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 stated membership qualifications in their bylaws, and some had broad fields of membership. 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 opinion concludes that the 1975 Code did not alter the membership qualifications of credit unions validly operating before it took effect.

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. A pre-1975 credit union's field of membership may therefore be included in the merger plan and assumed by the surviving credit union.

The opinion notes a 1997 memorandum of advice that had treated the 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. The merging boards and members must agree to a plan that includes the field.

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.

For a proposed Georgia state-chartered credit union merger, check the current Georgia statutes and the proposed merger plan before relying on this 2004 opinion.

Common questions

Q: Why did the General Assembly grandfather pre-1975 credit unions?
A: The opinion does not state the legislature's reason. It reads the statutory direction that nothing in the 1975 Code impairs the validity of an existing credit union's charter to preserve the membership qualifications in its pre-1975 bylaws.

Q: What's a "field of membership"?
A: It defines who can join a credit union. For the pre-1975 credit unions discussed here, those qualifications were stated in the bylaws.

Q: What does this mean for a member who already belongs to a pre-1975 credit union?
A: The opinion says the 1975 Code did not change a valid pre-1975 credit union's existing membership qualifications. It does not decide any individual member's rights.

Q: How does a merger work in practice?
A: The statute quoted in the opinion requires department approval, a plan agreed upon by a majority of each board, and approval by at least two-thirds of the members of each credit union present and eligible to vote at meetings called for the merger. To carry forward a pre-1975 field of membership, include it in that plan; the opinion says it may then vest in the surviving credit union.

Q: Does this opinion apply to federally chartered credit unions?
A: The opinion answers questions about Georgia state-chartered credit unions. It gives no answer about federally chartered credit unions.

Q: Could the General Assembly later strip a grandfathered credit union of its broad field of membership?
A: The opinion does not address a later law changing those fields of membership. It concludes only that the 1975 Code did not change the membership qualifications of credit unions already validly operating on April 1, 1975.

Background and statutory framework

The Financial Institutions Code of Georgia (1974 Ga. Laws 705) was a substantial 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 vests the merging credit union's "property, property rights, and interests" in the survivor. The opinion says the pre-1975 field of membership may be included in the merger plan.

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. The boards and members may include the pre-1975 field of membership in the merger plan.
4. That field is an "interest" under the merger statute.
5. When included in the agreed plan, the field may vest 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 Dir. 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.