Read 1st time January 24, 1996, and 1,000 copies ordered printed.

Read 2nd time January 31, 1996, and referred to the Committee on Financial and Governmental Operations.

Reported from the Committee March 21, 1996, with recommendation that the bill do pass, with Senate Committee Amendments Nos. 1 and 2.

Taken up for Perfection April 30, 1996. Bill declared Perfected and Ordered printed, as amended.

TERRY L. SPIELER, Secretary.

S2953.02P

To repeal sections 362.471, 427.041, 443.130, 456.500, 456.520 and 456.600, RSMo 1994, and section 361.160, RSMo Supp. 1995, relating to certain financial transactions, and to enact in lieu thereof twelve new sections relating to the same subject.

Be it enacted by the General Assembly of the State of Missouri, as follows:

Section A. Sections 362.471, 427.041, 443.130, 456.500, 456.520 and 456.600, RSMo 1994, and section 361.160, RSMo Supp. 1995, are repealed and twelve new sections enacted in lieu thereof, to be known as sections 361.160, 362.467, 362.471, 369.266, 408.032, 408.092, 427.041, 443.130, 456.500, 456.520, 456.600 and 490.750, to read as follows:

361.160. 1. The director of finance at least once each [year] eighteen calendar months, either personally or by a deputy or examiner appointed by the director, shall visit and examine every bank and trust company organized and doing business under the laws of this state, and every other corporation which is by law required to report to the director; except, that the director of finance, at the director's discretion, may conduct the director's examination, or any part thereof, on the basis of information contained in examination reports of other states, the Federal Deposit Insurance Corporation or the Federal Reserve Board or in audits performed by certified public accountants. The director or [his] the director's agent may concentrate [his] the examinations on institutions which [he] the director believes have safety or soundness concerns.

2. The director, or the deputy or examiners designated by the director for that purpose, shall have power to examine any such corporation whenever, in the director's judgment, it may be deemed necessary or expedient, and shall have power to examine every agency located in this state of any foreign banking corporation and every branch in this state of any out-of-state bank, for the purpose of ascertaining whether it has violated any law of this state, and for such other purposes and as to such other matters as the director may prescribe.

3. The director and the director's deputy and examiners shall have power to administer oaths to any person whose testimony may be required in such examination or investigation of any such corporation or agency, and to compel the appearance and attendance of any person for the purpose of any such examination or investigation.

4. On every such examination inquiry shall be made as to the condition and resources of such corporation, the mode of conducting and managing its affairs, the actions of its directors or trustees, the investment of its funds, the safety and prudence of its management, the security afforded to its creditors, and whether the requirements of its charter and of law have been complied with in the administration of its affairs, and as to such other matters as the director may prescribe.

5. The director may also make such special investigations as the director deems necessary to determine whether any individual or corporation has violated any of the provisions of this law.

6. Such examination may be made and such inquiry instituted or continued in the discretion of the director after the director has taken possession of the property and business of any such corporation, until it shall resume business or its affairs shall be finally liquidated in accordance with the provisions of this chapter.

7. The result of each examination shall be certified by the director or the examiner upon the records of the corporation examined and the result of all examinations during the biennial period shall be embodied in the report to be made by the director of the department of economic development to the legislature.

8. The director may contract with regulators in other states to provide for the examination of Missouri branches of out-of-state banks and branches of banks whose home state is Missouri. The agreements may provide for the payment by the home state of the cost of examinations conducted by the host state at the request of the home state regulators.

362.467. Notwithstanding any law to the contrary, any bank or trust company holding deposit accounts pursuant to chapter 362 shall have the same rights, powers and protections provided a bank or trust company under subsection 6 of section 362.471.

362.471. 1. A bank or trust company may contract for an account, including a certificate of deposit, in the following form: "John Doe, pay on death to Henry Doe". Such account shall, during the lifetime of the person or persons first named in the account, be the property of and under the sole control of the person or persons first named; and the first named person or persons shall be entitled to cancel, change, give away, or otherwise deal with the account as if no other person was named in the account.

2. At the death of all of the first named persons, the account shall become the property of the person or persons named as the "pay-on-death" person or persons. The bank or trust company is authorized to require proof of death and surrender of the evidence of account prior to withdrawal after the death of all of the first named persons.

3. If there is more than one first named person who is a holder of the account, the first named persons shall be joint tenants with right of survivorship. If there is more than one pay-on-death person, the account shall be paid in equal shares to pay-on-death persons living at the time all first named persons have died. The joint tenancy referred to in this section shall be governed by section 362.470.

4. The bank or trust company may make such [other] contractual terms as the parties may agree to with respect to an account contracted for under this section.

5. The form of account authorized by this section shall be valid and shall supersede and override the requirements of chapter 474, RSMo, as to disposition of the property of decedents and the requirements as to testamentary dispositions by will.

6. Any payment made by a bank or trust company on an account as described in this section shall be entitled to full credit upon such payment without necessity of determining whether any other person shall have an interest in the account, unless the bank or trust company shall have been served with process by a court of competent jurisdiction restricting payment on the account in accordance with the terms of such process.

369.266. 1. Upon compliance with any applicable laws of the United States and upon obtaining the approval of the director of finance, any association or federal association as defined in section 369.014, having its place of business in this state, may be converted under the laws of this state into a bank or trust company located in this state, or may be consolidated or merged with one or more banks or trust companies incorporated under the laws of this state under the charter of a bank or trust company incorporated under the laws of this state. The name of the resulting or surviving bank or trust company in the case of conversion, consolidation or merger may be the name of a party to the conversion, consolidation or merger, provided that in no case shall the name contain the word "national" or "federal" or be the same as or deceptively similar to the name of any bank or trust company incorporated under the laws of this state which is engaged in business at the time of the particular conversion, consolidation or merger and is not a party thereto.

2. Upon a majority of the board of directors of any federal association certifying to the director that the laws of the United States relating to the approval of stockholders and members have been complied with, the majority of the board shall have full power and authority to complete the conversion, consolidation or merger on the part of the federal association, provided that the rights of the dissenting shareholders of the federal association shall be determined pursuant to the laws of the United States.

3. (1) In the case of conversion the majority of the board of directors of the association or federal association shall proceed as is provided by law for other individuals incorporating a bank or trust company under the laws of this state except that the articles of agreement:

(a) May provide that instead of the capital stock having actually been paid up in money it is to be paid up in assets of the converting association or federal association, the net value of which is equal to at least the full amount of the capital stock of the proposed resulting bank or trust company which capital stock shall be no less than that required by law for a bank or trust company, as the case may be, to be located in the particular city or town in which the converting association or federal association is located;

(b) Shall provide that the proposed resulting bank or trust company is and shall be considered the same business and corporate entity as, and a continuation of the corporate entity and identity of, the converting association or federal association although as to rights, powers and duties the proposed resulting institution is a bank or trust company incorporated under the laws of the state of Missouri;

(c) Shall set out the names and addresses of all persons who are to be officers of the proposed bank or trust company; and

(d) Shall, if the converting association or federal association is a mutual association, set out the manner in which the ownership interest of the members shall be converted into stock of the resulting bank or trust company; provided, however, that the director may reject any such application upon a determination that the treatment accorded the members of the converting association or federal association is not fair and reasonable.

(2) If the director, as the result of an examination and investigation made by the division of finance, is satisfied that such assets are of such value and that the character, responsibility and general fitness of the persons named in the articles of agreement are such as to command confidence and warrant belief that the business of the proposed corporation will be honestly and efficiently conducted in accordance with the purpose and intent of the laws of this state relative to banks or trust companies, the director shall grant the charter. If the director is not satisfied, the director shall forthwith give notice thereof to the majority of the board of directors of the converting association or federal association who shall have the same right of appeal as is provided by the laws of this state in the case of the proposed incorporators of a new bank or trust company.

(3) Upon the approval of the particular conversion being granted the director shall execute and deliver to the majority of the board of directors of the converting association or federal association a certificate declaring that the bank or trust company therein named has been duly organized and is the institution resulting from the conversion of the association or federal association into the resulting bank or trust company, and that the resulting bank or trust company is and shall be considered the same business and corporate entity as, and a continuation of the corporate entity and identity of, the converting association or federal association. The certificate shall be recorded in the office of the recorder of deeds of the county or city in which the resulting bank or trust company is located and the certificate so recorded, or certified copies thereof, shall be taken in all the courts of this state as evidence of the conversion of the association or federal association into the resulting bank or trust company and that the resulting bank or trust company is the same business and corporate entity as, and a continuation of the corporate entity and identity of, the converting association or federal association.

(4) When the director of finance has given a certificate as aforesaid:

(a) The resulting bank or trust company and all its stockholders, directors, officers, and employees shall have the same powers and privileges and be subject to the same duties and liabilities in all respects as if such an institution had originally been organized as a bank or trust company under the laws of this state;

(b) All the rights, franchises, and interests of the converting association or federal association in and to every type of property, real, personal and mixed, and choses in action thereto belonging shall be deemed to be transferred to and vest in the resulting bank or trust company without any deed or other transfer; and

(c) The resulting bank or trust company by virtue of the conversion and without any order of any court or otherwise shall hold and enjoy the same and all rights of property and interests including, but not limited to, appointments, designations and nominations and all other rights and interests, as trustee, personal representative, conservator, receiver, registrar, assignee and every other fiduciary capacity in the same manner and to the same extent as these rights and interests were held or enjoyed by the converting association or federal association at the time of its conversion into the resulting bank or trust company; provided, however, that its corporate powers shall be limited to those granted to a bank or trust company under the laws of this state, but further provided that the association shall have a period of three years in which to divest itself of any nonconforming assets.

4. In the case of consolidation or merger, the same shall be consummated by each federal association complying with the laws of the United States relating to the consent of its shareholders or members, and also by each association and each bank or trust company complying with the provisions of the laws of this state relating to the consolidation or merger of banks or trust companies, except that where the resulting institution is a bank rather than a trust company the number and qualifications of directors and any requirement that directors shall or may be divided into classes shall be determined as provided by law for banks. The rights of dissenting shareholders of each federal association shall be determined pursuant to the laws of the United States and the rights of the dissenting shareholders of each association or bank or trust company shall be determined as provided by the laws of this state in the case of consolidation or merger of banks or trust companies. In the case of consolidation or merger the resulting bank or trust company shall be considered the same business and corporate entity as, and a continuation of the corporate entity and identity of, each association or federal association and each bank or trust company which is a party to the consolidation or merger, and all provisions of sections 362.610 to 362.810, RSMo, shall apply in the case of any such consolidation or merger even though one or more of the parties is an association or federal association.

408.032. Notwithstanding any law to the contrary, the recording fees, including actual fees paid to a third party by a creditor, may include the following: any fee paid in processing the debtors' liens as provided in section 136.055, RSMo, or any fee paid to a third party for expediting the debtors' motor vehicle or other title or lien with the department of revenue provided: (1) the creditor does not control the third party, or (2) both creditor and third party do not share common ownership. Either fee may be charged such debtor, and is not included as interest or service charges for the purposes of state usury laws; however, the expeditor fee may not exceed five dollars.

408.092. Notwithstanding any other provision of law to the contrary, attorneys fees are permitted to enforce any contract for credit provided by a for-profit business. A minimum attorney fee not exceeding fifteen percent of the amount of credit due, or the dollar value of the court's judgment, may be collected. When such attorney's fee is otherwise limited by law, additional attorneys' fees may be awarded to the attorney for the prevailing party at the court's discretion, provided such contract is enforced by an attorney who is not a salaried employee of the prevailing party.

427.041. In this chapter, the general assembly hereby occupies and preempts the entire field of legislation imposing liability on lenders-owners for precedent environmental conditions which result in contamination or pollution, including by way of example and not of limitation, lender liability for hazardous substances, toxic wastes, clean air, clean water, solid waste disposal, and underground storage tanks, to the complete exclusion of an order, ordinance or regulation by any political subdivision of this state and by the federal government to the extent permitted by the law except those state statutes [regulating and] pertaining to the underground storage [tanks] tank insurance fund.

443.130. 1. If any such person, thus receiving satisfaction, does not, within thirty days after request and tender of costs, deliver to the person making satisfaction a sufficient deed of release, such person shall forfeit to the party aggrieved ten percent upon the amount of the security instrument, absolutely, and any other damages such person may be able to prove such person has sustained, to be recovered in any court of competent jurisdiction.

2. To qualify under this section, the mortgagor shall provide the request in the form of a demand letter to the mortgagee, cestui qui trust, or assignee, by personal delivery or certified mail return receipt requested. The letter shall include good and sufficient evidence that the debt secured by the deed of trust was satisfied with good funds, and the expense of filing and recording the release was advanced.

456.500. As used in sections 456.500 to 456.600:

(1) "Prudent [man] investor" means a trustee whose exercise of trust powers is reasonable and equitable in view of the interests of income or principal beneficiaries, or both, and [in view of the manner in which men of ordinary prudence, diligence, discretion, and judgment would act in the management of the affairs of others] as otherwise defined in section 456.520;

(2) "Trust" means an express trust created by a trust instrument, including a will, whereby a trustee has the duty to administer a trust asset for the benefit of a named or otherwise described income or principal beneficiary, or both; "trust" does not include a resulting or constructive trust, a business trust which provides for certificates to be issued to the beneficiary, an investment trust, a voting trust, a security instrument, a trust created by the judgment or decree of a court, a liquidation trust, or a trust for the primary purpose of paying dividends, interests, interest coupons, salaries, wages, pensions or profits, or employee benefits of any kind, an instrument wherein a person is nominee or escrowee for another, a trust created in deposits in any financial institution, or other trust the nature of which does not admit of general trust administration;

(3) "Trustee" means an original, added, or successor trustee.

456.520. 1. From time of creation of the trust until final distribution of the assets of the trust, a trustee has the power to perform, without court authorization, every act which a prudent [man] investor would perform for the purposes of the trust [including but not limited to the powers specified in subsection 3]. The prudent investor has all the general authority for prudent investment provided in subsection 2 of this section, and all the remaining powers in this chapter.

2. [In the exercise of his powers including the powers granted by this chapter, a trustee has a duty to act with due regard to his obligation as a fiduciary.] To meet the standard of a prudent investor, the trustee is under a duty to the beneficiaries to invest and manage the funds of the trust as a prudent investor would, in light of the purposes, terms, distribution requirements, and other circumstances of the trust, except as otherwise provided by law.

(1) This standard requires the exercise of reasonable care, skill, and caution, and is to be applied to investments not in isolation but in the context of the trust portfolio and as a part of an overall investment strategy, which should incorporate risk and return objectives reasonably suitable to the trust.

(2) In making and implementing investment decisions, the trustee has a duty to diversify the investments of the trust unless, under the circumstances, it is prudent not to do so.

(3) In addition, the trustee must:

(a) Conform to fundamental fiduciary duties of loyalty and impartiality;

(b) Act with prudence in deciding whether and how to delegate authority and in the selection and supervision of agents; and

(c) Incur only costs that are reasonable in amount and appropriate to the investment responsibilities of the trusteeship.

3. A trustee, acting as a prudent investor, has the power[, subject to subsections 1 and 2]:

(1) To collect, hold, and retain trust assets received from a trustor until, in the judgment of the trustee, disposition of the assets should be made; and the assets may be retained even though they include an asset in which the trustee is personally interested;

(2) To receive additions to the assets of the trust;

(3) To continue or participate in the operation of any business or other enterprise, and to effect incorporations, dissolution, or other change in the form of the organization of the business or enterprise;

(4) To acquire an undivided interest in a trust asset in which the trustee, in any trust capacity, holds an undivided interest;

(5) To invest and reinvest trust assets in accordance with the provisions of the trust or as provided by law;

(6) To deposit trust funds in savings and loan associations, credit unions and banks, including a bank operated by the trustee;

(7) To acquire or dispose of an asset, for cash or on credit, at public or private sale; and to manage, develop, improve, exchange, partition, change the character of, or abandon a trust asset or any interest therein; and to encumber, mortgage, or pledge a trust asset for a term within or extending beyond the term of the trust, in connection with the exercise of any power vested in the trustee;

(8) To make ordinary or extraordinary repairs or alterations in buildings or other structures, to demolish any improvements, to raze existing or erect new party walls or buildings;

(9) To subdivide, develop, or dedicate land to public use; or to make or obtain the vacation of plats and adjust boundaries; or to adjust differences in valuation on exchange or partition by giving or receiving consideration; or to dedicate easements to public use without consideration;

(10) To enter for any purpose into a lease as lessor or lessee with or without option to purchase or renew for a term within or extending beyond the term of the trust;

(11) To enter into a lease or arrangement for exploration and removal of minerals or other natural resources or enter into a pooling or unitization agreement;

(12) To grant an option involving disposition of a trust asset, or to take an option for the acquisition of any asset;

(13) To vote a security, in person or by general or limited proxy;

(14) To pay calls, assessments, and any other sums chargeable or accruing against or on account of securities;

(15) To sell or exercise stock subscription or conversion rights; directly or through a committee or other agent, to consent to or oppose the reorganization, consolidation, merger, dissolution, or liquidation of a corporation or other business enterprise;

(16) To hold a security in the name of a nominee or in other form without disclosure of the trust, so that title to the security may pass by delivery, but the trustee is liable for any act of the nominee in connection with the security so held;

(17) To insure the assets of the trust against damage or loss, and the trustee against liability with respect to third persons;

(18) To borrow money to be repaid from trust assets or otherwise; to advance money for the protection of the trust, and for all expenses, losses, and liability sustained in the administration of the trust or because of the holding or ownership of any trust assets, for which advances with any interest the trustee has a lien on the trust assets as against the beneficiary;

(19) To pay or contest any claim; to settle a claim by or against the trust by compromise, arbitration, or otherwise; and to release, in whole or in part, any claim belonging to the trust to the extent that the claim is uncollectible;

(20) To pay taxes, assessments, compensation of the trustee, and other expenses incurred in the collection, care, administration, and protection of the trust;

(21) To allocate items of income or expense to either trust income or principal, as provided by this chapter, including creation of reserves out of income for depreciation, obsolescence, or amortization, or for depletion in mineral or timber properties;

(22) To pay any sum distributable to a beneficiary under legal disability, without liability to the trustee, by paying the sum to the beneficiary or by paying the sum for the use of the beneficiary;

(23) To effect distribution of property and money in divided or undivided interests and to adjust resulting differences in valuation;

(24) To employ persons, including attorneys, accountants, investment advisors, or agents, even if they are associated with the trustee, to advise or assist the trustee in the performance of his administrative duties; to act without independent investigation upon their recommendations; and instead of acting personally, to employ one or more agents to perform any act of administration, whether or not discretionary;

(25) To prosecute or defend actions, claims, or proceedings for the protection of trust assets and of the trustee in the performance of his duties;

(26) To execute and deliver all instruments which will accomplish or facilitate the exercise of the powers vested in the trustee;

(27) To invest and reinvest trust assets in United States government obligations, either directly or in the form of securities of, or other interests in, any open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940, as amended, provided that the governing instrument or order directs, requires, authorizes, or permits investment in United States government obligations, and provided that the portfolio of such investment company or investment trust is limited to United States government obligations and to repurchase agreements fully collateralized by such obligations, and provided further that such investment company or investment trust shall take delivery of such collateral;

(28) To invest and reinvest trust assets in securities or obligations of any state or its political subdivisions, including securities or obligations that are underwritten by the trustee or an affiliate of the trustee or a syndicate in which the trustee or an affiliate of the trustee is a member which in addition to meeting the standards under subsections 1 and 2 of this section also meet the standards established by the division of finance under subsection 5 of section 362.550, RSMo.

456.600. Except as otherwise specifically provided in the terms of the trust or in sections 456.500 to 456.600, the provisions of sections 456.500 to 456.600 of this chapter apply to any trust established before or after [September] August 28, [1983] 1996, and to any trust asset acquired by the trustee before or after [September] August 28, [1983] 1996.

490.750. 1. In this section, the following words have the meanings indicated:

(1) "Compliance review committee", a person or persons assigned by a depository institution or depository institution affiliate to test, review or evaluate its conduct, transactions or potential transactions for the purpose of monitoring and improving or enforcing compliance with:

(a) Safe, sound and fair lending practices;

(b) Financial reporting to federal or state regulatory agencies;

(c) The depository institution's or depository institution affiliate's own policies and procedures; and

(d) Federal or state statutory or regulatory requirements;

(2) "Compliance review document", documents prepared for or created by a compliance review committee, and exclude the original documents entered into to consummate the original financial transaction;

(3) "Depository institution", a state or federally chartered financial institution that is located in this state and is authorized to maintain deposit or share accounts, including a bank, savings and loan association or credit union;

(4) "Depository institution affiliate", any corporation whose stock is at least eighty percent owned by a depository institution or the holding company of a depository institution;

(5) "Person", an individual, group of individuals, board, committee, partnership, firm, association, corporation or other entity.

2. Except as provided in subsection 3 of this section and notwithstanding any law to the contrary:

(1) Compliance review documents are confidential and are not discoverable or admissible in evidence in any civil action;

(2) Individuals serving on compliance review committees or acting under the direction of a compliance review committee cannot be required to testify in any civil action as to the contents or conclusions of any compliance review committee or as to the actions taken by a compliance review committee;

(3) Compliance review documents delivered to a federal or state governmental or regulatory agency, or any political subdivision thereof, shall remain confidential and are not discoverable or admissible in any civil action.

3. This section does not apply to compliance review committees where individuals serving on or at the direction of the compliance review committee have management responsibility for the operations, records, employee or activities being examined or evaluated by the compliance review committee.

4. This section may not be construed to limit the discovery or admissibility in any civil action of any documents that are not compliance review documents.