2007 Oregon Code - Chapter 709 :: Chapter 709 - Regulation of Trust Business
Chapter 709 —
Regulation of Trust Business
2007 EDITION
REGULATION OF TRUST BUSINESS
FINANCIAL INSTITUTIONS
ORGANIZATION
709.005Â Â Â Â Certificate
of authority to transact trust business; application; contents; fee; exceptions
709.015Â Â Â Â Organization
as limited liability company
709.030Â Â Â Â Approval
to transact trust business; exceptions; deposit of cash, securities, letter of
credit or surety bond with director; amount
709.040Â Â Â Â Securities
eligible for deposit
709.050Â Â Â Â Trust
companies depositing securities guaranteed by mortgage insurance and mortgage
participation certificates
709.060Â Â Â Â Primary
liability of deposit
709.070Â Â Â Â Right
of action against deposit
709.080Â Â Â Â Charges
for handling securities; collection procedure
709.110Â Â Â Â Deposit
of documents with notes or bonds
709.120Â Â Â Â Substitution
of deposit securities; income of securities deposited
709.130Â Â Â Â Indemnity
bond when cash and securities of one trust exceed stockholdersÂ’ equity of trust
company
709.140Â Â Â Â Return
of deposit; liability of state
709.145Â Â Â Â Investment
of capital
GENERAL POWERS
709.150Â Â Â Â General
powers of trust companies
709.160Â Â Â Â Solicitation
and performance of legal business
709.170Â Â Â Â Establishment
of and investment in common trust funds; rules; accounting
709.175Â Â Â Â Limitation
on investment of trust funds; exceptions
709.190Â Â Â Â Trust
department kept separate; records of securities; retention of records
709.200Â Â Â Â Acquisition
or investment of trust property in own name or name of nominee
709.210Â Â Â Â Disclosure
of fiduciary character or terms of trust instrument
709.220Â Â Â Â Handling
of funds awaiting investment or distribution; security for use of funds
709.240Â Â Â Â Oath
and bond exemption for trust company appointed as fiduciary
709.270Â Â Â Â Disclosure
of communications and writings
709.280Â Â Â Â Loans
to directors, officers, employees or affiliates
709.290Â Â Â Â Closing
of trust unduly delayed
709.300Â Â Â Â Transaction
of trust business by national bank
709.330Â Â Â Â
709.335Â Â Â Â Digital
signatures
TERMINATION OF TRUST BUSINESS
709.340Â Â Â Â Trust
company quitting business; examination
709.350Â Â Â Â Successor
trustee upon liquidation or receivership; appointment and qualification;
petition by director; applicability of state laws
709.390Â Â Â Â Discontinuance
of trust business; determination of claims against deposit of securities
709.400Â Â Â Â Order
to start court action; publication of order; jurisdiction over securities;
notice to trustor; applicability of state laws
709.410Â Â Â Â Termination
of right to do trust business
709.420Â Â Â Â Actions
or suits on claims; service of summons; preference on calendar
709.430Â Â Â Â Release
or payment of deposit pending suit; distribution of deposits upon determination
of suit
709.440Â Â Â Â DirectorÂ’s
charges as prior lien on deposit
709.450Â Â Â Â
709.460Â Â Â Â Application
of ORS 709.390 to 709.450 to merger or consolidation; return of security
deposit after merger or consolidation
CONVERSION, MERGER AND ACQUISITION
709.520Â Â Â Â Conversion
to out-of-state trust company; conversion to
709.525Â Â Â Â Merger
or acquisition; procedures
709.530Â Â Â Â Applicability
of ORS 711.190, 711.197 and 711.199 to merging or converting trust company
709.535Â Â Â Â
709.540Â Â Â Â Rights
of stockholder of trust company party to merger, share exchange or acquisition
MISCELLANEOUS
709.600Â Â Â Â Regulation
of trust business by corporations formed prior to adoption of Bank Act;
regulation of other business
PENALTIES
709.980Â Â Â Â Civil
penalties
ORGANIZATION
     709.005
Certificate of authority to transact trust business; application; contents;
fee; exceptions. (1) Except
as provided in ORS 709.030 (4) or in subsection (4) of this section, no company
shall transact any trust business in this state until the company has obtained
a certificate of authority from the Director of the Department of Consumer and
Business Services under this section, authorizing the company to transact trust
business in this state.
     (2) To procure a certificate of authority
to transact trust business in this state, a company to whom this section
applies shall file a written application with the director, which shall contain
or be accompanied by:
     (a) The name of the company.
     (b) The state or country under the laws of
which the company is organized.
     (c) The date of incorporation or other
organization of the company.
     (d) The period of duration of the company,
if the duration is not perpetual.
     (e) A mailing address to which the
director may send notices.
     (f) The address of the principal office of
the company in the state or country under the laws of which it is organized.
     (g) The street address of the proposed
registered office of the company in this state and the name of its proposed
registered agent, who shall be amenable to service of process at that address.
     (h) A brief statement setting forth any
background and experience of the company in conducting a trust business in the
state or country in which it is organized, and its qualifications to transact
trust business in this state.
     (i) The names and addresses of the chief
executive officer and the secretary of the company.
     (j) Any additional information that the
director may by rule require.
     (k) The verified signature of the chief
executive officer of the company, certifying that all information contained in
the application is true, accurate and complete.
     (L) A certificate of existence, a
certificate of good standing, a status certificate or a document of similar
import, current within 60 days of making application under this section and
duly authenticated by the official with custody of the corporate or other
records in the state, province or country under the laws of which the company
is organized.
     (m) A certificate of authorization for a
foreign corporation, or a copy of the application for authority to transact
business in this state as a foreign corporation as filed with the Secretary of
State, current within 60 days of making application under this section and duly
authenticated by the Secretary of State evidencing the authorization of the
company, or application for authorization, to transact business as a foreign
corporation under ORS chapter 60.
     (n) An application fee of $2,500, provided
that no application fee shall be charged under this paragraph:
     (A) If the applicant is concurrently
applying for a charter under ORS chapter 707; or
     (B) If the director reduces or waives the
application fee.
     (3) If the director finds that the
application conforms to the requirements of subsection (2) of this section and
that the applicant is qualified by experience to transact trust business in
this state, the director shall direct the applicant to make the security
deposit required under ORS 709.030, and when the deposit is made, the director
shall issue and send to the company a certificate of authority to transact
business.
     (4) The requirement to procure a
certificate of authority under this section shall not apply to the extent
preempted by federal law, or to any bank lawfully transacting trust business in
this state on October 4, 1997. [1997 c.631 §229; 1999 c.107 §3]
     709.010 [Repealed by 1973 c.797 §428]
     709.015
Organization as limited liability company. (1) As an alternative to being organized as a corporation pursuant to
the provisions of ORS chapter 707 and this chapter, an
     (2) With respect to any
     (a) “Articles of incorporation” means the
     (b) “Bylaws” means the
     (c) “Certificate of incorporation” means a
certificate of organization issued to the
     (d) “Corporation” means a limited
liability company, as defined in ORS 63.001.
     (e) “Director,” “directors” or “board of
directors” means the
     (f) “Dividends” means distributions, as
defined in ORS 63.001, declared or paid by the
     (g) “Incorporator” means the
     (h) “Share” or “stock” means a membership
interest in the
     (i) “Stockholder,” “stockholders,” “shareholder”
or “shareholders” means the
     (3) An
     (4)(a) Notwithstanding any provision of
ORS chapter 63, the articles of organization of an
     (A) State that the existence of the
     (B) Provide that the
     (b) Notwithstanding any provision of ORS
chapter 63, an
     (c) Notwithstanding any provision of ORS
chapter 63, membership interests in an
     (d) ORS 63.621 (2) to (4) do not apply to
an
     (5) The articles of organization of an
     (6) An
     (7) Each
     (8) Any number of persons, not fewer than
five, may act as organizers of an
     709.020 [Amended by 1973 c.428 §10; repealed by 1973
c.797 §428]
     709.030
Approval to transact trust business; exceptions; deposit of cash, securities,
letter of credit or surety bond with director; amount. (1) Except as provided in subsection (4) of
this section, no person other than a trust company shall transact a trust
business in this state. Except as provided in subsection (4) of this section,
before a person transacts any trust business in this state, the person shall
obtain the approval of the Director of the Department of Consumer and Business
Services if required under ORS 709.005 and shall deposit with the director, as
security and as a pledge for the faithful conduct of its trust business:
     (a) Cash or interest-bearing securities
that have a ready market value;
     (b) A surety bond issued by a surety
company authorized to transact business in this state and in a form approved by
the director, under which the principal and surety indemnify the several owners
of the fund held in trust against loss due to the failure of the trust company;
     (c) An irrevocable letter of credit issued
by an insured institution, as defined in ORS 706.008; or
     (d) Any combination of cash, letters of
credit, interest-bearing securities and surety bond.
     (2) If the cash and securities held in
trust amount to less than $1 million, the deposit, bond, letters of credit or
combination thereof shall be $50,000. If the cash and securities held in trust
amount to at least $1 million but do not exceed $1.5 million, the deposit,
bond, letters of credit or combination thereof shall be $100,000. For each
$500,000 or fraction thereof in excess of $1.5 million held in trust, the
deposit, bond, or letters of credit or combination thereof shall be increased
an additional $25,000, except a trust company shall not be required to increase
the deposit, bond, letters of credit or combination thereof to an amount in
excess of $1 million.
     (3) The securities shall be deposited with
the director and held by the director as trustee for the beneficiaries of the
trust funds held by the trust company.
     (4) A person shall not be required to be a
trust company if the person:
     (a) Does not and will not regularly
transact trust business in the ordinary course of the personÂ’s business;
     (b) Acts in a manner authorized by law and
in the scope of authority as an agent of a trust company;
     (c) Is an attorney rendering a service
customarily performed by an attorney;
     (d) Is acting as trustee under a deed of
trust;
     (e) Is a licensed real estate broker or
principal real estate broker rendering a service customarily performed by a
broker;
     (f) Is a licensed escrow agent rendering a
service customarily performed by an escrow agent; or
     (g) Is exempt from the provisions of
subsection (1) of this section by rule of the director. [Amended by 1957 c.82 §1;
1967 c.139 §1; 1973 c.797 §183a; 1979 c.88 §12; 1981 c.192 §14; 1985 c.800 §1;
1991 c.331 §114; 1997 c.631 §203; 2001 c.300 §81; 2007 c.71 §228]
     709.040
Securities eligible for deposit. The securities mentioned in ORS 709.030 may only be of the following
classes:
     (1) Interest-bearing bonds, notes or
obligations of the United States including those of its agencies and
instrumentalities, or bonds, notes or obligations for which the faith of the
United States is pledged for the payment of the principal and interest.
     (2) Bonds or other obligations of the
State of Oregon, any county of this state or any incorporated city, town or
school or port district of this state having a population of not less than
2,000 as shown by the last federal census, or bonds of any other state, any
county, incorporated city, town or school or port district therein having a
population of not less than 25,000, as shown by the last federal census, if:
     (a) The bonds or obligations are issued in
compliance with the constitution and laws of the applicable state;
     (b) The bonds or obligations are a general
obligation of the state, city, town or school or port district issuing the
bonds; and
     (c) There has been no default in payment
of either principal or interest on any of the general obligations of the state,
county, incorporated city, town or school or port district for a period of five
years preceding the date of the deposit.
     (3) Notes or bonds secured by first liens
upon improved real estate in this state or any other state if the obligation,
plus taxes not due and bonded indebtedness for public improvements not due, do
not exceed 50 percent of the reasonable market value of the real estate. The
trust company shall file in support of a real estate obligation, such
appraisal, evidence of merchantable title and insurance as may be required by
the Director of the Department of Consumer and Business Services. [Amended by
1973 c.797 §184; 1997 c.631 §204]
     709.050
Trust companies depositing securities guaranteed by mortgage insurance and
mortgage participation certificates. A trust company authorized to do a trust business in this state which
is required to make any deposit of securities with any public official in order
to do business in this state may deposit:
     (1) Notes or bonds secured by mortgages or
deeds of trust, payment of which are guaranteed by policies of mortgage
insurance; and
     (2) Mortgage participation certificates
issued by a mortgage insurance company authorized to do business in this state
in accordance with ORS 742.282 and 742.284. [Amended by 1967 c.359 §703; 1973
c.797 §185; 1997 c.631 §205]
     709.060
Primary liability of deposit.
The deposit mentioned in ORS 709.030 is primarily liable for the malfeasance of
a trust company as a fiduciary and is not liable for any debt or other
obligation of the company until such malfeasance liability has been discharged.
[Amended by 1973 c.797 §186; 1997 c.631 §206]
     709.070
Right of action against deposit. A person who suffers loss or damage because of the breach of any trust
committed to a trust company may recover the amount of the loss or damage out
of the moneys or securities deposited under ORS 709.030 with the director by
the trust company. [Amended by 1973 c.797 §187; 1997 c.631 §207]
     709.080
Charges for handling securities; collection procedure. (1) The Director of the Department of
Consumer and Business Services may charge a reasonable amount for any expenses
incurred and services rendered in connection with deposits of securities.
     (2) If a trust company does not, after due
notice, pay to the director any charge assessed against it under this section,
the director may:
     (a) Apply in payment of the charges, with
interest at the legal rate, as much as necessary of the interest or other
earnings accruing on any securities deposited with the director; or
     (b) Report the facts to the Attorney
General, who shall, in the name of the director, institute appropriate action
against the trust company. [Amended by 1973 c.797 §188; 1997 c.631 §208]
     709.090 [Repealed by 1973 c.797 §428]
     709.100 [Repealed by 1973 c.797 §428]
     709.110
Deposit of documents with notes or bonds. All mortgages or deeds of trust and all insurance policies, abstracts
of title, certificates of title or title insurance policies and appraisements
required by the Director of the Department of Consumer and Business Services
under ORS 709.040 (3) shall be deposited with the notes or bonds. When less
than the whole of a bond issue is deposited, the director shall not require the
deposit of the abstract of title, certificates of title or title insurance
policies and appraisements, but may require a certificate from the trustee of
the mortgage or bond issue that the documents have been deposited with the
trustee. [Amended by 1973 c.797 §189]
     709.120
Substitution of deposit securities; income of securities deposited. (1) The Director of the Department of
Consumer and Business Services may require the immediate substitution of other
securities when the director has reason to believe that the market value of
securities which have been deposited under ORS 709.030 have depreciated below
the amount required under ORS 709.030. Substitution of securities with the
director at the request of the depositing trust company may be permitted if
approved by the director.
     (2) All interest, income or dividends from
all securities deposited with the director belong to the depositing trust
company, and if the trust company is solvent, it may receive and retain the
interest, income or dividends. [Amended by 1973 c.797 §190; 1997 c.631 §209]
     709.130
Indemnity bond when cash and securities of one trust exceed stockholdersÂ’
equity of trust company. If
the cash and securities belonging to any single fiduciary account exceed the
amount of the trust companyÂ’s stockholdersÂ’ equity, the court appointing the
trust company to the position of trust may require an indemnity bond from the
trust company for the amount of cash and securities exceeding stockholdersÂ’
equity. [Amended by 1973 c.797 §191; 1999 c.59 §219]
     709.140
Return of deposit; liability of state. The State of
     709.145
Investment of capital. The
capital of a trust company may be invested in the securities specified in ORS
709.040. [1973 c.797 §193]
GENERAL
POWERS
     709.150
General powers of trust companies. A trust company may:
     (1) Act as fiscal or transfer agent of the
United States or of any state, county, municipality, political subdivision or
corporation, and in that capacity receive and disburse money; transfer,
register and countersign certificates of stock, bonds or other evidence of
indebtedness; authenticate and certify the bonds and certificates of
indebtedness, and act as attorney-in-fact or agent of a person for any lawful
purpose.
     (2) Lease, hold, purchase and convey any
real property necessary or convenient in the transaction of its business.
     (3) Receive deposits of moneys, securities
and other personal property in trust from any person and loan trust funds on
real or personal securities.
     (4) Act as trustee under any mortgage or
bonds and accept and execute any lawful municipal or corporate trusts.
     (5) Be appointed by a court and act as a
fiduciary.
     (6) Accept and execute any lawful trust.
     (7) Rent receptacles for safe deposits of
personal property and receive personal property upon deposit for safekeeping.
     (8) Purchase, invest in and sell bills of
exchange, bonds and mortgages, and other evidences of indebtedness.
     (9) In the management of trust properties,
discount and negotiate promissory notes, drafts, bills of exchange and other
evidences of debt, and accept for payment at a future date drafts drawn upon it
and issue letters of credit authorizing the holders to draw drafts upon it or
its correspondents at sight or on time, not exceeding one year.
     (10) Exercise all other powers given to
trust companies under the Bank Act. [Amended by 1961 c.344 §106; 1973 c.797 §194;
1973 c.823 §141; 1974 c.36 §24; 1997 c.631 §210]
     709.160
Solicitation and performance of legal business. (1) A trust company shall not advertise to
furnish or furnish to the public legal advice or hold itself out as practicing
law.
     (2) A trust company that violates
subsection (1) of this section is ineligible for one year thereafter to be
judicially appointed as a fiduciary in this state. [Amended by 1973 c.797 §195;
1975 c.544 §28; 1997 c.631 §211]
     709.170
Establishment of and investment in common trust funds; rules; accounting. (1) “Common trust fund” as used in this
section, means any fund maintained by a trust company exclusively for the
collective investment and reinvestment of moneys contributed thereto by the
trust company or an affiliated trust company as a fiduciary. For the purposes
of this section, two or more trust companies are affiliated if they are members
of the same affiliated group, within the meaning of section 1504 of the
Internal Revenue Code.
     (2) A trust company may establish common
trust funds for the purpose of furnishing investments to itself as fiduciary,
to an affiliated trust company as fiduciary, or to itself or an affiliated
trust company and others as cofiduciaries. A trust company may, as a fiduciary
or cofiduciary, invest funds that it lawfully holds for investment, in
interests in the common trust fund or a common trust fund of an affiliated
trust company, if the investment is not prohibited by the instrument, judgment
or order creating the fiduciary relationship, and if, in the case of
cofiduciaries, the trust company procures the consent of its cofiduciary or
cofiduciaries to the investment.
     (3) The Director of the Department of
Consumer and Business Services, in accordance with ORS chapter 183, may adopt
rules necessary to control the establishment and operation of common trust
funds and to protect the investors. A trust company except a national bank that
is qualified to conduct a trust business pursuant to the laws of the
     (4) Unless ordered by a court a trust
company operating common trust funds is not required to render a court
accounting with respect to the funds, but it may, upon application to the
circuit court of the county in which it has its principal office in this state,
obtain a settlement of its common trust fund accounts on conditions specified
by the court. When application for the settlement is presented to a circuit
court for approval, the circuit court shall assign a time and place for hearing
and order notice thereof by:
     (a) Publication once a week for three
successive publications, the first publication to be not less than 20 days
prior to the date of hearing, of a notice in a newspaper having a general
circulation in the county in which the trust company operating the common trust
fund has its principal office;
     (b) Mailing, not less than 14 days prior
to the date of the hearing, a copy of the notice to all beneficiaries of the
trusts participating in the common trust fund whose names are known to the
trust company from the records kept by it in the regular course of business in
the administration of the trust, directed to them at the addresses shown by the
records; and
     (c) Such further notice, if any, as the
court may order. [Amended by 1953 c.258 §2; 1959 c.91 §1; 1963 c.56 §1; 1973
c.797 §196; 1973 c.823 §142; 1974 c.36 §25; 1983 c.367 §3; 1985 c.762 §41; 1997
c.631 §212; 2003 c.576 §546]
     709.175
Limitation on investment of trust funds; exceptions. (1) Except as provided in ORS 709.220,
subsection (2) of this section, or as lawfully authorized by the instrument
creating the trust relationship or by court order, funds held by a trust
company as fiduciary shall not be invested in stock or obligations of, or
property acquired from:
     (a) The trust company or its directors,
officers or employees;
     (b) Individuals connected to the trust
company or its directors, officers or employees;
     (c) Organizations in which the trust
company or its directors, officers or employees hold an interest;
     (d) Affiliates of the trust company or
their directors, officers or employees;
     (e) Individuals with whom there exists an
interest that might affect the exercise of the best judgment of the trust
company in making the investment or acquiring the property; or
     (f) Organizations in which there exists an
interest which might affect the exercise of the best judgment of the trust
company in making the investment or acquiring the property.
     (2) Subsection (1) of this section shall
not apply if the trust company invests funds held by it as fiduciary in any
open-end or closed-end management type investment company or investment trust
for which the trust company, or an affiliate of the trust company, acts as
investment advisor or custodian or provides other services, for which services
the trust company and its affiliates may receive reasonable fees.
     (3) For the purposes of this section,
companies are affiliated if they are members of the same affiliated group under
Section 1504 of the Internal Revenue Code. [1989 c.604 §3; 1991 c.353 §1; 1997
c.631 §213]
     709.180 [Repealed by 1973 c.797 §428]
     709.190
Trust department kept separate; records of securities; retention of records. (1) Each banking institution and each
non-Oregon institution authorized to transact a trust business in this state
shall establish and maintain in its office a trust department, in which
separate books and accounts shall be maintained. All property of the trust
department shall be segregated from and unmingled with other property.
     (2) The books and accounts of the trust
department shall show the ownership of all moneys, funds, investments and
property held by the trust department. Securities may be kept by the trust
department in either of the following ways:
     (a) All certificates representing the
securities of an account may be held separate from those of all other accounts;
or
     (b) Certificates representing securities
of the same class of the same issuer held for particular accounts may be held
in bulk without certification as to ownership attached and, to the extent
feasible, certificates of small denomination may be merged into one or more
certificates of larger denomination. Upon demand by any person to whom it has a
duty to account, a trust department shall certify in writing the securities
held by it for an account. A trust department, if operating under the
method of safekeeping security certificates described in this paragraph, is
subject to such rules as may be issued by:
     (A) In the case of a banking institution,
the Director of the Department of Consumer and Business Services;
     (B) In the case of an out-of-state bank,
the appropriate state supervisor;
     (C) In the case of an extranational
institution, the official charged with supervising the extranational
institution in the country under the laws of which it was organized; or
     (D) In the case of a national bank, the
Comptroller of the Currency.
     (3) All records shall be kept and retained
for such time as to enable the banking institution or non-Oregon institution to
furnish information or reports with respect to the records that may be required
by the director or other regulator specified in subsection (2)(b) of this
section. The records shall contain full information relative to each account and
nothing contained in this subsection shall require a banking institution or
non-Oregon institution to maintain the records required by this section in any
given manner, provided that the information required is clearly and accurately
reflected and provides an adequate basis for the audit of the information.
     (4) A banking institution transacting
trust business in this state shall retain the records required by this section
for a period of three years from the termination of the relationship to which
the records relate. A non-Oregon institution or federal bank transacting trust
business in this state shall retain such records pertaining to the trust
business transacted by it for such periods of time as may be required by
applicable laws of the jurisdiction under which the non-Oregon institution or
federal bank is organized, or if the applicable laws of the jurisdiction do not
specify a period for retaining the records, the non-Oregon institution or
federal bank shall retain the records required by this section for a period of
three years. The records shall be available for examination by the director or,
in the case of:
     (a) Federal banks, the Comptroller of the
Currency or other federal supervisor;
     (b) Out-of-state banks and out-of-state
trust companies, the appropriate state supervisor; or
     (c) Extranational institutions, the
official charged with supervising the extranational institution in the country
under the laws of which it was organized. [Amended by 1971 c.263 §1; 1973 c.797
§197; 1975 c.544 §29; 1985 c.762 §42; 1991 c.336 §1; 1997 c.631 §214]
     709.200
Acquisition or investment of trust property in own name or name of nominee. (1) In the acquisition or investment of
trust property, a trust company may take in its own name, or in the name of its
nominee, any assets in which it may be authorized to invest or hold trust
property.
     (2) Upon the satisfaction, conveyance or
investment of trust property, whether the trust property is held in the name of
the trust company, individually, or in its name as trustee or in a specified
fiduciary capacity or otherwise, the instrument of satisfaction or transfer may
be executed by the trust company in its own name. [Amended by 1973 c.797 §198;
1997 c.631 §215]
     709.210
Disclosure of fiduciary character or terms of trust instrument. In acquiring, holding, satisfying and
conveying trust property, a trust company is not required to disclose that it
is acting in a fiduciary capacity, the terms or conditions of the instrument
under which it acts, the nature or extent of its authority or the application
of the proceeds of the transaction. A person dealing with a trust company may
not inquire into the matters, except to the extent specified in ORS 709.270. [Amended
by 1973 c.797 §199]
     709.220
Handling of funds awaiting investment or distribution; security for use of
funds. (1) Funds placed or
held in trust by a trust company awaiting investment or distribution shall not
be held uninvested or undistributed for a longer period than is reasonable for
the proper management of the account, shall be carried in a separate account
and shall not be used by the trust company, bank or extranational institution
in the conduct of its business or in the conduct of the business of any of its
affiliates, except that such funds may be deposited in the commercial or
savings or other department of the trust company, bank or extranational
institution if the trust company, bank or extranational institution first
obtains and sets aside in its trust department:
     (a) Bonds or other securities eligible for
the investment of trust funds;
     (b) A surety bond;
     (c) An irrevocable letter of credit issued
by an insured institution, as defined in ORS 706.008; or
     (d) A combination of the securities,
letters of credit and surety bond.
     (2) The surety bond shall be issued by a
surety company authorized to transact business in this state and approved by
the Director of the Department of Consumer and Business Services. The bond or
letter of credit shall provide that the principal and surety or letter of
credit issuer shall indemnify the several owners of the funds held in trust
against loss due to the failure of the trust company, bank or extranational
institution.
     (3) Notwithstanding the provisions of ORS
708A.415, the securities, the surety bond, the letter of credit or the
securities, the surety bond and the letters of credit together shall be in an
amount equal to the portion of the trust funds not insured by the United States
Government or any agency or instrumentality of the
     (4) If the trust company, bank or
extranational institution fails, the owners of the funds held in trust for
investment or distribution have a lien on the bonds or other securities set
apart, or a right of action on the surety bond and upon the letter of credit,
in addition to their claim against the estate of the trust company, bank or
extranational institution. [Amended by 1957 c.82 §2; 1973 c.797 §200; 1975
c.544 §29d; 1983 c.296 §5a; 1987 c.216 §5; 1991 c.331 §115; 1997 c.631 §216]
     709.230 [Amended by 1961 c.344 §107; repealed by
1973 c.797 §428; amended by 1973 c.823 §143; amendment treated as reenactment,
see 709.231]
     709.231 [1973 c.823 §143 amending 709.230 treated as
reenactment of 709.230 repealed by 1973 c.797 §428; repealed by 1974 c.36 §28]
     709.240
Oath and bond exemption for trust company appointed as fiduciary. An official oath or indemnity bond or other
security shall not be required when a trust company is appointed as fiduciary
or during the administration of the trust except as required by ORS 709.030 and
709.130. [Amended by 1973 c.797 §201; 1973 c.823 §144; 1974 c.36 §26]
     709.250 [Repealed by 1973 c.797 §428; amended by
1973 c.823 §145; amendment treated as reenactment, see 709.251]
     709.251 [1973 c.823 §145 amending 709.250 treated as
reenactment of 709.250 repealed by 1973 c.797 §428; repealed by 1974 c.36 §28]
     709.260 [Repealed by 1973 c.797 §428]
     709.270
Disclosure of communications and writings. A trust company shall, except as otherwise provided in this section,
keep inviolate all communications and writings made to or by the trustees
touching the existence, condition, management and administration of any private
trust confided to it. A creditor or stockholder is not entitled to disclosure
or knowledge of the communication or writing. However, the officers, manager,
trust officer, secretary or attorney of the trust company may know of the
communication or writing. In any suit or proceeding touching the existence,
condition, management or administration of the trust, the court in which the matter
is pending may require disclosure of the communication or writing. [Amended by
1973 c.797 §202; 1997 c.631 §217]
     709.280
Loans to directors, officers, employees or affiliates. (1) A trust company shall not make any loan
to any director, officer or employee of the trust company or to any affiliate
or any director, officer or employee of an affiliate from its trust funds, and
shall not permit any director, officer, employee or affiliate to become
indebted to it in any way out of its trust funds, unless specifically
authorized to do so by the terms of the trust.
     (2) An officer, director or employee of a
trust company shall not knowingly violate any provision of this section, or aid
or abet any other person in a violation.
     (3) This section shall not prevent the
maintenance by a trust company of time or demand deposits of its trust funds in
an affiliate that is a bank or extranational institution, provided that the
bank or extranational institution complies with the requirements of ORS 709.220
pertaining to obtaining and setting aside bonds, surety bonds and other
securities in an amount equal to the portion of the trust funds not insured by
the Federal Deposit Insurance Corporation. [Amended by 1973 c.797 §203; 1975
c.544 §29e; 1983 c.296 §5b; 1997 c.631 §218]
     709.290
Closing of trust unduly delayed. If, as a result of an examination, the Director of the Department of
Consumer and Business Services finds that the closing of any trust by a trust
company has been unreasonably delayed, the director may initiate proceedings in
a court of competent jurisdiction to require the trust company to perform its
duties in closing the trust. [Amended by 1973 c.797 §204]
     709.300
Transaction of trust business by national bank. (1) A national bank authorized to conduct a
trust business that has complied with the applicable provisions of this chapter
may transact trust business in all respects, as provided by applicable laws of
the
     (2) Every national bank that is authorized
to transact trust business and that has qualified by making the deposit of
securities required under ORS 709.030, may:
     (a) Act or be appointed by any court to
act in any fiduciary capacity to the same extent as any trust company;
     (b) Use the word “trust” in its corporate
name; and
     (c) Advertise its authority to act in
fiduciary capacities. [Amended by 1963 c.55 §1; 1965 c.170 §1; 1973 c.797 §205;
1997 c.631 §219]
     709.310 [Amended by 1963 c.55 §2; repealed by 1973 c.797
§428]
     709.320 [Repealed by 1973 c.797 §428]
     709.330
     (2) The sale or transfer of assets shall
not effect a renunciation or revocation of any letters of administration,
letters testamentary, letters of guardianship or any other fiduciary
relationship.
     (3) If any trust requires the approval of
the court to a change of the fiduciary, within 90 days after the change becomes
effective the successor fiduciary shall file notice of the change with the
court having jurisdiction and serve notice of the change upon each beneficiary.
The notice may be served in the manner provided in ORCP 9 or, if the residence
of a beneficiary is not known, notice may be published in the manner provided
for the publication of summons.
     (4) A beneficiary or other person
interested in the trust or estate may, within 90 days after the service of the
notice, apply to the appropriate court for a change of fiduciary or such other
relief as may be proper. [Amended by 1973 c.797 §206; 1979 c.284 §195; 1997
c.631 §219a]
     709.335
Digital signatures. A trust
company may conduct transactions using digital signatures and issue
certificates for the purpose of verifying digital signatures. [1997 c.631 §234a;
1999 c.718 §3; 2001 c.535 §35; 2005 c.118 §5]
TERMINATION
OF TRUST BUSINESS
     709.340
Trust company quitting business; examination. A trust company quitting business shall furnish to the Director of the
Department of Consumer and Business Services satisfactory evidence of its
release and discharge from all obligations and trusts provided for in the Bank
Act. The director shall examine the trust company, and, if the director is
satisfied after the examination that the trust company has discharged all its
obligations and trusts, the director shall revoke its certificate of authority
and deliver up all securities on deposit with the director under ORS 709.030. [Amended
by 1973 c.797 §207]
     709.350
Successor trustee upon liquidation or receivership; appointment and
qualification; petition by director; applicability of state laws. (1) If a trust company goes into voluntary
or involuntary liquidation or receivership, the appointment of a successor
trustee for the trust shall be handled by the court hearing the liquidation
proceedings upon petition by the Director of the Department of Consumer and
Business Services, the trust company, any interested person or, in the case of
a federal bank or extranational institution, by its receiver or liquidating
agent.
     (2) Upon the filing of the petition, the
court shall order all persons interested in any trust to designate and take all
necessary steps to appoint a successor trustee within a time fixed in the
order, or to show cause why a successor trustee should not be appointed by the
court. The order may be general in its terms and need not designate the trusts
involved or the nature, purpose or extent of the trusts, or give the name of
any of the beneficiaries or interested persons.
     (3) In a trust where those interested in
the trust fail to cause a successor trustee to be appointed prior to the time
fixed in the order, the court shall appoint a successor trustee.
     (4) The successor trustee shall succeed to
all the rights, powers, and obligations of the trust company in liquidation,
except claims or liabilities arising out of the management of trusts prior to
the date of transfer.
     (5) A copy of the order provided for in
subsection (2) of this section shall be published once a week for four
successive weeks in a newspaper of general circulation to be designated by the
court and published in the county in which the liquidation proceedings of the
trust company are carried on. If there is no newspaper published in the county,
or if the court conducting the liquidation proceedings is located outside this
state, publication shall be made in a newspaper of general circulation in the
State of
     (6) The filing of the petition and the
making and entering of the order and the publishing of a copy of the order,
gives the court full jurisdiction of the trusts and all parties interested in
the trusts. A court having jurisdiction shall require the director to mail, by
registered mail or by certified mail with return receipt, postage prepaid, a
copy of the order to each living trustor of all private trusts in which the
trust company is trustee or to the then directly participating beneficiaries of
all private trusts in which there is no living trustor. The notice shall be
mailed to the last-known address of each trustor or participating beneficiary
as shown by the records of the trust company. Proof of mailing shall be in such
form as the court may require. Failure to mail the notice or the nonreceipt of
the notice by any trustor or participating beneficiary shall not affect the
jurisdiction of the court or invalidate any order or judgment made in the
proceedings.
     (7) It is unnecessary to require the
appearance of minors or other incompetents by guardians ad litem or otherwise.
     (8) The provisions of subsections (2) to
(6) of this section shall apply only to trust companies that are organized
under the laws of this state and to trust companies that are the trust
departments of banks having their principal places of business in this state.
If any other trust company goes into voluntary or involuntary liquidation or
receivership, the proceedings shall be governed by the laws of the state or
country in which the proceedings are initiated. The director and any other
interested person may participate in the proceedings. Any successor trustee
appointed pursuant to the proceedings shall succeed to all the rights, powers
and obligations of the trust company, except claims or liabilities arising out
of the management of trusts prior to the date of transfer. [Amended by 1973
c.797 §208; 1991 c.249 §64; 1997 c.631 §220; 2003 c.576 §547]
     709.360 [Repealed by 1973 c.797 §428]
     709.370 [Repealed by 1973 c.797 §428]
     709.380 [Repealed by 1973 c.797 §428]
     709.390
Discontinuance of trust business; determination of claims against deposit of
securities. (1) If a trust
company discontinues its trust business, the Director of the Department of
Consumer and Business Services shall file in the circuit court for the county
in which the principal place of business of the trust company is located a
verified petition:
     (a) Stating that the trust company is
closing, dissolving or transferring its trust business or is in process of
voluntary or involuntary liquidation.
     (b) Requesting that claims, if any,
against the deposit made under ORS 709.030 by the trust company with the
director be determined.
     (2) Notwithstanding the provisions of
subsection (1) of this section, if proceedings for the liquidation of the trust
company have been commenced in a court located in a county or state other than
the county in this state in which the trust company has its principal place of
business, the director shall file the verified petition described in subsection
(1) of this section in the court where the proceedings have been commenced. [Amended
by 1957 c.115 §1; 1973 c.797 §209; 1997 c.631 §221]
     709.400
Order to start court action; publication of order; jurisdiction over
securities; notice to trustor; applicability of state laws. (1) Upon the filing of the petition under
ORS 709.390, the court shall make an order requiring all persons having claims
against the deposits to start action in the circuit court hearing the petition
of the Director of the Department of Consumer and Business Services within six
months after the date of the order. Any claim not filed within the six-month
period is barred. The petition or the order need not give the names of any
beneficiary or the nature of the trusts protected by the deposit.
     (2) A copy of the order shall be published
in a newspaper designated by the court, having a general circulation in the county
of the principal place of business of the trust company at least once a week
for as many consecutive weeks as the court orders, but not less than four weeks
nor more than 12 weeks. If a newspaper is not published in the county, the copy
of the order shall be published in a newspaper of general circulation in the
State of
     (3) The filing of the petition, under ORS
709.390, and the making and entering of the order and the publishing of a copy
of the order under this section gives the court exclusive jurisdiction of
deposited securities and of all parties having an interest in or claim upon the
securities.
     (4) A court shall require the director to
mail, by certified mail with return receipt, postage prepaid, a copy of the
order to each living trustor of all private trusts in which the trust company
is trustee and which have not been closed or to the directly participating
beneficiaries of all private trusts in which there is no living trustor. The
notice shall be mailed to the last-known address of each trustor or
participating beneficiary as shown by the records of the trust company. Proof
of mailing shall be in the form required by the court. Failure to mail the
notice or the nonreceipt of the notice by any trustor or participating
beneficiary shall not affect the jurisdiction of the court or invalidate any
order or judgment made in the proceedings.
     (5) The appearance of minors or other
incompetents by guardians ad litem or otherwise is not necessary.
     (6) The provisions of subsections (1) to
(4) of this section shall apply only to trust companies that are organized
under the laws of this state and to trust companies that are the trust
departments of banks having their principal places of business in this state.
If a petition is filed under ORS 709.390 (2), the proceedings shall be governed
by the laws of the state or country in which the petition is filed. A copy of
any court order requiring persons having claims against the deposits made by
the trust company under ORS 709.030 to bring their claims within a specified
period of time shall be published in a newspaper of general circulation in the
State of
     709.410
Termination of right to do trust business. The filing by the Director of the Department of Consumer and Business
Services of the petition provided for in ORS 709.390 terminates the right of
the trust company affected thereby to do a trust business in this state, except
as may be necessary to wind up then existing trusts. [Amended by 1973 c.797 §211;
1997 c.631 §223]
     709.420
Actions or suits on claims; service of summons; preference on calendar. (1) In all actions to determine claims to
the deposits, the Director of the Department of Consumer and Business Services
shall be a necessary party defendant.
     (2) An action shall not be considered to
have begun within the time required by the order unless, in the case of
defendants within the state, summons is actually served within 60 days after
the time limited in the order.
     (3) Actions filed to determine claims to
the deposits shall have preference upon the calendar of any
     709.430
Release or payment of deposit pending suit; distribution of deposits upon
determination of suit. (1)
If any actions on claims against the deposit mentioned in ORS 709.390 are begun
within the six-month period, the Director of the Department of Consumer and
Business Services shall not release and the court shall not order the payment
of any part of the deposit until all actions are determined by final judgment.
     (2) When all actions on claims against the
deposit are finally determined, so much of the deposit as is necessary shall be
paid to the claimants who have established their claims in the sums allowed by
the court or, if not sufficient, the deposit shall be distributed pro rata
among the claimants establishing their claims.
     (3) The court, in the proceeding initiated
by the director, shall enter a judgment providing that the balance of the
deposit be paid to the trust company or if the trust company is in the process
of liquidation, to the official in charge of the liquidation. [Amended by 1973
c.797 §213; 1997 c.631 §225; 2003 c.576 §548]
     709.440
DirectorÂ’s charges as prior lien on deposit. All unpaid charges owing to the Director of the Department of Consumer
and Business Services for expenses and services rendered under ORS 709.080 in
connection with the deposit mentioned in ORS 709.030, and all expenses incurred
by the director, including services rendered by the director, attorney fees and
necessary court expenses in connection with the determination of claims against
the deposit, are a first and prior lien on the deposit, and shall be paid
before any part of the deposit is released or paid to any claimant or trust
company. [Amended by 1973 c.797 §214; 1997 c.631 §226]
     709.450
     (1) The unpaid charges and expenses
described in ORS 709.440; and
     (2) Claims established against the
deposit. [Amended by 1973 c.797 §215]
     709.460
Application of ORS 709.390 to 709.450 to merger or consolidation; return of
security deposit after merger or consolidation. (1) ORS 709.390 to 709.450 do not apply to a
merger or consolidation of a trust company with another trust company
authorized to conduct a trust business whereby the security deposits and the
trust business of the retiring trust company are acquired by the resulting
trust company.
     (2) Immediately following the completion
of a merger or consolidation described in subsection (1) of this section, the
Director of the Department of Consumer and Business Services, upon written
application of the resulting trust company, shall return to the resulting trust
company that portion of the combined security deposits of the trust companies
involved in the merger or consolidation which exceeds the deposit required by
ORS 709.030 for the combined cash and securities held in trust by the resulting
trust company following the merger or consolidation. [Amended by 1957 c.115 §2;
1973 c.797 §216; 1997 c.631 §227]
     709.500 [Formerly 57.830; renumbered 709.600 in
1997]
CONVERSION,
MERGER AND ACQUISITION
     709.520
Conversion to out-of-state trust company; conversion to
     (2) An out-of-state trust company that
follows the procedures prescribed by the supervisory authority having
jurisdiction over the converting out-of-state trust company shall be granted a
charter as an Oregon trust company by the Director of the Department of
Consumer and Business Services if the director finds that the converting trust
company meets the standards of the Bank Act for organization as an Oregon trust
company. An out-of-state trust company may apply to convert to an
     (a) A certificate signed by the chief
executive officer of the converting out-of-state trust company certifying that
the board of directors has taken all necessary corporate action in compliance
with the provisions of the laws of the supervisory authority having
jurisdiction over the converting out-of-state trust company.
     (b) The articles of incorporation,
approved by a majority of the stockholders of the converting out-of-state trust
company, for the operation of the out-of-state trust company as an Oregon trust
company. [1997 c.631 §230]
     709.525
Merger or acquisition; procedures. An
     709.530
Applicability of ORS 711.190, 711.197 and 711.199 to merging or converting
trust company. ORS 711.190,
711.197 and 711.199 shall be applicable to a merging or converting
     709.535
     (2) If an
     (3) The director shall approve an
acquisition transaction that is subject to this section if the director finds
that the acquisition transaction:
     (a) Conforms with the provisions of the
Bank Act;
     (b) Will not be detrimental to the safety
and soundness of an
     (c) Is not contrary to the public
interest; and
     (d) If the acquiring trust company is not
an
     (4) If the director disapproves an
acquisition transaction that is subject to this section, the director shall
state any objections in writing and give the parties to the acquisition
transaction an opportunity to take action to obviate the objections.
     (5) Any party to an acquisition
transaction agreement may appeal the decision of the director as provided in
ORS 183.415 to 183.500. [1997 c.631 §233; 2007 c.71 §229]
     709.540
Rights of stockholder of trust company party to merger, share exchange or acquisition. A stockholder of an
MISCELLANEOUS
     709.600
Regulation of trust business by corporations formed prior to adoption of Bank
Act; regulation of other business. (1) Trust business done by corporations created prior to the adoption
of the Bank Act (General Laws 1925, chapter 207) shall be subject to regulation
by the Director of the Department of Consumer and Business Services and such
corporations engaged in trust business are subject to the provisions, including
the filing and fee requirements, of ORS chapters 706 to 716.
     (2) If a corporation subject to subsection
(1) of this section also carries on business other than a trust business, the
Corporation Commissioner may retain a copy of the articles of incorporation and
other filings. As provided in ORS 60.957, such corporations also shall continue
to be subject to the provisions, including the filing and fee requirements, of
ORS chapter 60. [Formerly 709.500]
PENALTIES
     709.980
Civil penalties. (1) Any
person who violates ORS 709.270 or 709.280 or any rule adopted under ORS 709.170
(3) shall forfeit a civil penalty in an amount determined by the director of
not more than $2,500 for each offense.
     (2) All money forfeited under this section
shall be paid to the State Treasurer to be deposited in the Consumer and
Business Services Fund.
     (3) The civil penalty may be recovered as
provided in ORS 706.980. [1975 c.544 §29c]
     709.990 [Repealed by 1973 c.797 §428]
_______________
CHAPTER 710
[Reserved for expansion]
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