Request By:
Mr. Arthur Hatterick, Jr.
President
Commonwealth Credit Union
227 West Broadway
P.O. Box 854
Frankfort, KY 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas C. Jacobs, Deputy Attorney General
In OAG 78-780 this office opined that certain enumerated individuals 1 were employees of the Commonwealth of Kentucky within the meaning of Article III, Section 1 of the By Laws of the Commonwealth Credit Union. 2 The opinion contained additional language with reference to the relationship of the corporate charter of the Credit Union, its By Laws, and the method of altering either or both of same. In your letter of January 15, 1979 you stated that this additional language has given rise to some confusion and you ask for clarification.
On September 21, 1978, the Board of Directors of the Credit Union at its regular quarterly meeting approved the following By Law change:
Article III, Section 1 -- "Membership of this Credit Union is limited to those who are employees of the Commonwealth of Kentucky, who are employed by agencies in the Executive Branch of Government, the Legislative Branch of Government, the Administrative Office of the Courts, and regularly employed and who are also a contributing member of one of the state administered retirement systems. Membership is also permissive for members of immediate families, employees of this Credit Union, and those individuals retired from these agencies. Membership is not permissive for those who are a member of another credit union serving these branches of government."
KRS 290.050 requires that no amendment to the By Laws shall become operative until approved by the Commissioner of Banking.
No procedure for making application to the Commissioner is specified by this statute nor are any standards established by which the Commissioner is required to make his determination. No requirement of a hearing is established nor is any right of judicial review outlined. In view of this void, we deem the following to be relevant.
KRS 290.070 in Subsection 2 thereof authorizes the Commissioner to make general rules and regulations and special rulings, demands and findings necessary for the proper conduct and regulation of the business of credit unions.
In approving the original Articles and By Laws of a proposed Credit Union, the Commissioner is required pursuant to KRS 290.040(1)(b) to determine that "the proposed field of operation of the Credit Union is favorable to its success." KRS 290.080 establishes identity of employment as a permissable method of affiliation for establishment of a field of membership.
Although no right of appeal is established by the statute, there is an inherent right of appeal from orders of administrative agencies where constitutional rights are violated or where an agency may have acted in excess of its statutory authority,
American Beauty Homes, Corp. vs. Louisville and Jefferson Co. Planning and Zoning Commission, Ky. 379 S.W.2d 450 (1969).
In summary, it would be the opinion of this office that so long as the proposed by law change does not conflict with the Articles of Incorporation of the Credit Union, 3 application should be made to the Commissioner for his approval and if approval is not forthcoming a hearing should be held on the merits of the application. In the event of an adverse decision, recourse could be had to the Franklin Circuit Court, consistent with Article II of the Constitution of the Commonwealth of Kentucky. The Commissioner's general authority under KRS 290.070 coupled with the procedures required for approval of new Articles and By Laws as set out in KRS 290.040 together with general rules applicable to administrative hearings would seem to govern the Commissioner's method of handling such an application.
Footnotes
Footnotes
1 Property Valuation Administrators, Commonwealth Attorneys, Assistant Commonwealth Attorneys, Circuit Clerks, Deputy Circuit Clerks, District Judges, Court Reporters, and members of their respective staffs.
2 Section 1 -- "Membership of this Credit Union is limited to those who are employees of the Commonwealth of Kentucky and are not members of another Credit Union Serving Commonwealth of Kentucky employees, members of their immediate families, employees of this credit union and organizations of such persons."
3 No such conflict appears on the face of the documents.