AGO 1952 No. 291 - Apr 28 1952
MUTUAL SAVINGS BANKS ‑- DIVIDENDS ‑- USE OF ACCUMULATED PROFITS FOR ‑- LIABILITY OF TRUSTEES
Trustees of a mutual savings bank may equalize dividends by using accumulated undivided profits which are not required for expenses, reserves or the guaranty fund, without incurring personal liability therefor.
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April 28, 1952
Honorable R. D. Carrell
Supervisor of Banking
Division of Banking
Olympia, Washington Cite as: AGO 51-53 No. 291
Receipt is acknowledged of your letter of April 3, 1952, referring to the apparent conflict between subdivision (2) of RCW 32.08.120 (§ 3353 Rem. Supp. 1941), which provides that net earnings of mutual savings banks in excess of reserves and the requirements of the guaranty fund shall be available for dividends, and the provisions of subdivision (5) of RCW 32.12.090 (Rem. Rev. Stat. § 3354), which imposes a liability upon the trustees voting for a dividend "in excess of profits earned and appearing to the credit of the savings bank since the last declaration of dividends."
You request our opinion as follows:
"Will you please advise me whether, in view of these conflicting sections, trustees of mutual savings banks may equalize payment of dividends without incurring personal liability?"
It is our conclusion:
[[Orig. Op. Page 2]]
That trustees of a mutual savings bank may equalize dividends by using accumulated undivided profits which are not required for expenses, reserves or the guaranty fund, without incurring personal liability therefor.
After directing that specified percentages of the net earnings of a mutual savings bank shall be credited to the guaranty fund, subdivision (2) of RCW 32.08.120 (§ 3353 Rem. Supp. 1941), provides:
"(2) Thebalance of its net earnings for such dividend period, plus any earnings from prior accounting periods not previously disbursed and not reserved for losses or other contingencies or required to be maintained in the guaranty fund, shall be available for dividends." (Emphasis supplied.)
This subdivision clearly indicates a legislative intent that after the requirements have been met for the guaranty fund and proper provisions have been made for payment of expenses and for reserves for contingencies, the balance of net earnings may be distributed as dividends.
The question presented by your inquiry is whether the general legislative intent and purpose as expressed in this unambiguous statutory provision is in conflict with subdivision (5) of RCW 32.12.090 (Rem. Rev. Stat. § 3354), which reads as follows:
"(5) Whenever any dividend is, except as provided in subsection (6) of this section, declared and credited in excess of profits earned and appearing to the credit of the savings bank since the last declaration of dividends, after making the deduction for expenses, for amortization and for the guaranty fund as provided in RCW 32.08.120, 32.12.050 and this section, the trustees voting for such dividend shall be jointly and severally liable to such savings bank for the amount of such excess so declared and credited."
[[Orig. Op. Page 3]]
If this subdivision is to be interpreted as imposing liability upon the trustees voting for dividends in excess of profits earned since the last declaration of dividends, it is in direct conflict with subdivision (2) of RCW 32.08.120.
RCW 32.08.120 is derived from section 24 of chapter 175, Laws of 1915, relating to mutual savings banks. RCW 32.12.090 is derived from section 25 of the same act. As compared with subdivision (2) of RCW 32.08.120 in its present form as hereinabove quoted, the material portion of section 24 of the original act was as follows:
"* * * The amount of net earnings remaining after such deduction for the guaranty fund and its undivided profits shall be available for the declaration of dividends for such period."
This clause was re‑enacted in identical form when section 24 of the original act was amended by section 6, chapter 184, Laws of 1927, and again by section 3, chapter 123, Laws of 1929. Section 24 was last amended by section 4, chapter 15, Laws of 1941, at which time the wording of the clause in its previous form was abandoned and subdivision (2) as now codified in RCW 32.08.120 was enacted.
Section 25 of the original act (now codified as RCW 32.12.090), was amended by section 3 of chapter 200, Laws of 1919, and was last amended by section 4, chapter 156, Laws of 1921. In each instance the pertinent portion thereof (subdivision (5) was carried into and re‑enacted [[reenacted)]]in the same form by the amending act.
The later amendment of section 24 of the original act by section 4, chapter 15, Laws of 1941, in which subdivision (2) of RCW 32.08.120 was first enacted, is a positive and unqualified declaration of legislative intent that the balance of net earnings for a dividend period, "plus any earnings from prior accounting periods" not previously disbursed or reserved for losses or contingencies and not required for the guaranty fund,"shall be available for dividends." If accumulated profits from prior periods are to be available for dividends without qualification, it is clearly inconsistent to impose the penalty of liability upon the trustees as provided in subdivision (5) of section 25 of the act (RCW 32.12.090), when they exercise the power and authority clearly given them to distribute such accumulated profits as dividends.
The amendment of 1941, being later in point of time and the last expression of the legislature, should control. State ex rel. Calouri v. Stratton, 108 Wash. 485, 185 Pac. 610; 50 Am.Jur. 261, Statutes, § 275. We believe that subdivision [[Orig. Op. Page 4]] (2) of RCW 32.08.120 as derived from section 4, chapter 15, Laws of 1941, modified subdivision (5) of RCW 32.12.090 to the extent of eliminating any conflict which might otherwise exist between the two provisions. It is therefore our opinion that trustees of a mutual savings bank may use accumulated undistributed net profits from prior accounting periods designated in subdivision (2) OF RCW 32.08.120 for the purpose of equalizing dividends, without incurring the personal liability indicated by subdivision (5) of RCW 32.12.090.
Very truly yours,
FRED L. HARLOCKER
Assistant Attorney General