April 9, 1998
The Honorable Walter G. Church, Sr. Member of the North Carolina House of Representatives Room 1311, Legislative Building Raleigh, North Carolina 27601-1096
Re: Advisory Opinion — Multiple Group Memberships North Carolina Credit Unions (N.C.G.S. § 54-109.26)
Dear Representative Church:
We respond to your request for our opinion on the question of whether or not North Carolina chartered credit unions may have multiple group memberships. By way of background, you indicate that Piedmont Aviation Employees Credit Union, a North Carolina chartered credit union, admits to its membership both employees of Piedmont Aviation and also employees of other unrelated companies. You also indicate that Piedmont Aviation believes that a credit union can be composed of multiple groups as long as each separate group is composed of persons within a common bond, even though the common bond of each separate group may be different.
The Issue
The precise issue of law is whether or not credit unions, organized under the laws of North Carolina, may be composed of separate employer groups with different common bonds, or must all members of the same credit union share the same common bond. For the reasons expressed below, in light of rulings by the North Carolina and United States Supreme Courts, we are of the opinion that all members of a state chartered credit union must share the same common bond. Of course, because these court decisions are based on interpretations of state and federal laws, the General Assembly and Congress do have the authority to amend the respective statutes.
Legal Analysis
Eligibility for membership in a credit union organized under North Carolina is found in N.C.G.S. § 54-109.26(a) and (b). Subsection (a) provides that membership
"…shall be limited to and consist of the subscribers to the articles of incorporation and such other persons within the common bond set forth in the bylaws as have been duly admitted members, have paid any required entrance fee or membership fee, or both, have subscribed for one or more shares, and have paid the initial installment thereon, and have complied with such other requirements as the articles of incorporation or bylaws specify."
In Subsection (b), membership eligibility is further narrowed to "…groups having a common bond of similar occupation, associational interest, or groups who reside within an identifiable neighborhood, community, or rural district, or employees of a common employer, and members of the immediate family of such persons."
The question you raised regarding multiple group membership in a credit union was addressed by the North Carolina Supreme Court in North Carolina Savings & Loan League v. North Carolina Credit Union Commission, 302 N.C. 458, 276 S.E.2d 404 (1981). That decision considered whether or not the North Carolina Credit Union Commission was correct in construing the "common bond" requirement of N.C.G.S. § 54-109.26, when it approved a bylaw change to the North Carolina State Employees Credit Union which expanded membership eligibility to include municipal and county employees who were participants in various retirement plans administered by the state. The Court identified the legal issue as ". . . whether the membership of the State Employees Credit Union as enlarged by the [bylaw] amendment meets the "common bond" requirement of N.C.G.S. § 54-109.26." Id. 302 N.C. at 464, 276 S.E.2d at 409.
The Court then examined at great length the credit union membership provisions at N.C.G.S. § 54-109.26, particularly subsection (b), which imposes a "common bond" requirement ". . . of similar occupation, associational interests, or groups who reside within an identifiable neighborhood, community, or rural district, or employees of a common employer, and members of the immediate family of such persons." In its deliberation the Court recognized that the interpretation of a statute by an agency created to administer that statute is traditionally accorded some deference by appellate courts; however, it also noted that those interpretations are not binding and an appellate court may freely substitute its judgment for that of the agency and employ de novo review. Id. 302 N.C. at 465, 276 S.E.2d at 410.
Because the Court’s analysis of the "common bond" requirement of N.C.G.S. § 54-109.26(b) is, we think, dispositive of the question of whether or not Piedmont Aviation Employees Credit Union may have multiple group memberships, we have summarized the Court’s findings and conclusions on this matter.
(a) Similarity of Occupation.
In N.C. Savings & Loan League, supra, the North Carolina Supreme Court expressly rejected the opinion of the North Carolina Court of Appeals which concluded:
. . . public employees are united by the common bond of similar occupation for the simple reason that they are all employed in the service of the community, whether that community be narrowly defined as is the case with local public employees, or broadly delineated as in the case of state public employees. They all occupy positions in public service. Moreover, such employees are paid from public funds generated by taxing the citizenry. They serve the public; the public pays their salaries. These two characteristics are common to the membership as emphasized by the amendment to the bylaw in question here. We hold that these factors in particular provide sufficient similarity of occupation, despite the individual place and position of the employee, to meet the ‘common bond’ requirement of N.C.G.S. § 54-109.26 . . . Id. 302 N.C. at 469, 276 S.E.2d at 412.
The Supreme Court said that it could not accept the Court of Appeals interpretation of occupation. It considered similarity in occupation to mean similarity in the actual work done -similarity in occupational duties and responsibilities. Id. 302 N.C. at 469, 276 S.E.2d at 412. The Court went on to reason that under the similar occupation category, groups such as nurses, law enforcement officers and textile workers could each band together to form their own separate credit union. The Court concluded, however, that similarity in occupation cannot be premised upon similarity in who is benefited and who pays. Id. 302 N.C. at 470, 276 S.E.2d at 412. Most importantly, the Supreme Court concluded:
"If we were to affirm the Court of Appeals and adopt its reasoning, all employees in the private sector could form a credit union; private industry would provide the common bond. Private industry benefits from their labor and pays their salaries. Such a broad interpretation would make a farce of the common bond requirement and would render void and without meaning the legislative declaration that ‘credit union (membership) . . . be limited to . . . persons within the common bond . . . ." (Emphasis added) Id. 302 N.C. at 470, 276 S.E.2d at 470.
Finally with regards to its analysis of "similar occupation", the Supreme Court concluded that "[t]he common bond must be a single one, shared by all persons eligible for membership." Id. 302 N.C. at 471, 276 S.E.2d at 413.
(b) Similar Association or Interests.
The Court next examined whether the class of people eligible for credit union membership under the amended bylaw (which included local and county employees whose retirement funds were administered by the State) possess the common bond of "similar association" or "interests." Although the Court considered that these terms have several meanings and that they could construe the statutes to comport with their meaning in common usage, it concluded that ". . . we think the Legislature intended otherwise and used those words in a limited sense." Id. 302 N.C. at 471, 276 S.E.2d at 413. Additionally, the Court concluded that when these terms "association" and "interests" are read in the context of other categories of common bonds, ". . . it becomes obvious that shared and association interests must be both substantial and vital. Id. 302 N.C. at 471, 276 S.E.2d at 413.
Finally, the Supreme Court reasoned that
"Whether a common trait constitutes a similar associational interest can be determined
only upon a case-by-case basis; we do not pretend in this opinion to delineate or even
attempt to give examples of what traits constitute this type of common bond. But,
whatever "traits" those terms include, they must rise to at least the same level of
substantiality and be just as vital as the other types of common bonds enumerated by the
Legislature."
Id. 302 N.C. at 472, 276 S.E.2d 413.
The only common link found between employees of a municipality, county, and the state was the fact that they were public employees and paid from public funds. This was not, however, enough of a common bond for local and county employees to be admitted to membership in the State Employees Credit Union. The Court therefore held ". . . that state, county and municipal employees included within the Credit Union’s membership by the amended bylaw do not possess a common bond of similar associational interests. We conclude that the class of persons set forth in the amended bylaw possess no common bond of any type." Id. 302 N.C. at 473, 276 S.E.2d at
414. Therefore, the North Carolina Credit Union Commission was found to have been in error to permit the bylaw provision which admitted local and county employees to the State Employees Credit Union.
The United States Supreme Court has very recently addressed the issue you raise in your letter to us. In the matter of the National Credit Union Administration v. First National Bank & Trust Company, ___U.S. ___, 118 S.Ct. 927 (1998), the Court was called upon to examine an interpretation by the National Credit Union Administration ("NCUA") of § 109 of the Federal Credit Union Act, 12 U.S.C. § 1789. This section provides the basis for membership in a federal credit union. It is substantially the same language found in N.C.G.S. § 54-109.26(b), with regard to common bond. In pertinent part, §109 of the Federal Act provides that ". . . federal credit union membership shall be limited to groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community, or rural district."
The NCUA had, however, concluded that a common bond of occupation must unite only the members of each unrelated employer group. As a result of the NCUA interpretation, the AT&T Family Credit Union had approximately one hundred ten thousand members nationwide, only 35% of whom were employed with AT&T and its affiliates. The remaining members were employees of such diverse companies as Lee Apparel Company, the Coca-Cola Bottling Company, the Ceba-Giegy Corporation, the Duke Power Company, and the American Tobacco Company. 118 S.Ct. at 930.
After a searching analysis of the issue, the United States Supreme Court determined that this interpretation was contrary to the unambiguously expressed intent of Congress and that the same common bond of occupation must unite each member of an occupationally defined federal credit union.
"…the NCUA’s current interpretation makes the phrase "common bond" surplusage when applied to a federal credit union made up of multiple unrelated employer groups, because each single "group" in such a credit union already had its own "common bond." (citations omitted). To use the facts of this case, the employees of AT&T and the employees of the American Tobacco Company each already had a "common bond" before being joined together as members of [AT&T Family Credit Union]. The former were bonded because they worked for AT&T and the latter were bonded because they worked for the American Tobacco Company. It the phrase "common bond" is to be given any meaning when these employees are joined together, a different "common bond" — one extending to each and every employee considered together -must be found to unite them. Such a "common bond" exists when employees of different subsidiaries of the same company are joined together in a federal credit union; it does not exist, however, when employees of unrelated groups are so joined. (citations omitted). Put another way, in the multiple employer group context, the NCUA has read the statute as though it merely stated that single "[f]ederal credit union membership shall be limited to occupational groups," but that is simply not what the statute provides. Id. at 939.
CONCLUSION
In view of the foregoing authority we conclude that a credit union chartered under North Carolina law may not be composed of separate groups with different common bonds. According to the courts, each member of a credit union must share the same common bond.
Although the N.C. Savings and Loan League decision addressed whether or not local and county employees could join the State Employees Credit Union, which raised the issue of a common bond among public employees, the facts of that case present a far stronger argument for a common bond than the matter at hand — which raises the question of a common bond among unrelated employee groups of private employers. In fact, in the N.C. Savings & Loan League decision, the North Carolina Supreme Court suggested that to allow a private employer credit union to be composed of unrelated employer groups "…would make a farce of the common bond requirement and would render void and without meaning the legislative declaration that single "credit union (membership)… be limited to …persons within the common bond…." N.C. Savings & Loan League, supra, 302 N.C. at 470, 276 S.E.2d at 412. However, as noted at the outset of this opinion, the General Assembly could, should it choose to, amend the state law.
We trust that this provides you the guidance you seek on the issues raised. If we may be of further assistance, please let us know.
Signed by:
Andrew A. Vanore, Jr.
Chief Deputy Attorney General
Ann Reed
Senior Deputy Attorney General