August 9, 1994
The Honorable William T. Graham Commissioner of Banks Post Office Box 29512 Raleigh, NC 27626-0512
Re: Advisory Opinion — Authority of a Bank to own the Shares of a Nondepository Trust Company (G.S. § 53-47)
Dear Commissioner Graham:
You have asked us to revisit the question of whether or not a bank, organized under Chapter 53 of the North Carolina General Statutes, may, pursuant to G.S. § 53-47, own the shares of a nondepository trust company. As you know, Special Deputy Attorney General Henry T. Rosser, in an opinion letter dated October 7, 1992, concluded that a bank could not own such a trust company.
You have, however, asked us to focus on the more narrow question of whether a nondepository trust company, which we understand is organized as a special or limited purposes bank under
G.S. § 53-2, is considered a bank for the purpose of interpreting G.S. § 53-47. You indicated that a bank would prefer to offer its trust services through an operating subsidiary under the latter provision of law. For the reasons set forth below, we confirm our earlier conclusion that a bank may not own a nondepository trust company.
DISCUSSION OF THE LEGAL ISSUE
The statutes in question are G.S. §§ 53-1(1) and 53-47. G.S. § 53-1(1) defines a bank as any corporation ". . . . receiving, soliciting, or accepting money or its equivalent on deposit as a business." Banks may, under G.S. § 53-47, establish operating subsidiaries but are prohibited from making ". . . any investment in the capital of any other state or national bank. . . ."
You provided us with a memorandum of law from a private law firm which concentrated on the deposit taking functions of a bank and concluded that, because a nondepository trust company does not accept deposits, it is not a bank. Therefore, the G.S. § 53-47 prohibition against a bank owning another bank does not apply and thus a bank may own a nondepository trust company. While the memorandum appears to offer a persuasive argument that the term "bank" does not, for the purposes of G.S. § 53-47, include a nondepository trust company, it failed to take into account the statutory history of G.S. § 53-1(1) which, in our view, is dispositive of this issue.
A. Statutory History.
The banking laws of North Carolina, Chapter 53 of the General Statutes, were enacted as Chapter 4 of the 1921 Session Laws. When originally enacted, G.S. § 53-1(1) provided as follows:
The term "bank" when used in this Act shall be construed to mean any corporation, partnership, firm, or individual receiving, soliciting, or accepting money or its equivalent on deposit as a business: Provided, however, this definition shall not be construed to include building and loan associations, Morris plan companies, industrial banks or trust companies not receiving money on deposit. (Emphasis added). 1921 Sess. Laws c.4, s.1.
It is clear from this language that the original definition of a bank did not include a nondepository trust company. However, in 1945, H.B. 734 rewrote G.S. § 53-1(1) to read: The term "bank" shall be construed to mean any corporation, other than building and loan associations, industrial banks, and credit unions, receiving, soliciting, or accepting money or its equivalent on deposit as a business. 1945 Sess. Laws c.743, s.1.
Through this amendment, the General Assembly specifically removed the exception for nondepository trust companies from the definition of a bank. This leads us to the conclusion that since the 1945 revision, the definition of a bank should be construed to include nondepository trust companies.
B. Statutory Construction
In construing a statute with reference to an amendment, it is presumed that the General Assembly intended to either (i) change the substance of the original Act or (ii) clarify its meaning. An amendment is the re-enactment of the old statute with the amendment incorporated therein, and, from the date of its adoption, the revision has the same effect as if it had been a part of the original statute. See, N.C. Index Statutes § 42 (1994). Also, a later enactment will be regarded as an exception to or qualification of an earlier statute. Id. at § 27.
The intent of the General Assembly controls the interpretation of any statute. A construction which defeats or impairs the object of a statute must be avoided if that reasonably can be done without violence to the legislative language. Where possible, the statute should be given a construction which, when practically applied, will tend to suppress that which the General Assembly intended to prevent. Id. at § 29. Finally, statutes which are in pari materi, that is, which relate or are applicable to the same subject matter, although enacted at different times, must be construed together in order to ascertain legislative intent and harmonized, if possible, to give effect to each. Id. at § 27.
CONCLUSION
Based on the statutory history of G.S. § 53-1(1), and in view of the principles of statutory construction cited above, we are clearly of the opinion that the definition of a bank should be construed to include a nondepository trust company. As G.S. § 53-47 prohibits a bank from owning the shares of another bank, we conclude that a bank organized under Chapter 53 may not own a nondepository trust company.
We trust that this addresses your questions to this office. If, however, we may be of further assistance, please do not hesitate to let us know.
Ann Reed Senior Deputy Attorney General
L. McNeil Chestnut
Assistant Attorney General