National farm loan associations; disposition of stock in Federal land bank.-If any national farm loan association shall be declared insolvent and a receiver shall be appointed therefor by the Farm Credit Administration, the stock held by it in the Federal land bank of its district shall be canceled without impairment of its liability and all payments on such stock, with accrued dividends, if any, since the date of the last dividend shall be first applied to all debts of the insolvent farm loan association to the Federal land bank and the balance, if any, shall be paid to the receiver of said farm loan association: Provided, That in estimating said debts contingent liabilities incurred by national farm loan associations under the provisions of this chapter on account of default of principal or interest of indorsed mortgages shall be estimated and included as a debt, and said contingent liabilities shall be determined by agreement between the receiver and the Federal land bank of the district, subject to the approval of the Farm Credit Administration, and if said receiver and said land bank cannot agree, then by the decision of the Land Bank Commissioner, and the amount thus ascertained shall be deducted in accordance with the provisions of this section from the amount otherwise due said national farm loan association for said canceled stock. Whenever the capital stock of a Federal land bank shall be reduced, the board of directors shall cause to be executed a certificate to the Farm Credit Administration, showing such reduction of capital stock, and, if said reduction shall be due to the insolvency of a national farm loan association, the amount repaid to such association. (July 17, 1916, c. 245, § 29, 39 Stat. 381; Mar. 27, 1933, Ex. Or. 6084; June 16, 1933, c. 98, § 80 (a), 48 Stat. 273.)
"Farm Credit Administration" mentioned in the text was substituted for "Federal Farm Loan Board" pursuant to the Executive Order cited thereto, which is set out in full at the beginning of this chapter.
Voluntary liquidation; consolidation of farm loan associations. No national farm loan association, Federal land bank or joint stock land bank shall go into voluntary liquidation without the written consent of the Farm Credit Administration, but national farm loan associations may consolidate under rules and regulations promulgated by the Farm Credit Administration. (July 17, 1916, c. 245, § 29, 39 Stat. 381; Mar. 27, 1933, Ex. Or. 6084.)
"Farm Credit Administration" mentioned in the text was substituted for "Federal Farm Loan Board" pursuant to the Execu
tive Order cited thereto, which is set out in full at the beginning
of this chapter.
For limitations on new business of joint stock land banks, and
provisions for assisting in their orderly liquidation, see § 810
and 823 (note), of this title.
National farm loan associations; disposition
of stock in Federal land bank upon voluntary
liquidation; personal liability of members.
Upon liquidation of any national farm loan associa-
tion, the stock in the Federal land bank held by such
association shall be canceled and the Federal land
bank shall thereupon issue to the borrowers through
such association an amount of stock in the Federal
land bank equal to the amount of stock held by such
borrowers in the liquidated association, such stock
to be held by the bank as collateral to the loans of
such borrowers and to be paid off and retired at
par in the same manner as stock held by borrowers
in farm loan associations, and the Federal land
bank shall pay to the borrowers holding such stock
the same dividends as are paid to national farm
loan associations by such bank. The personal lia-
bility of the stockholders in such liquidated associa-
tion to the association shall survive such liquidation
and shall be vested in the bank in that district,
which may enforce the same as fully as the associa-
tion could if in existence. (July 17, 1916, c. 245,
§ 29, 39 Stat. 381; Mar. 4, 1923, c. 252, § 311, 42
Stat. 1478.)
Conservator in lieu of receiver-(a) Appointment; compensation; expenses.-Upon receiving satisfactory evidence that any national farm loan association has failed to meet its outstanding obligations of any description, and that it will be to the best interests of its creditors and stockholders for the association to continue in business, the Farm Credit Administration may, in its discretion, in lieu of appointing a receiver as provided in sections 961-966 of this title, appoint a conservator for such association and require of him such bond and security as the Administration may deem proper. The person so appointed shall be a land bank appraiser appointed under the authority of sections 651-664 of this title: Provided, however, That the Farm Credit Administration may, in its discretion, appoint some other qualified person. Any land bank appraiser appointed as a conservator shall serve without any additional compensation. Any other person appointed as a conservator shall receive such compensation as the Farm Credit Adminis
tration may authorize. Such compensation and all
necessary and proper expenses of any such conserva-
torship shall be paid out of the assets of such asso-
ciation and shall be a lien thereon which shall be
prior to any other lien. (July 17, 1916, c. 245,
§ 29, 39 Stat. 381; Aug. 19, 1937, c. 704, § 25 (d),
50 Stat. 713.)
(b) Conservation of assets; preparation of re-
port of association's financial condition. The
conservator, under the direction of the Farm Credit
Administration, may, when directed so to do, take
possession of the books, records, and assets of every
description of such association, and take such action
as may be necessary to conserve such assets pending
final determination of the financial condition of the
association and the conditions under which it may
be permitted to continue in business. Such conser-
vator shall at the earliest practicable date make such
investigations as shall be necessary to enable him
to prepare an accurate report on the financial condi-
tion of such association. In preparing such report
he shall value the association's assets and determine
its indebtedness: Provided, That in determining said
indebtedness contingent liabilities incurred by the
association under the provisions of this chapter on
endorsed mortgages shall be estimated and included
as a debt. On the basis of said evaluation of the
association's assets and indebtedness, the conservator
shall determine the fair book value of the outstand-
ing stock of said association and the claims of any
retired shareholders based on their previous stock
ownership. Upon its completion said report shall be
submitted to the Federal land bank of the district
and said bank shall thereupon indicate its approval
thereof or note any exceptions thereto and submit
such report together with its exceptions, if any, to
the Farm Credit Administration for consideration.
(July 17, 1916, c. 245, § 29, 39 Stat. 381; Aug. 19,
1937, c. 704, § 25 (d), 50 Stat. 713.)
(c) Approval or disapproval of report; powers of Administration.-If said report is approved, in whole or in part, by the Farm Credit Administration, upon recommendation of the Federal land bank of the district said Administration shall then decide whether such association shall be permitted to pay off and retire its capital stock at its fair book value, upon full payment of the mortgage loans in connection with which such stock was issued originally, and to settle on the same basis the claims of any of its stockholders who have previously paid their loans in full, but have not received credit for,
or the proceeds of their stock in such association.
At the same time the Farm Credit Administration
shall also decide whether it will permit said asso-
ciation to admit new members pursuant to section
724 of this title. If the decision of said Adminis-
tration is in the affirmative, it may terminate the
conservatorship and turn the affairs of the associa-
tion back to its board of directors. If said report
is not approved or the decision of said Administra-
tion is in the negative, it may, in its discretion, ter-
minate the conservatorship and permit such associa-
tion to resume the transaction of its business subject
to such terms, conditions, restrictions, and limita-
tions as it may prescribe for the protection of the
rights of creditors and stockholders, or said Admin-
istration may appoint a receiver for the association
as provided in sections 961-966 of this title. (July
17, 1916, c. 245, § 29, 39 Stat. 381; Aug. 19, 1937,
c. 704, § 25 (d), 50 Stat. 713.)
(d) Settlement with shareholders. Any settle-
ment made with a retiring or retired shareholder
on the basis of the fair book value of the stock of the
association pursuant to this section shall be made
only on condition that said shareholder agrees to
accept such settlement as payment in full. If any
shareholder or former shareholder does not desire
to settle on such basis, he may, in lieu thereof, be
given a participation certificate which will entitle
him to share pro rata, on the basis of the number
of shares of stock which he owned in the association,
in the distribution of any assets of the association
which is made after all of its indebtedness to cred-
itors has been satisfied. The Federal land bank
of the district may pay to the association from the
proceeds of bank stock retired in connection with
the payment in full of loans endorsed by such asso-
ciation an amount sufficient to permit the association
to make the settlements provided for in this section
and any balance of such proceeds shall be retained
by the bank and applied as a credit on the indebted-
ness of the association to it. (July 17, 1916, c. 245,
§ 29, 39 Stat. 381; Aug. 19, 1937, c. 704, § 25 (d),
50 Stat. 713.)
(e) Readjustment of fair book value of under par stock. After any determination by the Farm Credit Administration as provided in this section, that the fair book value of the stock of a national farm loan association is less than the par value thereof, periodically thereafter any increase in the fair book value of said stock resulting from earnings of the association and actual recoveries in ex
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cess of the valuations used by the Farm Credit
Administration in determining the fair book value
of the stock of such association, as provided in this
section, shall, under rules and regulations of the
Farm Credit Administration, be apportioned
ratably on a per-share basis to all outstanding
stock or participation certificates having a fair book
value less than par until the fair book value of
all such stock or participation certificates is equal
to the par value thereof. (July 17, 1916, c. 245,
§ 29, 39 Stat. 381; Aug. 19, 1937, c. 704, § 25 (d),
50 Stat. 713.)
(f) Continued losses; appointment of another
conservator or receiver.-In the event that the in-
debtedness, as determined by the conservator, of an
association which has been under conservatorship
pursuant to this section increases in excess of the
earnings of such association, the Farm Credit Ad-
ministration may, in its discretion, again appoint a
conservator for the association, or it may appoint a
receiver as provided in sections 961-966 of this title.
(July 17, 1916, c. 245, § 29, 39 Stat. 381; Aug. 19,
1937, c. 704, § 25 (d), 50 Stat. 713.)
STATE LEGISLATION IMPAIRING SECURITY OF
FARM LOANS
Examination to ascertain adequacy of safe-
guards to mortgagee. It shall be the duty of the
Land Bank Commissioner to make examination of
the laws of every State of the United States and
to inform the Farm Credit Administration as
rapidly as may be whether in his judgment the
laws of each State relating to the conveying and
recording of land titles, and the foreclosure of
mortgages or other instruments securing loans, as
well as providing homestead and other exemptions
and granting the power to waive such exemptions
as respects first mortgages, are such as to assure
the holder thereof adequate safeguards against loss
in the event of default on loans secured by any such
mortgages. (July 17, 1916, c. 245, § 30, 39 Stat.
382; Mar. 27, 1933, Ex. Or. 6084; June 16, 1933,
c. 98, § 80 (a), 48 Stat. 273.)
"Farm Credit Administration" mentioned in the text was substituted for "Federal Farm Loan Board" pursuant to the Executive Order cited thereto, which is set out in full at the beginning of this chapter.
Effect of insufficient protection on mortgages covering land in State; assistance in examining laws.-Pending the making of such examination in
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