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X-45$M)6 (Memorrnnjum J r ^ & r e d by O f f i c e of Comptroller of t h e C u r ^ n ^ f ) - . A p r i l 31, 1926. Memorandum f o r t h e C o m p t r o l l e r ; I have given a h u r r i e d examination of t h e p r o p o s e d c o d i f i c a t i o n of t h e laws w i t h r e f e r e n c e to s e c t i o n s r e l a t i n g to N a t i o n a l Banks and f i n d t h e f o l l o w i n g o m i s s i o n s and e r r o r s : OMISSIONS. 1 . The p r o v i s i o n i n t h e Act of June 3, 1864, i n c o r p o r a t e d i n S e c t i o n D80 of t h e R e v i s e d S t a t u t e s p r o v i d i n g t h a t s u i t s and p r o c e e d i n g s a r i s i n g o u t of laws governing N a t i o n a l Basking A s s o c i a t i o n s should, J^a, conducted b y d i s t r i c t a t t o r n e y s under t h e s u p e r v i s i o n of t h e S o l i c i t o r of t h e T r e a s u r y , 2i The p r o v i s i o n i n t h e Act of June 5, 1664, i n c o r p o r a t e d i n S e c t i o n 736 of t h e R e v i s e d S t a t u t e s p r o v i d i n g when p r o c e e d i n g s to e n j o i n t h e Comptroller, must be b r o u g h t , 3 . The p r o v i s i o n i n t h e Act of June 3, 1864. i n c o r p o r a t e d i n S e c t i o n 884 of t h e Revised S t a t u t e s nai.ti.ng s e a l e d c e r t i f i c a t e s of t h e Comptroller competent e v i d e n c e . 4 . The p r o v i s i o n i n t h e Act of June 3, 1864, i n c o r p o r a t e d i n S e c t i o n 885 of t h e Revised Statutes? making a c e r t i f i e d copy of t h e O r g a n i z a t i o n C e r t i f i c a t e evidence of t h e e x i s t e n c e of a N a t i o n a l Banking A s s o c i a t i o n , 5 . The p r o v i s i o n i n t h e J e d o r a l Reserve Act i n c o r p o r a t e d i:i S e c t i o n 24 a s amended Se~:te".bcr 7 , 1316, a u t h o r i s i n g N a t i o n a l Banks to make l o a n s on r o a l e s t a t e . While t h i s was p a s s e d a s an amendment to t h e F e d e r a l Reserve ^.ct, i t r e l a t e s e n t i r e l y to N a t i o n a l Banks and should be i n c o r p o r a t e d i n t h e c h a p t e r s r e l c , t i n c : to n a t i o n a l Bank Act and n o t i n c h a p t e r s r e l a t i n g to t h e F e d e r a l Reserve A c t . 6. That p o r t i o n of S e c t i o n 11-K of t h e F e d e r a l Reserve Act a u t h o r i z i n g t h e F e d e r a l Reserve Board to i s s u e p e r m i t s to N a t i o n a l Banks to e x e r c i s e f i d u c i a r y powers. As thi;3 r s l a t e s to N a t i o n a l Banks i t should a p p e a r i n the c h a p t e r s r e l a t i n g to N a t i o n a l Bank Act and n o t to t h o s e r e l a t i n g to t h e F e d e r a l Reserve A c t . 7 . S e c t i o n 25 of t h e F e d e r a l R3se:cva Act a u t h o r i z e s N a t i o n a l Banki n g A s s o c i a t i o n s p o s s e s s i n g c a p i t a l of a m i l l i o n d o l l a r s o r more w i t h t h e p e r m i s s i o n oi' t h e F e d e r a l Reserve Board t o e s t a b l i s h b r a n c h e s i n foreign countries. This r e l a t e n e n t i r e l y t o N a t i o n a l Banks and should appear i n c h a p t e r s r e l a t i n g to t h e N a t i o n a l Bank Act and n o t i n t h e F e d e r a l Reserve A c t . % -2- X-4595-b 3 1 7 8 . The 16th p a r a g r a p h of flection 24 of t h e Act of March 3, 1911, p r o v i d i n g t h a t N a t i o n a l Banks should "be deemed c i t i z e n s of t h e s t a t e s i n which l o c a t e d should a l s o appear i n t h e N a t i o n a l Bank A c t . 9 . S e c t i o n 18 Act of December 23, 1913, a u t h o r i z i n g N a t i o n a l Banks to r e t i r e t h e whole or any p a r t of t h e i r c i r c u l a t i n g n o t e s "by s a l e to F e d e r a l Reserve Banks. 10. S e c t i o n 175 Act of March 4 , 1909, p r o v i d i n g p e n a l t y f o r i m i t a t e i n g banks c i r c u l a t i o n . 11* S e c t i o n 176 Act of March 4 , 1909, p r o v i d i n g a p e n a l t y f o r mut i l a t i n g N a t i o n a l Banking c i r c u l a t i o n . * 12. While p r o v i s i o n i s made i n t h e Act f o r r e s e r v e s and where t h e y s h a l l be h e l d f o r banks l o c a t e d i n Alaska and Hawaii, a l l p r o v i s i o n s r e l a t i n g to r e s e r v e s f o r N a t i o n a l Banks i n t h e c o n t i n e n t a l United S t a t e s t h a t a r e member banks of t h e F e d e r a l Reserve System, have been o m i t t e d f r o m t h e N a t i o n a l Bank A c t . As t h i s p r o v i s i o n a l t h o u g h c o n t a i n e d i n t h e F e d e r a l Reserve Act r e l a t e s to N a t i o n a l Banks a s w e l l a s to S t a t e Banks, a s e c t i o n should b e i n s e r t e d i n t h e N a t i o n a l Bank Act c o v e r i n g t h e q u e s t i o n of r e s e r v e s . 1 3 . Act of J a n u a r y 26, 1907, f o r b i d d i n g N a t i o n a l Banks t o make con-v t r i b u t i o n s i n c o n n e c t i o n w i t h e l e c t i o n t o p o l i t i c a l o f f i c e should b e i n s e r t e d i n t h e c h a p t e r r e l a t i n g to N a t i o n a l Banks. ** 14. The p r o v i s i o n i n S e c t i o n 5240 a u t h o r i z i n g t h e Comptroller of t h e Currency, w i t h t h e a p p r o v a l of t h e S e c r e t a r y of t h e T r e a s u r y , t o a p p o i n t examiners who s h a l l examine every member bank a t l e a s t twice each c a l e n d a r y e a r h a s been o m i t t e d . The words "member banks" i n t h i s s e c t i o n r e f e r t o N a t i o n a l Banks o n l y a s t h e Comptroller does n o t a p p o i n t examiners to examine S t a t e Banks t h a t a r e members of t h e F e d e r a l Reserve system. 15. The Act of A p r i l 12, 1900, e x t e n d i n g N a t i o n a l Banking laws to P o r t o R i c a h a s been o m i t t e d , , * ^ 16, The Act of A p r i l 2 0 , 1 5 0 9 , e x t e n d i n g N a t i o n a l Banking laws t o Hawaii h a s been o m i t t e d . NOTE: ^ i -> I t i s assumed t h a t i n some o t h e r p a r t of than t h a t r e l a t i n g to t h e s e s e c t i o n s should r e f e r r i n g to National a l l of t h e s e s e c t i o n s a r e g i v e n t h e p r o p o s e d R e v i s e d Code o t h e r N a t i o n a l Banks b u t i t i s b e l i e v e d be i n c o r p o r a t e d i n t h e Chapter Banks. -3- X-4595-b ERRORS IN THE PROPOSED REVISION 31 The Numbers g i v e n a r e t h e numbers of t h e new s e c t i o n s . 25. This s e c t i o n i s n o t n e c e s s a r y a s i t merely r e p e a l s t h e qrld E x t e n s i o n Act and p r o v i d e s t h a t t h e p r e c e d i n g s e c t i o n s h a l l govern. The o l d E x t e n s i o n Act w i l l be r e p e a l e d by t h e g e n e r a l r e p e a l i n g c l a u s e t h a t comes w i t h t h e enactment of t h e Revised S t a t u t e s and a s p e c i f i c repeal i s not necessary. 38. I t i s n o t u n d e r s t o o d why t h i s s e c t i o n i s i n s e r t e d . The Act a s i t a t p r e s e n t s t a n d s i s i n c o r p o r a t e d under t h e t i t l e "Banks and Bankers" and i s i n many ways d i f f e r e n t from t h e Act of June 3, 1864. 55. Line 25 n e a r e s t i s m i s s p e l l e d . 57 and 58 Revised S t a t u t e s , S e c t i o n 5142, p r o v i d e d f o r an i n c r e a s e i n t h e c a p i t a l s t o c k of a N a t i o n a l Bank. When p r o v i s i o n was made t h e r e f o r , i n t h e A r t i c l e s of A s s o c i a t i o n i n Act of May 1, 1886, a new method f o r i n c r e a s i n g t h e c a p i t a l of a N a t i o n a l Bank was p r o vided f o r . A p o r t i o n of S e c t i o n 5142 i s t h e r e f o r e o b s o l e t e and a new s e c t i o n should be p r o v i d e d c o v e r i n g t h o s e p o r t i o n s of S e c t i o n s 57 and 58 t h a t a r e v a l i d a t t h i s t i m e . We had one i n s t a n c e r e c e n t l y of a bank d e s i r i n g to i n c r e a s e i t s c a p i t a l s t o c k under t h e o l d p r o v i s i o n s of S e c t i o n 5142 w i t h o u t t h e v o t e of i t s s h a r e h o l d e r s a s i s r e q u i r e d i n t h e Act of May 1, 1886. S e c t i o n s 63 and 64. S e c t i o n 12 of t h e Act of June 3, 1864, i n c o r p o r a t e d i n R e v i s e d S t a t u t e s a s S e c t i o n 5151 p r o v i d i n g f o r t h e i n d i v i d u a l l i a b i l i t y of s h a r e h o l d e r s , s t a t e d t h a t t h e s h a r e h o l d e r s should b e h e l d i n d i v i d u a l l y r e s p o n s i b l e e q u a l l y and r a t a b l y and n o t one f o r a n o t h e r , f o r a l l c o n t r a c t s , d e b t s and engagements of such association, etc. This i s i n c o r p o r a t e d a s S e c t i o n 63 of t h i p compiling. S e c t i o n 34 of t h e Act of December 23, 193,3, p r o v i d e d t h a t t h e s t o c k h o l d e r s of every N a t i o n a l Banking A s s o c i a t i o n s h a l l be h e l d i n d i v i d u a l l y r e s p o n s i b l e f o r a l l c o n t r a c t d e b t s and engagements each to t h e amount of h i s s t o c k t h e r e i n a t t h e p a r v a l u e t h e r e o f i n a d d i t i o n t o t h e amount i n v e s t e d i n such s t o c k . The remainder of th&s s e c t i o n r e l a t e s to t h e t r a n s f e r of s t o c k i n a N a t i o n a l Banking A s s o c i a t i o n w i t h i n 60 days b e f p r o t h e d a t e of i t s f a i l u r e . These two s e c t i o n s r e f e r r i n g to t h e game m a t t e r should be combined i n one and n o t r e e n a c t e d a s t h e y s t a n d becaa.su t h e y d i f f e r a s to t h e l i a b i l i t y of s h a r e h o l d e r a . As the l a s t p r o v i s i o n of law e n a c t e d governs i t i s now h e l d t h a t tho l i a b i l i t y i s f i x e d by p r o v i s i o n i n S e c t i o n 23 of t h e Act of December 23, 1913, and not by S e c t i o n 12 of t h e Act of June 3, 1864. I f , however, b o t h s e c t i o n s should be r e e n a c t e d a s p r o p o s e d , t h e r e would be a q u e s t i o n a s to e x a c t l y what t h e l i a b i l i t y of a s h a r e h o l d e r of a bank would b o . 82. In t h e f i f t h p a r a g r a p h of t h i s s e c t i o n a r e t h e words "of t h e Federal Reserve Act i n s t e a d of Chapter 3 " . I n t h e s i x t h p a r a g r a p h a r e 319 -4- X-4595-b t h e words "of t h e War Finance i n s t e a d of Chapter 10 of t i t l e 15 Commerce and T r a d e " . The e i g h t h p a r a g r a p h i s e n t i r e l y a d d i t i o n a l and cannot be v e r i f i e d from a n y t h i n g s u b m i t t e d , 84. On t h e f i f t e e n t h l i n e under t h i s number a f t e r 346 t h e r e should a l s o be i n s e r t e d "372 and 373". There o r i g i n a l l y appeared t h e number and words " 1 3 of t h e F e d e r a l Reserve A c t " . As i t s t a n d s today " S e c t i o n " ' 3 4 6 a l o n e a p p e a r s , 92. L a s t l i n e f i l i n g o m i t t e d between i n 94, F i r s t l i n e f i r s t word S u i t s o m i t t e d , 107, Line one his, e i g h t h word p r o c u r e d n o t p r o d u c e d . 143, The words " r e s e r v e of" o m i t t e d b e f o r e t h e words " l a w f u l money" i n $he 18th l i n e of t h i s s e c t i o n . 145. The T r e a s u r y n o t e s r e f e r r e d to i n t h i s s e c t i o n a r e t h o s e i s s u e d under t h e Sherman Act which h a s been r e p e a l e d , 162, In l i n e 7 v e r i f i c a t i o n i s m i s s p e l l e d , 178, The second p a r a g r a p h of t h i s s e c t i o n r e l a t e s e n t i r e l y to c i r c u l a t i o n i s s u e d under a u t h o r i t y of t h e s o - c a l l e d A l d r i c h Act p a s s e d H a y 30, 1908, This Act e x p i r e d by l i m i t a t i o n and t h e r e i s no l o n g e r any a u t h o r i t y f o r the i s s u a n c e of c i r c u l a t i n g n o t e s td N a t i o n a l Banks on any s e c u r i t i e s o t h e r than bonds of t h e United S t a t e s , • 191, This s e c t i o n r e l a t e s to R e c e i v e r s h i p r e f e r r e d to a s S e c t i o n 9 4 . This should be 93, 548 (d) Second l i n e a f t e r 6 t h word i n s e r t a t , 570 The l a s t c l a u s e does n o t r e f e r to N a t i o n a l Banks a t a l l , 591. This i s Revised S t a t u t e s S e c t i o n 208 which h a s been e n t i r e l y r e w r i t t e n and t h e g r e a t e r p a r t of t h e s e c t i o n h a s been o m i t t e d . The e a r l y p a r t of S e c t i o n 5208 d e f i n e d t h e crime f o r f a l s i f y i n g c e r t i f i e d c h e c k s . The l a t t e r p a r t p r o v i d e d a p e n a l t y t h e r e f o r . The former p a r t of t h i s s e c t i o n h a s been e n t i r e l y emitted i n 591 t h e p e n a l t y alone remaining i t being expressly stated t h a t i t i s a p e n a l t y f o r the v i o l a t i o n s of t h e p r o v i s i o n s of this^ s e c t i o n . This r e f e r s to t h e o m i t t e d p a r t of t h e s e c t i o n .
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