AGO 1951 No. 188 - Dec 7 1951
SAVINGS AND LOAN ASSOCIATIONS ‑- LIQUIDATION PROCEEDINGS ‑- CASHING OF CHECKS.
The Supervisor of the Division of Savings and Loan may cancel and void unpaid checks which are deposited with him at the close of liquidation proceedings pursuant to §§ 108 and 112, chapter 235, Laws of 1945 (3717-227 and 3717-231, Rem. Supp. 1945) and deposit the funds represented by such checks in a liquidation account for the payment of claims during the five‑year waiting period. Such funds may be deposited in a savings and loan association pursuant to the provisions of § 1, chapter 105, Laws of 1951 (new section added to Title 33 RCW).
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December 7, 1951
Honorable A. O. Kent, Supervisor
Division of Savings and Loan
Public Lands-Social Security Building
Olympia, Washington Cite as: AGO 51-53 No. 188
By letter of October 31, 1951, you refer to the provisions of §§ 108 and 112, chapter 235, Laws of 1945 (3717-227 and 3717-231 Rem. Supp. 1945) relating to checks and funds deposited with you by the liquidator of a savings and loan association at the close of liquidation proceedings. You ask our opinion on the question:
"Is it possible that such checks delivered by the Supervisor for eventual escheat to the state may be cancelled and the funds represented thereby be deposited in accordance with § 1 added to Title 33, RCW, and enacted in the regular session of 1951 and checks drawn against a liquidating account for the payment of claims during the five year waiting period."
It is our conclusion that:
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The Supervisor of the Division of Savings and Loan may cancel and void unpaid checks which are deposited with him at the close of liquidation proceedings pursuant to §§ 108 and 112, chapter 235, Laws of 1945 (3717-227 and 3717-231 Rem. Supp. 1945) and deposit the funds represented by such checks in a liquidation account for the payment of claims during the five‑year waiting period. Such funds may be deposited in a savings and loan association pursuant to the provisions of § 1, chapter 105, Laws of 1951.
Section 3717-227 Rem. Supp. 1945, relating to involuntary liquidation proceedings, provides in part:
"In any liquidation proceeding, any checks issued or payments held by the liquidator which remain undelivered for six (6) months following the final liquidation dividend, shall be deposited with the Supervisor, after which the liquidator shall be discharged by the Court. During five (5) years thereafter, the Supervisor shall deliver any such checks or payments to the payee, or his legal representative, upon receipt of satisfactory evidence of his right thereto. After said five (5) years, the Supervisor shall cancel all such checks or payments retained remaining in his possession and issue his check against the account for the amount thereof, payable to the State Treasurer, and deliver the same to him. * * *"
Section 3717-231, Rem. Supp. 1945, relating to voluntary liquidation proceedings, contains substantially the same provision as the above quoted portion of § 3717-227 with respect to the undistributed funds which are to be deposited with the supervisor by the liquidator.
Section 1, chapter 105, Laws of 1951, relating to the liquidation of building and loan associations, provides that:
"All funds received by the supervisor from liquidations may be invested by him in banks and savings and loan associations in amounts not in excess of the amount insured by the Federal Deposit Insurance Corporation or the Federal [[Orig. Op. Page 3]] Savings and Loan Insurance Corporation, or in securities authorized herein, and the earnings from the moneys so held may be applied toward defraying the expenses incurred in the liquidations." (Emphasis supplied)
During the five‑year period following the deposit of the funds with the supervisor he is directed under § 3717-227 to "deliver such checks or payments to the payee," and by § 3717-231 to "deliver any such checksor portions of such funds to the payee" upon receipt of satisfactory evidence of the payee's right thereto. The intent and purpose of each of these provisions is that the persons entitled to the funds shall, through the supervisor, and within the five‑year limitation period, receive that portion of the funds to which they are entitled as their respective liquidation dividends which the liquidator was unable to deliver. The accomplishment of this is not affected by the delivery of payments instead of the particular and identical checks which the liquidator may have drawn during the course of the liquidation proceedings.
Any such checks presumably would have been issued at least six months prior to the time that they are deposited with the supervisor. After the expiration of one year from the date of such checks the bank may properly refuse to honor the same "unless expressly instructed by the maker to pay the same." (3252-5 Rem. Rev. Stat.)
The duty of the supervisor to use due care in the preservation and protection of the funds involved implies a corresponding discretionary power to at all times exercise full control over such funds, including the right to maintain the funds in a depository of his own selection. Furthermore, to continue to maintain the funds represented by checks drawn by the liquidator in a commercial account throughout the five‑year limitation period would result in the loss of all earnings on such funds which otherwise would accrue in the form of interest or savings account dividends as contemplated by the provisions of chapter 105, Laws of 1951.
In view of the purpose and objectives of the provisions of §§ 3717-227 and 3717-231,supra, and of the provisions of the later legislative enactment of chapter 105, Laws of 1951, we are of the opinion that you may, in your discretion, cancel and void such checks and deposit the funds represented by the checks in a liquidating account for the purpose of paying liquidation dividend claims therefrom within the five‑year period. Such funds may be deposited in a savings and loan association pursuant to chapter 105, Laws of 1951.
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We believe that after the checks have been cancelled and voided by appropriate writing or obliteration on the face thereof, it would be advisable to retain the checks in your records and files throughout the five‑year period.
Very truly yours,
FRED L. HARLOCKER
Assistant Attorney General