The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site -



Opinion No. 5088

January 4, 1978


Foreign credit unions doing business in Michigan.


Michigan credit unions serving out-of-state members.

A foreign, state-chartered credit union soliciting and serving individuals residing in Michigan must be licensed pursuant to the Michigan Credit Union Act when such soliciting and service exhibits a continuity of activity or systematic course of conduct in this State.

A foreign, state-chartered credit union establishing a branch office or service center in this state must be licensed under the Michigan Credit Union Act.

A credit union chartered pursuant to the Michigan Credit Union Act may solicit and serve members residing or working in another state.

Richard J. Francis


Financial Institutions Bureau

Michigan Department of Commerce

Law Building

Lansing, Michigan 48913

You have requested my opinion on the following questions:

1. Is a credit union orgainized under the statutes of another state which conducts the business of a credit union in Michigan through the mail or otherwise but without establishing a branch office or service center in this state required to be licensed under the Michigan Credit Union Act or any other statute?

2. If the answer to (1) is 'No', does a foreign state chartered credit union have the right to operate a branch office or service center in Michigan?

3. Does a credit union organized under the Michigan Credit Union Act have the right to accept members who do not live or work in Michigan but are nevertheless associated by a common bond created by occupation (working for the same employer) or members of the same association?

You have been advised that certain foreign credit unions solicit membership from eligible Michigan residents. The bylaws of such credit unions provide that the field of membership shall include all employees of the company regardless of residence or place of employment. Business in Michigan is conducted either by designated employee representatives or by mail. Such credit unions offer the usual credit union services, such as the creation of share and deposit accounts, and the making of loans.

In Union Brokerage Co. v Jenson, et al, 322 US 202, 212; 64 S Ct 967, 973; 88 L Ed 1227, 1234 (1943), the United States Supreme Court recognized the authority of a state to guard its citizens against possible injurious business practices by foreign corporations. The court held that the Commerce Clause of the United States Constitution, art 1, Sec. 8, does not '. . . preclude a State from giving needful protection to its citizens in the course of their contacts with businesses conducted by outsiders when the legislation by which this is accomplished is general in its scope, is not aimed at interstate or foreign commerce, and involves merely burdens incident to effective administration.' See also Ferguson v Skrupa, 372 US 726; 83 S Ct 1028; 10 L Ed 2d 93 (1963); Head v New Mexico Board of Examiners in Optometry, 374 US 424; 83 S Ct 1759; 10 L Ed 2d 983 (1963); Huron Portland Cement Co v City of Detroit, 362 US 440; 80 S Ct 813; 4 L Ed 2d 852 (1960).

In People ex rel Attorney General v Fairfax Family Fund, Inc, 55 Mich App 305, 309-310; 222 NW2d 268, 271 (1974), the Michigan Court of Appeals addressed the question of whether a foreign small loan company, which conducted business in Michgan by mail, must be licensed by the State of Michigan. Although the holding of the court was that the Legislature had not indicated its intent to license foreign small loan companies, the Court specifically stated that:

'. . . we feel obligated to add that mere nondiscriminatory licensure by this state is not proscribed by the commerce clause . . .'

More recently, OAG 1975-1976, No. 5038, P ___ (July 27, 1976), held that, in the absence of discrimination or undue burden, the Legislature may require out-of-state collection agencies which operate in Michigan, either through the mails or by telephone, to become licensed under Michigan law.

The Michigan Credit Union Act, 1925 PA 285, as amended, MCLA 490.1 et seq; MSA 23.481 et seq, provides for the licensing and regulation of credit unions. Section 1(a) defines a credit union as 'a cooperative society incorporated for the twofold purpose of promoting thrift among its members and creating a source of credit for them at legitimate rates of interest for provident purposes.' (1)

In accomplishing their purposes, credit unions are intrusted with the funds of individual members which in some cases may constitute their life savings. Clearly, such activity affects the public welfare of the citizens of Michigan and is a legitimate area of legislative concern. In protecting the members of credit unions, the Michigan Credit Union Act prescribes the manner of credit union orgainization, (2) and requires that credit unions maintain minimum reserves, (3) have share insurance, (4) and submit to periodic audits and examinations, (5) all of which are designed to protect the funds of individual members of credit unions. Furthermore, the act limits the powers and investments of credit unions, (6) requires annual meetings, (7) and provides voting rights for all members. (8) The maximum interest rate that may be charged on loans is similarly established and regulated. (9) In summary, the Michigan Credit Union Act is principally concerned with protecting members from any loss occasioned by the failure of improvidently operated credit unions.

The Michigan Credit Union Act is not aimed at interfering with the activities of corporations engaged in interstate commerce. It is non-discriminatory in nature and seeks to protect members of the public by requiring licensure of those credit unions determined to be doing business in Michigan.

As posed, the first question specifically asks if the conduct of the business of a foreign credit union through the mail or otherwise, but without the establishment of a branch office or service center in Michigan, is doing business which would require licensing under the Michigan Credit Union Act. In Long Manufacturing Company, Inc v Wright-Way Farm Service, Inc, 391 Mich 82; 214 NW2d 816 (1974), Justice Levin quoted the following with approval from 17 Fletcher Cyclopedia Corporation (1960 rev. ed.) Sec. 8466, pp 554-555:

'It is not every act or transaction of a foreign corporation in the state that will bring it within the operation of laws imposing conditions on its right to do business in the state. The thing done must be of a character indicative of an intention on the part of the corporation to carry on its business in the state.'

A showing that the activities of a foreign credit union have a continuity of activity or systematic course of conduct in this state would be a showing of doing business in this state, and thus licensure would be required. If, however, the conduct of the foreign credit union can be shown to be made up of isolated transactions, it would not be doing business in this state and thus could not be required to obtain a license by the state. 'The question of what constitutes transacting or doing business withing the meaning of our statutes pertaining to foreign corporations is one of fact to be determined by the circumstances of each particular case.' Michigan Law and Practice Corporations,' Sec. 665, p 530-531. See National Concessions, Inc v National Circus Corp, 347 Mich 335; 79 NW2d 910 (1957) and Dobson v Maytag Sales Corp, 292 Mich 107; 290 NW 346 (1940).

It is therefore my opinion that the Michigan Financial Institutions Bureau may only require that credit unions found to be doing business in Michigan on a continuous and systematic basis become licensed under either the Michigan Credit Union Act or pursuant to applicable federal laws.

As to your second question it is my opinion that, while isolated instances of business activity within the State of Michigan by a foreign credit union do not require licensure, the establishment of a branch office or a service center does demonstrate evidence of an intent to do business within this state which would require the credit union to obtain a license under the Michigan Credit Union Act, supra.

Your final inquiry is whether a Michigan credit union may solicit and serve members who either reside or work outside the State of Michigan but who are nonetheless eligible for membership in the credit union. A review of the Credit Union Act does not disclose any geographical limitations on eligible members. Section 5 of the Act (10) sets forth membership qualifications as follows:

'Credit union membership shall consist of the incorporators and such other persons as may be elected to membership and subscribe to at least 1 share, pay the initial installment thereon and the entrance fee. Organizations, incorporated or otherwise, composed for the most part of the same general group as the credit union membership may be members. Credit union organization shall be limited to groups, of both large and small membership, having a common bond of occupation or association, or to groups within a well-defined neighborhood, community, or rural district and 1 or more credit unions may be organized to serve such groups. . . .'

Furthermore, Section 30 of the Michigan Credit Union Act (11) recognizes that Michigan credit unions may service members located outside the State of Michigan by providing that a credit union may pay funds over to the administrator or executor of the estate of an out-state member in substantially the same manner as if payment had been made to a legally qualified resident executor or administrator. Accordingly, it is my opinion that a credit union may solicit and serve any individual sharing the common bond of the credit union regardless of his or her place of occupation or residence. However, a credit union soliciting or serving members across state lines may become subject to the laws of the state in which it is doing business.

Frank J. Kelley

Attorney General

(1) 1925 PA 285, Sec. 1a(b), supra.

(2) 1925 PA 285, Sec. 1, supra.

(3) 1925 PA 285, Sec. 17a, supra.

(4) 1925 PA 285, Sec. 31, supra.

(5) 1925 PA 285, Sec. 6, supra.

(6) 1925 PA 285, Sec. 4, supra.

(7) 1925 PA 285, Sec. 8, supra.

(8) 1925 PA 285, Sec. 7, supra.

(9) 1925 PA 285, Sec. 14, supra.

(10) 1925 PA 285, Sec. 5, supra.

(11) 1925 PA 285, Sec. 30, supra.