If a Georgia state-chartered credit union existed before April 1, 1975 (when the Financial Institutions Code of Georgia took effect) and had a broad field of membership in its bylaws, did the 1975 Code shrink that field of membership? And when two state-chartered credit unions merge, does the broad pre-1975 field of membership transfer to the surviving credit union?

Plain-English summary

Credit unions historically have a "field of membership," which defines who is eligible to join. Pre-1975 Georgia state-chartered credit unions had this set out in their bylaws and could in some cases have very broad fields of membership (effectively any person within a wide geographic area or association). When the General Assembly passed the Financial Institutions Code of Georgia in 1974 (effective April 1, 1975), it tightened the rules around chartering and field-of-membership for new credit unions. The Department of Banking asked whether this 1975 Code shrank existing credit unions' fields of membership too, and whether merger transactions could transfer a grandfathered broad field of membership.

AG Thurbert Baker said pre-1975 credit unions kept their fields of membership and that mergers can carry that field forward.

1. Grandfathering. O.C.G.A. § 7-1-636(a) provides: "Nothing in this chapter shall be construed to impair the validity of the charter of a credit union existing on April 1, 1975." The word "charter" is not defined in the 1975 Code, but in the pre-1975 statutory framework, a credit union's "charter" included its petition (now called "articles") and its bylaws. The fields of membership were specified in the bylaws. So the "validity" of the charter (and therefore the bylaws and the field of membership) was preserved by the grandfathering provision. The 1975 Code's stricter membership rules apply to new credit unions but not to pre-1975 ones.

2. Mergers. O.C.G.A. § 7-1-667 governs credit union mergers. It says: "All property, property rights, and interests of the credit union so merging shall, upon merger, be transferred to and vested in the credit union under whose articles the merger is effected." The phrase "property, property rights, and interests" is broad. The AG used Black's Law Dictionary's definition of "interest" as "[t]he most general term that can be employed to denote a property in lands or chattels . . . a right to have the advantage accruing from anything." The power to enroll members within a defined field is plainly an "interest" of the credit union. So a pre-1975 credit union's broad field of membership transfers in a merger.

The opinion notes a 1997 informal letter of advice that had treated field of membership as either a "property right" or an "interest"; the 2004 opinion concludes that "interest" is sufficient and does not need to resolve which it is.

Currency note

This opinion was issued in 2004. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

In particular, federal credit-union regulation has changed significantly since 2004 (the National Credit Union Administration's field-of-membership rules have been amended multiple times), and Georgia's credit-union statutes have been amended as well. Anyone planning a credit-union merger or evaluating membership rights should consult the current statutes and NCUA rules.

Common questions

Q: Why did the General Assembly grandfather pre-1975 credit unions?
A: To avoid disrupting existing institutions and members. A statute that retroactively shrank a credit union's field of membership might have stranded current members who would no longer qualify under the new rules. The grandfathering preserves the institutional shape of pre-existing credit unions while applying new rules going forward.

Q: What's a "field of membership"?
A: It's the legal definition of who is eligible to be a member of the credit union. Common types: occupational ("employees of XYZ Co."), associational ("members of the State Bar"), or community ("residents of Cobb County"). Pre-1975 credit unions sometimes had broad multiple-group fields that would not be allowed for new credit unions today.

Q: What does this mean for a member who already belongs to a pre-1975 credit union?
A: The member's status is unaffected; the member is still entitled to all the rights of membership. The grandfathering protects both the institution and its members.

Q: How does a merger work in practice?
A: Under O.C.G.A. § 7-1-667, two credit unions can merge with the approval of (a) the Department of Banking, (b) the majority of each credit union's board, and (c) at least two-thirds of each credit union's voting members. After the merger, all property and rights vest in the surviving credit union, and the merged credit union's articles are void.

Q: Does this opinion apply to federally chartered credit unions?
A: No. Federal credit unions are governed by the Federal Credit Union Act and NCUA regulations. This opinion addresses only Georgia state-chartered credit unions.

Q: Could the General Assembly later strip a grandfathered credit union of its broad field of membership?
A: Possibly, depending on how it was done and whether it raised constitutional contracts-clause or due-process concerns. The 2004 opinion does not address such a scenario; it just resolves that the 1975 Code did not have that effect.

Background and statutory framework

The Financial Institutions Code of Georgia (1974 Ga. Laws 705) was a comprehensive recodification effective April 1, 1975. It included general protections for existing financial institutions in O.C.G.A. § 7-1-636: their charters remain valid, and they have perpetual duration unless amended otherwise. Section 7-1-667 governs mergers of credit unions and sweeps "all property, property rights, and interests" into the surviving institution.

Pre-1975 Georgia credit-union law (1925 Ga. Laws 165) set up a charter-by-petition-and-bylaws framework. The petition (analogous to today's articles) and the bylaws together formed what was called the credit union's "charter." This is the term the 1975 Code grandfathers in § 7-1-636(a).

The opinion's logic is straightforward:

1. Pre-1975 charter (petition + bylaws) is grandfathered.
2. Field of membership was in the bylaws, so it is part of the grandfathered charter.
3. On merger, all "interests" transfer to the survivor.
4. Field of membership is an "interest."
5. So a merger preserves the broad pre-1975 field of membership in the surviving credit union.

Citations and references

Statutes:
- O.C.G.A. § 7-1-630 (definition of "articles")
- O.C.G.A. § 7-1-636 (validity of pre-1975 charters; perpetual duration)
- O.C.G.A. § 7-1-667 (credit union mergers; transfer of "all property, property rights, and interests")
- O.C.G.A. § 7-1-860 (effective date of 1975 Code)
- 1925 Ga. Laws 165 (pre-1975 credit union law: charter as petition + bylaws)
- 1974 Ga. Laws 705 (Financial Institutions Code of Georgia)

Cases:
- Bryan v. Michigan Funeral Director Ass'n, No. 5:00-CV-99, 2001 U.S. Dist. LEXIS 580 (W.D. Mich. 2001) (broad definition of "interest")
- United States v. Beatrice Foods Co., 344 F. Supp. 104 (D. Minn. 1972) (broad definition of "interest")

Other:
- BLACK'S LAW DICTIONARY (4th ed. 1968) (definition of "interest")
- BLACK'S LAW DICTIONARY 228 (7th ed. 1999) (definition of "charter")
- 1997 internal letter of advice from Department of Law (referenced in opinion)

Source

• Landing page: https://law.georgia.gov/opinions/2004-6
• Original PDF: not linked from landing page

Original opinion text

You have requested advice concerning two questions related to state-chartered credit unions. In your first question, you ask whether state-chartered credit unions that were in existence and validly operating prior to April 1, 1975, continue to have broad and general memberships in light of certain statutory amendments that occurred in 1975. In your second question, you ask whether, when two state-chartered credit unions merge pursuant to O.C.G.A. § 7 1 667 (1997), the property, property rights, and interests that flow to the new, resulting credit union include the vested right to a broad field of membership, assuming such interest or property was held by one of the merging credit unions. The Financial Institutions Code of Georgia (hereinafter the "1975 Act"), a substantial recodification of Georgia's financial institution laws, including those regulating state-chartered credit unions, was enacted at 1974 Ga. Laws 705 and became effective on April 1, 1975. Id. at 955, now codified at O.C.G.A. § 7 1 860 (1997). The 1975 Act included the following section, now codified at O.C.G.A. § 7 1 636 (1997): (a) Nothing in this chapter shall be construed to impair the validity of the charter of a credit union existing on April 1, 1975. (b) Each credit union existing on April 1, 1975, shall have perpetual duration unless its articles are amended under this chapter to provide for a limited period of duration. The term "charter" is not defined in the 1975 Act but is generally understood to mean in the context of financial and similar institutions "[a] document issued by a governmental authority permitting [the entity] to conduct business." BLACK'S LAW DICTIONARY 228 (7th ed. 1999) (referring specifically to banking).1 In the context of the law existing prior to 1975, a credit union's petition (now called "articles"2) and its bylaws constituted its "charter." 1925 Ga. Laws 165. Thus, the General Assembly's stated intention in the 1975 Act was for the provisions of an existing credit union's petition and bylaws to remain in force and effect without impairment by the provisions of the 1975 Act. A pre-1975 credit union's qualifications for membership were stated in its bylaws. In light of O.C.G.A. § 7 1 636, as construed above, a pre-1975 credit union's qualifications for membership were not affected by the 1975 Act. Your second question is whether the merger of two state-chartered credit unions affects the broad field of membership when at least one of them is a pre-1975 credit union. As discussed above, pre-1975 credit unions retain the fields of membership they possessed prior to April 1, 1975, on account of the provisions of O.C.G.A. § 7 1 636 (1997). Code section 7 1 667 provides for the merger of credit unions and reads as follows: A credit union may , with the approval of the department and in accordance with such uniform rules and regulations as it shall make and promulgate, be merged with another credit union under the articles of such credit union, upon any plan agreed upon by the majority of the board of each credit union joining the merger and approved by not less than two-thirds of the members of each credit union present and eligible to vote at meetings called for that purpose. All property, property rights, and interests of the credit union so merging shall, upon merger, be transferred to and vested in the credit union under whose articles the merger is effected without deed, endorsement, or other instrument of transfer; and the debts and obligations of the credit union so merging shall be deemed to have been assumed by the credit union under whose articles the merger is effected; and thereafter the articles of the credit union so merging shall be void. O.C.G.A. § 7 1 667 (1997) (emphasis added). The language "all property, property rights, and interests of the credit union so merging shall . . . be transferred to and vested in the credit union under whose articles the merger is effected" evidences an intent on the part of the General Assembly to permit a liberal retention of those aspects of the merging credit unions which constitute property, property rights, and interests. Id. In common legal usage, "interest" is "[t]he most general term that can be employed to denote a property in lands or chattels. . . . More particularly, it means a right to have the advantage accruing from anything . . . ." BLACK'S LAW DICTIONARY 950 (4th ed. 1968) (emphasis added). Accord Bryan v. Michigan Funeral Dir. Ass'n, No. 5:00-CV-99, 2001 U.S. Dist. LEXIS 580 (W.D. Mich. 2001); United States v. Beatrice Foods Co. , 344 F. Supp. 104, 111-12 (D. Minn. 1972). Therefore, the power to establish fields of membership of the merging credit unions is clearly an "interest."3 Thus, a pre-1975 credit union's membership provisions may be included in a plan of merger and vested in the surviving credit union. Therefore, it is my official opinion that current state law governing credit unions which were in existence and validly operating prior to April 1, 1975, allows those credit unions to maintain the fields of membership that they possessed prior to April 1, 1975. The current statutory provisions governing mergers of state-chartered credit unions allow the field of membership of a pre-1975 credit union to be included in a plan of merger and assumed by the surviving credit union. Prepared by: Shirley R. Kinsey Assistant Attorney General 1 For an illustration in a similar context, see O.C.G.A. §§ 33 14 4 through 6 (provisions for "chartering" a domestic insurance company in Georgia under the review and approval of the Commissioner of Insurance). 2 O.C.G.A. § 7 1 630 (1997). 3 In your letter you refer to a memorandum of advice from this office dated June 19, 1997, which suggested that a credit union's field of membership might constitute either a "property right" or an "interest." Because a field of membership is an "interest" of the credit union that can be included in the plan to be agreed upon by each merging board and membership under the terms of O.C.G.A. § 7 1 667 (1997), it is not necessary to address the question whether it is property or a property right.