of the institution[, and, in the case of building and
24 loan associations, to the shareholders,] of the filing of the
25 petition for leave to transfer or convey such property pursuant
26 to the provisions of this section. Such notice shall be given at
27 the addresses which appear for such depositors[,] or other
28 creditors[, or shareholders] upon the books or other records of
29 the institution, or if none appear there, then at their last
30 known addresses. However, the court may, if it shall appear to
20020S1258B1904 - 52 -
1 be in the best interests of the estate, order the secretary to
2 substitute a single advertisement in a newspaper or newspapers,
3 for the individual notice to the depositors and other
4 creditors[, and in the case of a building and loan association,
5 the shareholders]. The court shall grant at least ten days for
6 the filing of objections by the depositors or other creditors of
7 the institution [and, in the case of a building and loan
8 association, the shareholders of such institution].
9 Section 24. Sections 718, 721A and C and 723 AND 721A AND C <--
10 of the act are amended to read:
11 Section 718. Sales of Real Property.--[A.] The secretary
12 may, with leave of, and upon the terms and conditions prescribed
13 by, the court, sell any real property of the institution of
14 which he is in possession as receiver. The order of the court
15 authorizing such sale shall state whether the sale shall be
16 entirely for cash or partly for cash and partly for evidences of
17 indebtedness, whether it shall be public or private, whether
18 notice shall be given to depositors, other creditors, and
19 shareholders, or to any of these groups, and whether
20 advertisement shall be made. Unless the court, in any case,
21 deems advertisement or notice necessary or desirable to protect
22 the interests of the estate, such advertisement or notice shall
23 not be required. If the court does require advertisement or
24 notice, then the court shall in no case require more than a
25 single insertion in one newspaper of general circulation in the
26 county of the receivership and one in such other county where
27 the real property may be located.
28 [Where the order of the court provides for advertisement, it
29 shall in no case require that there be more than a single
30 insertion in one newspaper of general circulation in the county,
20020S1258B1904 - 53 -
1 and, in first-class counties, in one legal newspaper. Where real
2 property which is to be sold is situated in a county other than
3 the one in which the institution is located, the court may also
4 authorize a single insertion in a newspaper of general
5 circulation in such other county, and, in first-class counties,
6 in one legal newspaper.]
7 Every such sale of real property shall be confirmed by the
8 court, if all the terms and conditions of its order authorizing
9 such sale have been complied with.
10 [B. When any real property of an institution of which the
11 secretary is in possession as receiver is situated in a county
12 other than the one in which the institution is located, the
13 secretary shall proceed in the same manner as is provided by
14 this section for the sale of real property within the county. In
15 addition, he shall petition the court of common pleas of the
16 county in which the real property is located, and it shall be
17 the duty of such court, to issue an order authorizing the sale
18 upon the terms or conditions prescribed by the order of the
19 court having jurisdiction of the receivership. The secretary
20 shall file a return of the sale in the court of common pleas in
21 the county in which the real estate is located, which court, if
22 all the terms and conditions of the order of the court, in which
23 the certificate of possession is filed, have been met, shall
24 confirm the sale and shall give the secretary a certified copy
25 of the return of the sale and a certified copy of the
26 confirmation thereof. Such certified copies shall be filed with
27 the prothonotary of the court in which the certificate of
28 possession is filed.]
29 Section 721. Sale or Exchange of Personal Property, Listed
30 and Unlisted Securities.--A. The secretary may, without leave
20020S1258B1904 - 54 -
1 of court, sell on any stock exchange or otherwise, at such times
2 and in such manner as he shall deem to be [to] in the best
3 interests of the estate, listed or unlisted securities which
4 belong to the institution of which he is in possession as
5 receiver, or which such institution has the power to sell.
6 * * *
7 C. The secretary may, without leave of court, sell any
8 mortgage or other lien upon real property or any judgment, at
9 such times and in such manner as he shall deem to be in the best
10 interests of the estate.
11 * * *
12 [Section 723. Enforcement of Shareholders' Liability.--A. <--
13 If at any time after he takes possession of a corporation as
14 receiver, it shall appear to the secretary that the assets of
15 such corporation will be insufficient to pay in full its debts
16 to depositors and other creditors, he shall, as soon as
17 expedient, estimate the amount which shall be assessed against
18 all shareholders who are, under these circumstances, personally
19 liable for any part of the debts of such corporation, by reason
20 of their ownership of such shares. He shall assess against such
21 shareholders the amount which he then deems necessary for the
22 payment of such debts, not however exceeding the maximum
23 liability of such shareholders, as provided by law. The
24 secretary shall send to every such shareholder by registered
25 mail to the address which appears on the records of the
26 corporation, or if none appears there, then to his last known
27 address, a demand that the amount assessed against him be paid.
28 Such demand shall state the total amount assessed by the
29 secretary against all the shareholders, and the specific amount
30 to be paid by the particular shareholder. It shall also
20020S1258B1904 - 55 -
1 designate a period within which such assessment shall be paid,
2 such period to be not less than thirty days after the date of
3 the sending of the notice. If any shareholders shall not pay the
4 amount assessed against them, the secretary may institute
5 actions at law or in equity against them, either severally or
6 jointly, for the amount of such assessment, together with
7 interest from the date designated in the notice from the
8 secretary, for the payment of such assessment. In such action,
9 the written statement of the secretary, signed by him in his
10 official capacity as receiver and bearing the seal of the
11 department, asserting that the assets of the corporation appear
12 insufficient to meet its liabilities to depositors and other
13 creditors, that consequently he has made an assessment against
14 the shareholder or shareholders being sued, that the period
15 designated for the payment of the assessment has expired, and
16 that the value of the assets of the corporation and the
17 liabilities of such corporations are as set forth, shall be
18 prima facie evidence of the facts therein stated.
19 B. The secretary may make as many partial assessments as
20 shall appear expedient, until the total liability of the
21 shareholders, or the total amount necessary to pay in full the
22 depositors and other creditors of the corporation, has been
23 assessed.]
24 SECTION 24.1. SECTION 723 OF THE ACT IS REPEALED. <--
25 Section 25. Section 725 of the act, added October 5, 1978
26 (P.L.266, No.1133), is amended to read:
27 Section 725. Rights of Subrogation.--When a public body of
28 the United States or this Commonwealth has made payment to any
29 depositor, it shall become subrogated to all rights of the
30 depositor against the institution in possession to the extent of
20020S1258B1904 - 56 -
1 such payment.
2 Section 26. The act is amended by adding sections to read:
3 Section 726. Other Powers of the Receiver.--A. The <--
4 following apply to suspension of legal actions:
5 (1) The receiver may request a stay for a period not to
6 exceed ninety days of any judicial action or proceeding to which
7 such institution is or becomes a party.
8 (2) Upon receipt of a request by any receiver pursuant to
9 paragraph (1) for a stay of any judicial action or proceeding in
10 any court with jurisdiction of such action or proceeding, the
11 court shall grant such stay as to all parties.
12 B. In the event of any appealable judgment, the secretary,
13 as receiver, shall:
14 (1) have all rights and remedies available to the
15 institution, including all appellate rights; and
16 (2) not be required to post any bond in order to pursue such
17 remedies.
18 C. No attachment or execution may issue by any court upon
19 assets in the possession of the receiver.
20 D. The following apply to fraudulent transfers:
21 (1) The receiver for an institution may void a transfer of
22 any interest of any director, officer, employe or controlling
23 shareholder of the institution or any person who is a debtor of
24 the institution that was made within five years of the date on
25 which the secretary became the receiver of the institution, if
26 such person voluntarily or involuntarily made such transfer or
27 incurred such liability with the intent to hinder, delay or
28 defraud the institution or the receiver.
29 (2) To the extent that a transfer is voided under paragraph
30 (1), the receiver may recover the property transferred, or, if a
20020S1258B1904 - 57 -
1 court so orders, the value of such property from the initial or
2 subsequent transferee, provided that the receiver cannot recover
3 from any transferee that takes for value, including satisfaction
4 or securing of a present or antecedent debt, in good faith.
5 E. The following apply to pre-receivership contracts:
6 (1) After the receiver takes possession of an institution,
7 the receiver in his or her discretion may disaffirm or repudiate
8 any contract or lease to which the institution is a party, when
9 the receiver determines performance of the contract or lease to
10 be burdensome and the disaffirmance or repudiation will promote
11 the orderly administration of the institution's affairs.
12 (2) The liability of the receiver for disaffirmance or
13 repudiation of any contract shall be limited to actual direct
14 compensatory damages, which shall not include punitive or
15 exemplary damages, damages for lost profits or damages for pain
16 and suffering. Any such liability may not accrue or be assessed
17 for the period from and after the date of disaffirmance or
18 repudiation.
19 (3) If the receiver disaffirms or repudiates a lease under
20 which the institution was the lessee, the receiver shall not be
21 liable for any damages, except as described in paragraph (4).
22 (4) Under a lease as described in paragraph (3), the lessor
23 shall be entitled to the contractual rent accruing before the
24 notice of disaffirmance or repudiation is mailed, unless the
25 lessor is in default of the terms of the lease. The lessor shall
26 have no claim for damages under any acceleration clause or other
27 penalty provision in the lease.
28 (5) If the receiver repudiates an unexpired written lease of
29 real property under which the institution is the lessor and the
30 lessee is not, as of the date of such repudiation, in default,
20020S1258B1904 - 58 -
1 the lessee may either treat the lease as terminated or remain in
2 possession of the leasehold interest for the balance of the term
3 of the lease, subject to the terms of the lease.
4 If such lessee remains in possession of the leasehold
5 interest, the lessee shall continue to pay the contractual rent
6 pursuant to the terms of the lease after the date of repudiation
7 of such lease. The receiver shall not be liable to the lessee
8 for any damages arising after or as a result of repudiation of
9 the lease, except to the extent of any offset stated below. The
10 lessee may offset any rent payment which accrues after the date
11 of the repudiation of the lease and any damages which accrue
12 after such date due to the nonperformance of any obligation of
13 the institution under the lease after such date.
14 (6) If the receiver repudiates any contract for the sale of
15 real property, and the purchaser of such real property is not in
16 default, such purchaser may either treat the contract as
17 terminated or remain in possession of such real property. If
18 such purchaser remains in possession under such contract, the
19 purchaser shall continue to make all payments due under the
20 contract. The receiver shall not be liable to the purchaser for
21 any damages arising after or as a result of repudiation of the
22 contract; shall deliver title to the purchaser in accordance
23 with the provisions of the contract; and shall have no
24 obligation under the contract other than the performance of
25 delivering title to the purchaser in accordance with the terms
26 of the contract, except to the extent of any offset. The
27 purchaser may offset against any payments due under the contract
28 any damages which accrue after the repudiation date due to the
29 nonperformance, after such date, of any obligation of the
30 institution under the contract.
20020S1258B1904 - 59 -
1 (7) The following apply to service contracts:
2 (a) In the case of any contract for services between any
3 person and any institution for which the secretary has been
4 appointed receiver, any claim for services performed before the
5 appointment of the receiver shall be treated as a claim pursuant
6 to Article X.
7 (b) If, in the case of any contract for services described
8 in subparagraph (a), the receiver accepts performance by the
9 other person before the receiver makes any determination to
10 repudiate such contracts, the other party shall be paid under
11 the terms of the contract for services performed; and the amount
12 of such payment shall be treated as an administrative expense of
13 the receivership. The acceptance by the receiver of services
14 shall not affect the right of the receiver to repudiate such
15 contract at any time after such performance.
16 (8) The following apply to certain qualified financial
17 contracts:
18 (a) The term "qualified financial contract" means any
19 securities contract, commodity contract, forward contract,
20 repurchase agreement, swap agreement and any similar agreement
21 that the receiver determines to be a qualified financial
22 contract.
23 (b) No person shall be stayed or prohibited from exercising
24 any right to cause the termination or liquidation of any
25 qualified financial contract with an institution which arises
26 upon the appointment of the receiver; any right under any
27 security arrangement relating to any contract or agreement
28 described in subparagraph (a); or any right to offset or net out
29 any termination value, payment amount or other transfer
30 obligation arising under or in connection with one or more
20020S1258B1904 - 60 -
1 contracts and agreements described in subparagraph (a),
2 including any master agreement for such contracts or agreements.
3 (9) The receiver may enforce any contract, including a
4 director's or officer's liability insurance contract or a
5 depository institution bond, entered into by the institution
6 notwithstanding any provision of the contract providing for
7 termination, default, acceleration or exercise of rights upon,
8 or solely by reason of, insolvency or the appointment of a
9 receiver.
10 SECTION 726. ADDITIONAL POWERS OF THE RECEIVER.--IN ADDITION <--
11 TO ANY OTHER POWER, RIGHT, PRIVILEGE, IMMUNITY, ABILITY OR OTHER
12 AUTHORITY CONFERRED UPON THE SECRETARY BY THIS ACT, THE
13 SECRETARY, AS RECEIVER OF ANY INSTITUTION, SHALL HAVE ANY POWER,
14 RIGHT, PRIVILEGE, IMMUNITY, ABILITY OR OTHER AUTHORITY CONFERRED
15 UPON THE FEDERAL DEPOSIT INSURANCE CORPORATION BY FEDERAL LAW
16 WHEN ACTING AS CONSERVATOR OR RECEIVER WHICH DOES NOT CONFLICT
17 WITH ANY POWER, RIGHT, PRIVILEGE, IMMUNITY, ABILITY OR OTHER
18 AUTHORITY CONFERRED UPON THE SECRETARY BY THIS ACT, INCLUDING
19 THE POWERS, RIGHTS, PRIVILEGES, IMMUNITIES, ABILITIES AND
20 AUTHORITIES CONFERRED UPON THE FEDERAL DEPOSIT INSURANCE
21 CORPORATION BY SECTION 11(D) THROUGH (W) OF THE FEDERAL DEPOSIT
22 INSURANCE ACT (64 STAT. 873, 12 U.S.C. § 1821(D) THROUGH (W)).
23 THE POWERS, RIGHTS, PRIVILEGES, IMMUNITIES, ABILITIES AND OTHER
24 AUTHORITIES CONFERRED UPON THE SECRETARY BY THIS PROVISION ARE
25 DISCRETIONARY AND NOTHING IN THIS ACT OR ANY OTHER LAW SHALL
26 REQUIRE THE SECRETARY TO EXERCISE ANY SUCH POWER, RIGHT,
27 PRIVILEGE, IMMUNITY, ABILITY OR OTHER AUTHORITY WHEN THE
28 SECRETARY, IN HIS DISCRETION, DETERMINES NOT TO DO SO.
29 Section 727. Taxation.--A. The receiver, including, FOR <--
30 PURPOSES OF THIS SECTION, the secretary and the department,
20020S1258B1904 - 61 -
1 shall be exempt from all taxation imposed by any state, county,
2 municipality, local or other taxing authority IN ANY STATE TO <--
3 THE EXTENT PERMITTED BY LAW, and the Federal Government to the
4 extent permitted by Federal law, except that any real property
5 OF THE RECEIVER shall be subject to applicable taxation. STATE, <--
6 COUNTY, MUNICIPAL OR LOCAL TAXATION TO THE SAME EXTENT ACCORDING
7 TO ITS VALUE AS OTHER REAL PROPERTY IS TAXED, EXCEPT THAT,
8 NOTWITHSTANDING THE FAILURE OF ANY PERSON TO CHALLENGE AN
9 ASSESSMENT UNDER STATE LAW OF SUCH PROPERTY'S VALUE, SUCH VALUE,
10 AND THE TAX THEREON, SHALL BE DETERMINED AS OF THE PERIOD FOR
11 WHICH SUCH TAX IS IMPOSED.
12 B. No property of the receiver shall be subject to levy,
13 attachment, garnishment, foreclosure or sale without the consent
14 of the receiver, nor shall an involuntary lien attach to the
15 property of the receiver.
16 C. The receiver shall not be liable for any amounts in the
17 nature of penalties or fines, including those arising from the
18 failure of any person to pay any real property, personal
19 property, probate or recording tax or any recording or filing
20 fees when due.
21 Section 27. Article VIII heading of the act is amended to
22 read:
23 ARTICLE VIII
24 SECRETARY IN POSSESSION OF
25 TRUST COMPANY OR TRUST DEPARTMENT
26 Section 28. Sections 801, 802 and 804 AND 802 of the act are <--
27 amended to read:
28 Section 801. Institution as Fiduciary.--References in this
29 act to funds, property, or investments held in a fiduciary
30 capacity by an institution of which the secretary has taken
20020S1258B1904 - 62 -
1 possession, shall apply only to funds, property, or investments
2 held in such fiduciary capacity by the trust company or trust
3 department of such institution, and shall not apply to funds,
4 property or investments which were held by the commercial
5 department of such institution. The receivership rules found in <--
6 other articles of this act shall supplement the rules contained
7 in this article to the extent that they are consistent with the
8 rules in this article.
9 Section 802. Secretary in Possession of Trust Company or
10 Trust Department.--A. The secretary, upon taking possession of
11 an institution as receiver, shall keep all the funds, property,
12 and investments, if any, which are held by such institution in a
13 fiduciary capacity, separate from the assets of the institution
14 itself.
15 B. The secretary, when in possession of an institution as
16 receiver, shall have all the rights, powers, and duties which
17 such institution had in its fiduciary capacity. He shall have
18 title to all the assets, including debts due, liens and other
19 security therefor, and all rights of action or redemption, of
20 all estates of which the institution, either alone or jointly
21 with someone else, was trustee, executor, administrator,
22 guardian, assignee, or other similar fiduciary, and shall have
23 the power to administer such estates. In pursuance of this
24 power, the secretary may institute any action at law or in
25 equity, or execute and sign any written instruments, which the
26 institution itself could have instituted, executed, or signed.
27 C. The secretary shall not[, however,] have the power to <--
28 invest funds or property of any such estate, except where it
29 shall appear necessary to purchase any real or personal property
30 or any interest therein, in order to protect an equity which
20020S1258B1904 - 63 -
1 such estate has in such property. Such purchase by the secretary
2 shall not[, however,] be made without the approval of any
3 corporation or person whose approval would have been necessary
4 to such purchase by the institution prior to the taking of
5 possession by the secretary, and of the court which has
6 exercised jurisdiction over such estate. If no court has yet
7 exercised jurisdiction over the estate, then the approval either
8 of the court of common pleas or of the orphans' court of the
9 county in which the place of business of the institution is
10 situated shall be procured.
11 Except where otherwise specifically provided, references in
12 this act to the court which has exercised jurisdiction over an
13 estate of which an institution in possession of the secretary
14 was fiduciary, shall be construed to refer, in cases in which
15 the institution was executor or administrator, to the orphans'
16 court of the county of which the register of wills issued the
17 letters testamentary or letters of administration respectively,
18 and in all other cases, to the court of common pleas or the
19 orphans' court in which an account of the estate has been filed,
20 or which has, in any manner, exercised control or supervision
21 over the administration of such estate by the institution as
22 fiduciary.
23 SECTION 28.1. THE ACT IS AMENDED BY ADDING A SECTION TO <--
24 READ:
25 SECTION 802.1. APPOINTING SUCCESSOR TRUSTEE.--A. THE
26 SECRETARY, UPON TAKING POSSESSION OF AN INSTITUTION AS RECEIVER,
27 AND EITHER BEFORE OR AFTER DETERMINING TO LIQUIDATE THE
28 INSTITUTION, MAY ENTER INTO ANY AGREEMENT TO ASSIGN, SELL OR
29 TRANSFER ONE OR MORE TRUST ACCOUNTS TO ONE OR MORE SUCCESSOR
30 TRUSTEES WITHOUT INCURRING ANY LIABILITY.
20020S1258B1904 - 64 -
1 B. UPON THE SALE, ASSIGNMENT OR TRANSFER OF A TRUST ACCOUNT
2 PURSUANT TO SUBSECTION A, THE SUCCESSOR TRUSTEE SHALL BE
3 AUTOMATICALLY SUBSTITUTED BY REASON OF THE SALE, ASSIGNMENT OR
4 TRANSFER AS FIDUCIARY OF THE TRUST ACCOUNT WITHOUT FURTHER
5 ACTION AND WITHOUT ANY ORDER OR DECREE OF ANY COURT OR PUBLIC
6 OFFICER.
7 C. NO DESIGNATION, NOMINATION OR APPOINTMENT AS FIDUCIARY
8 SHALL LAPSE BY REASON OF THE SALE, ASSIGNMENT OR TRANSFER OF A
9 TRUST ACCOUNT PURSUANT TO SUBSECTION A. THE SUCCESSOR TRUSTEE
10 SHALL BE ENTITLED TO ACT AS FIDUCIARY TO THE SAME EXTENT AS THE
11 INSTITUTION TAKEN INTO POSSESSION BY THE SECRETARY.
12 SECTION 29. SECTIONS 804, 805, 806 AND 807 OF THE ACT ARE
13 AMENDED TO READ:
14 Section 804. Appointment of Substituted Fiduciaries.--A. <--
15 Upon filing a supplement to the certificate of possession,
16 setting forth his determination to liquidate the affairs of the
17 institution, the secretary shall forthwith give written notice,
18 in so far as the giving of such notice is practicable, to [all
19 parties of whom he has notice, who are interested in any funds,
20 property, or investments held by such institution in a fiduciary
21 capacity.] settlors of the account THAT HAS NOT BEEN ASSIGNED, <--
22 SOLD, OR TRANSFERRED TO A SUCCESSOR TRUSTEE UNDER SECTION 802.1,
23 or if the settlor is deceased, to persons who are readily
24 ascertainable as beneficiaries of the account by their receipt
25 of statements of the account, and any co-fiduciary of the
26 account, of whom the secretary has notice. SUCH NOTICE SHALL BE <--
27 GIVEN AT THE ADDRESSES WHICH APPEAR FOR SUCH PARTIES UPON THE
28 BOOKS OR RECORDS OF THE INSTITUTION, OR IF NONE APPEARS THERE,
29 THEN AT THEIR LAST KNOWN ADDRESS. Such notice shall require such
30 parties, within thirty days after the giving of notice, to apply
20020S1258B1904 - 65 -
1 for the appointment of substituted fiduciaries[.], AND SHALL <--
2 NOTIFY SUCH PARTIES THAT THE RECEIVER IS STATUTORILY STAYED FROM
3 TAKING ANY ACTION REGARDING THE ADMINISTRATION OF THE TRUST
4 ACCOUNTS UNLESS OTHERWISE ORDERED BY THE COURT EXCEPT FOR
5 TRANSFERRING THE TRUST ACCOUNT TO A SUCCESSOR TRUSTEE OR A
6 SUBSTITUTED FIDUCIARY. Such application shall be made as
7 follows, with a copy of the application being mailed or
8 delivered to the secretary upon the filing of the application:
9 In any case in which the institution was executor or
10 administrator, application shall be made to the register of
11 wills having jurisdiction to grant new letters in such form as
12 the case shall require; in any other case, application shall be
13 made to any court which has exercised jurisdiction over the
14 estate, or if no court has exercised such jurisdiction, then to
15 the court of common pleas, or the orphans' court, of the county
16 in which the institution has its place of business. However, if
17 the instrument under which the fiduciary relationship was
18 established provides a particular method for the selection of
19 fiduciaries, such method shall be followed.
20 B. HOWEVER, THE COURT MAY, IF IT SHALL APPEAR TO BE IN THE <--
21 BEST INTERESTS OF THE ESTATE, ORDER THE SECRETARY TO SUBSTITUTE
22 A SINGLE ADVERTISEMENT IN A NEWSPAPER OR NEWSPAPERS FOR THE
23 INDIVIDUAL NOTICE TO ALL SUCH PARTIES. SUCH NOTICE SHALL REQUIRE
24 SUCH PARTIES, WITHIN THIRTY DAYS AFTER THE GIVING OF NOTICE, TO
25 APPLY FOR THE APPOINTMENT OF SUBSTITUTED FIDUCIARIES, AND SHALL
26 NOTIFY SUCH PARTIES THAT THE RECEIVER IS STATUTORILY STAYED FROM
27 TAKING ANY ACTION REGARDING THE ADMINISTRATION OF THE TRUST
28 ACCOUNTS UNLESS OTHERWISE ORDERED BY THE COURT EXCEPT FOR
29 TRANSFERRING THE TRUST ACCOUNT TO A SUCCESSOR TRUSTEE OR A
30 SUBSTITUTED FIDUCIARY.
20020S1258B1904 - 66 -
1 C. If the parties to whom [such] notice PURSUANT TO <--
2 SUBSECTION A OR B has been given do not, within the thirty-day
3 period designated, make such application, or pursue whatever
4 method is prescribed by the instrument under which the fiduciary
5 relationship was established, for the appointment of a
6 substituted fiduciary, or if it is impracticable to give notice
7 to the parties interested in the estate, then the secretary
8 shall make the application for the appointment of a substituted
9 fiduciary to the court or the register of wills, whichever the
10 case may be, designated above. Such court or register of wills
11 shall appoint a substituted fiduciary upon such petition of the
12 secretary.
13 Section 29. The act is amended by adding a section to read: <--
14 Section 809. Alternatives for Receivership of Trust Company
15 or Trust Department.--As an exclusive alternative to the other
16 sections in this article, the secretary may forthwith give
17 written notice, insofar as the giving of such notice is
18 practicable, to settlors of the account or, if the settlor is
19 deceased, persons who are readily ascertainable as beneficiaries
20 of the account by their receipt of statements of the account,
21 and any co-fiduciary of the account, of whom the secretary has
22 notice. Such notice shall be given at the addresses which appear
23 for such parties upon the books or other records of the
24 institution, or if none appear there, then at their last known
25 addresses. However, the court may, if it shall appear to be in
26 the best interests of the estate, order the secretary to
27 substitute a single advertisement in a newspaper or newspapers
28 for the individual notice to all such parties. Such notice shall
29 require such parties, within thirty days after the giving of
30 notice, to apply for the appointment of substituted fiduciaries,
20020S1258B1904 - 67 -
1 and shall notify such parties that the receiver is statutorily
2 stayed from taking any action regarding administration of the
3 trust accounts in exercising this alternative unless otherwise
4 ordered by the court except for transferring the trust account
5 to a substituted fiduciary.
6 If the parties to whom such notice has been given do not,
7 within the thirty-day period designated, make such application,
8 pursue whatever method is prescribed by the instrument under
9 which the fiduciary relationship was established, or designate a
10 substituted fiduciary that will accept the trust account for the
11 appointment of a substituted fiduciary, or if it is impractical
12 to give notice to the parties interested in the estate, then the
13 secretary may assign, sell or transfer the trust accounts to a
14 substituted fiduciary. Subsequent to the assignment, sale or
15 transfer of the trust accounts to a substituted fiduciary under
16 this section, the secretary shall file an account of the trust
17 accounts designating the substituted fiduciary.
18 SECTION 805. [TRANSFER OF ASSETS TO SUBSTITUTED FIDUCIARY <--
19 WITHOUT FILING ACCOUNT.--IF A SUBSTITUTED FIDUCIARY HAS BEEN
20 APPOINTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT, AND IF
21 THERE IS NO DISPUTE AS TO THE AMOUNT OR IDENTITY OF THE FUNDS,
22 PROPERTY, OR INVESTMENTS OF THE PARTICULAR ESTATE, AND AS TO THE
23 FEES, COMMISSIONS, AND EXPENSES DUE EITHER TO THE INSTITUTION
24 BEFORE THE SECRETARY TOOK POSSESSION OR TO THE SECRETARY AS
25 RECEIVER SINCE THE TAKING OF POSSESSION, AND IF ALL THE PARTIES
26 IN INTEREST, BEING SUI JURIS, AGREE IN WRITING TO WAIVE AN
27 ACCOUNTING IN COURT, THE SECRETARY IN POSSESSION OF AN
28 INSTITUTION AS RECEIVER, MAY TRANSFER TO SUCH SUBSTITUTED
29 FIDUCIARY ALL THE FUNDS, PROPERTY, AND INVESTMENTS OF THE
30 PARTICULAR ESTATE WITHOUT FILING AN ACCOUNT IN ANY COURT. UPON
20020S1258B1904 - 68 -
1 SUCH TRANSFER, HE SHALL PROCURE FROM ALL THE PARTIES IN INTEREST
2 AND FROM THE SUBSTITUTED FIDUCIARY A RECEIPT AND RELEASE IN
3 FULL, WHICH SHALL DISCHARGE THE SECRETARY AND THE INSTITUTION
4 FROM ANY FURTHER DUTY OR LIABILITY WITH REFERENCE TO SUCH
5 ESTATE.] NOTICE OF TRANSFER; FILING OF DISPUTES.--WITHIN THIRTY
6 DAYS, OR ANOTHER PERIOD OF TIME DESIGNATED BY THE DEPARTMENT, OF
7 THE SALE, ASSIGNMENT OR TRANSFER OF A TRUST ACCOUNT TO A
8 SUCCESSOR TRUSTEE PURSUANT TO SECTION 802.1.A, OR OF THE
9 APPOINTMENT OF A SUBSTITUTED FIDUCIARY PURSUANT TO SECTION 804,
10 THE SUCCESSOR TRUSTEE OR SUBSTITUTED FIDUCIARY SHALL PROVIDE
11 NOTICE TO SETTLORS OF THE ACCOUNT, OR IF THE SETTLOR IS
12 DECEASED, TO PERSONS WHO ARE READILY ASCERTAINABLE AS
13 BENEFICIARIES OF THE TRUST ACCOUNT BY THEIR RECEIPT OF
14 STATEMENTS OF THE ACCOUNT, AND ANY CO-FIDUCIARY OF THE ACCOUNT,
15 OF WHOM THE SECRETARY HAS NOTICE. WITH RESPECT TO TRUST ACCOUNTS
16 THAT HAVE NOT BEEN TRANSFERRED, ASSIGNED, OR SOLD, THE SECRETARY
17 AS RECEIVER SHALL PROVIDE THE NOTICE REQUIRED IN THIS SECTION.
18 THE NOTICE TO SUCH PARTIES SHALL INDICATE THAT THE ACCOUNT HAS
19 BEEN SOLD, ASSIGNED OR TRANSFERRED TO THE SUCCESSOR TRUSTEE OR
20 TRANSFERRED TO THE SUBSTITUTED FIDUCIARY. SUCH NOTICE SHALL
21 REQUIRE SUCH PARTIES WITHIN THIRTY DAYS OF RECEIPT OF THE NOTICE
22 TO NOTIFY THE RECEIVER AND THE SUCCESSOR TRUSTEE OR SUBSTITUTED
23 FIDUCIARY IF THERE IS ANY DISPUTE AS TO THE AMOUNT OR IDENTITY
24 OF THE FUNDS, PROPERTY, OR INVESTMENTS OF THE ESTATE, AND AS TO
25 THE FEES, COMMISSIONS, AND EXPENSES DUE EITHER THE INSTITUTION
26 BEFORE THE SECRETARY TOOK POSSESSION OR TO THE SECRETARY AS
27 RECEIVER SINCE THE TAKING OF POSSESSION. IF SUCH PARTIES DO NOT
28 NOTIFY THE SECRETARY AS RECEIVER AND THE SUCCESSOR TRUSTEE OR
29 SUBSTITUTED FIDUCIARY OF ANY DISPUTE, NO ACCOUNTING IN COURT
30 SHALL BE REQUIRED AND THE SECRETARY AND THE INSTITUTION IN
20020S1258B1904 - 69 -
1 RECEIVERSHIP SHALL BE DISCHARGED AND RELEASED IN FULL FROM ANY
2 FURTHER DUTY OR LIABILITY WITH REGARD TO SUCH TRUST ACCOUNT.
3 SECTION 806. FILING OF ACCOUNT; TRANSFER OF ASSETS TO
4 SUBSTITUTED FIDUCIARY.--A. EXCEPT IN CASES IN WHICH THE
5 SECRETARY IS AUTHORIZED BY THE PROVISIONS OF THIS ACT TO
6 TRANSFER TO A SUCCESSOR TRUSTEE OR A SUBSTITUTED FIDUCIARY,
7 WITHOUT FILING AN ACCOUNT, THE FUNDS, PROPERTY, OR INVESTMENTS
8 OF AN ESTATE OF WHICH THE INSTITUTION WAS FIDUCIARY, HE SHALL
9 FILE AN ACCOUNT FOR EVERY ESTATE OF WHICH SUCH INSTITUTION WAS
10 FIDUCIARY AND OF WHICH THE SECRETARY RECEIVED NOTICE OF A
11 DISPUTE UNDER SECTION 805. THE SECRETARY, WITH THE ASSISTANCE OF
12 THE SUCCESSOR TRUSTEE OR THE SUBSTITUTED FIDUCIARY, SHALL FILE
13 EACH SUCH ACCOUNT UPON THE DATE FIXED BY THE INSTRUMENT CREATING
14 THE FIDUCIARY RELATIONSHIP, OR IF THERE IS NO SUCH DATE FIXED,
15 THEN AS SOON AS EXPEDIENT AFTER THE FILING OF A SUPPLEMENT TO
16 THE CERTIFICATE OF POSSESSION, SETTING FORTH HIS DETERMINATION
17 TO LIQUIDATE THE AFFAIRS OF THE INSTITUTION. SUCH ACCOUNT SHALL
18 BE FILED IN THE COURT WHICH HAS EXERCISED JURISDICTION OVER THE
19 PARTICULAR ESTATE, OR IF NO COURT HAS YET EXERCISED
20 JURISDICTION, THEN IN THE COURT OF COMMON PLEAS, OR THE ORPHANS'
21 COURT, OF THE COUNTY IN WHICH THE PLACE OF BUSINESS OF THE
22 INSTITUTION IS SITUATED. [THE SECRETARY SHALL THEN TRANSFER OR
23 PAY TO THE SUBSTITUTED FIDUCIARY, APPOINTED PURSUANT TO THE
24 PROVISIONS OF THIS ACT, ANY FUNDS, PROPERTY, OR INVESTMENTS IN
25 HIS POSSESSION WHICH BELONG TO SUCH ESTATE. SUCH TRANSFER OR
26 PAYMENT SHALL BE MADE IN ACCORDANCE WITH THE ORDER OF THE COURT
27 IN WHICH THE ACCOUNT FOR SUCH ESTATE IS FILED. THE COURT, IN
28 DIRECTING SUCH TRANSFER OR PAYMENT, MAY RESERVE FOR FUTURE
29 DETERMINATION ANY QUESTION OF SURCHARGE.]
30 B. THE SECRETARY MAY SEEK AN ORDER FROM THE COURT WHICH HAS
20020S1258B1904 - 70 -
1 EXERCISED JURISDICTION OVER A PARTICULAR ESTATE OF WHICH THE
2 INSTITUTION WAS FIDUCIARY, OR IF NO COURT HAS EXERCISED SUCH
3 JURISDICTION, THEN THE COURT OF COMMON PLEAS, OR THE ORPHANS'
4 COURT, OF THE COUNTY IN WHICH THE INSTITUTION HAS ITS PLACE OF
5 BUSINESS, [MAY ORDER THE SECRETARY] TO TRANSFER THE FUNDS,
6 PROPERTY, OR INVESTMENTS OF THE ESTATE TO THE SUCCESSOR TRUSTEE
7 OR THE SUBSTITUTED FIDUCIARY, EVEN PRIOR TO THE FILING OF AN
8 ACCOUNT. THE COURT, IN SUCH ORDER, MAY RESERVE FOR FUTURE
9 DETERMINATION ANY QUESTION OF SURCHARGE, OR ANY OTHER QUESTION
10 WHICH MAY ARISE UPON THE AUDIT OF THE ACCOUNT.
11 C. THIS SECTION SHALL NOT BE CONSTRUED TO GIVE ANY COURT,
12 OTHER THAN THE ONE IN WHICH THE CERTIFICATE OF POSSESSION IS
13 FILED, JURISDICTION OVER DISPUTES INVOLVING THE IDENTITY OF
14 FUNDS, PROPERTY, OR INVESTMENTS OF AN ESTATE OF WHICH THE
15 INSTITUTION WAS FIDUCIARY.
16 SECTION 807. DEFICIENCIES IN ASSETS HELD BY INSTITUTION AS
17 FIDUCIARY.--WHENEVER THE COURT, IN WHICH THE SECRETARY HAS FILED
18 THE ACCOUNT OF AN ESTATE OF WHICH AN INSTITUTION IN HIS
19 POSSESSION WAS FIDUCIARY, SHALL, IN THE MANNER PROVIDED BY LAW,
20 RULE THAT THERE IS A DEFICIENCY IN THE FUNDS, PROPERTY, OR
21 INVESTMENTS OF SUCH ESTATE, OR THAT THE INSTITUTION IS LIABLE TO
22 SURCHARGE IN RESPECT THERETO, THE AMOUNT DETERMINED BY SUCH
23 COURT TO BE DUE SHALL CONSTITUTE A CLAIM AGAINST THE INSTITUTION
24 AND SHALL BE PRESENTED IN THE SAME MANNER AS OTHER CLAIMS,
25 EXCEPT THAT IT MAY BE PRESENTED AT ANY TIME WITHIN SIX MONTHS
26 AFTER THE APPOINTMENT OF A SUCCESSOR TRUSTEE OR A SUBSTITUTED
27 FIDUCIARY OF THE ESTATE AND THE ADJUDICATION OF THE ACCOUNT OF
28 SUCH ESTATE BY THE COMPETENT COURT. SUCH ORDER OR DECREE OF SUCH
29 COURT SHALL BE CONCLUSIVE AS TO THE AMOUNT DUE, EXCEPT FOR THE
30 RIGHT OF APPEAL PROVIDED BY LAW. ANY DISPUTE AS TO THE
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1 CLASSIFICATION OR ORDER OF PAYMENT OF SUCH CLAIM, AS
2 DISTINGUISHED FROM THE AMOUNT, SHALL BE ADJUDICATED BY THE COURT
3 IN WHICH THE CERTIFICATE OF POSSESSION IS FILED.
4 IF THE EXISTENCE OR AMOUNT OF ANY SUCH DEFICIENCY OR
5 SURCHARGE, OR THE LIABILITY OF THE INSTITUTION THEREFOR, IS IN
6 LITIGATION BUT UNDETERMINED AT THE TIME DIVIDENDS FOR CLAIMS
7 HAVING NO PRIORITY IN ORDER OF PAYMENT OVER SUCH CLAIMS ARE
8 BEING DISTRIBUTED, THE SECRETARY SHALL, UPON NOTICE OF SUCH FACT
9 FROM THE SUCCESSOR TRUSTEE OR SUBSTITUTED FIDUCIARY, WITHHOLD
10 AND SET APART A SUFFICIENT AMOUNT TO PAY THE PROPORTIONATE
11 DIVIDEND WHICH WILL BE DUE UPON SUCH UNDETERMINED CLAIM IF IT IS
12 FINALLY ADJUDICATED IN FAVOR OF THE ESTATE OF WHICH THE
13 INSTITUTION WAS FIDUCIARY.
14 Section 30. Article IX of the act is repealed.
15 Section 31. Sections 1001, 1002, 1003A, 1004, 1006, 1007 and
16 1010 of the act are amended to read:
17 Section 1001. Notice to Depositors[, Shareholders,] and
18 Other Creditors.--After filing a supplement to the certificate
19 of possession, setting forth his determination to liquidate the
20 affairs of an institution of which he has taken possession as
21 receiver, the secretary shall forthwith give notice of such fact
22 to all corporations or persons who appear upon the books of the
23 institution as, or who are otherwise known to the secretary to
24 be or claim to be, depositors or other creditors [and, in the
25 case of a building and loan association, shareholders of such
26 institution]. He shall likewise give notice to any corporation
27 or person who, pursuant to the provisions of this act, has given
28 the secretary notice of his claim to the right of execution or
29 attachment against any assets, owned by, or legally in the
30 custody or possession of, the secretary as receiver of the
20020S1258B1904 - 72 -
1 institution. Such notice shall be given at the addresses which
2 appear for such corporations or persons upon the books or other
3 records of the institution or, if none appear there, then at
4 their last known addresses. However, if it appears to be in the
5 best interests of the estate, the court may order the secretary
6 to substitute a single advertisement in a newspaper or
7 newspapers, for the individual notice to the corporations or
8 persons.
9 The notice to each depositor[, or, in the case of a building
10 and loan association, to each shareholder,] shall state the
11 amount which the books or other records of the institution show
12 to be due to such depositor [or shareholder]. It shall also
13 state that unless such depositor [or shareholder] shall, within
14 a specified time, present to the secretary for settlement, his
15 deposit or pass book, or other evidence of his account, showing
16 a different amount to be due, or unless such depositor [or
17 shareholder] shall, within a specified time from the date of
18 such notice, prove in the manner provided by this act that a
19 different amount is due, the amount shown to be due by the books
20 of the institution will be conclusively presumed to be correct,
21 unless the court, pursuant to the provisions of this act, grants
22 him an extension of time.
23 The notice to each creditor other than a depositor[, or in
24 the case of a building and loan association, other than a
25 shareholder,] shall inform such creditor that he must present
26 his claim in the manner provided by this act, within a specified
27 time from the date of such notice, or else be permanently barred
28 from sharing in any distribution of the assets of the
29 institution, unless the court pursuant to the provisions of this
30 act, grants him an extension of time.
20020S1258B1904 - 73 -
1 The secretary shall also advertise in a newspaper or
2 newspapers, as provided in this act, the fact that he has
3 determined to liquidate the affairs of the institution, and that
4 he has filed an inventory and appraisement in the office of the
5 prothonotary. Such advertisement shall state that all
6 depositors[, or in the case of building and loan associations,
7 all shareholders,] must prove their claims within a specified
8 period or be bound by the amount shown by the books or records
9 of the institution to be due them, and that any corporation or
10 person not appearing upon the books of the institution to be a
11 depositor[, or in the case of a building and loan association, a
12 shareholder,] and not presenting his pass book, or other
13 evidence of the state of his account, or otherwise presenting
14 his claim, will be permanently barred from sharing in any
15 distribution of the assets of the institution, unless the court,
16 pursuant to the provisions of this act, grants him an extension
17 of time. It shall also state that all creditors, other than
18 depositors[, or in the case of building and loan associations,
19 other than shareholders,] not proving their claims in the manner
20 provided by this act and within a specified period will likewise
21 be permanently barred from sharing in any distribution of the
22 assets of the institution, except where the court, pursuant to
23 the provisions of this act, grants to a creditor an extension of
24 time.
25 The secretary shall specify as the last day upon which
26 depositors[,] AND creditors[, and in the case of a building and <--
27 loan association, shareholders,] can present their claims, a
28 date not less than [one hundred twenty] SIXTY days after the <--
29 taking of possession of the institution by him as receiver,
30 provided that such date shall be at least thirty days after the
20020S1258B1904 - 74 -
1 date of the sending of such notice. However, claims based upon
2 deficiencies in, or surcharges with respect to funds, property,
3 or investments which such institution held in a fiduciary
4 capacity may be presented at any time within [six months] SIXTY <--
5 DAYS after the appointment of a substituted fiduciary of the
6 estate of which such funds, property, or investments were a part
7 and the adjudication of the account of such estate by the
8 competent court.
9 Section 1002. Proof of Claims of Depositors[, or, in
10 Building and Loan Associations, Shareholders].--Any depositor[,
11 or, in the case of a building and loan association, any
12 shareholder,] who disagrees with the amount shown by the books
13 or other records of the institution to be due to him, shall
14 present his claims to the secretary by presenting his deposit or
15 pass books, or other evidence of indebtedness, to the secretary,
16 within the time and in the manner designated by the secretary,
17 pursuant to the provisions of this act. Any such depositor [or
18 shareholder,] who shall not have received or shall have lost his
19 deposit or pass book or other evidence of indebtedness, or who
20 shall believe that the amount shown by such deposit or pass book
21 or other evidence of indebtedness to be due to him is incorrect,
22 shall, within the time designated by the secretary, present his
23 claim to the secretary by whatever method he shall designate.
24 Any depositor[, or, in the case of a building and loan
25 association, any shareholder,] who shall not present his claim
26 within the designated time and in the manner provided by this
27 section, shall be bound by the amount appearing to be due to him
28 upon the books or records of the institution, or where the name
29 of such depositor [or shareholder] does [nor] not appear at all
30 upon the books or records of the institution, or appears on such
20020S1258B1904 - 75 -
1 books or records but with no balance appearing to be due to him
2 by the institution, shall be permanently barred from sharing in
3 any distribution of the assets of the institution. However, the
4 court may, upon petition and adequate cause shown, permit any
5 depositor[, or, in the case of a building and loan association,
6 any shareholder,] to file his claim upon a later date, but no
7 claim shall in any event be allowed to be filed after the last
8 day for the filing of exceptions to the first account of the
9 secretary.
10 This section shall not, however, be construed to deprive any
11 such depositor [or shareholder] of any right of action at law or
12 in equity which he may have against an employe or former employe
13 of the institution, or upon the bond of such employe or former
14 employe, for any act committed by such employe which resulted in
15 such depositor's [or shareholder's] not appearing upon the books
16 of the institution, or appearing upon them but being credited
17 with an amount below that actually due.
18 The secretary shall prescribe the form for the proof of claim
19 of all depositors[, or, in the case of building and loan
20 associations, shareholders,] and for the affidavit to be
21 included therein. Whenever requested by any such depositor [or
22 shareholder] to prepare such proof of claim or to take the
23 affidavit thereto, the secretary shall do so without any charge
24 to such depositor [or shareholder].
25 Section 1003. Proof of Claims of Creditors.--A. Creditors
26 other than depositors[, or in the case of a building and loan
27 association, other than shareholders,] shall not share in any
28 distribution of the assets of the institution, unless the
29 creditor, or someone for him, shall, within the time specified
30 by the secretary, pursuant to the provisions of this act,
20020S1258B1904 - 76 -
1 present to the secretary a statement of his claim, together with
2 a copy of any book entries pertaining thereto, any note or other
3 instrument received as evidence thereof, and a list of any
4 collateral or agreement of pledge received in connection
5 therewith.
6 However, the court may, upon petition and adequate cause
7 shown, permit any creditor to file his claim upon a later date,
8 but no claim shall in any event be allowed to be filed after the
9 last day for the filing of exceptions to the first account of
10 the secretary.
11 The statement of a creditor's claim, required by this
12 section, shall be verified by affidavit in substantially the
13 following form:
14 "I, (name of claimant), do solemnly swear (or affirm) that
15 the above is a true statement of my claim against (name of
16 institution); that there are no credits or allowances against
17 this claim except as therein set forth; that there is no
18 collateral security for this indebtedness or any part thereof
19 held by me or by anyone else, other than as above set forth; and
20 that I am not the owner or the obligee, directly or indirectly,
21 of any contract of indemnity or insurance covering this claim,
22 except as set forth above."
23 If the creditor shall be a corporation, such affidavit shall
24 be made by the treasurer or assistant treasurer thereof, and if
25 a partnership, by any member thereof. In either such case the
26 form of the affidavit shall be modified accordingly.
27 * * *
28 Section 1004. Allowance of Claims.--For the purposes of the
29 accounting provided for in this act, the secretary shall allow
30 the claims of depositors[, or, in the case of a building and
20020S1258B1904 - 77 -
1 loan association, shareholders,] for the amounts shown to be due
2 to them upon the books or other records of the institution, or
3 for such other amounts as they shall, within the time and in the
4 manner provided by this act, prove to the satisfaction of the
5 secretary are due to them. He shall likewise allow the claims of
6 all other creditors, when presented within the time and in the
7 manner provided by this act, if he shall be satisfied that the
8 amounts claimed are rightfully due. He shall reject all other
9 claims of depositors[,] and other creditors[, and, in the case
10 of building and loan associations, shareholders].
11 Section 1006. Expenses of Administration.--Any reasonable
12 expenditure made by the secretary as receiver of an institution,
13 including any expense incurred in the management,
14 reorganization, consolidation, liquidation, or distribution of
15 the assets and affairs of the institution, and any compensation
16 paid to the deputy receiver or any other person employed to
17 assist the secretary in such management, reorganization,
18 consolidation, liquidation, or distribution, and to any deputy
19 attorney general, special deputy attorney general, assistant
20 deputy attorney general, or other attorney who has been assigned
21 by the [Department of Justice] Office of Attorney General to the
22 secretary to handle for him any legal business pertaining to the
23 affairs or property of such institution, shall be paid out of
24 the assets of the institution, provided it is included in any
25 partial or final account filed by the secretary, pursuant to the
26 provisions of this act, and is approved by the court in which
27 such account is filed.
28 Where such expenses are incurred, or such compensation is
29 paid, for the benefit of the estate of more than one institution
30 in the possession of the secretary as receiver, an equitable
20020S1258B1904 - 78 -
1 portion of such expenses or compensation shall be paid out of
2 the assets of each institution on whose behalf such expenditures
3 were made.
4 Section 1007. Partial or Final Account; Objections.--A. At
5 any time after the expiration of the period fixed by the
6 secretary, pursuant to the provisions of this act, for the
7 presentation of claims, he shall file a partial or final account
8 of his administration of the business and property of the
9 institution, duly verified by him under oath or affirmation, in
10 the office of the prothonotary.
11 If the secretary shall not file his first account within one
12 year after he takes possession of an institution, any
13 depositor[,] or other creditor[, or shareholder] of such
14 institution may petition the court to order the secretary to
15 file an account. The court may, in its discretion, grant or
16 refuse the petition.
17 The account shall present his administration of the estate,
18 including a statement of all receipts or expenditures by the
19 secretary, as receiver, a list of all claims which have been
20 allowed and a separate list of claims which have been objected
21 to or are disputed, showing as to all depositors[,] and other
22 creditors[, and, in the case of a building and loan association,
23 shareholders,] their names and addresses, the amounts due or
24 claimed to be due to them, and any priorities in the order of
25 distribution granted to or claimed by them.
26 B. The secretary shall forthwith give written or printed
27 notice of such filing of an account to all corporations or
28 persons whom he knows to be, or to claim to be, depositors[,]
29 and other creditors[, and, in the case of building and loan
30 associations, shareholders,] of the institution, at the
20020S1258B1904 - 79 -
1 addresses which respectively appear for them upon the books of
2 the institution, or if none appear there, at their last known
3 respective addresses. However, if it shall appear to be in the
4 best interests of the estate, the court may order the secretary
5 to substitute a single advertisement in a newspaper or
6 newspapers, for the individual notice to such corporations or
7 persons. Such notice shall also state that unless an exception
8 to the account or to any item therein is filed with the court
9 within thirty days from the date of the filing thereof, it will
10 be confirmed absolutely.
11 He shall likewise give notice to any corporation or person
12 who, pursuant to the provisions of this act, has given the
13 secretary notice of his claim to the right of execution or
14 attachment against any assets, owned by, or legally in the
15 custody or possession of, the secretary as receiver of the
16 institution.
17 He shall also advertise such notice in a newspaper or
18 newspapers as provided in this act, stating the date upon which
19 he has filed his partial or final account and the fact that all
20 exceptions to the account must be filed within thirty days from
21 the date of the filing of such account.
22 The secretary shall forthwith file with the court, under oath
23 or affirmation, a statement that he has, in the manner provided
24 by this act, sent both the notice of his determination to
25 liquidate and the notice of his filing of an account to all
26 corporations or persons entitled thereto, whose names appear in
27 the account, at the addresses stated therein. He shall also file
28 the proofs of publication of the advertisements which he has
29 inserted, pursuant to the provisions of this act, which
30 respectively set forth his determination to liquidate and his
20020S1258B1904 - 80 -
1 filing of an account.
2 C. The prothonotary shall not be under any duty to recopy or
3 otherwise record such account. He shall make no charge except
4 the regular fee for filing such or similar papers.
5 Section 1010. Confirmation of Account; Distribution of
6 Dividends.--A. If the secretary has approved all depositors'
7 claims[, or, in the case of building and loan associations, all
8 shareholders' claims,] as presented by them pursuant to the
9 provisions of this act, or if not presented, as they appear upon
10 the books or other records of the institution, and if no
11 exception has been filed to an account or to any item thereof
12 within thirty days after the filing of such account by the
13 secretary, the court shall confirm the account absolutely. If
14 any funds are available for distribution, the secretary shall
15 then declare and pay out of such funds a partial or a final
16 dividend, according to the priorities established by law.
17 If the secretary has rejected any such deposit or claim, or
18 if any such exception has been filed, the court shall confirm
19 the account as to all other matters and claims. The secretary
20 may then declare and pay out of the funds available for
21 distribution, if any, a dividend, according to the priorities
22 established by law. The dividend shall be calculated as if all
23 deposits and other claims were valid and approved. The
24 secretary, before paying any such dividend, shall set apart the
25 proportion of such dividend which would be properly
26 apportionable to any claim which has been rejected by the
27 secretary, or to which an exception has been filed, if the
28 amount and the priority claimed were sustained by the court. If
29 any such claim shall be determined by the court to be valid, the
30 secretary shall pay to the corporation or person entitled
20020S1258B1904 - 81 -
1 thereto the dividend which has been set apart in the manner
2 provided by this section. If any such claim shall be determined
3 by the court to be invalid, the dividend which has been set
4 apart in the manner provided by this section shall be
5 distributed in the order of the priorities established by law,
6 to those whose claims have been approved by the court.
7 B. The confirmation of any account after the adjudication of
8 all claims therein which have been rejected by the secretary, or
9 to which exceptions have been filed, and of all other exceptions
10 to such account, shall be conclusive as to all matters therein.
11 Except as otherwise provided in this act, no claim of any
12 depositor [or other creditor or, in the case of a building and
13 loan association, any shareholder,] shall be valid if not listed
14 and approved in the first account which has been filed.
15 The confirmation of the final account and distribution
16 thereunder shall discharge the secretary, the deputy receiver,
17 any other employe, and the legal counsel, as well as the surety
18 for any of them, from all further civil liability for any act
19 done in his official capacity as receiver, deputy receiver,
20 employe, or legal counsel of the institution.
21 C. If the receiver in all other respects is in a position to
22 close the receivership proceeding, the proposed closing is
23 sufficient grounds for the rejection of any remaining claim
24 based on an unliquidated or undetermined demand. The receiver
25 shall notify the claimant of the intention to close the
26 proceeding. If the demand is not liquidated or determined before
27 the sixty-first day after the date of the notice, the receiver
28 may reject the claim.
29 Section 32. Section 1011 of the act is repealed.
30 Section 33. Sections 1012, 1013 and 1101 of the act are
20020S1258B1904 - 82 -
1 amended to read:
2 Section 1012. Liquidation of Balance by Trustees.--Except in
3 the case of a [building and loan association] mutual
4 institution, the secretary shall dispose in the following manner
5 of any unliquidated assets of an institution of which he was
6 receiver, which are still in his possession after the filing and
7 confirmation of his final account, the payment in full of the
8 claims of all depositors, creditors, and other claimants which
9 have been approved by the court, the return to shareholders, pro
10 rata, of any amounts paid by them pursuant to an assessment made
11 by the secretary, under the provisions of this act, which have
12 proved unnecessary to pay in full the duly presented and
13 approved claims of depositors and other creditors, and the
14 distribution to shareholders of any cash balance remaining
15 thereafter.
16 The secretary shall call a meeting of all the shareholders of
17 the institution by giving them written notice at least thirty
18 days before the day fixed for the meeting. At such meeting, the
19 shareholders shall elect by ballot a trustee or trustees, who
20 shall complete the liquidation. A majority of the shares present
21 in person or by proxy shall be necessary to elect such trustee
22 or trustees. The secretary shall file one copy of the
23 proceedings of such shareholders' meeting in his office, and one
24 in the office of the prothonotary. Both copies shall be prepared
25 by him under oath or affirmation.
26 If no trustee is elected in this manner on the day
27 designated, the secretary shall petition the court in which the
28 certificate of possession is filed for the appointment of a
29 trustee or trustees.
30 The trustee or trustees who are thus elected by the
20020S1258B1904 - 83 -
1 shareholders or appointed by the court shall give bond to the
2 Commonwealth, in such amount, with such surety and under such
3 conditions as the court may direct. The secretary shall then
4 transfer to such trustee or trustees all the assets of the
5 institution which are still in his possession.
6 After such transfer by the secretary to a trustee or trustees
7 for the benefit of the shareholders, the institution shall have
8 no corporate powers or privileges whatsoever. The trustee or
9 trustees shall not succeed to any of its powers or privileges
10 except such as shall be necessary to the liquidation of the
11 remaining assets which have been transferred to such trustee or
12 trustees by the secretary.
13 Section 1013. Unclaimed Dividends.--Whenever, upon the audit
14 or adjudication of the final account of the secretary in
15 possession of an institution as receiver, there shall be and
16 remain in his possession any dividends which shall have been
17 awarded to any depositor or other creditor the whereabouts of
18 whom or of whose legal representatives the secretary has been
19 unable to ascertain, or any dividends which otherwise are by law
20 escheatable to the Commonwealth, he shall file in the court the
21 sworn statement required by law, and shall thereupon pay the
22 dividends into the State Treasury, through the Department of
23 Revenue, in accordance with the provisions of law, such moneys
24 to be subject to refund to any corporation or person entitled
25 thereto, pursuant to the provisions of law.
26 [This section shall not be construed to relieve the secretary <--
27 of any of the duties with respect to such unclaimed or
28 escheatable dividends imposed by law, TO THE EXTENT APPLICABLE, <--
29 upon any receiver appointed by any court within this
30 Commonwealth.] <--
20020S1258B1904 - 84 -
1 Section 1101. Criminal Prosecutions.--Upon discovery, by
2 report or otherwise, of any apparent ALLEGED violation of any <--
3 criminal law of this Commonwealth, which relates to an
4 institution, the department [shall institute criminal
5 proceedings in the manner provided by law.] may SHALL refer the <--
6 matter to the proper criminal enforcement authorities and notify
7 other regulatory agencies.
8 Section 34. This act shall take effect as follows: <--
9 (1) The addition of section 405 of the act shall take
10 effect in 60 days.
11 (2) The remainder of this act shall take effect
12 immediately.
13 SECTION 34. THIS ACT SHALL TAKE EFFECT IMMEDIATELY. <--
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