Full text of Digest of State Banking Statutes, Box 6, Item 1
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61s t C o ng ress 2d Session ) QVVATP SEN AIK l (D { ocum ent No. iS3 NATIONAL MONETARY COMMISSION Digest of State Banking Statutes COMPILED BY SAMUEL A. WELLDON O f the N *m York Bar Presented by Mr. A l d r ic h , from the Monetary Commission F e b r u a r y 8,1910.—Ordered to be printed Washington : : : Government Printing Office : : ; 1U10 61s t C o n g r e s s \ 2d Session / c -e'-vt A'T'tT' bJsN AIh, / D ocum ent j No. 353 NATIONAL MONETARY COMMISSION Digest of State Banking Statutes COMPILED BY SAMUEL A. WELLDON Of the New York Bar Presented by M r. A l d r i c h , from the Monetary Commission F e b r u a r y 8 ,1910-—Ordered to be printed Washington : : : Government Printing Office : : : 1910 NATIONAL MONETARY COMMISSION N e l s o n W . A l d r ic h , Rhode Island, Chairman. E d w a r d B . V r e e l a n d , N ew York, Vice-Chairman. J u l iu s C. B u r r o w s , Michigan. J e s s e O v e r s t r e e t , Indiana. E u g e n e H a l e , M aine. J ohn W . W eeks, P h il a n d e r C. K R obert W B o n y n g e . Colorado. nox, P en n sylvan ia. M assachusetts. T h e o d o r e E . B u r t o n , Ohio. S y l v e s t e r C. S m it h , C alifornia. J o h n W . D a n i e l , V irginia. L e m u e l P . P a d g e t t , Tennessee. H e n r y M. T e l l e r , Colorado. G e o r g e F . B u r g e s s , T e x as. H e r n a n d o D . M o n e y , Mississippi. A r s e n E P . P u jo , L ou isian a. J o se p h W. B a i l e y , Texas. A r t h u r B. S h e l t o n , Secretary . A . P ia t t A n d r e w , Special Assistant to Commission. CONTENTS. Page. I n t r o d u c t o r y ________________ T able 33 A.— T a b u l a r S u m m ar y fo r B a n k s . B. — T a b u l a r S u m m ar y fo r S a v in g s B a n k s . C. — T a b u l a r S u m m ar y fo r T r u st C o m p a n ie s . Alabam a: Introductory_____ _____________ 41 General provisions— I.— Terms of incorporation______________________ 42 II.— Liability of stockholders_____________________ 42 I II. IV . — Supervision____________ 42 R eports---------------------- 43 Exam inations__________________________ 43 — Reserve requirements__________ 44 V .— Discount and loan restrictions________________ 44 V I.— Investm ents_______________________________ 45 X .— Unauthorized ban kin g_______________________ X I .— Penalties-................................ 45 45 Trust companies— I.— Terms of incorporation............................... 46 III.— Supervision________________________________ 46 X .— Unauthorized trust com pany business__________ 46 A r iz o n a : Introductory............................ 47 Banks— III. IV . — Supervision______________________________ 48 R eports_______________________________ 49 Exam inations........................... 50 — Reserve requirements---------------------------------------- V .— Discount and loan restrictions________________ V I.— Investm ents_______________________________ 51 51 51 52 V I I I .— Branches----------X .— Unauthorized banking_______________________ X I .— Penalties------------------------ 52 52 Savings banks— I.— Terms of incorporation------------------------------------------ 53 II.— Liabilities and duties of stockholders and directors. 54 3 N at ion a l M onet ary Commission A rizona — Continued. Savings banks— Continued. III.— Supervision...................... Reports____________________________ Examinations_______________________ V.— Discount and loan restrictions_______________ V I.— Investments____________________________ V III.— Branches______________________________ X .— Unauthorized banking----------------------------------X I.— Penalties________________ A rkansas ..... ................................ C alifornia : Introductory--------------------------------------- ---------------------Banks— I.— Terms of incorporation------- ---------II.— Liabilities and duties of stockholders and directors. III. — Supervision__________________________ Reports____________________________ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions_______________ VI.— Investments____________________________ V II.— Overdrafts_____________________________ VIII.— Branches______________________________ X .— Unauthorized banking____________________ X I.— Penalties______________________________ Savings banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision__________________________ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount, loan, deposit restrictions, etc________ VI.— Investments____________________________ X .— Unauthorized banking____________________ X I.— Penalties______________________________ Trust companies— I.— Terms of incorporation____________________ III.— Supervision____________________________ Reports_____ VI.— Investments____________________________ X-— Unauthorized trust company business_________ X I.— Penalties..................................... 4 page. 54 54 55 55 56 56 57 57 58 60 62 63 63 65 67 68 69 71 72 72 72 73 75 76 76 76 76 77 79 80 80 81 81 81 82 82 82 Digest of State Banking Statutes Co lo r a d o : p age. Introductory______________________________________ 83 General provisions— I.— Terms of incorporation______________________ 84 II.— Liabilities and duties of stockholders and directors. 84 III.— Supervision______________________________ 84 Reports.___ ________________ Examinations_________________________ 86 V.— Discount and loan restrictions________________ 87 VI.— Investments______________________________ 87 V II.— Overdrafts_______________________________ 88 V III.— Branches________________________________ 88 X .— Unauthorized banking______________________ 88 X I.— Penalties________________________________ 88 Banks— I.— Terms of incorporation.................................... II.— Liabilities and duties of directors____________ 90 III. — Supervision__________________________ 90 IV. — Reserve requirements_____________________ 91 V.:— Discount and loan restrictions__________________ 91 VI.— Investments______________________________ 91 Savings banks— I.— Terms of incorporation______________________ 92 II.— Liabilities and duties of directors_______________ 92 IV.— Reserve requirements_______________________ 92 V.— Discount and loan restrictions_________________ 92 VI.— Investments______________________________ 93 X .— Unauthorized banking______________________ 93 Trust companies— I.— Terms of incorporation______________________ 93 II.— Liabilities and duties of stockholders and directors. 94 V.— Discount and loan restrictions___ 1 __________ 94 VI.— Investments___________________ 64 X .— Unauthorized trust company business_________ 95 Co n n e c t ic u t : Introductory................................... Banks and trust companies— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision..... .............................. Reports___________ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions________________ 5 96 97 97 97 98 99 100 100 86 90 N at ion a l Commission Connecticut — Continued. Page. Banks and trust companies— Continued. V I.— Investments____________________________ io i V I11.— B ranches............. 102 X .— Unauthorized banking____________________ # 102 102 X I.— Penalties................................ Savings banks— I.— Terms of incorporation____________________ 103 II.— Liabilities and duties of directors__________ . . . 103 III. — Supervision__________________ 103 Reports____________________________ 104 Examinations__________________ 104 105 V.— Discount, loan, and deposit restrictions________ VI.— Investments.................... ............^....... ........... ........... 105 X I.— Penalties______________________________ 106 D elaw are : 108 Introductory____________________________________ General provisions— I.— Terms of incorporation____________________ 108 III.— Supervision_____________________________ 108 Reports____________________________ 109 Examinations____ _______ no IV. — Reserve requirements__________________ no V II.— Overdrafts _______ in V III.— B ranches_____________________________ in in X . — Unauthorized banking______ X I.— Penalties______________________________ in D istrict of C olumbia : Introductory____________________________________ 113 Savings Banks— III.— Supervision____________________________ 114 R ep o rts__________ 114 Exam inations_______________________ 114 X I.— Penalties________ 115 Trust Companies— I.— Terms of incorporation___________________ II5 II. — Liabilities and duties of stockholders and directors. 116 III. — Supervision____________________ :______ R eports___________________________ 117 Exam inations_______________________ ll7 V I.— Investments___________________________ IX7 X .— Unauthorized trust company business--------------118 X I. — Penalties................. ” 8 _ . M on e t a r y 6 r Digest of State Banking Statutes F l o r id a : Page. Introductory_______________________________ General provisions— I.— Terms of incorporation_____________ II.— Liabilities and duties of stockholders and directors. III. — Supervision_____________________ '.______ Reports____________________________ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions_______________ V I.— Investments__________ V III.— Branches______________________________ X .— Unauthorized banking____________________ X I.— Penalties.................................... Savings banks— I.— Terms of incorporation------- ------III.— Supervision, exam inations_________________ V.— Discount, loan, and deposit restrictions___ ____ VI.— Investments.,___________________________ X I.— Penalties.................... 119 120 121 121 122 123 124 124 124 125 125 125 125 126 126 126 128 G e o r g ia : Introductory............................................... Banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision__________________________ Reports______________________ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions-------- ------VI.— Investments. ---------V III.— Branches-----------X I.— Penalties______________ Savings banks----------------------------Trust companies— I.— Terms of incorporation________ II.— Liabilities and duties of stockholders and directors. III. — Supervision------------IV. — Reserve requirements------------------V.— Discount and loan restrictions_______________ VI.— Investments____________________________ X I.— Penalties______________________________ 7 129 130 130 131 132 133 133 134 134 134 135 136 136 137 137 137 138 138 138 N at ion a l M on e t a r y Commission Idaho: Page. Introductory____________________________________ Banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision__________________________ Reports___________________________ Examinations---------IV. — Reserve requirements___________________ V.— Discount and loan restrictions______________ VI.— Investments_________________ X I.— Penalties____________ Savings banks— VI.— Investments____________________________ Trust companies— I.— Terms of incorporation____________________ VI.— Investments____________________________ 139 140 141 141 141 142 143 143 143 144 144 145 145 I l l in o is : Introductory____________________________________ Banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III.— Supervision__________ Reports............................ Examinations_______________________ V.— Discount and loan restrictions_________ V I.— Investments____________________________ X I.— Penalties____________ Savings banks___________________________________ Trust companies— III.— Supervision__________ Reports____________________________ Examinations_______________________ V.— Discount, loan, and depositrestrictions________ X I.— Penalties........................................................................ 146 147 147 148 148 149 149 149 150 150 150 151 152 152 152 I n d ia n a : Introductory____________ Banks— I.— Terms of incorporation------------II.— Liabilities and duties of stockholders and directors. III.— Supervision....... ..................- ....................................... Reports____________________________ Examinations---------------------------------------V.— Discount and loan restrictions------------------------VI.— Investments.................. 8 *53 x53 154 L54 x55 155 156 156 Digest of State Banking Statutes I ndiana — Continued. Page. Banks— Continued. V II.— Overdrafts_____________________________ 156 V III.— Branches______________________________ 156 X I.— Penalties______ 156 Private ban ks.________ 157 Savings banks— I.— Terms of incorporation____________________ 158 II.— Liabilities and duties of trustees_____________ 159 III. — Supervision__________________________ 160 Reports.___ _______________________ 161 Examinations_______________________ 161 IV. — Reserve requirements___________________ 162 V.— Discount, loan, and deposit restrictions________ 162 VI.— Investments. ______ 163 X I.— Penalties______________________________ 164 Trust companies— I.— Terms of incorporation____________________ 164 II.— Liabilities and duties of stockholders and directors. 165 III.— Supervision_____________________________ 165 Reports____________________________ 165 Examinations_______________________ 166 V.— Discount and loan restrictions_______ 1 ______ 166 VI.— Investments____________________________ 166 166 VII.— Overdrafts----- -----------------------------------X .— Unauthorized banking____________________ 166 X I.— Penalties. ......................... 167 I ow a : Introductory--- --------------- . ----------------- ----------------------168 General provisions applicable to banks and savings banks— II.— Liabilities and duties of stockholders and directors. 169 III. — Supervision__________________________ 169 Reports__________ 170 171 Examinations---------V.— Discount and loan restrictions_______________ 172 X .— Unauthorized banking______ 172 X I.— Penalties__________— -------------- --------------173 Banks— I.— Terms of incorporation---------------------------------174 II.— Liabilities and duties of stockholders and directors. 174 IV. — Reserve requirements............ 174 X .— Unauthorized banking................................................ 175 Savings banks— I.— Terms of incorporation---------175 II.— Liabilities and duties of stockholders and directors. 176 9 — —— N at i o n a l M o n et a r y Commission I owa— Continued. Savings banks— Continued. Page. III. — Supervision, examinations________________ 176 IV. — Reserve requirements___________________ 176 V.— Discount, loan, and deposit restrictions________ 177 VI.— Investments____________________________ 177 X .— Unauthorized banking____________________ 178 Trust companies_________________________________ 178 K ansas : Introductory___________________________________ 179 Banks— I.— Terms of incorporation____ ____ 180 II.— Liabilities and duties of stockholders and directors. 181 III. — Supervision__________________________ 181 Reports.............. ..................................... - ........... 183 184 Examinations_______________________ IV. — Reserve requirements___________________ 185 V .— Discount, loan, and deposit restrictions________ 185 V I.— Investments_______ 186 187 V II.— Overdrafts_____________________________ X .— Unauthorized banking____________________ 187 X I.— Penalties______________________________ 187 X II.— Depositors’ guaranty system________________ 189 Savings banks___________________________________ 193 Trust companies— I.— Terms of incorporation____________________ 194 II.— Liabilities and duties of stockholders and directors. 194 III. — Supervision__________________________ 195 IV. — Reserve requirements________ 195 V.— Discount and loan restrictions_______________ 195 195 V I.— Investments....................... X .— Unauthorized trust company business_________ 196 196 X I.— Penalties______________________________ K en tu ck y : Introductory___________________________________ 197 Banks and savings banks— I.— Terms of incorporation____________________ *97 II.— Liabilities and duties of stockholders and directors. 198 III. — Supervision---------*99 Reports____________________________ 200 IV. — Reserve requirements--------------------------------200 V .— Discount and loan restrictions------------------------200 V I.— Investments____________________________ 201 X .— Unauthorized banking ................ - .......................... 201 X I.— Penalties______________________________ 201 D igest of State Banking Statutes K entucky — Continued. Trust companies— Page. I.— Terms of incorporation____________________ 202 II.— Liabilities and duties of stockholders__________ 202 III.— Supervision____________________________ 203 Reports___________________________ 203 V.— Discount and loan restrictions_______________ 203 VI.— Investments____________________________ 204 X I.— Penalties______________ ,________________ 204 L ouisiana : Introductory_____ 205 Banks, savings banks, and trust companies— I. — Terms of incorporation__________________ 206 II.— Liabilities and duties of stockholders and directors. 207 III. — Supervision................................. 208 Reports___________ , --------------------------210 Examinations_______________________ 211 IV. — Reserve requirements___________________ 212 V.— Discount and loan restrictions_______________ 213 VI.— Investments____________________________ 213 V II.— Overdrafts___________ 214 V III.— Branches______________________________ 215 215 X .— Unauthorized banking____________________ X I.— Penalties____ __________________________ 215 Ma in e : Introductory___ ________________________________ 218 Savings banks— I.— Terms of incorporation____________________ 219 II.— Liabilities and duties of trustees_____________ 220 III.— Supervision____________________________ 221 Reports____________________________ 222 Examinations_______________________ 223 V.— Discount, loan, and deposit restrictions________ 223 VI.— Investments-_____________________ 224 X .— Unauthorized b a n k i n g ___ __ 227 X I.— Penalties______________________________ 227 Trust and banking companies— I.— Terms of incorporation____________________ 229 II. — Liabilities and duties of stockholders and directors. 229 III. — Supervision____________ 230 Reports.................... — ............. 231 Examinations_______________________ 232 232 IV . — Reserve requirements.______ V.— Discount and loan restrictions _................................. 233 11 N at ion a l M onet ary Commission Maine — Continued. Trust and banking companies— Continued. VI.— Investments____________________________ V III.— Branches______________________________ X .— Unauthorized trust company business_________ X I.— Penalties______________________________ •Maryland : Introductory________________ Banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III.— Supervision____ ________ Reports____________________________ Examinations_______________________ V.— Discount and loan restrictions_______________ VI.— Investments____________________________ X I.— Penalties______________________________ Savings banks— Terms of incorporation_________________________ Reports and examinations_______________________ Loans______________________________________ Penalties___ ____________ Trust companies— Stockholders’ liability__________________________ Supervision_____ Reports___ ______ Examinations_____________________________ Loans, deposits, and investments__________________ Massachusetts : Introductory__________ Banks— I-— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision__ _______ Reports____________________________ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions------------VI.— Investments____________________________ V III.— Branches________________ IX .— Occupation of the same building---------------------X .— Unauthorized banking----------------------------------X I.— Penalties______________________________ It Page. 234 234 234 235 236 237 238 238 239 239 240 240 240 241 241 242 242 243 243 244 244 245 246 247 248 249 251 252 253 254 255 255 255 256 256 Digest of State Banking Statutes Massachusetts— Continued. Savings banks— Page. I. — Terms of incorporation__________________ 257 II.— Liabilities and duties of trustees_____________ 259 260 III.— Supervision____________________________ 261 Reports____________________________ 263 Examinations-------------- ------------------------263 V.— Discount, loan, and deposit restrictions________ 264 VI.— Investments____________________________ 272 V III.— Branches______________________________ 272 IX .— Occupation of the same building_____________ X .— Unauthorized banking____________________ 273 X I.— Penalties______________________________ 273 Trust companies— I.— Terms of incorporation---------------------------------274 II.— Liabilities and duties of stockholders and directors. 276 276 III. — Supervision__________________________ Reports____________________________ 277 Examinations__ _____________________ 279 280 IV. — Reserve requirements___________________ 281 V.— Discount and loan restrictions______________ 282 V I.— investments____________________ _______ 283 V III.— Branches______________________________ IX .— Occupation of the same building_____________ 283 X .— Unauthorized trust company business_________ 283 X I.— Penalties______________________________ 284 Michigan : Introductory------------- ---------------- --------------- --------- ----285 Banks and savings banks— I. — Terms of incorporation__________________ 286 II. — Liabilities and duties of stockholders and directors. 287 III. — Supervision__________________________ 288 Reports____________________ _______ 290 Examinations__________________ :.____ 291 IV. — Reserve requirements___________________ 291 V.— Discount, loan, and deposit restrictions________ 292 V I.— Investments___________ _________ _______ 293 V II.— Overdrafts_____________________________ 296 V III.— Branches...................... .............. ......................... ....... 296 X .— Unauthorized banking____________________ 267 X I.— Penalties______________________________ 297 Trust companies— 299 I.— Terms of incorporation---------------------------------II. — Liabilities and duties of stockholders and directors. 300 13 National i Monetary Commission Michigan — Continued. Trust companies— Continued. Page. III. — Supervisio n__________________________ 300 R ep orts___________________________ 301 Examinations_______________________ 302 IV. — Reserve requirements___________________ 302 V.— Discount and loan restrictions______________ 302 VI.— Investments____________________________ 302 X I.— Penalties______________________________ 303 Minnesota : Introductory_________ 305 General provisions— II.— Liabilities and duties of directors_____________ 306 III.— Supervision____________________________ 306 Reports____________________________ 308 Examinations_______________________ 309 V II.— Overdrafts-------------------------------------------------309 X I.— Penalties______________________________ 310 Banks— 3 11 I.— Terms of incorporation___________________ II.— Liabilities and duties of stockholders and directors. 312 III. — Supervision__________________________ 312 Reports____________________________ 313 Exam inations_______________________ 313 IV . — Reserve requirements___________________ 313 V.— Discount and loan restrictions_______________ 313 314 VI.— Investments____________________________ X.— Unauthorized banking____________________ 314 314 X I.— Penalties______________________________ Savings banks— I.— Terms of incorporation___________________ 315 II.— Liabilities and duties of trustees_____________ 315 III.— Supervision___________ 316 Reports____________________________ 316 Exam inations_______________________ 316 V.— Discount, loan, and deposit restrictions-------------317 VI.— Investments____________________________ 317 X .— Unauthorized banking----------------------------------319 X I.— Penalties______________________________ 319 Trust companies— I.— Terms of incorporation---------------------------------319 II.— Liabilities and duties of directors---------------------320 III.— Supervision______________ ____- ......... ......... 320 Reports.................. 320 V.— Discount ajid loan restrictions------------------------^2i 14 Digest of State Banking Statutes Minnesota — Continued. Trust companies— Continued. Page. 321 VI.— Investm ents___________________________ VII.— Overdrafts_____________________________ 321 X .— Unauthorized trust companybusiness__________ 321 321 X I.— Penalties______________________________ Mississippi : Introductory____________________________________ 322 General provisions— I.— Terms of incorporation____________________ 322 II.— Liabilities and duties of stockholders and directors. 323 III.— Supervision______ 323 R eports___________________________ 323 Exam inations.___ __________________ 324 V.— Discount and loan restrictions_______________ 324 VI.— Investments____________________________ 324 V III.— Branches______________________________ 324 X .— Unauthorized banking____________________ 325 X I.— Penalties______________________________ 325 Missouri : Introductory____________________________________ 326 Banks— I.— Terms of incorporation____________________ 327 II.— Liabilities and duties of stockholders and directors_ 328 III. — Supervision__________________________ 329 Reports____________________________ 330 Examinations_______________________ 332 IV. — Reserve requirements___________________ 332 333 V.— Discount and loan restrictions______________ VI.— Investments_________________ 333 V II.— Overdrafts_____________________________ 334 334 V III.— Branches_________________ 1_________ . . . X .— Unauthorized banking____________________ 334 X I.— Penalties______________________________ 334 Savings banks— I.— Terms of incorporation___________________ 335 II.— Liabilities and duties of stockholders and directors. 337 III. — Supervision__________________________ 338 Reports____________________________ 338 Examinations_______________________ 339 IV . — Reserve requirements___________________ 339 V.— Discount, loan, and deposit restrictions________ 340 V I.— Investments________ , __________________ 340 X I.— Penalties.___ __________________________ 342 15 N ation a l M onet ary Commission M isso u ri — Page. Trust companies— I.— Terms of incorporation_________ II.— Liabilities and duties of stockholders and directors. III. — Supervision__________________________ Reports____________________________ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions______________ VI.— Investments__________ VII.— Overdrafts_____________________________ X I.— Penalties.................................. 342 343 344 344 344 345 345 345 345 346 Mo n t a n a : Introductory____________________________________ Banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision----------Reports____________________________ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions_______________ VI.— Investments____________________________ X .— Unauthorized banking____________________ X I.— Penalties______________________________ Savings banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision__________________________ IV. — Reserve requirements__________ ________ — V.— Discount and loan restrictions______________ VI.— Investments_________________________ ^. VII.— Overdrafts_____________________________ X.— Unauthorized banking............ — ........... .............. . X I.— Penalties______________________________ Trust companies— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision__________________________ IV. — Reserve requirements------------------V. — Discount and loan restrictions................. VI.— Investments____________________________ X .— Unauthorized trust company business---------------X I.— Penalties______________________________ 16 347 348 349 350 351 35! 352 352 353 354 354 356 356 357 358 358 358 359 359 359 359 360 361 362 362 362 363 363 D igest of St at e Banki ng St at ut es Nebr a sk a : Introductory.................................................................... Banks— I.— Terms of incorporation______________ II.— Liabilities and duties of stockholders and directors. III. — Supervision_____ Reports______ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions_______________ VI.— Investments. __________ VII.— Overdrafts_________________ X .— Unauthorized banking____________________ X I.— Penalties______________________________ X II.— Depositors’ guaranty system__________ Savings banks— Capital...................... Directors_________________ Reserves..... ............................................................................... Loans and investments_________________________ Penalties___ ________________________________ Trust companies__________________________________ Page. 364 365 366 366 368 369 370 370 371 372 372 373 374 377 377 377 378 379 379 Nevada: Introductory____________________________________ Banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision_____________ — ................. ........... Reports.................................... Examinations_______________________ IV. — Reserve requirements.---------V.— Discount and loan restrictions______________ V I.— Investments-............................. V II.— Overdrafts_____________________________ V III.— Branches__________ _________ _______ — X .— Unauthorized banking----------------------------------X I.— Penalties............................................... Savings banks. -------Trust companies. ---------- 380 381 382 383 385 385 386 386 387 388 389 389 389 391 392 N e w H a m p s h ir e : I ntroductory........................ Banks— I.— Terms of incorporation____________ II.— Liabilities and duties of stockholders and directors. S. Doc. 3S3, 61—3----- a . 17 393 393 394 N a t io n a l M on e t a r y Commission N ew H ampshire— Continued. Banks— Continued Page. III.— Supervision--------------395 Reports____________________________ 396 Examinations_______________________ 397 V.— Discount and loan restrictions______________ 397 VI.— Investments____________________________ 398 X .— Unauthorized banking____________________ 398 X I.— Penalties________________________ 398 Savings banks— I.— Terms of incorporation____________________ 399 II.— Liabilities and duties of stockholders and directors. 401 III.— Supervision____________________________ 401 Reports________________________ 402 403 Examinations_______________________ V.— Discount and loan restrictions______________ 404 V I.— Investments_______ 404 409 IX .— Occupation of the same building_____________ X . — Unauthorized banking__________________ 409 X I.— Penalties______________________________ 409 Trust companies— I.— Terms of incorporation____________________ 411 II.— Liabilities and duties of stockholders and directors. 411 III.— Supervision____________________________ 412 V.— Discount and loan restrictions______________ 412 V I.— Investments_________________ 412 413 X I. — Penalties___________________________ N ew J e r se y : Introductory____________________________________ 414 Banks— I.— Terms of incorporation____________________ 414 II.— Liabilities and duties of stockholders and directors. 415 III. — Supervision_________________ 415 Reports.__________ 417 Examinations_______________________ 417 IV. — Reserve requirements................. 417 V.— Discount and loan restrictions______________ 418 V I.— Investments____ ____— ................... ......... ......... 418 V II.— Overdrafts_____________________________ 419 X .— Unauthorized banking____________________ 419 X I.— Penalties______________________________ 419 Savings banks— I-— Terms of incorporation__ ^________________ 420 — Liabilities and duties of managers............................ 421 D igest of State Banking Statutes N ew Jersey — Continued. Savings banks— Continued. Page. III.— Supervision____________________________ 421 Reports____________________________ 422 Examinations_______________________ 424 V.— Discount, loan, and deposit restrictions________ 424 V I.— Investments____________________________ 425 X .— Unauthorized banking____________________ 427 427 X I.— Penalties______________________________ Trust companies— I.— Terms of incorporation____________________ 428 II.— Liabilities and duties of stockholders and directors. 428 III. — Supervision______ 429 430 Reports._____ Examinations_______________________ 430 IV. — Reserve requirements.______ 431 V .— Discount and loan restrictions______________ 431 V I.— Investments_____________ 432 V II.— Overdrafts_____________________________ 432 X .— Unauthorized trust company business_________ 432 X I.— Penalties.______ 432 N ew Mexico : Introductory______ I _________________________ ___ 434 Banks— I.— Terms of incorporation____________________ 435 II.— Liabilities and duties of stockholders and directors. 436 III.— Supervision____________________________ 437 437 Reports____ _____ Examinations__________________ 438 V.— Discount and loan restrictions__________ 439 V I.— Investments. _______ 440 V III.— Branches_______ 440 X .— Unauthorized banking____________________ 441 X I.— Penalties..____ __________ 441 Savings banks— I.— Terms of incorporation___________ 442 II.— Liabilities and duties of stockholders and directors. 443 III.— Supervision__________ 443 Reports----------444 Examinations_______________________ 445 V.— Discount and loan restrictions_______________ 446 V I — Investments_____________ 447 V III.— Branches------- ------448 X I.— Penalties........................................................................ 448 *9 National M on e t a r y Commission N ew Mexico — Continued. Trust companies— I.— Terms of incorporation___________ II.— Liabilities and duties of stockholders and directors. III. — Supervision__________________________ Reports____________________________ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions________ ____ — VI.— Investments________ V III.— Branches....................... X I.— Penalties. __________ N ew Y o r k : Introductory____________________________________ Banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision__________________________ Reports____________________________ Examinations___________ IV. — Reserve requirements................ V.— Discount and loan restrictions_______________ VI.— Investments________________ V II.— Overdrafts..... ............ V III.— Branches________________ '_____________ IX .— Occupation of the same building_____________ X .— Unauthorized banking____________________ X I.— Penalties.......................... Savings banks— I.— Terms of incorporation.................. II.— Liabilities and duties of trustees.............. III. — Supervision..... ......................................................... Reports____________________________ Examinations............................. — ................... IV. — Reserve requirements___________________ V.— Deposit, discount, and loan restrictions..... ............. VI.— Investments____________________________ V III.— Branches ................... IX .— Occupation of the same building---------------------X .— Unauthorized banking........................................ X I.— Penalties____________________ Trust companies— I-— Terms of incorporation____________________ IE— Liabilities and duties of stockholders and directors.. Page. 449 450 450 452 453 454 454 455 455 455 457 457 458 459 460 462 463 463 466 466 466 467 467 468 470 470 471 471 473 473 474 474 479 479 479 . 479 480 480 20 1 Di g e s t of St at e Ba n k i n g St at ut es New Y ork — Continued. Trust companies— Continued. Page. III. — Supervision__________________________ 481 Reports____________________________ 482 Examinations ....................................... . ............. 482 483 IV. — Reserve requirements___________________ V. — Discount and loan restrictions_____________ 484 VI.— Investments____________________________ 485 VII.— Overdrafts_________ ___________________ 485 V III.— Branches______________________________ 485 IX .— Occupation of the same building................... 486 X .— Unauthorized trust company business_________ 486 X I.— Penalties.________ 486 North C arolina : Introductory____ ___________ 487 Banks, savings banks, and trust companies— I. — Terms of incorporation..... .......... 488 II.— Inabilities and duties of stockholders and directors. 488 III. — Supervision_________ 489 Reports____________________________ 490 Examinations------- --------------------------------491 IV. — Reserve requirements___________________ 491 V.— Discount and loan restrictions______________ 492 VI.— Investments____________________________ 492 X I.— Penalties------ ------------493 North D akota : Introductory............... 494 Banks— I .— Terms of incorporation-----------------495 II. — Liabilities and duties of stockholders and directors. 495 III. — Supervision__ _____ 496 Reports....................... 497 Examinations_____________ 498 IV. — Reserve requirements.................... 499 V.— Discount and loan restrictions_______________ 499 VI. — Investments. ............ ........ 500 500 V II.— Overdrafts______________ X .— Unauthorized banking.---------501 X I.— Penalties-................................ — ----------------------501 Savings banks___________________________________ 502 Trust companies— I.— Terms of incorporation___________ 502 II.— Liabilities and duties of stockholders and directors. 503 III.— Supervision........................................ 503 R eports...........................................................— 504 Examinations......... ............ 504 21 N at ion a l M on e t a r y Commission N orth D akota — Continued. Trust companies— Continued. Page. V.— Discount and loan restrictions______________ 504 VI.— Investments____________________________ 504 V II.— Overdrafts__ ____ 505 O hio : Introductory____________________________________ 506 General provisions— I.— Terms of incorporation____ ____-___________ 507 II.— Liabilities and duties of stockholders and directors. 508 III. — Supervision__________________________ 508 Reports____ _______________________ 510 Examinations___________ 510 V.— Discount and loan restrictions_______________ 511 V I.— Investments____________________________ 511 V II.— Overdrafts_____________________________ 51* X .— Unauthorized banking____________________ 512 X I.— Penalties______________________________ 512 Banks— IV. — Reserve requirements___________________ 513 V.— Discount and loan restrictions_______________ 513 VI.— Investments______ _____ 1 ......... ......................... 514 Savings banks— IV.— Reserve requirements_____________________ 515 V.— Discount, loan, and deposit restrictions..... .............. 515 516 VI.— Investments____________________________ Trust companies— I.— Terms of incorporation____________________ 517 III. — Supervision__________________________ 517 Examinations_______________________ 517 IV. — Reserve requirements................................... 517 V.— Discount and loan restrictions______ 518 VI.— Investments_________ 518 O klahoma : Introductory_______ 519 Banks— I.— Terms of incorporation____________________ 520 II.— Liabilities and duties of stockholders and directors. 521 III. — Supervision__________________________ 521 Reports____________________________ 522 Examinations_______________________ 523 IV. — Reserve requirements___________________ 524 V.— Discount, loan, and deposit restrictions-------------525 VI.— Investments____________________________ 526 22 Digest of State B an k i n g Statutes Oklahoma— Continued. Banks— Continued. VII.— Overdrafts_____________________________ X .— Unauthorized banking__________ X I.— Penalties____ ._________________________ X II.— Depositors’ guaranty system________ *.-----------Savings banks_________________ ‘__________________ Trust companies— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision___________________ Reports--------_ .------------------------------------Examinations__________ V.— Discount and loan restrictions_______ _____— VI.— Investments____________________ VII.— Overdrafts_____________________________ X .— Unauthorized banking_________ X I.— Penalties----------------------------------------------------X II.— Depositors’ guaranty system________ Oregon : Introductory............... Banks— I.— Terms of incorporation______________ II.— Liabilities and duties of stockholders and directors. III. — Supervision....................... Reports--------------------------------------Examinations_____________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions..... ...................... VI.— Investments____________ *......... ............. ........... V III.— Branches....................................................................... X .— Unauthorized banking................... X I.— Penalties........................................ Savings banks. ________ Trust companies................................................................................ P ennsylvania : Introductory................................................... Banks— I.— Terms of incorporation.............................................. II.— Liabilities and duties of stockholders and directors . III. — Supervision.............. Reports--- --------Examinations.................................. IV. — Reserve requirements_____ V.— Discount and loan restrictions..... .......................... 23 Page. 526 526 527 528 530 531 532 532 533 533 534 534 535 535 535 535 536 537 538 538 539 540 541 541 542 542 542 543 544 544 545 546 548 550 552 554 555 556 National Monetary Commi s s i o n _ P ennsylvania — Continued. Banks— Continued. VI.— Investments____________________________ V III.— Branches............ X.— Unauthorized banking._____ X I.— Penalties._____ Savings banks— I.— Terms of incorporation____ ____ II.— Liabilities and duties of stockholders and trustees. III. — Supervision__________ Reports______________ Examinations_______________________ IV. — Reserve requirements._____ V .— Discount, loan, and deposit restrictions________ V I.— Investments_______ X .— Unauthorized banking____________________ X I.— Penalties_______________ Trust companies— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision______ IV. — Reserve requirements___________________ V.— Discount and loan restrictions______________ V I.— Investments____________________________ X .— Unauthorized trust company business________ X I.— Penalties______________________________ R hode I sland : Introductory____________________________________ Banks— I.— Terms of incorporation__________ II.— Liabilities and duties of stockholders and directors. III. — Supervision__________________________ Reports................................................................. Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount, loan, and deposit restrictions..... ............ V I.— Investments____________________________ V II.— Overdrafts_____________________________ V III.— Branches______________________________ X .— Unauthorized banking----------------------------------X I.— Penalties______________________________ Savings banks— I.— Terms of incorporation---------------------------------II.— Liabilities and duties of trustees_____________ 24 Page. 558 560 560 560 563 564 565 567 568 569 569 569 571 571 572 573 573 573 574 574 574 575 576 576 576 577 578 579 580 581 ' 582 582 583 583 583 584 585 Digest of State Banking Statutes R hode I sland — Continued. Savings banks— Continued. Page, III.— Supervision____________ 585 Reports____________________________ 586 Examinations_______________________ 587 V.— Discount and loan restrictions_______________ 588 V I.— Investments. _____ 588 V III.— Branches__________________ 594 X . — Unauthorized banking..................... 594 X I.— Penalties______________________________ 594 Trust companies— I.— Terms of incorporation____________________ 595 II.— Liabilities and duties of stockholders and directors. 595 III. — Supervision__________________________ 595 IV. — Reserve requirements___________________ 595 V.— Discount, loan, and deposit restrictions________ 596 V I.— Investments........................ 596 V II.— Overdrafts_________ 596 South C arolina : Introductory____________________________________ 597 I.— Terms of incorporation____________________ 597 II.— Liabilities and duties of stockholders and directors. 597 III.— Supervision____________________________ 598 598 Reports.............. Examinations_______________________ 599 V.— Discount and loan restrictions______________ 599 V I.— Investments____________________________ 599 X I.— Penalties____ ____________ 600 South D akota : Introductory____________________________________ 601 Banks— I.— Terms of incorporation.................................. 602 II.— Liabilities and duties of stockholders and directors. 603 III. — Supervision_______ 605 Reports____________________________ 607 Examinations____ ______ 608 IV. — Reserve requirements._______ 609 V.— Discount, loan and deposit restrictions________ 609 V I.— Investments____________________________ 610 V II.— Overdrafts_____________________ _______ 611 V III.— Branches_____________ ________________ 611 612 X .— Unauthorized b an k in g ..__________________ X I. — Penalties____________________________ 612 X II.— Depositors’ guaranty system_______ 614 Savings banks___________________________________ 617 25 N a t i on a l M on e t a r y Commission S outh D akota — Continued. Trust companies— Page. I.— Terms of incorporation____________________ 617 II.— Liabilities and duties of stockholders and directors, 6x7 III. — Supervision______ 618 Reports___________________________ 618 Examinations____ ____ 619 IV. — Reserve requirements___________________ 619 V.— Discount and loan restrictions______________ 620 V I.— Investments___________________________ 620 X .— Unauthorized trust company business..................... 620 X I.— Penalties________________ 621 X II.— Depositors’ guaranty system............ 621 T e n n essee: Introductory____________________________________ Banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III.— Supervision__________ Reports--------------------------------- • _______ Examinations________ V.— Discount and loan restrictions______________ VI.— Investments______________ V III.— Branches______________________________ X.— Unauthorized banking____________________ X I.— Penalties............... Savings banks— I.— Terms of incorporation________________ III.— Supervision Reports_______________ Examinations_______________________ V.— Discount, loan, and deposit restrictions--------------V I.— Investments................. X I.— Penalties______________________________ 622 623 623 624 624 625 625 626 626 626 626 627 628 628 628 628 628 Texas: Introductory____________________________________ Banks— I.— Terms of incorporation____________________ II.— Liabilities and duties of stockholders and directors. III. — Supervision---------------Reports............... Examinations_____ 1 ................... ................... IV. — Reserve requirements---------V.— Discount and loan restrictions-------------VI.— Investments_________ 629 629 631 632 635 636 636 637 638 D igest of State Banking Statutes T exas — Continued. Banks— Continued. Page. V II.— Overdrafts_______ 640 V III.— Branches____ :_________________________ 640 640 X .— Unauthorized banking____________________ X I.— Penalties______________________________ 641 X II.— Depositors’ guaranty system________________ 643 Savings banks— I.— Terms of incorporation___ ______ 648 II.— Liabilities and duties of stockholders and directors. 649 III. — Supervision__________ 650 Reports________ 651 Examinations_______________________ 651 IV. — Reserve requirements___________________ 652 V.— Discount, loan, and deposit restrictions________ 652 VI.— Investments__________ 653 653 V III.— Branches_________ X .— Unauthorized banking____________________ 654 X I.— Penalties............... 654 Trust companies— I. — Terms of incorporation__________________ 654 II.— Liabilities and duties of stockholders and directors. 654 III. — Supervision__________________________ 655 IV. — Reserve requirements___________________ 655 V.— Discount and loan restrictions_______________ 655 656 VI.— Investments___________________ V II.— Overdrafts..... ................................ 656 656 V III.— Branches____________________ X .— Unauthorized trust company business_________ 656 656 X I.— Penalties__________ X II.— Depositors’ guaranty system........................ 656 Ut a h : Introductory _____ Banks and savings banks— I.— Terms of incorporation____________________ II. — Liabilities and duties of stockholders and directors. III. — Supervision..... ................................ Reports_____________________ Examinations____________ IV. — Reserve requirements------V.— Discount and loan restrictions_______________ VI.— Investments____________________________ X I.— Penalties-----------Private bankers..... ......................................................................— 27 657 658 658 658 659 660 660 660 661 661 662 National Monetary Commi s s i on U tah — Continued. Trust companies— Page. I.— Terms of incorporation____________________ 662 II.— Liabilities and duties of stockholders and directors. 662 III.— Supervision____________________________ 662 V. — Discount and loan restrictions_____________ 662 V I. — Investments_________ 662 V ermont : Introductory_________ 663 Savings banks— I.— Terms of incorporation_____________ ____— 664 II.— Liabilities and duties of trustees....... ............ 665 III.— Supervision____________________________ 666 Reports__________________ - ................... 667 Examinations_______________________ 669 V.— Discount, loan, and deposit restrictions________ 670 V I.— Investments____________________________ 671 IX .— Occupation of the same building_____________ 673 X I.— Penalties________________________ ; _____ 673 Trust companies— I.— Terms of incorporation____________________ 673 II.— Liabilities and duties of stockholders and directors. 674 III.— Supervision____________________________ 674 V.— Discount and loan restrictions______________ 675 VI.— Investments____________________________ 675 IX .— Occupation of the same building. ............................ 676 X I.— Penalties______________________________ 676 V irginia : Introductory____________________________________ 677 Banks— I.— Terms of incorporation____________________ 678 II.— Liabilities and duties of stockholders and directors. 678 III.— Supervision____________________________ 679 Reports____ _____ 679 Examinations_______________________ 680 V.— Discount and loan restrictions.............. 680 VI.— Investments____________________________ 680 X .— Unauthorized banking................. 681 X I.— Penalties__________________________ 681 Savings banks— I.— Terms of incorporation---------------------------------681 II.— Liabilities and duties of directors— ................... 682 III.— Supervision____________________________ 682 682 V.— Discount and loan restrictions........... ........................ VI.— Investments____________________________ 683 . X I.— Penalties______ L_______________________ 683 28 Digest of State Banking Statutes V irginia — Continued. Trust companies— I.— Terms of incorporation____________________ III.— Supervision____________ Reports________ X I.— Penalties._______ W ashington : Introductory_________ Banks— I.— Terms of incorporation___________ II.— Liabilities and duties of stockholders and directors. III. — Supervision______ Reports.___ ______ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions______________ VI.— Investments____________________________ V III.— Branches_________ X .— Unauthorized banking____________________ X I.— Penalties________ Savings banks— I.— Terms of incorporation____________________ III.— Supervision, reports______________________ X I.— Penalties.............. Trust companies— I.— Terms of incorporation____ _______ II.— Liabilities and duties of stockholders and directors. III.— Supervision............ Reports____________________________ Examinations_______________________ V.— Discount and loan restrictions______________ V I.— Investments._______ X .— Unauthorized trust company business_________ X I.— Penalties__________ W est V irginia : Introductory................... Banks— I.— Terms of incorporation____ ______ II.— Liabilities and duties of stockholders and directors. III. — Supervision........... Reports________ Examinations_______________________ IV. — Reserve requirements___________________ V.— Discount and loan restrictions_______________ VI.*—Investments. ................................................................ 29 Page. 683 684 684 685 686 687 689 689 691 691 692 692 692 693 693 693 694 695 695 695 696 696 697 698 698 698 698 699 700 701 702 702 703 704 705 705 705 N at ion a l M on e t a r y Commission W est V irginia — Continued. Banks— Continued. Page. VII.— Overdrafts______________________________ 706 X .— Unauthorized banking______________________ 706 X I.— Penalties_______________________________ 706 Savings banks— 707 I.— Terms of incorporation______ II.— Liabilities and duties of members and directors__ 708 III.— Supervision_____________________________ 708 709 Reports_____________________________ Examinations_____________________ 709 V.— Discount and loan restrictions________________ 710 V I.— Investments___________________ 710 X .— Unauthorized banking____________________ 711 X I .— Penalties___________________ 711 Trust companies— I.— Terms of incorporation____________________ 712 III.— Supervision____________________________ 712 V.— Discount and loan restrictions________________ 712 V I.— Investments_____________________________ 712 V II.— Overdrafts______________________________ 713 X .— Unauthorized banking___________________ 713 713 X I.— Penalties............................... W isconsin : Introductory--------------------------------------------714 Banks— I.— Terms of incorporation_______________ 715 II.— Liabilities and duties of stockholders and directors. 716 III. — Supervision___________________ 717 Reports___________________ 719 Examinations................................................ 720 IV. — Reserve requirements____________________ 720 V .— Discount and loan restrictions________________ 720 V I.— Investments................................................... 721 V II.— Overdrafts....... .................................................... 722 V III.— Branches______________________ 722 IX .— Occupation of the same building......................... 722 X .— Unauthorized banking___________________ 722 X I.— Penalties_________________________ 723 Savings banks— I.— Terms of incorporation_____________________ 724 725 II.— Liabilities and duties of trustees......... .................... III. — Supervision____________________________ 725 IV. — Reserve requirements_________________ 726 V.— Discount, loan, and deposit restrictions_________ 726 30 I Digest of State Banking Statutes W isconsin — Continued. Savings banks— Continued. Page. V I.— Investments. ................... 726 IX .— Occupation of the same building.................. ........... 727 X I.— Penalties______________________________ 727 Trust companies— I.— Terms of incorporation____________________ 727 III. — Supervision__ _______ ________ ________ 728 IV . — Reserve requirements___________________ 728 V .— Discount and loan restrictions______________ 729 V I.— Investments____________________________ 729 V II.— Overdrafts_______ _____________________ 730 V III.— Branches____________ ____ ____________ 730 X .— Unauthorized trust-company business_________ 730 W yoming : 731 Introductory____________________________________ Banks— I.— Terms of incorporation____________________ 731 II.— Liabilities and duties of stockholders and directors. 732 III.— Supervision____________________________ 733 Reports-----------------------------------------------733 Examinations_______________________ 734 V.— Discount and loan restrictions______________ 735 V I.— Investments. --------- ------------------------------------736 X .— Unauthorized banking............................................... 737 737 X I.— Penalties.--------- ----------------------------------------Savings banks— I.— Terms of incorporation........... ................. ................. 738 II.— Liabilities and duties of stockholders and directors. 739 III. — Supervision__________________________ 739 IV. — Reserve requirements___________________ 740 V .— Discount and loan restrictions______ _____ __ 740 V I.— Investments____________________________ 741 X .— Unauthorized banking____________________ 741 X I.— Penalties................................. ......... ............... ........... 742 Trust companies— I.— Terms of incorporation------- ----------- --------------742 II.— Liabilities and duties of stockholders and directors. 743 III. — Supervision------------------ ------------------ -------743 Reports.......................... ............... ............. ......... 743 Examinations_________________ _____ 744 IV . — Reserve requirements....................... ........... ....... 744 V.— Discount and loan restrictions--------------- -------744 V I.— Investments. .............. ....................... ......................... 745 X .— Unauthorized trust-company business.................... 746 X I.— Penalties....................................................................... 746 31 INTRODUCTORY. This digest of banking laws, covering the forty-six States, the District of Columbia, and the Territories of Arizona and New Mexico, is a digest only of statutes. Doubts as to the application or interpretation of statutes might in a few instances be resolved by investigating decided cases, but the greater volume of a digest includ ing such material, and the infinitely greater labor required to prepare it, forbade any excursion into the decisions. It is true also that whereas the language of a statute may be safely condensed, briefly stating the point of law adjudicated in a particular case is a hazardous business. Another matter which must be borne in mind in reading the digest is that the volume of the legislation covered by it made condensation constantly a point of the greatest importance. The statutes of each State are, whenever possible, divided under the three heads, Banks, Savings banks, and Trust companies; sometimes when space may be saved by combining (under such heads as General Provisions, Banks and trust companies, Banks and sav ings banks, etc.) material which applies to more than one of the three classes, such an arrangement has been adopted. Under each of the heads, twelve subheads appear (I. Terms of incorporation— including capital, dividends, sur plus, etc.; II. Liabilities and duties of stockholders and S. D oc. 353, 6 1 - 2 ------ 3 33 N at ion a l M onetary Commission directors; III. Supervision, including reports and exam inations; IV. Reserve requirements; V. Discount, Loan, and sometimes Deposit restrictions; VI. Investments; VII. Overdrafts; VIII. Branches; IX. Occupation of the same building; X. Unauthorized banking, Savings bank ing, or Trust company business; XI. Penalties; and X II. Depositors’ Guaranty System); under these heads are given only the most important points in the statutes bearing upon the subject under consideration. So many minor provisions, therefore, are omitted, and the lan guage of those which are inserted has been so abbreviated and popularized, that a lawyer investigating the statutes of a particular State to determine the course of conduct of a particular client engaged in banking might find the digest serviceable merely by way of finding his citations for him— the particular statute on which each state ment in the digest is based being cited in parenthesis after the statement. The language of the digest, too, is made, so far as possible, simple and untechnical, since the purpose is to present an easily intelligible comparative statement of the statutes, not a legal text-book. Since the digest is one of banking and not general cor poration statutes, the general corporation laws of the particular States have been gone into only when they were peculiarly accessible or the banking statutes left blanks likely to be readily supplied. A digest of corporation legislation would, of course, be of much greater bulk than this. Provisions dealing with circulation have been uni formly omitted as being of no importance in the present state of the national banking laws. 34 Digest of State Banking Statutes Among the abbreviations to which attention should be called lest they lead to misunderstanding is the use of the word “ municipality,” which occurs sometimes to save a list including perhaps “ city, town, county, school district, or irrigation district,” etc.; lists of investments are often shortened— “ United States securities,” for example, is sometimes employed to save such language as “ stocks, bonds, public funds, and interest-bearing securities of the United States.” Among the things omitted may be noted details of incorporation, what the certificate must recite, what notice must be given to other institutions in the neighborhood, whether the charter is lost if business is not begun within a specified time, etc.; proceedings to increase and reduce capital stock; details with respect to the depu ties and subordinates of the state officials, and the power of state officials to subpoena, take oaths of witnesses at examinations, etc.; treatment of minors, married women, and trustees as depositors and stockholders; fees for exami nations ; details of the business trust companies may do as trustees, guardians, executors, administrators, sureties, etc.; details with respect to savings-bank pass books; notice required for withdrawal of savings deposits; pro ceedings for assessments against stockholders; bonds and oaths of officers; embezzlement and perjury with respect to banks, when these offenses seem not different from the same offenses with respect to other sorts of business; directors’ objections, by which they avoid liability for illegally declared dividends; limits on the time during which a bank remains liable for payment of forged or 35 N at ion a l M onet ary Commission raised checks; and the order of distribution of assets on dissolution. The heading “ X I. Penalties” is a catch-all for offenses and their punishment not treated under other heads. Penalties which entail the dissolution of the corporation and placing it in the hands of a receiver appear under III; and since the gist of the unauthorized banking provision is usually the punishment, that penalty is uniformly given under X. Where offenses— directors’ borrowing, the making of false reports, etc.— are made misdemeanors merely, that provision of the statutes is noted under Penalties. Wherever a reprint of statutes, collected by the banking department of the State, has been used as the basis for the digest of that State instead of the published statutes of the State themselves, that is noted in the introductory paragraph under the particular State. Many of these reprints have been compiled from confused sources and are of high value. The preliminary paragraph under each state also indicates the date to which the digest has been brought, usually through the 1909 legislative session of the State, if one was held. The material for each State has been sent to the supervisor of banking in that State, with a request for his suggestions. The following officials have been most courteous, and the digest has profited greatly by their correction and help: Mr. T. J. Rutledge, state bank examiner of Alabama; Mr. Wm. T. McGuire, secretary, board of bank commis sioners of California; Mr. E. W. Pfeiffer, state bank com missioner of Colorado; Mr. Charles H. Noble, bank com- 36 D igest of State Banking Statutes missioner of Connecticut; Mr. Charles H. Maull, commis sioner, department of insurance and banking, Dela ware; Mr. A. C. Croom, comptroller of Florida; Mr. J. P. Brown, state treasurer of Georgia; Mr. Wm. G. Cruse, bank commissioner of Idaho; Mr. J. S. Mc Cullough, auditor of public accounts of Illinois; Mr. J. C. Billheimer, auditor of Indiana; Mr. John L. Bleakly, auditor of Iowa; Mr. William S. Albright, assistant bank commissioner of Kansas; Mr. Ben L. Bruner, secretary of state of Kentucky; Mr. W. L. Young, bank examiner of Louisiana; Mr. William B. Skelton, bank commissioner of Maine; Mr. Murray Vandiver, treasurer of Maryland; Mr. Charles L. Burrill, secretary to the bank commissioner of Massachusetts; Mr. H. M. Zimmermann, commissioner of banking of Michigan; Mr. A. Schaefer, public examiner of Minnesota; Mr. E. J. Smith, auditor of Mississippi; Mr. F. H. Ray, state examiner of Montana; Mr. E. Royse, secretary of state banking board, Nebraska; Governor D. S. Dickerson, chairman, and Mr. M. M. Van Fleet, bank examiner and secretary, state banking board of Nevada; Mr. Richard M. Scammon, bank commissioner of New Hampshire; Messrs. D. 0 . Watkins and Vivian M. Lewis, commissioners of banking of New Jersey; Mr. C. V. Safford, traveling auditor of New Mexico, and Mr. A. L. Morrison, jr., chief clerk; Mr. Clark Williams, superintendent of banks, and Mr. George I. Skinner, first deputy superintendent of banks, of New York; Mr. H. C. Brown, clerk of the corporation commission of North Carolina; Mr. B. B. Seymour, superintendent of banks of Ohio; Mr. A. M. Young, commissioner of banking of Oklahoma; Mr. James Steel, state bank ex- 37 N a t io n a l M onet ary Commission aminer of Oregon; Mr. John W. Morrison, deputy com missioner of banking of Pennsylvania; Mr. William P. Goodwin, bank commissioner of Rhode Island; Mr. Giles L. Wilson, state bank examiner of South Carolina, and State Senator T. G. Croft, of the same State; Mr. John L. Jones, public examiner of South Dakota; Mr. Hallum W. Goodloe, secretary of state of Tennessee; Mr. Thos. B. Love, commissioner of banking of Texas, and Mr. Charles V. Johnson, chief clerk; Mr. C. S. Tingey, secretary of state of Utah; Mr. F. C. Williams, bank commissioner of Vermont; Mr. Robert R. Prentis, chairman, and Mr. Richard T. Wilson, clerk, of the state corporation com mission of Virginia; Mr. S. V. Matthews, commissioner of banking of West Virginia; Mr. M. C. Bergh, commissioner of banking of Wisconsin; and Mr. Harry B. Henderson, state examiner of Wyoming. Readers may think the system of references in the digest is lacking in uniformity. It must be remembered, how ever, that the condition of the statutes of the different States— the frequency of revision, system of chapters and sections, etc.— is lacking in uniformity also, and, what has been even more important in arranging the system of references in parenthesis, it was necessary that the refer ences should occupy no more space than necessary. If a glance is taken in each State at the brief introductory paragraph, a hint will be found there wdiich will make the references in parenthesis intelligible. There follows a tabular summary of the digest. What has been done is to state in such form as to make them readily accessible, the few provisions which are law in 3« D igest of State Banking Statutes enough States to make it worth while showing in how many. The value of even this much summarizing is problematical, for it has been necessary to consider as one, provisions which differ in different States; the limit of individual liability to a bank, for example, may in one State be a per cent of capital, in another a per cent of capital and surplus, and in a third a per cent of capital, surplus, and undivided profits. The tables may, how ever, serve to show to what extent these most common provisions are dealt with in some form or other by the various States. But the reader is cautioned against rely ing on the tables without reference to the digest itself, except when he is in search of information of a general sort; when a page of statute has been reduced to a para graph or a sentence of digest, and the paragraph or the sentence has been reduced to a word or two in the table, the result is a hint, necessarily often an inaccurate one. 39 S. Doc. 353, 61-2. (To follow page 39.) No. 10. “ See Pa*e 60 fo T the impossibility of summarizing Arkansas. &The equivalent of state bank statutes is, in Maine, under trust companies. * There is no legislation on state banks in Vermont. * Where more than one figure is given in answer to the question, it is generally because the statute provides different rules for banks in communities of different sizes. In reserves the difference is sometimes that between a reserve depositary and a bank not designated as one. \ I ) f % L Kansas. Kentucky. Louisiana. Maine. b 5o,ooo_. - $10,000 to $50,000_. _ $15,000 to $100, DOO- Maryland. $50,000 to $300,000; maximum, $500,000 to $2,000,000. All............................ Massachusetts, j * $100,000; maximum, $1,000,000. Michigan. Minnesota. $20,000 to $400,000.- $10,000 t0$25,000__ A ll-........................... $50,000 to $300,000-. Mississippi. Missouri. Montana. Nebraska. $10,000 to $15,000__ $10,000 to Sioo.ooo; maximum, $5,000.000 $20,000...................... $10,000 to $200,000.. $10,000 to $15,000__ i 50 per cent................ All.............................. 5 months___________ 20 per cent_________ New Hampshire. New Mexico. New Jersey. New York. North Carolina. $25,000 to $100,000.. $5,000 to $25,000___ All________ All i year_____________ 10 per cent_________ Nevada. • 2 years (see page 381; i year_____________ 10 per cent_________ 10 per cent________ 20 per cent_________ Yes N o..................... Probably yes_____ Yes........................... Three to twenty-one. teen. twelve. 2 to S county; holders each of $500 of stock. States, etc. page 207.) Stockholders; citi zens of Maryland. (See y com- Citizens of Massa chusetts ; holders of 5 shares, etc. S em ia n n u a lly by state banks. Hold $300 to $500 of stock. stock. committee. Bank commissioner.. Examiner merely___ Bank commissioner. Superintendent banks. States; 3 resi , dents of Montana; each holder of 10 shares. county ; holders of specified amounts of stock, etc. Majority residents of county; each hold er o f specified amount of stock, etc. Hold 5 to 10 shares of stock. Annual examination by committee of stockholders. committee. C om m ission er of banking d e p a r t ment. Residents of Missouri; each holder of 2 shares. 0f State banking board (governor and four appointees). Board of bank com missioners. ____________ Majority residents of New Jersey ; each holds 5 shares. o gov- Biennially to gov ernor. Yes Yes . - __ - Biennially to legisla ture. Yes ______ Annually to governor. Biennially to legisla ture. Yes Annually to governor. Annually to governor. Y e s ........... ........... . Yes_________ - .................... Semiannually______ auditor Commissioner of bank Traveling and bank exam ing and insurance. iner. Superintendent banks. Annually to secre tary of state. Annually to legisla ture. 3 years____________ Yes----------- ------------ Annually to legislature. Y es.................. ......... Yes................. . Y e s ______________ Yes ....................... Apparently seven___ * years----------------- of Y es; c o r p o r a t io n commission. Annually to legisla ture. . Annually___________ States; t h r e e fourths residents of New York; hold certain stock. Yes; state examiner. Yes; state banking board (governor, auditor, and attor ney-general). To a certain extent; board of bank in corporation (bank comr., treasurer, receiver genl., and corporation cotnr.). Annually to legisla ture. ___ S e m ia n n u a lly by committee. 2 Yes; state treasurer. Yes_____ _____ Not more than nine.. At least five. Yes___________ Yes............................. Yes______ . Yes____________ Two.............. ............. Four_____ . Four____________ \nnually............ ....... Annually__________ Report to Commissionerevery 3 years. At supervisor’s dis cretion. One----------------------- Two__________ One___________ 25 per cent _______ per cent. md is 20 per cent and 25 per cent. IS per cent and 25 per cent. Eight twenty-fifths. . Three-fourths .................. i ................. 15 per cent and 25 per cent. 15 per cent and 20 per cent. ___ Seventeen fifths. One-half 15 per cent and 20 per cent. ___ ___ _ 15 per cen t_________ ______ twenty- All........................... . A portion at directors’ discretion. 25 per cent, 20 per cent, and 15 per cent. 15 per cent _______ Tliree-fifths, one-half, two-fifths. Two-fifths_____ Two-fifths, one-half, three-fifths. Three-fifths___ 25 per cent and 40 per cent (see page 463). 10 per cent________ Yes............................ Yes_______ ________ ............ 50 per tgage. 10 percent and 20 per 15 per cent and 20 cent on mortgage,etc. per cent. cured. Y e s ............................ Yes____________ Y e s ............................ Restricted_______ Y e s ............................ Yes......... ................... Yes Yes------------------- Yes________________ Yes________________ Yes_______________ Not over 50 per cent of capital, etc. Vm V *pc ------- ------------- Yes.............................. Yes_______________ Yes_________ ______ Yes............................. Y e s ............................ Yes________________ Yes Yes Yes Loans, eight times__ Loans, eight times__ Yes......... Yes__ ___________ Yes----------------------- Yes_________ ______ Yes............................ Restricted (see page 464). Land must be worth twice the loan. v Yes________________ Yes________________ Yes............................. Yes_______ ________ Yes________ _______ Y e s ............................ Apparently allowed. _ Yes_______________ Forbidden to officers, directors, etc. • — i eThe reports and examinations here tabulated are only the regular reports to state officials and the regular examinations by state officials. The number given is usually the minimum per year; many States provide for special reports and examinations at the supervisor's discretion. / The provisions restricting individual liability vary greatly, as will appear on reference to the body of the digest. The per cent is sometimes of capital, sometimes of paid-in capital, sometimes of capital and surplus, etc. Liability of an individual firm or corporation frequently includes the liability of members. Commonly liability is not considered increased by the discount of bills of exchange drawn in good faith against existing values nor by the discount of commercial paper actually owned by the person negotiating it. Where there are further exceptions (as in statutes which allow liability beyond the per cent named, if security is given), an effort is made in the table to suggest this. Mo. lb. Yes______ _____ ____ Yes_______ _______ _ .Yes_______________ Yes............................. Yes__________ Apparently allowed.. Allowed in home city on increasing capi tal, etc. CO. North Carolina. New York. _ $5.000 to $25,000__ Ohio. North Dakota. $10,000 to $50,000. - . All .................... ._ .. 10 per cent _____ 20 per cent. .......... ......... Yes____ _______ _ Oregon. Pennsylvania. $10,000 to $100,000. $10,000 to $50,000__ $25,000 to $50,000.. All________________ 50 per cent _______ 50 per cent_____ 6 months__________ S months____ S months_______________ S months_________ 10 per cent_____ Oklahoma. 50 per cent . _____ ao per cent________ Citizens of United States; t h r e e fourths residents of New York; hold certain stock. 1 Two-thirds residents of North Dakota ; each holder of 10 shares. Three-fourths residents of Ohio; each holder of 5 shares. Superintendent banks. 4 years____________ Yes; c o r p o r a t io n commission. Annually to legisla ture. Yes Yes Yes Yes ___ 20 per cent________ Yes______ ______ _ 4 years..................... - Two-fifths, one-half, three-fifths. per cent of demand de posits and 4 per cent of time deposits in cash; the rest deposited. Wisconsin. Wyoming. $10,000 to$50,ooo__ $10,000 to$ioo,ooo._ West Virginia. YVasliington. Property worth $25,000; maximum, $10,000 to $100,000. $500,000. All All 3 4 20 per cent _______ 5 Sper cent (see page 678) 1 .. Y es_______________ Yes Vf“? | At least five___ Hold $500 of stock. C o m m is s io n e r of banking. Hold 10 shares of stock. 4 years____________ Bank commissioner.. Bank examiner____ Majority residents of S o u t h Dakota, etc.; each holder of S shares. Annually to eommissioners. Annually togovernor. Annually to legislature. Yes_______________ Yes___________ ____ Yes_______________ Yes___________ Four_____■ _________ Like national banks. - Tw o_______________ Five_______ Biennially_________ Annually......... ......... Savings d e p o s its every 5 years. One............................ At supervisor’s discretion. T wo____ 15 per cent and 23 per cent. 1s per cent_________ 10 per cent_________ 7 To l e g i s l a t u r e through treasurer. Stockholders; major ity residents of Wisconsin. Majority citizens of Virginia; each own $100 of stock. shares, etc. 8 States; majority residents of Wyo ming; owners of certain stock. Semiannually by committee of di rectors or stock holders. Banking department. An examiner only — 9 10 banking. banking. 11 Y'es; state examiner. Y’ es; secretary of state and comptroller. Y'es; commissioner of agriculture, in surance, etc. Biennially to governor. Annually to legisla ture. Yes_______ ________ Four............... ........... Five ....................... . Yes; state examiner.. 12 Yes;corporation com mission. Yes; secretary o f state. Annually to governor. Annually to governor. Annually to governor. Annually to governor. 13 Biennially to legisla ture. • Yes Two (see page 624). Yes Yes Yes 14 Yes________________ Yes 15 16 Four 17 One............................ Two___ Four; but see page 625. 15 per cent and 20 per cent. One______ _________ 18 20 per cent_________ 19 tier cent.... ......... 20 15 per cent and 25 per cent. One-third__________ One-third of demand reserve. Two-fifths.. . Two-thirds_________ T wo-thirds_________ All not held in cash or bonds. Three-fifths.. 20 per cent and 25 per cent. 21 15 per cent and 25 per cent. Two-fifths ........ . As directors determine. 22 All________________ All 23 cretion. One-third of both deinand and time re serve. Yes Yes Yes _______ 24 10 per cent, with ex ceptions. 25 per cent, with ex ceptions. 20 per cent, with excep tions. 25 per cent and 40 per cent (see page 463). Yes____________________ Yes________________ Yes............................. Yes......... ................. . Yes________ _____ _ Yes_______________ Yes_______________ Yes......... ................... 25 per cent. . 30 per cent, with ex ceptions. Yes___ Y e s . . . ...................... Yes......... Restricted (see page 514) . First mortgages for not longer than 1 year, etc. Yes. ________ Vm Apparently allowed, except to officers, etc. ........ 1......... Yes________ __ Y e s _____________ The limitations on a bank’s holding its own stock, either as collateral or outright, is commonly subject to the proviso that the stock may be held if it is necessary to take it to prevent loss on a debt previously contracted on security thought adequate at the time. The statutes allowing stock to be thus taken usually require it to be sold within a certain time—six months, a year, etc. * For typical limitations on real estate holding, see the provisions of the New Jersey statutes, on page 418. and of the New York statutes, on page 466. i Other than the national banking act, there is no statute in force in the District of Columbia providing for the organization of commercial banks. j The Massachusetts bank statutes here tabulated are obsolete; see page 246. 26 Y e s _______ _______ 27 Limited to 50 per cent of capital and deposits, with ex ceptions. Y'es______________ Y'es. . Allowed for 60 days.. 1 Yes_______________ 28 Limited in total amount and value (see page 637). Allowed if capital is increased. j i Yes----------- ------- ---- Y e s ............................ In effect forbidden__ Allowed in home city on increasing capital, etc. One-half capital and one-half deposits only may be so loaned. sylvania land; lim- j ited in amount. Yes_______________ 25 Deposits limited (see page 630). times. First lien only, etc__ Y’ es............................. Y'es_______________ Y e s ...... ............... Y’ es____ Deposits, ten times. Restricted (see page 464). 6 7 3 years...................... 4 years................. ..... To a certain extent ; board of bank in corporation (com missioner, treasur er. and attorneygeneral). Y e s . ................ ......... One-third--------------6 Virginia. Vermont, c Utah. Semiannually______ 20 per cent and 25 per cent. Three-fifths, one-half, two-fifths. Texas. 10 per cent_________ At least three______ Yes_______________ T wo_______________ 25 per cent, 20 per cent, and 15 per cent. 10 per cent________ 25 per cent_________ To a certain extent; board of commis sioners (governor, secretary of state, and state treasurer). Yes; state examiner and banking board (governor, secre tary of state, and attorney-general). All________________ Quarterly................. Superintendent of banks. _ Bank commissioner.. Bank examiner____ of Tennessee. $10,000 to $100,000-- $10,000 to $100,000; maximum $1,000,- Yes_______________ Hold $500 of stock. _ Hold $500 of stock.. Citizens of United States .and Penn sylvania: e a c h holder of 10 shares. Annually by committee. . Semiannually______ exam• At least three______ South Dakota. ___ 10 per cent_________ 10 per cent. ______ Three to thirteen__ South Carolina. .. 10 per cent_________ Yes_______ ________ Yes........................... Rhode Island. Y'es_______________ Y e s ............ ......... . . Limited to 5 per cent of deposits. Apparently allowed.. Apparently a l lowed. 29 Yes________________ 30 Allowed for 90 days. 31 Forbidden__________ 32 of capital. _________ ____ 33 ............ Ic 1 1 1 1 1 Alabama. No________________ I 1 Arizona. Yes . . . . Arkansas.6 __ California. No __________ ______ Yes...... .......... . Colorado. . . Yes Except where legis lated for sepa rately. Savings banks subject to the same laws as commercial banks. Connecticut. Delaware. District of Columbia. Florida. Yes Georgia. Idaho. Indiana. Illinois. Y e s ....................... No No To a certain extent (see page 83). Iowa. Yes_______ ________ Kansas. Practically, no . . . Yes In part------------------- Probably, yes______ $10,000 to $100,000.. $10,000 to $50,000--- $10,000 to $50,000__ At least five.............. Five to thirteen__ . Must be approved by a judge. Hold from 2 to s shares. R e s i d e n t s of the cou n t y ; each holder of $500 of stock. Annually by com mittee. Quarterly by com mittee. Quarterly________ ........ - ......... Yes...... ...................... Y e s ........................ Kentucky. N o____ ___________ Yes_______________ Yes 3 4 5 6 In mutual, must be members and de positors. Must be stockholders- All citizens of United S t a t e s ; threefifths residents of F l o r i d a ; each holder of 10 shares of stock. Hold $500 of stock__ Hold 10 shares of stock. Annually through au ditors. J Yes _____ Yes Yes _____ .... Yes Yes Yes Yes Yes Yes Yes Yes. Yes Yes........ .................. Yes Yes Annual report comptroller. 1s per cent of demand deposits. First liens only, e tc.. First liens on land w'orth twice the loan. First liens on Con n e c t i c u t land, worth twice the loan. Fully Y es............................ S. Doc. 353, 61-2. 1 (To follow page 39.) .......................... No. 2a. 1 jMa. ii 1 a .......... Voc !.......................... • Every other year___ Tw o_________ 15 per cent of de mand liabilities. Not more than 20 per cent. 8 per cent--------------- 20 per cent__ Two-fifths c a s h ; three-fifths depos its or bonds. Half cash, half de posits. Cash or deposits___ One-fourth c a s h , three-fourths de posits. First liens on Florida realty only, etc. First liens on land worth twice the loan. First lien on Indiana realty worth twice the loan. First lien on Iowa land worth twice the loan. Fully Yes At d i s c r e t i o n of C om p troller of Currency. Cash or its equiva lent; one-half in currency. So per cent of all loans must be first liens on Arizona land, etc. F o u r------ -------------- to At supervisor’s dis cretion. Three-fifths d e posited, two-fifths cash. Yes -------- -------------- Y e s ________ F ou r_________ Three $15,000 to $100,000-. 1..................................... .................... Yes 10 per cent........ ....... One-half cash, onehalf bonds. One-third cash, twothirds deposits. Y e s ______ Y e s ........... - ............. Yes Yes Yes Y es.. - ....................... I'ABLE B.— TABULAR SUMMARY OF STATE LEGISLATION GOVERNING SAVINGS BANKS. [General note: In many states the statutes contemplate that savings bank business be done by commercial banks, not by institutions devoted exclusively to savings banking. In such cases the statutes applicable to commercial banks are again tabulated here, although they may seem in certain respects inapplicable to savings business— as, for example, where reserves are required to be a percentage of demand deposits.) Maryland. V ps actically, n o ___ , . Yes In part. 236). - __________ (See page V><5 Yes Annually by com mittee of two. Stockholders; citi zens of Maryland. Annually by commit tee of five. Ve «5 s _______________ Annually by com mittee. North Carolina. New York. North Dakota. Only with respect to supervision, etc. In part____________ Almost entirely____ Almost entirely___ $10,000 to $15,000__ $10,000 to $100,coo; maximum, $5,000,000. $100,000; maximum $500,000. $15,000 to $75,000__ At least seven______ Five to thirteen__ Not more than thirteen. Three to fifteen____ Three to thirteen__ Hold 10 shares of stock. Residents in t h e county, etc. Stockholders; a majority citizens of Missouri. Citizens of United S t a t e s ; threefourths residents of Montana; each holder of 10 shares. Hold 5 shares of stock, etc. Majority residents of c o u n t y ; each holder of certain stock, etc. Hold 5 to 10 shares of stock, etc. Majority residents of county and free holders in New Jersey, etc. Residents of New York; financially responsible, etc. Two-thirds residents of North Dakota; each holder of 10 shares. S e m i a n n ually by committee. Annually through an accountant. Semiannually______ Quarterly__________ Semiannually______ Annually by committee. S e m i a n n u ally by committee. Semiannually______ Y e s ................ ......... Yes________________ In some m atters__ Quarterly__________ Before each dividend is declared, etc. Yes------------------------ Four _ _ Yes........................... Yes______ _________ Y es.. ...................... Y e s ____ __________ Yes_______ ________ Four____ _________ F o u r---------- ----------- Four........................... _________ One...................... ..... In a few respects___ In a very few respects. Both______________ Yes................- ........... Four.... ........... ........... Report to commis sioner every three years. One-third cash, twothirds deposits. New Mexico. Perhaps in some matters. Yes________________ Yes...... ...................... Every other year___ One____________ . 15 per cent of total assets. 15 per cent and 25 per cent. Yes________________ Yes________________ $5,000 to $25,000___ $10,000 to $50,000__ Not more than nine.. At least thirteen----- Y es............................. Yes____ Yes________________ Yes.......................... . Yes........................... - Yes________________ Yes________ Yes___________ F o u r_____ _____ . . Five. ____ . _____ __ _________ Annual report to superintendent. Every other year----- Every other year----- O ne_______________ One _____________ 5 per cent of all deposits. 20 per cent of all deposits. 5 per cent--------------- In cash or deposits. - In cash or deposits. . In available funds— thirds deposits. 1. N o________________ Y e s ................. ......... Every five years____ per cent-------------- e-half cash, onelalf bonds. New Jersey. Yes________________ Y es________________ Yes_____ _____ _____ Yes________________ Yes________________ Practically.no.. Yes.............. - ............. Biennial report to comptroller. New Hampshire. A few provisions___ Y es._______________ Not mentioned in statutes. Y es.. _____________ Yes ______________ u r --------------------- Nevada. 0 0 0 d holding in other banks. Nebraska. vj : si de n t s of the rount y; each lolder of $500 of stock. Montana. 0 0 0 0 d 0,000 to $50,000---- Missouri. Yes________________ Yes____ ___________ A few provisions___ .......... - - - - $50,000 to $300,000; maximum, $500000 to $1,000,000. Mississippi. Minnesota. Michigan. Massachusetts. § 0 0 b 0 0 Maine. Louisiana. c 0 A Kentucky. 0 6 0 0 Kansas. One-third, cash; twothirds, deposits. * • Cash or deposits__ __ T w o - f i f t h s cash, three-fifths depos * its. $4,000-------------------Massachusetts re alty, etc. or New Hamp shire realty, etc. worth twice the loan. Fully.......................... Yes Y e s _______________ Yes____ Yes __________ First liens only, e tc .. First liens on Minnesota land, etc. First liens on land worth twice the loan, etc. First liens on land worth twice the loan. Fully.......................... Fully.......................... Very briefly------------- Briefly........................ Briefly___________ Vm ...... ........... ....... 1 Yes............................. Yes............................. cases, second liens, etc. cases, second liens, etc. Jersey land worth twice loan, etc. Fu lly.. Yes * See digest, Page 530, for the difficulty in determining what statutes apply to savings banks in Oklahoma. For a typical limitation on real estate bolding, see the provisions of the New Jersey statutes on page 426 No. 2b (See page 475-) Practically, n o t____ ........ Yes. 8 Where more than one figure is given in answer to the question, it is because the statute provides different rules for institutions in communities of different sizes. In reserves, the difference is sometimes that between a reserve depository and a bank not designated as one. 6 See page 58 for the impossibility of summarizing Arkansas. ♦ The confused condition of the Louisiana statutes has made a summary of savings bank and trust company provisions seem unprofitable; see page 205 of the digest. d The reports and examinations here tabulated are only the regular reports of state officials and the regular examinations of state officials. The number given is usually the minimum per year; many States provide for special reports and examinations at the discretion of the supervisor. t of the land mort gaged (see page 4 4 7 ). Yes_ Yes Practically, not . ........ - ........... Yes________________ Y e s ............... . % cial New Mexico. New York. Yes________________ Yes________________ In a few respects___ North Carolina. North Dakota. Ohio. Oklahoma.* Y e s ______ _______ - _ Oregon. Pennsylvania. No__ Yes_______ _____- . - Yes______ Yes _____ ____ ... . With respect to su pervision, etc. Y e s ............... ........... $15,000 to $30,000__ . Rhode Island. South Carolina. Yes. No Only with respect to supervision. South Dakota. Tennessee. Texas. Utah. Washington. Wisconsin. West Virginia. In part____________ Are departments of banks and trust companies. Yes________________ Yes________________ Yes $10,000 to $50,000__ $25,000___________ - ‘ Property w o r t h $10,000 to $100,000. $10,000 to $50,000; $io,ccc to $100,00c; maximum,$1 ,coc, maximum,$5,000. coo. 000. Not more than nine. - At least thirteen___ of ew m- th Five to nine________ » Residents of New York; financially responsible, etc. te - of North Dakota; each holder of 10 shares. Ohio; each holder of 5 shares. Hold $500 of stock__ sylvania, etc. Annually by com mittee. Yes_______ _______ - Yes........ ................... . Yes______ Yes________________ Yes________________ Yes________________ Y e s ___ __ _____ Tw o_______________ Two_______________ Annually.. ______ Annual report to superintendent. One______________ Every other year___ Yes______________ Y e s... ______ No office in another savings bank, etc. By committee, before Before each dividend declaring dividends. and annually by committee. S e m i a n n ually by committee; and be fore dividends. . . Yes__________ ... Majority citizens of Virginia; e a c h holder of $100 of stock. Citizens of United States; majority residents of Wyoming; holders of certain stock. ginia. S e m i a n n ually by committee. Y e s .._ ........ - ........... - Yes Yes_______________ Yes________________ shares of stock. S e m i a n n ually by committee of di rectors or stock holders. Yes------------------------ Yes________________ Yes________________ \ Yes...... ............. ......... Yes________ _______ Five .............. ......... Four_______________ One_______________ One_______________ Annually___________ At supervisor’s dis cretion. 5 per cent of all de posits. • -. - - _ Stockholders; a ma jority citizens of Texas. stock. Sem iann ually by committee. Yes________________ Wyoming. Yes________________ A few provisions___ No Yes............................. $5,000 to $25,000___ Virginia. Vermont. 20 per cent of all de posits. 15 per cent of all de posits. T w o - f i f t h s cash, three-fifths depos its. 3 per cent of demand and and 2 per cent of time in cash; the same in securities; the rest de posited. 15 and 25 per cent of demand, 10 per cent of time. One-half cash, onehalf securities. thirds deposits. 7 Every other year___ ■ per cent of time deposits. 15 per cent of total assets. Cash, deposits, and not more than onethird bonds. 20 per cent of de mand liabilities. 15 per cent of de mand deposits. 5 per cent__________ 10 per cent of savings deposits. Cash, checks, deposits. T w o - f i f t h s cash; three-fifths depos its. Cash or deposits____ Cash or deposits__ - and $1,000 a year_______ Restricted by value of the land mort gaged (see page 4 4 7 ). First liens only, etc. (See page 475.) First liens only, etc.. amount, etc. sylvania land; lim ited in amount. First liens only, etc.. Practically, n o t. __ Y es.. _____________ Yes___ ________ - -J Yes________________ Yes________________ Yes................ rve rial ........ Yes____________ Yes_________ Yes ___ First liens on land worth twice the loan. one-half deposits may be so loaned. Yes............................. First lien; loan only t hr ee- f i f t hs o f value of land, etc. Practically, not _ _ Yes Yes No. ic. First liens on land in West Virginia or adjoining States, etc. First liens on land in certain States, etc. First liens only_____ Yes............................. Very briefly____ Very briefly______ - Yes............ ................. Yes________________ Yes...... ..................... Yes________________ Alabama. Arkansas. 6 Yes. _____ X 1 Arizona. Colorado. Yes.. ....................... Yes. _______________ N o.............................. No.............................. Y es_______________ To a certain extent (see page 83). Yes________________ Except where legislated for s epa1 rately. Trust companies subject to laws governing commercial banks. Delaware. California. Connecticut. $1,000,000 $1,200,000. $50,000 to$ ioo,ooo.. 3 A ll........................... 4 District of Columbia. Florida. Idaho. No_________ ___ to A ll.............. .. ............ AH ■ Georgia. Yes Yes Yes If they do banking business. $25,000: not over $2,000,000. $ 25,000; perhaps also same requirement as for banks. Iowa. Indiana. Illinois. ___ $10,000 to $50,000--- $100,000; maximum $1,000,000. All, if not $100,000. All________________ 20 per cent_________ So per cent------------- over 6 months___________ 6 7 50 per cent_________ Y es............................ Three-fourths must be residents of Connecticut. Stockholders; onehalf citizens of District of Colum bia. Yes Ve <5 Yes ______ 0 1 year-------------------- Y e s _____ ________ Yes________________ Yes------ --------------Five to fifteen______ Nine to thirty______ 9 $15,000 to $200,000. - $25,000 to $100,000; maximum, $2,000000. 10 per cent________ No ............................. Louisiana.e Very briefly________ Yes________________ Yes_______________ One year. ............ ..... 8 Kentucky. Yes______________ 20 per cent; not less than $15,000. 5 Kansas. Majority residents of K a n s a s ; each holder of $1,000 of stock. Majority citizens of I n d i a n a ; each holder of 10 shares. Hold at least 1 share of sfock. Quarterly__________ t 2 Yes 3 Yes 4 Three Yes Yes V>«5 Yes ____ Yes.......... ................ Yes...... .................... Yes........- .................- Yes________________ Yes________________ Yes Four_____ ______— Five.. Four_______ ______ Four............- ............ 5 Two 6 7 At supervisor’s dis cretion. Minimum reserve; 0 What per cent of demand deposits. See pages 171 and 178. At comptroller’ s dis cretion. 15 per cent and 10 per cent. S ..................................... 15 per cent or 20 per cent. • 0 1 Three-fourths........... All Eleven-fifteenths___ 2 All Individual borrower’s liability limited to what per cent of capital.* See pages 61 and 70. 10 per cent unless amply secured. Yes________________ Yes...........................- Yes 4 Total loans or deposits restricted to what proportion to capital. Both, ten times____ Loans on real estate restricted _____ ____ First liens on Colo- ..................................... ..................................... ..................................... ...................................... r a d 0 real estate only. Corporation forbidden to purchase its own stock / ____ Real estate holdings limited a ........................................ Overdrafts forbidden_______________________________ Yes........ ..................... Only forbidden officers. Permitted if capital increased. Y e s ............................ Yes............................. Y e s ........ ................. . Y e s...................... . Yes_______________ Only forbidden to officers, directors, etc. to ------------------- ------ ..................................... __________ Allowed on increase of capital, etc. ___________ S. Doc. 353, 61—2. (To follow page 39.) No. 3a. . » Where more than one figure is given in answer to the question, it is generally because the statute provides different rules for corporations in communities of different sizes. In reserves, the difference is sometimes that between a reserve depository and a corporation not authorized to receive reserves of others on deposit. 6 See page 58 for the impossibility of summarizing Arkansas. « The confused condition of the Louisiana statutes has made a summary of savings bank and trust company provisions seetn unprofitable; see page 205 of the digest. d The reports and examinations here tabulated are only the regular reports to state officials and the regular examinations by state officials The number given is usually the minimum per year; many States provide for special reports and examinations at the discretion of the supervisor. TABLE C.— TABULAR SUMMARY OF STATE LEGISLATION GOVERNING TRUST COMPANIES Kentucky. Louisiana.e Yes______________ Maryland. Maine. Yes_______________ Yes---------------------- So per cent____ __ Yes_______ Michigan. Massachusetts. ______ Y e s .............. ......... In part ; see page 236- $25,000 to $150,000; maximum, $1,000,000. $50,000 to $300,000 ; maximum, $500,000 to $2,000,000. All....... ................. .. $50,000 to $300,000-. All $100,000 to $200,0 0 0 ; maximum, $1,000,000. $150,000 to $300,000 ; maximum, $5,000,000. Minnesota. Mississippi. Missouri. Montana. Nebraska. !v Yes________________ 1 Tes________________ No.............................. Yes________________ In some matters___ Y e s ........ .................. In respect to super vision, etc. $200,000 ; maximum, $2,000,000. $100,000; maximum, $10,000,000. $100,000; maximum, $10,000,000. A ll.............................. 50 per cent of sub scribed capital. $100,000; 50 per cent. Nevada. No________________ New Hampshire. Yes.......... New Jersey. Yes Y e s _______________ In respect to reports, examinations, etc. i year___ New Mexico. New York. With respect to su pervision, etc. In certain respects . . Ve* $100,000 and $250,000 $100,000 to $500,000. $5,000 to $25,000---All. All $50,000 and $100,000. All 2 years; see page 381. 10 per cent____ ____ Probably 50 per cent. Probably 5 months.. 10 per cent________ 25 per cent_________ Yes----------- North Carolina. 20 per cent................ Y es........................ Yes........ ............... . Two-thirds residents of Maine; e ach holder of io shares. Stockholders; citizens of Maryland. No.............................. Yes ............ ............... Probably yes; see page 360. Yes Five to twenty-five.. Annually by committee of two. Yes_______ Majority residents of M a s s a c h usetts; each holder of 10 shares, etc. stock. Quarterly mittee examines annually. One_______ ________ Annually___________ One____________ .. O ne................ ......... Yes._____ _________ Yes____ „•................... Four............. ............. One_______________ Stockholders; a majority citizens of Montana. ................... Stockholders’ committee examines annually. Yes________________ Yes_______________ _ Yes...... .................. ... Yes........ ..................... Yes_________ ______ Four---------- Stockholders, a majority citizens of Missouri. Residents of Minne sota ; each holder of 10 shares. Four ......................... At supervisor’s dis cretion. Majority residents of c o u n t y ; each holder of specified amount of stock, etc. of stock, etc. Hold 5 shares of stock. Majority citizens of New Mexico; each holder of 10 shares. Hold 10 shares of stock. S e m i a n n u a l l y by committee. * Yes........... ................. Yes...... ...................... Yes____ ___________ Yes...... ......... ......... Four_______________ F o u r............ ............. Y e s ........ Veq V ps Apparently seven__ Reported to commissioner every three years. One.......................... . One_______________ 15 per cent_________ 20 per cent of matured obligations. per cent. T' 1 1 1 At supervisor’s dis cretion. 15 per cent................ See pages 352 and 362. 15 per cent; and 10 per cent. • Two-fifths; and onehalf. Three-fifths; one-half. and All; two-thirds; and one-half. Three-fourths______ A l l . . .......... ............... None; o n e - t h i r d ; and one-half. One-fifth------- --------- 20 per cent. 10 per cent to 25 per cent unless secured, etc. Yes......................... Yes See pages 352 and 362. Yes............................. Yes............ ................. ___ Y e s ........ ................... Yes------------------------ One branch in home city. ^ es________________ \ e s.______ ________ Yes............. .............. Yes.... ......................... Yes------------------------ Forbidden to officers directors, etc. Forbidden____ _____ « The provisions restricting individual liability vary greatly, as will appear on reference to the body o times of paid-in capital, sometimes of capital and surplus, etc. Liability of an individual firm or corporation liability is not considered increased by the discount of bills of exchange drawn in good faith against existing owned by the person negotiating it. Where there are still further exceptions (as if the per cent may be exceed incompleteness. No. 36. Yes Restricted (see pages 464 and 485). Apparently allowed.. Restricted by location and capital. Yes . Yes Yes Y«s-............ - ............. Yes............................. First liens on Montana realty. Restricted...... ........... Yes_____ 25 per cent and 40 per cent (see page 463). Allowed in home city on increasing cap ital, etc. the digest. The per cent is sometimes of capital, some frequently includes the liability of members. Commonly, values, nor by the discount of commercial paper actually tl in the case of secured loans) the table aims to suggest its New Jersey. North Carolina. New Mexico. Oklahoma. Ohio. North Dakota. Oregon. Pennsylvania. Rhode Island. South Carolina. South Dakota. Yes. Yes. No_________ Yes________ Yes___ Yes___________ Y e s .._____ _______ Practically no. N o. Y es............... With respect to supervision, etc. In certain respects _. Probably yes. Probably yes. In part. In some matters. In so far as they do banking business. In many respects___ Yes_________ Yes. Probably not $100,000____ $100,000. $100,000 to $200,000; maximum, $10,000,000. $10,000 to$so,ooo__ $50,000; maximum, $2,000,000. $25,000. $25,000 to $100,000. 50 per cent. 50 per cent. 50 per cent All. All. 6 months__ 6 months__ $100,000and$250,0001 $100,000 to $500,000. $5,000 to $25,000 — $50,000 and$ioo,000. All Probably 50 per cent. $50,000. Probably 5 months.. 2 years_____________ 5 months . . All Tennessee.* No. Texas. Virginia. Vermont. Utah. Washington. West Virginia. Briefly_____________ Yes_______ Yes- Yes________________I A few provisions Yes.............................| Yes------ Largely. In part____________ Yes. Yes.............................' Yes........................... Largely___________ I In part. $50,000; maximum, $10,000,000. $25,000 to $100,000- $50,000. $25,000 to $100,000-- $100,000. $50,000 to $100,000; ma x i m u m , $5,000,000. A ll. All. Yes____ 50 per cent. 6 months__ 10 per cent_________ 10 per cent. ro per cent. Probably 10 per cent. 10 per cent. 10 per cent. 10 per cent. 10 per cent. 10 per cent. er cent - 20 per cent. Probably 20 per cent. 20 per cent. 20 per cent. 20 per cent. 30 per cent. 50 per cent. 20 per cent_________ 20 per cent. 20 per cent. Yes_______ Y es........... . Yes............. Yes. Yes. Yes............ . At least five. Five to twenty-five.. Majority residents of S o u t h Dakota; each holder of 5 shares. Stockholders; a ma jority citizens of Texas. Probably yes . No________ Double unpaid stock Yes. ?ast five. At least five. Thirteen to thirty. Nine to fifteen. Five to thirty__________ Five to twenty-five.. At least three____ 1 5 shares of Majority citizens of New Mexico; each holder of 10 shares. Hold 10 shares of stock. Majority citizens of N o r t h Da kota; each holder of 10 shares. Three-fourths residents of Ohio; each holder of 5 shares. Must be stockholders Semiannually. Probably semiannu ally. Annually by committee. Yes.............. Yes.. act. liann 11ally by mmittee. ; Probably yes. Yes. Yes.. Y es.. Probably yes . Probably yes . Two Four. Four_______ Five________ Hold $500 of stock__ Hold $500 of stock. Hold 10 shares of stock. Yes............................. At least five. : Majority citizens of V i r g i n i a ; each owns $100 of stock. Yes________________ Four. O ne_______________ Two. Probably one. Two. One. Yes. Y es.. Yes____ ___________ Y es.. Like national banks. . Two. Five. 15 per cent; and 10 per cent. 15 per cent _ 1S per cent . Probably 20 per cent. 15 per cent. At supervisor’s discretion. Two. 15 per cent and 25 per cent. 15 per cent.. 1o per cent 7Ya per cent. Two. Yes.. Yes.... .....................-Four Four. Tw o____________ Four. At least three . One. Two-fifths.. Probably two-fifths.. 3 per cent of demand; 2 per cent of time. One-third .. One-third of demand reserve. Two-fifths.. -fifths. Three-fifths. None; o n e - t h i r d ; and one-half. Three-fifths Probably three-fifths . Two-thirds. All not held in cash or bonds. Three-fifths 1S per cent of all, minus 6 per c e n t of demand and 4 per cent of time. Yes. Five to nine----------Citizens of United States; majority residents of Wyo ming; each holder of certain stock. S e m i a n nually by committee of di rectors or stock holders. Yes. Yes. Yes. Yes. Yes. Y es.. Two_______________ Four Five. 13 Four. One Two______ Four ■ „ j Two_______________ '-------------------------- One. At supervisor’s discretion. per cent_________ One. One. 15 per cent. 15 per cen t. 25 per cent. A ll. A ll. Two-fifths.. A ll. All. Three-fifths One-third of both de mand and time re serves. 3 per cent of demand; 2 per cent of time. 10 per cent. Probably 15 per cent . 20 per cent. 25 percent with ex ceptions. Probably yes. Probably yes____ Yes. 30 per cent. 10 per cent with ex ceptions. 15 per cent with ex ceptions. 25 per cent. 20 per cent. 5 per cent of de posits, etc. (see 15 per cent. 20 per cent. page 670). Yes. Restricted (see pages 464 and 485). Probably only first liens, etc. Limited in amount, etc. Yes. Yes________________ ! Probably yes . Probably yes______ Y e s ----------------------------- Yes. Yes________________ | Yes_________ Yes...... ............. ........ Yes____________________ Apparently allowed. Forbidden to officers directors, etc. Y es. Yes.......................... Yes............................ Deposits, ten times. Loans, ten times------ ........ | YeS......................... |.............. One-half capital and one-half deposits j may be so loaned. First mortgages on Utah land, worth twice the loan. Yes. Yes. First liens on land worth twice the loan. First lien; loan not to exceed *“ re<\ fifths value of land. etc. dden to officers ectors, etc. Allowed in home city on increasing cap ital, etc. Yes. Yes________________ Yes_______________ Yes......... Yes.. ■Allowed if capital increased. Yes........................ Apparently allowed. except to officers, etc. Apparently allowed.. Allowed. Forbidden. . . ______ / The limitations on a bank holding its own stock, either as collateral or outright is commonly subject to the proviso that the stock may be held if it is necessary to take it to prevent loss on a debt previously contracted on security thought adequate at the time; the statutes allowing stock to be thus taken usually require it to be sold within a certain time— six months, a year, etc. 9 For a typical limitation on real estate holding, see the provisions of the Michigan statutes on page 302. * Banks inTennesseeapparently do all the trust businessdone inthe State. See Table for banks. ................. Yes. Query .. Yes. Yes. Limitedto 5 percent of deposits. Allowed if capital inincreased. No. 3c. 14 15 E ven ’ 6 years_______________________ j Biennially 10 per cent. All; two-thirds; and one-half. Yes________________ Yes- Two. 10 per cent. Hold 10 shares of ____________________ Stockholders; ma stock. jority residents of Wisconsin. 15 per cent and 25 per cent. Two-fifths. . 25 per cent and 40 per cent (see page 463)- Yes- Yes. Y es............................. Yes................ 25 per cent. fifth.. percent_________ Seven to thirty. Quarterly Biennially__________ Annually___________I Savings deposits every 5 years. upervisor’s disition. Yes........................... Quarterly. Yes. $10,000 to $100,000.. All. er cent _ Yes_______ Wyoming. Wisconsin. Y e s _______________ Yes- Yes............................. Yes. Allowed for 90 days. Forbidden. 16 STATE BANKING STATUTES. ALABAMA. Article X III of the constitution of Alabama, entitled “ Banks and banking,” contains provisions dealing chiefly with note issues, redemptions, etc. The Code of Alabama, which includes all statutes passed prior to the end of the 1907 session, deals with the subject of banks in three arti cles of the chapter (No. 69) on “ Corporations.” There are articles in this chapter also, concerned with mutual aid, benefit, and industrial companies, building and loan asso ciations, etc. The three articles really concerned with banking are: (9) General provisions as to banks and banking; (10) Regulation of trust companies; and (11) Examination and regulation of banks. There is no legis lation dealing specifically with savings banks, but by section 3561 the provisions of article 11 are made to apply “ to all banks except national banks, and to all trust companies and individuals doing a banking business, whether incorpo rated or not.” All the legislation, therefore, for which sec tions in the code from 3538 to 3561, inclusive, are cited, applies according to the terms of section 3561. These sec tions, together with a few others, are accordingly grouped in the first division of this summary of Alabama, as bear ing upon all banking institutions, including savings banks, and trust companies that are engaged in banking. Under 41 N at ion a l M onetary Commission the second division, headed “ Trust companies,” are merely inserted those provisions of the statutes which deal with trust companies. The citations where they are simply numbers in parenthesis are references to the Code of 1907. Mr. T. J. Rutledge, state bank examiner of Alabama, assured the compiler, in a letter dated May 31, 1909, that at that date there had been no banking legislation subse quent to the material included in the digest. GENERAL PROVISIONS. I.— T erms of I ncorporation. Banks doing business in Alabama, if in towns of more than 2,500, must have a capital of not less than $25,000 actually paid in and employed in the business; if in smaller towns the capital must be not less than $15,000 (3542). For combining banking with trust business, see VI, below. II.— L iability of Stockholders. No stockholder in any corporation is individually liable for mote than the unpaid stock owned by such stockholder (3468, and constitution, sec. 236). III.— Supervision . * The officer of the State whose duties are concerned sim ply with banks is the state bank examiner. He must be a competent and experienced accountant and must have no interest, either pecuniary or as an officer, in any bank subject to this statute or in any national bank. His sal ary is $2,000. His term of office is the same as that of the state treasurer (3549). Information had on examination, etc., must not be disclosed except in the course of duty (3553)* 42 A l a b am a — General Provisions If the treasurer finds that a bank is not in a solvent condition, he reports the fact to the governor, who insti tutes proceedings for a receivership (3560). REPORTS. All banking institutions in the State report to the state treasurer not less than twice yearly according to the form prescribed by him (3538). These reports exhibit in detail and under proper heads the resources and liabilities of each bank on any past day, specified by the treasurer, and not more than three days prior to the issue of the call for the report by the treasurer. The day for reports must be uni form throughout the State. The bank must transmit its report to the treasurer within five days after receiving his request. The report is published once in a local newspaper (3539)- The treasurer may call for special reports from any particular bank in his discretion (3540). State depos itaries report daily and monthly to the state treasurer (647). From his reports during the year the state bank exam iner constructs an annual report, which is published by the state treasurer as a part of the treasurer’s annual report to the governor (3557). The report of the examiner and the treasurer’s report to the governor may always be seen at the treasurer’s office (3558). If any annual report of the state bank examiner is deemed of sufficient importance to the public by the governor, he may require the report to be published in newspapers (3559). EXAMINATIONS. The bank examiner visits all banking institutions once each year, and twice if it is practicable. The visits are not at stated times, and the bank must not know when they will occur. The examiner carefully and thoroughly exam- 43 N at ion a l M on e t a r y Commission ines the affairs of the bank and reports to the treasurer immediately. His report covers all the subject-matter that the law requires banks to report upon and such other subjects necessary for the protection of depositors and stockholders as the state treasurer requires. The state treasurer may require an examiner to visit any bank when ever he thinks public interests so demand (3552). The examiner is prohibited from receiving fees from banks (3551). He may disclose information had upon ex amination only to the state treasurer (3553). He must never report any list of names of depositors or amounts of deposits (3554) • IV.— R eserve R equirements. No bank, person, firm, or corporation doing a banking business may reduce its cash on hand below 15 per cent of demand deposits, but three-fifths of the 15 per cent may be in the shape of balances due from other banks and bankers (3543). V.— D iscount and L oan R estrictions. Loans to any individual, firm, or corporation are limited to 10 per cent of the capital, surplus, and profits of the lender, unless the loan is amply secured by good collateral, or is approved by a majority of the board of directors of the corporation making the loan (3547). Loans must not be made to any salaried officer, agent, or employee of the bank, person, firm, or corporation making the loan, unless good security is furnished (3546). If losses impair the capital of a bank, the shrinkage is chargeable to profit and loss, so that the notes and bills discounted and the loans made, shown as debts due the bank, may be collectible assets (3548). 44 Alabama General Provisions VI.— Investments. Corporations doing a banking business may buy and sell stocks, bonds, etc.; lend money on personal security or upon pledges of bonds and stocks; take security, by mortgage or otherwise, on property, real and personal; become trustees for any purpose; be appointed and act as executors, administrators, guardians, and receivers; and do any business and exercise any powers incident to the business of trust and banking companies doing a bank ing business (3518). X.— U nauthorized B anking . No foreign corporations invested with the privilege of banking may exercise it by agent in this State, except by the exclusive use of United States currency (3525). XI.— P enalties . The penalty for failing for thirty days after notice to make good impaired reserve is $25 for each day after the expiration of the thirty (3545). Any bank failing without satisfactory reasons to fur nish a report when requested by the treasurer forfeits $50 (3 5 4 i ) - Any bank examiner who receives fees from a bank doing business in Alabama is guilty of a felony punishable by imprisonment from one to five years. The person, firm, or corporation offering the fee is similarly punishable (6362). If the bank examiner reports a list of depositors he is guilty of a misdemeanor which is punishable by fine not exceeding $1,000 and he is also liable to the person, firm, or corporation whose affairs he has disclosed in the penal sum of $1,000 (3555). N at ion a l M onetary Commission Withholding demands upon banking institutions in or der to accumulate enough to induce a run is a misde meanor, for which the penalty is from $500 to $2,000 (6361). TRUST COMPANIES. I.— T erms of Incorporation. Corporations operating as trust companies must have the word “ trust” as part of their corporate names, are amenable to the banking law, and are examined like state banks (3528). In cities of 5,000 inhabitants or less, trust companies must have a paid-up capital of not less than $25,000; in cities from 5,000 to 30,000 the capital must be not less than $75,000; and in cities of over 30,000 it must be not less than $100,000 (3529). I l l .— Supervision . Trust companies are allowed to deposit with the state treasurer securities of certain prescribed sorts which are used to secure the payment of liabilities of the company in fiduciary capacities and to exempt the company from giving bond (3531 et seq.). Trust companies are exam ined as state banks are (3528). X .— U nauthorized T rust Company B usiness . No corporation which is not organized as a trust com pany or as a bank or as a combined bank and trust com pany, and which has not complied with the statute, may use “ trust” as part of its name, nor may any partnership use the word “ trust ” (3530). Corporations that employ the word “ trust” illegally as part of their name thereby make their incorporation void and make their members liable as partners (3530). I ARIZONA. The most recent compilation of the laws of the Territory of Arizona is the Revised Statutes, 1901. The session laws have been examined through 1909. The legislation on the topics covered by the digest is contained, apart from amendments in the session laws, chiefly in chapter 7 of title 1 of the Revised Statutes, “ Territorial Auditor,” and in chapter 6 of title 13, “ Savings and Loan Corpora tions. ” The contents of this latter chapter are digested under “ Savings banks;” the companies with which the chapter deals are defined as “ corporations organized for the purpose of accumulating and loaning the funds of their members, stockholders, and depositors” (828, amd. by 1903, chap. 86). Most of the provisions in the chapter on the territorial auditor apply in terms to “ every building and loan society or association, savings bank, bank, and banking company;” these provisions are digested fully under “ Banks,” and are merely referred to under “ Savings banks.” The heading “ Trust companies” is omitted from the digest, since such corporations are mentioned only in one section, 131 of the Revised Statutes, which provides for the annual examination of every bank, savings bank, “ or any trust company receiving any valuable thing in trust, or money on special deposit. ” It is possible, of course, that trust companies might be brought within the general expressions “ banking corporations,” etc., but 47 N at ion a l M on e t a r y Commission since there is no special legislation with respect to them (except chapter 31 of 1903, which makes certain provision for fiduciary business), a separate heading including such sections as might inferentially be made applicable to trust companies seems of little value. The references, where they are simply numbers in parenthesis, are to sections in the Civil Code in the Revised Statutes of 1901; later acts are cited by year and chapter. BANKS. III.— Supervision . The auditor of the Territory (an official appointed by the governor for terms of two years, with a salary of $1,000— 107 and 109) is by virtue of his office bank comptroller of Arizona (129). If on examination of the affairs of any corporation, firm, or individual doing the business men tioned in the chapter on the territorial auditor (the chap ter mentions banks, savings banks, and building and loan societies repeatedly; refers in section 131 to trust com panies receiving valuable things in trust or money on special deposit; and in section 138, amended by 1909, chapter 90, declares that “ the terms bank or bankers whenever used in this law are intended to include all per- • sons, firms, or individuals receiving deposits, buying or selling exchange, or doing any other kind of business as bankers”) the bank comptroller finds the bank has vio lated any law of the Territory or is conducting its business unsafely, he orders a discontinuance of the practices and conformity with the requirements of law and with safety in its transactions; in case of a failure to comply with his order, and whenever it appears to him that it is unsafe for any bank to continue its business, he must then imme 48 A r i z o n a S t a t e B a n k s diately take possession of the business of the bank and all its property. He notifies the governor and the attorneygeneral, who causes suit to be instituted to enjoin the in stitution from the transaction of any further business. If the court then finds that it is unsafe for the business to be continued or that the bank is insolvent, the comptroller surrenders possession to a receiver, who winds up the affairs of the bank (139, amd. by 1907, chap. 96, 1). The bank comptroller may proceed in the same way against any bank which, after having purchased its own stock under the law, fails to dispose of it within six months (1907, chap. 96, 3). He may revoke the license of any bank which, having neglected to furnish a report, fails to pay the statutory penalty (1907, chap. 96, 4). He approves of reserve depositories, and may declare any bank which fails to maintain its reserve insolvent (138, amd. by 1909, chap. 90). REPORTS. The bank comptroller, not less than once a year and as often as he thinks necessary, without previous notice, requires every “ savings bank, banker, or banking asso ciation or corporation” to report its condition (130). Every “ savings bank, bank or banking corporation” makes not less than three reports to the comptroller every year, showing the actual financial condition of the bank at the close of business on a past day specified by the comptroller; the report includes a statement of the amount of capital stock, names of directors, number of shares held by directors, amount paid in in money by stockholders for capital, amount of reserve, amount due depositors, and amount and character of liabilities, par ticulars with respect to real estate held, amount loaned on real estate, with details, amount invested in bonds, with details, amount loaned on stocks and bonds, with N at ion a l M on e t a r y Commission details, amount loaned on other securities, with details, amount of money on hand or on deposit and where de posited, and a statement of other assets not included in the above list (136). These reports must be transmitted to the comptroller within ten days after the receipt of his request, unless he designates a shorter time; they must be published in a local newspaper (137). Receivers of in solvent banks report to the comptroller as solvent banks do (139, amd. by 1907, chap. 96, 1). The bank comptroller reports annually to the governor a synopsis of reports received from all the institutions under his control, together with any other proceedings had by him, the general condition of banking and savings banking in the territory, etc. (130). After every exami nation he reports the condition of the examined institu tion to the attorney-general (131). At each legislative session he reports the business of his office to the legisla ture (141). “ The semiannual reports provided for” are kept on file at his office and open to public inspection (142); all his books and records are open to public inspection (i44)EXAMINATIONS. The bank comptroller or some person appointed by him must, at least once in each year and as often as he deems it necessary, without previous notice, visit and thor oughly examine each bank and savings bank “ or any trust company receiving any valuable thing in trust or money on special deposit” ; he inspects books, papers, etc., and all securities, to ascertain the condition of the corpora tion, its solvency, £tc. (131). It is the duty of the comp troller to examine the condition of the affairs of every bank in liquidation in the same way he examines solvent banks (139, amd. by 1907, chap. 96, 1). 50 S t a t e A r i z o n a B a n k s IV.— R eserve R equirements . “ Every bank, banker, or banking association, except savings banks,” must keep on hand in lawful money of the United States 15 per cent of the aggregate amount of its deposits and of any sums or amounts owing on account of money borrowed; of this reserve two-fifths must be in cash and three-fifths on deposit with other banks ap proved by the comptroller. If a bank fails to keep the reserve as required the comptroller may prohibit it from transacting further business and declare it insolvent (138, amd. by 1909, chap. 90). V.— Discount and L oan R estrictions. Among the matters required to be reported are amounts loaned on real estate, amounts loaned on stocks and bonds, and amounts loaned on other securities (136). No bank may loan or discount on the security of shares of its own stock unless accepting such security is neces sary to prevent loss of a previous debt, in which case the stock so acquired must be sold within six months from its acquisition (1907, chap. 96, 3). bor provisions whereby territorial banks may become depositaries of public moneys, see 3770 et seq. and amend ments of 1905, chapter 56; also 1909, chapter 96. V I.— I nvestments. Among the items required to be reported are “ the amount at which the lot.and building occupied by the bank for the transaction of its regular business stands debited on its books, together with the market value of all other real estate held, whether acquired in settlement of loans or otherwise,” with details, and “ the amount invested in bonds” (136). N at ion a l M on e t a r y Commission No bank may purchase shares of its own stock unless the purchase is necessary to prevent loss on a previous debt, in which case the stock must be sold within six months from its purchase (1907, chap. 96, 3). VIII.— B ranches. Branches are apparently allowed, for the section pre scribing compensation for examinations includes the sum which the comptroller is entitled to receive “ from each branch or agency of a bank ” (140). X .— U nauthorized B anking . No corporation, firm, or individual may use the name or transact the business of a “ savings bank or bank or banking corporation ” without the comptroller’s license. A violation of this provision entails a penalty of $100 per day during the continuance of the offense; any person who in any manner attends to such business as manager, agent, etc., forfeits $100 per day also. Any violation of this provision is a misdemeanor (134). X I.— P enalties . Whoever refuses to testify before the bank comptroller or his subordinate in the discharge of his duties is guilty of a misdemeanor punishable by fine not exceeding $5,000, imprisonment not exceeding one year, or both fine and imprisonment (132). If the comptroller has knowledge of the insolvency or unsafe condition of a bank and neg lects to report to the attorney-general he is punishable by a fine of from $5,000 to $10,000, imprisonment for from one to two years, or both fine and imprisonment; his office is vacated by the offense (133). If any officer or em ployee of a bank or any other person fails to comply with the provisions relative to dissolution of an insolvent bank 52 A r i z o n a - S a v i n g s B a n k s or refuses to obey the directions of the bank comptroller in dissolution proceedings, he is guilty of a misdemeanor punishable by fine not exceeding $300, imprisonment not exceeding six months, or both (139, amd. by 1907, chap. 96, 1). If any bank fails to furnish the comptroller, within the time specified, with a report required by him, it forfeits $100 per day during the default; failure to pay the penalty is cause for revocation of license to transact business (1907, chap. 96, 4). There is a Penal Code pro vision making it a misdemeanor for an officer, agent, teller, or clerk of “ any bank ” to receive deposits knowing that the bank is insolvent (Penal Code, 506). vSAVINGS BANKS. I.— T erms of I ncorporation. It is hinted that savings banks may be incorporated without capital stock; one section reads: “ When savings and loan corporations have a capital stock specified in their articles of incorporation, certificates of the owner ship of shares may be issued” (829). Another section requires “ the directors of any such corporation having no capital stock” to retain on each dividend day at least 5 per cent of net profits to constitute a reserve fund, which must be invested like other funds of the corporation and used to pay losses. A savings bank may provide by its by-laws for the disposal of any excess reserve fund over $100,000 and the final disposal of the fund (834). The directors of savings banks may declare dividends of so much of the net profits and of the interest arising from the capital stock and deposits as may be appropriated for that purpose under the by-laws and under the agree ments with depositors. Depositors have priority over stockholders upon the assets of a savings bank, “ but the 53 ^252 N at ion a l M o n et a r y ' C o m m i s s i o n by-laws may provide that the same security shall extend to deposits made by stockholders” (830). II.— L iabilities and D uties of Stockholders and D irectors. There is no especial provision for stockholders’ liability in savings banks. The directors must not contract any debt or liability against the corporation for any purpose except deposits and for necessary current expenses of conducting busi ness (830). See also V, infra, for further restrictions on borrowing by directors (835, amd. by 1905, chap. 13). III.— S upervision . The bank comptroller exercises the same authority over savings banks that he does over banks (129 et seq.). Savings banks seem clearly within the provisions of the statutes on procedure for a dissolution. (See Banks, III.) REPORTS. See this heading under Banks. The section of the Revised Statutes making it a duty of the bank comptroller to call for a report at least annually, includes savings banks in terms (130). So also does the section requiring the comptroller to report to the attorney-general after each examination (131); that requiring not less than three reports a year including specified items (136); and that requiring publication of the report (137). The provision requiring receivers to report to the bank examiner is applicable to receivers of savings banks, since the section covers the dissolution of “ any corporation, firm, or indi vidual doing business as mentioned in this chapter ” (1907, chap. 96, 1, amending 139). (See Banks for the various reports made by the comptroller.) 54 % — -A r i z o n a — S a v i n g s B a n k s EXAMINATIONS. Savings banks are mentioned in the section digested under Banks requiring the comptroller, or a person appointed by him, to make a full examination at least annually (131). The requirement that he examine the condition of banks in the hands of receivers in the same manner in which he examines solvent banks applies to “ any corporation, firm, or individual doing business as mentioned in this chapter,” thus clearly including savings banks (1907, chap. 96, 1, amending 139). V.— D iscount and L oan R estrictions. No savings bank may receive a license from the bank comptroller unless at least 50 per cent of its loans are secured by first mortgage or other prior liens upon real estate in Arizona, the loans when made not to exceed 60 per cent of the market value of the security, except when made for the purpose of facilitating the sale of property owned by the bank. No savings bank may loan on mining shares (135). The directors of a savings bank “ must not contract any debt or liability against the corporation for any pur pose whatever, except for deposits and for the necessary current expenses of conducting the business” (830). No director or officer of a savings bank may, directly or indirectly, borrow the deposits or other funds of the bank except upon real estate security having a market value of at least one-third more than the amount borrowed or (a misprint in the statutes makes this provision doubtful) upon the stock of the bank owned by the director, but in no case may he borrow upon the stock more than its cash surrender value, nor may he become an indorser or security for loans to others, or in any manner become an obligor for moneys borrowed or loaned by the bank. Upon violation 55 N a tio n a l M onetary Commission of this section the director’s or officer’s office becomes vacant (835, amd. by 1905, chap. 13). Savings banks may not loan except upon adequate security on real or personal property or personal security with at least two sureties or indorsers; such loans must not be for a longer period than ten years, and no loan may be made to one person, firm, or corporation to an amount exceeding $20,000 (828, amd. by 1903, chap. 86). See 833 for provisions with respect to the issue of transferable and nontransferable certificates of deposit. V I.— INVESTMENTS. No savings bank may invest its capital or deposits in mining shares (135). A savings bank may hold real estate only as follows: The lot and building in which the bank’s business is carried on, the cost of which must not exceed $100,000, except that, on two-thirds vote of stockholders, the bank may increase the holding to an amount not exceeding $250,000; such as has been mortgaged to it; such as has been pur chased on foreclosure sale under mortgages for money so loaned; and such as is conveyed to it by borrowers in satisfaction of loans, the real estate acquired under the last-mentioned circumstances being required to be sold within ten years. As to personalty, a savings bank may hold only such as is requisite for its accommodation in business, mortgages on real estate, bonds and securities, gold and silver bullion, United States mint certificates, and United States securities; no savings bank may hold securities except bonds of the United States, Arizona, or Arizona municipalities unless the bank has a capital stock or reserve fund paid in of not less than $100,000 (831). V III.— B ranches. The section cited under Banks, V III, applies to savings banks also (140). 56 A r i z on a — S a v in g s Banks X .— U nauthorized B anking . The section digested under this heading in Banks is applicable also to savings banks (134). 9 X I.— P enalties . See Banks, X I, for the penalty for failing to testify before the bank comptroller or his subordinate (132); for the penalty upon the banking comptroller if he fails to report the insolvency of a bank (133); for the penalty for failing to comply with the provisions of the section respecting dissolutions or to obey the directions of the bank comptroller in pursuance of his power to dissolve (1907, chap. 96, 1); and for the penalty for failing to fur nish the bank comptroller with any report requited by him (1907, chap. 96, 4): in some of the above provisions imposing penalties, savings banks are specifically men tioned, and in others they are included by reasonable inference. The provision of the Penal Code making it a misdemeanor for an officer, agent, etc., to receive deposits, knowing that the bank is insolvent, applies to “ any bank ” (Penal Code, 506). Particular savings bank penalties include the provision which makes it a felony for any president or managing officer to violate the provisions of 135, which withhold a license unless 50 per cent of the bank’s loans are secured by first mortgage on Arizona real estate, which forbid taking mining stock as security or investment, etc. (135); and the provision which makes it a misdemeanor for any director or officer to violate the statute restricting loans to officers or directors (835, amd. by 1905, chap. 13). Also there is a provision in the Penal Code making it a misdemeanor for an officer, agent, etc., to overdraw his account knowingly and obtain money (Penal Code, 505). 57 ARKANSAS. There is practically no banking legislation in this State. A few scattering provisions appear in the revision of statutes by Kirby (1904): The most important are on taxation, reports to the assessors, etc. (sec. 6919, et seq.); others forbid banking by limited partnerships (5803); make a willful false report, with intention to deceive any person as to the condition of the bank, punishable by fine not exceeding $1,000 and imprison ment not exceeding one year (1813); and forbid receipt of deposits in insolvency, making it a felony on the part of any officer, director, etc., knowingly to receive these deposits, punishable by imprisonment of from three to five years (1814). The session laws of 1905- and 1907 contain no banking legislation. In chapter 31 of the revision, sections 887-891 deal with trust and surety com panies. The most important provisions of these sec tions are as follows: No share of stock may be of greater face value than $1,000 (887). The total paid-up cap ital must be not less than $100,000 in a county of more than 50,000; not less than $75,000 in a county of 40,000 to 50,000; and in no case less than $50,000 (889). Trust company powers do not in terms include the power to do a banking business; they may “ exercise such powers as are usually had and exercised by trust companies,” may “ loan money upon real estate and 58 I A r k a n s a s collateral security,” and may “ buy and sell all kinds of government, state, municipal, and other bonds and all kinds of negotiable and nonnegotiable paper, stocks, and other investment securities” (888). So far as trust company affairs are not covered by these few sections they are governed by the laws of the State governing banks; and trust companies are “ subject to such exam inations as banks are now or hereafter may be subjected to by the laws of this State” (890)— but there is no statute of the State subjecting banks to examination at all. Although at the date of making this compilation the 1909 session laws are not accessible, a reprint of the corporation laws of Arkansas, published by authority of the secretary of state and including all 1909 amendments, contains no material except that digested above; it is merely noted in the reprint that banks organize under the laws applicable to manufacturing and other business corporations. 59 I CALIFORNIA. A digest of the statutes of this State was prepared before the session laws of 1909 were available; it consisted of pro visions extracted with some difficulty from the four vol umes of Codes (by Kerr), published in 1906, from the General haws (by Henning), published in 1905, and from the later statutes and amendments to the Codes, including legislation of 1906 and 1907. The legislature of 1909 passed a statute, chapter 76 of the 1909 laws, which con sists of an article entitled “ General provisions,” one en titled “ Savings banks,” one entitled “ Commercial banks,” one entitled “ Trust companies,” and one entitled “ State banking department.” The compiler of this digest has been advised by William T. McGuire, esq., superintendent of banks of California, that the new.statute, in repealing at section 146 “ all acts or parts of acts in conflict with this act,” obliterates all the legislation previously in force. The new statute does, indeed, cover completely the topics treated by the digest; it is a well-drawn piece of legisla tion defining the three sorts of institutions sharply and leaving little room for doubt to which of the three each particular provision of the statute is applicable. The advice of the superintendent of banks has, therefore, been acted upon, to exclude from the digest all legislation ex cept the 1909 statute. The compiler feels less confidence in the correctness of this view, however, since a later stat60 California Statute of 19 0 9 . ute of the 1909 session, chapter 453, amends section 290a of the civil code by altering slightly the provisions with respect to the affidavit required to be made by the direct ors of a newly incorporated trust company that certain capital has been paid in before a certificate of incorpora tion issues. The statute of 1909 defines “ bank” to include all per sons, firms, and corporations receiving money on deposit, and divides banks into three classes, savings banks, com mercial banks, and trust companies (2). The provisions framed to apply to banks, therefore, and inserted in the digest only once under “ Banks,” must be remembered to be applicable to all three sorts of institutions; where the pro visions digested under “ Banks” apply only to commercial banks, that is indicated. The provisions of Article III of the statute,which is headed “ Commercial banks,” should no doubt be taken as applicable to commercial banks ex clusively. It is to be noted, however, that, although in that article the term “ commercial bank” is usually used, one or two provisions contain the language “ each bank,” which, if the statute is to be read literally, applies to all three sorts of corporations, because in section 2 “ bank” is used to include commercial banks, savings banks, and trust companies. All the provisions under Article V of the statute, “ State banking department,” are applicable to all three sorts. The references, where they are merely numbers in paren thesis, are to sections in chapter 76 of 1909. 61 N at ion a l M o n et a r y Commission BANKS. I.— T erms of I ncorporation. Corporations may be formed under the statute, to do “ any one or a ll” of the three sorts of businesses, savings banking, commercial banking, and trust company busi ness (3). Another section provides that any corporation may combine the business of “ a commercial bank and sav ings bank and trust company, or any or all of them” (22). The departments must be kept separate (25, 26, and 27). A bank doing a commercial business must include “ com mercial” in its.advertising, etc.; one doing a savings busi ness must use “ savings;” and one doing a trust business must use “ trust” (28). Before a bank begins business or opens a new department, it must obtain a certificate from the superintendent (24). The superintendent passes upon the character and fit-* ness of the incorporators before issuing a certificate authorizing them to begin business (128). Every commercial bank must have a paid-in capital of $25,000 (82). Every bank doing a departmental business must have a capital paid up in cash of not less than $25,000 if it transacts both a commercial and savings business, and not less than $225,000 if it transacts both a commercial and trust business, or both a savings and trust business, or a commercial, savings, and trust busi ness (23). Paid-up capital and surplus must always equal 10 per cent of deposit liabilities; deposit liabilities may not be increased when this proportion is wanting (19). The directors of any bank having a capital stock may pay dividends to depositors and stockholders of so much of the profits as may be appropriated for that purpose under the by-laws or under the agreements with deposi tors, but before a dividend is declared at least one-tenth 62 C a l i f o r n i a —1 S t a t e B a n k s of the net profits for the preceding half year must be car ried to surplus, until it amounts to 25 per cent of paid-up capital. The surplus may be converted into capital, in which event surplus must be restored. Depositors have priority upon the assets of the corporation over stock holders, but the by-laws may provide that the same se curity shall extend to deposits made by stockholders (21). II. — L iabilities and Duties of Stockholders and D irectors. There is a constitutional provision that “ each stock holder of a corporation or joint-stock association shall be individually and personally liable for such proportion of all its debts and liabilities contracted or incurred during the time he was a stockholder as the amount of stock or shares owned by him bears to the whole of the subscribed capital stock or shares of the corporation or association.” (Art. X II, sec. 3). No bank may make a contract with its depositors whereby this stockholders’ liability is waived; any such contract is void (40). To be a director, one must own shares of the market value of at least $500. In banks “ organized without capital stock” (there are a number of provisions framed in this language which seem designed only for savings banks) a director must be both a member and a depositor of the bank (10). The directors must make annual exam inations and report the results to the superintendent (see III, infra). 111.— Supervision . There is a state banking department, of which the chief officer is the superintendent of banks, appointed by the governor for terms of four years. The superintendent must have had active banking experience, one-half of which must have been had in California, and must not be 63 N a t io n a l M on e t a r y Commission interested in the business of banking. His salary is $10,000 a year (120). His deputy, attorney, clerks, and examiners must not be interested in banks in the State, and the deputy must have had at least three years’ ex perience in a California bank. Neither the superintendent, his deputy, nor an examiner may be in any way indebted to a bank under his supervision or subject to his examina tion (121). The expenses of the department, including salaries, are paid out of what is known as the state bank ing fund, to which each bank contributes such proportion as its deposits bear to the aggregate deposits in banks sub ject to the supervision of the department (123). The superintendent, before authorizing a bank to begin busi ness, ascertains whether the character and general fitness of the incorporators are such as to command the confi dence of the community (128). The superintendent notifies a bank or a trust company whose reserve is below the requirement to make good the reserve, and if it fails for thirty days to comply it is pro ceeded against as insolvent (20). When the superintend ent has reason to believe that the capital of a bank is reduced below the requirement, he requires the deficiency to be made good within sixty days (133). If it appears to him that any bank has violated its articles of incorpora tion or any statute, he must direct the discontinuance of the violation, or, if it appears that a bank is conducting its business in an unsafe manner, he must direct a discon tinuance of the injurious practices. If, after a hearing, he makes such an order final, and if, within ten days, the bank has not secured an injunction against the enforce ment of the order and still fails to comply with it, the superintendent may take charge of the bank and liquidate it (134). The provisions for the superintendent’s taking control and liquidating are elaborate. Whenever he has reason to think that a bank is in an unsound condition to 64 S t a t e C a l i f o r n i a B a n k s transact its business or that it is unsafe or inexpedient for it to continue business, he may take possession and retain possession until the bank resumes business or its affairs are finally liquidated. He is given various powers and duties with respect to collection of debts, appointment of special deputies to assist in liquidating, proof of claims, enforce ment of stockholders’ liability, etc. (136). No examiner may be appointed receiver of a bank which he has ex amined (125). The superintendent has certain supervision over the sale of the assets of one bank to another and the assumption by the buyer of the seller’s obligations (31); over the sale by a director, officer, employee, or controlling stockholder, to the bank, of a mortgage arising from the sale of real estate made by a corporation in which such a director, officer, employee, or controlling stockholder is interested— this transaction is permitted only upon the superintend ent’s consent (35); and over branches, which he must approve before they may be opened (9). The superin tendent passes upon loans by commercial banks to their directors (33). The superintendent keeps a bulletin in his office on which he posts weekly a detailed statement giving general information in regard to the work in his department and numerous items specified in the statute (141). REPORTS. The superintendent of banks calls for reports at least three times a year, on the same days, if possible, as those on which national banks report (131). Whenever re quired by the superintendent, every bank must report, showing the financial condition of the bank at the close of a past day specified by the superintendent. The fol lowing items must be included: Amount of capital and amount paid in; names of directors and shares held by S. D oc. 353, 6 1-3 ----- 5 65 , N a t i on a l M on et a r y Commi ssi on each; capital actually paid in in money; amount of con tingent and reserve funds; amount due depositors; amount and character of other liabilities; real estate held, with particulars; amount loaned on real estate, with particu lars; bond investments; loans on stocks and bonds; loans on other securities; money on hand or on deposit, and in what depositories; other property held; other loans, de posits, and investments; and any other information re quested by the superintendent (130). Banksconducting a departmental business render a separate report for each department (129). At the time a report is furnished each bank publishes a condensed statement of its financial condition in a local newspaper, showing loans, overdrafts, investments in securities, amount due from banks, cash items, cash on hand, capital, surplus, undivided profits, amounts due other banks, deposits, certified checks, etc. (132). Every other year each bank reports to the superintend ent the names of depositors who have not deposited or withdrawn funds for ten years. These statements must show the amount of the account, the depositor’s last known residence, and the fact of death, if known. These deposits must be noticed in a local newspaper (15). The board of directors of every bank, at least annually, and at intervals of not less than three months, must examine the affairs of their bank, especially with a view to ascertaining the value and security of its loans and dis counts. The directors place a report of the examination on file, which the superintendent of banks may examine. This report must contain a statement of the assets and liabilities of the bank, loans which are of doubtful value, loans on collateral which are insufficiently secured, over drafts, with especial reference to those which are doubtful, and a full statement of whatever other matters affect the solvency of the bank (139). 66 C a l i f o r n i a S t a t e B a n k s In the article on commercial banks and in a section dealing apparently with commercial banks, it is provided that “ each bank” having a loan outstanding to any director must report monthly to the superintendent de tails with respect to such loans (83). Every year the superintendent of banks reports to the governor, for submission to the next legislature, a sum mary of the condition of every bank subject to the control of the superintendent, a list of new banks and of old banks which have been closed, recommendations for amend ments to the banking law, a list of banks in process of liquidation, and details of the administration of the bank ing department (140). This report must include informa tion with respect to deposits which have not been dealt with for ten years (15). For reports required of depositories of state funds, see 1907, chapter 50. EXAMINATIONS, The superintendent, his deputy, or some examiner appointed by the superintendent, examines every bank other than a savings bank twice a year, making inquiry into the resources of the bank, its mode of conducting its affairs, the action of its directors, its investments, the safety and the prudence of its management, the security afforded to its obligees, its compliance with law, and such other matters as the superintendent prescribes. Exam inations may be oftener if the superintendent thinks them necessary. When, upon examination, an examiner finds a bank holds securities which are of doubtful value, the superintendent may employ appraisers to appraise the securities (124). When the superintendent has ordered impaired capital to be restored, he may cause a special examination to be made to determine whether the de ficiency has been made good (133). If a bank fails to 67 N at io n a l M on et a r y Commi ssi on report, its affairs are immediately thoroughly examined (138). There is a preliminary examination before a cer tificate to begin business or open any new department is granted (24 and 127). The board of directors of every bank examine it at least once a year, and file in the bank a record of their exami nation, to which record the superintendent has access. Items with respect to which this examination and report are made are given above under Reports (139). Any national bank receiving deposits of state banks must submit to examination at the request of the super intendent. If the national bank refuses, then the superin tendent notifies all state banks depositing in this particular national bank to withdraw, their deposits. Failure to withdraw is a misdemeanor (48). IV.— R eserve R equirements. Every bank other than a savings bank must at all times keep on hand in money an amount equal to 15 per cent of its deposits, exclusive of state, county, and mu nicipal deposits. Three-fifths of the reserve of any bank other than a savings bank may consist of deposits in any bank other than a savings bank. Banks which serve as reserve depositaries must maintain a reserve of at least 20 per cent of deposits, exclusive of state, county, and mu nicipal deposits. When reserves fall below the require ment, a bank must not make new loans or discounts ex cept by discounting sight exchange and must not make dividends from profits until the reserve is restored. The superintendent notifies banks whose reserves are below the requirement to make good the reserve (20). Banks doing a departmental business maintain the statutory reserve for each department separately. No department may receive deposits of any other department of the same I C a l i f o r n i a — S t a t e B a n k s bank (25). No bank may deposit any of its funds in any other bank unless the depository has been designated as such by vote of a majority of the directors of the deposit ing bank, exclusive of the vote of any director who is an officer or director of the depository bank (43). V.— D iscount and L oan R estrictions. No bank may loan on real estate unless its security is a first lien; second liens may be taken, however, to secure the payment of previous debts (47). No bank may loan on the security of the stock of another bank if by making the loan the total stock of the other bank held by the loaning bank as collateral exceeds 10 per cent of the other bank’s stock, and no loan may be made upon the capital stock of any bank which has not been in existence for two years and paid a dividend (44). No bank may loan its capital or the money of its deposit ors on shares of its own stock unless accepting this secu rity is necessary to prevent loss on a previous debt, in which case the stock must be disposed of within six months “ from the time of its purchase” (34). No bank may loan more than 5 per cent of its assets upon bonds of any one issue except bonds of the United States, Califor nia, or California municipalities (46). No officer or employee may directly or indirectly bor row the funds of the bank, nor may any officer, employee, or director be an indorser or surety for loans to others or in any manner be obligor for moneys borrowed or loaned by the bank (33). Officials of the banking department may not borrow from banks subject to their supervision (121). No director, officer, employee, or controlling stockholder may directly or indirectly sell to his bank, without the consent of the superintendent of banks, any mortgage on real estate or contract resulting from the 69 y N at i on a l M on et a r y Commission sale of real estate made by a corporation or syndicate in which the director, officer, employee, or controlling stock holder is interested (35). No commercial bank may loan to any person, firm, or corporation an amount exceeding one-tenth of its capital paid in and surplus, except that “ a bank” may loan to a person, firm, or corporation, a sum not exceeding 25 per cent of its capital paid in and surplus, on security worth at least 15 per cent more than the loans, or it may loan 10 per cent of capital paid in and surplus, as stated at the beginning of this paragraph, and a further sum not ex ceeding 15 per cent of capital paid in and surplus on secu rity worth at least 15 per cent more than the amount of the loan; but a commercial bank may buy, or discount or loan upon, bills of lading, warehouse receipts, and bills of exchange drawn in good faith against existing values, or commercial paper owned by the person negotiating it (80). No loan may be made by a commercial bank on the securities of one or more corporations, the payment of which is undertaken, in whole or in part, severally but not jointly, by two or more individuals, firms, or corpora tions: (a) if the borrowers or underwriters are obligated absolutely or contingently to purchase the collateral se curities, unless the borrowers or underwriters have paid in cash an amount equal to at least 25 per cent of the amount for which they are still obligated to complete the purchase; (b) if the commercial bank making the loan is liable, directly or indirectly, or contingently, for the re payment of the loan; (c) if the term of the loan exceeds a year, including any agreed renewal of it; or (d) to an amount, under any circumstances, in excess of 25 per cent of the capital and surplus of the commercial bank making the loan (81). 7c C a l i f o r n i a S t a t e — B a n k s No commercial bank may loan any of its funds to any of its directors unless the loan has been first approved by a two-thirds vote of the directors, the borrower not voting; the loan, name of director, time when the loan is due, rate of interest, and security pledged, if any, are submitted to the superintendent of banks, who, if he disapproves, noti fies the bank to collect the loan. The total loans to all directors of a bank must never exceed 30 per cent of capi-' tal and surplus (83). V I.— I nvestments. No bank may invest in shares of corporations unless the purchase is necessary to prevent loss on a previous debt, in which case the stock must be disposed of within six months from the purchase, unless the superintendent grants permission to hold it longer (37). No bank may invest more than 5 per cent of its assets in any one bond issue except bonds of the United States, California, or California municipalities (46). No bank may purchase or guarantee any bond issue in excess of 5 per cent of its assets, except bonds of the United States, California, or California municipalities (36). No bank may purchase or invest capital or deposits in shares of its own stock unless the purchase is necessary to prevent loss on a previous debt, in which case the stock must be sold within six months (34). See V, above, for other investment restrictions, and see IV, above, for provisions respecting the designation of depositories. Investments, like all other transactions, must, in the case of a bank having different departments, be made separately and accounted separately for each department. Ihe cash, securities, and property of one department must not be mingled with those of another (26). The money belonging to each department and the investments are 71 N at i on a l M on e t ary Commission held solely for the repayment of depositors in that depart ment; if after paying the depositors in that department an overplus remains, it is applied to the other liabilities of the bank (27). V II. — Overdrafts . The report made by the directors at least annually after an examination ofAthe affairs of their bank must include “ a statement of overdrafts” (139); and the summary of each bank’s condition published at the time it reports to the superintendent must show “ the total amount of overdrafts” (132). See also the section which makes it a felony for any officer, employee, director, etc., to over draw his account or to accept a bribe for permitting an overdraft by another (39). V III. — B ranches. No bank may open an office other than its principal place of business without the approval of the superin tendent of banks, which is only given if the superintendent has ascertained that public convenience will be promoted by opening the office; in any case the paid-in capital must exceed the ordinary requirement by $25,000 for each branch opened (9). X .— U nauthorized B anking . No person, firm, or corporation not subject to the super vision of the superintendent and not reporting to him may use an office sign having a name or other words on it indicating that the place is a bank or that banking busi ness is done there; no person, firm, or corporation may use letter heads or other papers showing a corporate name or other words indicating that the business is that of a bank, savings bank, or trust company. Violation of this 72 S t a t e C a l i f o r n i a B a n k s section is a misdemeanor (12). It is a misdemeanor also to transact banking business in the State without the certificate of the superintendent (127). For restrictions on banking by foreign corporations, see 7. Every individual, firm, or corporation doing a banking, business must on its signs, stationery, advertising, etc., use the word “ commercial” if it conducts a commercial business, “ savings” if it conducts a savings business, and “ trust” if it conducts a trust company business (28). X I.— P enalties . The following are misdemeanors: The purchase by a director, officer, agent, or servant of a bank, directly or indirectly, of the assets of a bank for a sum less than their market value (42); direct or indirect borrowing of the funds of a bank by an officer or employee, or an officer, employee, or director becoming in any manner an obligor for money borrowed or loaned by the bank (33); failure by a state bank to withdraw its deposits on order of the superintendent from a national bank which refuses to be examined (48); advertising by a bank or one of its officers the authorized or subscribed capital without also stating how much has been actually paid up (14); unau thorized maintenance by a bank or an officer or director of a bank of a branch office (9); failure by president or managing officer of a bank to report deposits not dealt with for ten years (15); failure on the part of a bank to post conspicuously its last certificate from the superintendent (50); and failure by the directors of a bank to make an annual examination and file at the bank a report based on it (r39)- There seems no reason to suppose that the 1909 statute repeals a section of the Penal Code, formerly in force, which makes it a misdemeanor for an officer or employee of a bank to receive deposits knowing the bank is insolvent (Penal Code, sec. 562). 73 N at i o n a l M on e t a r y Commission The following are felonies: Violation by the officers of a bank of the section which forbids purchases of and loans upon shares of a bank’s own capital except when necessary to prevent loss on a previous debt and requires the stock thus held to be disposed of within six months (34); viola tion by a director, officer, employee, or controlling stock holder of a bank of the section forbidding transfers to the bank of mortgages arising from the sale of real estate made by a corporation or syndicate in which the offender is interested (35); violation by the officers of a bank of the section forbidding investments in shares of corporations except when necessary to prevent loss on previous debts and requiring the sale of such stock within six months (37); neglect by the deputy of the superintendent or any examiner, with knowledge of the insolvency or unsafe condition of a bank, to report the fact to the superintend ent (126); neglect on the part of the superintendent him self, if he has knowledge of the insolvency or unsafe con dition of a bank, to take action against it as provided in the statute (143); and violation by an officer or director of a commercial bank of the section restricting loans to directors and requiring them to be approved by the superintendent and to be monthly reported to him (83). Any director, officer, agent, or employee of a bank who takes its property except in payment of a just demand and, with intent to defraud, omits to make true entry of the transaction on its books, or concurs in omitting to make true entry, or concurs in publishing false statements of its affairs, or fails to make proper entry in the corporation’s books or to allow them to be inspected by the banking department, is guilty of a felony (38). Any director, officer, employee, etc., of a bank who knowingly overdraws his account and obtains the funds of his bank and asks or receives a consideration for procuring a loan from or dis- n C a lif o r n i a Savings — Banks count by his bank, or for permitting an overdraft of an account with the bank, is guilty of a felony (39). No director, officer, or agent of a bank may be interested in the purchase of any of its obligations for a less sum than appears upon their face (41). Any bank which fails to make its report within ten days from the day designated for making it or to include in the report any matter required by law or by the superintend ent forfeits $100 for each day’s offense (138). Banks which fail to contribute their share to the fund out of which the expenses of the banking department are paid forfeit their certificates to transact business (123). SAVINGS BANKS. I.— T erms of I ncorporation. As noted in Banks, I, savings banking may be combined with the other sorts of business (3 and 22). The statute, as was noted in the introductory paragraph, contains cer tain provisions applicable to banks organized without capital stock; it is to be inferred from this that some savings banks are mutual organizations. “ Savings ” must appear on all advertising, etc., of a bank conducting a savings business (28). See Banks, I, for the requirements for the capital stock of a bank doing a departmental business. The savings bank provision is that every savings bank must have, actually paid in, a capital stock of not less than $25,000; or, if organized without capital stock, a reserve fund of at least $1,000,000 (60). In the section requiring paid-up capital and surplus of every bank to equal 10 per cent of its deposit liabilities it is provided that no savings bank may be required to have a paid-up capital and surplus of more than $1,000,000; or, if organized without capital stock, a reserve fund of more than $1,000,000 (19). 75 N at i on a l M o n et a r y Commission The directors of a savings bank which has no capital stock must retain on each dividend day at least io per cent of the net profits of the bank to constitute a reserve fund, which must be invested in the same manner as the other funds of the bank and applied to payment of any losses (64). Restrictions on borrowing by savings banks and on deposits in savings banks are grouped with loans under V, infra. II.— L iabilities and D uties of Stockholders D irectors. and The only particular provision to be here recorded with respect to savings banks is that to be a director in a bank organized without capital stock one must be both a mem ber and a depositor of the bank (10). I l l .— S upervision . The superintendent of banks has, besides his regular duties given under Banks, authority with respect to sav ings banks to fix the amount which savings banks shall be allowed to borrow to meet demands of depositors, and the time and rate of interest on these loans (62). EXAMINATIONS. The superintendent must examine banks other than savings banks at least twice a year, and must examine savings banks at least annually. He has, of course, the power stated under Banks, of examining any bank when ever, in his judgment, such an examination is necessary (124). IV.— R eserve R equirements. Each savings bank must carry in cash or its equivalent an amount equal to 4 per cent of its deposit liabilities, of which 2 per cent of deposit liabilities must be in coin or 76 C a l i f o r n i a — Savi ngs Banks currency of standard value, in the bank’s own keeping. No new loan may be made during any deficiency in this reserve (68). The provisions for the “ reserve fund’’ required of savings banks without capital stock (see I, above) have no reference to money reserve, but to an invested fund to take the place of capital stock. V.— D iscount , L oan , D eposit R estrictions, etc . No director or officer of a savings bank may directly or indirectly borrow its funds nor become in any manner obligor for moneys borrowed of or loaned by the savings bank (65). No savings bank may loan money except on adequate security of real or personal property and never for a longer period than ten years. No loans may be made on unsecured notes. No savings bank may loan more than 5 per cent of its assets on bonds of any one issue, except bonds of the United States, California, or California municipalities. No savings bank may loan to exceed 90 per cent of the market value of bonds specified in (a), (b), (c), and (d) of the second paragraph of Investments, below, n o r m o r e than 85 per cent of the market value of bonds specified in (e), nor more than 75 per cent of the market value of bonds specified in (/) and (9), nor more than 65 per cent of the market value of personal property and stock of corporations or banks; no loan may be made on the capital stock of a corporation or bank that has not been in existence for two years and has paid a dividend. No savings bank may loan on any real-estate security unless the security is a first lien, and in no event to exceed 60 per cent of the market value of the real estate except to facilitate the sale of property owned by the savings bank; a second lien may, however, be accepted to secure the payment of a previous debt. No savings bank may loan on shares of mining stock. No savings bank may 77 National Monetary Commi ssi on loan on the security of shares of stock in another bank, if by making the loan the total stock of the other bank held as collateral by the loaning bank exceeds io per cent of the other bank’s stock (67). No savings bank may loan on the bonds of any corporation if the franchise of that corporation expires prior to the maturity of the bonds or if its special franchise granted by some munici pality so expires (61). No savings bank may contract any debt or liability for any other purpose than deposits, except the following: It may pay regular depositors by draft on deposits to its credit with other banks. No savings bank may bor row, or pledge its securities, except to meet the imme diate demands of its own depositors, and then only by resolution of the directors and with the approval of the superintendent of banks, who has authority to fix the amount, term, and rate of interest of the loan. Sav ings banks may, however, without the approval of the superintendent, borrow the public moneys of the State and of municipalities, and may receive such public moneys on deposit (62). Savings banks may issue transferable certificates of deposit and, when requested, special nontransferable certificates (63). Deposits may be made with commercial banks and trust companies to facilitate business transactions, and these are not to be construed as loans. Not more than 5 per cent of the deposits of any savings bank, however, may be deposited with any one bank (68). Whenever there is a call by depositors for the pay ment of a greater amount than the savings bank has disposable, the directors must not make new loans or investments until the excess of call has ceased (64). . 78 C a lif o r n i a — Savings Banks VI.— I nvestments. Saving banks may hold real estate only as follows: (i) The lot and building in which the business is carried on, their cost not to exceed the amount of capital and surplus; (2) such realty as has been mortgaged to the savings bank; (3) such as it has purchased at sales under mortgages made for its benefit and such as is conveyed to it in satisfaction of loans. Real estate acquired under (3) must be sold within ten years unless permission for longer holding is given by the superin tendent. No savings bank may hold personalty except such as is required for its accommodation in business, and mort gages on real estate, bonds, securities, etc., bullion, mint certificates, and evidences of debt issued by the United States. Bonds and securities may be held only as follows: (a) United States securities; (b) bonds of California; (c) bonds of any State which has not de faulted in principal or interest in five years; (d) bonds of California municipalities; (e) bonds of any city, town, or county of 20,000 inhabitants in any other State, pro vided the entire bonded indebtedness of the municipality does not exceed 5 per cent of its taxable property, in cluding the issue of bonds under which the investment is made, and provided that the municipality or the State in which it is situated has not defaulted on principal or interest for five years; (/) first mortgage or underlying bonds of a steam railway in the United States, the in come of which pays operating expenses and fixed charges; (g) bonds of street railroads, water, light, light and power, gas, and other public utility and industrial cor porations. These bonds must be secured by a first or underlying mortgage of the corporation issuing the bonds, or by a refunding mortgage to retire all prior 79 N at i on a l M on et a r y Commission debts of the corporation, and the income of the corpo ration must have been sufficient to pay operating ex penses and fixed charges for three years prior to the issue of the bonds or else the payment of the bonds must have been guaranteed by a corporation which has paid operating expenses and fixed charges for three years prior to making the guaranty; (h) first mortgage bonds of real-estate corporations, provided the bond issue does not exceed 60 per cent of the market value of the real estate taken as security. No savings bank may pur chase bonds of a corporation if the franchise of the cor poration expires prior to the maturity of the bonds, or if the special franchise granted to this corporation by a municipality so expires (61). No savings bank may deal or trade in realty or personalty except as pro vided in the statute (62). No savings bank may invest more than 5 per cent of its assets in bonds of any one issue, except bonds of the United States, California, or California municipalities. No savings bank may purchase mining stock (67). X . — U nauthorized B anking . No commercial bank, individual banker, trust company, firm, or corporation may advertise as a savings bank or in any way solicit or receive deposits as a savings bank, except savings banks or other banks having savings de partments subject to the provisions of the statute (49). Every individual, firm, or corporation doing a savings banking business in the State must use the word “ savings ” on its signs, advertising, stationery, etc. (28). X I. — P enalties . Particular provisions with respect to savings banks make it a misdemeanor for a director or officer to borrow, 80 California — Trust Companies directly or indirectly, the funds of his bank, or be in any way an obligor for moneys borrowed of or loaned by the bank; it is similarly a misdemeanor to authorize or consent to such a loan or to receive it. The officer or director vio lating these provisions immediately loses his office (65). The president or managing officer consenting to a violation of the section containing most of the restrictions on sav ings bank loans (see V, supra) is guilty of a felony (67). TRUST COMPANIES. I.— T erms of I ncorporation. Trust-company business may be combined with either or both of the other two sorts (3 and 22). Trust funds must of course be kept separate from other assets (32). “ Trust” must appear in all advertisements, etc., of a bank doing a trust business (28). Before the superintendent issues a certificate of author ity to transact business, a majority of the board of direc tors of the proposed trust company must make affidavit that at least $200,000 of capital stock has been paid in (100). See Banks, I, for capital required for departmental business. III.— S upervision . Before doing a trust business, a company must deposit with the treasurer of the State $100,000 in certain securi ties (96, ei seq.). The superintendent supervises the retire ment from business of any trust company (102). REPORTS. In addition to the items required in the reports of every bank, a trust company must furnish a list and brief de scription of the trusts it holds, etc. (101). S. Doc. 353, 6 1 -2 ----- 6 81 N at i on a l Monetary Commi ssi on V I.— I nvestments. Trust companies invest their capital and trust funds in accordance with the laws relative to the investment of funds deposited with savings banks, unless a specific agreement to the contrary is made between the trust com pany and the person creating the trust (105). X.— U nauthorized T rust Company B usiness. The use of the word “ trust” in connection writh the words “ company,” “ association,” etc., is prohibited to everyone except corporations provided for in the statutes. The use of the word without authority is a misdemeanor. No corporation may use the word “ trust ” or “ trustee ” as part of its name unless it is authorized by its articles of incorporation to act in fiduciary capacities, nor may it act in such capacities unless it has complied with the provisions of the statute (104). Every bank conducting a trust department must use the word “ trust” on its signs, advertising, and stationery (28). XI.— P enalties . The officers of any bank receiving trust funds who min gle these funds with other assets of the bank or count them as part of the reserve are guilty of a felony (32). COLORADO. Mills’ Annotated Statutes of Colorado, volumes I and II, include all statutes in force January i, 1891. Volume III carries the statutes to January 1, 1905. Subsequent statutes are in the session laws of Colorado for 1905, 1907, and 1909. In volumes I and II, banks are treated in a short chapter (12); and in chapter 30 (corporations), there are provisions, in division 2 (particular corpora tions), on first, banks (secs. 510-519), second, savings banks (secs. 520-530), and third, trust, deposit, and security associations (secs. 535-544). Volume III, though it does not alter the law on banks and savings banks, adds a later act for the regulation of trust companies, embodied in sections 544a to 544/. In the session laws of 1907 there is an important act at page 222, providing for supervision and other regulation, extending, under section 36 of the act, to all individuals, firms, savings banks, trust companies, or other corporations engaging in banking business in Colorado. Since this act applies, therefore, to all banking institutions, its provisions, together with those of the former statutes which apply generally, are grouped in the digest under the title “ Gen eral provisions.” Those provisions which apply only to one of the three classes are later grouped under the respec tive titles: “ Banks,” “ Savings banks,” and “ Trust com panies.” Where citations are simply numbers in paren thesis they are to sections in Mills’ statutes. The act of 83 N at ion a l M onetary Commission 1907 is cited by its number in the session laws for that year (111) and by sections in the act. There is late legislation dealing with building and loan associations. GENERAL PROVISIONS. I.— T erms of Incorporation. The liability of any bank for borrowed money or redis counted paper must never exceed the amount of the actual capital stock paid in (111, 27). Dividends must be declared only from net earnings (531). II.— L iabilities and D uties of Stockholders Directors. and Shareholders in banks, savings banks, trust, deposit, and security associations are individually responsible for the debts of the corporations in an amount double the par value of their stock (533). If any director or officer receives deposits or creates debts with knowledge of the corporation’s insolvency, he is guilty of larceny; he is also individually responsible for the deposits received or indebtedness contracted (222, 224, and h i , 31). The executive officers of all corpo rations give bonds for the faithful performance of their duties; breach of these bonds gives a right of action to whatever persons are damaged (111, 39). No officer of any banking institution may take compensation as an inducement to make a loan out of the funds of the bank (h i , 32). III.— S upervision. The official in charge of banking is the state bank com missioner, a qualified person who has been for three years a citizen of Colorado, who has had at least five years’ 84 Colorado General Provisions experience in practical banking, and who is not interested in any banking institution except as a depositor. His term of office is four years (h i , i). The commissioner’s salary is $3,600 a year ( h i , 2). He and his deputies must keep secret whatever information they obtain in the course of their duties ( h i , 3 and 4). If a bank refuses to submit its books for the inspection of the commissioner, or refuses to furnish information, he institutes proceedings for the appointment of a receiver (111,7). If he has reason to believe that the capital of any banking institution is impaired he must examine the bank to ascertain its true condition; and if he finds the capital really impaired, he requires the bank to make good the deficiency. If for sixty days the deficiency is not made good to his satisfaction, he takes control of the bank and institutes proceedings for a receivership (111, 8). When he learns that a banking institution has refused to pay its depositors, or that it is insolvent, or that it has returned a false report, he takes charge of the affairs of the institution until a receiver is appointed (111, 10). A banking institution may voluntarily put its affairs and assets under the control of the commissioner. He has complete control until a receiver is appointed (111, 13). When the commissioner has taken charge of the affairs of a banking institution, under any circumstances, he must apply to the proper court for the appointment of a receiver as soon as possible (111, 14). If the commis sioner finds, after taking control, that the institution is only temporarily embarrassed, or that whatever impair ment there has been will be made good, etc., he may refrain from applying to the court for a receiver and allow the bank, upon arranging its affairs with its creditors, to resume business within sixty days (111, 15). If a bank exceeds the prescribed loan limit, the commissioner may order the excess reduced within sixty days (111, 30). N at ion a l M on e t a r y Commission REPORTS. Every banking institution makes to the commissioner not less than three reports a year in the form he prescribes, exhibiting in detail the resources and liabilities of the bank at the close of business on a past day specified by the commissioner. The day must be the same as that upon which national banks make their reports. Within ten days after the request of the commissioner, the reports must be transmitted to him; and they must be published in a local newspaper. Special reports may be called for by the commissioner when necessary, but need not be published ( h i , 17). Receivers of insolvent banks report as the institutions themselves would (111, 11). The commissioner makes a report to the governor every other year, giving details of each institution reporting to him, general statistics, and such other information con cerning the banking situation in the state as he thinks necessary (111, 23). Banking associations and trust companies make certain reports to the assessor for purposes of taxation (3927m). EXAMINATIONS. A t least twice a year, and oftener if the commissioner deems it advisable, he or his deputy examines the cash, bills, collaterals, books, documents, assets, liabilities, and other affairs of each banking institution and the methods it employs (111, 6). Whenever the commissioner has reason to believe that the capital of a banking institution is impaired, he must make an examination of the affairs of the institution (111, 8). The commissioner examines corporations in the hands of a receiver once every six months (111, 11). Before beginning business, banking institutions are examined by the commissioner to determine if they are solvent and if they have the required capital (111, 20). 86 Colorado General V.— Discount and Provisions L oan R estrictions. The total liability to any banking institution of one person, firm, or corporation for money borrowed, includ ing in company or firm liabilities those of the members, must not exceed 20 per cent of the capital and surplus of the bank; but the discount of bills of exchange, loans on produce in transit or on warehouse receipts, etc., or on collateral having a market value in excess of the loan (this last exception renders the restriction on individual liability easily avoided), and the discount of commercial paper generally, are not considered as money borrowed ( h i , 30). No director or officer may borrow over 10 per cent of the capital and surplus of the lending bank without the consent of a majority of the directors ex clusive of the borrower; and all loans to officers must have the consent of the directors (111, 29). It was law before the act of 1907, that no corporation could loan to an officer or director an amount greater than 90 per cent of the stock in the corporation actually owned by the borrower, unless he gave security worth 10 per cent more than the loan (223); but the state bank commissioner considers this provision repealed by the statute of 1907. No banking institution may loan upon its own stock as security unless it is received as collateral or in the collection of previous debts, in which case it must be disposed of as soon as conveniently can be done (111, 28). Limitations on borrowing power are given under I, supra. VI.— I nvestments. Banking institutions must not employ their assets in trade or commerce nor hold real estate except such as they occupy in connection with their banking business, nor may they engage in mining or speculate in unstable 87 N at ion a l M onetary Commission property. They may hold all kinds of property, includ ing their own stock, which come into their possession as collateral or in the collection of debts, but property so acquired must be disposed of as soon as can conven iently be done (h i , 28). V II. — Overdrafts. Overdrafts are apparently allowed, for it is provided that in declaring dividends, all “ losses, overdrafts, and surplus” must be first deducted from earnings (531). V III. — B ranches. No banking association or corporation may establish any branch office or agency, or employ an agent to make loans or discounts at any place other than the banking house of the association (531). X .— U nauthorized B anking . It is unlawful for any individual, firm, or corporation except national banks to do a banking business, or ad vertise as though they did a banking business, or use such words as “ bank,” “ banking,” or “ trust company” without complying with the provisions of the statute. Violation of this provision is a misdemeanor entailing imprisonment for not over one year, or a fine of not over $1,000 or both ( h i , 34). Individuals and firms doing banking business under the statute are not allowed to use the word “ State” as part of the bank or firm name ( h i , 21). X I.— P enalties . The director or officer of any banking institution who receives deposits, knowing the institution is insolvent, is guilty of larceny, for which the punishment is fine not 88 Colorado General Provisions exceeding $5,000, imprisonment not exceeding five years, or both (222 and 111, 31). If any officer of a bank takes compensation for inducing the bank to make a loan he is guilty of a misdemeanor, punishable by a fine of not over $1,000, imprisonment for not more than twelve months, or both (111, 32). If the commissioner or one of his employees discloses information which he should keep secret he forfeits his office and is fined from $500 to $1,000, or imprisoned from six months to two years, or suffers both penalties (111,4). Any official making an examination who reports fraudulently in order to aid an insolvent institution or to injure an institution, or any official making examination who takes a bribe for any purpose or neglects to examine an institution by reason of having taken a bribe is guilty of a felony, punishable by imprisonment for from two to ten years (111, 6). Institutions which fail to report are subject to a penalty of $25 a day during the delay (111, 18). Receivers who fail to report or submit to examination suffer the same penalties (111, 11). The executive officers of banking institutions who fail to file bonds are subject to the pen alties provided for failure to make reports (111, 39). For penalties upon bank officials who fraudulently issue or transfer stock see 1389 and 1390. Any person who, with intent to defraud, gives a check on a bank in which he has not sufficient funds is guilty of a misde meanor, punishable by a fine of not less than $200 nor more than $1,000, or imprisonment for not less than three months nor more than one year, or both (1397). 89 National Monetary Commi ssi on BANKS. I.— T erms of I ncorporation. The required capital for banks of discount and deposit is as follows: In cities and towns having a population of 2,000 or less, at least $10,000; in those of from 2,000 to 5,000, at least $15,000; in those of from 5,000 to 10,000, at least $25,000; in those of over 10,000, at least $30,000. At least 50 per cent of the capital must be paid in in cash before business is begun, and the whole capital must be paid in in cash within a year (1907, chap. 140). Unin corporated banking businesses must have a capital of at least $10,000 (111, 20). The directors of every bank declare semiannually dividends of so much of the net profits as they deem expedient (516). Possibly banks may have a savings department, for it is provided that “ any savings bank or banking association formed under the provisions of this act ” must hold a certain per cent of its savings deposits by way of reserve (526). II.— L iabilities and D uties of Directors. There must be not more than nine directors (512). If they willfully violate any of the provisions of the banking act in the general statutes they become personally liable for all the debts of the bank contracted previous to and during the period of their neglect (517). I l l .— Supervision . The provision of section 516, that a report be submitted to the state treasurer immediately after the declaration of a dividend and that it be published seems repealed by m , 17- 90 C o l o r a d o S t a t e B a n k s IV.— R eserve R equirements. If a bank has a savings department it must keep at its own bank or on deposit subject to call at least 20 per cent of the savings deposits (526). V.— D iscount and Doan R estrictions. It is provided in chapter 140 of 1907, possibly in con flict with h i , 28, which applies to all banking institutions and is given above under General Provisions, V, that no bank shall take as security for any loan or discount a lien on any part of its capital stock. The same security is required from shareholders as from persons not share holders (1907, chap. 140). The stockholders collectively of any bank must never be liable to the bank to an amount greater than two-fifths of the capital (519). V I.— I nvestments. A bank may hold real estate only when necessary for its accommodation in the transaction of its business; when mortgaged to it in good faith for previously made loans; when conveyed to satisfy previous debts; and when pur chased under judgments or mortgages held by the bank, but in this last situation the bank must not bid a larger amount than is necessary to satisfy the debt and cost (514)* It is provided in chapter 140 of 1907, possibly in con flict with the provision applicable to all banking institu tions in section 28 of chapter 111, that no bank shall hold any portion of its own stock or of the stock of any other incorporated company unless the purchase is nec essary to prevent loss on a debt previously contracted on security which at the time the loan was made was 91 I I N a t io n a l M onet ary Commission thought adequate. Stock so purchased must in no case be held by the bank longer than six months, if it can be sold at par or for what it cost (1907, chap. 140). SAVINGS BANKS. I.— T erms of I ncorporation. The capital of a savings bank must be not less than $25,000, paid in in cash (520). Dividends may be declared out of net profits (534). II. — L iabilities and D uties of D irectors. There must be at least three directors, who must be stockholders (521). IV.— R eserve R equirements. Every savings bank must keep at its bank or on deposit, subject to call, with some other bank, at least 20 per cent of its savings deposits (526). See, however, the provision of 523, given below under V, which seems to look toward the retention of 50 per cent of deposits in the savings bank itself or on deposit. V.— Discount and L oan R estrictions. Savings banks may invest one-half of their deposits on personal security, in securities of Colorado or of the United States, or in bonds of Colorado municipalities, or they may loan these funds on bonds secured by mortgage of unincumbered real estate worth double the loan. The other half of the deposits they may deposit temporarily in other banks, though they must never deposit more than $25,000 in any one bank; or they may keep the whole of this other half to meet current payments, depositing it, or handling it otherwise, as seems convenient (523). No 92 Trust Colorado Companies savings bank may take as collateral its own stock (526). No officer of a savings bank may borrow from the bank, or be surety for a borrower; nor may a savings bank dis count paper of a cashier or clerk in the bank (530). VI. — I nvestments. As stated above, under Loans, savings banks may invest one-half their deposits on personal security, in Colorado or United States securities, or in securities issued by municipalities of Colorado (523). X .— U nauthorized Banking . Savings bank business may be carried on only by persons organized under Colorado law (528). TRUST COMPANIES. I.— T erms of I ncorporation. Under the provisions of the old statute dealing with trust, deposit, and security corporations, a corporation for this purpose had to have a capital of not less than $50,000; $30,000 had to be paid in before business could be done (536). Under the later act providing for “ the incorporation and regulation of trust companies,” found in Volume III, trust companies are required to have a capital stock of at least $100,000 in cities of the first class and $50,000 in cities of the second class, paid in in cash (5447, amd. by 1909, chap. 215). (For classification of cities, see 4482 et seq.) The enumeration of trust company powers does not in clude except by rather free inference that to do a banking business, and it is provided that trust companies may not do a banking business except in so far as the statutes ex pressly authorize it (544c). 93 National Monetary II.— L iabilities and Commission D uties of Stockholders Directors. and Section 533, stated under II in General provisions, makes shareholders in trust, deposit, and security associ ations liable for double the par value of the stock they own. The more recent trust company law makes the stockholders of trust companies individually responsible for debts of their corporation during the time of their being stock holders, “ equally and ratably to the extent of their re spective shares of stock in such association and in addition thereto” (544*7). There must be not less than three directors of a trust, deposit, and security association (540). V.— Discount and L oan R estrictions. Trust companies may not loan to their directors or officers nor loan upon the stock of the company (544/). VI.— I nvestments. The trust, deposit, and security association law pro vides that such an association may hold whatever real or personal estate is necessary to carry on its business, as well as the real or personal estate it may think it necessary to acquire in enforcement or settlement of demands arising out of its business transactions (542). That law author ized investment of the capital of such a corporation in good securities; in bonds and mortgages on unincum bered real estate in Colorado; in securities of the States of the United States or of Colorado municipalities (543). The later trust company law requires that trust funds and investments be separated from assets of the company and investments of them (5441). It gives trust compa nies wide latitude in the investment of trust funds, but 94 Colorado Trust Companies forbids them to be invested in the stock or bonds of any private incorporated company (5440). X.— U nauthorized T rust Company B usiness . The word “ trust” must not be used as part of the name of any institution unless it has organized under the trust company laws. The penalty for breach of this rule is found under General provisions ( i n , 34). 95 » CONNECTICUT. Title 24 of the revision of 1902 of the general statutes of Connecticut deals with “ Banking institutions.” It con tains five chapters: No. 199, “ State banks and trust com panies;” No. 200, “ State banks converted into national banking associations; ” No. 201, “ Savings banks; ” No. 202, “ Bank commissioners; ” and No. 203, “ Receivers of banks, savings banks, and trust companies.” Inasmuch as banks and trust companies are, as appear from the heading of chapter 199, legislated for together, the Connecticut laws are digested under two heads instead of three. The provi sions for supervision are, in so far as they are general and applicable to all three classes of institutions (qualifications of bank commissioners, salaries, etc.), inserted only once— that is, under the first heading. The references, where they are simply numbers in parenthesis, are to sections in the revision of 1902. Where they are to later enactments, they are cited by the year in which they were passed and the chapter in that year’s volume of laws. The statutes have been examined through the session of 1907; and one or two minor additions have been made which cover, ac cording to the advice of Mr. Charles H. Noble, bank com missioner, all the legislation affecting the digest passed at the session of 1909, the statutes of which are not, at the time of making this compilation, yet published. 96 Connecticut State Banks, etc. BANKS AND TRUST COMPANIES. I.— T erms of Incorporation. Dividends may be declared only from net profits (3413). Banks and trust companies may conduct savings depart ments, as appears from the provision requiring them to report savings items and to separate the savings-deposit investments, etc. (1907, 85). II. — L iabilities D uties of Stockholders D irectors. and and Although there is no provision for stockholders’ liability in the chapters applicable to banks, it is a provision of the general corporation act that no stockholder shall be liable for any debt of the corporation after the par value of his stock has been paid (3369). Three-quarters of the directors of banks and trust com panies must be residents of Connecticut (3410). Not more than three officers of any one savings bank may be officers of a bank or trust company; and no cashier of a bank may be treasurer of a savings bank that has over $500,000 de posits (3443). Directors of banks and trust companies must not receive any compensation for indorsing paper discounted by the corporation (3412). III. — S upervision . The state officials in charge of banking are two bank commissioners who hold office for four years (3455), and receive a salary of $3,500 each; these and the other sala ries of the commissioners’ office, are apportioned among the banking institutions of the State (3464; and a 1909 amend ment) . Officers of banks, savings banks, and trust com panies chartered by Connecticut are ineligible to be bank commissioners. If a commissioner becomes interested in S . D o c. 353, 6 1 -2 — 7 Q7 % National Monetary Commi ssi on the business of banking or negotiating loans he forfeits his position. When a commissioner becomes indebted to a bank that bank must notify the governor (3456). The commissioners must not disclose the information they acquire, except as their duties demand (3457)- They ap prove reserve depositaries (3400). The commissioners apply for the appointment of a re ceiver in case the reserve of a state bank or trust company falls below 15 per cent and the bank fails for thirty days to make the deficiency good (3400). When the bank com missioners consider the charter of any bank, savings bank, or trust company forfeited, or the public in danger of be ing defrauded, they may institute proceedings in court for a receivership (3461). Upon application of the bank commissioners or of the directors of any bank, savings bank, or trust company, a court may make an order restraining the bank from pay ing out its funds or declaring dividends (3460). reports. All banking institutions, immediately after organizing, report the fact of their organization to the bank commis sioners (3463). State banks and trust companies report to the bank commissioners at least five times annually, exhibiting in each report in detail, in a form prescribed by the commis sioners, the resources and liabilities of the bank at the close of business on a past day specified by the commis sioners; the report must be sent to the commissioners within ten days after they request it and must be published in such form as they prescribe in a local newspaper (3416; and 1903, 167). Banks and trust companies that conduct savings de partments report to the bank commissioners a statement 98 1 Connecticut — State Banks, etc. of the amount of the deposits and the securities in which they are invested, together with the other information required to be given in their annual statement (1907, 85). Receivers of banks, savings banks, and trust companies appointed under the provisions of chapter 203 report to the commissioners annually, or oftener if the bank com missioners require, on the state of the bank’s affairs (3472). The commissioners report annually to the governor the condition of all institutions examined by them with such recommendations as they deem proper. They report to the local state’s attorney any violation of law (3459). Banks, national banks, and trust companies are re quired to file certain annual statements with the tax com missioner showing especially the place of residence of all the stockholders (1905, 54). Section 2332 and following in the Revised Laws cover taxation of banking corpora tions; incidental to the taxation are the returns to the assessors of towns under section 2336. EXAMINATIONS. I hese are semiannual or more frequent, covering books and papers (3457). Trust companies are specifically made subject to examination by 1903, 167. Special examinations of school- fund depositaries are allowed, and also special examinations by the treasurer of the State in case stock in the examined bank or trust com pany is owned by the State (3405). Stockholders in a bank or trust company are given au thority to examine the books, accounts, securities, and expenditures of their corporation at an annual meeting or at a special meeting called for the purpose by five stock holders owning not less than 100 shares (3406). 99 National Monetary Commission IV. — R e s e r v e R e q u ir e m e n t s . Banks and trust companies must maintain a reserve equal to 15 per cent of their aggregate deposits. Not less than four-fifteenths of this reserve must consist of gold and silver coin, the demand obligations of the United States, or national-bank currency, held by the bank in its office; the remainder may consist of balances with reserve agents subject to demand, and of railroad bonds which are legal investments for savings banks. Ihe reserve agents must be members of clearing-house associations of New York, Boston, Philadelphia, Chicago, or Albany, or else be national banks, state banks, or trust companies in New Haven, Bridgeport, or Hartford. Each reserve de positary must be approved by the bank commissioners. The amount of reserve held in the form of railroad bonds must never exceed one-fifth of the whole reserve (3400, amd. by 1909, 40). This provision for reserve does not apply to savings deposits in banks and trust companies (1907, 85). V .— D isco u n t and L oan R e s t r ic t io n s . The total liabilities to any bank or trust company of any person, firm, or corporation, including in firm liabili ties the liabilities of its members, must not exceed 10 per cent of the amount of the capital of the bank or trust company and its surplus and undivided profits, this restriction, however, is subject to the proviso that the 10 per cent limit of individual loans may be exceeded to a point not over 20 per cent, provided the loans are secured by collateral whose market value exceeds by 20 per cent the liabilities secured. Twenty per cent of capital, sur plus, and profits is set as the highest point of a loan to any individual, firm, or company (3402)- 100 Connecticut State Banks, etc. Banks and trust companies may not loan to any director an amount exceeding 5 per cent of capital, surplus, and undivided profits, and the total of debts due from directors must not exceed 20 per cent. It is permitted, however, to exceed the limits thus set if the loans are secured by col lateral of a certain market value, etc. (3411). No bank or trust company may loan or discount on a pledge of its own stock (3401). No bank or trust com pany may discount negotiable instruments made, ac cepted, or indorsed by an officer or clerk (3403). No bank or trust company may loan to parties outside Connecticut until the loans and discounts to parties within Connecticut amount to one-half the capital of the corporation (3404). The provision in the statute prohibiting loans at interest greater than 15 per cent excepts from that prohibition loans by and to national banks, state banks, and trust companies, and excepts also bona fide mortgages of real or personal property (1907, 238). V I .— I n v e st m e n t s . A bank and trust company to which its own stock has been transferred may cast no vote on it, except that a trust company holding its own stock in trust may vote the stock so held (3407). In the general corporation law it is pro vided that corporations may hold such stocks and bonds issued by other corporations “ as the purpose of the cor poration shall require” (3355). Banks and trust companies are allowed to maintain sav ings departments, the deposits in which, however, must be invested according to the statutes prescribing invest ments for deposits in savings banks; investments thus made are for the protection solely of depositors in savings department (1907, 85). IO I National Monetary Commission V III.— B r a n c h e s . Banks and trust companies are prohibited from estab lishing branches or employing agents to do business in other places than at the home office (3401). X .— U n au th o rized B a n k in g . Soliciting deposits as a savings bank or using on a sign such words as “ bank,” “ trust,” or “ savings,” or any name indicating that the persons are a bank, savings bank, or trust company is illegal if the users of the word are not entitled to do so under the statute. The penalty for such use must not be more than $1,000. Firms or individuals who deposit a $10,000 bond with the state treasurer or, if they choose, acceptable securities to the same value, may style themselves private bankers (1907, 86). X I.— P e n a l t ie s . There is a general provision that if no other penalty is provided any violation of the law in relation to banks, sav ings banks, or trust companies shall be a fine of from $100 to $500 (3454)Banks and trust companies which exceed the loan limit set by section 3402 forfeit $3,000 (3402). Those that vio late the provisions against loans to officers forfeit between $500 and $1,000 for each offense (3411). Directors who indorse for a compensation paper discounted by their bank or trust company forfeit between $500 and $1,000 for each offense (3412). Directors voting for illegal dividends forfeit $500 (3413). If a bank or trust company fails to transmit its report to the commissioners it forfeits $10 a day (3416). 102 * Connecticut Savings Banks SAVINGS BANKS. I.— T erm s of I n co r po r atio n . Savings banks are institutions without capital stock. The net income of any savings bank in excess of oneeighth per cent of its deposits, actually earned during the preceding half year, and only such net income, may be divided semiannually among the depositors. Dividends ordinarily must not exced 4 per cent a year (3440). Sav ings banks are required to hold a surplus of at least 3 per cent of their deposits as a contingent fund, which must never exceed 10 per cent of the deposits; any surplus be yond that may be divided in sums not less than 1 per cent of deposits (3441). Directors of savings banks may discriminate in dis tributing dividends between deposits of $1,000 or less, and those above. Discrimination must not exceed 1 per cent a year, and if it is necessary it must be in favor of the smaller deposits (3442). II.— L ia b il it ie s and D u tie s of D ir e c t o r s . Not more than three officers of any one savings bank may be officers of a bank or trust company, and no cashier of a bank may be treasurer of a savings bank that has over $500,000 deposits (3443). Directors of savings banks appoint annually at least two auditors not interested in the bank, who examine its books, accounts, and securities, and file in the bank office a state ment, a copy of which is forwarded annually to the com missioners (3447). I l l .— S u p e r v isio n . . Seneral provisions concerning the bank commis sioners were given under Banks and trust companies. 103 National Monetary Commission The authority of the bank commissioners to apply for restraining orders or institute receivership proceedings is the same as it was under Banks and trust companies (3460 and 3461). They approve of a savings bank’s ex penditure for a building (3438). REPORTS. The treasurer of each savings bank, yearly, or if required by the bank commissioners, oftener, reports its condition to them, giving the par value, cost, and market value of its assets, besides all information required in the annual statements of banks and trust companies (3452). Receivers of savings banks, like receivers of banks and trust companies, report to the bank commissioners (3472). The commissioners receive annually a report of the exami nation by the two auditors explained above (3447). Savings banks are also required to report various matters in connection with taxation (2336; 1903, 189; and 1907, 204). The treasurer of each savings bank reports annually to the comptroller the name of such depositors as have not dealt with their deposits for twenty years. The state ment must include the amount credited to such persons. No statement need be made, however, where the depositor is known by the bank to be living. The comptroller communicates this statement to the general assembly (345i)EXAMINATIONS. Savings banks are, like banks and trust companies, examined semiannually or oftener by the bank com missioners (3457). There is also an annual examination by two auditors, appointed by the directors (3447). 10 4 Connecticut V .— D is c o u n t , Do a n , Savings and Banks D e p o sit R e s t r ic t io n s . No savings bank, having more than $25,000 of deposits, may loan on personal security to any one person or com pany more than 3 per cent of its deposits (3432), nor may a savings bank buy an obligation or loan upon it if only one person or firm is obligated, unless the savings bank takes additional security equivalent to an indorse ment (3433). No officer of a savings bank may borrow or be surety for a loan of any of its funds, nor may he take a fee for procuring a loan from a savings bank or for selling securi ties to it (3446). With minor exceptions savings banks may not receive interest at more than 6 per cent (3439). No individual may deposit more than $1,000 annually in one savings bank (3433). V I.— I n v e st m e n t s . No savings bank may expend in a building to accom modate its business more than can be taken from the surplus, after allowing for depreciation of securities and the 3 per cent contingent fund; this expenditure is in all cases subject to the approval of the bank commissioners (3438). The securities in which savings banks may invest their deposits and surplus are, omitting minor distinc tions, as follows: First, not exceeding 20 per cent of the deposits and surplus in notes secured by the pledge of stocks or bonds which have paid dividends or interest for two years at not less than 3 per cent, or by the pledge of securities which can be purchased by savings banks; second, not exceeding 20 per cent in notes which are the joint and several obligations of two or more residents of Connecticut; third, in United States bonds, 10 5 National Monetary Commission the bonds of any New England State, and the bonds of certain other enumerated States; fourth, in the bonds of any New England city, or any city in New York, or cer tain enumerated cities; fifth, in the obligations of munici palities of Connecticut; sixth, in the stock of a bank or trust company located in Connecticut, New York City, or Boston; seventh, in the bonds of other cities in the States enumerated before, if the city has not less than 20,000 inhabitants, if the amount of its bonds does not exceed 7 per cent of the taxable value of its property, and if the city has not defaulted on its debt within fifteen years; eighth, in the bonds of any railway company in the enumerated States if the bonds are a first mortgage and if they are the only mortgage on some portion of the road; also in the consolidated refunding bonds of Connecticut railways if in all these cases the railroad has paid for five years interest and at least 4 per cent dividends on all its stock and if the stock of the railroad equals at least onethird of the outstanding bond issue; ninth, in the bonds of enumerated railroads if for five years the railroad has paid interest and dividends and if the stock of the railroad equals at least one-third its mortgage debt. All railroad bonds cease to be legal investments for savings banks when the railroad ceases to pay dividends on all its stock. The securities of railroads operated exclusively by elec tricity and of street railways are not legal investments. All other investments must consist of deposits in banks or trust companies in Connecticut, New York, Massa chusetts, or Rhode Island, or of loans secured by mort gage on unencumbered real estate in Connecticut worth double the loan (1905, 231, 184, and 207; 1903, 171). X I.— P e n a l t ie s . The general penalty stated under Banks and trust companies applies to savings banks (3454). The penalty 106 Connecticut Savings Banks for officers who become personally interested in directing savings bank investments is $1,000 (3446). The penalty for failure by the treasurer to report unused accounts is $100 (3451). In case of a violation of the statute, the officials who assent to the violation are liable to the bank for the loss it suffers. They are also subject to fine of not less than $100 or not more than $1,000 (3453). 107 DELAWARE. The banking statutes of this State are extremely meager. In the Revised Code as amended to 1893 (this is the latest revision of the statutes of the State) a chapter (LXXI) is entitled, “ Of Banks; ” this chapter, with two or three pages of later acts appended to it in the Code, con tains little of importance. The subsequent session laws have been examined through those of 1909. In 1903 an act was passed providing for supervision over state banks, savings banks, trust companies, etc. In 1909 branches and reserves were provided for. There is not sufficient separation of the three sorts of business in the statutes to warrant separate headings. I.— T erms of I n c o r po r a tio n . Apparently banks in Delaware must still be chartered by special act of legislature, for the general corporation law denies to any corporation created under it the power to carry on the business of discounting bills, notes, or other evidences of debt, receiving deposits of money, etc. (1903, chap. 394, 4). III.— S u p e r v is io n . The insurance commissioner of Delaware has super vision over all banks and trust companies (1903, chap. 330, 1). For the duties he performs as a banking super visor he receives $500 a year (1903, chap. 330, 21). When ever it appears to him that it is desirable that proceedings 108 D el aw are General Provisions should be brought against “ state banks, savings banks, trust companies, and safe deposit corporations and other companies engaged in like business or in any manner receiving deposits of money, ” if the affairs of any corpora tion of these sorts are in an unsound condition from illegal or unsafe investments, or it appears to him that its liabilities exceed its assets or that it is violating the law or that it is inexpedient for it to continue business, then it is the duty of the insurance commissioner, through the attorney-general, to institute such proceedings against the corporation as the situation requires; if from an examination the commissioner has reason to believe that the corporation is in an unsafe condition, he may take possession of the corporation’s property and retain it until a receiver is appointed (1903, chap. 330, 5). He proceeds similarly against any bank or trust company of which the reserve has fallen below the requirement, and which, after thirty days’ notice from him, has not made the reserve good. He approves of reserve depositaries (1909, chap. 162). REPORTS. The corporations enumerated in the quotation above make to the insurance commissioner not less than two reports each year in the form prescribed by him showing resources and liabilities at the close of business on a past day specified by him; each report is transmitted to him within twenty days after the receipt of his request and an abstract in the form prescribed by him is published in a local newspaper. He may call for special reports when he thinks them necessary for a complete knowledge of the condition of any corporation (1903, chap. 330, 2). Every savings bank or other incorporated institution for savings” must annually publish once a week for three 109 t N at i on a l M on e t a r y C o mmi s s i o n weeks a statement of its financial condition, presenting the amount and nature of its business during the preced ing year, with assets, liabilities, investments, etc. (Laws of Delaware, p. 570). EXAMINATIONS. Whenever the insurance commissioner deems it expedi ent, or at the request of the corporation, he may examine any of those corporations enumerated above under Super vision (1903, chap. 330, 4). IV. — R e s e r v e R e q u ir e m e n t s .Every bank, and every trust company receiving de posits, must, if it does business in a city of over 50,000, keep a reserve equal to 15 per cent of aggregate deposits, exclusive of deposits on which there must be thirty days’ notice of withdrawal; one-third of this reserve must be in money, and the part not held in money must be on deposit in a Delaware bank or trust company having a capital of $50,000 and a surplus of $50,000, approved by the com missioner, or on deposit in a bank or trust company approved by him doing business in New York, Philadel phia, or Baltimore. Banks and trust companies doing business elsewhere in the State must keep a reserve equal to 10 per cent of deposits, exclusive of those on which there must be thirty days’ notice of withdrawal; the pro portion of cash and the designation of depositaries are the same as in the case of corporations located in cities of over 50,000. While the reserve is below the requirement, no new loans or discounts may be made except by dis counting sight exchange, and no dividends may be declared (1909, chap. 162). D el aw are General Provisions V II.— O v e r d r a f t s . Among the items required to be reported by the Farmers’ Bank of the State of Delaware, under a special statute, is “ overdrafts” (Daws of Delaware, p. 589). V III.— B r a n c h e s . Branches are allowed only on the approval of the insurance commissioner, who must ascertain that the bank has a paid-in capital of $25,000 for each place of business then established, and for the proposed branch, and a surplus of $25,000 for each place of business then estab lished, and for the proposed branch; this act applies to all corporations “ possessing banking powers” (1909, chap. 163). X .— U n au th o rized B a n k in g . No foreign corporation is deemed to possess the power of discounting bills, notes, or other evidences of debt, of receiving deposits, buying and selling exchange, etc. (1903, chap. 395, 7). Forming a banking company without incorporation is forbidden, and any person who receives subscriptions to the capital stock of such a company, or subscribes, for feits $500 to any one who sues, one half to the use of the State (Daws of Delaware, Chap. DXXI, 1). Any mem bers or agents of such an association who loan money on notes or receive money on deposit also forfeit $500 (Daws of Delaware, Chap. DXXI, 2). X I.— P e n a l t ie s . The act placing banks under the supervision of the in surance commissioner provides that failure to report is punishable by a penalty of $100 a day (1903, chap. 330, 2); m National Monetary Commission that the making of a report with intent to deceive an ex aminer is a misdemeanor on the part of the director, officer, or employee who does so (1903, chap. 330, 3); and that any corporation doing business “ in contradiction of the provisions herein contained” is liable to a fine of $1,000 (1903, chap. 330, 10). A statute in the amended Code makes it a misdemeanor, punishable by fine, for directors or managers of a bank to be concerned in paper or security on which the bank makes a profit of more than 1 per cent for sixty days; the offending bank forfeits its charter (Laws of Delaware, p. 588). Savings banks which fail to publish the annual reports required suffer a penalty of $200 for each omission (Laws of Delaware, P- 570). % 112 DISTRICT OF COLUMBIA. Most of the banking in the District of Columbia is done by national banks or by foreign corporations. No dis trict banks are provided for in the Code; savings banks are briefly treated as to reports and examinations; and only for trust companies is there legislation which is at all. comprehensive. The digest is based upon Treasury Document No. 2505, a pamphlet which reprints the national-bank act and other laws relating to national banks, together with all the provisions of the District Code relating to banking. The pamphlet sets out in full a subchapter of the Code dealing with the organization in the District of corpora tions of various sorts— manufacturing, agricultural, mining, etc.; savings banks are incorporated under this statute not by virtue of being expressly named in it, but merely because they are not provided for separately. The chap ter does provide, however, that “ banks of circulation or discount ” may not be incorporated under it. The head ing “ Banks ” is, of course, omited in the digest. Citations are to sections in the Code according to the numbering given in the reprint, which, though published in 1908, includes, according to the assurance received by the com piler at the office of the Comptroller of the Currency, all statutes affecting banking in the District passed previous to the end of the first session of the Sixty-first Congress. S. Doc. 353, 61-2-----8 "3 National Monetary Commission SAVINGS BANKS. III.— S u p e r v i s i o n . The Comptroller of the Currency exercises supervision over “ all savings banks, or savings companies, or trust companies, or other banking institutions, organized under authority of any act of Congress to do business in the District of Columbia, or organized by virtue of the laws of any of the States in this Union, and having an office or banking house located within the District of Columbia where deposits or savings are received. ” When in his opinion it is necessary he may take possession of such a corporation for the same reasons and in the same manner as is provided with respect to national banks (713). REPORTS. The corporations named in the quoted passage in the paragraph above are required to make to the Comptroller all the reports which national banks are required to make, except that banking institutions having offices in foreign countries as well as in the District of Columbia are only required to make these reports semiannually. Reports must be published in Washington newspapers (713). The national-bank requirement is five reports a year showing resources and liabilities on a past day, and special reports when demanded by the Comptroller (R. S., 5211), and a report after each dividend showing its amount, and net earnings not divided (R. S., 5212). EXAMINATIONS. The Comptroller of the Currency is authorized, when ever he deems it useful, to cause an examination to be made of any of the corporations mentioned in the quoted passage above (714). 114 D istrict of Columbia Trust Companies X I. — P e n a l t ie s . The penalty for failure to report is the same as that imposed on national banks for a like offense (713), $100 a day during the delay (R. S., 5213). TRUST COMPANIES. I.— T erm s of I n co r po r atio n . A corporation may be formed to carry on in the District of Columbia “ a safe deposit, trust, loan, and mortgage business,” with a capital of at least $1,000,000, and if the company also does a storage business a capital of at least $1,200,000 (715). Trust companies may “ accept deposits of money for the purposes designated herein, upon such terms as may be agreed upon from time to time with depositors” (721). Of the capital stock at least 50 per cent must be paid in in cash or by the transfer of assets before business is begun, and within a year after availing itself of the powers given by the statute each company must have its entire capital stock paid in (728). Gener ally only money may be considered as payment of capital; but in the case of companies existing when the trust-com pany act was passed, and taking new charters under the statute, the provision given above that assets may be accepted as payment of capital may be taken advantage of with respect to the assets of the old company trans ferred to the new (735). Shares are of $100 each (729). See below under III the requirement of a deposit of secu rities before the corporation may “ transact the business o a trust company or any business of a fiduciary char acter” (728 and 719). 115 National Monetary I I — L ia b il it ie s and Commission D u tie s of S tockh o ld er s D ir e c t o r s . and Trust company stockholders are individually liable to the creditors of their company to an amount equal to and in addition to the stock held, for all debts and contracts of the company (734). There must be from 9 to 30 directors, who must be stockholders and at least one-half of them residents and citizens of the District (736). In case of failure to make the annual report provided for in section 730, the directors are liable for all debts existing at the time of the delin quency and for all that are contracted before the report is made (731). They are liable as guarantors for all debts existing or afterwards contracted, if a dividend is declared which renders the company insolvent or creates a debt against it (739). If liabilities exceed cash value of assets the directors who assent to this condition are personally liable for the excess to the creditors (741). III. — S u p e r v is io n . The Commissioners of the District of Columbia have power to grant or withhold the charter of incorporation (717). Before a corporation is entitled to “ transact the business of a trust company, or to become and act as an adminstrator, executor, guardian of the estate of a minor, or undertake any other kindred fiduciary duty,” it must deposit in securities with the Comptroller of the Currency an amount equal to one-fourth of its paid-in capital; the Comptroller may call for additional deposits not exceed ing one-half the paid-in capital. No corporation may “ transact the business of a trust company or any business of a fiduciary character” until it has the Comptroller’s certificate, which will not issue unless the required deposit has been made (728 and 719). 116 D istrict of Columbia Trust Companies The Comptroller of the Currency has power, when in his opinion it is necessary, to take possession of any trust company, for the same reasons and in the same manner and to the same extent as is provided with respect to national banks (713 and 720). REPORTS. Trust companies must report to the Comptroller as national banks do (713 and 720): five times a year, show ing resources and liabilities on a past day specified by him, with special reports when he requires them (R. S., 5211), and after each dividend a report of its amount and the amount of net earnings not divided (R. S., 5212). Every trust company must annually, within twenty days after the 1st of January, report to the Comptroller stating amount of capital, proportion paid in, amount of debts, gross earnings for the previous calendar, year, and ex penses; this report, on which the company’s taxes are based, must be published in a local newspaper (730). EXAMINATIONS. The Comptroller of the Currency exercises “ the same visitorial powers’’ over trust companies as he does over national banks (720). Trust companies are also men tioned in the section which authorizes the Comptroller, whenever he deems it useful, to cause an examination of savings banks, etc., to be made (714). The practice is to examine trust companies which are in satisfactory condi tion twice a year. V I .— I n v e st m e n t s . A trust com pany m ay hold real estate not exceeding in value $500,000, and such in addition as it m ay acquire in satisfaction of debts due it under sales, decrees, judgm ents, ” 7 N at ion a l M onet ary Commission and mortgages; but it may not hold real estate under foreclosure or real estate purchased to secure debts, for longer than five years (726). X .— U n au th o rized T r u st C o m pan y B u sin e s s . No corporation organized under the laws of any of the States and having its principal place of business in the District may carry on any of the business named in the trust-company chapter without compliance with the pro visions of the chapter for the government of corporations formed under it; each officer of an offending corporation is punishable by fine not exceeding $1,000, or imprison ment not exceeding one year, or both (747). X I.— P enalties . Failure to report subjects a trust company to the same penalty as is imposed upon national banks for the same offense (720 and 713), $100 a day during the delay (R. S., 5213). See also 732 for false swearing and misappropria tion of trust funds. FLORIDA. The General Statutes of Florida include all statutes through the session of 1903, and in an appendix are inserted the acts of 1905. Title 3 of the fourth division of the statutes deals with corporations. In chapter 2 (Cor porations for profit) of this title, subchapter 1 contains the special provisions for banking companies. The first eleven articles of this subchapter contain provisions applicable to all banking companies. The twelfth article deals with savings banks exclusively. The only pertinent later statute is found at page 197 of the session laws of 1907. This act also deals generally with banking companies, except in one or two minor provisions. There is no law applicable to trust companies as distinguished from other corporations. The digest is accordingly divided under only two heads, “ Gen eral provisions,” which are applicable to all banks, and Savings banks.” Numbers in parenthesis are citations to the General Statutes of Florida, 1906; citations to the later statute are by its number in the laws of 1907— that is, 92 followed by the section in that law. The digest includes legislation through the session of 1907; and the compiler has been advised by Mr. A. C. Croom, comp troller of the State, that at the 1909 session of the legisla ture no statutes were passed affecting the matters covered in the digest. 119 N a t ion a l Monetary Commission GENERAL PROVISIONS. I.— T erms of I ncorporation. Every banking company must have a capital of at least $50,000, except that, with the approval of the comptroller, banks may be organized in cities or towns of not more than 3,000 with a capital of at least $15,000, and, with the ap proval of the comptroller, they may be organized in cities or towns of not more than 6,000 with a capital of $25,000. The capital must be divided into shares of $100 each. Sav ings banks are in a measure excepted from this provision— see I, under Savings banks (2697). At least 50 per cent of the capital must be paid in in full before business is begun. The remainder must be paid in in monthly installments of at least 10 per cent of the whole capital (2698). Dividends may be declared semiannually from net profits. Before declaring a dividend one-tenth of the net profits must be carried to surplus until it amounts to 20 per cent of the capital (2714). The capital must never be impaired either by withdrawing dividends or other wise (2715). No banking company may ever become indebted to an amount exceeding its capital stock except on the following sorts of demands: First, money deposited with or collected by the company; second, drafts against money due to the company; third, liabilities to the stockholders for divi dends and reserved profits (2712). Apparently, commercial and savings banking may not be combined, for the application for incorporation must specify whether the business contemplated is “ general banking’’ or “ savings banking” (2694). Florida — II-— L iabilities General and Provisions D uties of Stockholders Directors. and The stockholders of every banking company are individ ually responsible for the debts of the company to the ex tent of the amount of their stock at par in addition to the amount invested in the shares (2700). If a banking com pany begins business before authorized by the comptroller, its stockholders are personally liable as partners (2701). Banking companies must have a board of not fewer than five directors (2704). Each director must be a citizen of the United States, and three-fifths of the directors must be residents of Florida for at least one year before their elec tion and must be residents during their continuance in office. Each director must own at least ten shares of stock (27° 5)- Where directors participate in a violation of law, they become individually liable for all damages which the company, its stockholders, or any other persons may sus tain in consequence of the violation (2724). III.— Supervision . 1 he real supervision of banks is in the hands of the comp troller ; but he has power to employ a discreet and compe tent person to make examinations. This inspector may not be connected with any banking business (92, sec. 1); he has a salary of $2,000 per year (92, sec. 2). I he comptroller must approve of the organization of banks with a capital less than the regular amount, $50,000 (2697). The comptroller examines the condition of each company before he authorizes it to begin business, with a view especially to ascertaining the amount paid in on its capita , the names and residences of the directors, with the and whether the company has complied wi aw. If it appears that the organization is for other 121 National Monetary Commission than legal purposes, the comptroller may withhold his cer tificate (2702). The comptroller approves of bonds in which reserves may be invested (2711). If he becomes satisfied from the reports furnished him or from other good proof that a banking company is insolvent and is in default, or if the directors of a banking company assent to a violation of any of the provisions of law, the comptroller applies to the courts for the appointment of a receiver (2724). In case reserves are impaired the comp troller notifies the banking company to make good its re serve. If it fails in thirty days, he applies for a receiver (2710); he does so if a banking company holds its own stock over the time allowed (2713); or if its capital stock is impaired, and after notice from him the impairment is not made good within three months nor liquidation begun (2716); or if the capital is impaired by cancellation for un paid assessments and not increased to the required amount on thirty days’ notice (2699) J or if any losses or irregulari ties apparent from an examination are not made good by the directors of the banking company to the satisfaction of the comptroller at once (92, sec. 5); or if a bank fails to pay its examination fees within sixty days after notifica tion of the amount due (92, sec. 6); or if he is dissatisfied with the report of a banking company going into voluntary liquidation (92, sec. 4). REPORTS. The statute of 1907 provides that every bank, banker, banking firm, banking company, branch bank, or associa tion doing business in this State, except national banks (this is the phraseology of all the general sections in the act of 1907), must make complete reports to the comptroller whenever and in whatever form he prescribes, and must publish in a local newspaper in January and July of each year a full statement of assets and liabilities (92, sec. 7). 122 Florida General Provisions This act repeals only the laws or parts of laws in conflict with its provisions. It is worth noticing, therefore, that it had been provided in the general statutes that every bank ing company should make report to the comptroller not more seldom than twice a year, exhibiting its resources and liabilities at the close of business on any day specified by the comptroller, this report to be submitted within five days after receipt of the comptroller’s request; also, that the general statutes allowed him to call for special reports, and provided that all banks, bankers, etc., receiving money on deposit should advertise every January in a local news paper the amount of their capital stock and personal prop erty owned and subject to payment of their liabilities (2718 and 2719). A receiver, within thirty days after taking charge of the assets of a banking company, must forward to the comp troller a full report of its assets and liabilities, including a list of the stockholders, the number of shares owned by each, the names of the depositors, the amounts of deposits, a list of assets, and such other information as the comp troller requires. From then on the receiver makes monthly reports containing complete details (92, sec. 3). If a banking company goes into voluntary liquidation, it first furnishes the comptroller with a detailed statement of its affairs, following this with a similar detailed state ment every month until its liabilities have been settled in full (92, sec. 4). For the reports required for purposes of taxation, see 43 5>437 (including trust companies), and 2720. EXAMINATIONS. All bankers, firms, or companies are examined at least ° ^ e a Year by the person appointed by the comptroller. 1S *s subject to a difference in the case of savings banks.) The examinations may be oftener if they are 123 National Monetary Commission deemed necessary (92, secs. 5 and 6). The person making examination reports in detail to the comptroller the con dition of the bank examined (92, sec. 1). There is a pre liminary examination before a certificate of incorpora tion is granted (2702). IV.— R eserve R equirements. Every banking company must keep in lawful money of the United States a reserve equal to 20 per cent of its deposits. Three-fifths of this 20 per cent reserve may consist of balances, payable on demand, due from banks in other cities with whom the company keeps its current accounts, or may consist of bonds of the United States, of Florida, or of municipalities of Florida if these bonds are approved by the comptroller. When the reserve falls below 20 per cent, the company must not increase its liabilities except by discounting or buying sight bills of exchange, and must not declare dividends (2710 and 2711). V.— Discount and L oan R estrictions . Banking companies may not make any loan or discount on security of shares of their own stock unless it is neces sary to prevent loss upon a previous debt; if stock is so acquired it must be gotten rid of within six months (2713). For restrictions on borrowing, see I, supra. VI.— I nvestments . Banking companies may only hold such real estate as is necessary for immediate accommodation in the transac tion of business; such as is conveyed in satisfaction of previous debts; and such as is purchased under judg ments or mortgages running to the purchaser or is pur chased to secure debts due the purchaser (2707). 124 F l o r i d a S a v i n g s B a n k s No banking company may purchase its own shares unless the purchase is necessary to prevent loss on a pre vious debt, in which case the stock must be sold within six months (2713). V III.— B ranches. Any banking company may establish branches or agencies in any city or town in Florida, the capital being joint and used by the mother bank and the branches in definite proportions. Six months’ public notice must be given of the discontinuance of any branch (2709). X . — U nauthorized B anking . Banks not organized and doing business under the laws of Florida or under the national banking laws, and “ all persons or corporations doing the business of bankers, brokers, or savings institutions,” are prohibited from using the word bank or any other title which would imply that they are incorporated banking institutions. Illegal use of words implying that the bank is an incorporated institution under the statute entails a penalty of $50 a day (2728). X I.— P enalties . Insolvency, or violation of law, entails forfeiture of all franchises and privileges (2724). Banks failing to report are subject to a penalty of $100 a day during the delay (92, sec. 7). SAVINGS BANKS. I- Terms of I ncorporation. I he general amount of capital required of all banking companies is $50,000, but savings banks may be formed with a capital of not less than $20,000. The capital of 125 National Monetary Commi ssi on savings banks may be divided into shares of not less than $10 each (2697). I l l .— Supervision . EXAMINATIONS. Savings banks are examined at least twice a year (92, sec. 6). V.— Discount, L oan , and D eposit R estrictions. A committee or board of investment in each savings bank, charged with the duty of investing its funds, is apparently contemplated by the general statutes. No member of this committee or officer whose duty it is to invest the bank’s funds may borrow of the savings bank, or become owner of real estate mortgaged to the bank (2735)- No savings bank nor any person acting in its behalf may take a consideration of any sort on account of a loan made by the savings bank other than appears on the face of the contract of loan (2736). Savings banks may receive deposits from any one per son until they amount to $2,000, and may allow interest on the deposits until the principal and accrued interest amount to $3,000; this limitation, however, does not apply to deposits by religious and charitable associations (2729). VI.— Investments. The capital and deposits of savings banks may be in vested only as follows: First, in first mortgages of Florida real estate to an amount not to exceed 60 per cent of the valuation of the real estate. Not more than 75 per cent of the whole amount of deposits may be thus invested, and no loan on mortgage may be made except on the report of two members of the board of investment. Second, in the public funds of the United States, or bonds 126 F l o r i d a S a v i n g s B a n k s of any State, or securities of any American municipality whose indebtedness does not exceed 5 per cent of the valuation of its property, or in notes of any citizen of hlorida with a pledge of the securities just mentioned at no more than their par value. Third, in first-mortgage bonds of any railroad incorporated under the laws of one of the United States and located in that State, if the railroad is in possession of its'own road and has paid dividends for two years; or in the first-mortgage bonds of a railroad, so incorporated and located, guaranteed by another such railroad; or in the bonds or notes of a rail road incorporated under Florida law which is unencum bered and has paid 5 per cent dividends for two years; or in the notes of any Florida citizen with a pledge of these securities at no more than 80 per cent of their par value. Fourth, in the stock of any Florida State bank, or any national bank, or in the notes of a Florida citi zen with a pledge of these securities at no more than 80 per cent of their market value and not exceeding their par value. Savings banks may deposit sums not exceeding 30 per cent of their deposits on call in Florida banks, national banks, or Florida or United States trust com panies; and they may take interest on these deposits. Fifth, in loans on personal notes of depositors secured by the depositor’s book; not more than three-fourths of the amount of the deposit may be thus loaned. Sixth, in case the funds of the bank can not be conveniently in vested as above provided, then not more than one-third of the funds may be invested in bonds or other personal security payable in a time not less than a year, with two sureties, if the principal and sureties are all citizens of Florida. Seventh, 10 per cent of the deposits of a sav ings bank, but not more than $25,000, may be invested in a building for its business (2733). 127 National Monetary Commission X I.— Penalties . The member of the investment committee of a savings bank, or officer in charge of investments, who borrows from the bank or becomes owner of real estate on which the company holds a mortgage, forfeits his office (2735). Whoever violates the provisions of the section forbidding savings banks or persons negotiating for savings banks to take a consideration for procuring a loan from the sav ings bank is liable to a penalty of from $100 to $1,000 (2736). 128 GEORGIA. The last revision of the laws of Georgia is the Code of 1895. In the Code, beginning at section 1903, is an article, Banks,” many sections of which deal with circulation and have therefore been omitted. A supplement to the Code was published in 1901, including all legislation through the session of 1900; in this are found sections concerned with banks, many of them dealing with circulation, and also a chapter, beginning with section 6458, which is con cerned with trust companies. The numbers of the sections in the supplement follow consecutively after those in the third volume of the Code of 1895; moreover, the supple ment has a complete index, to the Code as well as to itself, which has been used in preparing the digest. In the later session laws are found a few amendments, culminating in act No. 84 of 1907, which creates a bank bureau, besides legislating on many topics with regard to banks; since this act merely repeals all laws and parts of laws in con flict with its own provisions, it is a matter of some doubt what sections of the Code it supersedes— in clear cases code sections have been omitted. Savings banks are not sepa rately legislated for. Trust companies receiving deposits are, under 1907, No. 84, 8, subject to all laws regulating banks. The session laws have been examined through those of 1908, and the compiler has been assured by Mr. S. D oc. 3S3. 61-2----- 9 129 National Monetary Commission J. P. Brown, state bank examiner, that at the 1909 ses sion no laws were passed affecting the matters covered by the digest. In the parentheses in the digest the Roman numeral indicates the volume of the Code, I\ being the supplement; the Arabic figures following are sections in the volume given. References to the session laws are by year, number, and section. BANKS. I.— T erms of I ncorporation. The minimum capital for banks is $25,000, of which not less than 20 per cent, and in no case less than $15,000, must be paid in in cash before organization (II, 1910). Dividends may be declared only from net profits (II, 1968); and any shrinkages in capital due to losses are charged to profit and loss, so that notes and bills dis counted shown as debts due the bank are live and col lectible assets (II, 1917). II.— L iabilities and D uties of Stockholders D irectors. and Stockholders are individually liable to the amount un paid on their shares for all the corporation’s debts, and all stockholders, above the face value of the shares they hold, are individually liable to depositors in the bank for all moneys deposited in an amount equal to the face value of the shares (II, 1911). There must be not fewer than three nor more than fif teen directors, each the holder of one or more shares of stock (1903, No. 446). There must be at least one meeting every three months, and at one meeting every six months the directors must have a thorough examination made; 130 G e o r S * a S t a t e B a n k s they then require that all back debts be collected or well secured and that no debt be held twelve months without interest being paid, or, unless well secured, put in suit or charged off (1907, No. 84, 25). I l l .— S upervision . There is in the department of the treasury a bank bu reau charged with supervision of banks and enforcement of banking laws (1907, No. 84, 1). The treasurer of the state is also state bank examiner; he holds office for the same term as his treasurer’s term, and receives a salary of $2,500 for being examiner (1907, No. 84, 2). Neither the state bank examiner nor his assistants may be officers or stockholders of banking corporations or firms or be en gaged individually in banking business in the United States (1907, No. 84, 7). Whenever it appears that the capital of a bank or trust company doing business under the banking act has been impaired over 10 per cent, the examiner notifies the cor poration to make the impairment good within ninety days (1907, No. 84, 15). If any bank or trust company refuses to comply with requirements of the examiner for thirty days after his demand, it may be proceeded against by the examiner for revocation of its authority to do business (1907, No. 84, 12). The proceedings for forfeiture are be gun by the attorney-general at the request of the gov ernor, and if the court decrees the bank’s charter to be for feited, then a receiver may be appointed (1907, No. 84, 13). Any bank doing business under the statute of 1907 may place its affairs voluntarily under the control of the exam iner (1907, No. 84, 14). Whenever any officer of a bank re uses to submit to examination, or obstructs examina tion, a receiver may be appointed (1907, No. 84, 16). If from examination or report it appears that a bank is 131 National Monetary Commission insolvent, it is the duty of the examiner to report the insol vency to the governor, and when ordered by the governor, to take possession of the bank. He then makes a thorough examination, and if satisfied that the bank can not resume business or liquidate its debts, he reports again to the gov ernor, who then institutes, through the attorney-general, proceedings for a receiver. When directed by the governor the state examiner may appoint a special assistant to take charge of the bank until a receiver is appointed, but in no case may this official retain possession of the bank’s affairs for longer than sixty days (1907, No. 84, 27). R eports . Every bank and trust company must make at least four reports a year, and more if called upon by the examiner. The reports must, in the form prescribed by him, show re sources and liabilities at the close of business on a past day specified by the examiner; must be sent to him within ten days after receipt of his request; and must be published, as he prescribes, in a local newspaper (1907, No. 84, 10). Receivers report and make publication as the banks them selves would (1907, No. 84, 17), besides making annual re turns of receipts and disbursements to court (1907, No. 84, 13). Once a year a list of names and residences of share holders in every bank, with the number of shares held by each, is transmitted to the examiner (1907, No. 84, 28). The examiner may call for records of meetings of directors (1907, No. 84, 25). The state treasurer, in his capacity of state bank exam iner, makes an annual report to the governor (1907, No. 84,18), which includes a summary of the condition of banks and trust companies doing a deposit business from which he has had reports, with any other information in relation to these corporations which he thinks may be useful; a statement of banks and trust companies whose business 132 G e o r g i a — S t a t e B a n k s has been closed during the year; suggestions for amend ments to banking laws; and details of department admin istration (1907, No. 84, 20). If the governor thinks these reports of sufficient importance he may require them pub lished in newspapers of the State (1907, No. 84, 19). Occa sions when the examiner is required to report to the gov ernor the insolvency of individual institutions against whom receivership proceedings are to be brought were stated above (see also 1907, No. 84, 22). EXAMINATIONS. The state bank examiner, or his subordinate, visits every bank and trust company twice each year and oftener, if necessary, in order to make a careful examination into its condition (1907, No. 84, 23). It is a provision of the Code, apparently not repealed by the act of 1907, that the examinations must not be at stated times, and must be without warning (II, 1922). He must examine also banks in the hands of receivers once every six months and file the results with the court (1907, No. 84, 17); but the compiler is advised by the state bank examiner that this provision is not enforced, on the theory that the bank in the receiver’s hands is actually in the custody of the court appointing him. At a meeting of directors at least once every six months a thorough examination is made by the directors or by an auditor, after which the direc tors act as stated under II, supra (1907, No. 84, 25). The special examinations made to determine the solvency of banks against which receivership proceedings are about to be brought were explained above. IV. R eser ve R e q u ir e m e n t s . No bank or corporation doing a banking business” may re uce its cash on hand, including amount due by ban s and bankers, and the market value of all stocks 133 N a t i on a l M o n et a r y Commission and bonds actually owned and held below 25 per cent of demand deposits” (II, 1915). This is as near as the statutes come to a reserve requirement. V.— D iscount and L oan R estrictions. Among the powers given banks is that “ to lend money upon personal security or upon pledges of bonds, stocks, or negotiable securities” (II, 1907). “ No bank or corporation doing a banking business” may loan to any one person without ample security more than 10 per cent of its capital and surplus; in this section surplus is to be construed net profits (IV, 6158). “ No bank or corporation doing a banking business” may loan to any officer without good collateral or other ample security, and if such a loan exceeds 10 per cent of the capital it must be approved by a majority of the direc tors (1905, No. 89). The Criminal Code makes it a mis demeanor for an officer or agent of a bank to borrow money from the bank without permission of a majority of direct ors (III, 212), or for an officer or agent of a bank to lend money to another officer or agent without permission of a majority of directors (III, 213). In so far as No. 89 of 1905 is in conflict with the two sections of the Criminal Code last cited, it must, as being later legislation, be taken to repeal them. V I. — INVESTMENTS. Every bank may hold “ such real and personal property as may be necessary for its uses and business” (II, 1907). Capital stock must not be applied by any bank to the purchase of its own shares (II, 1968). V III.— B ranches. Bank is defined to include in certain cases “ the parent bank, its branches, if any,” etc. (II, 1967). As further evidence that branches are allowed in Georgia, note that 134 G e o r g i a — S t a t e B a n k s the bank bureau is created to examine the condition, among other institutions, of all “ branch banks” (1907, No. 84, 1). XI.— P enalties . Every bank or trust company failing to make and pub lish the regular quarterly or special reports is subject to a penalty of $50 a day (1907, No. 84, 11). Receivers of insolvent banks failing to report or allow examination are subject to the penalties provided for officers or employees of banks (1907, No. 84, 17). If the state bank examiner or his assistant neglects his duty, makes a false statement, or is guilty of misconduct in office, he loses his office and is guilty of a misdemeanor (1907, No. 84, 32). It is a misdemeanor for an officer or employee of a bank to certify a check for which no sufficient funds are on deposit (1907, No. 84, 25). It is a misdemeanor for an offi cer or agent of a bank to borrow money of the bank with out permission of a majority of the directors (III, 212), or to lend the money of the bank to another agent or officer without permission of a majority of the directors (III, 213); but see V, supra, for the later statute authorizing, under certain restrictions, loans of this sort to be made. The Penal Code also makes the following offenses pun ishable by imprisonment of from one to ten years: Violation by a bank director or officer of the provisions of the bank’s charter (III, 204); fraudulent insolvency in which the president and directors of the bank are impli cated (III, 206); receipt of deposits by officers who know their bank to be insolvent (III, 207); and purchase with capital stock of the bank’s own shares (III, 211). The following offenses are punishable by imprisonment of from four to ten years: Conveyances, etc., in defraud of credit ors by directors or officers of a bank (III, 208); purchase 135 National Monetary Commission by a director, officer, or agent of paper issued by the bank for a less sum than appears due on its face (III, 209); and declaration, in which president or directors are implicated, of a dividend out of any funds except net profits (III, 210). SAVINGS BANKS. There is no distinct legislation for savings banks. They are referred to in the trust company provisions, where it is provided that “ any savings bank” having a paid-in capital of not less than $100,000, previously incorporated by the legislature, with authority to exercise trust powers, may take advantage of the trust company provisions (IV, 6466); this would imply that savings banks are institu tions with capital stock. The only other mention made of them seems to be in section 2391 of volume II of the Code, where it provides that “ all the provisions of this article are to apply to all savings institutions which pay interest to depositors and whose deposits are not subject to check.” The article referred to is article 8 of chapter 2 of title second; the article is entitled “ Corporations created by superior court.” Section 2350 of the article, however, declares that the superior courts of Georgia have power to create corporations, except for various purposes, among which is banking. TRUST COMPANIES. I.— T erms of I ncorporation. Trust companies may not receive deposits subject to check on demand, nor may they discount commercial paper, until they have complied with the laws regulating the incorporation of banks; but once those laws have been complied with, trust companies may acquire all rights and privileges and “ be subject to the same liabilities and 136 Georgia Trust Companies restrictions as apply to banks” (IV, 6462). It is simi larly provided in the statute of 1907 that a trust company receiving deposits under its charter is subject to the requirements of the state examiner, must make reports, and must conform “ to all the laws enacted regulating chartered banks in this State” (1907, No. 84, 8). All the statutes explained under Banks must, therefore, hold good for trust companies that do a banking business. The capital of a trust company must never exceed $2,000,000 and must be divided into shares of $100 each (IV, 6465). At least $100,000 of capital must have been paid in before business is begun (IV, 6462). II.— L iabilities and D uties of Stockholders Directors. and Trust companies doing a banking business are, it ap pears, subject to the rule for double liability of stock holders. See also provisions under Banks for directors. It is provided in the trust company provisions that every trust company must have a board of trustees of not less than five nor more than fifteen (IV, 6463). I l l .— Supervision . Trust companies that do a banking business are sub ject to the same rules for supervision by the examiner, for reports to him, and examinations by him or by his sub ordinate (1907, No. 84, 8). Several of the sections deal ing with supervision include trust companies in terms (1907, Nos. 84, 10, 23, etc.). IV.— R eserve R equirements. See the provision given under this head under Banks, t e anguage of which is ‘‘ bank or corporation doing a banking business” (II, i 9 i 5). 137 N at i on a l M on e t a r y V.— Discount and Commission L oan R estrictions. Among trust company powers is that “ to loan money on real estate or personal securities” (IV, 6461). The pro hibition on loans to any one person, unless amply secured, amounting to more than 10 per cent of capital and sur plus (see V, Banks), seems applicable to trust companies on the strength of its own language, “ bank or corpora tion doing a banking business” (IV, 6158). The language of the prohibition upon loaning to an officer without good security, and of the requirement that if the loan exceeds 10 per cent of capital it must be approved by a majority of directors, is the same— “ bank or corporation doing a banking business” (1905, No. 89). (See also Banks.) VI.— I nvestments. Trust companies may hold all real estate necessary in the transaction of their business or acquired in satisfac tion of debts due the corporation under sales, judgments or mortgages or in settlement of debts due the corpora tion. Trust companies may buy and sell “ stocks, bills of exchange, bonds and mortgages, and other securities” (IV, 6461). (See also Banks.) X I.— P enalties . See X I, Banks, for penalties upon trust companies doing a banking business. The penalty for failure to report is framed to include trust companies (1907, No. 84, 11). Among the penal provisions, that for receiving deposits while insolvent applies to any bank or “ any company or individual doing a banking business in this State” (IV, 207); and the provisions against an officer’s or an employee’s borrowing or loaning to another officer or employee apply to “ any bank or other corporation” (IV, 212 and 213). But see Banks, V, for the limitation on this prohibition enacted by act No. 89 of 1905. 138 — IDAHO. The bulk of the statute law of Idaho on banking is in chapter 13, “ Banking corporations,’’ of title 4, “ Corpo rations,” of the Civil Code of 1908. Chapter 12 of the same title, “ Guaranty title and trust companies,” con tains a few provisions concerned with trust companies, and chapter 13 contains some provisions specifically con fined to savings banks; but for the most part chapter 13 is applicable to banks, savings banks, and trust companies. The first section of the chapter (2968) provides for regard ing as a bank any person, firm, or corporation, except national banks, having a place of business in Idaho where credits are opened by the deposit or collection of money or currency, subject to be paid upon order, or where money is loaned on stocks, bonds, bullion, or commercial paper, or where stocks, bonds, bullion, or commercial paper are received for discount or sale. Since the pro visions of the chapter apply to all who fall within this classification, all the provisions of the statute presented below under the heading “ Banks” must be taken to be equally applicable to savings banks and trust companies. Under the headings “ Savings banks” and “ Trust com panies,” accordingly, are given only such few provisions as apply to them exclusively. The digest includes all statutes through the session of 1909. 139 N & 11 o n a l A1 o n e t a r y Commission BANKS. I.— T erms of I ncorporation. Banking corporations may have departments for both regular banking and savings banking (2991). When a corporation does both regular and savings banking, how ever, it must account in separate books for each kind of business, and its transactions of a savings character will be governed by the law applicable to savings banks, its business of an ordinary banking nature by the provisions in the statute applicable to that sort of bank (2995). Corporations, firms, and individuals doing a banking business must have property of a cash value as follows: In communities of less than 2,000, $10,000; 2,000 to 3,000, $20,000; 3,000 to 5,000, $25,000; 5,000 to 10,000, $30,000; 10,000 to 25,000, $50,000; over 25,000, $100,000. This property may be in money, commercial paper, and neces sary realty and personalty, which must be unencumbered (2970). Foreign banks to do business in Idaho must maintain at their office capital satisfying the above requirements; they are subject, moreover, to the other provisions of the chapter (2982 and 2983). At least 50 per cent of the capital of every bank must be paid in before it begins business and the remainder must be paid in monthly installments of 10 per cent of the whole capital until the amount of property paid in sat isfies the requirements given above (2973). Dividends may be declared out of net profits after pro viding for expenses, but before a dividend is declared not less than one-tenth of the net profits for the preceding dividend period must be carried to surplus until the sur plus amounts to 20 per cent of the paid capital (2981). 140 I d a h o II.— L iabilities S t a t e and B a n k s D uties of Stockholders D irectors. and The stockholders of banks in addition to the amount invested in their stock are liable to the creditors to an amount equal to the par value of their stock (2979). Directors, of whom there must be not less than five, must own $500 par value of stock (2970 and 2980). Directors who permit officers or employees to borrow in an excessive or dishonest manner or in a manner that entails risk of loss are liable individually for the damage suffered in consequence by the corporation or any person (2989). III.— S upervision . The bank commissioner is the state official overseeing banking. His term is four years; he must have had at least five years’ practical experience in banking business or have served for five years in the banking department of some State. He must have no interest in any bank in Idaho (189). His salary is $2,400 a year (192). Neither he nor his assistants may disclose information obtained in the business of the department except in the course of their duty (3008). Whenever it appears from a report or an examination that a bank’s capital is impaired the commissioner re quires the bank to make good the deficiency. If this is not done, or if the bank, when given notice of a violation of law, does not discontinue the violation, or if the commis sioner has cause to consider the bank insolvent, he applies to the court for a receiver (3004 and 3005). REPORTS. Banks report at least twice a year to the bank com missioner in the form prescribed by him, exhibiting in detail the resources and liabilities of the bank on some 141 N at ion a l M on et a r y Commission past day specified by the commissioner. The report must be transmitted to the commissioner within ten days of the receipt of his request for it. An abstract of this report must be published within thirty days in a local newspaper. The commissioner may call for special reports when he thinks them necessary, but not more than three each year (2999). Every other year every institution in which deposits are made makes a statement to the bank commissioner showing deposits that have been dormant for ten years, the amount of each deposit of this sort, the residence of the depositor, and the date of his death, if that is known. Notices of these deposits must be published in local news papers. If the depositor is known by the president of the bank to be living, or if the deposit is of less than $50, no report of it need be made to the commissioner. The material in these reports of unclaimed deposits must appear in the bank commissioner’s report (2997). Banks and trust companies may become depositaries of county or state funds. When serving in that capacity they are required to make monthly reports to the state and county financial officials (127-136; and 2013-2022). The bank commissioner files the reports, furnishes blank forms for them, and reports annually to the gov ernor, with a copy of the published abstract of the last report of each bank, with a statement of all proceedings of his, with a general outline of the condition of banking business in the State, and with such other matters as he thinks the public are interested in (3000). EXAMINATIONS. The bank commissioner examines the condition of each bank before giving it a certificate to do business (2975). When he deems it necessary, and at least annually, the bank commissioner visits all banks without notice. He 142 I d a h o S t a t e B a n k s examines the affairs of each bank and makes a complete report of it (3001). IV.— R eserve R equirements. Reserves must be not less than fifteen per cent of demand liabilities, but of this fifteen per cent one-half may consist of balances due “ from good solvent banks” (2998). V.— Discount and L oan R estrictions. The liabilities to a bank of one person, firm, or corpo ration, including in the liability of a corporation or firm the liabilities of its members, must never exceed 25 per cent of the capital, surplus, and undivided profits of the bank, but discount of commercial paper is not considered as lending money for this purpose, nor is a loan counted, where securities representing actual value, real estate, warehouse receipts, bills of lading, etc., have been hypothecated (2987). Firms and individuals may not carry as an asset the obligation of the firm or individual or a member of the firm. No employee of a banking corporation may loan to himself any of the bank funds without the approval of a majority of the directors (2989). See VI, below, for the restriction upon a bank’s taking its own stock as collateral (2976). VI.— I nvestments. Banks may purchase real estate only for the following purposes: First, necessary business use, but real estate held for this purpose must not exceed 50 per cent of capi tal, surplus, and undivided profits; second, real estate re ceived in satisfaction of previously contracted debts; third, real estate purchased by the bank at sale under judgments or mortgage foreclosures where the bank was holder of the lien as security (2978). M3 N a t io n a l M o n et a r y Commission No bank may accept as collateral or purchase its own capital stock, except when the transaction is necessary to prevent loss on a previous debt; and in that case the stock must be sold within twelve months (2976). X I. — P enalties . The following are misdemeanors: Failure by the presi dent of a banking institution to report unclaimed deposits (2997); wilful overdraft by an employee of a savings bank (7118); receipt of deposits with knowledge of the insolvency of the depositary (7119). The following are felonies by the bank commissioner: Malicious institution of proceedings, or institution without reasonable cause; for this the commissioner answers to the bank for damages and is also punishable by fine not over $1,000, imprisonment not over two years, or both (3°°5): disclosure of official information by the commis sioner or an assistant; for this the penalty is forfeiture of office and a fine of not over $1,000 with imprisonment until it is paid (3008). Wilful certification of a check for which no funds are on deposit entails a fine of $1,000 (2988). Foreign corporations and their employees who violate the statute forfeit $1,000 in addition to the regular pen alties (2984). Penalty for fraudulent receipt by the owner or officer of a bank of deposit with knowledge that the bank is insolvent is $1,000 fine, imprisonment not exceeding two years, or both (2985). SAVINGS BANKS. VI.— Investments. Savings banks or other institutions with savings depart ments may invest their capital and the money deposited only as follows: First, in securities of the United States; 1 44 Idaho — Trust Companies second, in securities of Idaho;* third, in securities of municipalities of Idaho, but not more than 50 per cent of the assets of any savings bank may be securities of any one municipality; fourth, in securities of any State or any city of any State that has not for three years before the investment defaulted on any interest payment, but not more than 50 per cent of the assets of any savings bank may be invested in securities of any one State, or of any municipality outside Idaho; fifth, in mortgages on unin cumbered real estate worth double the loan; sixth, in real estate, subject to the other provisions of the statute on that topic, but no savings bank may have more than 50 per cent of its capital invested in the lot and building in which it does business; seventh, in dealing in exchange by purchasing and selling sight and time drafts and notes; eighth, awaiting opportunity to invest, the deposits may be loaned on well-secured commercial paper, stocks, and other securities, but the loan must not exceed 80 per cent of the market value of the security (2992). TRUST COMPANIES. I.— T erms of I ncorporation. Guaranty, title, and trust companies must have a paidup capital of not less than $25,000 (2963). VI.— I nvestments. Guaranty, title, and trust companies may hold in trust and as security estate, real and personal, including the obligations of corporations. They may invest their funds in the purchase of real and personal securities and may oan money on real and personal security; they may pur chase and sell real estate (2961). S. Poc. 353i 61-2--- *45 ILLINOIS. In the Revised Statutes of Illinois, 1906, by Hurd, chap ter 16a is entitled “ Banks,” although the act which is made into that chapter was entitled “ An act concerning corporations with banking powers.” Chapter 160 was amended by an act found at page 52 of the laws of Illi nois for 1907. The digest treats the amendments as though actually incorporated in the chapter, and refers to sections in the chapter simply by their number, since most of the references are within it. In chapter 32, sections 129-147 deal with trust companies; the act embodied in those sections was one “ to provide for and regulate the administration of trusts by trust companies.” References to these sections and to other sections in the Revised Statutes not in the chapter on banks are by page in the Revised Statutes followed by the number of the section as numbered on that page. The sections dealing with trust companies have not been amended since the Revised Laws were published. There is no special legis lation for savings banks; the chapter on banks provides that “ all corporations with banking powers” are subject to its provisions, and banks organized under it are allowed to receive savings deposits and to do a trust business. Trust companies, unless organized as banks, may not do a banking business. 146 I l l i n o i s S t a t e B a n k s The constitution of the State, Article X I, section 5, provides that all acts authorizing or creating corporations or associations with banking powers, and amendments to such acts, must be approved by a majority of the votes at the popular election following their passage in the legislature. The statutes have been examined through those of 1909. BANKS. I.— T erms of I ncorporation. The minimum capital for banks is as follows: In cities or towns of not more than 5,000, $25,000; in those of from 5,000 to 10,000, $50,000; in those of from 10,000 to 50,000, $100,000; in those of 50,000 or more, $200,000 (11). The auditor does not grant his certificate of organization unless the capital stock has all been fully paid in (5). The language of sec. 25d on page 671 shows that commercial banks may receive savings deposits; it provides that no “ savings bank, individual, or individuals doing banking business, banking company, or incorporated bank receiving savings deposits ” may become guarantor. Banks may, upon qualifying under the trust act and making the required deposit, accept and execute trusts (1). L iabilities and D uties of Stockholders Directors. and Stockholders are individually responsible to creditors to an amount equal to the shares held, over and above the stock itself, for all liabilities accruing while they remain stockholders (6, and constitution, Art. X I, sec. 6). Directors must own at least ten shares of stock. They must hold regular meetings at least as often as monthly (4)- B directors participate in illegal loans they become 14 7 National Monetary Commission personally liable for damages which anyone may suffer by their violation of the statute (io). III. — Supervision . There is no special banking supervisor; supervision is in the hands of the auditor of public accounts. He super intends authorization to begin business and may withhold a certificate if he is not satisfied of the personal character of the incorporators, or if he has reason to believe the bank is organized for other than a legal purpose (5). When capital stock becomes impaired, the auditor notifies the bank to make good the impairment. If, after thirty days, this has not been done, he must sue stockholders of the bank for their proportion of the sum necessary to make the impairment good. If it appears from reports or examinations that the impairment can not be made good, or that the bank is conducting business in an unsafe manner, the auditor may at once, through the attorneygeneral, bring proceedings for a dissolution and the appointment of a receiver (11). The auditor exercises supervision over consolidations and voluntary dissolu tions (13 and 15). Examiners may not be financially interested in banks they examine (8). REPORTS. At least once every three months (see constitution, Art. X I, sec. 7) the auditor calls for a report, which must be transmitted within five days. It must show the re sources and liabilities of the bank before beginning busi ness on the morning of any day the auditor may choose. The report is published in a local newspaper (7). Direct ors must furnish the auditor with lists of stockholders and copies of any other records he may require (4). Lists of stockholders and transfers must be filed with the local recorder of deeds (6, and constitution, Art. X I, sec. 8). 148 S t a t e I l l i n o i s B a n k s Receivers of banks are required to make report gener ally three times a year to the appointing court (p. 1614, 1 and 2). These reports they must send also to the auditor (u ). (Tor reports required for purposes of taxation see page i 648, 35 et seq.) EXAMINATIONS. A thorough examination is made by the auditor or a subordinate before a bank begins business to ascertain that its capital is paid up, etc. (5). Regular examinations are made at least once a year, and oftener if the auditor thinks necessary, by a suitable person appointed by him. This examiner must not be interested in any bank which he is directed to examine (8). V.— Discount and Doan R estrictions. The total liabilities to any bank of a person, corporation, or firm for money borrowed, including in corporation or firm liabilities those of the members, must not exceed 15 per cent of capital and 15 per cent of surplus. The total liabilities of any such person, corporation, or firm must not exceed 30 per cent of the paid-in capital. Undivided profits are not to be construed as part of the surplus. Discount of commercial paper is generally not considered as money borrowed. No bank may loan to any of its officers or employees, or to corporations or firms in which they are actively interested, until the loan has been ap proved by the directors (10). VI.— I nvestments. Ranks may hold and carry as assets the necessary real estate in which they do their banking business, and such othei real estate as is acquired in the collection of debts, 149 N at ion a l M o n et a r y Commission but, except that used as a banking house, real estate must not be carried as assets for a longer period than five years (9). XI.— P enalties . Directors and employees who make false statements in order to deceive examiners are punished by imprisonment of from one to ten years (4). Receipt of deposits with knowledge of a bank’s insolvency is embezzlement, pun ishable by fine of double the amount of the sum embezzled, and in addition imprisonment of from one to three years (p. 670, 25a). There is a $100 a day penalty for delay in reporting (7). SAVINGS. BANKS. The only special provisions for savings banks are in the Criminal Code (p. 671); 25c, on that page, provides that no loans may be made by savings banks to their officers, on penalty of forfeiture of charter or fine of twice the amount of the loan, and that the officers receiving the loan be punished as for receipt of money under false pre tenses; 25d forbids any savings bank to become guarantor on evidences of indebtedness. (Under an opinion of the attorney-general of the State, dated January 5, 1906, 25c is inapplicable to banks created under the general banking chapter; since there are no “ savings banks” beyond these, the section becomes practically inoperative.) TRUST COMPANIES. I l l .— S upervision . Trust companies are required to deposit with the auditor, for the benefit of their creditors, securities to amounts varying according to the size of the city (p. 539. 6). When it appears to the auditor from examina tion or report that a trust company has violated the law 150 Illinois Trust Companies or is conducting its business unsafely, he must direct the discontinuance of the practices; if the corporation neg lects to report or to comply with such an order, or if it appears to the auditor that the corporation should be stopped, or that its depositors’ interests are in danger, or that an officer has been guilty of misconduct, or that a serious loss has occurred, he institutes, through the attorney-general, whatever proceedings the case re quires (p. 541, 13). If the auditor has evidence that a report is false, he revokes the certificate of authority of the corporation (p. 541, 14). REPORTS. Trust companies file with the auditor every January a statement of their condition on December 31 preceding, showing the following items: Assets, including items of real estate; cash on hand and on deposit; cash in the hands of agents; loans on mortgages and bonds consti tuting a first lien on real estate on which there is less than a year’s interest owing, and such loans on which there is more than a year’s interest owing; amount due on judg ments; stocks and bonds of Illinois, of the United States, of Illinois municipalities, and other stocks and bonds with values; loans on pledge of securities, particularized; and other assets. Liabilities, including capital, surplus, undi vided profits and deposits; an account of trusts held; and such other information as the auditor requires (p. 54°> 9) • 1 he auditor causes an abstract of this annual leport to be published in a Springfield newspaper and in a local newspaper (p. 541, 16). The auditor may address any inquiries or ask for any reports; the companies must act promptly on such requests (p. 540, 11). Every two years the auditor embodies in his report to the legislature the result of examinations of trust companies (p. 540, 12). 151 IV a t i o n a l M o ft c t a r y Commission EXAMINATIONS. The auditor, personally or by an examiner, investigates the affairs of every trust company annually or, if he thinks necessary, oftener. Inquiry is made as to the condition of resources of the corporation; how it conducts its business; its investments; its safety and prudence; security given; its obligations; and its compliance with law (p. 540, 12). V.— D iscount, L oan , and D eposit R estrictions. The amount of money which any trust company may have on deposit at one time must not exceed ten times its capital and surplus, nor may its outstanding loans at any time exceed that amount (p. 539, 3). X I.— P enalties . Any violation of the act dealing with trust companies subjects the offender to a penalty of $500 for each offense, and the additional sum of $100 a day is forfeited for failure to file a report (p. 541, 15). I INDIANA. All the Indiana statutes, except acts passed at a special session in 1908 and at the regular session of 1909, during which two sessions there was no legislation affecting banks, are in Burns’ Annotated Indiana Statutes, revision of 1908. Chapter 15, “ Banks,” is divided into four arti cles: Article I, “ Banks of discount and deposit;” Article II, “ Savings banks;” Article III, “ Private banks,” and Article IV, “ Bank examiners.” Chapter 37 is entitled “ Corporations— Boan and deposit companies; ” the pro visions of this chapter, however, deal in terms with “ loan and trust and safe deposit companies.” The article on private bankers is summarized briefly in a paragraph at the end of “ Banks.” All the references in the digest are to sections in the revision of 1908. BANKS. I-— T erms of Incorporation. Banks are given power to act as trustee (3332), but the statutes seem silent on the question whether banks of discount and deposit may receive savings deposits. There is no requirement that commercial banks receiving interestbearing deposits should handle them subject to savingsbank rules, as trust companies which receive savings deposits are required to do. Banks must have a capital of not less than $25,000, divided into shares of $100 each (3329). Banks must N at ion a l M onetary Commission not do business until 50 per cent of the capital has been actually paid in; the rest must be paid within six months (3332 and 3335). Ten per cent of the annual net profits of every bank must be set apart by the directors as a surplus fund until it amounts to 25 per cent of the capital. Dividends may be declared semiannually out of net profits, but no capital may be withdrawn (3337). II. — L iabilities and D uties of Stockholders D irectors. and Shareholders in a bank are individually responsible to an amount above their stock, equal to its par value, for all liabilities of the bank (3337, and constitution, Art. XI, sec. 6). Directors must each own at least five shares of stock (3334). There must be not less than three nor more than nine directors (3343). They must meet at least once a month (3333). III. — S upervision. There is no official in charge merely of banking. The state auditor performs that duty, assisted by four exam iners whose appointment is provided for in the statutes (3418 et seq.). No examiner may disclose, outside of his duty, the names of depositors, amounts on deposit, or other information concerning private accounts of depositors in banks, savings banks, or trust companies (3422); nor may any examiner be a director or other officer in an association he examines (3346). When the auditor has reason to believe that the capital stock of any bank is impaired, he requires the deficiency to be made good. If the bank does not make the impair ment good within sixty days by assessment or sale of stock, the auditor reports to the attorney-general, who 154 I n d i a n a — S t a t e B a n k s institutes proceedings to wind up the bank (3341). If it appears from an examination that a bank is insolvent, or that its assets are being improperly used, the auditor directs the examiner who has reported the insolvency, or some other appointee, to take charge of the affairs of the bank; and he proceeds in court for a receiver. If a bank fails or suspends between periods of examination, the auditor proceeds similarly. Failure to pay an assessment for an examination is cause for the appointment of a receiver (3346 and 3419). REPORTS. A statement of each bank’s financial condition is annu ally published for two weeks in a local newspaper (3344). Not less than five regular reports are made every year, ac cording to the form prescribed by the auditor, exhibiting the resources and liabilities of the bank at the close of business on a past day specified by the auditor. The report must be sent to him within five days after receipt of his request. The report is published in a local newspaper. Special reports may be called for whenever the auditor desires (3347)- Banks in the hands of a receiver report as sol vent banks do (3346 and 3419). For statements required for purposes of taxation see 10210. EXAMINATIONS. One of the examiners appointed by the auditor examines each bank as often as is deemed necessary. The exam iners report to the auditor, especially in case the bank is in such condition that he should proceed against it, as stated above (3346 and 3419). Banks in the hands of receivers are subject to the same examinations (3346 and 3419)- The auditor examines the affairs of a bank before it is allowed to reduce its capital stock (3336). 155 N at ion a l M onetary V.— D iscount and Commission L oan R estrictions. It is a felony for a director or employee of a bank to borrow the bank’s funds without the consent of the directors (2296). V I. — Investments. Banks may hold such real estate as is necessary for their accommodation in business; such as is mortgaged to them; such as is conveyed to them in satisfaction of previous debts; and such as they purchase under judg ments or mortgages to secure debts due them. Except the real estate necessary for their accommodation, banks must get rid of what they purchase within five years (3340)V II. — Overdrafts. Directors, employees, etc., of banks who knowingly overdraw their accounts without the written consent of the directors being indorsed on the check are guilty of a felony (2295). V III. — B ranches. The legislature has power to charter “ a branches” (constitution, Art. XI, sec. 4), but banking chapter, the articles of association of of discount and deposit must state “ the place to be located,” etc., indicating that a single contemplated (3329). bank with under the each bank where it is office was X I.— P enalties . Receipt of deposits or other things of value during insolvency is embezzlement, punishable by a fine of double the value of the receipt, imprisonment of from two to fourteen years, disfranchisement, and forfeiture of the right to hold any office of trust or profit for any determi156 I n d i a n a P r i v a t e B a n k s nate period (2294). Overdrafts by an officer without the consent of the directors is a felony, punishable by impris onment for from two to fourteen years, and fine of double the amount of the overdraft (2295). The director or officer who borrows funds of the bank without the con sent of the board of directors is guilty of a felony, punish able by imprisonment of from two to fourteen years, and fine of double the amount of the loan (2296). A bank that fails to transmit a regular or special report to the auditor suffers a penalty of $100 a day (3347). The penalty for failure by the president and cashier of a bank to publish annually for two weeks in a local news paper a statement of the bank’s condition is a fine of from $25 to $1,000 (3345). The examiner who discloses information had upon ex amination is guilty of a misdemeanor, punishable by fine of not more than $100. PRIVATE BANKS. Capital.— Partnerships and individuals transacting a banking business, or advertising as bankers, must have at least $10,000 of cash capital, invested in well-secured notes, in state or municipal bonds, or in bank building and furniture (3403). An individual or a partnership must issue certificates of stock to the individual, or the mem bers of the firm, as though the organization were a cor poration (3405). Individual bankers must be residents of the State (3404). Supervision.— Partnerships and indi viduals must make to the auditor two reports a year, ac cording to the forms he prescribes, showing in detail re sources and liabilities at the close of business on a past ay specified by the auditor. They must transmit the report within five days after receipt of his request, eports are published in a local newspaper in a form 157 s National Monetary Commi ss i on similar to reports of incorporated banks. The auditor may call for special reports (3408). Once in twelve months, or oftener if necessary, examiners make an ex amination of each private bank. If it is found to be insolvent, or if its assets are being reduced, the examiner notifies the auditor, who may thereupon direct the ex aminer or some other appointee to take charge of the bank, pending the appointment of a receiver. Failure between periods of examinations, or suspension, is also cause for putting the bank into the hands of an appointee of the auditor, pending the appointment of a receiver. If a bank fails to pay an assessment for an examination, it may be put into the hands of a receiver (3409). Loans.— No private bank may loan to any of its officers an amount exceeding 30 per cent of its capital (3414). Investments.— Not more than one-third of the capital may be invested in real estate, except such as is taken in settlement of debts or purchased at judicial sales (3403). Penalties.— Failure to report within five days from the request en tails a penalty of not less than $100 nor more than $500 (3408). There is a general penalty for violation of the provisions dealing with private banks, which is a fine of not over $1,000, with imprisonment for not longer than two years for a second offense (3410). The penal pro vision for receipt of deposits during insolvency applies to individual bankers (2294). SAVINGS BANKS. I.— T erms of I ncorporation. The incorporators of a savings bank must be voters of Indiana, citizens of the county where they reside for at least five years, and severally owners of unincumbered realty in the county worth at least $5,000 (3348). Apparently, the statutes contemplate associations without capital 158 I n d i a n a S a v i n g s Banks stock (3349). A local judge must, after diligent inquiry, be satisfied of the qualifications of the incorporators as suitable men to conduct a savings bank (3350). The trustees of every savings bank must set aside every^ year from gross gains not less than one-half of 1 per cent, nor more than 3 per cent, of the deposits, as a surplus fund, until this fund equals 10 per cent of the deposits. The surplus may accumulate, if the bank desires it, until equal to 25 per cent of the deposits (3375 and 3381). Dividends must not be declared except from profits (3377)- No dividends are declared on deposits of over $5,000 (3379). The trustees may discriminate so as to give to deposits under $1,000 a higher interest than to those over $1,000, and so as to give higher dividends to depositors who leave their deposits undiminished (3380). After expenses and surplus contributions have been de ducted from profits, all that remains must be, so far as is practicable, divided among depositors (3381). If any residue is still undistributed it must be divided among depositors at least once in every three years as equitably as possible, as the trustees direct (3382). *L— L iabilities and D uties of T rustees . • Trustees must meet at least every three months (3360). A local judge must certify to their fitness for the position (3355)- If a trustee of a savings bank neglects his duties, or borrows from the corporation, or misses meetings for nine months, he forfeits his position (3353). Trustees must not receive pay unless they are engaged in work which requires t eir regular and faithful attendance at the bank, in which case t e salary is voted by the trustees, exclusive of the one interested (3362 and 3396). Also after a savings bank has accumu ated a surplus of not less than 5 per cent of its deposi s, it nia\ pay the trustees who render special personal service a compensation determined upon by the trustees 159 N at i on a l M o n et a r y Commission and approved by the auditor. Interested trustees do not vote. This special pay must not be granted if the sur plus is impaired (3397). When a savings bank has ac cumulated a surplus of 15 per cent of its deposits it may pay trustees who have attended every regular meeting during the year a gratuity of not more than $3 a meeting (3398). If a trustee or other officer of a savings bank, by his misconduct, wastes the bank’s assets, he is re sponsible for the losses to the depositors and other creditors (3401). III.— S upervision . As before, the auditor is general supervisor. He appoints examiners as subordinates, who must not dis close the information they obtain in examinations (3418 and 3422). The qualifications of incorporators of a savings bank must be inquired into by a local judge. They must appear trustworthy to him, or he will not go through the necessary preliminaries to their getting a certificate (3350). When extra compensation is given officers and trustees of savings banks, the auditor must approve (3396 and 3397). The auditor passes upon the necessity of extending the time for notice of withdrawal of deposits (3364) and also passes on the cost of the sav ings bank’s building (3372); he may suspend savings bank trustees (3383), subject to the later action of a court (3385). Whenever a savings bank fails for thirty days to pay its depositors, or when it appears to the satisfaction of the auditor that its business is being mismanaged, and that it is insolvent or in danger of insolvency, then it is the duty of the auditor to institute proceedings for a dissolution. The court applied to may decree a receiv ership (3401). 160 S a v i n g s I n d i a n a Banks REPORTS. Savings banks make an annual report to the auditor of their condition on January i, after the dividend of that day has been allowed (3387). In this report the total amount of assets are stated: The amount loaned on notes, bonds, and mortgages; interest on loans; value and rate of interest on all stock investments; stock investments, the interest on which is in arrears; bonds, notes, and mortgages, the interest on which is in arrears; bank stock held by a savings bank; commercial paper held; real estate held, and its value; income derived from real estate; cash on hand or on deposit; names of deposita ries and interest received; average monthly balances on deposit in banks; and any other items of assets. Also liabilities, including amounts due depositors, dividends, and any other debts which may become a charge upon assets. Also the number of open accounts; amounts de posited and amounts withdrawn during the year; whole amount of interest earned; expenses; new accounts opened and accounts closed (3388 and 3389). The auditor prescribes the form and may call for other items (339°) • In years when the legislature is in session the auditor reports to the legislature the condition of every savings bank from which he has received a report in two years; he may suggest amendments to the savings bank few (3393)EXAMINATIONS. One of the examiners, as often as is necessary, and at least every other year, visits every savings bank without giving it warning of the examination (3394 and 3420). No compensation may be voted to a trustee of a savings bank until the auditor has caused an examination of its affairs to be made, showing that the required surplus has been accumulated (3397). The trustees of every savings S . D o c. 353, 6 1 - , — „ 6 iV d t i on a l M on et a ry Commission bank, by a committee of not less than three of them, examine its affairs yearly as a preliminary to rendering the report to the auditor (3395). IV.— R eserve R equirements. The trustees may keep in reserve not more than 20 per cent of total deposits without investment, or they may deposit that amount on call with or without interest, in an Indiana bank or a national bank (3369). V.— Discount , L oan , and D eposit R estrictions. No trustee or officer of. a savings bank may borrow any of the funds of the bank, nor may a trustee or officer indorse loans to others, so as to become in any way an obligor on a loan by the savings bank. No trustee or officer may receive any commission for procuring a loan from the bank (3362). Pending an opportunity to invest, loans may be made on stocks and securities which are a proper investment, if the loan is of not more than 90 per cent of the cash value of the securities (3367)- Loans may not be made, on security of real estate or on notes or bills without the consent of a majority of the trustees or the unanimous consent of the investment committee (3370). (See other loan restric tions inserted under VI because so classified in the statute.) Savings banks need not receive sums less than $1 or exceeding $500 in any one year from any one depositor (3363)- Savings banks may require, <as is usually pro vided in savings bank statutes, certain notice of with drawal of deposits. There is the unusual provision here, however, that, with the consent of the auditor, if it is necessary to prevent a run, savings banks may require any time not exceeding six months as notice of with drawal (3364). 162 I n d i a n a — S a v i n g s B a n k s V I.— I N VESTM ENTS. A savings bank may hold such real estate as is requi site for the transaction of its business, and from a portion of this it may receive an income, such as is mortgaged to the savings bank, and such as it purchases at judicial sales on claims in favor of the savings bank, or purchases to prevent loss on debts due it (3371). The banking house must not cost more than 5 per cent of the amount of the deposits of the savings bank, and the estimates for it must be approved by the auditor (3372). Except its banking house, every savings bank must, as a rule, dis pose of its real estate within three years after acquiring it (3373). There is a prohibition on trade and com merce (3374). Investments for savings banks are as follows: First, securities of the United States; second, securities of In diana; third, securities of municipalities of Indiana; fourth, securities of any State in the Union that has for five years paid interest regularly; fifth, bonds or notes secured by mortgage of unincumbered realty situated in Indiana, or in a county, in an adjoining State, adjoining the county where the bank is situated, if the real estate is worth twice the loan; sixth, commercial paper payable at an Indiana bank and having not more than twelve months to run, made or indorsed by at least two free holders, one of whom at least is a resident of Indiana, but no such bill or note may exceed $10,000, and no more than $10,000 may be loaned on the same security; seventh, in real estate subject to the limitations in the prece ing paragraph; eighth, in dealing in sight and time exchange, payable outside the State; but no draft may e for more than $10,000, nor may any time draft paya e outside the State be purchased which has more ian sixty days to run. Moreover, not more than one 163 N a t i on a l Monetary Commissi on draft may be held by any savings bank at one time, secured by any of the same indorsers (3366). Pending an opportunity for investment, money may be loaned on the stocks and other securities just enumerated, if the loan does not exceed 90 per cent of the market value of the securities (3367). Although 3366 provides that only the securities enumerated are legal investments for sav ings banks, the list of assets in savings bank reports includes stock in other banks (3388). X I.— P enalties . If a savings bank fails to report, the employee whose duty it was to report is fined from $1 to $50 for every day’s delay (3392). It seems likely that the penal provisions concerned with receipt of deposits during insolvency, overdrafts by officers, and loans of funds to officers may apply to savings banks. The language of these statutes makes them applicable to persons, firms, corporations, etc., “ doing a banking business” (2294, 2295, and 2296, given under Banks, XI). TRUST COMPANIES. I.— T erms of I ncorporation. Trust companies may not only do a commercial banking business (4953) but may also apparently receive savings deposits, for it is provided that every loan and trust and safe deposit company which receives savings deposits must do so under the regulations to which savings banks are subject (4962). The capital stock of corporations organized under the loan and trust and safe deposit company statute must be as follows: In cities of over 50,000, not less than $100,000; in cities of from 25,000 to 50,000, not less than $50,000; in cities of less than 25,000, not less than $25,000. Shares 164 * I ndi a n a — Trust Companies are of $100 each. The capital must never exceed $2,000,000 (4944). Business must not be begun until the whole capital, provided it does not exceed $100,000, has been paid in (4948). H • L iabilities and D uties of Stockholders Directors. and Stockholders are individually liable, in addition to their holdings of stock, in a sum equal to that amount for the payment of any debt of the corporation left unpaid after its assets have been exhausted (4947, and possibly constitution, Article XI, sec. 6). There must be not less than six directors, a majority of whom must be citizens of the State, and each of whom must own at least ten shares of stock (4949). I l l .— S upervision . The auditor and his examiners (see Banks, III) have supervision of trust companies. If it appears from exami nations that a trust company has violated the law, or is conducting its business unsafely, or is insolvent, the auditor directs a discontinuance of the unsafe or illegal practices. If the trust company fails to report after ten ays notice, or to comply with an order, or if it appears to nn that the corporation should stop transacting busi ness, or that it is insolvent, then the auditor institutes, rough the local prosecuting attorney, such proceedings as e institutes against an insolvent corporation (4959). reports. Every year each trust company reports a detailed !nH°Un! , ,‘tS COndition on or W ore April i to the auditor, and publishes a condensed statement of such account in a oca newspaper. Statements must be rendered also to I6 5 t National Monetary Commi ssi on courts that appoint the company to a fiduciary position (4957)- Tor tax reports see 10210. EXAMINATIONS. These are made by an examiner, without notice to the company, as often as is necessary, and at least once every six months (3421 and 4958). The auditor also causes an examination to be made when the capital stock is reduced (4945)V.— Discount and L oan R estrictions. Directors, officers, and employees of a trust company are forbidden to become in any manner indebted to the trust company (4956 and 2997). V I. — I nvestments. A trust company may hold such real and personal property as is necessary for the convenient transaction of its business; real estate acquired on foreclosure sale or in settlement of an obligation may be held for the best interests of the company; the company may purchase at foreclosure or judgment sale (4953). There is a provision against engaging in commerce, manufacture, etc. (4956). V II. — Overdrafts . In forbidding directors, officers, and employees to become indebted to their trust company, the enumeration of the possible ways in which they may become indebted includes “ by means of any overdraft ” (4956). X.— U nauthorized B anking . All persons and corporations not organized under the trust-company law are prohibited from using the word “ trust” in their name. The penalty for violation is $50 a day while the word is used (4960). 166 \ I ndi ana — Trust Companies X I. — P enalties . Directors or officers of a loan and trust and safe deposit company who loan its funds to any director or officer and any director or officer who borrows from the company are guilty of a misdemeanor, punishable by a fine of not less than $100 nor more than $500 and imprisonment of not less than thirty days nor more than six months (2297). Trust company directors who loan the company’s funds to a director, and also the borrowing director himself, are guilty of a misdemeanor (2297). The fact that this penal provision, directly following 2294, 2295, and 2296 (receipt of deposits when insolvent, overdrafts by officers and loans of funds to officers— see Banks, XI), includes trust com panies expressly suggests that the three sections named may not be applicable to trust companies. 167 IOWA. The statutes of this State to date are in the Annotated Code of Iowa, 1897, in the supplement of 1907, and in the session laws of 1909. Citations in the digest are to sec tions in the Code, treating changes made by amendments which appear in the supplement as incorporated in the code itself. Three chapters of Title IX (Of corporations) are concerned with banking: Chapter 10, Of savings banks; chapter 11, Of state banks; and chapter 12, Of banks. Trust companies are mentioned only in one or two sections. Since the whole of chapter 12 applies both to banks and to savings banks, it has been made the subject of a sepa rate heading in the digest, “ General provisions;’’ chap ter 11 is digested under the heading “ Banks,” and chapter 10 under the heading “ Savings banks;” the few trust com pany provisions are put under a heading, “ Trust com panies.” Constitutional provisions require that an act of assembly authorizing or creating corporations with banking powers be passed by a majority of voters at an election (constitu tion, art. 8, sec. 5), and make every stockholder “ in a banking corporation or institution” individually liable in an amount equal to the shares held, in addition to them, for all debts accruing while he is a stockholder (constitu tion, art. 8, sec. 9). The compiler of the Code, however, cites cases to the effect that these provisions of the con stitution apply only to banks of issue (70 N. W., 752; 63 Iowa, 11). 168 Iowa — G en e r al Provisions GENERAL PROVISIONS APPLICABLE TO BANKS AND SAVINGS BANKS. II.— L iabilities D uties of Stockholders D irectors. and and All stockholders of savings and state banks are individ ually liable to the creditors of the corporation above the amount of stock held by them, to an amount equal to their shares, for all liabilities accruing while they remain stock holders (1882). (See statement of the constitutional pro vision on this point in the paragraph above.) Officers may receive a reasonable compensation, but no director as such may be paid for his services (1869). The board of directors of every bank must at its annual meeting appoint from its members an examining committee of not less than two, who make all examinations and report to the board (1871). If the directors of a bank whose capital is impaired do not proceed when notified by the auditor to make it good by assessment and sale, they are individually liable for the deficiency (1880). III. — Supervision . The auditor of the State is in charge of banking. None of the six examiners (appointed by the auditor with salaries of $1,800 each per annum) may examine a bank or loan and trust company in a county in which he is inter ested in banking or trust company business (1875, amd. by I9° 9> chap. 115; and 1876). When it appears to the auditor that a bank has refused to pay its deposits, or has become insolvent, or that its capital has become impaired, or that it has violated the law, or is conducting its busi ness in an unsafe manner, he orders a discontinuance of the illegal and unsafe practices. If the bank refuses to comply with his orders, or if he becomes satisfied that the 169 N a t i on a l M on et a r y Commission bank is insolvent or unsafe, or that the interests of creditors require it to be closed, he authorizes one of his bank exam iners to take possession of the bank, and applies to court for a receiver (1877). When the capital of any bank is impaired the auditor may require an assessment upon the stockholders. When so ordered, the directors of the bank must cause the deficiency to be made good by assessment and, where that is unpaid, sale of the stock of the share holder assessed (1878); if they fail to proceed thus, a receiver may be appointed (1880). In case a director, officer, or employee is guilty of intentional fraud, or of de ception with regard to means or liabilities, or of partici pating in the payment of dividends which leave insufficient funds to meet liabilities, not only is the guilty person pun ished, but the bank may be closed by proceedings in court (1888). For violations of section 1889 corporations for feit their charter (see XI, infra). The auditor exercises supervision over renewals or extensions of the period of corporate existence of banks (1618 et seq). REPORTS. Banks are required to transmit a statement of their condition to the auditor within ten days after receiving his request. The following are the items: Capital paid in; debts due all persons other than regular depositors; amount due depositors, including both sight and time deposits; deposits by the bank subject to draft at sight, specifying location of depositaries and amounts of de posits; coin and bullion; legal tender, national bank notes, etc.; drafts and checks on other solvent banks, and other cash items; bills, bonds, and other evidences of debt dis counted or purchased by the bank; value of real and per sonal property specifying the amount of each; undivided profits; and the total amount of liabilities of directors to the bank (1872). Reports must be at least quarterly; 170 Iowa — General Provisions _____________________________ 5_________ _ but the provision is that the auditor may examine any bank when he thinks proper or he must call upon it for a report on a given past day as often as four times a year and must cause the report to be published in a local news paper (1873). He has power to call for special reports whenever he thinks them necessary to obtain a complete knowledge of the condition of the bank (1874). The president and cashier of every bank keep a list of names and residences of officers, directors, and stockholders, with the number of shares held by each; they transmit a copy of this list to the auditor within ten days after each annual meeting (1889). The examining committee must make four examinations a year, of which one must be in June and another in December; the results of these two examinations are reported to the auditor (1871). For reports required for purposes of taxation, see 1322. In his biennial report to the governor, the auditor is required to state the condition of every bank from which he has had reports for the past year and to suggest changes in the laws (1881). EXAMINATIONS. The provision for examinations or reports referred to above reads as follows: “ The auditor of State may, at any time he may see proper, make or cause to be made an exami nation of any savings or state bank, or he.shall call upon it for a report of its condition upon any given day which has passed, as often as four times each year,” etc. (1873). Ihe board of directors of each savings and state bank shall, at its annual meeting, appoint from its members an examining committee of not less than two, which shall examine the condition of the bank, at least every quarter,” and report to the board; two of these quarterly examina tions are reported to the auditor. In case any bank fails to urnish reports of these two examinations, the auditor 171 N at i on a l M on et a r y Commi ssi on may have an examination made by one of his regular examiners (1871). V.— D iscount and L oan R estrictions. The total liabilities to any bank of a person, company, or firm, for money borrowed, including in company or firm liabilities those of the members, must not exceed 20 per cent of the paid-in capital of the bank; but a bank may loan, in an amount not exceeding one-half its capital, to any person, company, or firm, on mortgage of unin cumbered farm land in Iowa worth at least twice the amount of the loan, and the discount of bills of exchange drawn against existing values or of paper owned by those negotiating it is not considered money borrowed (1870). Officers and employees of banks must not borrow except upon the express order of the board of directors made in the absence of the applicant; the same security must be required from them as from others. The board of direct ors, however, may authorize loans to a director not holding any other office, nor being an employee, not to exceed sum at any one time a maximum fixed by the reso lution of the board; the director in question must not be present when the vote is taken, and must give the same security as is required of others (1869). State and savings banks may contract indebtedness only for expenses of transacting business, for deposits, and to pay depositors; except that by order of the direct ors further liabilities not in excess of the capital stock may be incurred (1855a). X.— U nauthorized B anking . No corporation may engage in the banking business, receive deposits, and transact the business generally done by banks unless it is subject to the provisions of Title IX 172 Iowa General Provisions (Of corporations), or other banking laws of the State, ex cept that loan and trust companies may do certain bank ing business. Any corporation violating the section of which this provision is a part forfeits its charter, and the corporation, its officers, directors, and agents are punished by a fine of not less than $500, or imprisonment for not less than two years, or both (1889). X I. — P enalties . An officer or employee of a bank violating the provi sions against loans to an officer or employee is guilty of embezzlement, and suffers imprisonment not exceeding ten years, or fine not less than the amount embezzled, or both penalties (1869). Any officer whose duty it is to make a report is guilty of a misdemeanor if he fails to do so, punishable by fine of from $100 to $1,000 or imprison ment from three months to three years (1886). Directors, officers, and employees who make false entries or reports with intent to deceive an examiner, or who divert the funds of the bank to other objects than those authorized by law, are fined not more than $10,000, and imprisoned fiom two to five years (1887). Directors, officers, and employees who are guilty of intentional fraud, or of deceit in relation to liabilities, etc., or of assisting in the payment of excessive dividends, are punished by a fine of not less than $500, imprisonment of not less than one year, or both (1888). Section 1889 provides that any corporation which violates it shall forfeit its charter, and its officers, irectors, and agents shall be punished by a fine of not ess t an $500, imprisonment for not less than two years, or 0 b the provisions of the section include that requir ing a list of officers, directors, and stockholders to be kept and transmitted to the auditor; that forbidding corpo ra 10ns o engage in banking business except under the 173 N at i on a l M o n et a r y Commi ssi on law; and those subjecting trust companies to the rules applicable to savings banks and state banks in certain respects (see Trust companies, infra). The officer, director, etc., who receives deposits knowing his bank is insolvent is guilty of a felony punishable by fine not exceeding $10,000, imprisonment in the peniten tiary for not more than ten years, or imprisonment in the county jail for not more than one year, or both fine and imprisonment. Among the sorts of institutions subject to this rule are banks, deposit offices, and corporations receiving deposits (1884 and 1885). BANKS. I.— T erms of I ncorporation. State banks must not be organized with a less paid-up capital than $50,000, except that in cities or towns of not more than 3,000 there may be banks with a paid-up capital of not less than $25,000 (1864). Shares must be of $100, issued only on .full payment of the sum repre sented by them (1865). II.— L iabilities and D uties of Stockholders Directors. and Every state bank is managed by a board of directors of not less than five, who must be shareholders, as follows: In banks having a capital of $25,000 to $30,000, two shares; in those having a capital of $30,000 to $40,000, three shares; in those having a capital of $40,000 to $50,000, four shares; and in those having a capital of $50,000 or over, five shares (1866). IV.— R eserve R equirements. All state banks located in cities or towns of less than 3,000 must maintain a reserve of not less than 10 per cent 174 I o wa S a v i n g s B a n k s of their total deposits; all those located in citie£ and towns of 3,000 or more must maintain a reserve of not less than 15 per cent. Three-fourths of the reserve may be on deposit subject to call with other banks organized under state or national laws (1867). X . — U nauthorized B anking . Unless the provisions of the code are complied with, no association may transact the business of banking, buying and selling exchange, receiving deposits, and discounting paper (1861). No unincorporated bank may embrace in its name the word “ state” (1862), which is required to be part of the name of banking corporations (1861). SAVINGS BANKS. I.— T erms of I ncorporation. Savings banks may do a conhnercial banking business (i860). I he paid-up capital of every savings bank must be not less than $10,000 in cities, towns, or villages of 10,000 or less, nor less than $50,000 in cities having a greater popu lation. the capital must be paid in before business is begun (1843). Shares must be of $100 each, issued only on full payment of the sums represented by them. The provision that stock “ owned by any corporation” may be transferred by an agent of that corporation indicates that corporations may be shareholders (1853). The directors of any savings bank may set apart from its net earnings any desired sum as a surplus fund to be kept separate from undivided profits. This surplus may be transferred back to the undivided profits account and used to pay expenses and dividends only when deposits are less than ten times the capital or capital and remain ing surplus (1850a). Dividends may be declared only 175 N at i on a l M one t ary Commi ssi on out of net profits, after expenses, including interest tc depositors, have been paid (1852). II.— L iabilities and Duties oe Stockholders Directors. and There must be not fewer than five nor more than nine directors, at least three-fourths of them citizens of the State. The stock required to be held to qualify as a director is as follows: In a savings bank having a capital of less than $20,000, one share; in one having a-capital of $20,000 to $30,000, two shares; in one having a capital of $30,000 to $40,000, three shares; in one having a capi tal of $40,000 to $50,000, four shares; in one having a capital of $50,000 or over, five shares (1845). III.— S upervision . EXAMINATIONS. The auditor may make a preliminary examination of the affairs of a savings bank to satisfy himself that the required capital has been paid in, etc. (1843). IV.— R eserve R equirements . Savings banks doing a commercial business located in towns of less than 3,000 must keep a reserve equal to 15 per cent of their commercial deposits and 8 per cent of their savings deposits. Savings banks located in cities and towns of 3,000 or over must keep a reserve equal to 20 per cent of their commercial deposits and 8 per cent of their savings deposits. Savings banks doing an exclu sively savings bank business must keep an 8 per cent reserve fund. Three-fourths of the reserve may be on deposit, subject to call, in other banks organized under state or national laws (i860). 176 I o wa S a v i n g s — V.— Discount , L oan , and B a n k s D eposit R estrictions. For certain provisions regarding loans, forbidding loans on the savings bank’s own stock, etc., see VI, infra. Every savings bank may receive on deposit money equal to twenty times its paid-up capital and surplus; no greater amount of deposits may be received unless the paid-up capital and surplus are correspondingly increased. When there are sufficient funds on hand to pay depositors, the officers of a savings bank may waive the sixty days’ notice requirement. They may issue certificates of de posit payable on demand (1848). All accounts upon which no deposit or draft has been made for ten years are closed for purposes of interest, unless the deposit is an endowment for children, a trust estate, or a deposit where special provision has been made for a longer time (1849). VI.— I nvestments. A savings bank may hold real estate only as follows: The lot and building in which its business is carried on; such real estate as has been purchased at sales on fore closure of mortgages owned by the bank or on judgments rendered for debts due the bank; such as has been con veyed to it in satisfaction of previous debts; and such as it may obtain by redemption as junior mortgagee or judg ment creditor. All apparently but the lot and building first named must be sold within ten years (1851). Every savings bank must invest its funds, capital, de posits, profits (and surplus— 1850a), as follows: In United States securities; in securities of Iowa; in bonds or war rants of municipalities of Iowa, but not exceeding 25 per cent of the assets of the bank may be thus invested; in notes or bonds secured by mortgage of unincumbered real estate in Iowa worth twice the loan; in dealings in com mercial paper, bills of exchange, or any o£her personal or S- D oc. 353, 6 1 -2 ----- 12 177 National Monetary Commi ssi on public security, but a savings bank must not purchase, hold, or loan upon shares of its own capital (1850). X .— U nauthorized B anking . Any bank or person not incorporated under the pro visions of the chapter on savings banks who advertises, exhibits a sign, etc., as a savings bank, and any savings bank advertising a greater amount of capital than has been paid in forfeit $100 a day while the offense is con tinued; it is also a misdemeanor for each day (1859). TRUST COMPANIES. Trust companies are referred to in the section requiring reports to the assessors for taxation (1322), and in the section forbidding examiners to examine institutions in a county where they are interested in the banking or loan and trust company business (1875, amd. by 1909, chap. 115; and 1876). The most important trust company provisions are in section 1889: Corporations are forbidden to do banking except as authorized by the banking laws, except that “ loan and trust companies may receive time deposits subject to the same limitations as are now or may hereafter be prescribed for the receiving of deposits by state banks and issue drafts on their depositaries.” All companies authorized to execute trusts or employing the word “ trust ” in their name must have a paid-up capital of not less than that required of savings banks and are “ subject to examination, regulation, and control of the auditor of state like savings and state banks.” Their stockholders are liable to creditors in the terms of section 1882. (See supra for the provisions referred to.) Any corporation violating section 1889 forfeits its charter, and the corporation, its officers, directors, and agents are pun ished by fine of not less than $500, imprisonment for not less than two years, or both. 178 KANSAS. So far as the general banking law of Kansas is concerned, the digest is based upon the 1908 reprint by the state bank ing department, which includes all legislation through the special session of 1908. The general law is chapter n a of the General Statutes of 1901, amended by various later laws; most of the citations in the digest are accordingly simply numbers in parenthesis, which refer to sections in the General Statutes of 1901, assuming all amendments incorporated. So far as the trust company law is con cerned, the digest is based upon the General Statutes of 1905, in which article 19 of chapter 23 is entitled “ Trust companies. ” References to that act, therefore, are by numbers of sections in the General Statutes of 1905, in dicating that the section is in those statutes and not in the statutes of 1901, by prefixing 1905 to the number of the section, dhe 1909 session laws have also been ex amined; an amendatory act, chapter 59 of 1909, and also the bank depositors’ guaranty law, chapter 61 of 1909, appear in the digest. References to acts in the 1907 or 1909 session laws are prefixed by 1907 or 1909, as the case m aybe; note, however, that as explained above, refer ences which are prefixed by 1905 are not to the session laws of that year, but to the edition of General Statutes then published. There is no special law dealing with 179 National M o n e t a ry Commissi on savings banks. It is a constitutional provision that bank ing laws must be submitted to popular vote and approved by a majority (constitution, Art. X III, sec. 8). BANKS. X.— T erms of I ncorporation. Apparently the business of savings banking and general banking may be combined, for it is provided that all savings banks or savings associations which do not trans act a general banking business must keep a certain re serve (418). The capital in towns or cities of less than 500 must be not less than $10,000; in towns of from 500 to 1,000, not less than $15,000; in all cities of the third class with a popu lation of 1,000 and over, not less than $20,000, in all cities of the second class, not less than $25,000; and in all cities of the first class, not less than $50,000 (408). (For classi fication of cities see i 9° 5»chapter 17#-) Shares must be of $100 each and all subscriptions paid in in cash (410). A restriction on the amount of deposits allowed in propor tion to capital is given under V, infra. Dividends may be declared out of net profits, but before any dividend is declared one-tenth of the net profits since the last dividend must be carried to surplus fund until it amounts to 50 per cent of capital (438). No capital may be withdrawn in dividends or otherwise (440). Banks are forbidden to give preference to depositors or creditors by pledging the bank’s assets as collateral, but banks may borrow for temporary purposes not more than 50 per cent of the capital, pledging assets not to exceed by more than 20 per cent the amount borrowed. This privilege must not be used habitually for the purpose of reloaning, however (446). 180 K a n s a s II.— L iabilities — and S t a t e B a n k s Duties of Stockholders Directors. and Shareholders are liable additionally for a sum equal to the par value of their stock (416). There must be from five to thirteen directors, a majority of whom must be residents of the county where the bank is located or an adjoining county. Each must own at least $500 of stock. They hold not less than four regular meetings a year (415, amd. by 1909, chap. 59, 1). Direct ors who receive deposits knowing the bank is insolvent are guilty of a felony (421) and are besides individually re sponsible for deposits so received, or debts created under like circumstances (471). Bank officers who permit the funds of the bank to be paid on check, order, or draft, the drawer of which has not on deposit a sum equal to his draft are personally liable to the bank for the amount paid (445) III.— Supervision . The state official is the bank commissioner, who is ap pointed for four years; he and his deputies must have had at least three years’ practical knowledge of banking, or have served one term as bank commissioner. No commissioner or deputy may examine a bank in which he is financially interested (427). The salary of the bank commissioner is $2,500 a year (463). I he occasions in which the commissioner takes action against banks are as follows: If reserves fall below the required amount, he notifies the bank in question to make good the reserve, and if it fails to do so for thirty days it is deemed insolvent; the commissioner then takes possession and proceeds against the bank for a receiver (418, amd. by 1909, chap. 59, 2). He orders excessive loans reduced within sixty days (419). When it appears that the capital 181 National Monetary Commission of a bank is impaired, the commissioner notifies the bank to make the impairment good within ninety days (450). If a bank refuses to be examined, the commissioner re vokes the bank’s authority to transact business and insti tutes receivership proceedings (454)- When the bank appears to be habitually borrowing for the purpose of reloaning, the commissioner requires it to pay off its debts (446). The commissioner proceeds against a bank which refuses to comply with any requirement made upon it for ninety days, to forfeit its franchise and dissolve the corporation (426). In general, in case of insolvency (de fined in 437) shown by examination or report, and in case of violation of law, the bank commissioner immediately takes charge of the bank. He may appoint a special deputy to serve in this capacity, like a receiver, for a period not longer than ninety days. The commissioner examines the bank’s affairs thoroughly, and if satisfied that it can not resume business or liquidate its debts, he then definitely appoints a receiver. If the holders of more than 50 per cent of the claims against the bank agree upon a person for receiver the commissioner must appoint him (434). There are provisions for the enforcement of the double stockholders’ liability by receivers (461, amd. by 1909, chap. 59, 7). Banks may voluntarily put themselves in the commissioner’s hands. (435); he has, besides, super vision over voluntary liquidations (436). He approves reductions of capital stock (449). After a special examination required to be made under the guaranty fund act when a bank fails to pay its assess ments, the bank commissioner, if he finds the bank insol vent, proceeds to liquidate it (1909, chap. 61, 5). If upon examination a bank is found to be violating the depositors’ guaranty statute, the commissioner, after thirty days’ notice to the bank to comply with the statute, may cancel 182 K •a n s a s S t a t e B a n k s its membership in the fund, and seize for the fund the deposited bonds. See X II, infra (1909, chap. 61, 11). If the bank commissioner finds any officer of a bank dishonest, reckless, or incompetent, he orders the directors of the bank to remove the officer; failure to comply with his order cancels the bank’s authority to transact business till it is complied with (1909, chap. 59, 4). The commissioner has certain discretion with respect to reserve depositaries. See IV, infra. REPORTS. A preliminary report containing names and residences of stockholders is transmitted to the bank commissioner before business is begun (411). Regular reports must be made at least four times a year and oftener if called for by the bank commissioner, according to the form he pre scribes, exhibiting resources and liabilities at the close of business on a past day specified by the commissioner. They must be transmitted to the commissioner within ten days after receipt of his request, and must be published in a local newspaper (423 and 432). In addition to these reports every bank must within ten days after declaring a dividend forward to the commissioner a statement of the amount of the dividend and the amount carried to surplus. Also within ten days after January 1 of each year a report of receipts and disbursements for the preceding year must be forwarded to the commissioner (424)- After each examination made by the directors at their quarterly meetings a report of the result is forwarded as a record of the meeting to the commissioner (415, amd. by 1909, chap. 59, 1). Once a year a list of shareholders, their addresses, and amounts held is sent to the commis sioner (453). Receivers make and publish reports as banks do (459). 183 National Monetary Commission For special reports required to be made by banks guar anteed under the depositors’ guaranty fund statute, see X II, infra (1909, chap. 61, 7). Every other year the commissioner reports to the governor, stating the name, location, and officers of each bank, number and dates of examinations and reports, and whatever other information the commissioner thinks proper (462). (For reports required for purposes of taxation, see 1905, 8276.) EXAMINATIONS. A preliminary examination is made by the commissioner before business is begun with a view particularly to ascertaining the amount of capital paid and compliance with preliminaries (411 and 422). The regular examina tions are made semiannually, or oftener if necessary, by the commissioner or a subordinate, who fully investigates the condition of the bank (429). Banks in the hands of receivers are examined in the same way (459). The commissioner makes an examination of banks in voluntary dissolution (414 and 436). He examines thoroughly insolvent banks against which receivership proceedings are being brought (434). Before a bank is allowed to become a guaranteed bank (see X II, infra) it must be rigidly examined by the bank commissioner (1909, chap. 61, 1). A special examination is immediately made when a bank fails to pay its assess ments to the depositors’ guaranty fund (1909, chap. 61, 5). Directors at their regular meetings, which are at least quarterly, make a thorough examination of the affairs of the bank (415, amd. by 1909, chap. 59, 1). 184 K a n s a s S t a t e B a n k s IV. — R eserve R equirements. Banks in cities or towns of less than 5,000 must keep a reserve in available funds equal to 20 per cent of their entire deposits, and banks in cities over 5,000, 25 per cent of their entire deposits, three-fourths of which may consist of balances due from good solvent banks, provided the depositor bank has no stockholders who are also stock holders in the depository, unless the bank commissioner waives this prohibition in the particular case, and provided the depositories are banks located at commercial centers or other places approved by the commissioner; the other one-fourth must be in cash. A bank which is a deposi tary for reserves of other banks must keep a reserve of 25 per cent always. Cash items must not be considered part of reserves. When the reserve falls below, no new lia bilities may be incurred except discount or purchase of sight exchange and no dividends may be declared. The commissioner notifies banks whose reserves are below the requirement, to make the deficiency good. The commis sioner may refuse to consider as part of a bank’s reserve balances due from other banks which neglect to furnish him with required information (418, amd. by 1909, chap. 59, 2). V-— D iscount , L oan , and D eposit R estrictions . The total liability to any bank of a person, firm, or corporation for money borrowed, including in firm or corporation liabilities those of the members, must not exceed 15 per cent of the capital and surplus, but discount of bills of exchange drawn against existing values and of commercial paper under most circumstances is not con sidered as money borrowed (419). No bank may loan on the security of shares of its own stock, unless the security is necessary to prevent loss on 185 N at ion a l Mon etary Commission a previous debt, in which case the stock must be disposed of within six months (417). No bank may accept deposits continuously for six months in excess of ten times its paid up capital and sur plus. The violation of this section for thirty days cancels the bank’s authority to transact business until the section is complied with (1909, chap. 59, 5). A bank guaranteed under the depositors’ guaranty fund statute loses its membership in the fund if its deposits exceed this propor tion, and forfeits its deposited securities (1909, chap. 61, 14). See X II, infra. (For restrictions on banks’ power to borrow, see I, supra.) VI.— I nvestments. Only such real estate may be held as is necessary for the convenient transaction of the bank’s business (this must not exceed one-third of the paid in capital), such as is con veyed to the bank in satisfaction of previous debts, and such as the bank purchases under judgments or foreclosures on liens held by the bank (and the bank must never bid a larger amount than that necessary to satisfy the debt and costs). All real estate, except that held for the accommodation of the bank in its business, must be dis posed of within five years and thirty days (456). In the enumeration of powers of banks it is provided that they may buy and sell United States bonds, Kansas bonds, and bonds of Kansas municipalities (407). No bank may engage in commerce, etc., nor invest in the stock of any other bank or corporation, nor purchase its own stock unless that purchase is necessary to prevent loss upon a previous debt, in which case the stock must be disposed of within six months. Nevertheless, a bank may hold and sell all sorts of property which it acquires as collateral for loans or in the ordinary collection of debts, 186 K a n s a s — S t a t e B a n k s but such goods must be disposed of as soon as possible and are not considered as assets for more than six months after they are acquired (417). VII.— Overdrafts. These are not expressly forbidden, but it is provided that any officer who pays out the funds of the bank upon a check, order, or draft of one who has not on deposit a sum equal to the draft is personally liable to the bank for the amount paid (445). X . — U nauthorized B anking . It is unlawful for any individual, firm, or corporation to do a banking business or receive deposits without hav ing received a certificate from the bank commissioner. Doing business without this certificate, whether indi vidually or as an interested party in a firm or corporation, is a misdemeanor, punishable by fine of from $300 to $1,000, or by imprisonment of from thirty days to one year, or by both (422). Doing business after authority has been revoked is similarly punishable (455). Indi viduals, firms, or corporations who advertise themselves to be engaged in a banking business without having first obtained authority from the bank commissioner are guilty of a misdemeanor, punishable by fine not to exceed $1,000, imprisonment not to exceed one year, or both (468 and 441). Private bankers must have the capital required of incorporated banks; they must not use the word “ State” as part of their name, and in all published advertisements, etc., they must use the words “ private bank” (452). X I.— P enalties . False reports or entries in books are punished by a fine of not over $1,000, or imprisonment of from one to five National Monetary Commission years (420). Receipt of deposits while the bank is insol vent is a felony by the officer who does so, punishable by a fine of not over $5,000, imprisonment of from one to five years, or both (421). Failure to report entails a penalty on the bank of $50 per day (425). Receivers of banks who fail to report or permit themselves to be examined are subject to the same penalty that banks are (459). Failure to comply with a requirement made by the bank commissioner for ninety days entails forfeiture of the bank’s franchise (426). The bank officer or em ployee who certifies a check when the drawer has not the required funds in the bank is guilty of a misdemeanor, punishable by the general penalty given below (443). Refusal to submit the affairs of a bank for examination may entail revocation of authority to do business (454). The commissioner or a subordinate of his who neglects his duty, permits a violation of the statute for ninety days, makes false statements, etc., loses his office, and is pun ished by the general penalty given below (464, amd. by 1909, chap. 59, 3). The general penalty for bankers, officers of banks, directors, or employees who violate the banking statutes is a fine of not over $1,000, imprisonment of not over one year, or both (441). Every officer, agent, etc., of a bank who embezzles, issues a certificate of deposit, draws a draft, etc., with intent to defraud anyone, or to deceive an officer of the bank or an examining official, and anyone aiding in such an offense, is guilty of a felony, punishable by imprisonment for from one to fifteen years (444, amd. by 1909, chap. 59, 6). For penalties with respect to the guaranty fund sys tem see X II infra. Assessments are increased by penal ties in case they are not paid on time; various fines and imprisonments result from a bank’s improperly advertis ing itself (1909, chap. 61, 5, 7, etc.). 188 K a n s a s S t a t e B a n k s X II. — D epositors’ G uaranty System . Any state bank in Kansas having a paid up and unim paired surplus equal to io per cent of its capital may par ticipate in the assessments and benefits of the bank de positors’ guaranty fund of the State of Kansas. The bank examiner when notified that the directors have re solved to participate in the system makes a rigid exami nation of the bank, and if it is found to be solvent, prop erly managed, and conducted in strict accordance with the law the commissioner, after the bank has made the re quired deposit, issues a certificate stating that its deposits are guaranteed (1909, chap. 61, 1). Before receiving this certificate each bank, as an evidence of good faith, must deposit, and it must at all times maintain a deposit, of cash, or of United States bonds, Kansas bonds, or bonds of Kansas municipalities, to the amount of $500 for every $100,000, or fraction, of average deposits eligible to guar anty (less its capital and surplus) as shown by its last four statements; provided, however, that each bank must deposit not less than $500. These bonds, or cash in lieu of them, must not be charged out of the assets of the bank, but must be carried in its assets as “ guaranty fund with state treasurer” until such a time as the bank shall de fault in payment of assessments. In addition to this de posit every bank must pay in cash an amount equal to one-twentieth of 1 per cent of average deposits eligible to guaranty (less its capital and surplus), and these assess ments must be credited to the bank depositors’ guaranty fund with the state treasurer, subject to the order of the bank commissioner. The minimum assessment required from any bank is $20. Any bank seeking to participate in the system after the first annual payment, that of 1910, is assessed an amount approximately equal to its propor tionate share of the money then in the fund, the amount 189 N at ion a l M onet ary Commission of the assessment to be determined by the commissioner (190$, chap. 61, 2 and 10). The bank commissioner during January of each year makes assessments of one-twentieth of 1 per cent of the average guaranteed deposits, less capital and surplus, of each bank (the minimum assessment to be $20) until the cash fund is approximately equal to $500,000 above what ever cash may have been deposited in lieu of bonds. When the fund has reached this point the commissioner discontinues assessments. If the fund becomes depleted, the commissioner levies such additional assessments as are necessary to maintain it, provided that not more than five assessments of one-twentieth of 1 per cent may be made in one year. The treasurer holds the fund in state depository banks, subject to the order of the bank com missioner, and credits it quarterly with interest (1909, chap. 61, 3). "When any bank is found to be insolvent by the bank commissioner and he is proceeding to wind up its affairs (see Banks, III, supra), he issues at the earliest possible moment to each depositor a certificate bearing interest at 6 per cent, except where a contract rate exists on the de posit, in which case the certificate bears interest at the contract rate. After the officer in charge of the bank has realized upon the assets of the bank and exhausted the double liability of its stockholders and has paid all the funds so collected in dividends to depositors, he then cer tifies all balances due on guaranteed deposits, if any such balances exist, to the bank commissioner, who drawTs upon the depositors’ guaranty fund, a check in favor of each depositor for the balance due him. If the available funds in the guaranty fund are not sufficient to pay all guaran teed deposits of a failed bank and the five assessments have been made, the commissioner pays to the depositors pro rata the funds in his hands, and pays the remainder 190 K a n s a s S t a t e B a n k s due them when the next assessment becomes available. When the commissioner has paid any dividend to depos itors out of the fund, the claims of the depositors so paid revert to the commissioner for the benefit of the fund until it has been reimbursed for its payments with interest at 3 per cent (1909, chap. 61, 4). A penalty of 50 per cent of the amount of an assessment is added to it when a bank does not remit within thirty days after receipt of notice, and if a bank after that notice fails to remit an assessment a sufficient amount of its bonds are sold by the commissioner to pay the assess ment. The remainder of the bonds, or cash deposited in lieu of them, are forfeited to the guaranty fund if the bank does not within sixty days from the default in pay ment of the assessment remit the full amount of assess ment and penalty to date and restore its pledge of bonds or money. On the bank’s failure to remit its assessments the commissioner examines it, and if he judges it insol vent proceeds to liquidate it. If it is found to be solvent, he cancels its certificate as a guaranteed bank and posts a notice that it has withdrawn from the guaranty fund system. Banks may voluntarily withdraw from the sys tem, in which case they receive their pledged bonds when the affairs of all failed banks in liquidation at the end of six months after the bank has elected to withdraw have been closed up and the bank has paid its assessments on account of these failures (1909, chap. 61, 5). Only deposits which do not bear interest and the fol lowing deposits are guaranteed under the statute: time certificates payable in from six months to one year, bear ing interest at not more than 3 per cent, on which interest ceases at maturity; savings accounts, not over $100 to any one person, not subject to check, requiring sixty days notice of withdrawal, and bearing interest at not 191 National Monetary Commission more than 3 per cent. Deposits which are primarily re discounts or money borrowed by the bank and all deposits otherwise secured may not be guaranteed. Deposits not eligible to guaranty are excluded in computing its assess ments (1909, chap. 61, 6). Each bank guaranteed under the statute keeps a record of the interest paid to each depositor and makes a quar terly statement of this record to the commissioner. If a bank advertises that its depositors are guaranteed, then if it pays or agrees to pay interest at- a greater rate than 3 per cent on any deposits it must state on the adver tisement that no deposits are guaranteed which bear a greater rate of interest than 3 per cent. No bank which pays interest at a greater rate than 3 per cent on any deposit, or pays interest on short-time savings deposits, or on time certificates cashed before maturity, may par ticipate in the system. Any managing officer of a guar anteed bank, or any person acting for the bank who prom ises to pay a depositor interest at a higher rate than that allowed by the statute, or who pledges time certificates or other obligations of the bank as security for his or another’s personal obligation, in order to avoid the pro visions of the statute, is guilty of misdemeanor, punish able by fine of $500 to $5,000, imprisonment not exceeding one year, or both. Advertising in such a way as to imply that deposits are guaranteed by the State of Kansas is a misdemeanor punishable by fine of $500, and advertising so as to imply that deposits are guaranteed by the system when the advertising bank is not so authorized to do is a misdemeanor punishable by fine of $500 to $1,000 (1909, chap. 61, 7). Any trust company may reorganize as a state bank so as to come within the provisions of the depositors’ guaianty fund system, and private banks or national banks properly qualified may also reorganize as state banks 192 K a n s a s S a v i n g s — Banks (1909, chap. 61, 8). Any national bank in Kansas, after an examination resulting in the approval of the bank commissioner, may participate in the system on the same terms as state banks, provided it forwards to the com missioner detailed reports of its condition on the dates when they are required of state banks (which reports it need not publish, however), and provided it submits to one examination a year by the commissioner, or more at his discretion (1909, chap. 61, 13). No guaranteed bank may receive deposits continuously for six months in excess of ten times its paid-up capital and surplus; violation of this provision cancels all rights to participate in the benefits of the fund and forfeits the deposited bonds (1909, chap. 61, 14). Another statute provides that if a bank exceeds this deposit limit for thirty days over the continuous six months, its authority to transact business is revoked till the excess of deposits is reduced (1909, chap. 59, 5). If upon examination a guaranteed bank is found to be violating the statute, the commissioner notifies it that it has thirty days in which to comply with the provisions of the statute; if it fails to do so, it forfeits its membership in the guaranty fund, and its bonds deposited belong to the fund (1909, chap. 61, 11). SAVINGS BANKS. The only special provision for savings banks is that those which do not transact a general banking business must keep on hand at all times in actual cash a sum equal to 10 per cent of their deposits, and keep a like sum in vested in good bonds of the United States, or state or municipal bonds of Kansas worth not less than par (418). S. D oc. 353, 61 13 *93 National Monetary Commission TRUST COMPANIES. I.— T erms of I ncorporation. Trust companies do a general banking business (1907, p. 629). The capital must be not less than $100,000 nor more than $1,000,000, divided into $100 shares. Twenty per cent must be paid in before the company begins business, and the entire capital fully paid within six months (1905, 1529)Dividends may be declared not in excess of net profits, if a sum equal to 10 per cent of the earnings during the last dividend period has been carried to a surplus account; this last must be done until the surplus equals one-half the capital. When the surplus is used in charging off losses, no dividend may be declared in excess of 50 per cent of net earnings until the surplus is restored, the other 50 per cent being, at each dividend time, used to replenish surplus (1905, 1535)II.— L iabilities and D uties of Stockholders Directors. and Dues from corporations are secured by individual lia bility of the stockholders to an additional amount equal to the stock owned by each stockholder (constitution, Art. X II, sec. 2). There must be from five to fifteen directors, a majority of them residents of Kansas, and each a stockholder to an amount not less than $1,000 (1905, 1533). They must hold at least four regular meetings a year, making a thorough examination of the affairs of the company at each meeting (1905, 1534). If they pay an illegal dividend, they are liable to the company or to creditors for that amount (1905, 1535). 194 K a n s a s Trust Companies III. — Supervision . Trust companies are under the supervision of the bank commissioner. The provisions of the banking law relating to impairment of capital, insolvency, and the duty of the bank commissioner in such cases, apply also to trust companies. They make four R eports like banks, and are subject to the same sort of E xaminations (I9°5» j 538 and 1540). The directors at their quarterly meeting examine the affairs of the company (1905, 1534). IV. — R eserve R equirements. Trust companies that receive deposits must keep a sum equal to 25 per cent of the deposits that are subject to check, and 10 per cent of the time deposits, “ in the same manner and subject to the same rules as is provided for state banks,” but United States bonds, and demand loans, secured by United States, state, or municipal bonds of the cash value of the loans, may be accepted as part of the reserve in lieu of deposits in banks (1905, 1528). V. — Discount and L oan R estrictions. A trust company may loan on “ real estate, chattel, collateral, or personal security,” but no trust company may loan on its own stock. The latter restriction seems not even subject to the exception of necessity to secure an old debt, for the exception is phrased to include “ purchase,” but not taking as security. (1907, p. 628.) VI.— I nvestments. Trust companies may own buildings suitable for the conduct of their business and may hold real estate acquired in the collection of debts, but the real estate so owned must not exceed 50 per cent of the capital of the company for a longer period than six months (1905, 1537). 19 5 N at ion a l M on e t a r y Commission A trust company may buy and sell all kinds of govern ment, municipal, and corporation bonds, and “ all kinds of negotiable and non-negotiable paper, securities, and stocks;” but the total investment of any trust company in bank stock must not exceed one-fourth of its paid up capital, and no trust company may purchase its own stock unless necessary to prevent loss on a previous debt, in which case the stock must be disposed of within six months. (1907, p. 628.) X .— U nauthorized T rust Company B usiness. The name of every trust company must end with the words “ trust company” (1905, 1532). No corporation not organized under the Kansas law relating to trust companies may use the word “ trust” as part of its name. Illegal use of the word is a misdemeanor, entailing a fine of not less than $300 nor more than $1,000, or imprison ment for not less than thirty days nor more than one year, or both; each day during which the word is used being a separate offense. (1907, p. 629.) X I.— P enalties . All the penalties provided in the banking law for failure to report or permit examinations or to comply with requirements of the bank commissioner, penalties for frauds, etc., and those for receiving deposits when insol vent, apply to trust companies, their officers, directors, and employees (1905, 1539). 19 6 KENTUCKY. In the revisal of the Kentucky statutes issued in 1903, chapter 32 deals with “ Corporations— private.” Of this chapter Article II is entitled “ Banks and banking” and is divided into two subdivisions, “ Incorporated banks and “ Private bankers,” of which the latter was repealed in 1906. Article III of chapter 32 treats of “ Trust com panies;” and Article VII, of “ Building and loan associa tions.” Since this arrangement groups banks and savings banks together, the digest discusses them under one head, treating trust companies separately. It must be noted, however, that under 612a, the second and third clauses of which seem still to be in effect, trust companies, in so far as they do a banking business, are subject to the laws applicable to banks. Numbers in parenthesis refer to sections in the Kentucky statutes of 1903, and later legislation is referred to by chapters of the session laws, which have been examined through 1908. BANKS AND SAVINGS BANKS. I.— T erms of I ncorporation. Any number of persons, not less than five, may establish a commercial bank, or a savings bank, or a bank with de partments for both classes of business (577). A bank combining the business of a commercial and savings bank must keep separate books for each kind of business (590). 19 7 N a tio n a l M o n et a r y Commi ssi on The capital stock of any bank must be at least $15,000, and in cities having a population of fifty thousand or more, at least $100,000 (577). At least 50 per cent of the capital must be paid in in money before business is begun. The remainder must be paid in in money within a year (580). To combine the business of a bank and a trust company, not less than seven persons may associate with a capital stock of not less than $50,000 all paid in in money before the corporation begins business, except that if the capital equals or exceeds $100,000, then only one-half of it need be paid in before business is begun, and the rest must be paid in within twelve months. One-half of the capital stock must be securely invested for the trust business and kept separate; this is primarily liable for trust obliga tions. The rest of the capital may be used in banking business. The books must always show this separation (1906, chap. 146). The statutes governing banks apply to the banking department of such a corporation, and those governing trust companies apply to the trust company department (612a), unless the second and third clauses of 612a were repealed by chapter 146 of 1906, which seems unlikely. Dividends may be declared out of net profits, but before declaring any dividend not less than one-tenth of the net profits for the preceding dividend period must be carried to a surplus fund until the surplus amounts to 20 per cent of the capital stock (596). II.— L iabilities and D uties of Stockholders D irectors. and Stockholders are liable for all contracts and liabilities of their bank to the extent of the amount of their stock at par, in addition to the amount of the stock (595). No per198 Kentucky State Banks, etc. son may hold more than one-half the capital stock of a bank exclusive of stock held as collateral (581). Directors or other officers of any bank who receive deposits with knowledge that the bank is insolvent are individually responsible for the deposits (597)- Directors who knowingly violate or permit their bank to violate any provisions of the statutes are liable to creditors and stock holders for any loss resulting from the violation (598). III.— Supervision . There appears to be no officer of the State charged with the duty of supervising banks alone. It is the secretary of state who performs the functions of a bank supervisor. If the reserve of any bank falls below the required amount, the secretary of state notifies the bank to make the re serve good, and if it fails to do so for thirty days the sec retary of state, with the consent of the attorney-general, institutes proceedings for a receivership (585). If the capital stock of a bank becomes impaired, the secretary of state notifies the bank to make it good, and if the bank fails to do so for thirty days the secretary of state may institute proceedings necessary to wind up the affairs of the bank (580 and 586). In general, the secretary of state, when satisfied that any bank or corporation is insolvent or that its capital is impaired, or that it has violated any of the provisions of the law under which it was organized, may, with the approval of the attorneygeneral, apply to the court for the appointment of a receiver (616); and in case directors who violate the law fail to make good within a reasonable time whatever loss their violation occasions, the secretary of state institutes proceedings for forfeiture of the bank’s charter (598). The secretary of state has authority to pass upon proposed reductions in the capital stock of any bank (587). 199 National Monetary Commi ssi on REPORTS. Once in every three months, and oftener if required, each bank reports its condition to the secretary of state at such times and according to such forms as he prescribes. Each alternate report is published in the county news paper having the largest circulation (593). In January of each year the directors of every bank file with the secretary of state a list of stockholders and officers (595). Twice in each January every bank publishes a state ment of deposits, dividends, and interest which have been unclaimed by the person to whom they are due for five years (592). (For reports due from state depositaries, see 4691 and 1906, chap. 5; for reports required for purposes of taxa tion, see 4092, etc., and 1906, p. 134.) IV.— R eserve R equirements. Banks must keep on hand at least 15 per cent of their total deposits, and in cities with a population of 50,000 at least 25 per cent. One-third of this reserve must be in money, and the balance may be in demand deposits in other banks. No bank, however, is required to keep on hand more than 10 per cent of savings deposits— that is, deposits on which the depositor has not the right to check except upon giving at least thirty days’ notice (1906, chap. 155). V.— Discount and L oan R estrictions. No bank may permit any of its stockholders or any person, company, or firm, including in company or firm liabilities those of the individual members, to become indebted to the bank in an amount exceeding 20 per cent of its capital and surplus, unless the borrower pledges good collateral security, or executes a mortgage which is ' Kentucky — I State Banks, etc. of more than the cash value of the loan above all other incumbrances. If the borrower is a director or officer his indebtedness must not exceed io per cent of the capital of the bank, unless he pledges property worth double the amount of the excess. In no case may the indebtedness of a person, company, or firm, including in company or firm liabilities those of the members, exceed 30 per cent of capital and surplus (583). There must be no privileges given stockholders in making loans over persons not stockholders (581). No bank is allowed to take as security its own stock (581). VI.— I nvestments. Banks may hold such real estate as may be necessary for the transaction of their business; and, for a period not longer than five years, such other real estate as is received in satisfaction of previous debts, or such as is purchased under a judgment in favor of the purchasing bank (582). No bank may hold any of its own capital stock unless the purchase is necessary to prevent loss on previous debt. Stock so purchased must not be held for a longer time than one year (581). X .— U nauthorized Banking . Individuals and partnerships may not engage in bank ing; violation of this rule is a misdemeanor, for which the penalty is from $20 to $50 a day while the illegal business is conducted (1906, chap. 44). X I.— P enalties . Any bank which fails to make reports within five days after they are due, or which fails to publish them, forfeits $200 (594). Officers of banks who receive deposits with 201 National Monetary Commi ssi on knowledge of the bank’s insolvency (and the same rule prevails in the case of individual bankers) are guilty of a felony, for which the punishment is from one to ten years’ imprisonment (597). If directors of a bank allow a viola tion of law and the damage occasioned is not made good within a reasonable time, the secretary of state institutes proceedings for forfeiture of the bank’s charter (598). TRUST COMPANIES. I.— T erms oe I ncorporation. Any number of persons, not less than seven, may incorporate a trust company with a capital of not less than $15,000 in counties having a population of over 25,000 and under 40,000; with a capital of not less than $100,000 in counties of over 40,000 and less than 100,000; and with a capital of not less than $200,000 in counties of over 100,000. In counties of 25,000 or more, however, where there are cities belonging to certain classes (see statutory classification in 2740), a trust com pany may be organized in one of those cities with a capital of not less than $25,000 (1904, chap. 78). At least 50 per cent of the capital stock must be paid in in money before the trust company begins business. The remainder must be paid in in money within a year (607). For the combination of trust company and banking business see I, under Banks and savings banks. Trust companies are forbidden to engage in banking business except under the provisions of chapter 146 of 1906, and 612a, for the combination of banking and trust company business (612). II.— L iabilities and D uties of Stockholders. The stockholders of trust companies are liable for all contracts and liabilities of their corporation to an amount equal to their stock at par in addition to the amount of 202 Trust Kentucky Companies the stock (613). No person may hold more than onehalf the stock of any trust company, exclusive of stock held as collateral (609). III.— Supervision. The secretary of state has authority, with the advice and consent of the attorney-general, to withhold the certificate allowing the company to begin business if he thinks it has been formed for an illegitimate purpose (608). On becoming satisfied that a trust company h£^ become insolvent or that its capital is impaired, or that it has violated the law, he may apply for the appointment of a receiver (607 and 616). REPORTS. Trust companies report their condition as often and on the same dates and in the same manner as banks do (615). A list of the stockholders and officers must be filed with the secretary of state in January of each year (613). (For reports for purposes of taxation see 4092, etc., and 1906, p. 134.) V.— Discount and L oan R estrictions. No stockholder or any person, company, or firm, including in company or firm liabilities those of the members, may be indebted to a trust company in a sum exceeding 10 per cent of its capital and surplus, unless the borrower deposits good collateral security, or executes a mortgage worth more than the cash value of the loan above all other incumbrances. If the borrower is a director or officer he must not become indebted in excess of 10 per cent of the capital stock without pledging property worth double the excess. In no event may the indebtedness of one person, company, or firm, including in company or firm liabilities those of the members, 203 N at i on a l M on e t a r y Commission exceed 20 per cent of capital and surplus (610). The same security is required of stockholders as of persons not stockholders (609). Trust companies are not allowed to take their own stock as security (609). VI.— I nvestments. Trust companies may acquire land only for the trans action of their business, and, for a period not longer than five ye^rs, such other land as may be conveyed to them in satisfaction of previous debts, or such as may be pur chased under a judgment in favor of the company; this does not prevent trust companies from holding land in trust, however (612). Trust companies may not hold their own stock, unless the purchase is necessary to prevent loss upon a previous debt, and in that case the stock must be disposed of at the end of a year (609). The capital of trust companies doing a banking business must be invested by halves, one-half for the trust-company business and the other for the banking business (1906, ch. 146). X I.— P enalties . Failure to make or publish reports entails the same penalty that is imposed upon banks for a like offense (615); and in general trust companies are subject, when engaged in the banking business, to all the provisions of law regarding banks (612a). 204 LOUISIANA. The statute law of this State on banking is in a very con fused condition because so many recent statutes, in stead of repealing former statutes specifically, have only repealed such laws or parts of laws as are consistent with the recent enactments. The revision of 1904 recognizes this difficulty, and so does the reprint of banking statutes on which this digest is based— a compilation, including all legislation through the session of 1908, prepared by L. E. Thomas, formerly state examiner of state banks. Mr. Thomas calls act No. 179 of 1902, as amended by act No. 140 of 1906, the general banking act, and act No. 45 of 1902 the trust company act. This, however, by no means makes it clear to which classes of business each of these two statutes applies, for No. 179 is framed to cover “ bank ing associations and savings banks ” and No. 45 to cover “ banks ” organized “ for the purpose of conducting a sav ings, safe-deposit, and trust banking business in any of its branches.” Owing to the difficulty occasioned by this phraseology in determining to which of our three classes, viz, banks, savings banks, or trust companies, the various pro visions apply, the digest is not arranged according to those three classes, but in stating each provision tries to point its application merely by using the language of the clause on which it is based. The matter is further complicated be cause section 32 of 179 provides that in case of conflict with 205 N a t ion a l M on e t a r y Commission 45, 45 is to control so far as concerns savings, safe-deposit, and trust banks; whereas section 7 of 45 provides that banks organized under that law shall, except as provided in it, have the powers and be subject to the regulations of banks organized under the general banking laws. All pertinent provisions of acts Nos. 45 and 179 of 1902 are here presented, citing those acts simply as “ 45 ” and “ 179 ” , with sections. Other acts are inserted which seem clearly not repealed; they are cited either by year and number, or, where the abbreviation R. S. is used, by sections in the revised laws of Louisiana, 1904. I.— T erms of Incorporation. The regular amount of capital prescribed for banking associations and savings banks is $100,000 (179, sec. 28). Outside any incorporated town of 250 or more inhabitants, however, the corporation need have a cash capital of only $10,000 (179, sec. 2). There are the following rules for smaller capital, also: Banking associations other than savings banks may be organized in incorporated towns of less than 2,500 with a capital of $10,000; in incorporated cities or towns of from 2,500 to 10,000, with $30,000; and in those between 10,000 and 20,000, with $50,000. Also savings banks may be established in towns of not more than 15,000 with a capital of $30,000; and in towns from 15,000 to 30,000, with $50,000 (179, sec. 28). Banks organized under the act relating to savings, safedeposit, and trust banking business must have a cash paidin capital of at least $100,000 (45, sec. 6). It has been enacted, however, that savings and safe-deposit banks may be organized with a cash capital of not less than $30,000 in incorporated towns of not more than 20,000 (R. S. 277, as amended by 189 of 1902). 206 Louisiana — General Provisions Banking associations and savings banks must not begin business until one-half of the subscribed capital has been paid in in cash. The remainder must be paid up within ninety days after the business has been begun (179, sec. 8). The directors of every banking association and savings bank must set aside one-tenth of the annual profits, until this surplus equals 20 per cent of the capital; no divi dends may be paid unless they have been earned within the preceding dividend period, and in case there are debts on which payments of principal or interest have been overdue for twelve months, no dividends may be declared till the debts in question have been charged off or reduced in value after an appraisement by the state bank examiner and two stockholders of the bank (179, sec. 30, and see also act 65 of 1900). Banks may apparently combine general banking, sav ings bank, and trust company business (45, sec. 5). II.— L iabilities and Duties of Stockholders Directors. and The liability of a shareholder in any banking association or savings bank is limited to the unpaid portion of the original purchase price of his stock (179, sec. 10). There must be not fewer than seven nor more than fifteen (though note that under 45 the number of direct ors may be whatever the articles of incorporation pre scribe) directors of a banking association or savings bank; at least three-fourths of the directors, officers, and em ployees of every banking association and savings bank must be citizens of Louisiana; all directors of banking associations and savings banks must be citizens of the United States (179, sec. 4); a majority of the directors of a corporation organized under the savings, safe-deposit, and trust banking act must be citizens of Louisiana (45, sec. 1). Directors of banking associations and savings 207 National Monetary Commission banks must meet once a month, at which meeting the cashier reports a statement of the condition of the com pany to the directors (179, sec. 25). If directors consent to dealing in any merchandise, except such as is necessary to secure previously contracted debts, they become personally responsible for all damages and losses (179, sec. 11). If they assent to declare a divi dend in excess of net profits, or a dividend which impairs the capital and surplus, they are liable to the creditors of the company for whatever loss occurs thereby (act 65 of 1900). In case a banking association or savings bank after having committed a continuing act of insolvency assigns its prop erty, those officers who assist in such assignment are per sonally liable for the corporation’s debts (179, sec. 18). Directors who participate in the reduction of reserves below the required amount are probably liable for the debts of the banking company (R. S., 301). It is a crime for a director or other officer of a banking institution or other corporation accepting deposits or loans to accept deposits or create debts with a knowledge that the corporation is insolvent. The director or officer makes himself indi vidually responsible for such deposits or debts (constitu tion, art. 269, and act 108, 1884). III.— S upervision. The official in charge of banking in Louisiana is the state examiner of state banks. He must be an expert accountant and familiar with banking transactions; he is appointed for a term of four years (constitution, art. 194, and act 198 of 1898, sec. 1); his salary is $2,500 a year (act 198 of 1898, sec. 1); he may not receive any compen sation or gift beyond this (act 198 of 1898, sec. 2). Before doing business, every banking association and savings bank procures a certificate from the examiner, to obtain which it must furnish him with satisfactory proof of 208 L o u i s ian a General Provisions compliance with the statutory requirements (179, sec. 8). The articles of association under which a banking associa tion or savings bank organizes are published in the local newspaper for four weeks (179, sec. 5); they contain such items as the domicile of the banking association or savings bank, the amount of its capital, number of shares, the names and addresses of subscribers, and the names of directors (179, sec. 7). Whenever the examiner believes the capital of a banking association or savings bank to be impaired, he proceeds, with the assistance of two stockholders, to make an esti mation of resources and liabilities; if he is then of the opin ion that the capital is impaired to the amount of 20 per cent he reports the result of his findings to the auditor, who directs the banking association or savings bank to make good the impairment within two months (sec. 179, sec. 17). When the reserve of a banking association car rying on the business of a bank of discount, deposit, exchange, and circulation falls below the required amount, and remains so for ten days, the president must notify the state examiner within twenty-four hours of the end of the tenth day (179, sec. 15). This reduction of reserve prob ably warrants proceedings by the auditor for a liquidation of the bank’s affairs (R. S., 301). An act of insolvency or violation of law is ground for forfeiture of charter and a receivership (R. S., 284, and 179, sec. 13). Various acts of insolvency are defined. One is refusal to pay demand obligations, but the proviso is added that with the consent of the governor or the auditor of public accounts, any clearing-house association may agree to suspend payment of demand obligations when this is deemed necessary by a majority of the banks or bankers forming the association, in order to protect stockholders and creditors or avert financial panic (179, sec. 16). S. D oc. 353, 6 1-2 14 209 National Monetary Commission REPORTS. Four times a year the examiner announces to each bank ing association and savings bank a certain past day on which the condition of each corporation is to be reported to him (179, sec. 19); each corporation within seven days after the notice reports the condition of its business on the date specified, which report is published by the examiner in such manner as to secure the greatest possible publicity, and by the banking association or savings bank in a local newspaper (179, sec. 20). The form which is furnished by the examiner includes the following items: Resources— Demand loans, loans secured by mortgage, other loans and discounts, overdrafts secured and unsecured, United States bonds, Louisiana state bonds, other bonds, stocks, securities, etc., banking-house furniture and fixtures, other real estate owned, due from banks and bankers, checks for the clearing house, checks and other cash items, lawful money reserved in bank, gold coin, silver, nickel, and copper coin, national-bank notes, and all issues of the United States Government, and suspense account. Liabilities— Capital stock paid in, surplus, undivided profits less ex penses and taxes paid, due to other banks and bankers, dividends unpaid, individual savings deposits, individual deposits subject to check, time certificates of. deposit, demand certificates of deposit, certified checks, cashier’s checks outstanding, bills payable, notes and bills redis counted, certificates of deposit for borrowed money, and amounts due to persons not included in the foregoing (179, sec. 21 and 22). At the monthly directors’ meeting of banking associa tions and savings banks the cashier reports to the directors a statement of the company’s condition (179, sec. 25). Certain reports of banking institutions are required to be made for purposes of taxation ^act 170 of 1898, sec. 27). 210 Louisiana General Provisions All incorporated institutions in Louisiana receiving deposits or declaring dividends on money or evidences of indebtedness publish annually in the official journal of the State, once a week for four weeks in succession, a complete list of unclaimed deposits or other claims, of more than $10, whenever these deposits or claims are of three years’ standing. When unclaimed for seven years these funds are administered as vacant estates (act h i , 1874). It is provided in a later statute (which is thought to repeal act h i of 1874 only with respect to banking associations) that the bank examiner reports to the auditor all balances on the books of banks and trust companies that have remained uncalled for and unnoticed by the depositors for ten years (act 288 of 1908). The examiner reports biennially to the legislature at the commencement of each session a summary of the condi tion of state banks, banking associations, and savings banks from which he has had reports, with an abstract of total capital, total debts and liabilities, total resources and assets, total specie held, and other useful information; suggestions with regard to the banking laws; and a state ment of the banks, banking associations, and savings banks that have closed business during the preceding two years (act 198 of 1898, sec. 5). EXAMINATIONS. The examiner must examine all state banks at least twice every year (constitution, art. 194), when he believes the capital of any banking association or savings bank to be impaired he examines with two stockholders as described above (179, sec. 17). When in the examiner’s opinion, after the examination, there is good cause to believe that any bank, banking association, or savings bank has made an incorrect quarterly return, or is not in a sound condition, or has not conformed to law, it is the examiner’s duty to N ational M on e t a r y Commission examine its affairs fully and if necessary close the opera tions of the institution while making a complete investiga tion, the results of which the examiner reports to the gov ernor (act 198 of 1898, sec. 4, as amd. by 149 of 1900). When a corporation organized under the act relating to savings, safe deposit and trust banking business is acting as fiduciary, the court appointing it may, if it thinks neces sary, require the examiner to investigate the affairs and management of the corporation (45, sec. 2). IV.— R e s e r v e R e q u i r e m e n t s . In the act for banking associations and savings banks it is provided that “ every banking association carrying on the business of a bank of discount, deposit, exchange, and circulation,” must keep in its office in lawful money of the United States an amount equal to 8 per cent of its demand deposits; it must also keep in lawful money on deposit, subject to sight draft, an additional amount equal to 17 per cent of its demand deposits. The remaining 75 per cent of its deposits it must keep in lawful money or in cash balances in other solvent banks, or in discounted paper having not more than twelve months in which to mature, or in such bonds as are described in section 3 of 179, given below under VI (179, sec. 14). If the reserve falls below the requirement and remains so ten days, the president must notify the examiner. Thereafter it is not lawful for the bank to discount any new paper until the reserve has been reestablished. This, in section 15, is the only consequence (prescribed in 179) of failure to preserve the reserve. It was law before the passage of 179, however, that a violation of the re serve provisions of the Revised Statutes should be an act of insolvency for which the affairs of the company might be liquidated (R. S., 301). If R. S. 301 has been repealed, 212 Lo ui s i ana — Ge n e r a l Pr ovi si ons it is by virtue of sec. 16 of 179, as amended by act 140 of 1906. Banks organized under the act dealing with savings, safe deposit and trust banking must maintain a reserve in lawful money of the United States or in cash due from other banks or bankers equal to 25 per cent of demand deposits; 8 per cent of demand deposits must be kept on the premises in cash; for the remainder of demand deposits there must be kept on hand lawful money of the United States or cash due from other banks, or bills of exchange, or discounted paper maturing within a year, or securities of the United States, any state, or any American public or private corporation (No. 45, sec. 5). V.— D iscount and L o a n R estrictions . No banking association or savings bank may loan to any one borrower more than 20 per cent of its stock, surplus, and undivided profits unless the loans are secured by good collateral or solvent endorsements (179, sec. 26). No banking association or savings bank may lend to any officer or employee of the corporation engaged in its active management unless the loan is approved by the directors by a vote in which the applicant for the loan does not par ticipate (179, sec. 26). No banking association or savings bank may loan on a pledge of its own stock (179, sec. 9). VI.— In v e s t m e n t s . Banking associations and savings banks may only hold real estate when necessary for the transaction of their business; when mortgaged to them to secure loans; when conveyed to them to satisfy previously contracted debts; and when purchased at sales under judgment or mortgage in favor of themselves (179, sec. 3). 213 N at i on a l M on et a r y Commi ssi on Banking' associations and savings banks may invest in bonds of the United States, of Louisiana, of levee districts in Louisiana, and of such municipalities of Louisiana as have not defaulted in interest on their bonds for five years preceding (179, sec. 3). No banking association or savings bank may hold its own stock for a longer time than six months (179, sec. 9). Banking associations and savings banks are prohibited from dealing in cotton, sugar, or any kind of merchandise except to secure a debt previously contracted (179, sec. 11). Savings banks may buy and sell such promissory notes as are secured by good and sufficient collateral securities worth 50 per cent more than the loan (179, sec. 3). Banks organized to conduct a savings, safe deposit, and trust banking business may hold only such real estate as is necessary for their business, or has been mortgaged to secure loans, or has been conveyed to satisfy previously contracted debts, or has been bought at a sale under judg ment or mortgage. With the exception of real estate held in trust or for the transaction of their business, they may not hold real estate for a longer period than ten years. These corporations may hold such personal property, including securities of the United States or of any State of the United States or of any public or private corporation, as may be necessary or convenient to the objects of the corporations (45, sec. 1). VII.— O v e r d r a f t s . Overdrafts are allowed, for they are referred to in the list of resources in reports (179, sec. 22) and also in an other enumeration of assets of banking corporations (179, sec. 30). 214 L o u is i a n a General Provisions V III.— B ranches. Corporations organized under the savings, safe deposit, and trust banking law may have “ one or more offices of discount and deposits” in the municipality or parish where the company is located (45, sec. 7). X.— U nauthorized B anking . The business of banking may be carried on only by cor porations organized under the laws of Louisiana or of the United States, by individual citizens of Louisiana, and by firms domiciled in Louisiana whose active members are citizens of Louisiana. Unless incorporated no banker shall use the title “ banking association,” or “ savings bank” (179, sec. 1). Every savings bank must make use of the words “ savings bank” in its title (179, sec. 3). XI.— P enalties . If a banking association or savings bank begins busi ness without authority from the examiner, or without its capital having been paid up, it is punished by a fine not exceeding $500 laid upon the directors and managers (179, sec. 8). Moreover, banking associations and sav ings banks that do not complete their required capital may lose their charters (179, sec. 29). The banking asso ciation or savings bank that violates the rule requiring a surplus, or that forbidding the payment of dividends unless earned forfeits $500 (179, sec. 30). The banking association which is guilty of a continuing act of insol vency forfeits its corporate rights (179, sec. 13). If the president of a banking association carrying on the business of a bank of discount, etc., does not report an impairment of reserve within eleven days, the banking association forfeits $10 per day (179, sec. 15). 215 National Monetary Commi ssi on The banking association or savings bank which fails to transmit its report to the examiner, publish it, and furnish proof of the publication, becomes liable to a penalty of $50 (179, sec. 20). A further provision of the same act makes it the duty of the district attorney of the local parish to sue the banking association or savings bank that fails to furnish its report on time for a penalty of $100 (179, sec. 23). Any incorporated institution receiving deposits or declaring dividends on money or evidences of indebtedness must, if it fails to publish its unclaimed deposits, etc., pay a penalty of $1,000; if, after suit for this $1,000 has been begun, the institution still fails to publish, it becomes sub ject to a further penalty of $2,000 a month (act 111 of 1874, sec. 3). So far as it relates to state banking asso ciations this penalty for not publishing unclaimed deposits is thought to be repealed by act 288 of 1908. A banking association or savings bank that holds its own stock for a longer period than six months forfeits $10 per month per share (179, sec. 9). The banking associa tion or savings bank that deals illegally in merchandise forfeits not more than $1,000 (179, sec. 11). The director or other officer who receives deposits after a banking institution has become insolvent is liable to imprisonment of from five to ten years (act 108 of 1884, sec. 2). The director or officer of a banking association or savings bank who assents to a violation of the section deal ing with the limit of loans to individuals and to officers is fined $500 (179, sec. 26). The directors, officers, etc., of banking companies, who perpetrate various frauds, among them concealment of the condition of the bank from the examiner, are liable to imprisonment of from one to three years (R. S., 877) . The cashier of any banking asso ciation or savings bank who fails to notify stockholders and directors of meetings, or to present to the directors a statement of the affairs of the corporation at the monthly 216 Louisiana — General Provisions meeting, suffers a penalty of $25 (179, sec. 25). Officers of a banking association or savings bank who fail to keep proper accounts are subject to a penalty of $25 per month (179, sec. 27). Any examiner who receives extra compensation is guilty of a misdemeanor, punishable by $500 fine, in de fault of payment of which he is imprisoned from six months to one year (act 198 of 1898, sec. 2). Any person who maliciously circulates false statements attacking the financial condition of any bank organized under Louisiana law is guilty of a misdemeanor punishable by fine, imprisonment, or both (act 251 of 1908.) 217 » MAINE. The digest for Maine is based upon a compilation of the statutes issued by the banking department of the State, including all laws through the session of 1907. This com pilation has been compared with the statutes themselves and found to include all material laws, except a few sec tions; these are added in the digest, together with amend ments contained in two short statutes of 1909. Chapter 48 of the Revised Statutes, which include legislation through the session of 1905, is entitled “ Savings banks, Loan and building associations, Trust and banking companies, Foreign banking corporations.” Many of the provisions of chapter 48 apply clearly to savings banks. Those which apply to building and loan associations, etc., are omitted from the digest. The remaining sections apply to “ trust and banking companies.” These sections are supplemented by an act passed in 1907 which states in its title that it is additional to and amendatory of chapter 48, and that it relates to the organization and management of trust companies. Under it, trust companies are all given banking powers, and by one of its sections, a section of chapter 48 dealing with banking and trust companies is amended, using in the amendment the words simply “ trust companies.” It is believed, therefore, that none of the provisions of the Maine statutes applies simply to banks; so the digest is arranged under the heads simply 218 M a i n e — S a v i n g s B a n k s of “ Savings banks” and “ Trust companies.” The refer ences in the digest are either to the Revised Statutes, in which case they begin with the letters R. S., or to the public laws of 1905 or 1907, in which case the year is indi cated. Where statutes of 1905, 1907, or 1909 amend directly a section in the Revised Statutes, the section is, for the sake of saving space, cited by its number in the Revised Statutes simply, considering the amendment as incorporated in it. The chapter is given in each case, and the number following is the section in the chapter. SAVINGS BAN KS.' I.— T erms of I ncorporation. The statute contemplates savings banks without capital stock (R. S., chap. 48, 3). Three-fourths of the incor porators must reside in the county where the bank is to be located, and all members added to the number of original incorporators must be citizens of that county or one adjoining it (R. S., chap. 48, 4 and 12). There must be at least thirty members; removal from the State or failure for two successive years to attend annual meetings is equivalent to resignation' (R. S., chap. 48, 12). Dividends must not exceed 2% per cent semiannually, except as appears below. After passing the required amount to reserve fund (one-fourth of 1 per cent of the average deposits for the preceding six months) the trustees accord dividends to depositors of three months’ standing at least, unless the by-laws provide that the period be shorter. When the reserve fund amounts to 10 per cent of the average deposits for the six months previous to the declaration of a dividend, all net profits still remaining are divided every three years among depositors of one, two, 219 and three full years’ standing as extra dividends. Divi dends must always be within the amount of actual earnings (R. S., chap. 48, 28). No deposits may be received under an agreement to pay a specified sum of interest (R. S., chap. 48, 30). The assets of a savings bank that is connected with a “ national or stock bank’’ must be kept separate from the assets of the national or stock bank (R. S., chap. 48, 34). This reference to a “ stock bank’’ is the only intimation in the statutes of the possibility of such a bank as different from a trust and banking company. II.— L iabilities and D uties of T rustees . There must be not less than five trustees, not more than two of whom are allowed to be directors in any one national bank, trust company, or other banking institution (R. S., chap. 48, 13). There are restrictions upon the positions in other banking institutions which savings bank officers may hold; and it is provided that if the treasurer of a savings bank having deposits not exceeding $150,000 is cashier of a national bank or a trust and banking company, the board of trustees of the savings bank must not include more than one director nor more than two stockholders in the national bank or trust and banking company thus connected with the savings bank (R. S., chap. 48, 14). A trustee who becomes a trustee or officer of another savings corporation vacates his office (R. S., chap. 48, 15). The trustees may receive such compensation for their services in making examinations and returns as may be fixed by the corporation in meeting (R. S., chap. 48, 16). It is the duty of at least two of the trustees once a year to make the examination described below (R. S., chap. 48, 39). No officer of a savings bank may take a fee or commission on account of a transaction to which the bank is a party (R. S., chap. 48, 40). M a i n e — S a v i n g s B a n k * III.— Supervision . The state officer who supervises banking is the bank commissioner, who holds office for three years and must not be an officer in any bank in thewState (R. S., chap. 48,1). His salary is $2,500 a year (1905,chap. 159). The bank commissioner approves of the place chosen to deposit the securities held by savings banks; they must be kept within the State (R. S., chap. 48, 35). Before granting permission to a savings bank to do busi ness, the commissioner determines whether there will be greater access to a savings bank afforded a considerable number of people by opening the one. proposed, and whether the responsibility, character, etc., of the incor porators are such as to command confidence (R. S., chap. 48, 7). He does not grant a certificate unless satisfied of these points and that the organization as proposed will be a public benefit (R. S., chap. 48, 8). He may require a savings bank to charge down its investments on its books to what he considers a proper value (1909, chap. 149, amending R. S., chap. 48, 23). If upon examination the commissioner is of opinion that any savings bank is insolvent or that its condition is such as to make its further proceedings hazardous, he must apply for an injunction to stop its business. If he is of opinion that it has exceeded its powers or has failed to comply with law, he may apply for the injunction. The court may grant such decrees as the case warrants, including the appointment of receivers (R. S., chap. 48, 44). Their con duct of the liquidation is detailed (R. S., chap. 48, 45, 46, and 47). If a savings bank is insolvent on account of depletion in its assets without fault of its trustees, then, on petition of a majority of the trustees and the bank commissioner, the court may set a time for examination, and, on being satisfied that the corporation has complied 221 I N at ion a l M onetary Commission with law, may decree a reduction of deposits of each deposi tor so as to divide the loss pro rata. The savings bank then proceeds with its business with the deposits as reduced, although if such a sum is realized from the assets as to make it possible to set the deposits at their original figure or raise them toward it, that is done (R. S., chap. 48, 48). The court may grant orders restraining the paying out of funds, the declaration of dividends, etc. (R. S., chap. 48, 49). Voluntary liquidation under order of court is pro vided for at the request of the commissioner and a majority of the trustees (1907, chap. 128). REPORTS. After the annual election a list is published of officers and incorporators; the same list is transmitted to the com missioner (R. S., chap. 48,17). The treasurer of every sav ings bank, on forms furnished by the commissioner, annu ally reports its condition at such time as the commissioner designates, transmitting the report to him within fifteen days after receipt of his request (R. S., chap. 48, 37). At least two trustees annually, after examining the affairs of the savings bank and settling the treasurer’s account, report the condition of the bank to the commissioner, on blanks furnished by him, and after notice from him (R. S., chap. 48, 39). The treasurer publishes annually in a local news paper a statement of the name, the amount standing to his credit, residence and fact of death, if known, of every depositor who has not dealt with his deposit for more than twenty years, this does not apply if the treasurer knows the depositor to be living. A copy of this statement is sent to the commissioner (R. S.,chap. 48,38). Receivers of savings banks report annually to the commissioner, or oftenerif he requires (R. S., chap. 48, 44). (For reports required of savings banks for purposes of taxation, see R. S., chap. 8, 53 et seq.) 222 M a i n e S a v i n g s B a n k s Annually the commissioner reports to the governor and council the condition of all savings banks he has examined, with such suggestions as he deems expedient (R. S., chap. 48, 50). EXAMINATIONS. Weekly balances and annual statements of the amount of individual deposits, with the aggregate of deposits, are required of the treasurer (R. S., chap. 48, 36). At least two of the trustees once a year examine the affairs of the savings bank, settle the treasurer’s account, and report to the bank commissioner the condition of the savings bank as he requires (R. S., chap. 48, 39). The commissioner or one of his clerks as deputy visits every savings bank once a year, and oftener if he deems it expedient, to inspect its affairs, its ability to fulfill its engagements, and its compliance with law. A copy of the commissioner’s statement is published in a local newspaper (R. S., chap. 48, 1 and 42). V.— Discount, L oan , and D eposit R estrictions. No loan may be made to any officer of a savings bank or a firm of which he is a member (R. S., chap. 48, 27). No savings bank may hold as security for loans more than one-fifth of the capital stock of any corporation (R. S., chap. 48, 25). Savings banks must not receive from any one depositor over $2,000, no interest is allowed to be paid to any depositor if his deposits, including dividends, exceed that sum, except in the case of deposits of widows, orphans, etc., charitable institutions, and trust funds (R. S., chap. 48, 19). Deposits may not be received under agreement for a specified rate of interest (R. S., chap. 48, 30). No savings bank is required to pay any depositor more than $50 at a time or in any month until after ninety days’ notice (R. S., chap. 48, 31). 223 » National Monetary Commission (For other provisions concerning loans, see VT, Invest ments, infra.) VI.— I nvestments. Real estate in the city or town in which a savings bank is located may be held by the savings bank to an amount not exceeding 5 per cent of its deposits, or to an amount not exceeding its reserve fund (R. S., chap. 48, 24). Deposits may be invested only as follows: First— (a) In public funds of the United States and the District of Columbia; (b) in the public funds of any of the New England States and of certain other enumerated States. Second— (a) In the bonds of municipalities of New Eng land States; (b) in the bonds of cities and districts of enumerated States having a population of 75,000 or more, if issued for municipal purposes and a direct obligation on all taxable property; (c) in bonds of counties of 20,000 inhabitants or more in enumerated States if issued for municipal purposes and a direct obligation on all taxable property and not issued in aid of railroads, provided that the net indebtedness of the county does not exceed 5 per cent of the valuation of its property for taxes; (d) in bonds of any city of 10,000 or more, in enumerated States, if issued for municipal purposes and a direct obligation on all taxable property and not issued in aid of railroads, provided that the net indebtedness of the city does not exceed 5 per cent of the valuation of its property for taxes; (e) in refunding bonds of counties and cities above enumerated issued to take up legally issued bonds, pro vided interest has been fully paid on the original bonds for five years prior to the refunding, and provided the counties and cities can otherwise meet the foregoing con ditions; (/) in bonds and obligations of school district boards, boards of education, etc., “ in such cities,” author ized to issue bonds payable from taxes levied on all the 224 M a i n e — S a v i n g s B a n k s property in the district, provided the population of the district is 10,000 or more, and the population and assessed valuation of the district are at least 90 per cent of popu lation and valuation of the city in which the district is located, and provided the net indebtedness of the district does not exceed 5 per cent of its property as valued for taxes; (g) in bonds or obligations of municipal or quasi municipal corporations of Maine if a direct obligation on all the taxable property of the corporation. Third— (a) In railroad bonds of Maine; (b) in first-mortgage bonds of railroads in enumerated States; (c) in first-mortgage bonds of three named railroads; (d) in mortgage bonds of a railroad leased to a dividend-paying railroad in New England, if the lessee guarantees dividends and interest of the lessor; (e) street railroad companies are not rail road companies for investment purposes; (/) in bonds of street railroads in Maine and in first-mortgage bonds of street railroads in other enumerated States, provided in general, with certain minor distinctions, that the paid in capital stock equals 33^ per cent of the mortgage debt and has been expended on the road, or that annual dividends of 5 per cent have been paid for five years on an amount of capital stock equal to one-third of the bonded debt; no bonds secured by an open mortgage are legal under this provision unless the mortgage provides that the total outstanding bonds shall never exceed 75 per cent of the cash expended on the road; (g) in refunding bonds which are of an issue to retire the entire funded debt under the conditions as applied to first-mortgage bonds in (6), (c), and (/) of the above, and which are secured by a first mortgage on the whole or any part of the system. Fourth— In the mortgage bonds of New England water companies earning more than fixed charges, interest on debts, and running expenses. Fifth— In bonds of other corporations of Maine paying 5 per cent dividends. S- Doc. 353. 61-3---- 15 225 N ation al M on e t a r y Commission Sixth— (a) In stock of any bank or banking association incorporated under the laws of Maine; (b) in the stock of national banks in New England; (c) in the stock of rail road companies of Maine unincumbered by mortgage; (d) in the bonds, stocks, or notes of any New England railroad which has paid annual dividends of 5 per cent on capital equal to one-third of its funded debt for ten years, and in the stock or notes of four enumerated railroads; (e) in the stock of any railroad leased to a dividend-paying railroad in New England, if the lessee guarantees divi dends and interest of the lessor; (/) in the stock of other Maine corporations earning regular dividends of not less than 5 per cent a year. Seventh— (a) In loans secured by first mortgages of real estate in Maine and New Hamp shire to an amount not exceeding 60 per cent of the value of the real estate; (6) in notes with a pledge as collateral of securities in which the bank might invest, provided the market value of the collateral is equal to the amount of the loan; (c) in notes with a pledge as collateral of any savings bank deposit book issued by a Maine savings bank; (d) in notes with a pledge as collateral of such funds, bonds, notes, or stocks as in the judgment of the trustees it is for the interest of the bank to accept, to an amount not exceeding 75 per cent of their market value; (e) in loans to municipal corporations of Maine; (/) in loans secured by a mortgage of personal property, if the trustees approve; (g) in loans to corporations owning real estate in Maine and conducting their business in Maine. Ninth— There are provisions for valuing invest ments on the bank’s books, under supervision of the com missioner, who may also require reports of corporations whose securities are, or are likely to become, savings bank investments (R. S., chap. 48, 23). No savings bank may hold more than one-fifth of the capital stock of any corporation; no savings bank may 226 M a i n e S a v i n g s B a n k s invest more than io per cent of its deposits, nor exceeding $60,000 in the stock or notes of any corporation; no sav ings bank may have more than 50 per cent of its deposits in mortgages of real estate. The provisions of this para graph, however, and of the two preceding paragraphs, do not apply to real estate or other assets acquired by fore closure or judgment, or in settlements to secure debts, nor does this paragraph apply to bonds enumerated under First, Second, Third, Fourth, and Fifth of the paragraph above (R. S., chap. 48, 25). Savings banks may deposit on call in Maine banks or banking associations or national banks (R. S., chap. 48, 26). X .— U n a u t h o r i z e d B a n k i n g . Whoever, not authorized by law, advertises his busi ness as that of a savings bank, or receives deposits under that pretense, forfeits $100 for each offense (R. S., chap. 48, 52); it was so provided in the Revised Statutes, but a law of 1905 apparently changes the provision by enact ing the following: No person, firm, or corporation, ex cepting those authorized under Maine or United States law to conduct a bank or trust company business, may use as part of their name the words “ bank,” “ savings,” etc.; the persons violating this either individually or as members of a partnership or persons interested in a cor poration may be punished by fine of not more than $1,000, imprisonment for not less than sixty days nor more than one year, or both (1905, chap. 171). X I.— P e n a l t i e s . If the clerks of a savings bank do not publish the list of officers and incorporators required, and return a copy of this list to the commissioner, any clerk offending is liable to a penalty of $50 (R. S., chap. 48, 17). If the treasurer 227 N at ion a l M onetary Commission of a savings bank neglects within sixty days after the declaration of a dividend to credit it to the proper deposit account he is punished by a fine of from $100 to $200 (R. S., chap. 48, 29). If the treasurer of a savings bank fails to publish the annual report of undisturbed deposits and transmit to the commissioner he is liable to a penalty of $50 (R. S., chap. 48, 38). Whoever obstructs the commissioner in the discharge of his duty is fined not exceed ing $1,000 or imprisoned not exceeding two years (R. S., chap. 48, 43). Any officer of a savings bank who re ceives a commission on account of the transaction to which the bank is a party forfeits $100 for each offense (R. S., chap. 48, 40). Any officer of a corporation who reports falsely to the commissioner when required to report in formation with respect to its securities as savings bank investments, and any officer, employee, etc., of a savings bank or trust company who undertakes to deceive the commissioner with respect to the value of the invest ments of the bank or trust company, suffers a fine of not more than $500, imprisonment for not more than two years, or both fine and imprisonment (1909, chap. 149, amending R. S., chap. 48, 23). Violations of law by a savings bank or its officers or trustees, unless otherwise prescribed, are punishable by a fine of from $100 to $500 (R. S., chap. 48, 51). TRUST AND BANKING COMPANIES. (The above is the phraseology of the sections in chap ter 48 which apply to this sort of companies. Chapter 96, of 1907, is phrased to apply to “ trust companies;” and it gives them, in section 1, power to receive deposits.) Trust M a i n e I.— T e r m s of Companies In c o r p o r a t i o n . The proposed incorporators of a trust company apply to the examiner for a certificate that public convenience will be promoted by the establishment of the corporation. If he refuses to issue this certificate, the application may not be renewed for a year (1907, chap. 96, 3). Stock must be paid in at its par value in cash (1907, chap. 96, 6). The minimum amount of paid-in capital for trust companies is $25,000 in towns or cities of not more than 5,000; $50,000 in those from 5,000 to 10,000; $75,000 in those from 10,000 to 20,000; $100,000 in those from 20,000 to 30,000; and $150,000 in those of over 30,000. Shares must be of $100 each (1907, chap. 96, 8). The maximum of capital stock for a trust company is $1,000,000 (1907, chap. 96, 10). Every trust and banking company must set apart as a guaranty fund or surplus not less than 10 per cent of its net earnings for each year until this fund with accumu lated interest amounts to one-fourth of the capital stock (R. S., chap. 48, 81). The assets of any savings bank connected with a national or stock bank must be kept separate from the assets of the national or stock bank (R. S., chap. 48, 34). All property held in trust, and the accounts concerned with that property, must be kept separate. Trust funds and the investments or loans of them are not subject to the other liabilities of the company (1907, chap. 96, 14). II. — L iabilities and D uties o f St o c k h o l d e r s D irec t o r s . and The shareholders in a trust and banking company are individually liable for the contracts and debts of the com pany to a sum equal to the par value of their shares and 2?9 N at ion a l M onetary Commission in addition to the amount invested in them (R. S., chap. 48, 86). There must be not fewer than five directors, twothirds of whom must be residents of Maine. At the option of the stockholders the affairs of the company may be entrusted to an executive board of not less than five members, two-thirds of whom must be residents of Maine, elected from the directors (1907, chap. 96, 11). Each director must own ten shares of stock (1907, chap. 96, 13). The directors or the executive board constitute a board of investment; they keep accurate accounts of loans and investments in such form as the examiner directs (1907, chap. 96, 12). Directors who are implicated in making excessive loans to one person, firm, or corporation, or who vote for loans to directors, officers, and employees, or are implicated in the payment of such loans, are personally liable for the payment of them (1907, chap. 96, 22). III.— Su p e r v i s i o n . The commissioner referred to under Savings banks super vises trust and banking companies as well (R. S., chap. 48, 79). He determines if public convenience will be promoted by the establishment of any proposed trust company (1907, chap. 96, 3). He passes upon the pro posed establishment of branches (1907, chap. 96, 21). He passes upon such reserve depositaries as are not located in Maine (R. S., chap. 48, 80). When he finds that a corporation has made an illegal loan, he orders it reduced (1907, chap. 96, 22). He has the same control with regard to liquidating the affairs of a bank or trust company that he has over savings banks— that is to say, he must, according to the provisions of Revised Statutes, chapter 48, section 44, apply for an injunction, if upon examination he thinks 230 I Maine T r u s t C o m p a n i e s a company insolvent or in such condition that its continu ing business is hazardous for the public; he may apply if he thinks it has exceeded its powers or failed to comply with law. The court then grants whatever decree the facts warrant, including the appointment of receivers if necessary (R. S., chap. 84, 79). The commissioner licenses foreign investment corpora tions and has authority over them (R. S., chap. 84, 89 et seq.). (See also 1905, chap. 73.) reports. A preliminary report, consisting of a complete list of stockholders’ names, residences, and number of shares held by each is filed with the bank commissioner before incor poration (1907, chap. 96,6). After the election of directors the company publishes a list of them (1907, chap. 86, 11). Every trust company must report its condition at such times as the bank commissioner requires, and publish the report as he directs (1907, chap. 96, 18). At least two directors annually, when notified by the commissioner, re port on blanks furnished by him, and publish the report if he requires (1907, chap. 96, 19). Receivers of banking and trust companies must report annually, and at such times as the commissioner requires, the progress made in the set tlement of the corporation’s affairs; the commissioner gives notice of this report and furnishes blanks for it (R. S., chap. 48, 44). (For reports required of trust and banking companies for purposes of taxation see R. S., chap. 8, 64 et seq.) Annually by December 1 the commissioner reports to the governor and council the general condition of each bank ing and trust company, making such suggestions as he deems expedient (R. S., chap. 48, 79). 231 I N at ion a l M onetary Commission EXAMINATIONS. When all the capital stock of a trust company has been issued and a statement made to the commissioner, he makes a preliminary examination to assure himself that the state ment is true and that preliminaries have been complied with (1907, chap. 96, 6). At least two directors make an annual examination, the result of which they report to the commissioner (1907, chap. 96, 19). Every bank and trust company is visited by the commissioner or one of his clerks acting as deputy once a year, and oftener if he thinks it -expedient. The affairs are investigated to determine its condition, its ability to fulfill its obligations, and its com pliance with the law. The statement of the examination made by the commissioner is published in a local news paper (R. S., chap. 48, 1 and 42). IV. — R e s e r v e R e q u i r e m e n t s . Every trust and banking company having authority to receive money on deposit must keep on hand in lawful money or national-bank notes as a cash reserve an amount equal to at least 15 per cent of its deposits that are subject to withdrawal on demand or within ten days; two-thirds of this 15 per cent may be in balances payable on demand, due from national banks or trust companies of Maine, or from any trust company located in other New England States or in New York, approved by the commissioner. One-third of the 15 per cent may consist of bonds of the United States, the District of Columbia, any New England State, and certain enumerated States. When the reserve falls below the requirement no new loans may be made (R. S., chap. 48, 80). 232 M a i n e T r u s t V.— D isc o u n t and C o m p a n i e s L o a n R estrictions . No trust company may loan to a person, firm, or corpo ration an amount in excess of io per cent of its capital, surplus, and undivided profits, except on approval of a majority of the whole investment board, unless secured by collateral; nor in excess of 25 per cent, except on the same approval and secured by collateral which in the judg ment of a majority of the investment board is of value equal to the excess of the loan above the 25 per cent. The discount of bills of exchange and of commercial paper owned by the person actually negotiating it is not con sidered as money borrowed (1907, chap. 96, 16). No trust company may loan to its directors, officers, or employees, or make a loan on which an officer, director, or employee is surety, or to any firm in which an officer, director, or employee is a member, or to any person or on the indorsement of any person who is a partner of an officer, director, or employee, or to any corporation in the man agement of which a director, employee, or officer is inter ested, until the directors or the executive committee have by a majority vote, exclusive of the director interested, approved. The provisions of this paragraph do not pre vent a trust company from giving to a person, firm, or corporation a line of credit for a period of six months to an amount not exceeding 25 per cent of capital, surplus, and undivided profits, subject to the restrictions as to per centage of entire board and right of interested persons to vote contained in this paragraph and the paragraph next preceding (1907, chap. 96,17, amending R. S., chap. 48,82). Trust and banking companies must not loan on the security of their own stock unless it is necessary to prevent loss upon previous debt, in which case the stock must be gotten rid of within a reasonable time (R. S., chap. 48, 83). 233 N at i on a l M on et a r y Commission VI. — In v e s t m e n t s . The board of directors or the executive board of every trust company constitutes the board of investment. They keep a record of all loans and investments,indicating such particulars as the bank examiner directs (1907, chap. 96, 12). Trust and banking companies must not hold shares of their own stock unless it is necessary to prevent loss on a previous debt, in which case the stock must be disposed of within a reasonable time (R. S., chap. 48, 83). Every trust company may hold “ such estate, real, per sonal, and mixed as may be obtained by the investment of its capital stock” (1907, chap. 96, 1). V III. — B r a n c h e s . No trust company may establish a branch in any city or town other than that in which the parent institution is located until it has received a warrant to do so from the bank commissioner, who is to issue this warrant only if he is satisfied that public convenience and advantage will be promoted by the establishment of a branch, and that the unimpaired capital of the parent institution is sufficient to comply with the provisions for minimum capital, reck oning the aggregate population of the home city and of all cities and towns in which the company is authorized to establish branches, including the one now proposed. No trust company may establish a branch except in its own or in an adjoining county (1907, chap. 96, 21). X . — U n a u t h o r i z e d T r u s t C o m p a n y B usiness . No person, firm, or corporation excepting those duly authorized under Maine or United States law to conduct a bank or trust company business may use as part of their name the words “ bank,” “ savings,” “ savings depart ment,” “ trust,” “ trust and banking company,” etc. 234 Mai ne Trust Companies Anyone violating this rule either individually or as a member of a firm or as one interested in a corporation, is liable to a fine not exceeding $1,000, imprisonment not less than sixty days nor more than one year, or both (1905, chap. 171). No person may, as a private banker not specially authorized by the legislature, transact any banking business except that of discount and deposit; the penalty for this with other offenses enumerated in the section is $1,000 for each offense (R. S., chap. 48, 2). XI.— P enalties . Refusal on the part of officers, agents, etc., of a trust and banking company to be examined, or any obstruction of examination, entails a fine of not more than $1,000 or imprisonment not exceeding two years (R. S., chap. 48, 43). Directors, officers, and employees who are impli cated in granting a loan in excess of the amount allowed to be made to any person, firm, or corporation, and directors who vote for a loan in violation of the provisions against loans to officers, directors, and employees, or who use money or are implicated in the payment of such a loan, are guilty of a misdemeanor (1907, chap. 96, 22). See Savings Banks, XI, for the penalty for undertaking to deceive the bank commissioner as to the value of invest ments (1909, chap. 149). 235 I MARYLAND. The Maryland statutes are in the Public General Laws, published in 1904, and in the acts of 1906 and of 1908. In the Public Laws, Article X I is entitled “ Banks;” and Article X X III, “ Corporations,” contains certain sec tions (318-321) which deal with savings institutions; others (339-342) which prescribe the conditions on which trust, surety, and fidelity companies may become surety on official bonds; and others (94-107, slightly amended in 1908) which deal with safe deposit, trust, guaranty, loan, and fidelity companies. The article on banking is incomplete and much of it not pertinent to the matters covered by the digest. It is not always clear to what sorts of banking corporations each section applies. The language is in one section “ every bank and' incorporated institution in this State which is in the habit of receiving deposits and declaring dividends” (5), in another, “ every banking association authorized by its charter to do a bank ing business” (12), in others clearly directed to savings banks (8, etc.). What makes it seem clear that the article for the most part is meant to apply to all corporations doing a banking business is the language of section 37, which provides that certain named sections of the article shall not apply to savings banks having no capital stock, nor to corporations authorized to do a trust, fidelity, 236 S t a t e M a r y l a n d B a n k s surety, or deposit business. It is likely, therefore, that all the provisions given in the digest under “ Banks ” apply to savings banks and trust companies, except as overridden by provisions digested under “ Savings banks ” and under ‘‘ Trust companies. ’ ’ The provisions for savings banks and trust companies are so meager that it has not been thought worth while to separate them completely under the headings used generally in the digest. Citations which are simply numbers in parentheses are to sections in Arti cle XI. BANKS. I.— T erms of I ncorporation. Every bank in Baltimore must have a capital of not less than $300,000 nor more than $2,000,000, divided into shares of $100 each. Not less than $300,000 must be fully paid in lawful money of the United States before the cor poration can do business (21). Every bank located out side Baltimore must have a capital of not less than $50,000, nor more than $500,000, divided into shares of $100 each. Not until $50,000 has been paid in lawful money of the United States may the bank begin business (22). Every stockholder is entitled to one vote for every share he holds up to ten; to one vote for every additional two shares up to one hundred; and to one vote for every addi tional five shares above one hundred. Shares must have been held for four months before the election to entitle the shareholders to vote (25, art. 1). Half-yearly divi dends are made to stockholders out of net profits (25, art. 9). Eimitations on the amounts of debt which a bank may owe are stated under V, infra. 237 National Monetary II.— L iabilities and Commi ssi on D uties of Stockholders D irectors. and The stockholders in every “ banking corporation” are liable “ to the amount of their respective share or shares of stock in such banking institution for all its debts and liabilities upon note, bill, or otherwise” (29, and constitu tion, Art. I ll, sec. 39). There must be not fewer than five nor more than seven directors, each a stockholder and a citizen of Maryland (24, and 25, art. 2). No director may be at the same time director of any other bank in Maryland. Once a year the directors lay before the stockholders a statement of debts remaining unpaid, and surplus profits (25, art. 3). If the debts of a bank become greater than its capital, the directors under whose administration the excess is created are liable personally for the excess (25, art. 7). If the directors knowingly declare a dividend which impairs the capital stock the directors implicated are individually liable to the corporation for the proportion of capital so divided (25, art. 9). Directors receive only such pay as is voted at a stockholders’ meeting (25, art. 10). III.— S upervision . There seems to be no official charged with the duty of superintending banks. The treasurer of the State appoints an examiner for the purpose merely of making examina tions (33). When the treasurer of the State is satisfied that “ any of the associations mentioned in this article” (this language, broad as it is, does not, of course, include national banks, although they are mentioned in the arti cle) has failed to comply with the provisions of the article, he declares, with the approval of the governor, that the charter of the corporation is forfeited, and, with the assent of the governor, appoints a receiver who acts sub ject to the control of the local court (34). 238 M a r y l a n d — S t a t e B a n k s REPORTS. Every bank reports to the treasurer of the State not less than five times each year according to the form pre scribed by the treasurer. Each report shows the resources and liabilities of the bank at the close of business on a past day specified by the treasurer, to whom it is trans mitted within five days of the receipt of the request. A summary of the report is published in a local newspaper. The treasurer may call for special reports when in his judgment necessary (12). A further provision of the same article requires that the treasurer of the State be furnished with a statement of amount of capital; amount of debts due to the corporation and from it, speci fying those due from and to other banks; deposits; cash on hand, specifying coin and notes of other banks; value of real estate held; and amount and value of stocks held— showing these details at the close of business on the first Monday of January and the first Monday of July. These statements are required to be published (25, art. 4). (For reports required for purposes of taxation see Public General Taws, Art. E X X X I, sec. 156 et seq.) Banks must cause to be published in a local newspaper once a week for three weeks in September of each year a list of the deposits and dividends unclaimed for three years or more, with the names of the depositors so credited, and amounts (5). EXAMINATIONS. The treasurer, with the approval of the governor, appoints an examiner to visit “ each and every association mentioned in this article, doing business in this State (excepting state banks which may be members of the Baltimore clearing association, and as such required reg ularly to submit to examination by a national bank 239 n et a r y mission examiner),” at least once a year, or oftener if in his judgment necessary (33). V.— D iscount and L oan R estrictions. No loan may be made by a bank to Maryland or the United States to an amount exceeding $50,000, or to any other State of the Union or to a foreign state to any amount whatever (25, art. 17). The total amount of debts which a bank may at any one time owe must not exceed the amount of paid in capital, but money deposited in the bank “ for safe keep ing” is not for this purpose considered as debts of the bank (25, art. 7). VI.— I nvestments. A bank may own only such real estate as is requisite for the convenient transaction of its business, and such as has been mortgaged to it, conveyed to it in satisfaction of debts, or purchased by it at sales on judgments ob tained for such debts. Real estate thus purchased at judgment sale must not be held for longer than three years, if judicious sale can be made in the three years (25, art. 13). A bank must not trade in anything except commercial paper and bullion, or the produce of its lands or of chat tels taken as security, conveyed to it to satisfy debts, or purchased at judicial sales in enforcing debts. A bank, however, may make temporary investments of its funds by purchase of the public debt of the United States, of any State, of Baltimore, or of the county or city where the bank is located (25, art. 14). X I.— P enalties . If any bank fails to publish unclaimed deposits its president is liable to a fine of from $50 to $100 (7). 240 M a r y l a n d Savings Banks SAVINGS BANKS. TERMS OF INCORPORATION. There may be savings banks without capital stock, for certain sections of Article X I are expressly made inap plicable to “ savings banks having no capital stock” (37); these sections are 12, the provision for at least five reports every year; 33, the provision for examinations at least annually by an examiner appointed by the treasurer; 34, the provision for voiding charters and appointing re ceivers when banks violate the law; and 35 and 36, pro visions exempting banks from other examinations, and providing a scale of fees for examinations. There may also be savings banks with capital stock, however, for it is provided that the capital stock of any savings bank incorporated under the general corporation law must not exceed $1,000,000 (Public General Laws, Art. X X III, sec. 321). A section just preceding the one cited requires directors to make “ such dividends” to the depositors at least every six months out of the interest and profits of the institution as will not impair its deposits or credit (Public General Laws, Art. X X III, sec. 319); the use of “ dividends” in this section is odd if the corporation con templated is one in which there are stockholders. REPORTS AND EXAMINATIONS. The provisions for publication of unclaimed deposits do not apply “ to savings banks nor to institutions which receive deposits and compound the interest and dividends as they become due ” (5); that is because the statute pro vides especially for that sort of report by savings banks. In October of every second year the treasurer of each savings bank delivers to the comptroller a written state ment containing the name of every depositor, with the amount standing to his credit, who has not deposited or S. D oc. 3S3, 61-2-----16 oAi X N at i on a l M on et a r y Commi ssi on withdrawn money for twenty years. This does not apply to persons known by the treasurer of the savings bank to be living. The comptroller inserts these statements in his next report to the legislature (8). These provisions for reports of unclaimed deposits are in the article on banks. In the article on corporations the savings bank sections include a provision requiring directors to appoint every twelve months five competent members of the cor poration as a committee of examination, who after making an examination publish a report of it in a local newspaper (Public General Laws, Art. X X III, sec. 319). Reports of savings banks for purposes of taxation are dealt with in Public General Laws, Article L X X X I, section 89. lo an s. A provision of the savings bank sections in the article on corporations forbids loans to be made to an officer or director (Public General Laws, Art. X X III, sec. 318). PENALTIES. A special savings bank penalty provided for in the article on banks is that of $500 for each failure of the treasurer of a savings bank to report unclaimed de posits (9). TRUST COMPANIES. (The fact that section 37 of Article X I provides that certain sections do not apply to corporations authorized by their charters to transact a trust, fidelity, surety, or deposit business implies that the other sections of the article do; and in some cases the terms of the individual sections may include trust companies— “ every bank and incorporated institution in this State which is in the habit of receiving deposits,” for example (5). The provisions which are expressly withheld from operating on trust 242 Mary land Trust Companies companies are the same that were given under savings banks— five reports a year (12); annual examinations (33); receivership proceedings for failure to comply with the provisions of the article (34), etc. The matters covered by sections 339-342 of Article X X III, prescribing conditions on which trust, surety, and fidelity companies may become surety on official bonds, with particular reference to for eign corporations, have not been included in the digest. Sections 94-107, legislating for trust companies upon those subjects with respect to which trust companies are ex empted from the provisions of the banking chapter, are digested below; these sections are generally made appli cable to every “ safe deposit, trust, guaranty, loan, and fidelity company. ” ) s t o c k h o l d e r ’s l ia b il it y . The stockholders in every “ safe deposit, trust, and loan company” are personally liable for the contracts, debts, and engagements of the corporation to the amount of their stock at par, in addition to the amount invested in the stock (Public General Laws, Art. X X III, sec. 104, amd. by 1908, chap. 153). SUPERVISION. Trust companies which do a “ security or guarantee business” must deposit securities worth $100,000 with the state treasurer in trust for the holders of the company’s guarantees; other trust companies deposit securities worth 15 per cent of the corporation’s paid-up capital, and not less than $30,000, in trust for depositors and creditors. The securities must be of certain sorts (Public General Laws, Art. X X III, secs. 98 and 106). Doing business without having made the required deposit entails a $100 a day forfeit (Public General Laws, Art. X X III, sec. 99, amd. by 1908, chap. 385). 243 National Monetary Commission If it appears to the treasurer from an examination that a trust company has violated its charter or the law, or is conducting its business unsafely, he orders a discontin uance of the illegal or unsafe practices; if any corporation fails to obey an order or refuses to report, or if it appears to the treasurer inexpedient for the corporation to con tinue business, he communicates with the attorney-gen eral, who institutes proceedings (Public General Laws, Art. X X III, sec. 97). REPORTS. Every trust company which receives money on deposit or assumes any obligation in Maryland must report semi annually its condition at the close of business on the last days of June and December, showing amount loaned on bond and mortgage, with a list of the bonds and mort gages not previously reported, payments on bonds and mortgages previously reported, particulars with respect to stock investments, amount loaned on pledge of securi ties with particulars, real estate investments, cash on hand and on deposit with names of depositaries and amount on deposit in each, liabilities of the corporation, amount due depositors, and any other information required by the treasurer. The treasurer may require additional reports. He summarizes the condition of each trust com pany which reports or is examined, in a report made to the legislature at each regular session (Public General Laws, Art. X X III, secs. 94 and 103). Reports for pur poses of assessment for taxation are made in accordance with Public General Laws, Article L X X X I, section 165. EXAMINATIONS. The treasurer, either personally or by an appointee, examines each trust company annually, to determine the condition and resources of the corporation, the conduct of 244 Mary land Trust Companies its affairs, the prudence of its management, its invest ments, the security afforded its obligees, and its compli ance with its charter and the law (Public General Laws, Art. X X III, secs. 95 and 96). LOANS, DEPOSITS, AND INVESTMENTS. The money held on deposit, or in trust, or the amount loaned, must never exceed ten times paid-up capital and surplus, nor may the outstanding loans ever exceed that amount; this does not apply to court deposits (Public General Laws, Art. X X III, sec. 100). Among the items required to be reported are: Loans on bonds and mortgages, stock investments, loans “ upon the pledge of securities of whatsoever kind,” and real estate investments (Public General Laws, Art. X X III, sec. 94). 343 MASSACHUSETTS. The Massachusetts Revised Laws of 1902 contain three chapters on the topics with which the digest is concerned: 113, Of savings banks and institutions for savings; 115, Of banks and banking (a chapter of which much relates to circulation, and much, with reference to supervision especially, seems superseded by chapter 590 of 1908, which, though a savings-bank statute, contains sections, 2-15, of broad enough application to include banks); and 116, Of trust companies; besides chapters dealing with cooperative banks, etc. The material from chapter 115 (that is to say, practically the whole digest under “ Banks ” ) is characterized by the local banking officials, in a letter from Mr. Charles L. Burrill, secretary, office of the bank commissioner, as “ absolutely obsolete and of no use;” but it is inserted in the digest because it has never been repealed. Since the date of Mr. BurriH’s letter a statute of 1909 has in effect forbidden banking by state banks and even more positively reduced chapter 115 to the condition of a dead letter, still, however, without actu ally repealing it; this new statute amends a section of chapter 590 of 1908 by adding a provision that no person, firm, or corporation, except savings banks, trust companies, and cooperative banks incorporated under Massachusetts law, and foreign banking corporations 246 State M assachusetts Banks which were doing business and subject to the commis sioner’s supervision on June i, 1906, may “ hereafter transact business under any name or title which contains the word ‘ bank’ or ‘ banking,’ as descriptive of said business” (1909, chap. 491, 4, amending 1908, chap. 590, 16). Under this statute, even though it does not com pletely repeal the legislation on state banks, the interest in the material in the digest under “ Banks” (except such of it as applies to other institutions— see III, IX, etc.— provisions, chiefly, of chapter 590 of 1908) becomes academic. A supplement to the Revised Laws carries amendments and additions through the session of 1906, and the later legislation is in the acts of 1907, 1908, and 1909. Chapter 590 of 1908 repeals chapter 113 of the Revised Laws, amendments to it, and certain other acts, and provides a complete new savings bank chapter. The references to the Revised Laws consist of the letters, R. L., then the chapter, then the section or sections in the chapter which are cited for the statement just made; the references to the supplement and the 1907, 1908, and 1909 laws are by year, chapter, and section. BANKS. I.— T erms of I ncorporation. The business contemplated for banks under chapter 115 is that of receiving deposits, loaning, and discount ing “ on banking principles,” and issuing circulating notes (R. L., chap. 115, 30). lh e capital stock of every bank must be not less than $100,000 nor more than $1,000,000, paid in in gold or ■247 National Monetary Commission silver money, one-half before the bank goes into opera tion, the remainder within the ensuing year (R. L., chap. 115, 2). No bank may begin business until the half of its capital which is paid in has been examined and found complete by three commissioners appointed by the gov ernor (R. L., chap. 115, 3). No stock of a bank may be transferred until the whole capital is paid in (R. L., chap. 115, 5). No person may hold more than one-half the capital of a bank exclusive of stock he holds as collateral (R. L., chap. 115, 6). In addition to the capital to which a bank is entitled, the State may subscribe an amount equal to 50 per cent of the capital authorized, in which case the State takes its dividends (R. L., chap. 115, 7). Stockholders are entitled to one vote for one share, and for every two additional shares one vote more, but no stockholder may have more than ten votes (R. I,., chap. 115, 10). Dividends may be declared out of net profits every six months (R. L., chap. 115, 30). II.— L iabilities and Duties oe Stockholders D irectors. and Apart from provision for unlimited liability on circu lating notes (R. L., chap. 115, 80), the only special pro vision for bank stockholders’ liability seems to be that if the capital stock is depleted by the directors’ mismanage ment those who are stockholders at the time are person ally liable, except that no stockholder is liable to pay a sum exceeding the amount of stock actually held by him at the time (R. L., chap. 115, 85). Corporations may, it seems, be stockholders, for these liabilities are, in terms, put on corporate shareholders (R. L., chap. 115, 84 and 87). There must be from seven to twelve directors, and for a bank with a capital of $500,000 or more there must be at least nine (R. L., chap. 115, 17). Each director 248 State Massachusetts Banks must hold at least five shares of stock and be a citizen of Massachusetts; no one may be director in two banks at the same time. A majority of directors must reside or have their place of business in the county where the bank is established, or within io miles of the bank (R. T., chap. 115, 18). The legislature may appoint extra directors in proportion to capital which the State subscribes (R. L., chap. 115, 20). The cashier of a bank may not be a director (R. L., chap. 115, 29). The directors are required to keep a book for record of discounts and proceedings at meetings (R. L., chap. 115, 23). In case a bank becomes indebted beyond twice the amount of its paid-in capital, exclusive of sums due on account of deposits not bearing interest, debts between banks, etc., the directors under whose administration the bank becomes thus illegally in debted are personally liable for the excess to creditors of the bank (R. L., chap. 115, 35). III.— Supervision . The recent savings bank act (1908, chap. 590) provides for officers to supervise all sorts of banking institutions. There is a bank commissioner appointed for a three-year term, who must not be interested in a bank, corporation, or business that requires his supervision. He may engage in no other occupation. His salary is $5,000 a year (1908, chap. 590, 2). Information obtained by the com missioner and his subordinates from examinations and reports may be divulged only to officers whose duties so require (1908, chap. 590, 5). The commissioner, the treasurer and receiver general, and the commissioner of corporations constitute a board of bank incorporation (1908, chap. 590, 4). Among their duties they exercise supervision over a recently authorized form of coop erative corporation, called a “ credit union” (1909, chap. 419). The commissioner may prescribe the manner in 249 N at ion a l M on et a r y Commission which the books and accounts of any bank are kept and the extent to which they must be audited (1908, chap. 590, 12). If, in the opinion of the commissioner, a savings bank, trust company, or other person, partnership, or corpora tion doing a banking business, or the officers or trustees of such institution, have violated any law, he reports to the attorney-general, who institutes a prosecution for the vio lation. If, in the opinion of the commissioner, such a bank is conducting its business unsafely, he directs the practices to be discontinued; and if the bank fails to com ply or if, in the opinion of the commissioner, a trustee or officer of the bank has abused his trust, the commissioner must, after giving a hearing to the directors of the insti tution, either report to the shareholders or, with the con sent of certain officials, publish whatever facts public inter est seems to him to require (1908, chap. 590, 8). If, upon examination, the bank seems insolvent or in such condition as to render its continuance in business hazardous, the com missioner applies to court to restrain the bank from doing business. If the bank seems to have exceeded its powers or failed to comply with law, he may apply for such an in junction. As soon as he has applied to the court the com missioner takes possession of the affairs of the bank, pend ing action by the court. The court may appoint receivers (1908, chap. 590, 9). During a receivership, if the com missioner thinks a receiver has violated his duty he pre sents the facts to the court (1908, chap. 590, 11). Any committee appointed by the legislature may exam ine the affairs of any bank. If, upon examination, it is de termined by the legislature that the bank has exceeded its powers or failed to comply with law, its franchises may be declared forfeited (R. L., chap. 115, 108). One-eighth of the stockholders in number or interest in a bank may choose a committee to investigate the bank’s affairs. If, 250 Massachusetts — State Banks upon examination, this committee considers the bank in solvent or in a condition to render further business hazard ous, or thinks that the bank has exceeded its powers or failed to comply with law, the committee reports to a court, which may enjoin further business by the bank and appoint receivers (R. L-, chap. 115, no). If the court is satisfied from certificate of the auditor that a bank is in solvent or in a hazardous condition, or has exceeded its powers, it may proceed as just explained (R. L., chap. 115, i n ) . If the commissioner thinks a bank or its directors or cashier has violated the law, he reports to the secretary of Massachusetts, who notifies the attorney-general to institute a prosecution (R. L., chap. 115, 114; and 1908, chap. 590, 5, amd. by 1909, chap. 491, 3). The provisions of this paragraph are those for supervision contained in the Revised Taws; they have not been expressly re pealed, though the provisions (given in the preceding paragraph) contained in the act of 1908 seem designed to supersede them. For supervision of ticket-selling offices that accept de posits, see 1908, chapter 493; 1907, chapter 377; 1906, chapter 408; and 1905, chapter 428. REPORTS. Banks are within the provision of the statute of 1908 that, “ in addition to the reports required by law to be made,” they must make such other statements to the com missioner as he may require (1908, chap. 590, 1 and 13). The provisions in the Revised Laws with regard to reports by banks are the following: Banks doing busi ness in certain districts of Boston must transmit every Monday morning to the secretary of the Commonwealth a statement of amount of capital stock; average amounts due to and from other banks; deposits; loans; discounts; specie and lawful money of the United States deposited in 2 51 V National M on e t a r y Commission the bank of deposit of the Boston clearing house; this statement to be based on the condition of the bank on each day of the preceding week (R. chap. 115, 99). Banks in other less central districts of Boston, and banks outside of Boston, must, on the first Monday of each month, transmit to the secretary statements generally similar. This class of banks base their reports on their condition on each Saturday of the preceding month (R. T., chap. 115, 100). An abstract of weekly and monthly reports must be published in Boston papers by the secre tary (R. L., chap. 115, 102). The secretary must furnish blank forms for these reports (R. L., chap. 115, 103). The cashier of every bank must annually make a return of the condition of the bank on the afternoon of any Saturday named by the governor. The report must be sent to the secretary of the Commonwealth within fifteen days. The items are given in the statute (R. L., chap. 115, 104). The secretary after receiving the annual re turns must cause an abstract to be printed, sending a copy to each bank and one to the legislature (R. L., chap. 115, 107). Receivers must make annual report to the legis lature showing their progress (R. L., chap. 115, 118). The statute of 1908 provides that the commissioner must annually make a statement to the legislature of the condition of all incorporated banks, including those in the hands of receivers, from which he has received a report during the preceding year, together with such other infor mation of the affairs of the banks as public interest may require, with suggestions relative to the general conduct and condition of the banks (1908, chap. 590, 15). EXAMINATIONS. The commissioner or a subordinate, at least once a year and whenever he considers it expedient, visits every bank in order to ascertain its condition, its ability to fulfill its 252 State M assachusetts Banks obligations, and its compliance with law. The informa tion obtained by the commissioner is open only to the inspection of officials in the course of their duty (1908, chap. 590, 5). Upon application by five or more officers, trustees, creditors, or depositors the commissioner must examine any bank (1908, chap. 590, 7). In case banks are in the hands of receivers, the commissioner or a sub ordinate examines them at least once a year, and oftener if he considers it expedient. He examines the reports made by receivers to the appointing court, and presents to the court any violation of duty by a receiver which he discovers (1908, chap. 590, 11). In the sections of the Revised Laws given above before Reports, are provisions for various examinations: A com mittee of the legislature may examine (R. L., chap. 115, 108). A committee chosen by one-eighth of the stock holders in number or interest in a bank may examine (R. L., chap. 115, no). The commissioner must visit banks; he, as successor to the board of commissioners of savings banks, is given such powers over banks as certain repealed savings banks statutes gave that board over savings banks, and must report to the secretary of Massa chusetts violations of law by a bank or its directors or cashier (R. L., chap. 115, 112, 113, and 115; also 1908, chap. 590, 5, amd. by 1909, chap. 491, 3). Three com missioners appointed by the governor examine as a pre liminary, to make sure the capital is paid in in coin, etc. (R. L., chap. 115, 3). IV.— R eserve R equirements. Every bank must keep an amount of specie or lawful money of the United States equal to 15 per cent of its liabilities “ for circulation and deposits.” When from weekly or monthly reports it appears that its average re serve is less than that amount, no new loans may be made. 253 — National Monetary Commission Lawful money of the United States or specie specially deposited by a bank in Boston in the bank of deposit of the Boston clearing house, and balances payable on de mand from certain other banks, are a part of reserve (R. L., chap. 1 15, 50). V.— D iscount and L oan R estrictions. No loan may be made to a stockholder until the full amount of his shares is paid in (R. L., chap. 115, 5). No bank may have owing to it on loans made on pledge of its own stock more than one-half its paid in capital (R. L., chap. 115, 31); stock taken as security must be sold within six months after it becomes the bank’s property (R. L-, chap. 115, 32). The debts of a bank must not exceed twice its paid in capital exclusive of sums due on account of deposits not bearing interest; there must never be due to a bank more than double its paid in capital (R. L-, chap. 115, 33). Debts due from one bank to another, however, and loans directly made by a bank to Massa chusetts or the United States, etc., are for this purpose not debts due (R. L., chap. 115, 34). No bank may make a loan or discount unless it is payable by the bank on demand in specie or in bills which the bank is author ized to pay out (R. L., chap. 115, 51). Without a special vote of stockholders, no officer of a bank may be liable to it to an amount greater than 8 per cent of its paid in capital, or greater than $40,000. The whole board of directors must not be liable to an amount exceeding 30 per cent of the capital (R. L., chap. 115, 53). No bank may loan or discount to a manufacturing corporation any financial officer of which is also cashier of the bank (R. L., chap. 115, 54). Upon requisition of the legisla ture any bank must loan to the State an amount not more than 5 per cent of its capital, to be repaid in five annual installments or in a shorter period. The total of 254 Massachusetts State Banks such loans demanded by the State must not at any one time exceed one-tenth of the capital of the bank (R. L,., chap. 115, 55). Neither the cashier nor any officer under him may borrow of the bank (R. T., chap. 115, 29). No bank may issue notes, etc., payable “ at a future day certain or with interest,” except for money borrowed of the State, or from a domestic savings bank, etc.; banks may pay interest on debts due other banks and due municipalities, however (R. L,., chap. 115, 40). VI.— I nvestments . A bank may hold real estate requisite for the convenient transaction of its business, not exceeding, however, 12 per cent of the amount of its capital, exclusive of real estate held on mortgage, received on execution, or taken to se cure or satisfy debts (R. T., chap. 115, 39). Any bank is subject to a penalty if it holds its own stock, except as security for debts, or neglects to sell stock received as se curity within six months after it has become the property of the bank (R. T., chap. 115, 32). No bank may engage in trade or commerce, but it may sell property it holds in pledge (R. L., chap. 115, 38). V III.— B ranches. • These are forbidden (R. T., chap. 115, 30). IX .— Occupation of the Same B uilding. No savings bank may occupy the same office or suite of offices with a national bank, trust company, or other bank of discount, nor occupy any office directly con nected by means of doors, etc., with the office of a na tional bank, trust company, or other bank of discount (1908, chap. 590, 19). 255 National Monetary Commission X .— U nauthorized B anking . See introductory paragraph. Late legislation makes banking by state banks practically an impossibility. No person, firm, or corporation, except savings banks, trust companies, cooperative banks, and certain foreign banks that were doing business in the State in 1906, may do business under a name which contains “ bank” or “ bank ing” (1908, chap. 590, 16, amd. by 1909, chap. 491, 4). X I.— P enalties . Whoever obstructs an examiner in the course of his duty is punished by a fine of not more than $1,000, or imprisonment for not more than one year (1908, chap. 590, 6). An officer or employee of a bank who fails, when required by the commissioner, to report, or, when so re quired, reports falsely, is punished by fine of not more than $1,000, by imprisonment for not more than three years, or by both (1908, chap. 590, 14). Occupation by a savings bank of offices with another bank is forbidden; “ any such corporation” violating that provision is pun ished by a fine of not more than $500— this penalty, though probably only for the savings bank, may include the other bank Miose office is shared (1908, chap. 590, 1 and 19). The president, vice-president, or treasurer of a savings bank who holds the same offices or that of cashier, in a national bank or trust company or any other bank of discount, suffers a fine of not more than $500 (1908, chap. 590, 20). If the cashier is director of a bank, or if he or an officer under him borrow of the bank, the bank forfeits $500 for each offense (R. L., chap. 195, 29). A bank which holds its own stock, except as security for debts, or neglects to sell stock received as security within six months after it has become the bank’s own property, forfeits $500 for 256 each offense (R. L., chap. 115, 32). If a bank makes a loan or discount of which the amount is not payable by the bank on demand in currency, it forfeits $500 for each offense (R. L., chap. 115,51). Exceeding the legal amount of loans to officers is punishable by a $500 fine (R. L., chap. 115, 53). Failure of a Boston bank to furnish the weekly report required by the Revised Laws entails a pen alty of $500; failure by a suburban bank, or one outside Boston altogether, to furnish the monthly report, $25; if the neglect continues ten days from the first Monday of any month, there is a forfeit of $500 (R. L., chap. 115, 101). Failure to report to the secretary of Massachusetts with respect to the Saturday designated by the governor entails a forfeiture of $100 for each day’s neglect (R. L-, chap. 115, 105). Obstructing an examination by a com mittee of the legislature is punishable by fine of not more than $10,000 or imprisonment for not more than three years (R. L., chap. 115, 109). Receivers who fail to report annually to the legislature forfeit $20 for each day’s neg lect (R. L., chap. 115, 118). A bank whose directors fail to keep a record of discounts and of proceedings at meet ings forfeits $500 for each neglect (R. L-, chap. 115, 23). Failure to furnish a loan demanded by the State entails a penalty of 2 per cent of the amount per month (R. L., chap. 115, 58). SAVINGS BANKS. I.— T e r m s of In c o r p o r a t i o n . Savings banks are evidently institutions without capital stock. Members of savings banks must be citizens of Massachusetts; failure to attend two consecutive annual meetings is ground for forfeiture of membership (1908, chap. 590, 27). Before the board of bank incorporation authorizes the organization of any savings bank they S.Doc. 353, 6 1 - s ----- J7 2157 N a t to n a l M on e t a r y Commission must assure themselves that public convenience will be promoted by the establishment of the savings bank (1908, chap. 590, 23). Before making a semiannual dividend savings banks set apart from net profits as a guaranty fund not less than one-eighth nor more than one-fourth of 1 per cent of total deposits until the fund amounts to 5 per cent of deposits, beyond which point it must not be increased (1908, chap. 590, 59). The income of the savings bank, after expenses and contributions to guaranty fund have been deducted, is divided among depositors in the follow ing manner: An ordinary dividend is declared every six months out of earnings for that period. There may be appropriated, from earnings left undivided after the declaration of a dividend, an amount sufficient to declare an ordinary dividend; but the total dividends declared during any twelve months must not exceed the income during the period without written approval of the com missioner. Ordinary dividends must not exceed 2^/2 per cent on amounts which have been on deposit for six months, or 1% per cent on amounts which have been on deposit for three months. Savings banks need not pay a dividend on less than $3 or on fractional parts of a dollar (1908, chap. 590, 60). Before the meeting called to declare a dividend the auditing committee must examine the affairs of the savings bank for the last six months to determine net earnings (1908, chap. 590, 61). If the net income for the preceding six months, above the amount set apart for guaranty fund, does not amount to 1 1/ 2 per cent of deposits, no dividend is declared except such as the commissioner approves (1908, chap. 590, 62). Whenever the guaranty fund and undivided net profits together amount to io>^ per cent of the deposits at the end of a divi dend period, an extra dividend of not less than one-fourth of 1 per cent may be declared on all amounts which have 258 Savings M as s a c h u s e t t s Banks been on deposit for six months, or not less than one-eighth of i per cent on all amounts that have been on deposit for three months; in no case may an extra dividend be paid which reduces the guaranty fund and undivided profits together to less than io per cent of deposits (1908, chap. 590, 63). If necessary to pay depositors, a savings bank, by vote of its board of investment, may borrow money, pledging any of its securities (1908, chap. 590, 67). Chapter 561 of 1907 provides elaborately for the institu tion of insurance departments in savings banks. II.— L iabilities and Duties of T rustees. There must be a board of investment of not less than three, and a board of not less than eleven trustees. No person may hold office in two savings banks at the same time. Only one of the persons occupying the office of president, treasurer, or clerk may be at the same time a member of the board of investment (1908, chap. 590, 28). Trustees must meet regularly at least once in three months to receive the report of the treasurer, etc. A statement, in the form of a trial balance, is prepared at each regular meeting showing the condition of the corporation (1908, chap. 590, 30). The trustees appoint an auditing com mittee of not less than two of their number, who cause a thorough audit of the books, securities, and cash of the savings bank to be made every twelve months (1908, chap. 590, 32). Failure of a trustee to attend regular meetings and perform the duties of trustee for six consecutive months, and bankruptcy, etc., are ground for forfeiture of office (1908, chap. 590, 34). At least once in each fiscal year an accurate trial balance must be made of the deposi tors’ ledger (1908, chap. 590, 42). Any member of the board of investment or officer charged with the duty of investing the savings bank’s funds who becomes indebted N at i on a l M one t ary Commission to the savings bank or becomes the owner of real estate on which the savings bank holds a mortgage vacates his office (1908, chap. 590, 44). Immediately before meet ings called to declare dividends, the auditing committee must examine the affairs for the preceding six months and report to the trustees the estimated net earnings (1908, chap. 590, 61). III.— Supervision . The bank commissioner and the board of bank incor poration, whose appointment is discussed under III, in Banks, exert their powers under the savings-bank act, although their authority extends over all banking institutions. If, in the opinion of the commissioner, a savings bank has violated the law, he reports the fact to the attorney-general, who prosecutes. If, in the opinion of the commissioner, a savings bank is conducting its business in an unsafe or unauthorized manner, and if it fails to comply with his order to discontinue the prac tices, or if a trustee or officer has abused his trust, the commissioner, in the case of a savings bank, must report the facts to the attorney-general, who may after a hear ing institute proceedings for removal of trustees or officers, or such other proceedings as the case may require (1908, chap. 590, 8). See Banks, III, for the general provisions requiring the commissioner to institute proceedings against insolvent banks, to take possession of those banks, and to sue for a receiver (1908, chap. 590, 9). He may prescribe rules for bookkeeping, audits, etc. (1908, chap. 590, 12). The board of bank incorporation has authority to grant or withhold the certificate that public convenience will be promoted by the establishment of a proposed savings bank; this certificate is a prerequisite to incorporation (1908, chap. 590, 23). Every three years deposit books 260 M as s a c h u s etts Savings Banks are called in for verification under rules approved by the commissioner (1908, chap. 590, 43). The commissioner authorizes a declaration of dividends under certain ex traordinary circumstances (1908, chap. 590, 62); must be notified when a savings bank borrows, pledging securities (1908, chap. 590, 67); and performs certain duties with respect to investments, including the approval of invest ment in bank building. See VI, infra (1908, chap. 590, 68 ). Provision is made in the statutes for the disposal of un claimed deposits (1908, chap. 590, 55 et seq.). REPORTS. The clerk of every savings bank publishes in a local newspapers list of the members and the new officers, after every election. This list is included in the annual report of savings banks to the commissioner (1908, chap. 590, 29). The trustees publish semiannually in a local newspaper the names of the officers of the corporation charged with the investing of its funds (1908, chap. 590, 30). The regular reports are annual. Within twenty days after the last business day of October the treasurer reports to the com missioner in a form prescribed by the commissioner show ing the condition of the savings bank at the close of busi ness on that day. The following items must be included: Name of corporation and names of corporators and officers; place where located; amount of deposits; amount of each item of other liabilities; public funds, including all United States, state, and municipal bonds; railroad bonds, streetrailway bonds, telephone bonds, and stock in banks and trust companies, stating each particular kind, values, and amount invested in each; loans to municipalities; loans on mortgage of real estate; loans on personal security; estimated value of real estate, and amount so invested; cash on deposit in banks and trust companies, with the 261 N ation al M o n et a r y Commission names of depositaries and amount deposited in each; cash on hand; the whole amount of interest or profits received, and the rate and amount of dividends for the previous year; the times for the dividends; the rates of interest received on loans; the total amount of loans bearing each specified rate of interest; the number and total amount of loans which do not exceed $3,000 each; the number of open accounts; the number and amount of deposits; the number and amount of withdrawals; the number of ac counts opened and the number closed during the previous year; annual expenses of the corporation; and such other information as the commissioner may require (1908, chap. 590, 37). Every fifth year the report gives other statistics, including figures showing the amount of de posits of various sizes; the amount credited to women, to guardians, etc., received during the preceding twelve months (1908, chap. 590, 38). In addition to the reports required by law, savings banks must make whatever other reports the commissioner requires (1908, chap. 590, 13). The treasurer of every savings bank every five years returns to the commissioner and publishes a statement of the name, the amount standing to the credit, the last known address, and the fact of death, if known, of each depositor who has not deposited or withdrawn for twenty years. He need not report if the depositor in question is known to an officer of the bank to be living, nor need he report deposits for which the book has not been brought in within twenty years to have interest added or to be verified, nor need he report deposits which with accumu lations are less than $25 (1908, chap. 590, 39). Each year the commissioner reports to the legislature, as stated under Banks (1908, chap. 590, 15); the report of unclaimed deposits must be included in this report (1908, chap. 590, 39). 262 Massachusetts — Savings Banks EXAMINATIONS. The commissioner or a subordinate at least every year, and oftener if he thinks it necessary, examines every sav ings bank to ascertain its condition, its ability to fulfill its obligations, and its compliance with law (1908, chap. 59°. 5)- On application of five or more officers, trustees, creditors, or depositors, the commissioner makes a special examination (1908, chap. 590, 7). Once a year, and oftener if he thinks it necessary, the commissioner or a subordinate examines banks in the hands of receivers, reporting the result of his examinations to the appointing court (1908, chap. 590, 11). Savings banks and their officers are subject to examination by committees of the legislature (1908, chap. 590, 21). The auditing committee of not less than two trustees make a thorough audit of the books, securities, and cash of their savings bank at least once a year (1908, chap. 590, 32). The auditing committee examine the income, profits, and expenses for the preceding six months before a dividend is declared (1908, chap. 590, 61). V.— Discount, L oan , and Deposit R estrictions. There is a board of investment which has charge of loans and investments; it meets at least monthly (1908, chap. 590, 31). No president, treasurer, member of a board of invest ment, or officer charged with the duty of investing a sav ings bank’s funds may borrow from the savings bank or be surety for loans by it, etc. (1908, chap. 590, 44). Neither a savings bank nor anyone acting for it may take a fee, commission, etc., on account of a loan made by the bank, other than that which appears on the face of the contract of loan (1908, chap. 590, 45). 263 N at io n a l M on et a r y Commission A savings bank may receive on deposit from any per son not more than $1,000, and may allow interest on principal and accumulated interest until the whole amounts to $2,000; thereafter interest will be allowed only upon $2,000. This does not apply to deposits by reli gious or charitable corporations labor unions, deposits under order of court, or for the sinking fund of a munici pality (1908, chap. 590, 46, amd. by 1909, chap. 491, 7). For certain other loan provisions, see VI, below. If necessary to pay depositors, a savings bank may bor row money, pledging securities for the loan (1908, chap. 590, 67). See VI, below, for certain restrictions on loans given under investments because so classified in the statutes. VI.— I nvestments. There is a board of investment of not less than three, who are in charge of investments (1908, chap. 590, 28). They meet at least once a month to approve loans, pur chases or sales of bonds, stocks, etc. (1908, chap. 590, 31). The provisions for savings-bank investments are so extremely long and complicated that the finer distinc tions and provisos have had to be ignored here. Stated in as condensed a form as possible, investments may be: First.— In first mortgages of real estate in Massachu setts. Not exceeding 60 per cent of the value of the real estate nor more than 70 per cent of the whole amount of deposits may be thus invested. If the loan is on unimproved and unproductive real estate, the amount loaned must not exceed 40 per cent of the value of the real estate. The board of investment, or two of them, value the mortgaged premises at least once every five years. Second.— (a) In the public funds of the United States or of any of the New England States. (b) In bonds or 264 Massachusetts Savings — Banks notes of a Massachusetts county, city, or town, (c) In bonds or notes of an incorporated district in Massachu setts whose debt does not exceed 5 per cent of its property’s valuation for taxes, id) In the bonds or notes of munici palities of the other New England States whose debt does not exceed, for certain classes, 5 per cent, and for others 3 per cent, of the valuation of the property of the munici pality for taxes, (e) In bonds of certain named States, and the bonds of municipalities of those States which have 30,000 inhabitants and a debt not exceeding 5 per cent of the valuation of property for taxes; bonds of municipalities in other named States having more than 200,000 inhabitants and a debt not exceeding 7 per cent of the valuation of the property. Third.— (a) In bonds or notes of a railroad incorporated in Massachusetts and located wholly or in part there, which has paid 4 per cent dividends on all its stock for five years; or in first-mortgage bonds of a terminal com pany incorporated in Massachusetts and located there, if it is owned or operated, or its bonds are guaranteed, by such a railroad. (6) In bonds or assumed bonds of a railroad corporation incorporated in any of the New England States, if at least one-half its road is located in those States, whether the road is in possession of the com pany or leased to another, provided that the bonds are either secured by a first mortgage of the railroad’s prop erty, or by a refunding mortgage as described in (3) or (4) of (g), or, if the railroad of the corporation is unencum bered by mortgage, then the bonds are issued under a statute providing that after an issue of bonds the railroad may not execute a mortgage without securing by it pre vious liabilities, and provided that this railroad has paid 4 per cent dividends on all its capital stock for five years, (c) In first-mortgage bonds or assumed first-mortgage 265 N at i on a l M on et a r y Commission bonds, or bonds secured by a refunding mortgage as de scribed in (3) or (4) of (g), of a railroad incorporated in any New England State whose road is located wholly or in part there which have been guaranteed by a railroad de scribed in (a) or (b) which is operating its own road, (d) No bond is made a legal investment by (b) unless the cor poration issuing or assuming the bond has during the pre ceding year paid in dividends an amount equal to onethird the interest paid on its funded debt direct or assumed. No bond is made a legal investment by (c) unless the guaranteeing corporation has during the preceding year paid in dividends an amount equal to one-third the inter est paid on its funded debt, direct, assumed, and guaran teed. (e) In mortgage bonds, as described below under this clause, of any railroad incorporated under the laws of any of the United States; provided (1) that dur ing each of the last ten years the railroad owned 500 miles of line within the United States, or if owning less, then the gross earnings of the railroad were $15,000,000; (2) the railroad has paid matured principal and inter est of mortgage debt; (3) the railroad has paid 4 per cent dividends on all its stock; (4) the gross earnings, including those of controlled roads and those of con trolled mines, have not amounted to less than five times the amount necessary to pay interest on entire debt, rentals, and interest on debts of controlled lines; but (5) no bonds are made a legal investment by (g) if the mort gage authorizes a total issue of bonds which make the whole authorized debt of the company exceed three times its stock; (6) no bonds may be made a legal investment by (i) or (/), if the mortgage securing them authorizes an issue of bonds which, added to the total debt of the guaranteeing corporation, exceeds three times the capital of the guaranteeing corporation, nor in case the total debt of the issuing corporation exceeds three times 266 Massachusetts Savings Banks its capital. (/) A “ first mortgage” must be on not less than 75 per cent of the railroad owned by the company in question, and in no case less than ioo continuous miles of road: provided that 75 per cent of the road is connected; that for five years all the road subject to the mortgage has been operated by the road which issues, assumes, or guar antees the bonds; and that the date of the mortgage is at least five years prior to the investment. (g) Bonds issued or assumed by a railroad described in (e) which are secured by a mortgage which was, at its date or at the date of the investment, (1) a first mortgage on railroad owned by the issuing or assuming corporation, except that if not a first mortgage on 75 per cent of the railroad owned by the cor poration, it must be a first mortgage on 75 per cent of the road subject to the lien of the mortgage at its date; but if any stocks or bonds are deposited with the trustee of the mortgage as part of its security, the bonds secured by the mortgage are not legal investments unless the corporation owns at least 75 per cent of the total mileage which is subject to the lien of the mortgage and is represented by the stocks or bonds; (2) a first mortgage, which is in effect a first mortgage on all railroad subject to its lien, by virtue of the irrevocable pledge with a trustee of an entire issue of bonds that are a first lien on the road of a company which is operated by the corporation issuing or assuming the bonds; (3) a refunding mortgage covering at least 75 per cent of the road owned by the corporation at the date of the mortgage and providing for the retirement of mortgages which are prior liens, with certain require ments, particularly where the mortgaged property is not owned in fee by the corporation executing the refunding mortgage; (4) a mortgage on not less than 10 per cent of a road owned by the corporation issuing or assum ing the bonds, but not less than 500 miles of line: provided that the mortgage is a first or second lien on not less than 267 N ation a l M one t ary Commission 75 per cent of the total road covered by the mortgage at its date and provides for the retirement of all mortgage debts which are a prior lien; that the bonds secured by the mortgage mature at a later date and cover 25 per cent more property than any of the bonds secured by prior lien; and that the date of the mortgage is five years prior to that of the investment. (h) Mortgage bonds, or bonds secured by mortgage bonds, which are an obligation of a railroad whose refunding bonds are a legal investment under (3) or (4) of (g) : provided that the bonds are to be refunded by the refunding mortgage; that the refunding mortgage covers all the real property on which the mortgage securing the underlying bonds is a lien; and that, in case of bonds guaranteed or assumed, the corporation issuing them is operated by the railroad corporation, (t) Bonds which have been guaranteed by indorsement by a railroad which has complied with all the provisions of (e), provided that the bonds are secured by a first mortgage on the railroad of a corporation operated by the guaranteeing corporation, and that, in the case of a leased road the entire capital of which is not owned by the lessee, the rental includes an amount to be paid the stockholders of the leased road equal to at least 4 per cent on that portion of the capital not owned by the lessee, (f) First-mortgage bonds of a railroad corporation which has for ten years complied with (2), (3), and (4) of (e) , provided the bonds are guaranteed by a railroad company which has complied with all the re quirements of (1), (2), (3), and (4) of (e), notwithstanding that the railroad of the issuing corporation is not operated by the guaranteeing corporation. (k) Bonds which are a legal investment are not rendered illegal even though the corporation issuing, assuming, or guaranteeing them fail not longer than two years to comply with the requirements of (4) of (e). No further investment is made during that period in the bonds of the corporation in question, but if, 268 Savings Massachusetts Banks during the year following its two years’ unsatisfactory con dition, it complies with all the requirements of (e), it is then regarded as having complied with them throughout. (Z) Bonds which are a legal investment are not rendered illegal by the fact that the property upon which they are secured is acquired by another railroad; and although the issuing or assuming corporation is consolidated with another, if the consolidated or purchasing corporation assumes the payment of the bonds, and so long as it pays interest or dividends on the securities issued to effect the consolidation to an amount equal to 4 per cent at least on the capital of the issuing or assuming corporation, the bonds remain a legal investment, (m) If a railroad which has com plied with all the requirements of (1), (2), (3), and (4) of (e) for more than five, but less than ten years, is merged with another railroad, the succeeding corpora tion is considered as having complied with the first four provisions of (e) during those years preceding the date of merger during which all the merged corporations, if con sidered as one corporation, would have so complied; pro vided the succeeding corporation continues to comply for a period making the total ten years, of which total not less than two years are under the consolidation, (n) Railroad does not include street railway. The commis sioner prepares annually a list of authorized investments under Third. Fourth.— Certain investments made prior to the act of 1908 may continue to be held. Fifth.— In the bonds of any street railway company in corporated in Massachusetts and located wholly or in part there, which has paid dividends of 5 per cent on all its stock for five years. The commissioner’s annual list in cludes those bonds and notes which are authorized under Fifth. 269 National Monetary Commission Sixth.— In the bonds of any telephone company a ma jority of whose directors are residents of Massachusetts, provided that for five years the company has satisfied these requirements: (i) Its gross annual income has been at least $10,000,000; (2) it has paid principal and interest of all its debts; (3) it has paid 6 per cent dividends; (4) the dividends have not been less than the total amount necessary to pay all interest; these bonds, moreover, must be secured either by a first mortgage of 75 per cent of the property of the company, or by the deposit of bonds and shares of other telephone companies, under a trust agree ment limiting the amount of bonds to 75 per cent of the value of the securities deposited; for five years, interest and dividends paid on the deposited securities must have amounted to not less than 50 per cent in excess of the annual interest on the bonds secured. Not more than 2 per cent of the deposits of a savings bank may be invested in bonds of telephone companies. The commissioner’s annual list of securities that are a legal investment must show those authorized under Sixth. Seventh.— In the stock of New England national banks, or of Massachusetts trust companies, but the corporation must not hold, both as an investment and as security, more than 20 per cent of its deposits in this sort of stock; nor in the stock of any one national bank or trust company more than 3 per cent of its deposits, nor more than $100,000, nor more than one-quarter of the capital stock of the bank or trust company. A savings bank may deposit not more than 2\ per cent of its deposits in any Massachusetts na tional bank and in any Massachusetts trust company, but the deposit must not exceed $500,000, nor 25 per cent of the capital and surplus of the depositary. Eighth.— In loans not for a longer period than one year, subject to the requirements given below. Not more than one-third of deposits and income may be thus invested, 270 M as s a c h u s e t t s — Savings Banks nor may the total liabilities to a savings bank of a person, firm, or corporation for money borrowed on personal se curity, including in firm liabilities those of the members, exceed 5 per cent of deposits and income; these limitations, except the one-year limitation, not to apply to loans made under (2) of (e). These loans may be of the following sorts: (a) Notes of three or more responsible Massachusetts citizens; provided that the total liabilities to any savings bank of a person or firm for money borrowed under this subdivision, including in firm liabilities those of the mem bers, must not exceed 1 per cent of the deposits. (b) Notes, with one or more substantial sureties or indorsers, of a Massachusetts corporation, or of a manufacturing corporation with a Massachusetts commission house as surety, or of an association or corporation at least half whose property is located in New England, with a surety who is a citizen or corporation of Massachusetts, but no loan of this sort may be made unless an examination of the borrowing corporation has been made by an accountant approved by the commissioner. (c) Notes or bonds of gas, electric light, telephone, or street railway corporations of Massachusetts that have had annual net earnings for three years equal to 4 per cent of their capital, and gross earnings for one year of $100,000. (d) Bonds or notes issued, as sumed, or guaranteed by railroad corporations complying with the requirements of (b) , or (1), (2), (3), and (4) of (e), of Third. The principal of the securities named in (c) and (d) must be payable in a time not longer than a year. (e) Notes of responsible borrowers with a pledge of various collateral, including (1) mortgages of Massachusetts real estate, if the note does not exceed 60 per cent of the value of the real estate, nor 40 per cent if it is unproductive; (2) securities which are legal investments under Second, Third, Fourth, or Fifth, at not more than 90 per cent of their market value; (3) deposit books of depositors, at not more than 90 per 271 N ational Monetary Commission cent of the amount of deposits; (4) railroad stocks which are legal investments under (a), (b), or (e) of Third, at not more than 80 per cent of their market value; (5) other stocks and bonds at percentages settled by the board of investment, subject to the approval of the com missioner. (Changes of collateral under (e) must be ap proved by the board of investment— 1908, chap. 590, 31.) Ninth.— A sum not exceeding the guaranty fund and undivided earnings of the savings bank, nor in any case exceeding 5 per cent of its deposits, or $200,000, may, subject to the approval of the commissioner, be invested in suitable real estate for business purposes. Tenth.— A savings bank may hold real estate acquired by foreclosure of mortgages owned by it, or by purchase at sales made under such mortgages, or upon judgments for debts due it, or settlements to secure such debts. This real estate must be sold within five years, and the bank may take a purchase money mortgage, notwithstanding the provisions of First. Eleventh.— A savings bank may hold stocks, bonds, notes, or other securities acquired in settlements to secure debts, but these securities must be sold in five years (1908, chap. 590, 68, amd. by 1909, chap. 491, 8). V III.— B ranches. Savings banks may not do business at any place other than their own banking house, except that with the per mission and under the regulation of the commissioner one or more branches for the receipt of deposits may be estab lished in the city or town in which the banking house is located, or in towns not more than 15 miles distant in which there is no savings bank (1908, chap. 590, 36). IX .— Occupation * of the i See Banks. 272 S ame B uilding . M as s a c h u s etts Savings Banks X .— U nauthorized Banking . No corporation, person, or firm, except savings banks and trust companies incorporated under Massachusetts law (except certain foreign corporations subject to super vision of the commissioner— 1907, chap. 533), may use a sign having on it words indicating that the office is that of a savings bank, nor may such words be used on letter paper, etc. Business appearing to be that of a savings bank may not be transacted (1908, chap. 590, 16). The penalty for violation is $100 a day; the offender may be enjoined from doing business (1908, chap. 590, 17). X I.— P enalties . See Banks for penalties for obstructing examinations; failure to report or false report; occupation by a savings bank of offices with another bank; and the holding of office in a national bank or a trust, company by a savings bank officer (1908, chap. 590, 6, 14, 19, and 20). Any officer of a savings bank, or other person in charge of its property, who obstructs examination by a com mittee of the legislature is punished by a fine of not more than $10,000 or imprisonment for not more than three years (1908, chap. 590, 21). If the clerk of a savings bank neglects to notify newly elected officers or to publish the required list of them, or if he publishes a false list, he is liable to a penalty of $50 (1908, chap. 590, 29). The treas urer of a savings bank who fails to make a return of un claimed deposits is punished by a fine of $100 (1908, chap. 590, 39). Whoever violates the provision forbidding the receipt by a savings bank of a fee for negotiating a loan from the savings bank, other than that which appears on the face of the contract of loan, suffers a fine of not more than $1,000, imprisonment for not more than one year, or both (1908, chap. 590, 45). Toss of office is the penalty S. D o c. 3S3, 6 1 -2 ----- 18 273 National Monetary Commission for the president, treasurer, member of investment board, or officer charged with investing funds, who borrows from the savings bank or becomes owner of land mortgaged to it (1908, chap. 590, 44). TRUST COMPANIES. I.— T erms of I ncorporation. Trust companies are clearly given banking powers; they may “ receive on deposit, storage, or otherwise money * * * and other property of any kind. ” Trust com panies receiving such general deposits of money must not give the depositor security (R. L., chap. 116, 12). Prop erty received in trust is kept separate from the general assets of the company; investments, loans, etc., are distinct and in a trust department (R. L., chap. 116, 24). The trust department may have a trust guaranty fund accumu lated out of profits, invested only in legal trust fund invest ments (R. T., chap. 116, 25), and pledged for performance of fiduciary undertakings (R. L., chap. 116, 26). This trust guaranty fund must not be transferred to the general capital while trust obligations are owed; but its income may be added to the general income of the corporation when it is not needed to discharge fiduciary obligations (R. L-, chap. 116, 27). The capital of every trust company must be not less than $200,000 nor more than $1,000,000, except that in a city or town of not more than 100,000 the capital may be not less than $100,000, divided into shares of $100 par value. The whole capital must be actually paid in before business is begun, and no share may be issued till paid for in cash (R. L.,chap. 116, 5, amd. by 1907, chap. 487). No shares may be issued till paid for at par in cash (1904, chap. 374,6). A guaranty fund must be set aside each year of not less than 10 per cent of net earnings until this fund amounts to 274 Ma s s a c h u s e t t s Trust C o mp a n i e s 25 per cent of capital; the guaranty fund must be invested “ in the same manner as deposits in savings banks may be invested” (R. L., chap. 116, 29). Before they are allowed to begin business the incorpora tors of a trust company must obtain a certificate that public convenience and advantage will be promoted by the establishment of the company. If this is refused the application may not be renewed until a year later (1904, chap. 374, 3). Before beginning fiduciary business the trust company must receive authority (R. L., chap. 116, 20). The issuing of this authorization is at the discretion of the board of bank incorporation, who also make the preliminary examination to ascertain that the whole capi tal has been paid in in cash and that all requirements have been complied with, before issuing the certificate authorizing the trust company to begin business (1904, chap. 374, 6; and 1908, chap. 590, 4, amd. by 1909, chap. 49B 2). A recent statute provides for the separation of savings deposit business in a department of its own. Every trust company “ soliciting or receiving deposits (a) which may be withdrawn only on presentation of the pass book or other similar form of receipt which permits successive deposits or withdrawals to be entered thereon, or (h) which at the option of the trust company may be withdrawn only at the expiration of a stated period after notice of intention to withdraw has been given, or (c) in any other way which might lead the public to believe that such deposits are received or invested under the same conditions or in the same manner as deposits in savings banks,” must have a separate savings department (1908, chap. 520, 1). The loans and investments of these deposits are governed by the savings-bank statute (1908, chap. 520, 2). These deposits and the investments or loans of them must not be mingled with the general property of the trust company 275 Na tional M o n et a r y Commission or be liable for the general obligations of the company until deposits in the savings department have been- paid in full (1908, chap. 520, 3). In addition to this security, savings depositors have an equal claim with other creditors upon the property of the trust company (1908, chap. 520, 4). II.— L iabilities and D uties of Stockholders Directors. and The stockholders of every trust company are personally liable for the obligations of the corporation to the amount of their stock at par in addition to the amount invested in the shares (R. L., chap. 116, 30, amd. by 1905, chap. 228). Each director of a trust company must own at least ten shares of its stock. A majority of them must be citizens of Massachusetts and there resident; not more than onethird of the directors of one trust company may be directors of another (R. L., chap. 116, 9). III.— Supervision . See Banks for the details of the make up of the board of bank incorporation, the qualifications of the bank commissioner, etc. The commissioner, if he thinks a trust company has violated the law, reports to the attorney - general, who prosecutes. The commissioner directs unsafe practices to be discontinued, and may, if the trust company fails to comply or if he thinks a trustee or officer of the trust company has abused his trust, etc., either report to the shareholders or, with the consent of the treasurer and receiver general, the attorneygeneral, and the commissioner of corporations, publish the facts as he thinks public interest requires (1908, chap. 590, 8). If a trust company on examination appears insolvent or in a hazardous condition, the com missioner must, or in cases of apparent violation of law 276 M o s s a c h u s et t s Trust Compani es or exceeding powers may, take possession and apply for a receiver (1908, chap. 590, 9). The commissioner examines the affairs of receivers and reports any violation of duty to the appointing court (1908, chap. 590, 11). The com missioner may prescribe the form of keeping books and accounts of trust companies and the extent to which they must be audited (1908, chap. 590, 12). The bank commissioner has authority to determine what trust companies in Boston may act as reserve agents for other trust companies; his consent is necessary to use a reserve agent as such (1908, chap. 520, 10). He notifies a trust company to make good its reserve when it falls below the required amount, and if the company fails for sixty days to do so he applies to a court for a receiver. If the reserve of a trust company which has been authorized to act as reserve agent is less than the required amount, the commissioner notifies the company to make the reserve good, and if it fails to do so for ten days he may revoke its authority to act as a reserve agent (1908, chap. 520, 11). Increases in capital stock must be approved by the com missioner (1905, chap. 189; and 1908, chap. 590, 5, amd. by 1909, chap. 491, 3). The board of bank incorporation has authority to refuse to allow the incorporation of a trust company if not required by public convenience, and to refuse to allow a trust company to begin trust business if they think it inexpedient (R. L., chap. 116, 20; 1904, chap. 374, 3; and 1908, chap. 590, 4). REPORTS. The recent savings bank act provides that in addition to reports required by law to be made, trust companies must make such other statements to the commissioner as he may require (1908, chap. 590, 13). Every trust company must when required by the commissioner, but not exceed- 277 N at i on a l M on e t a r y Commission ing five times a year, return to the board a report of its con dition at the close of business “ on said d ay” (there seems to be no day previously specified), detailing the following items: Capital stock; amount of all money and property in detail, in the possession or charge of said corporation as deposits; amount of deposits payable on demand or within ten days; amount of trust guaranty fund; trust funds or for purposes of investment; number of depositors; invest ments in authorized loans of the United States or any of the New England States, counties, cities, or towns; invest ments in bank stock, railroad stock, and railroad bonds, stating amount in each; loans on notes of corporations; loans on notes of individuals; loans on mortgages of real estate; cash on hand; rate, amount, and date of dividends since last return; and such other information as the board of commissioners of savings banks may require. This return must be made within ten days and must be in the form of a trial balance, specifying different kinds of liabilities and assets in accordance with a blank form furnished by the board. It is published in a local news paper (1908, chap. 520, 13; and 1908, chap. 590, 5, amd. by 1909, chap. 491, 3). Reports are required to be sub mitted to the bank commissioner within ten days after the examinations by the committee of three stock holders discussed below. This report is made on forms furnished by the commissioner, and contains a statement of assets and .liabilities, including those of the trust department, together with whatever other information the commissioner requires. It specifies loans or discounts which the committee thinks worthless or doubtful and loans made on collateral which is of doubtful value or not readily marketable (1907, chap. 319, 2 and 3). For tax reports, see 1908, chapter 520,12; and 1909, chapter342, 2. 278 M a s s ac hu s et ts Trust C o mp a n t e s The report required to be made by the bank commis sioner to the legislature is as stated under Banks (1908, chap. 590, 15). EXAMINATIONS. The general rules for examinations are as stated under Banks. The commissioner or a subordinate, at least an nually, and whenever he considers it expedient, visits every trust company (1908, chap. 590, 5). On application of five or more officers, trustees, creditors, or depositors to the commissioner he must make a special examination (1908, chap. 590, 7). He examines trust companies in the hands of receivers (1908, chap. 590, 11). A preliminary examination is made by the board of bank incorporation to ascertain that the capital has been paid in in cash (1904, chap. 374, 6; and 1908, chap. 590, 4, amd. by 1909, chap. 491, 2). The commissioner may examine trust companies as he does savings banks, and may employ an expert for additional examinations of trust .companies that are acting in a fiduciary capacity. He examines whenever ordered to do so by a court of competent juris diction (R. L., chap. 116, 37; and 1908, chap. 590, 5, amd. by 1909, chap. 491 ,.3). The stockholders of every trust company elect an ex amining committee of not less than three stockholders, of which certain specified managing officers of the company may not be members. This committee, once a year, with out notice to the officers or directors, makes a thorough ex amination of assets and liabilities, including those of the trust department. Within ten days after their examina tion they report to the bank commissioner as explained above. If upon receipt of this report, or if upon examina tion, a further examination or audit of the affairs of a trust company seems necessary, the commissioner may cause it to be made by an expert (1907, chap. 319, amd. by 1908, chap. 520, 14). 279 ) N at ion a l M onet ary Commission IV.— R eserve R equirements. Every trust company must have a reserve equal to at least 15 per cent of its deposits, exclusive of savings de posits and of deposits represented by certificates and not subject to be withdrawn within thirty days. Every trust company doing business in Boston must have a reserve equal to 20 per cent of deposits computed in the same man ner (1908, chap. 520, 8). At least two-fifths of this re serve must consist of lawful money of the United States, gold or silver certificates, or national bank notes. The re mainder may consist of balances payable on demand, due from trust companies in Boston authorized as reserve agents by the commissioner, or from national banks in Massachusetts and named cities. A portion not exceeding one-fifth of the reserve may consist of United States or Massachusetts bonds. The aggregate amount of lawful money of the United States, gold and silver certificates, and national bank notes must equal at least 5 per cent of ^all deposits exclusive of those in the savings department (1908, chap. 520, 9). The commissioner may authorize any trust company in Boston to act as reserve agent for trust companies doing business in Massachusetts, but a trust company must not keep its reserves in such an au thorized trust company without obtaining the commis sioner’s consent. Not less than one-half of the reserve of a trust company acting as reserve agent must be in lawful money of the United States, gold certificates, silver certifi cates, or national bank notes, and the remainder may con sist of balances payable on demand, due from trust com panies in Boston authorized to act as reserve depositaries, or from national banks in Massachusetts or irj named cities (1908, chap. 520, 10). While the reserve of a trust com pany is below the required amount no new loans or invest ments may be made. The commissioner notifies the com- Massachusett s — Trust Compani es pany to make good its reserve, and if it fails for sixty days sues for a receiver. When the reserve of a reserve deposi tary is below, the commissioner requires that trust company to make good its reserve, and if it fails to do so within ten days he revokes its authority to be a reserve agent (1908, chap. 520, 11). V.— D iscount and Doan R estrictions. A trust company may loan its capital or general de posits on real property in Massachusetts and on personal security (R. E-, chap. 116, 13). No trust company may advance money on notes secured by mortgage of farms or agricultural or unimproved land outside of Massachu setts except on land in New England or New York, nor may it invest in or make loans upon the securities of a company dealing in notes secured by such mortgages (R. E-, chap. 116, 14). No trust company may loan or discount on the security of shares of its own stock unless the security is necessary to prevent loss on a previous debt, in which case the stock must be disposed of within six months (R. L-, chap. 116, 33). The total liabilities of a person, other than cities or towns, for money borrowed, including in the liabilities of a firm those of its members, to trust companies with a capital of $500,000 or more, must never exceed onefifth of the surplus and of the paid-up capital; and the liabilities to any other trust company must not exceed one-fifth of paid-up capital. But the discount of bills of exchange drawn in good faith against existing values, and of commercial paper owned by the person negotiat ing it, are not considered as money borrowed (R. L., chap. 116, 34). Trust funds are separated from general assets; loans of them are appropriated to the security of the trust de posits (R. E., chap. 116, 24). Loans of savings deposits 281 N at io n a l M onet ary Commission are handled by the savings department of the trust com pany and are appropriated solely to the security and pay ment of the savings deposits. They must be made in accordance with the restrictions on savings bank loans (1908, chap. 520, 2 and 3). See further loan restrictions, under VI. VI.— I nvestments. A trust company may hold unincumbered real estate suitable for its business, to an amount not exceeding 25 per cent of its paid-in capital, and in no case exceeding $250,000 (R. T., chap. 116, 35). A trust company may invest its capital and general deposits in stocks, bonds, or other evidences of indebtedness of corporations (R. L., chap. 116, 13). A trust company may not invest in the securities of a company dealing in notes secured by real estate mortgages which would not be a legal loan for the trust company (R. L., chap. 116, 14). A trust company may not be agent to deal in securities on which the company could not lawfully loan, nor may it act as agent to deal in evidences of debts secured exclusively by mortgage of real estate (R. L., chap. 116, 15). A trust company may not invest in its own shares unless the purchase is necessary to prevent loss on a previous debt, in which case the stock must be disposed of within six months (R. L., chap. 116, 33). There is a separate trust department, the investments of which are especially appropriated to the security of trust deposits and are not mingled with the investments of capital or general assets of the company (R. L., chap. 116, 24). The trust guaranty fund may be invested only in such securities as trust deposits may be invested in (R. L-, chap. 116, 25). Trust deposits with a trust company under order of court may be invested only in 262 Massachusetts — Trust C o mp a n i e s United States securities, securities of any New England State, of any New England municipality, of named States, and of the municipalities of the named States, or in stocks of state or national banks of Massachusetts, or in first mortgage bonds of New England railroads that have paid dividends on all their capital for two years, or in bonds of such a railroad unincumbered by mortgage, or in first mortgages on Massachusetts realty, or in securi ties in which savings banks may invest, or in loans upon notes, with two sureties, of domestic manufacturing cor porations or of individuals with pledge of any of the securi ties named, but all real estate acquired by judicial process must be sold at public auction within two years (R. L., chap. 116, 17). If a trust company receives savings deposits, it must keep them in a savings department, and must invest them according to the statutes governing savings bank invest ments ; they are appropriated for the security of savings depositors solely (1908, chap. 520, 1, 2, and 3). VIII.— B ranches. The board of bank incorporation may authorize any trust company to maintain not more than one branch office, which must be in the city or town in which its main office is located (1908, chap. 520, 15). IX.— Occupation of the Same B uilding. See Banks. X.— U nauthorized T rust Company B usiness. No corporation, whether domestic or foreign, and no person or firm, except savings banks and trust companies incorporated under Massachusetts law, may use a sign, letter paper, etc., on which appears a name or other words 283 N at i on a l M on et a r y Commission indicating that the business done is that of a savings bank. See this heading under Savings banks (1908, chap. 590, 16 and 17). No person, firm, or corporation, except trust companies incorporated under Massachusetts law, may use the words “ trust company” in his or its name, or advertise or solicit or receive deposits as a trust company. Whoever violates this provision forfeits $100 for each offense for each day (R. b., chap. 116, 3, amd. by 1909, chap. 491, 1). X I. — P enalties . See this heading under Banks for penalties for obstruct ing examinations, failing to report, occupation by a savings bank of offices with a trust company, and violations of the rule forbidding officers of savings banks to hold office in trust companies (1908, chap. 590, 6, 14, 19, and 20). MICHIGAN. The digest for this State is based upon a reprint of the laws relating to banking compiled under the supervision of George A. Prescott, secretary of state, published in 1908, and including all legislation through the 1907 session of the legislature. Legislation by the 1909 session has been taken from the later reprint, compiled under the supervision of Frederick C. Martindale, secretary of state, published in 1909. The general banking law applies for the most part to both commercial and savings banks, which may be combined. On this account these two sorts of institutions are put under one head in the digest. At the end of each subhead are collected such few provisions as relate either to banks alone or to savings banks alone. There is legislation for trust companies, following the bank ing act for the most part, even to the language, and scarcely less complete. This has been digested under the heading “ Trust companies.” A constitutional provision in Michi gan requires that a general banking law be approved by a majority of voters at a general election (constitution, Art. X V , sec. 2); it seems that the trust company laws are not within the constitutional provision, since banking powers are expressly denied trust companies (6164). The references in the digest, following those in the reprints of the secretary of state, are, where they are simply numbers in parenthesis, to sections in the Compiled Laws of 1897, the last revision of the Michigan statutes. Amendments as indicated in the two reprints are noted in the digest. N at ion a l M onet ary Commission BANKS AND SAVINGS BANKS. I.— T erms of I ncorporation. Incorporation under the general banking law may be “ to establish offices of discount and deposit to be known as commercial banks, and also to establish offices of loan and deposit to be known as savings banks, or to establish banks having departments for both classes of business.” All three of these sorts of banks are regulated by the banking act (6122). The capital stock must be at least $250,000, except that banks with a capital of not less than $20,000 may be organized in a city or village of not more than 1,500; with a capital of not less than $25,000 in a city or village of not more than 5,000; with a capital of not less than $50,000 in a city or village of not more than 20,000; and with a capital of not less than $100,000 in a city of not less than 110,000. Banks having deposits exceeding $5,000,000 must have a capital of not less than $400,000 (6090, amd. by 1899, act 265). The capital must be divided into shares of $100 each (6091). A t least 50 per cent of the capital must be paid in before business is begun; the remainder must be paid in in installments of at least 10 per cent on the whole of the capital, payable at the end of each month from the time the bank is author ized to begin business (6094). Any bank which combines the business of commercial and savings banking must keep separate books of account, and all transactions relating to each class of business are governed by the rules applicable to that sort of banking. Savings investments must be separated, savings reserves must be separated, and uninvested savings deposits and investments of sav ings deposits are held solely for the payment of savings depositors (6118, amd. by 1909, act 193). Directors may declare dividends out of net profits, but before the declaration not less than one-tenth of the net 286 M ichigan — State Banks and Savings Banks profits for the preceding dividend period must be carried to surplus, until the surplus amounts to 20 per cent of capital (6102). (For restrictions on banks borrowing, see VI, infra.) COMMERCIAL BANKS. The salient feature of a commercial bank seems to be that, although it may allow interest on accounts or certifi cates of deposit, all deposits are payable on demand with out notice, unless the contract of deposit otherwise pro vides (6113). SAVINGS BANKS. The statute distinguishes savings banks by providing that they “ may receive on deposit money offered by trades men, mechanics, laborers, servants, minors, and other persons; and all deposits in said banks may be repaid to the depositors, * * * when required at such time or times and with such interest and under such regulations as the board of directors of the bank from time to time pre scribes” (6115). II.— L iabilities and D uties of Stockholders D irectors. and Stockholders are individually liable for the benefit of depositors in their bank to the amount of their stock at par in addition to the stock (6135). See constitutional provisions for unlimited liability of officers and stock holders of banks issuing money (constitution, Art. XV, sec. 3), and of stockholders of all corporations for labor (constitution, Art. XV, sec. 7). There must be not less than five directors, each of whom must own not less than ten shares of stock (6101, amd. by 1899, act 265). The directors appoint an examining committee of directors or stockholders, who must examine 287 N at i on a l M onetary Commission the bank every six months and report to the directors, with a view to ascertaining what assets of the bank are not of the value at which they appear on the records (6104, amd. by 1907, act 65). The directors, or a committee of at least three of them, must meet monthly to examine loans, investments, and other transactions since the last meeting (1909, act 193). III. — Supervision . There is a bureau in charge of the execution of laws relating to banks, trust companies, etc., called the state banking department (6124). The chief officer is the com missioner of the banking department, whose term of office is four years and whose salary is $3,500 a year. Neither the commissioner nor his deputy may be interested in bank ing business (6125, amd. by 1909, act 103). No one may be appointed to examine a bank in which he is interested in any way-. The commissioner and his subordinates must keep secret information obtained in the course of examina tion except so far as public duty requires them to report (6129, amd. by 1905, act 88). The commissioner grants a certificate of authority to begin business, which he may withhold, on consultation with the attorney-general, if he has reason to believe that the organization is for other than legitimate purposes (6096). He approves of reductions in capital stock (6099). He approves of cities in which banks may be used as reserve depositaries (6113; and 6116, amd. by 1905, act 262, and by 1907, act 322). When it appears that a bank is borrowing habitually for the purpose of reloaning, the commissioner requires the bank to pay off the borrowed money (6121, amd. by 1905, act 117). He may call stockholders’ meetings of any bank (6133). Voluntary liquidations are reported to him (6142) and 288 M ichigan — State Banks and Savings Banks he approves of consolidations (6143). He has supervision over extending the corporate existence of banks (1899, act 143). With the concurrence of the attorney-general, the com missioner institutes proceedings to wind up the affairs of a bank, under the following circumstances: When a bank’s reserve has fallen below the required amount and for thirty days after notice from the commissioner the bank has failed to make the reserve good (6114; and 6116, amd. by 1905, act 262, and by 1907, act 322); when by cancel lation of unpaid shares the capital is reduced below the minimum and is not increased to the required amount within thirty days (6095); and when the directors violate or allow a violation of the banking law and after warning from the commissioner fail to make good all damages that have resulted (6109). If the commissioner is satisfied that the capital of a bank is reduced below the legal requirement, and the impairment is not made good as required by him, or if he is satisfied that a bank has refused to pay its deposits, or if it has violated the law or is conducting its business in an unsafe or unauthorized way, or if it refuses to submit to examination, or if from an examination or report he concludes that the bank is in an unsound or unsafe condition, then the commissioner communicates with the attorney-general and institutes through him receivership proceedings. The court appoints the banking commissioner or a subordinate* or some other person as receiver. Pending the appointment the com missioner may take possession of the bank (6144, amd. by 1909, act 103). The stockholders of the bank may put it in condition to resume business, in which case the court discharges the receiver (1909, act 193). S . D o c. 353, 6 1 —2----- 19 289 Commission REPORTS. Every bank makes to the commissioner not less than four reports a year, at times and according to forms he pre scribes. They show resources and liabilities at the close of business of a past day specified by the commissioner, and must be transmitted to him within five days after the receipt of his request. They are published in a local news paper. The commissioner may call for special reports when he thinks them necessary. Every bank must also report within ten days after declaring a dividend the amount of the dividend, the amount carried to surplus, and the amount of excess net earnings (6110). After the examining committee of the directors of every bank have made their semiannual examination and reported to the directors, a copy of the record is sent to the commissioner; once a year a list of stockholders is sent him (6104, amd. by 1907, act 65). There is a provision not part of the banking act that “ every banking * * * or other incorporated company” must file annually with the sec retary of state a list of the number of shares issued, with the names and addresses of the owners (11364, amd. by 1903, act 35). Receivers must report to the commissioner all their proceedings (6144, amd. by 1909, act 103). A provision not part of the banking act requires that every third year every person, firm, or corporation who is engaged “ in the trust business or the business of banking within this State, and as a part of such business, receive in any manner whatever, moneys, or securities of persons upon deposit,” must report to the commissioner deposits where the persons making them have not dealt with them for three years and the depositary has good reason to be lieve that the depositor is dead. The report includes name of depositor, sum deposited, date and form of deposit, 290 J __ M ichigan — State Banks and Savings Banks interest, and amount, with the total of deposits of this sort (1218). At the end of every year the commissioner reports to the governor showing a summary of the condition of every bank from which reports have been received during the year, with an abstract of total capital, liabilities, resources, and lawful money held, and such other information as the commissioner thinks is required; a statement of the banks and corporations whose business has been closed, with details; and details of the conduct of the banking department (6132). EXAMINATIONS. There is a preliminary examination to ascertain the amount of money paid in on capital, and performance of other preliminaries (6096). The commissioner or a sub ordinate examines, twice or oftener each year and when ever required by the directors, the cash, securities, books, condition, etc., of every bank (6128, amd. by 1903, act 107, and 1905, act 88). He causes a special examination to be made before allowing a bank to extend its corporate existence (1899, act 143). An examining committee of directors or stockholders make an examination at least once every six months in order to report to the directors assets which are not of the value at which they appear on the books (6104, amd. by 1907, act 65). IV.— R eserve R equirements. COMMERCIAL BANKS. Every commercial bank must keep on hand at least 15 per cent of its total deposits, and every commercial bank in a city of over 100,000 20 per cent of its total deposits, of which reserve one-half must be in lawful money, and onehalf may be in deposits payable on demand in banks in 291 National Monetary Commission cities approved by the commissioner as reserve cities (6113). Whenever the reserve of any commercial bank falls below the requirement the bank must not increase its liabilities by making new loans or discounts except by buying sight exchange (6114). SAVINGS BANKS. Every savings bank must keep on hand at least 15 per cent of its total deposits, of which reserve one-third must be in lawful money, and the balance on deposit, payable on demand, with banks or trust companies in cities approved by the commissioners as reserve cities, or invested in United States bonds (6116, amd. by 1905, act 262, and by 1907, act 322). V.— Discount, L oan , and D eposit R estrictions. The total liabilities to any bank of any person, firm, or corporation for moneys advanced, including in firm or corporation liabilities those of the members, must not exceed one-tenth of the capital and surplus of the bank, but the discount of bills of exchange drawn in good faith against existing values and the discount of paper owned by the person negotiating it are not considered as money bor rowed. The foregoing limitations, moreover, do not apply to loans on real estate or other authorized collateral. The directors, by a two-thirds vote, may allow an increase in the liabilities to the bank of any person, firm, or corporation, to a sum not exceeding one-fifth of capital and surplus. Before any bank loans any of its funds to its officers or employees the directors must approve (6141, amd. by 1899, act 265, 1905, act 262, and 1907, act 322). No bank may take as security a loan upon any part of its capital stock. The same security in kind and amount must be required of stockholders and of persons not stockholders (6090, amd. by 1899, act 265). 292 M ichigan — State Banks and Savings Banks No bank may give a preference to a depositor or cred itor by pledging the assets of the bank as collateral, but a bank may borrow for temporary purposes and may pledge assets not more than 50 per cent over the amount borrowed as collateral. When it appears that a bank is borrowing habitually to reloan, the commissioner may require the bank to pay off the borrowed money. These provisions do not prevent a bank from rediscounting and indorsing its notes. No bank may issue its certificate of deposit for the purpose of borrowing money. No bank may make partial payments upon certificates of deposit (6121, amd. by 1905, act 117). (Incidental loan restrictions appear under VI, infra.) COMMERCIAL BAN KS. No commerical bank may lend to exceed 50 per cent of its capital upon mortgage or any other form of real-estate security, “ and then only upon the adoption of a resolu tion by a two-thirds vote of the board of directors stating to what extent its officers may loan on real estate, * * * except to secure a debt previously contracted in good faith on personal security deemed at the time ade quate to secure such loan” (6112). Commercial banks may invest their capital and deposits in negotiable or commercial paper or loans on personal securities (6113). SAVINGS BANKS. Savings banks may issue time and other certificates of deposit (6117). V I.— I n v e s t m e n t s . A bank may hold real estate only for the following pur poses: Such as is necessary for the convenient transaction of its business, including with its banking office other rented apartments, but this investment must not exceed 293 N at ion a l M on et a r y Commission 50 per cent of paid-in capital; such as is conveyed to the bank in satisfaction of previous debts; and such as it pur chases at judicial sales under securities held by it, but the bank must not bid a larger amount than will satisfy debt and costs. The last two sorts of real estate must be sold within thirty days after the expiration of five years (6100). No bank may hold any portion of its own capital unless the purchase is necessary to prevent loss on a previous debt, in which case the stock must be sold within six months if it will bring what it cost; and if not sold within a year at the best price obtainable, then it must be can celed (6090, amd. by 1899, act 265). Not more than one-fourth of the assets of any bank may be invested in steam-railroad bonds; not more than one-tenth in the bonds of any one railroad corporation described in (c) or (d) of the next paragraph; not more than one-twentieth in the bonds of any corporation de scribed in (e), (/), or (g) of the next paragraph, and not more than one-tenth loaned to any one person, firm, or corporation on pledge of collateral described in (h) of the next paragraph (6141, amd. by 1899, act 265; 1905, act 262, and 1907, act 322). SAVINGS BAN KS. After a savings bank has set aside its 15 per cent re serve, three-fifths of the remainder of savings deposits must be invested as follows: (a) In bonds of the United States, or of any State or Territory which has not for ten years failed to pay debt or interest; (6) in bonds of any municipality in the United States, if the total debt of the municipality does not exceed 5 per cent of its assessed valuation, and by a two-thirds vote of directors munic ipal bonds may be purchased if the total liabilities do not exceed 10 per cent of assessed valuation; (c) in first294 M ichigan — State Banks and Savings Banks mortgage bonds of any steam railroad of any State, if the company has for five years paid 4 per cent dividends on its whole capital stock and has not defaulted for the same time in payment of principal or interest of mortgage debt or bonds guaranteed; (d) in first-mortgage bonds of rail roads whose lines are controlled by a railroad company spe cified in (c), if the controlling company guarantees prin cipal and interest of the bonds; (e) in mortgage bonds of any steam railroad of any State if they have been issued to retire prior mortgages and to provide for improvements, provided the company in question has paid 4 per cent dividends on its whole capital for three years, has a cap ital of at least one-third the par value of the bonded indebtedness, and has not for three years defaulted on principal or interest of mortgage debt or of bonds guar anteed— bonds under (e) must be approved by the secur ities commission; (/) in first mortgage bonds of any electric railroad, street railway, gas or electric light or power company organized under Michigan law, if the com pany has for five years paid 4 per cent dividends on its whole capital, and has not during the same period de faulted in payment of principal or interest of mortgage debt or of bonds guaranteed; companies in this class which have not yet been operating five years may satisfy the requirements otherwise— bonds under (/) must be ap proved by the securities commission; (g) in first-mortgage bonds of steamship companies if the mortgage, entailing liability not in excess of one-half the cost of the property, is on steel steamships of certain tonnage on the Great Lakes; the mortgage must provide for the retirement of 10 per cent of the bonds annually, and certain insurance requirements must be complied with, etc.— bonds under (g) must be approved by the securities commission; (h) in loans secured by any of the above securities; (■ 1) in 295 N ationa l M o n et a r y Commission loans upon notes or bonds secured by mortgage of unin cumbered real estate worth double the amount loaned. The remainder of the deposits— i. e., two-fifths of those not held in reserve funds— may be invested in notes, bills, etc., secured by deposit with the bank or with a deposit com pany, of collateral consisting of personal property or securi ties of known marketable value worth io per cent more than the amount of the loan and interest; or may be deposited in a bank or trust company in cities in Michigan or elsewhere, approved by the commissioner as reserve cities. Also, a portion of the remainder, not exceeding the capital and additional stockholders’ liability, may be invested in paper approved by the directors. The deposits in any one bank must not exceed io per cent of the total deposits, capital, and surplus of the depositing bank (6116, amd. by 1905, act 262, and 1907, act 322). The securities commission that passes upon the securities in (e), (/), (g), and (h), above, consists of the commissioner, the attorney-general, and the State treasurer. When an issue of bonds of the classes in (e) and (/) are presented to the commission, they examine the condition of the issuing corporation, compar ing the issue with the valuation of the corporation’s prop erty. The securities commission keeps a record of invest ments which it authorizes banks to make (1905, act 262). V II. — Overdrafts . The only reference to overdrafts is in the section which provides that an overdraft of more than ninety days standing shall not be allowed as an asset of a bank (6121, amd. by 1905, act 117). V III. — B ranches. The constitution gives the legislative power, by a twothirds vote to “ create a single bank with branches” (constitution, Act XV, sec. 1). This clearly is not con296 M ichigan — State Banks and Savings Banks cerned with branches of regular state banks or savings • banks. X .— U nauthorized B anking . No incorporated company without express authoriza tion of law may be interested in receiving deposits, making discounts, etc.; any director, officer, or agent of a company who violates this provision forfeits $1,000 (11351). The act relative to bankers and banking firms forbids their advertising, etc., in such a way as to represent themselves as “ an organized bank,” though they may employ the words “ bank” and “ banking office” in connection with the individual or firm name. Violation of the section is a misdemeanor, punishable by fine of not more than $200 or imprisonment for not more than six months (5275). X I.— P enalties . Every bank which fails to report is subject to a penalty of $100 a day during the delay (6111). Failure to report unclaimed deposits after being required to do so by the commissioner of banking entails a penalty of $300 for each failure, and an additional $10 a day while the report remains unfiled (1219). Anv company which fails to report to the secretary of state annually a list of stock holders is liable to a fine of not more than $500 (11365). The officers of a bank whose duty it is to keep a book with names and residences of stockholders, stock transfers, etc., forfeit $100 for every day’s neglect if they fail to keep the book, and $50 for a refusal to exhibit it to one rightfully demanding inspection (6134). Every officer, director, or employee who embezzles, makes a false entry, reports falsely, with intent to deceive an examining officer, etc., is imprisoned for not longer than twenty years (6147). Any officer or employee who certifies to a check for which there are not funds to the 297 N at ion a l M on e t a r y Commission credit of the drawer, any director or officer who receives a deposit knowing his bank to be insolvent, and any officer or employee who knowingly assists in a violation of the banking act is punished by imprisonment for not longer than five years, fine of not more than $1,000, or both (6108, 6103, and 6107, amd. by 1899, act 265). Any bank combining commercial and savings banking which does not keep separate accounts, separate invest ments, etc., suffers a penalty of $50 for each offense (1909, act 193). Any person who: First, knowingly makes a false state ment in writing to a person, firm, or corporation engaged in banking or other business, respecting his own financial condition or that of a firm or corporation with which he is connected, for the purpose of procuring a loan or credit from the person, firm, or corporation to whom the false statement is made; or, second, having made, or knowing that another has made, a false statement in writing to a person, firm, or corporation engaged in banking or other business, respecting his own financial condition or that of a firm or corporation with which he is connected, after wards procures a loan or credit on the faith of the state ment, knowing at the time that the statement was false; or, third, delivers to a note broker a statement in writing, knowing it to be false, respecting his financial condition or that of a firm or corporation with which he is connected, for the purpose of using the statement to further the sale, pledge, or negotiation of commercial paper, made or indorsed, etc., by him or his firm or corporation; or, fourth, having previously delivered, or knowing that another has previously delivered, to a note broker a statement in writing with respect to his own financial condition or that of a firm or corporation with which he is connected, afterwards delivers to the broker for the purpose of sale, pledge, or negotiation, on the faith of the statement, any commercial 298 M ichigan — Trust Companies paper made or indorsed, etc., by him or his firm or cor poration, knowing that the statement is false— is guilty of a misdemeanor, punishable by fine of not more than $500 for each offense, or imprisonment for not longer than six months, or both fine and imprisonment (1909, act 25). Whoever willfully makes a false statement in writing of his property valuation or his indebtedness, to obtain credit, is guilty of a felony, punishable by imprisonment for not longer than one year and fine not exceeding $1,000 (1909, act 85). Any person who willfully and maliciously makes a statement derogatory to the financial condition of a bank, savings bank, or trust company doing business in Michigan, or who aids in the circulation of such a statement, or rumor, is guilty of a felony, punishable by fine of not more than $5,000, or by imprisonment for not longer than five years, or both (1909, act 273). TRUST COMPANIES. I.— T erms of I ncorporation. The section of the chapter on trust, deposit, and secur ity companies which enumerates the powers of such com panies provides that “ nothing herein contained shall be construed as giving the right to issue bills to circulate as money, or buy or sell bank exchange, or do a general bank ing business” (6164). Note that deposits of savings bank reserves may be made “ in any national bank, trust company, or bank in cities in this or any other State, approved by the commissioner,” etc. (6116, amd. by 1905, act 262, and 1907, act 322). Trust companies, moreover, may keep their reserves “ in any bank or trust company approved by the commissioner” (6165). The capital stock of a trust, deposit, and security com pany must be at least $300,000 and not more than $5,ooo,oo°, except that in cities of less than 100,000 it 299 N a t to n a l M onet ary Commission must be not less than $150,000. Fifty per cent of the capital must be paid in in cash before business is begun, and the rest within six months thereafter (6157). Shares must be of $100 each (6158). Dividends may be declared out of net profits, but before the declaration not less than one-tenth of the net profits for the preceding dividend period must be carried to sur plus until it amounts to 20 per cent of the capital (6162). II.— L iabilities and D uties of Stockholders Directors. and Stockholders are individually liable for all obligations of the corporation to the extent of the amount of their stock at par in addition to the amount invested in the shares (6169). There must be not fewer than seven directors, each the owner of at least ten shares of stock (6162). III.— Supervision . See III under Banks and Savings banks for provi sions dealing with the commissioner, his qualifications, salary, report to governor, etc. The trust company act provides that all trust, deposit, and security com panies are subject to the inspection and supervision of the commissioner of the banking department (6172). It provides for secrecy on the part of him and his sub ordinates and forbids examination by anyone interested in the trust company examined (6174). It gives him power to call stockholders’ meetings of trust companies (6177). It provides that he is to be notified of volun tary dissolutions (6182) and must approve of consolida tions (6183), and that he is to designate banks and trust companies which may act as depositaries of trust com pany reserves (6165). It gives him power to authorize 300 M ichigan — Trust Companies trust companies to begin business (6157). The miscon duct upon which receivership proceedings may be based is similar to that in the banking act; if the directors allow a violation of the trust company act and after warning from the commissioner fail to make good dam ages which result (6162), or if an officer refuses to allow examination (6175), or if it appears from a report, or the commissioner has reason to believe, that capital is impaired or reduced, which deficiency the trust company fails to make good on ninety days’ notice (6176), or if the commissioner is satisfied that a trust company has refused to pay its obligations or has become insolvent, or that its capital has become impaired, or that it has vio lated the provisions of the trust company law, he pro ceeds with the approval of the attorney-general for a receiver (6184). Every trust company deposits with the state treasurer not less than 50 per cent of the amount of its capital, nor more than $200,000 in bonds and mortgages of certain sorts, to be held by the state treasurer as security for depositors and creditors (6157). REPORTS. Every trust company makes to the commissioner not fewer than four reports each year at such time and in such form as the commissioner prescribes. The reports exhibit resources and liabilities of the corporation at the close of business on a past day specified by the commis sioner. They are transmitted to him within five days after the receipt of his request and are published in a local newspaper. The commissioner may call for special reports whenever they are necessary. In addition each trust company must report to the commissioner within ten days after declaring any dividend the amount of the 301 National M on et a r y Co mmi s s i o n dividend, the amount carried to surplus, and the amount of excess net earnings (6170). Receivers report all their acts to the commissioner (6184). (See Banks and Savings banks for the list of stockholders required to be sent every year to the secretary of state (11364, etc.) and the report of un claimed deposits (1218). EXAMINATIONS. The commissioner or a subordinate examines once every year, and when requested by the directors, the cash, bills, securities, books, condition, etc., of every trust company, to determine among other things whether the company transacts its business at the place designated in its articles of incorporation and whether it complies with law (6173). IV.— R eserve R equirements. Every trust company must keep on hand funds to an amount equal at least to 20 per cent of its matured obliga tions and money due and payable, three-fourths of which reserve may be kept in any bank or trust company ap proved by the commissioner of the banking department (6165). V.— Discount and L oan R estrictions. Trust companies may “ loan money upon real estate and collateral security” (6164). VI.— I nvestments. Any trust company may hold personalty which is neces sary to carry on its business, or which it is necessary to acquire in the enforcement of claims, etc.; also real estate, but only for the following purposes: Such as is necessary 302 Michigan Trust Companies for the convenient transaction of its business, including with its office other apartments in the same building which may be rented, but this investment must not ex ceed 50 per cent of its paid in capital and surplus; such as is conveyed to the company in satisfaction of previous debts; and such as it purchases at judicial sales under liens held by it, but it must not bid more than is neces sary to satisfy debt and costs. Real estate of the second and third sorts may not be reckoned as an asset for longer than five years. Real estate may, of course, be held in trust (6165). The capital which is required to be deposited in the state treasury must be invested in bonds secured by mortgages, or notes and mortgages on unincumbered real estate in Michigan, worth double the amount secured, or in securities of the United States, or of any State that has not defaulted on principal or interest in ten years, or of any municipality in Michigan or in any other State. The balance of the capital stock, together with trust funds, may be invested in or loaned on securities of designated sorts, or whatever real or personal securities the directors think proper (6166). X I.— P enalties . A trust company which fails to report is subject to a penalty of $100 a day (6171). See Banks and Sav ings banks for the penalties for failure to send annually a list of stockholders to the secretary of state and for failure to report unclaimed deposits. If the officer of a trust company whose duty it is to keep a book for names of stockholders, transfers of stock, etc., fails to keep the book he is liable to a penalty of $100 for every day’s neglect, and if he refuses to exhibit the book to a person rightfully demanding inspection he is subject to a penalty of $50 (6178). See also the last paragraph under X I in y>3 N at ion a l M onet ary Commission Banks and Savings banks, for 1909 statutes which pro vide penalties for making various false statements to procure credit, circulating rumors derogatory to a trust company’s credit, etc. Every officer, director, or employee who embezzles or commits various frauds, including false entries or reports to deceive an examining officer, is imprisoned for not longer than twenty years (6187). The directors and officers of a trust company who receive money or prop erty knowing the corporation is insolvent are guilty of a misdemeanor punishable by fine of not more than $1,000, imprisonment for not longer than a year, or both. Officers or employees who assist in the violation of any provision of the trust company act are guilty of a mis demeanor punishable by a fine of not more than $1,000, or imprisonment for not longer than one year (6162). 304 MINNESOTA. The Revised Laws of Minnesota, including all statutes enacted prior to the session of 1905, contain a division dealing with “ Financial corporations.” This in turn is divided into “ general provisions” (secs. 2967-2982), “ banks” (secs. 2983-3008), “ savings banks” (secs. 30093032), “ trust companies” (secs. 3033-3047), “ local build ing and loan associations” (secs. 3048-3058), and “ gen eral building and loan associations” (secs. 3059-3067). The digest, which follows this arrangement of the statute, is confused by the necessity of inserting important statutes, chiefly of 1909, which seem for the most part properly under “ General provisions,” and leave it doubtful just which of the old sections they repeal. One of the 1909 stat utes creates the office of superintendent of banks, who takes over the work formerly in the hands of the public ex aminer; but since the statutes all read “ public examiner,” they are so digested, leaving it for the reader to note that the new official is now substituted. Under heading “ Gen eral provisions ’ ’ are inserted such parts Pf the statute on financial corporations and such other provisions of the Minnesota statutes as apply generally to all three kinds of banking institutions. Under “ Banks,” “ Savings banks,” and “ Trust companies,” respectively, are inserted the pro visions applicable to each class. Where the references are simply numbers in parenthesis, they are to sections in the Revised Laws of 1905. Other references are to the later statutes by year and chapter; they have been ex amined through the laws of 1909. S. D o c. 3S3, 6 i -2- -20 305 N at i on a l M on e t a r y Commission GEN ERAL PROVISIONS. II.— L iabilities and D uties of D irectors. There must be at least three directors, who must be stockholders (2858). III.— Supervision . Two late statutes alter the system of bank supervision materially; one, chapter 201 of 1909, creates a depart ment of banking in charge of a superintendent of banks, provides for a system of examination, etc., and the other, chapter 179 of 1909, provides for proceedings against de linquent corporations and for the liquidation of their assets. The department of banking has charge of the execution of all laws relating to banks, savings banks, trust com panies, building and loan associations, and other financial corporations chartered under the laws of Minnesota; the chief officer of the department is the superintendent of banks (1909, chap. 201, 1). The superintendent, ap pointed by the governor for a term of three years, must be a practical banker of not less than five years’ active expe rience. He must not, during the term of his office, hold any other public office, nor be a stockholder, officer, em ployee, etc., of any financial corporation within or outside of Minnesota (1909, chap. 201, 2). He is vested with all of the authority and takes over all of the duties formerly in the hands of the public examiner with respect to banks, savings banks, trust companies, building and loan asso ciations, and other financial corporations (1909, chap. 201, 4 and 5). He may appoint eight examiners and certain other employees; the examiners must have had at least three years’ active experience in the banking business. No examiner may examine any corporation in which he has a direct or indirect interest (1909, chap. 201, 8). The 306 Minnesota — General Provisions State is divided into eight districts for examination, to each of which an examiner is appointed (1909, chap. 201,9). The superintendent’s salary is $5,000 a year (1909, chap. 201, n ). The public examiner (whose duties have now devolved upon the superintendent of banks— 1909, chap. 201, 4) may, under certain circumstances, take possession of the property and business of a bank, savings bank, or trust company and hold possession until the corporation resumes business or is finally liquidated. The circumstances under which he may so act are the following: Whenever it appears to him that a bank has violated its charter or any statute, or is conducting its business in an unsafe or unauthorized manner, or that its capital is impaired; whenever it refuses to submit to examination or suspends payment, or fur nishes reason for the examiner to conclude that it is in an unsound or unsafe condition to transact its business, or that it is unsafe and inexpedient for it to continue business; and whenever it fails to observe a proper order of the examiner. This statute provides elaborately for the liquidation by the examiner of such delinquent banks, the proof of claims against their assets, the distribution of their funds to depositors, creditors, and stockholders, etc. (1909, chap. 179). Chapter 201 of 1909 provides for the repeal of all laws inconsistent with it; there is no repealer at all in chapter 179. I he digest accordingly includes in the paragraph below and in certain paragraphs in III, under Banks, under Savings banks, and under Trust companies, provi sions of the Revised Taws and of later statutes which are, in all probability, repealed by the 1909 legislation. It is to be borne in mind also that chapter 201 transfers from the public examiner to the superintendent of banks all powers and duties with respect to banks, savings banks, and trust companies, the examiner’s name is used in the digest 307 N a t io n a l M o n et a r y Commission because it so appears in the statutes, even those of 1909, except chapter 201. When the examiner is of opinion that an examined cor poration may not operate further without danger to public interests, he takes possession of its property and reports to the governor for appropriate action (2968). He super vises voluntary liquidations (2969, 2970, and 2971). Whenever any banking corporation becomes insolvent, fails to pay its debts, or violates any provision of law, it may be enjoined by the court from transacting further business (3179). In certain cases the court may appoint a receiver (3180). The examiner, before granting a certificate to an incor porating banking institution, must be satisfied that the cor poration has been organized for legitimate purposes under conditions to merit public confidence, and that it has com plied with law (2974). REPORTS. The eight examiners appointed under the statute of 1909 report to the superintendent immediately after hav ing examined the condition of any institution, making such recommendations as they deem advisable (1909, chap. 201, 10). The superintendent of banks reports annually to the governor touching his official acts, with abstracts of the condition of the corporations to which his duties relate, making whatever recommendations he thinks proper; this report he must distribute to the corporations under his charge (1909, chap. 201, 7). The examiner under the old statute reported to the governor biennially, giving an abstract of the work of his department, and the condition of the corporations to which his duties related; he might make whatever recommedations he thought proper (1907, chap. 128). After making the examination discussed below, the pub308 Minnesota General Provisions lie examiner is required, if the provision of the Revised Laws is still in force, to report promptly the condi tion of the examined corporation to the governor, es pecially with regard to infringements of law. This report the governor may publish (1584). EXAMINATIONS. Under the statute of 1909 the superintendent, through his examiners, visits, at least twice each year, every state bank, savings bank, and trust company, inspecting and verifying its assets and liabilities thoroughly enough to ascertain if its assets are correctly carried on its books; he investigates the conduct of these corporations and their systems of accounting to determine whether they accord with law and sound banking principles (1909, chap. 201, 4). The older provisions of the Revised Laws, given in the following paragraph, seem clearly overridden by the foregoing. At least once a year the public examiner was, under the provisions of the Revised Laws, required to visit all banking corporations, to inspect and verify their assets and securities, assure himself of the validity of their mortgages, and ascertain whether their transactions were legitimate (1584). The examinations might be as much more frequent than annual as the examiner thought necessary. Without previous notice he or his deputy visited and examined the business and offices of each corporation; ascertained its financial condition and its ability to perform its functions, with special refer ence to any violations of law (2968). VII.— Overdrafts . There is evidently no general objection to overdrafts, for they are mentioned as a possible liability of the director of a trust company to his corporation (3045). 309 N at i on a l M on et a r y Commission XI.— P enalties . Every person who fails to obey an order of the super intendent of banks or withholds any information called for by him for purposes of examination, or who willfully obstructs or misleads him, or swears falsely, is guilty of a felony punishable by fine of at least $1,000, or imprison ment for at least one year (1909, chap 201, 6). Any person who (1) makes a false statement to a bank, savings bank, or trust company respecting his financial condition or that of another, for the purpose of pro curing a loan from the corporation to which the state ment is made; or (2) having previously made or having knowledge that another has made a statement to a bank, savings bank, or trust company respecting his or another’s financial condition, afterwards on the faith of the state ment procures from the bank, savings bank, or trust company a loan, knowing that the statement is false; or (3) delivers to a note broker for the sale or negotiation of commercial paper to a bank, savings bank, or trust company, a false statement respecting his own or an other’s financial condition for the purpose of having the statement used to further the sale, pledge, or negotia tion of the commercial paper; or (4) having previously delivered or knowing that another has previously de livered to a note broker for the sale or negotiation of commercial paper a statement respecting his own or another’s financial condition, afterwards delivers to the note broker for the purpose of sale, pledge, or negotiation on the faith of the statement any commercial paper, knowing that the statement is false with respect to his own or another’s financial condition, is guilty of a gross misdemeanor punishable by a fine not exceeding $1,000, or imprisonment not exceeding five years, or both (1909, chap. 431). 310 S t a t e M i n n e s o t a B a n k s Corporations failing to report to the public examiner within ten days after the proper time forfeit $100 per day (2979). Persons who refuse to testify before the examiner or who obstruct or mislead him are punished by a fine of $1,000 or imprisonment for one year (1587). There is a general provision making it a felony for an officer or employee of a banking corporation to violate the provisions of the statutes (2981). It is also a felony for officers, directors, and employees to receive deposits in an insolvent bank, punishable by imprisonment for not less than one or more than ten years or by fine of not less than $500 nor more than $10,000 (5118). BANKS. I.— T erms of I ncorporation. The capital of every bank of discount and deposit must be at least $10,000 in a municipality of not over 1,000 pop ulation; at least $15,000 in one of over 1,000 and not over 1,500; at least $20,000 in one of over 1,500 and not over 2,000; and at least $25,000 in one over 2,000. The capital must be paid in full in cash (2983); when the bank pre sents its certificate of incorporation to the examiner it must present also the certificate of a solvent bank of the deposit in that bank to the credit of the proposed bank of an amount equal to its capital stock (2973.) At the end of each dividend period one-fifth of net profits must be set aside before declaring a dividend, until the surplus equals one-fifth of the capital (2987). Capital must never be withdrawn in dividends or other wise except according to the legal mode of reducing it (2997). A bank may conduct a savings department under the supervision of the state examiner (1909, chap. 178). 3” % National Monetary •II.— L iabilities and Commission D uties of Stockholders Directors. and Stockholders in banks of discount and deposit are in dividually liable for the debts of the bank in an amount equal to the amount of stock owned by them. Even after stock has been transferred, this liability continues to rest upon the transferrer for a year (1907, chap. 137). Directors of a bank whose capital is not over $15,000 must each own $300 of stock; directors in banks with a capital exceeding that sum, at least $500 (2986). III.— S upervision. A statute of 1909, digested under General Provisions, provides for dissolution proceedings. The sections given in the next paragraph, though not expressly repealed, seem in part inconsistent with the new act. When a bank is about to become insolvent its managing officers must report that fact to the examiner. If the latter is satisfied that the bank is insolvent, that its books are fraudulently kept, or that it has violated the law, he may take possession of the bank’s property, may examine the bank, and apply for a receiver (2998). If a bank fails to pay up its capital stock, or if its capital stock is im paired, it must make up the deficiency within ninety days after notice from the examiner, or go into liquidation. If it refuses, a receiver may be appointed. The examiner has authority to empower the bank to reduce its capital, avoid the receivership, and continue with smaller capital (3000). If capital is impaired by reason of cancellation of shares on which an assessment is unpaid, a receiver may be appointed if the impairment is not made good in thirty days (3002). The examiner has authority over reorganizations and consolidations (3001 and 3004). He determines what books must be kept (2991). 312 S t a t e M i n n e s o t a B a n k s REPORTS. At least four times a year, and at other times if re quested by the examiner, every bank must within seven days transmit to the examiner, in a form prescribed by him, a report stating its assets and liabilities at the close of business on a day specified in the report, if it is a special request, otherwise on the la^business day of the pre ceding month. This report is published in a local news paper (2990). Annually, banks file, with the register of deeds and the examiner, a copy of their list of stockholders with the amount of stock held by each (1907, chap. 137). The report of the examining committee of the directors of banks alluded to below is transmitted to the examiner (2988). EXAMINATIONS. The directors appoint certain of themselves as an examining committee to examine the bank’s condition semi-annually, and oftener if required. The committee reports on all assets carried on the books in excess of the actual value thereof. This report is transmitted to the examiner (2988). IV.— R eserve R equirements. Every bank keeps a reserve equal to one-fifth of its demand liabilities. One-half of the reserve must be in cash, including specie, legal tender, and national-bank notes, and the rest may be in balances due from solvent banks (2996). V.— Discount and L oan R estrictions. The total liability to any bank, as principal or surety, of any person, corporation, or firm, including the liabilities of the members, must not exceed 15 per cent of the bank’s capital and surplus, except that if the loans are on first mortgage of improved farms in Minnesota, the limit is 3*3 i N ational M onetary Commission 20 per cent, though the mortgage loans must never exceed 50 per cent of the cash value of the mortgaged land. The total liability of any officer or director must never be more than 10 per cent of stock and surplus. In reckoning these loan limits, however, discounts are not regarded as creating liability, if they are of commercial paper of cer tain sorts (1907, chap. 156). Loans to directors must be subject to the same regulations as to others and must be made by the board and acted upon in the absence of the applicant (2989). No bank may loan or discount on the security of its own stock (2992). . V I.— I nvestments. The real estate used by a bank for the transaction of its business may include premises leased to others, but the entire cost must not exceed 25 per cent of capital and surplus. It must hold no other real estate longer than five years, unless the time has been extended by certificate of the examiner. The examiner must approve of changes of location (2995 and 2976). No bank may be purchaser or holder of its own stock unless it is necessary to prevent loss on a previously con tracted debt. Stock so acquired must be disposed of within six months (2992). X.— U nauthorized B anking . Persons, firms, and individuals doing a banking busi ness must consent to supervision, otherwise they are not entitled to use the word “ bank” on stationery, or in advertisements, etc. Unauthorized use of the title “ bank” is a misdemeanor (1907, chap. h i ). XI.— P enalties . The penalty for failure to keep proper books is $10 per day (2991). 314 Savings M innesota Banks SAVINGS BANKS. I.— T erms I ncorporation. of -The statutes dealing with savings banks evidently con template institutions without capital stock. A savings bank is defined to be a corporation managed by disinter ested trustees, solely authorized to receive “ the savings of small depositors ” (1909, chap. 103). It must be shown to the examiner that it is expedient to organize a savings bank (3009), and that preliminary publication has been made of incorporators’ names, etc. (2973). The depositors in savings banks receive as nearly as possible all the profits after expenses and surplus have been set aside. When the surplus amounts to 15 per cent of the deposits, at least once in three years the savings bank divides the excess as an extra dividend, for which purpose the depositors may be divided according to the character of their dealings with the bank (1907, chap. 468, sec. 9). II. — L iabilities and D uties of T rustees . The business of a savings bank is managed by a board of at least seven trustees, residents of the county of the bank’s location (2858 and 3014). The bonds which they give may be sued upon by any person damaged by the trustees’ breach (3012). If the trustees declare a divi dend in excess of that earned, those who vote for it are liable to the bank (1907, chap. 468, sec. 9). The trustees must meet at least once a month (1907, chap. 468, sec. 3). No officer of a savings bank may engage in lending money, protesting paper, or doing any other sort of business in or about the bank except as his duties require (3024). No trustee may have any interest in the profits of the bank, nor take any compensation for his services, except when he acts as an officer whose duties 315 N at ion a l M onetary Commission require regular and faithful attendance, or as member of a committee whose duties require actual service; the board of trustees, exclusive of the one who is to receive com pensation, vote upon his salary. No trustee or officer may borrow funds or in any manner use funds except in necessary disbursements authorized by specific resolution of the board. No officer or trustee is allowed to make himself liable to the bank for money loaned or in any other way; nor may he become employed by any other savings bank (1907, chap. 468, sec. 4). I l l .— S upervision . The examiner passes upon the expediency of proposed organizations (3009). When he believes that a savings bank is conducting its business in an unsafe or unauthor ized manner, he directs the methods to be discontinued. If the bank refuses to comply or make report, or if the examiner thinks it unsafe for the bank to continue busi ness, he may institute proceedings for removal of trustees, transfer of corporate powers to other persons, or any other appropriate action (3030). See General Provisions, III, for the important statute of 1909 on proceedings by the examiner against corporations which are in default. REPORTS. The trustees report annually, in the form prescribed by the examiner, the condition of the savings bank at the end of the preceding calendar year. The report is based on the examination discussed below, and includes the items there enumerated (1907, chap. 468, sec. 10). EXAMINATIONS. The trustees annually cause a thorough examination to be made by an expert accountant, showing the savings bank’s condition at the end of the year, specifying the 316 M innesota — Savings Banks following: Loans or notes secured by mortgages, with items as to locality, amounts paid, foreclosures, etc.; value of bond investments, with particulars; loans on pledge of securities, with particulars; defaulted interest on obliga tions held; investments in real estate; cash on hand, on deposit, and where deposited; such other information as the public examiner may require (1907, chap. 468, sec. 10). Also amount due depositors, and all claims against the savings bank which may be a charge on its assets; various items with regard to deposits; their amounts; the amounts withdrawn; dividends declared; number of accounts, etc. (3028). V.— Discount, L oan , and D eposit R estrictions. No trustee or officer may borrow the funds of a savings bank nor become liable to the bank as surety (1907, chap. 468, sec. 4). See VI, below, for further loan restrictions. Savings banks must receive all money offered for deposit in amounts of not less than $1 nor more than a maximum fixed by the bank’s by-laws, which must, however, never exceed $5,000 (3017). VI.— Investments. Savings banks must not hold land and buildings for the transaction of their business in excess of a value equal to 50 per cent of the net surplus of the bank (2976). Savings banks may hold land sold on foreclosure of mortgages owned by the bank, or upon judgments in favor of the bank, or they may take land in settlement of debts, or in exchange as part of the consideration of land they sell. This land must ordinarily be sold within ten years of its acquirement (3021). The authorized securities for sav ings bank investment include only the following: First, United States securities; second, bonds of any State which has not defaulted within ten years; third, bonds of coun- 317 National Monetary Commi ssi on ties, cities, etc., in Minnesota and neighboring States, or securities of Minnesota, or securities of cities, counties, etc., in the United States of at least 3,500 inhabitants, but the total bonded debt of the municipality must not exceed 10 per cent of its assessed valuation; fourth, notes secured by mortgages on unencumbered realty in Minne sota and neighboring States worth, if improved, at least twice, and if unimproved, at least three times, the amount loaned, but not more than 70 per cent of the money of the bank must be loaned in this way; fifth, notes secured by such bonds or mortgages as the bank is authorized to in vest in, but the collateral must not be taken for more than its par value, the securities must equal the full amount loaned, the loan must be for not more than a year and no greater to any one person than 3 per cent of the deposits of the bank— not more than one-fourth of the bank’s deposits must be thus loaned; sixth, railroad bonds of companies which have received a land grant from the Government, if the bonds are a first lien upon the railroad; seventh, bonds of other railroad companies which are a first lien upon a railroad within the United States, or in refunding mortgage bonds of such a railroad, or in the bonds of any railroad in the United States guaranteed by another rail road in the United States, provided that the railroad com pany, except one whose bonds are thus guaranteed, has not within five years failed to pay dividends of not less than 4 per cent on its whole capital, and has not defaulted in payment on its bonds— savings banks, however, must not invest in railroad bonds more than 20 per cent of their deposits nor more than 5 per cent of their deposits in the securities of one railroad; eighth, in debenture stock of a Minnesota railroad, if the stock bears interest at at least 4 per cent and is secured by a first lien on the railroad, but not more than 5 per cent of the bank’s deposits may be thus invested (3022, and 1907, chap. 468, secs. 7 and 8). 318 M in n es ot a — Trust Companies Deposits must be promptly invested, except so much, not exceeding 15 per cent, as may be required for current necessary disbursements. This expense fund may be put into demand loans secured by securities of the first two classes, or if these loans are not to be obtained, the fund may be deposited in solvent authorized banking institu tions in Minnesota, New York City, or Chicago (3023). Savings banks must not deal in property or engage in other business not essential to the transaction of its own (3024). X.— U nauthorized B anking . Only savings banks and safe deposit and trust companies complying with all provisions of the law applicable to the business done are allowed to make use of letter heads, advertisements, etc., representing them authorized to transact that sort of business, or to use “ savings” or “ trust” in their names, or to solicit or do a savings bank or trust company business. An exception is made for state banks, which may conduct and advertise a savings department. The penalty for breach of these provisions is $100 a day (2978, amd. by 1909, chap. 178). X I.— P enalties . 1 he trustee who becomes interested in the savings bank’s profits, or who takes unauthorized compensation, or becomes obligated to the bank, or becomes employed by another savings bank, vacates his office and becomes ineligible to office in any savings bank. Six months’ neg lect of duty by a trustee is also cause for loss of office (1907, chap. 468, sec. 4). TRUST COMPANIES. I.— T erms of I ncorporation. The capital of a trust company must be not less than $200,000 nor more than $2,000,000. Before it transacts business at least $200,000 must have been actually paid in National Monetary Commission in cash, and at least one-fourth of its capital must have been invested in securities belonging to classes first, second, third, fourth, seventh, and eighth of the authorized invest ments for savings banks. The securities thus invested in are deposited with the public examiner, as a guarantee for the trust company’s faithful discharge of its duties. The company collects the income and may exchange securities (3033)- Trust accounts must be kept separate from the com pany’s general accounts (3044). II.— L iabilities and D uties of D irectors. Directors must own at least ten shares of stock, and a majority of them must be residents of Minnesota (3034). I l l .— Supervision . The provisions of 1909, chap. 179 (see General Provi sions, III), though they do not expressly repeal the fol lowing section, seem inconsistent writh it: When the offi cers of a trust company believe that it is about to become insolvent, they report to the examiner. If he believes from that report, or from his own examination, that it is conducting its business unlawfully or unsafely, or that it is insolvent, he may take possession of the company’s affairs for a thorough examination. If necessary, the examiner may then apply to a court for a receivership. The court judges of its necessity (3047). REPORTS. Trust companies annually render the public examiner a detailed account of their condition, with such supple mentary information in relation to particular transactions as the examiner may require. A cbndensed statement of the annual account with a list of the directors, approved by the examiner, is published in a local newspaper (3046). Trust Minnesota V.— D iscount and Companies L oan R estrictions. Trust companies may not loan any funds to officers or employees. No officer or employee may become indebted to a trust company by means of overdraft or other con tract (3045). V I. — I NVESTMENTS. The entire cost of land and buildings for the transaction of a trust company’s business must not exceed 25 per cent of its capital and surplus (2976). A trust company may acquire real and personal property necessary for its business. If it acquires real estate on foreclosure of a mortgage in the course of its legitimate business, it may deal with the real estate for its best interests, and may purchase if necessary at foreclosure or judicial sale. It may loan money and secure these loans by mortgage, purchase and sell securities, and may guar antee title to securities sold by it (3035). In ordinary cases trust funds must be invested in the same securities authorized for savings bank investments (3040). It must not engage in unauthorized businesses (3045). V II. — Overdrafts. No officer or employee may become indebted to his corporation by means of overdraft or other contract (3045)X .— U nauthorized T rust Company B usiness . See Savings Banks, X. X I.— P enalties . Directors who borrow from the trust company are guilty of larceny (3045). S . D o c. 3S3, 6i>-a----- a i I 321 MISSISSIPPI. The Code of 1906 contains one brief chapter (14), enti tled “ Bank statements,” practically the only banking law of the State. The digest includes this chapter, a few other sections of the Code relating to banks, and two stat utes of 1908. The references that are simply numbers in parenthesis are to sections in the Code of 1906. Since the statutes make no effort to provide separately for dif ferent classes of banking institutions, the digest is not divided under the usual three heads; each provision is given, using the words of the statute, whether “ banks,” or “ banks and trust companies,” etc. The digest carries legislation through the session of 1908. I.— T erms of Incorporation. “ Every bank and every person, corporation, or asso ciation of persons * * * organized to receive money on deposit, issuing, buying, or selling exchange, or doing a banking business ” must have, in towns of 500 or less, a capital of not less than $10,000, and in towns or cities of over 500, not less than $15,000. This must be paid in in cash before business is begun, and, if the capital is larger, the additional amount must be paid in in not less than five equal monthly installments (1908, chap. no). Any bank with a paid up capital of at least $100,000 may include a trust company business in its transactions (263). “ Such corporations” (by which trust companies appear to have been meant) are governed by the same laws as other banking institutions (264). 322 M i s s i ss i p p i II. — L ia b il it ie s General and Provisions D u tie s of S to ckh o ld er s D ir e c t o r s . and There is no provision for liability of shareholders in banks. The board of directors “ of every bank” must hold at least three regular meetings a year to make full investi gation of the affairs of the bank (262). The directors, or a majority of them, “ of all banks, branch banks, and trust companies” must personally inspect the affairs of the institution on the first Wednesday of January, April, July, and October, or within ten days after those days (1908, chap. no). The latter of the two provisions just stated seems to override the former in the matter of requir ing four inspections a year by directors instead of three. The director of any “ bank of deposit” who authorizes a loan in excess of one-fifth of the capital to any officer or director is individually liable to the bank for loss thereby sustained (922). 111.— S u p e r v is io n . Apparently there is no particular official charged with the supervision of banks; the auditor of public accounts receives reports, etc. reports. “ Every bank and every branch bank and every person, corporation, or association of persons receiving money on deposit, or issuing or buying and selling exchange, or otherwise doing a banking business ” must make a bal anced statement to the auditor at least four times a year with reference to the condition of the bank, its resources and liabilities, and the amount of indebtedness to the bank of owners, stockholders, and directors. The auditor fur nishes forms. The statements are published in a local newspaper (1908, chap. 111). The requisitions must be 323 National Monetary Commission made at times known only to the auditor (257). After providing that a bank may also do the business of a trust company, it is said that “ such corporation” must make the same reports as other banking institutions (264); it is clearly meant that trust companies must make the reports. Directors of “ banks, branch banks, and trust companies” after their quarterly inspection must report their findings to the auditor (1908, chap. no). For reports required for purposes of taxation see 4273; and for the penalty for failing to make those reports, 1048. EXAMINATIONS. There seems to be no provision for examination by an official of the State. The board of directors make the examinations explained above (262, and 1908, chap. no). V.— D isco u n t and L oan R estr ic tio n s . “ Banks” may loan money to their stockholders; but “ a bank of deposit” must not loan a sum greater than one-fifth of its capital to any officer or director (922). Trust companies (that is what “ such corporation” seems to mean in the section) may loan “ on real estate or col lateral security” (264). VI.— I nvestments. Trust companies may own such real estate as is required for the convenient transaction of their business, and such as they may acquire in the enforcement or collection of debts due them (265). VIII.— B r a n c h e s . There is a provision in the Code of 1906 forbidding the establishment of branches; there may be no branch banks in Mississippi, and no Mississippi bank may establish a 324 Mississippi General Provisions branch in Mississippi or elsewhere (260). For branches already operating when this statute went into effect it was provided that there should be set apart and devoted to each branch not less than $10,000 of the parent corpora tion’s capital for the exclusive use of the branch (261). X .— U n au th o rized B a n k in g . “ Bank” or “ banking” must not appear in the name of an institution not authorized by its charter to do a banking business, and “ trust” or “ trust company” must not ap pear in the name of any corporation not authorized by its charter to transact a trust company business (266). X I.— P e n a l t ie s . The penalty for rendering a false statement of the affairs of a banking corporation is a fine upon the mem bers of not less than $100 (1908, chap. n o). Failure to make the regular statement required within ten days after the requisition is mailed entails a penalty upon the bank or banking house of $25 a day (258). If the direct ors of any “ bank, branch bank, or trust company ” fail to make an inspection quarterly and certify their findings to the auditor, the corporation suffers a penalty of from $100 to $500 for each failure (1908, chap. n o). The officer or employee of “ any bank” or “ establishment conduct ing the business of receiving deposits,” who knowing the establishment to be insolvent receives deposits without informing the depositor of its condition is punished by not more than five years’ imprisonment (1169). 325 = MISSOURI. The digest of the banking statutes of Missouri is based on the compilation of the banking laws published in 1908 by the secretary of state of Missouri. In the Revised Statutes of 1899 there were, in Chapter X II, three articles pertinent to our subject: Article VIII, “ Banks of deposit and discount;’’ Article X II, “ Trust companies;” and Article X III, “ Savings and safe-deposit institutions.” The laws of 1907 enacted complete new articles to super sede those three, and added Article X X , “ State banking department.” These new laws went into effect January 15, 1909. It is a provision of the constitution of Missouri that acts authorizing or creating corporations with bank ing powers, except banks of deposit or discount, and amendments, be submitted to popular vote (constitu tion, Art. X II, sec. 26). The provisions of Article X X are in the main applicable to all three classes. They have been inserted once under “ Banks,” and are merely mentioned under “ Savings banks” and “ Trust companies.” A few’ of the provisions of Article V III which are applicable only to unincorporated bankers are inserted; in many respects private bankers are made subject to the same rules as banks of deposit and discount (VIII, 29). The references are by article and section, the Roman figure representing the article; the Arabic, the section in that article. The statutes have been examined through those of 1909. 326 S t a t e M i s s o u r i B a n k s BANKS. I.— T erm s oe I n co r po r atio n . The title of the article on commercial banks is “ Banks of deposit and discount.” There is no provision forbid ding such banks to accept savings deposits, nor does it seem that such a rule is to be implied from Chapter X III, section 9, which forbids savings banks to transact a busi ness of banking, whether of issue, deposit, or discount, especially since banks may pay interest on deposits (VIII, 4). The cash capital of every bank must be not less than $10,000, nor more than $5,000,000, and for banks situated in cities of 150,000 or more, the cash capital must be not less than $100,000 (VIII, 6). The shares must be not less than $100 each (VIII, 7). One-half must be paid up in lawful money before business is begun (VIII, 10). The remaining half must be paid up in cash within a year (VIII, n ). The bank commissioner makes a preliminary examination before granting the certificate of incorpora tion (VIII, 5). Dividends may be declared semiannually, if they have been earned, but there must be no dividend if the capital has been impaired so as not to be worth in good resources the full amount paid in. When the capital stock is impaired to the extent of 25 per cent, the bank must cease doing business, unless the capital is made good within sixty days or reduced equal to the impairment (VIII, 16). Before declaring a dividend, every banking institution must set apart 10 per cent of the net profits for the dividend period for surplus fund, until it amounts to 20 per cent of the capital stock (VIII, 21). A further provision for a larger permanent surplus, important in determining if 3 27 N ation a l M o n et a r y Commission there are excessive loans, is discussed under V, Loans (VIII, 20). Private bankers, that is, those not incorporated, who receive deposits, sell exchange, etc., must have a paid-up capital of at least $10,000, and if carrying on business in a city of 150,000 or more, a paid-up capital of at least $100,000 (VIII, 27). Private bankers must set apart 20 per cent of each year’s net profits, until they have a sur plus of 20 per cent of their capital (VIII, 28). II.— L ia b il it ie s and D u t ie s of D ir e c t o r s . S tockh o ld er s and It is a constitutional provision that dues from private corporations may be secured by such means as may be prescribed by law, but that in no case is a stockholder to be individually liable in any amount above the amount of stock owned (constitution, Art. X II, sec. 9). If any shareholder in a bank transfers his shares before they are fully paid, he, as well as his transferee, is liable for a year for whatever is still due (VIII, 7). The board of directors of every bank consists of from three to twenty-one shareholders, each a resident of the State and holder of at least two shares. No shareholder is eligible if the bank holds a judgment against him. The board must meet once a month to pass upon the business since the last meeting (VIII, 9). Any officer or director who assents to declaring a dividend while the capital stock is impaired, is personally liable to the creditors of the corporation for loss occurring because of the dividend (VIII, 16). Any director or officer of a bank or banking institution, organized under any law of Missouri, who receives deposits or creates debts after he has knowledge of the institution’s insolvency, is indi vidually responsible for the obligations so contracted (VIII, 23). It is a constitutional provision that the 328 M i s s o u r i S t a t e B a n k s officer or director who participates in the reception of deposits of this sort, or the creation of debts, is guilty of a crime, and is individually responsible (constitution, Art. X II, sec. 27). I l l .— S u p e r v isio n . There is a state bank department under the control of a bank commissioner (XX, 2). The commissioner holds office for four years. He and his deputy must have had at least three years’ practical experience in banking busi ness, or have served three years in some state banking department. No one interested in a bank or trust com pany is eligible (XX, 3). The commissioner’s salary is $3,500 a year with necessary expenses (XX, 5). The commissioner and his subordinates must keep secret information obtained in the course of examinations, except so far as their public duty may require it to be divulged (XX, 8). The commissioner and his employees must not accept payment other than the salary fixed by law (XX, 19). If the commissioner has reason to believe that the cap ital of any corporation subject to his control is impaired, he requires the deficiency to be made good. If, from an examination or otherwise, it appears that any bank, sav ings bank, or trust company receiving deposits is con ducting its business in an unsafe or unauthorized manner, the commissioner directs the illegal and unsafe practices to be discontinued. If any corporation refuses to obey his orders, or if it appears to the commissioner that it is unsafe or inexpedient for the corporation to continue business, or that losses are threatened, etc., the commis sioner requires the attorney-general to institute whatever proceedings the case may require, such as removal of officers or other remedy. If, from an examination, it is discovered that a bank, savings bank, or trust company is 329 National Monetary Commission insolvent, or that its continuance in business is dangerous, and if the official who made the examination recommends that the bank be closed, then the commissioner may immediately close the corporation and take charge of its property. He examines its affairs thoroughly to ascer tain its condition, and if he finds it insolvent, requires the attorney-general to institute proceedings for a receiver. The commissioner may appoint a special agent to act as receiver for a period not longer than sixty days. A bank, savings bank, or trust company may voluntarily put itself in the control of the commissioner (XX, io). All bank ing corporations are forbidden to make a general assign ment, and are required to put themselves in the hands of the bank commissioner instead, if they are threatened with insolvency (XX, 13). If any of these corporations refuses to be examined, receivership proceedings may be instituted (XX, 14). If the corporation’s own stock, acquired by it under provisions discussed later, is not dis posed of within six months, receivership proceedings may be instituted (XX, 15). Private bankers are subject, so far as possible, to the provisions in the above paragraph. Moreover, if they loan on account of the personal security of one of the owners of the private bank in excess of 10 per cent of its capital and surplus, the commissioner may have them put into the hands of a receiver (XX, 16). If the commissioner or his subordinate report fraudu lently, any one injured by the fraud may sue on the official’s bond. Neither the commissioner nor any sub ordinate may be receiver of a corporation he has exam ined (XX, 18). REPORTS. In the article applicable only to banks, there is the requirement that each bank must furnish, whenever so 330 M i s s o u r i — S t a t e B a n k s required by the commissioner, a statement of its actual condition at the close of business on a past day designated by him (VIII, 12), in a form prescribed by the statute, and including the following items: Resources— Loans and discounts, undoubtedly good on personal or collateral; loans, real .estate; overdrafts; bonds and stocks; real estate (banking house); other real estate; furniture and fixtures; due from other banks and bankers, subject to check; cash items; currency; specie; other resources. Liabilities— Capital stock paid in ; surplus fund; undivided profits, net; due to banks and bankers, subject to check; individual deposits, subject to check; time certificates of deposit; demand certificates of deposit; cashiers’ checks; bills payable and rediscounts; other liabilities (VIII, 13). This statement is published in a local newspaper (VIII, 14). The bank commissioner gives no notice of the day on which he will call for a statement. He makes calls for statements twice a year, and oftener if he thinks necessary (VIII, 15). Private bankers are, for purpose of reports and in every other case where the article on the state banking department is applicable, made subject to the same rules that apply to banks (VIII, 29). In the article on the state banking department, it is provided that in addition to all other examinations or reports, every bank, savings bank, and trust company receiving deposits must have an examination made by at least three shareholders into all the affairs of the company; on this examination they base a report including various particular items, and such others as the bank commis sioner may require, which report, within ten days after the completion of the examination must be filed in the insti tution and with the commissioner. He sends out a call at least every year with blanks for this report (XX, 17). Whenever a bank, savings bank, or trust company has been placed in the hands of a receiver, the bank com 331 N at i on a l M onetary Commission missioner, if he thinks it necessary, may make special examinations, the result of which he reports to the court which appointed the receiver (XX, 12). Whatever re ports receivers make to their courts they file duplicates of with the commissioner (XX, 11). The result of all examinations during the previous year is embodied in a report made by the commissioner to the legislature (XX, 9). EXAMINATIONS. A preliminary examination is made by the commis sioner before he grants a certificate of incorporation to any bank or trust company (VIII, 5). At least once a year the commissioner causes an examination to be made of every bank and trust company receiving deposits (XX, 9). Special occasions, when the commissioner makes exam inations, were discussed above; he does so when he has taken possession of the assets of a corporation prior to proceedings for a receivership (XX, 10) and also when a corporation has been declared insolvent and placed in the hands of a receiver, and the interests of the depos itors and creditors seem to require an examination (XX, 12). Also, as above explained, in addition to all other examinations required, every bank, savings bank, and trust company receiving deposits must make at least yearly, by a committee of at least three shareholders, a thorough examination, on which they base a report in the form prescribed by the commissioner (XX, 17). IV.— R eserve R equirements. Banks must keep an account of cash on hand and cash due from other banks equal to at least 15 per cent of de mand deposits. Whenever the reserve falls below 15 per cent no new loans may be made (VIII, 8). 332 S t a t e M i s s o u r i V.— D iscount and B a n k s Doan R estrictions. No bank may loan to any person or company an amount exceeding 25 per cent of its capital stock. For this purpose the bank may consider as capital stock a permanent surplus, the setting apart of which has been certified by the commissioner and which can not be diverted without due notice to the commissioner. This surplus must be equal to or in excess of 50 per cent of the capital. The discount of certain commercial paper well secured is not considered as money borrowed, however (VIII, 20). No director or officer of a bank may borrow in excess of 10 per cent of the capital and surplus without the consent of a maiority of the directors, exclusive of the borrower (VIII, 9). No bank, savings bank, or trust company receiving deposits may loan on the security of its own shares unless necessary to prevent loss upon a previous debt, in which case the stock must be gotten rid of in six months (XX, 15). VI.— I nvestments. It is a constitutional provision that no corporation may hold real estate for a longer period than six years, except such as is necessary and proper for carrying on its legiti mate business (constitution, Art. X II, sec. 7). Banks are prohibited from employing their funds in commerce by buying and selling goods, etc., but they are allowed to sell all kinds of property which may come into their possession as collateral security for loans, or in the ordinary collection of debts (VIII, 19). Banks, savings banks, and trust companies are forbidden to purchase shares of their own stock unless the purchase is necessary to prevent loss on a debt previously con tracted, in which case the stock must be sold within six months (XX, 15). 333 N a t ion a l M onetary Commission VII.— Overdrafts. These seem surely allowed in the case of banks, for they appear as an item in the resources in bank statements (VIII, 13). IMforeover, it seems they must be generally permitted in the case of banks, savings banks, and trust companies, for in the provision for annual examinations to be made by a committee, it is provided that they exam ine into overdrafts (XX, 17). V III.— B ranches. Branches are forbidden (VIII, 4). X .— U nauthorized B anking . No one may advertise by a sign or in a newspaper or on letter heads, etc., using the words “ bank,” “ banker,” or “ banking” unless doing business under United States or Missouri law (Revised Laws of 1899, sec. 1947) XI.— P enalties . If the bank commissioner or his subordinate discloses information except in the course of duty, he is guilty of a misdemeanor, punishable by forfeiture of office and a fine of from $100 to $1,000 (XX, 8). If the commissioner warns banks of an approaching report, he is guilty of a misdemeanor, punishable by loss of office and a fine of not less than $500 (VIII, 15). If the commissioner or a subordinate is guilty of breach or neglect of duty for which no other penalty is provided, he commits a felony, punish able by imprisonment in the penitentiary for from two to five years, or fine of from $100 to $1,000, or imprisonment in a county or city jail for from one month to twelve months, or both fine and imprisonment (XX, 20). Officers of banks who refuse to make the semiannual statement required by the commissioner, or make a false 334 M isso u ri Savings Banks statement, are guilty of a misdemeanor, punishable by fine of from $100 to $500, or by imprisonment of from one to twelve months, or by both (VIII, 15). It is also provided in the article on commercial banks that private bankers who refuse to render reports or who make false reports or who violate other provisions of the article are guilty of a misdemeanor, punishable by a fine of from $500 to $5,000, or imprisonment of from one to twelve months, or both (VIII, 29). Any bank, savings bank, or trust company that fails to report to the commissioner, within thirty days of the notification, the result of the examination by the com mittee of three stockholders, forfeits $100 per day during the delay (XX, 17). The officer of any banking institution, including trust companies, who receives deposits or creates debts with knowledge of the institution’s insolvency, commits a felony, punishable as theft of money to the amount of the obligation created would be (Revised Laws, 1899, sec. 1945). There are other penal provisions in the Revised Laws for punishment for false entries in books, altering or forging instruments, etc. (Revised Laws, 1899, sec. 2000 et seq.). SAVINGS BANKS. I-— T erms of I ncorporation. Article X III, “ Savings and safe deposit institutions,” apparently contemplates organizations with capital stock (XIII, 2). It contemplates a safe deposit business to be done in connection with savings banking (XIII, 7), but savings banks are not allowed to transact a banking busi ness of deposit or discount (XIII, 9). The capital of savings and safe deposit institutions must be not less than $10,000 in cities of 50,000 or under, not less than $50,000 in cities of 50,000 to 150,000, and not less 335 N at ion a l M onet ary Commission than $100,000 in cities of 150,000 and over. The capital must be paid in in lawful money and is regarded as a guaranty fund for the security of depositors (XIII, 4). The capital stock must be not more than $5,000,000 (XIII, 15). Shares are of $100 each, apparently (XIII, 2). Whenever interest at not less than 3 per cent per year has been paid out of net profits for the current six months on all savings or trust funds entitled to interest, the directors may declare out of remaining net earnings a dividend on the stock not greater than 6 per cent a year. No dividend, however, may be declared until at least onetenth of the net profits for the preceding six months has been carried to a guaranty fund; this continues until the fund amounts to the capital stock. The guaranty fund must be invested according to the provisions given later under VI (XIII, 17). If for the preceding six months the net profits are not sufficient to pay a 3 per cent dividend for those six months, then whatever excess of net profits is earned in the succeeding six months over interest to depositors and contributions to guaranty fund is applied to arrears of dividends (XIII, 18). When the guaranty fund amounts to a sum equal to the capital stock, and interest has been paid and dividends on capital stock to date, then, if there are still net profits undisposed of, the directors set aside a sum not exceeding one-fourth of 1 per cent of the total deposits on that day, until the sums so set aside, known as the indemnity fund, amount to 10 per cent of the whole deposits. This indemnity fund is held as an added security against loss (XIII, 19). Wrhen the guaranty fund amounts to as much as the capital stock, and interest and dividends have been paid to date, and the indemnity fund has risen to 10 per cent of the whole deposits, then, if the net profits still amount to 1 per cent of the deposits that have remained in the bank for at least one year preceding, these profits are at the end of every 336 M iss ou r i — Savings Banks three years divided among the depositors whose deposits have remained in the bank at least one year preceding, the division being in proportion to the amount of interest which has been paid on the deposits during the three years next preceding (XIII, 20). In no case may interest or dividend be paid until the directors have examined the condition of the savings bank and have found that the interest and dividend have been actually earned (XIII, 21). II.— L iabilities and D uties of Stockholders D irectors. and The provision of Article X II, section 9, of the constitu tion, that no stockholder in a private corporation is indi vidually liable above the amount of stock held, here obtains. Every savings bank has from five to thirteen directors who must be stockholders, and a majority of them must be citizens of the State (XIII, 5). A director is not dis qualified by reason of his being director or officer of another banking or savings institution (XIII, 6). Neglect of duties, or borrowing the funds of the savings bank, is ground for loss of office (XIII, 10). Meetings must be held once a month (XIII, 11). The directors must examine assets before declaring a dividend or interest (XIII, 21). Directors must not receive payment for their services unless they are such as require regular and faith ful attendance, in which case the majority, exclusive of the director who is being paid, vote the compensation (XIII, 10 and 24). No one acting for a savings bank may take a fee for a loan made by the savings bank other than appears on the face of the contract of loan (XIII, 8). The constitution makes it a crime for an officer or director of any banking institution to receive deposits when he knows the bank to be insolvent (constitution, Art. X II, sec. 27) S. Doc. 353, 6 1 - 2 -----22 National Monetary Commission III.— S upervision . For most of the provisions for supervision of savings banks, see III, under Banks. It is especially provided in the article on savings banks, besides, that when it ap pears to the bank commissioner from his examination or report that a savings bank is conducting its business in an unsafe or unauthorized way, he must direct a discontinu ance of the practices, and if the savings bank refuses to report or to comply with his orders, or if it appears to him that the corporation should stop business, that it is in a dangerous condition, or that directors or officers have been guilty of misconduct, he must institute, through the attorney-general, whatever proceedings the case requires. These proceedings may be for orders restraining paying out undue amounts of funds, or for the removal of officers or for the appointment of receivers. If the order is one restraining the savings bank from paying out funds, the commissioner may take temporary possession of the prop erty of the savings bank (XIII, 31). REPORTS. Every savings bank reports annually to the bank com missioner its condition on the 1st of September. The reports state the amount loaned on bond and mortgage, with a list of such loans; the values of bond investments, with particulars; the amount loaned on pledge of de posits, with statement of collateral; the cash on hand and on deposit, with names of depositaries; the amount of all assets, and such other information as the commis sioner may require (XIII, 26). Also all liabilities on the morning of September 1; amounts due depositors, in cluding dividends, and any other claims chargeable against the assets. The report states also the amount of deposits made during the year; amount drawn out; amount of 338 M issou r i S avings Banks interest received and earned; interest paid depositors; number of accounts opened and reopened; the number closed; the number open at the end of the year; and whatever other information the commissioner may re quire (XIII, 27). This report is based on an examina tion which must be made by not less than three directors (XIII, 28). In addition to all other reports there is the annual report after examination by a committee of three stockholders (Banks, III). The bank commissioner reports annually to the legis lature a statement of the condition of every savings bank that has reported to him during the preceding two years, with a list of new savings banks (XIII, 29). The results of all examinations made within the past year are em bodied in the annual report (XX, 9). EXAMINATIONS. Every two years, or oftener if necessary, the commis sioner examines personally or by an agent every savings bank in the State (XIII, 30 and X X , 9). The directors make an examination before declaring any interest or dividend (XIII, 21). They make a thorough examina tion upon which the annual report is based (XIII, 28). 1 here is also the examination by a committee of three shareholders (see Banks, III). IV.— R eserve R equirements. The restrictions on investments include a provision in the nature of a reserve requirement; 15 per cent of total assets must be kept as a cash fund on hand or on deposit in Missouri banks or trust companies, or national banks in Missouri (XIII, 7). 339 National Monetary V.— Discount, L oan, and Commission Deposit R estrictions. Savings banks may not loan money upon or discount notes, bills of exchange, or other personal security (XIII, 9). Loans may be made to depositors not exceeding 50 per cent of the amount on deposit from the borrower, in which case the deposit and book of the depositor are collateral (XIII, 9). No director or officer of the savings bank may borrow the funds of the bank or be indorser for moneys loaned by the bank (XIII, 10). (For loans on security of the savings bank’s own stock, see this heading under Banks.) Savings banks with a capital of $10,000 may receive deposits up to $200,000; those with a capital of $25,000 may receive deposits up to $500,000; and those with a capital of $50,000 may receive deposits up to $1,000,000. The statute provides that nothing in this article shall be so construed as to prevent the issuing of certificates of deposit payable on demand (XIII, 12). Pass books must be called in every three years and verified. The aggre gate amount of deposits received from one individual or corporation must not exceed $4,000, including dividends (XIII, 14). In allowing interest to depositors, they may be classified according to the character, amount, and dura tion of their dealings with the savings bank (XIII, 16). VI.— Investments. Savings banks may hold real estate as follows: First, a plot and building for the transaction of the bank’s busi ness, from part of which rent may be derived. The cost must not exceed $100,000 except in cities of over 300,000, where the cost must not exceed $250,000. Second, such real estate as is purchased at sales on foreclosure of mortgages owned by the bank, or upon judgments ren340 M iss ou r i Savings Banks dered for debts due it, or such as is purchased to secure old debts. All the real estate under second must be sold within five years (XIII, 8). See the constitutional pro hibition upon ownership by any private corporation of any real estate except that necessary for its business, for a longer period than six years (constitution, Art. X II, sec. 7). Savings banks must not deal in merchandise, etc. (XIII, 9). (For the provisions on purchase of its own stock by a savings bank, see VI under Banks.) The funds of savings banks may be invested as follows: First, in United States securities; second, in Missouri bonds; third, in bonds of any State that has not de faulted in payment on its bonds for five years; fourth, in bonds of any Missouri municipality that has not defaulted within five years, provided the bonded debt does not exceed 5 per cent; fifth, in the bonds of any municipality of more than 20,000 inhabitants in certain enumerated States, if the entire bonded debt of the city or county in question does not exceed 5 per cent of the assessed value of its property, and if the municipality, “ or the State in which it is situated, has not defaulted in the payment of any part of either principal or interest thereof” within five years; no savings bank may invest more than 25 per cent of its assets in bonds of municipalities outside of Missouri, nor invest more than 3 per cent in the bonds of any one of those municipalities, nor invest in more than 10 per cent of all the bonds issued by any of those munici palities, nor invest in the bonds of any of those munici palities issued to aid in the construction of a railroad; sixth, in the first mortgage bonds of any steam railway the income of which is sufficient to pay all operating expenses and fixed charges, if the railway is located in certain specified States, and if it has paid interest on the bonds for three years; the first mortgage bonds of several 341 National Monetary Commission specified railways are included; seventh, in bonds or notes secured by first mortgages of unincumbered real estate worth twice the loan, but if the loan is on unim proved and unproductive real estate it must not be more than 40 per cent of the value of the land— not more than 60 per cent of the funds of the savings bank may be thus loaned, and a committee of investigation must report on the value of the land; eighth, in real estate subject to the limitations given above. Current expenses may be met by pledging or selling securities. Fifteen per cent of the whole amount of assets must be kept as an available cash fund for current expenses. This may be kept on hand or on demand deposit in Missouri banks or national banks in Missouri or in Missouri trust companies. The deposits in any one bank or trust company, however, must not exceed 20 per cent of the total deposits, capital, and surplus of the depositor bank (XIII, 7). X I .— P enalties . The special savings bank penalties include loss of office, in the case of the director who borrows of the savings bank, or who fails to attend meetings or to perform his duties for three successive months without excuse from the board (XIII, 10), and the penalty of $100 per day payable by the savings bank which withholds a report (XIII, 28). Savings bank officers are within the felony provision for receiving deposits while insolvent (Revised Laws, 1899, sec. 1945). TRUST COMPANIES. I.— T erms of I ncorporation. The amount of capital stock must be not less than $100,000, actually subscribed, and the amount authorized must be not more than $10,000,000 (XII, 7). Before Trust M issou r i Companies business is begun, one-fourth of the authorized capital must be actually subscribed, and one-half the subscribed capital must have been paid in in lawful money (XII, 2). The bank commissioner makes a preliminary examination before business is begun (VIII, 5). Trust companies, whenever a dividend is paid to stock holders, must set aside 10 per cent of the net earnings of the last dividend period for surplus until the surplus amounts to 20 per cent of the capital (XII, 5b). Dividends may be declared every six months, or oftener, but they must not be declared while the corporation is insolvent, nor when the declaration itself will render the corporation insolvent (XII, 10). II.— L iabilities and Duties of Stockholders Directors. and Stockholders’ liability is limited by the constitution for all private corporations to the amount of stock held (con stitution, Art. X II, sec. 9). There must be not less than five, nor more than twentyfive, directors, who must be stockholders in the corpora tion, and a majority of them citizens of Missouri (XII, 7). They must meet at least monthly to pass upon the busi ness of the company since the last meeting. The records at that meeting must show aggregate debts at the time and the liability of each director and officer to the com pany (XII, 9). If the directors knowingly declare a divi dend while the corporation is insolvent, they are liable for the debts of the corporation then existing or thereafter contracted, unless they record their objection (XII, 10). See also the constitutional provision making the reception of deposits under such circumstances a crime (constitu tion, Art. X II, sec. 27). 343 N at ion a l M o n et a r y Commission III.— S u p e r v i s i o n . See the general provisions for supervision under III in Banks. If the reserve of a trust company falls below the 15 per cent required, then the secretary of state may notify the trust company to make the reserve good; if it fails to do so within thirty days, then the commis sioner may direct the attorney-general to institute what ever proceedings the case requires (XII, 5a). A deposit in certain securities to the amount of $200,000, qualifies the trust company to act as guardian, etc. (XII, 18). REPORTS. Whenever required by the bank commissioner, within fifteen days of his call, every trust company must furnish a statement giving such particulars as the commissioner prescribes of its condition at close of business on a desig nated day prior to the call. This statement must be pub lished in a local newspaper (XII, 11). There is also the report of the annual examination by a committee of three shareholders (see Banks, III). The commissioner embodies in his report to the legis lature, as in the case of banks, the results of his trustcompany examinations (XX, 9). EXAMINATIONS. A preliminary examination is made before any trust company begins business to make sure that the required capital has been subscribed and paid in, etc. (VIII, 5). Regular examinations of every trust company receiving deposits are made by the commissioner or a subordinate at least once a year, and oftener if necessary (XX, 9). There is also the examination by a committee of three shareholders (see Banks, III). 344 I Missouri Trust Companies IV.— R eserve R equirements. Every trust company must have in cash on hand and due from other banks and trust companies an amount equal to 15 per cent of its demand deposits. If the reserve falls below the 15 per cent no new loans or discounts may be made (XII, 5a and 8). V.— Discount and L oan R estrictions. No director or officer of a trust company receiving deposits may borrow in excess of 10 per cent of the capital and surplus without the consent of a majority of the directors, exclusive of the borrower (XII, 9). (For provisions dealing with loans by a trust company on security of its own stock, see V, under Banks.) VI. — I nvestments. There is, as before, the constitutional provision that no corporation may hold real estate for a longer period than six years, except such as is necessary and proper for carry ing on its legitimate business (constitution, Art. XII, sec. 7). Trust companies may own only such real estate as is necessary for the transaction of their business and such as they may acquire in the enforcement and collec tion of debts due them (XII, 10). The directors of trust companies may invest “ the moneys placed in their charge” in loans secured by real estate or other sufficient collateral, in United States or Missouri bonds, or in bonds of Missouri municipalities (XII, 10). (For provisions dealing with purchase by a trust com pany of its own stock, see VI, under Banks.) V II. — Overdrafts . These seem to be permitted in the case of trust com panies, for it is provided that when the committee of at 345 National Monetary Commission least three shareholders examines a bank, savings bank, or trust company it takes account, among other things, of overdrafts (XX, 17). X I. — Penalties . The only particular penalty in the article on trust com panies is that for refusal to report or for making a false report; this is a misdemeanor on the part of an officer or director which entails a fine of not more than $500, imprisonment of from one to twelve months, or both (XII, 11). (For receipt of deposits while insolvent, see Banks, XI.) 346 MONTANA. Except for a few penal provisions, and except for minor changes effected by various chapters of the session laws of 1909, all the banking statutes of Montana are in a title at page 1137 of the Revised Codes of 1907, entitled “ Banks and banking corporations.” This title is divided into five chapters: I. Banks of discount and deposit; II. Trust deposit and security companies; III. Savings banks; IV. Endowment and investment companies; V. Foreign banking corporations; VI. Regulation of banking corpora tions. Of these, Chapter IV is not treated in the digest, and Chapter V only very briefly. The provisions of Chapter I are generally digested under the heading “ Banks,” those of Chapter III under the heading “ Savings banks,” and those of Chapter II under the heading “ Trust companies.” Even this scheme can not be consistently followed, how ever, because despite the classification in the code a num ber of sections show by their language that the statutes which form them were not designed to apply strictly to the sort of corporation designated at the head of the chapter; indeed the classification in the code, compared with the language of the sections, shows many variances. Espe cially is the word “ bank ” frequently used in such a way as to suggest that it is meant to include all three sorts of cor porations: see 3993, where after speaking of “ any bank, banking institution, or trust company ” the section refers to “ such bank; ” see also 3996. It is particularly difficult 347 N a t to n a l M on e t a r y Commission to tell, too, to what classes of corporations the provisions of Chapter VI apply, composed as it is of various statutes passed during different sessions, framed in varying terms. Where, as is in several places the case, the code includes contradictory sections, both are given, with a statement showing which is based on more recent enactment. The question in each case, which section is in force, should be studied with reference to 3553 et seq., where there are complicated rules for settling conflicts in the codes, and with reference to the original enactments found in the session laws. The language of *each section has been fol lowed in the digest so as to indicate its application as clearly as may be. References, where they are simply numbers in parenthesis, are to sections in the Revised Codes of 1907. BANKS. I.— T erms of I ncorporation. The capital stock of a bank of discount and deposit must be not less than $20,000, and must be paid into the treasury of the bank in cash before business may be begun (3909) • Dividends may be declared by any “ banking cor poration” only from net earnings (3916). Before declar ing a dividend a “ banking corporation, trust deposit and security company or savings bank” must set aside 10 per cent of the net earnings available for dividends, as a sur plus, until the fund amounts to 20 per cent of the capital of the corporation (1909, chap. 112). They may be de clared semiannually on the first Monday of January and July (3997)- M o n t a n a II.— L iabilities and S t a t e B a n k s Duties of Stockholders D irectors. and "The officers and stockholders of every banking cor poration formed under the provisions of this title (see in troductory paragraph under Montana for scope of the title and its chapters) are individually liable for all debts con tracted during the term of their being officers or stock holders of such corporation equally and ratably to the extent of their respective shares of stock in any such cor poration, except that when any stockholder shall sell and transfer his stock such liability shall cease at the expiration of six months from and after the date of such sale and transfer” (3915). There is another provision, based on a later act, making the stockholders “ of every corporation formed under this chapter or which may avail itself of its provisions ” individually liable “ for all contracts, debts and engagements of such corporation to the extent of the amount of their stock therein at the par value thereof in addition to the amount invested in such shares” (4012). Note that the words “ this chapter,” have been carried over from the language of the session laws without read justment to the code. The state examiner, F. H. Ray, considers 4012 inoperative because “ this chapter” prop erly refers to chapter 190 of the laws of 1907, which did not provide for the formation of corporations— a “ corpo ration formed under this chapter” is, in Mr. R ay’s opin ion, an impossibility therefore. Attention is called, how ever, to the continuation of the quotation, above. Every bank of discount and deposit must have not more than thirteen directors, who must be citizens of the United States, and at least three of them residents of Montana. Each director must own at least ten shares of capital stock (3912)- After providing for reports by banks, savings banks, and trust companies, the statutes go on to provide 349 that if “ any such bank ” delays a report one month beyond the time it is due or willfully violates any provisions of the act relative to reports, the directors are personally liable for all the debts of the corporation contracted previous to and during the period of the neglect (4000). III.— Supervision. The state examiner, an official appointed for terms of four years, and charged with the duty of examining vari ous public accounts, etc. (see 208 et seq.), has supervisory powers over banks, savings banks, and trust companies. As state bank examiner he approves of increases in capital stock of “ any corporation organized under the provisions of this title” (3918 and 4009), or, in the words of another section, of “ any banking association, trust, deposit and security corporation, or savings bank organized under the laws of this State” (4005 and 4009). When any “ bank organized under the provisions of this title” neglects to comply with an order within sixty days, or violates any of the provisions of the title, he makes demand upon the proper officer to begin an action to annul the corporation’s existence (3919 and 4009). He passes upon voluntary dissolutions of banks, savings banks, or trust companies (4003); he approves of reductions of capital stock (4006); he approves of reserve depositaries (4010); and he notifies banks (“ each bank organized under the provi sions of this title”) whose reserves have fallen below the requirements, to make good the deficiency (3921). All information in reports to the state examiner is con fidential and used only in furtherance of his official duties (3999) • Whenever the examiner, after a full examination of the affairs of a bank, savings bank, or trust company, finds evidences of impairment or insolvency, he submits a statement to the governor and attorney-general; and if they are satisfied that the impairment or insolvency exists, M o n t a n a S t a t e B a n k s the attorney-general gives notice to have it made good, and upon failure sues for a receiver, pending whose appoint ment the governor may direct the state examiner to take charge of the business of the corporation (4004). REPORTS. Every bank, savings bank, and trust company must make to the state examiner not less than four reports a year at his call, not less than two months to intervene between calls, according to the form prescribed by him, and containing a full abstract of the accounts of the bank, its resources and liabilities, etc. The statement must be transmitted to the examiner within five days after receipt of his request and must be published in condensed form in a local newspaper. The examiner may call for special reports when in his judgment they are necessary (3996). Moreover, “ every such bank” must report to the state examiner within ten days after declaring any dividend showing the amount of the dividend and the amount of net earnings in excess of it (3998). “ Every corporation doing a banking business in this State ” must, besides keeping the stockholders’ book generally required, post in its office the names of its directors and the number and value of shares held by each (3917). For reports required from “ every bank or banking association organized under the authority of this State,” for purposes of taxation, see 2503. EXAMINATIONS. Proceedings for a receiver are only begun when evidences of impairment or insolvency are found by the state exam iner “ after a full and careful examination of the affairs ” of a bank, savings bank, or trust company (4004). The state examiner makes a thorough examination of the affairs of a bank, savings bank, or trust company before he approves of its voluntary dissolution (4003). It is the duty of the 351 n et a r y mmtsston state examiner once a-year or oftener, without previous notice, to examine each bank, banking corporation, and savings bank (the language of this statute does not include trust companies, although it does investment and loan companies) and examine their affairs, verify the value and amount of their securities and assets, and inquire into violations of law (209). I V — R eserve R equirements. “ Each bank organized under the provisions of this title” must keep in available funds at least 20 per cent of all immediate liabilities, of which reserve one-half must consist of balances due from solvent banks and one-half of cash. When the reserve falls below the requirement, the corporation must not make any loans or discounts, except by buying or discounting sight exchange, nor make divi dends (3921). There is another section based on more recent legislation than the one just cited, which provides that “ every bank ” must keep on hand at least 15 per cent of its total deposits, of which a portion, to be determined by the directors, may be deposited in banks in cities of a certain size approved as reserve banks by the examiner, and that reserve banks must keep at least 25 per cent of total deposits in lawful money or deposited in other reserve banks (4010). The state examiner considers the second of the above two sections as the operative one. V.— Discount and L oan R estrictions. Among powers of banks of discount and deposit is that of “ loaning money on real and personal security” (3911). The total liability to “ any bank incorporated under the provisions of this title” of any person, company, or firm for money borrowed, including in company or firm liabil ities those of the members, must never exceed 15 per cent of the paid-in capital and permanent surplus of the bank, 352 S t a t e M o n t a n a B a n k s but the discount of bills of exchange drawn against existing values and of commercial paper owned by the persons negotiating it is not considered money borrowed (3920). There is a section, based on a later enactment, providing that the total liabilities of any person, firm, or corporation to “ any bank ” for money borrowed, including in firm, but not corporation, liabilities, those of the members, must never exceed 20 per cent of capital and surplus; this section excludes discount of bills and commercial paper as above and loans on warehouse receipts and bills of lading, from the classification of money borrowed (4011). It is unlawful for “ any bank, banking institution, or trust company” to loan to a managing officer without taking ample security; and when such a loan or one made to a director exceeds 10 per cent of the capital of the cor poration, it must be first approved by a majority of the directors (3993). VI I nvestments. Among powers of banks of discount and deposit are those of buying and selling the bonds or stock of Montana or of any other State or Territory, and the bonds of Mon tana municipalities (3911). Banks of discount and deposit may hold such real estate as is necessary for the proper transaction of business; such as is mortgaged to secure previous loans; such as is con veyed to the corporation in satisfaction of previous debts; and such as it purchases at judicial sale under liens held by i1: (3913)No bank of discount and deposit must hold any portion of its own capital, or of the capital of any other incorpo rated company, unless the purchase is necessary to prevent loss on a previous debt contracted on security which was thought adequate at the time; and stock so purchased must S. Doc. 3S3, 6i-a-— 33 353 National Monetary Commission not be held longer than six months, if it can be sold for what it cost or at par (3910). X .— U nauthorized B anking . The chapter on foreign banking corporations forbids them to do any banking business in Montana unless they comply with various requirements of capitalization, reserves, reports, limitations on liabilities, examinations, etc. (3976 et seq.). It is unlawful to use the words “ trust” or “ trust com pany,” “ saving,” or “ savings bank” in the title of any business unless the business is organized under the Mon tana laws relating to trust, deposit and security, and sav ings bank corporations. Violations of this provision, whether individually or as one interested in a firm or cor poration, is a misdemeanor, punishable by fine of from $300 to $1,000, imprisonment for from sixty days to a year, or both (3992). This provision is inserted under Banks because it appears in Chap. VI, “ Regulation of Banks;” it seems to fall more properly under Savings banks and under Trust companies. X I .— P e n a l t ie s . Whenever any “ bank organized under the provisions of this title ” fails to make good a depleted reserve within thirty days after notice, it is guilty of a misdemeanor pun ishable by a fine of from $100 to $500 (3921). If “ any bank, banking institution, or trust company” loans to a managing officer without ample security, or loans to a managing officer or a director in an amount exceeding 10 per cent of the capital stock, without the approval of a majority of the directors, the bank or any managing officer of it violating the rule is liable to a fine of $1,000, and in addition the officer may be imprisoned for from one to ten years (3993 and 3994). After providing for reports from 354 M o n t a n a S t a t e B a n k s banks, savings banks, and trust companies, the statutes proceed to provide that “ if any such bank ” fails to report it suffers a penalty of $20 a day (4000). Every officer or other person who wilfully makes a false statement or entry, with intent to deceive an examiner, reports falsely, etc., is guilty of a felony, punishable by imprisonment for from one to ten years (4001). The following three sections, all inserted in the code, though 8715 is the latest enactment, seem inconsistent in part: Banks, savings banks, and trust companies are for bidden to receive deposits or transact other business after they are insolvent, except that they may act as trustee for depositors, etc., keeping deposits thus made after the insolvency separate from the general assets of the bank; any officer, director, etc., knowingly receiving these trust deposits except in the manner stated in the statute is pun ishable by a fine not to exceed $10,000, imprisonment not to exceed five years, or both (4007). Any officer, agent, or clerk of a bank, savings bank, or trust company who receives deposits except in the separate trust manner just explained, or who makes a false statement, etc., with intent to deceive an examiner (this portion of 4008 seems in con flict with the later passed statute, 4001, above), is subject to imprisonment for a term not exceeding five years (4008). No bank, banking house, etc., or party engaged in banking, loan, or deposit business may accept a deposit if the bank is unsafe and insolvent; any officer, director, etc., know ingly receiving such deposit is guilty of a felony, punishable by imprisonment for from one to twenty years (8715). Whenever any provision of the banking laws as they existed in 1907 is violated, for which no particular penalty is provided, the violation is a misdemeanor (4014). 355 » N at i on a l M on et a ry Commi ssi on SAVINGS BANKS. I.— T erms of Incorporation. Savings banks must have a capital, fully paid in cash before deposits are received, of not less than $100,000; but a savings bank may organize on a basis not exceeding $500,000 capital stock, of which at least $100,000 must be paid in before deposits are received and the balance within five years from incorporation, as called for by the directors, in amounts not exceeding 25 per cent of the unpaid capital in a year (3946). The directors “ of each bank’’ (following a provision applicable to banks, savings banks, and trust companies) may declare dividends semiannually on the first Monday of January and July out of net profits (3997). Every cor poration organized under the savings-bank chapter was required, under the provisions of the Code, to set aside annually at least 5 per cent of net profits as a contingent fund until “ such surplus” amounted to 20 per cent of capital (3956). This has been changed, apparently, by a late statute digested under Banks, I, to require savings banks to carry to surplus, before each dividend is declared, 10 per cent of the amount available for dividends, until the surplus equals 20 per cent of capital (1909, chap. 112). II.— L iabilities and D uties of Stockholders Directors. and The officers and stockholders of every savings bank “ are individually liable for all debts contracted during the term of their being officers or stockholders of such corporation equally and ratably to the extent of their respective shares of the stock in any such corporation, except that when any stockholder sells and transfers stock such liability ceases at the expiration of six months from and after the date of 356 M ontana Savings Banks such sale and transfer ” (3953; see also 3915). There is in the code also the inconsistent provision in 4012, stated under Banks. There must be not more than thirteen directors, who must be citizens of the United States, and at least three-fourths of them residents of Montana. Each director must own at least 10 shares of stock (3947). No director of a savings bank may receive any pay until after whatever interest the directors have determined to allow depositors has been provided for (3952). There is also among the sections requiring reports from banks, savings banks, and trust companies the provision that if “ any such bank ” delays a report a month or willfully violates any other provision of the statute on reports, the directors are personally liable for all debts of the corporation contracted previous to and during the period of the neglect (4000) III.— Supervision . The digest of the statutes on this topic under Banks ex plains the application of the provisions that are there given. It seems as though all the sections cited there applied clearly to savings banks, including provisions for R eports and E xaminations. There is, besides, this section in the savings-bank chapter; the books of every savings bank must be open at all times to inspection by the auditor, or other persons designated by the legislature or the auditor. Every savings bank must report to the auditor its condi tion on the first Monday of January, April, July, and October, and at such other times as the auditor may call for reports, showing liabilities and assets, loans on mort gages, on collateral, and on personal securities; bonds and stocks; deposits in banks; and cash on hand (3955). Note, however, that a section passed in 1907, transfers all the auditor’s duties under banking laws to the state examiner (4009). 357 IV. — R eserve R equirements. See Banks, IV. The provisions of 3921 extend over all banks organized under the provision of the title, clearly including savings banks; the language of 4010 is simply “ every bank.” • V.— D iscount and L oan R estrictions. The provisions for limit on the amount of money to be borrowed by one person, firm, or corporation given under this head in Banks apply here; there is the same conflict between 3920, applicable to all banks created under the title, and 4011, applicable in its terms to “ any bank.” See also the provision of the savings-bank chapter that no loan on personal security may be made to any one person or firm to an amount exceeding $10,000 (3951). See Banks, V, also for the prohibition upon loans to managing officers without ample security, and loans to managing officers or directors without the approval of a majority of the directors; this section applies to “ any bank, banking institution, or trust company” (3993), and, though more recent, is thought, under the quoted language, not to override the provision in the savings-bank chapter that no director, officer, or servant of a savings bank may borrow the funds or deposits of the corporation or in any way use them in his private affairs (3952). (See also VI, below.) VI. — I nvestments. A savings bank may hold such real estate as is neces sary for the proper transaction of its business, not to exceed $150,000 in value; such as is mortgaged to it; and such as is purchased at sale on judgment or decree rendered for money so loaned. A savings bank must not deal in per358 Montana Trust Companies sonal property except such as is necessary for the trans action of its business and such as it takes as security (3954). At least one-half of the capital paid in and one-half of all deposits must be invested in United States securities, securities of some State, or securities of Montana munici palities on which interest is paid, or loaned on unincum bered realty worth at least double the loan. The remainder may be invested thus or on approved personal security, but no loan must be made on personal security of less than two responsible persons or collateral to be approved by the directors (3951). A savings bank may deposit cash on hand in a bank or trust company in Montana, but not more than $50,000 may be deposited with any one corpo ration (3958). V II. — Overdrafts. There is a penal provision that every officer, teller, or clerk of a savings bank who knowingly overdraws his account and obtains the funds is guilty of a misdemeanor (8714). X .— U nauthorized Banking . (See Banks, X.) X I.— P enalties . The provisions under this heading seem to be the same as those under Banks, X I, adding only the penal pro visions against overdrafts by savings banks’ officers given above under VII. TRUST COMPANIES. I.— T erms of I ncorporation. Trust companies are given power to “ receive money from any person or persons, corporation, or company, 359 N at ion a l M on e t a r y Commission on deposit, at such rate of interest and for such time as may be agreed upon, for the purpose of loaning and invest ing the same” (3927); and they may be formed to “ hold money on deposit payable, either on time or on demand, with or without interest” (3937). The amount of capital stock of a trust company must be not less than $100,000 nor more than $500,000, divided into shares of $100 each; $100,000 must be subscribed and paid in cash before the corporation may begin busi ness (3924 and 3936). A later section provides that the authorized capital stock shall not be more than $10,000,000 (3938). One-half the capital must be stated, in the pre liminary papers, to have been paid in in lawful money (3936). . Dividends of the profits may be declared every six months or oftener, but not while the company is insol vent nor so as to make it insolvent (3939). Before declar ing a dividend 10 per cent of the amount available must be carried to surplus, until surplus equals 20 per cent of capital (1909, chap. 112). The provisions of 3997 (see Banks, I) may apply; that section, following one applica ble to banks, savings banks, and trust companies, allows the directors of “ each bank” to declare dividends semi annually, on the first Monday of January and July, out of net profits. II.— L iabilities and D uties of Stockholders Directors. and The stockholders of every trust company are individ ually liable for all debts contracted during the time of their being stockholders to the extent of the shares held by them at the time the debts were contracted (3934). See, however, 4012, the application of which has been discussed under II in Banks. 360 1 Montana Trust Companies There must be not fewer than three nor more than twenty-five directors, all of them stockholders and a major ity citizens of Montana (3926 and 3938). If the directors knowingly declare a dividend when the corporation is insolvent, or such dividends as will render it insolvent, they are liable for the debts, then existing, and contracted later while they continue in office (3939). For the pos sible application to trust companies of the section making directors liable for debts contracted while a report is over due, see the quoted language under Banks, II (4000); the state examiner considers this section inapplicable to trust companies. Directors must make statements of the affairs of the corporation to exhibit to the stock holders at least once a year (3940). III.— Supervision . See III under Banks, where the language of the various sections is indicated to show the extent of the applica tion of each one. All sections there given on supervision, reports, and examinations seem to include trust compa nies, except, perhaps, those which cover “ all banks organ ized under the title.” Trust companies, although undoubt edly organized under the title, may not be banks organ ized under the title. There is this section on supervision in the trust company chapter: The books and records of a trust company are open to examination by the auditor of the State or such persons as he or the legislature desig nate. Each trust company reports its condition to the auditor on the first Monday of January, April, July, and October and at such other times as he desires, showing liabilities and assets; loans on mortgages, on collateral, and on personal security; bonds and stocks; deposits; and cash on hand (3940). Note, however, that a section passed in 1907 transfers all the duties of the auditor, 361 N a t io n a l M o n et a r y Commission “ under the laws regulating the business of banking,” to the State examiner (4009). IV.— R eserve R equirements. See Banks, IV ; it is questionable if these sections apply to trust companies, though it may well be that the lan guage of 3921, “ each bank organized under the provi sions of this title,” may extend to trust companies. It is more doubtful still if 4010, providing for the reserves of “ every bank,” applies to trust companies. V.— Discount and Doan R estrictions. See Banks, V, for the provisions restricting the amount of loans to one person, firm, or corporation; one of the sections there given applies to all banks created under the title (3920), the other to all banks (4011); it is ques tionable if either of these, especially the latter, applies to trust companies. It is unlawful for any bank or trust company to loan to any managing officer of “ such bank” without ample security, and when the loan or a loan to a director exceeds 10 per cent of the capital it must be approved by a majority of directors (3993). VI.— Investments. A trust company may hold all such real and personal property as is necessary to carry on its authorized busi ness, as well as such as it deems it necessary to acquire in the enforcement or settlement of demands (3928). An other section provides that a trust company may own only such real estate as is acquired for the transaction of its business and in the enforcement and collection of debts and liabilities due it (3939). The directors are authorized to invest the capital “ in good securities;” it is lawful for a trust company to invest capital and funds in mortgages 362 M o n t an a Trust Companies of unincumbered realty in Montana, in stocks or bonds of Montana or any other State, and in bonds of any Montana municipality (3930). X.— U nauthorized T rust Company B usiness. (See Banks, X.) X I.— P enalties . See Banks, X I; the language of each section is there quoted with sufficient accuracy to suggest the application as far as the section itself does. 363 NEBRASKA. All the statutes of Nebraska dealing with banks, savings banks, and trust companies in force before the session of the legislature of 1909 were contained in Chapter 8, at page 1617, of the compiled statutes of Nebraska, 1907. This chapter was repealed by an act passed at the 1909 session, printed at page 66 of the session laws of Nebraska for 1909, which enacts a complete new statute on the subject of banking. Most of this statute applies to “ banks,” which term is defined to mean “ any incorpo rated banking institution;” the term “ commercial bank” is defined to mean “ any such banking institution as shall, in addition to^the exercise of other powers, follow the practice of repaying deposits upon check, draft, or order, and of making commercial loans chiefly;” the term “ sav ings bank” is defined to mean “ any such banking insti tutions as shall, in addition to the exercise of other powers, follow the practice of repaying deposits only upon the presentation of pass books, and whose loans are chiefly made on real-estate security” (3). Trust companies are not legislated for particularly unless they are within the definition “ incorporated banking institution.” The stat ute applies for the most part to commercial banks and savings banks indiscriminately; the particular matters in which savings banks are legislated for separately are given under that heading in the digest, and of course override, with respect to savings banks, inconsistent provisions given under “ Banks;” on all other matters, however, sav 364 N e b r a s k a S t a t e B a n k s ings banks must be taken to be subject to the rules which govern banks. References in the digest are to sections in chapter 10 of 1909. BANKS. I.— T erms of Incorporation. The language of the quotations given in the preliminaryparagraph above seems to imply that commercial banking and savings banking may be combined (3); but every corporation at its organization must in its statement declare “ the nature of proposed banking business, whether commercial or savings” (15). The capital required of commercial banks is as follows: In no case less than $10,000; if the bank is located in a village or town of from 100 to 500 inhabitants, not less than $15,000; in a town or village of 500 to 1,000, not less than $20,000; in a town or village of 1,000 to 2,000, not less than $25,000; in a city or village of 2,000 to 5,000, not less than $35,000; in a city of 5,000 to 25,000, not less than $50,000; in a city of 25,000 to 100,000, not less than $100,000; in a city of 100,000 or more, not less than $200,000. The provisions giving the form in which capital may be paid in at organization are given under Savings Banks, although the wording of the statute permits of the interpretation that these provisions apply to commercial banks as well (13). Before organizing, each bank files an oath that “ the capital stock has been paid in as provided for.” The state banking board must satisfy itself that the incorporators are persons of integrity and responsi bility (16). No bank may withdraw capital in dividends or otherwise (34). Dividends may be declared semiannually of so much of net profits as seems expedient, but before the declaration the bank must carry one-fifth of net profits 365 National Monetary Commission to surplus fund, until the surplus amounts to 20 per cent of the paid-up capital (28). II.— L iabilities and Duties of Stockholders D irectors. and It is a constitutional provision that “ every stockholder in a banking corporation or institution” is individually liable over and above the amount of stock held, to an amount equal to his shares, for all liabilities accruing while he remains a stockholder (Annotated Statutes, Cobbey, 1907, sec. 650). The banking statute provides for this liability, and adds that if a stockholder transfers his shares knowing the bank to be insolvent, he continues liable (35). Another section empowers directors “ to levy and collect assessments on the stock of the banking corporation for the purpose of repairing and restoring the credit of said banking corporation, or to repair and restore any defi ciency that may occur by reason of the impairment of the capital stock of said bank” (50). There must be from three to fifteen directors, who must be stockholders (26), and a majority of them residents of the county where the bank is located, or adjacent coun ties; every director of a bank capitalized at $50,000 or less must own 4 per cent of paid-up capital, and of a bank capitalized at more than $50,000 must own not less than $3,000 of paid-up stock (12). The board of each bank must meet at least twice annually for a thorough examination of the books, records, funds, and securities of the bank; a certified copy of this record is sent to the state banking board (26). III.— Supervision . The state banking board of Nebraska consists of the governor, who is ex officio chairman, the auditor of public accounts, and the attorney-general (5). The governor 366 N e b r a s k a S t a t e B a n k s appoints a secretary of the banking board, who must be an elector of the State and have had three years’ practical experience in banking. His salary is $3,000 per year, and the clerk’s salary is $1,500. The governor also appoints examiners, who must have had three years’ experience in banking, and who may not have a personal interest in any bank they examine, nor be nor have been within a year preceding their appointment, officers or employees of banks they examine (6). The state banking board, before granting charters, satisfy themselves that the incorporators of the bank in question are persons of integ rity and responsibility (16). The banking board approves all reductions and increases in capital stock, and grants consents to voluntary liquidations (34 and 42) and con solidations (41). They approve reserve depositaries (13 and 22). Any corporation which conducts a banking business without complying with the statute of 1909 may be put into the hands of a receiver (2). When reserves fall below the required amount or capital is impaired, the state banking board may notify the bank in question to make good the deficiency; if this is not done within the time directed, a receiver may be appointed (23). If a bank takes its own stock and does not dispose of it within six months, a receiver may be appointed (25). If it appears to the banking board from an examination or report that the capital of a bank is impaired, or that the bank is con ducting its business in an unsafe or unauthorized manner, or endangering the interests of depositors, or if the bank fails to report or to comply with the statute in any other respect, the banking board institutes through the attorneygeneral a suit for the appointment of a receiver (48). Any bank examiner, when ordered by the board, may take and hold possession of a bank for a time sufficient to make a thorough examination of its condition, and if it is found 367 / National Monetary Commission to be insolvent, or to be conducting its business unsafely, or to be endangering the interests of depositors, then the examiner may hold possession of all the assets of the bank until the board can receive his report, and by proper pro ceedings institute a receivership (io). A bank may vol untarily place its affairs under control of the board by posting a notice on its door (43). After the banking board, a bank examiner, or receiver has held possession of a bank, the stockholders may place it again in condition to do a banking business, whereupon the board issues permission for a reopening in the same manner as it origi nally granted permission to begin business (50). The banking board has authority to draw upon the depositors’ guaranty fund in amounts required to pay claims of de positors in an insolvent bank; see X II, infra (52). The authority of a bank examiner, when ordered by the bank ing board, or a receiver appointed under the act, to take and hold possession of all assets of a bank is provided for, together with their fees (55). If a bank refuses to deliver possession of its assets to the board or its agent, the board communicates with a state’s attorney, who applies to court for an order placing the board or its agent in charge (56). REPORTS. It is a constitutional provision that “ all banking cor porations” must publish a quarterly statement of their assets and liabilities (Annotated Statutes, Cobbey, 1907, sec. 650). This is taken care of in the banking act by the requirement that every bank make to the banking board not less than four reports each year in the form prescribed by the board (17), including the following items: Amount loaned on bonds and mortgages; amount loaned on notes, bills of exchange, overdrafts and other personal securities, with values of securities; amount of rediscounts and of 368 c N e b r a s k a S t a t e B a n k s past-due paper; real-estate investments with cost; cash on hand and on deposit, with names of depositaries and amounts; all other assets; and other information required by the board. Each report states resources and liabilities at the close of business on a past day specified by the board, and must be transmitted to the board within five days after receipt of request. A summary of the report is published in a local newspaper (18). Special reports may be called for by the board (19). Receivers must make monthly reports to the banking board (58). State ments of average daily deposits are required semiannually to ascertain the bank’s contribution to the depositors’ guaranty fund; see infra (45). After each semiannual meeting of the board of directors of a bank they forward to the banking board within ten days a certified copy of the record of their examination into the bank’s affairs (26). After each examination by an examiner he reports the condition of the examined bank to the board (8). A list of the names and residences of stockholders, shares held by each, and amount of paid-up capital represented by the shares must be kept subject to inspection by stock holders and creditors (38). For reports required for purposes of taxation, see An notated Statutes, Cobbey, 1907, section 10955, and for those required of state depositaries, ibid., section 11366. EXAMINATIONS. The affairs of every bank are examined as often as the banking board think necessary, at least semiannually. No examiner may examine a bank in which he has a per sonal interest, nor one in which he is or has been within a year of his appointment an officer or employee (6). A bank examiner, when ordered by the board, may take possession of a bank for a long enough time to make a thorough examination into its condition, preparatory to S . D oc. 3S3, 6 1 -2 ----- 24 369 N at i ona l M o n et a r y Commission the institution of proceedings for a receiver, if they prove necessary (io). The state banking board may, if they deem it advisable, order special examinations before allowing voluntary liquidations (34); another section seems to make this examination a prerequisite to every voluntary dissolution (42). The state banking board makes careful investigation of the affairs of a bank in the hands of a receiver before allowing it to resume business (50). The board of directors of every bank make a thorough examination of its records and funds at each semiannual meeting (26). IV.— R eserve R equirements. In cities of less than 25,000 every bank must keep a 15 per cent reserve, of which two-fifths must be in cash and the rest may be deposited in depositaries approved by the state banking board. In cities of over 25,000 the reserves must be 20 per cent of aggregate deposits, of which two-fifths are kept in cash and the rest, if desired, in approved depositaries (22). When the reserves fall below the requirement, a bank may make no new loans or discounts, except by discounting or purchasing sight exchange, nor may it declare dividends, until the reserve is restored (23). V.— D iscount and L oan R estrictions. “ The aggregate amount of the rediscounts and bills payable of any corporation transacting a banking busi ness in this State shall at no time exceed two-thirds of its paid-up capital except for payment of its depositors;” nor may any commercial bank permit loans and invest ments, exclusive of reserve and banking house and fix tures, to exceed eight times capital and surplus (24). No officer, except a director who is not an officer, and no em 370 N e b r a s k a State Banks ployee of any bank, may borrow the funds of the bank; no director may borrow without the approval of the board of directors (32). No bank may loan to any single corporation, firm, or individual, “ including in such loan all loans made to the several members or shareholders of such firm or corporation, for the use and benefit of such firm, corporation, or individual,” more than 20 per cent of paid-up capital and surplus, but the discount of bills of exchange drawn against existing values, and of commer cial paper owned by the persons negotiating it, is not con sidered money borrowed. The total liabilities of the stockholders of a bank to the bank must never exceed 50 per cent of paid-in capital and surplus (33). “ No corporation transacting a banking business shall make any loan or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of any such shares, or the shares of any corporation, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith; and such stock so purchased or acquired shall within six months from the time of its purchase be sold or disposed of at public or private sale; or in default thereof a re ceiver may be appointed to close up the business of the bank. Provided, that in no case shall the amount of stock so held exceed 10 per cent of the paid-up capital of such bank ” (25). No bank may pay interest on deposits at a greater rate than 4 per cent a year (27). V I .— I n v e st m e n t s . A bank may hold real estate only for the following pur poses: Such as is necessary for the convenient transac tion of its business, not exceeding one-third of paid-up capital; such as is conveyed to the bank for debts, and 371 N at t o n a l M on et a ry Commission such as it purchases at sale under judgment on its securi ties, but the bank must not bid a larger amount than is necessary to satisfy the debts. Real estate acquired in satisfaction of debts or at judgment sale must not be held longer than five years and thirty days; at no time may the total amount of real estate held for any purpose exceed 50 per cent of paid-up capital (29). The somewhat confusing section on purchase by a bank of shares of its own stock or of that of any corporation is quoted under V, supra (25). V II.— O v e r d r a f t s . The only mention of overdrafts is in the section on reports, which includes overdrafts as one item required to be reported (18). X . — U nauthorized B anking . • It is unlawful to transact a banking business in Nebraska except by means of a corporation organized for the purpose under Nebraska law. No corporation may receive money on deposit or prosecute a banking business until it has complied with the provisions of the statute of 1909. The penalty for violation of these prohibitions is $25 a day and the appointment of a receiver to wind up the business of the offender (2). A later section of the statute declares the penalty for transacting a banking business without having obtained a charter and certifi cate to be $50 a day (20). It is reiterated that no person or persons, exclusive of national banks, are permitted to prosecute a banking business in Nebraska except corpo rations that have complied with the provisions of the statute of 1909 (5). It is unlawful to transact a banking business without obtaining a charter from the state bank ing board (11). 3 72 N e b r a s k a S t a t e B a n k s X I. — P e n a l t ie s . Any corporation failing to report, or transacting a bank ing business without first obtaining a charter and a certifi cate that the corporation has complied with the deposit guaranty law (see also X, supra), suffers a penalty of $50 a day (20). Any person who knowingly subscribes to a false report or false entry, or exhibits false papers with intent to deceive an examiner, is guilty of a felony punishable by imprisonment for from one to ten years (21). Any person who makes false oath to any statement required in the reports of average daily deposits on which assessments for the deposit guaranty fund, is guilty of a felony punishable by a fine of from $100 to $1,000, or imprisonment of from one to five years, or both fine and imprisonment (45). Any examiner who willfully makes a false report with intent to aid in the operation of an insolvent bank, or who receives a bribe to induce him not to file the report of an examination, or who neglects to examine on account of having received a bribe, is guilty of a felony punishable by imprisonment from two to ten years (8). Any officer, director, or employee who pays interest on deposits at a greater rate than 4 per cent, commits a felony punishable by a fine of from $100 to $500, or imprisonment not to exceed three years ,or both (27). Any officer, agent, or employee knowingly aiding in the receipt of a deposit after insolvency is guilty of a felony punishable by impris onment for from one to ten years (30). Any officer, direc tor, or employee who is implicated in the violation of the section forbidding officers to borrow, and directors to bor row without the approval of the board, is guilty of a felony punishable by a fine not to exceed $1,000, or imprisonment not to exceed five years, or both (32); any officer, director, or employee who permits a violation of the section forbid ding loans to any individual to exceed 20 per cent of paid 373 N ation al M on e t a r y Commission up capital and surplus, is punishable by a fine not to exceed $500 (33): the two offenses just named also render the guilty officer or employee personally liable for loss resulting to the bank (40). A violation of the section requiring the president and cashier to keep, subject to the inspection of stockholders and creditors, a list of the names and resi dences of stockholders, etc., is punishable by a fine of from $50 to $200, or imprisonment for from thirty to sixty days, or both (38). It is unlawful for an officer or employee to certify a check drawn upon the bank unless the drawer has on deposit an amount of credit equal to the face of the check; on being certified, the amount of the check must be immediately charged against the account of the drawer (39). The banking board may pay rewards not exceeding in any case $500, out of the depositors’ guaranty fund, for the apprehension of persons violating the statute of 1909 (60). Where no other punishment is provided, any breach of the statute is a misdemeanor, punishable by fine of $25 to $300, imprisonment for thirty to ninety days, or both (61). The printing or engraving of a false statement that a bank has taken advantage of the depositors’ guaranty law is declared to be a violation of the act (14). X II.— D e p o sito r s ’ G u a r a n t y S y s t e m . All banks are subject to assessment for a guaranty fund for the protection of depositors (44). On June 1st and December 1st of each year every bank files with the bank ing board a statement showing average daily deposits for the preceding six months, exclusive of public money other wise secured. A month after the reports are filed the state banking board levies assessments against the capital stock of each bank as follows: Within sixty days after the taking effect of the 1909 statute (effective July 2, 1909), onefourth of 1 per cent of average daily deposits; on January 1, 374 N e b r a s k a S t a t e B a n k s 1910, one-fourth of 1 per cent of the average daily deposits for the six months preceding December 1, 1909; on July 1, 1910, one-fourth of 1 per cent of the average daily deposits for the six months preceding June 1, 1910; on January i, 1911, one-fourth of 1 per cent of the average daily deposits for the six months preceding December 1, 1910; and on July 1st and January 1st of each subsequent year, onetwentieth of 1 per cent of the average daily deposits for the six months ending on each preceding June 1st and Decem ber 1st (45). Banks organized after the act of 1909 took effect pay 4 per cent on the amount of the capital, when the bank opens for business, this fund to be subject to adjustment on the basis of average daily deposits as shown by its first two semiannual statements. The board has power to adjust rates of assessments of these new banks so as to require each bank to contribute an equitable sum to the fund; and its first two assessments, together with its 4 per cent of capital originally contributed, must equal at least 1 per cent of daily deposits, as shown by the first two semiannual statements (45a). Banks are notified of the amount of assessments by the banking board, whereupon they must at once set apart the amount of the levy, which they keep as a depositors’ guar anty fund payable to the board on demand (46). If the depositors’ guaranty fund before July 1, 1910, becomes reduced to an amount less than one-half of 1 per cent of average daily deposits, or subsequent to July 1, 1910, to an amount less than 1 per cent of average daily deposits, the board must levy a special assessment to cover the defi ciency ; special assessments must be based on average daily deposits, and, when required for the immediate payment of depositors, may be for any amount not exceeding 1 per cent of average daily deposits in any one year (47). After the board, an examiner, or a receiver has had pos session of a bank, its stockholders may replace it in con- 375 N at i on a l M onet ary Commission dition to do business, but it may not reopen until the board, after investigation, is of opinion that its funds are wholly restored and that all advances, if any have been made, from the depositors’ guaranty fund are fully repaid with interest (50). Claims of depositors for de posits and claims of holders of exchange have priority in insolvency over all other claims except those for taxes; they are paid immediately out of the available cash in the hands of the receiver. If the cash in the hands of the receiver is insufficient to pay depositors, the court in which the receivership proceedings are had certifies to the state banking board the amount required to supply the deficiency; the board thereupon draws against the deposi tors’ guaranty fund to the amount required and transmits to the receiver these funds, which he applies to pay de positors; but the fund is not available to pay depositors in banks which have not complied with the depositors’ guaranty sections of the statute. These drafts against the fund are prorated among the solvent banks in which the fund is kept, in accordance with the amount held by these solvent banks (52). To the extent of the amount paid from the guaranty fund to satisfy claims of creditors, the banking board, for the benefit of the fund, is subrogated to the rights of “ creditors” (are “ depositors” meant?) thus paid to participate in the assets of the bank; what ever is realized by the receiver through this subrogation is deposited for the fund in the solvent banks proportion-' ately to the assessments levied against these banks (53) SAVINGS BANKS. Savings banks— that is, “ such banking institutions as shall, in addition to the exercise of other powers, follow the practice of repaying deposits only upon presentation of pass books, and whose loans are chiefly made on real 37 6 Nebraska Savings Banks estate security ” (3)— are, except as noted below, subject to the rules given under banks. The fact that on beginning business a bank must state “ the nature of proposed bank ing business, whether commercial or savings,” may imply a prohibition on combining commercial and savings bank ing in the same institution (15). CAPITAL. The minimum paid up capital of a savings bank is $15,000; in cities of from 50,000 to 100,000, the minimum paid up capital is $35,000; in cities of 100,000 or more the minimum paid up capital is $75,000. This paid up capital must consist, at the time, of lawful money carried with depositary banks approved by the banking board, or of national, state, county or municipal bonds, bank furniture, and necessary building and lots on which the building is ' situated, free from incumbrance; the bonds must not con stitute more than one-half, nor the building, lots, furniture, and fixtures more than one-third of the paid in capital, nor the furniture and fixtures more than one-tenth. The wording of this paragraph admits possibly of the in terpretation that these limitations on the form of capital apply to commercial banks as well as savings banks (13). DIRECTORS. The ownership of five shares of the capital stock of a savings bank qualifies one to be a director (12). RESERVES. The section which provides that every bank in cities of less than 25,000 must keep a reserve of 15 per cent of de posits, two-fifths in cash, and in cities of more than 25,000 20 per cent of deposits, two-fifths in cash, proceeds: “ Pro N at ion a l M onet ary Commission vided further, That savings banks shall have on hand at all times as a reserve in available funds an amount equal to at least 5 per cent of their aggregate deposits” (22). LOANS AND INVESTMENTS. Savings banks are exempted from the requirement that loans and investments, exclusive of reserve, bank ing house and fixtures, must not exceed eight times capital and surplus (24). The provisions of the section forbidding loans to a single firm, corporation, or indi vidual in excess of 20 per cent of capital stock and sur plus (see Banks, V) do not apply to the securities of savings banks enumerated in section 36 of the statute (33). The section named provides that the loanable funds of a savings bank, except its reserves, must be invested in bonds of the United States, or of any State, or of any municipality in the United States, or, when approved by the state banking board, in other bonds of known marketable value; or loaned on negotiable paper secured by the above-named securities; or loaned upon unencumbered real estate (second-mortgage loans may be made on improved farm lands, but no loans may be made on these lands or other real estate “ which, includ ing the aggregate amount of incumbrance thereon, shall exceed 50 per cent of the cash value thereof”) ; or loaned upon notes secured by collateral security of known marketable value; or held in cash; or deposited in good solvent banks. Chattel mortgages may not be taken by savings banks as collateral (36). Savings banks are not subject to the restrictions (see Banks, V) upon hold ing real estate (29). Pass books are provided for; a savings bank may issue certificates for legitimate de posits, however (37). Nebraska Trust Companies PENALTIES. Since the provision forbidding loans to an individual in excess of 20 per cent of capital and surplus does not apply to the enumerated securities of savings banks, the penalty upon officers or employees who loan in excess of 20 per cent is in so far inapplicable to savings banks (33). TRUST COMPANIES. There is no separate legislation for trust companies; if they transacted a banking business, they might be within the term “ bank,” which is defined to mean “ any incorporated banking institution,” or even within the term “ commercial bank,” which is defined to mean “ any such banking institution as shall, in addition to the exercise of other powers, follow the practice of repaying deposits upon check, draft, or order and of making com mercial loans chiefly” (3). Practically all the provisions of the 1909 statute apply to “ every corporation trans acting a banking business under the laws of this State or under the provisions of this act.” The compiler has been assured, however, by E. Royse, esq., secretary of the state banking board, in a letter dated March 24, 1909, that trust companies in Nebraska do not do a banking business. 379 NEVADA. The digest of the statutes of this State is based upon the pamphlet issued by the state banking board in 1909, which contains the three statutes under which banking is conducted. Most of the banking legislation is contained in the statute at page 251 of the laws of 1909, Chapter CXCI of that year; references in the digest, where they are simply numbers in parentheses, are to sections in that act. The other two important statutes, Chapter XCII of 1909 (p. 95), and Chapter CLXVI of 1907 (p. 362), are each cited by the year, the .page on which the statute begins, and the section. These statutes apply, except where the language is quoted, indiscriminately to banks, savings banks, and trust companies; the act at page 251 of 1909, indeed, defines “ bank,” as used in that act, to include banks, savings banks, and trust companies, and extends its provisions to all “ individuals, firms, and cor porations of any character conducting the business of receiving money on deposit or otherwise acting in the capacity of a bank” (60). It must be borne in mind therefore, that the provisions digested under “ Banks” are applicable also to savings banks and trust companies. An old savings bank statute, Chapter XCIII of 1869, was not thought sufficiently important to deserve a place in the latest compilation of the statutes of Nevada, issued in 1900, and on the suggestion of the state banking board, who took counsel of the attorney-general of the State on the question, it has been omitted from the digest. 380 S t a t e N e v a d a B a n k s BANKS. I.— T erms of I ncorporation. The statutes do not expressly allow, and, indeed, may be said by implication to forbid, the combination of com mercial and savings banking. A bank before beginning business must make a statement to the banking board, setting out, among other things, “ the nature of the pro posed banking business, whether commercial or savings” (16); a corporation may be formed “ for the transaction of a general banking business, or for the purpose of aggre gating the funds of the savings of the members thereof and others and preserving and safely investing the same for their common benefit” (1907, p. 362, 1). “ The paid-up capital stock required to entitle a corpo ration to a license” to do a banking business must be as follows: In no case less than $10,000; in a village or town with from 100 to 500 inhabitants, $15,000; in a village or town of from 500 to 1,000, $20,000; in a village or town of from 1,000 to 2,000, $25,000; in a city or village of 2,000 to 5,000, $35,000; in a city of 5,000 to 20,000, $50,000. “ The entire capital stock shall be subscribed, and at least 80 per cent thereof paid in, before such license shall be issued * * * ; and such paid-in capi tal, including the initial and subsequent payments, shall consist at the time o f” money, deposits, national, state, or municipal bonds, bank furniture, building, and the lots on which the building is situated, free from incumbrance; the public bonds mentioned must not constitute more than one-half, nor the building and lots, with furniture and fixtures, more than one-third, of the paid-in capital, nor the furniture and fixtures more than one-tenth (14). Under the previous statute, only 50 per cent of capital had to be subscribed, and 50 per cent of the subscriptions paid in in money (1907, p. 362, 3); “ the balance of the 381 capital stock remaining unpaid shall be paid in within two years ” after the bank receives its certificate of incor poration (1907, p. 362, 4): although the 1909 statute clearly overrides these provisions with respect to the amount of capital required to be subscribed and paid in at the time of incorporation, the quoted requirement that the balance be paid in within two years may still be in effect. Any corporation transacting a banking business may semiannually declare a dividend out of net profits, but before the dividend is declared one-tenth of net profits must be carried to surplus until it amounts to 20 per cent of paid-up capital (28). Capital must never be with drawn, either in the form of dividends or otherwise. Dividends may be declared only out of net profits (35). For limit on borrowing by a bank, see V, infra. II.— L iabilities and Duties of Stockholders D irectors. and There is no legislation on stockholders’ liability; the constitution of Nevada provides that stockholders in cor porations are not to be individually liable for debts or liabilities of their corporations (art. 8, sec. 3). There must be not fewer than three nor more than thir teen directors. They must hold not fewer than four regu lar meetings a year, at which they make examinations (1907, p. 362, 5). A majority of the directors must be residents of the county in which the bank is located or adjacent counties. Each director of a bank capitalized at less than $50,000 must own one-twentieth of its paid-up capital, and in a bank capitalized at more than $50,000 must own not less than $3,000 of paid-up capital (13). Every officer and director violating any provision of the statute of 1909 is civilly liable for damages to any person N e v a d a S t a t e B a n k s injured (57). See also under XI, infra, the provision im posing personal liability upon directors who violate the sections forbidding them to borrow from their bank except on security approved by the board, and limiting the amount of loans to any individual and to stockholders of the bank (33, 34, and 39). III.— Supervision . The Nevada state banking board consists of the gov ernor, who is ex officio chairman, and four other members, appointed by him. These appointees hold office for terms of two years. The board meets twice a year and at such other times as the governor or any two members request. Members of the board receive $10 a day while performing their duties (5). The board has general supervision and control of banks and banking under the laws of the State (6). The governor appoints a suitable person, who must have had at least three years’ experi ence in practical banking, to examine banks; this exam iner, who is ex officio secretary of the board, must not exam ine any bank in which he has a personal interest, or of which he is, or within a year preceding his appointment was, an officer or employee (7). His salary is $3,000 a year (10); the appropriation for his salary in the 1909 statutes, however, was $5,500 (1909, chap. CXL, p. 162, sec. 85). The bank examiner, when ordered by the board, has authority to take possession of any banking corporation, to retain possession long enough to make a thorough ex amination, and if he then finds that the bank is insolvent or is conducting its business in an unsafe or unauthorized manner, or is endangering the interests of its depositors, he has power to hold possession of all its assets until the board may receive his report and act upon it to have a 383 N at ion a l M o n et a r y Commission receiver appointed (n ). The board may notify any bank whose reserve falls below the requirement, or whose capital is impaired, to replenish reserves or capital within such time as the board directs; failure to comply is ground for the appointment of a receiver (24). Whenever it appears to the board, from an examination or a report, that the capital of a banking corporation is impaired, or that the corporation is conducting its business in an unsafe or unauthorized manner, or is endangering the interests of its depositors, and whenever a corporation fails to make a report or to comply with any provision of the 1909 statute, the board reports to the attorney-general, who institutes suit for a receiver (44). The board pro ceeds for the appointment of a receiver of any corpora tion, firm, or individual doing a banking business except by means of a properly organized corporation (2). Any bank examiner when ordered by the board, or any re ceiver appointed under the 1909 statute, has authority to hold the assets of a delinquent corporation until its lia bilities have been fully discharged (50). After the board, an examiner, or a receiver has taken possession of a bank, its stockholders may repair its credit, replenish its re serves, and otherwise restore it to proper condition to transact business, subject to the approval of the board (46). Any bank may place its affairs voluntarily under the control of the board by posting a notice on its door (42). The provisions for proceedings in liquidating a bank, proof of claims, distribution of assets, etc., are somewhat detailed; see 47, et seq. The state banking board passes upon reductions and increases of capital, upon voluntary dissolutions (35 and 41), and upon consolidations (40), and makes rules and regulations necessary to carry the 1909 statute into effect (54). Whenever the bank examiner finds an officer of a bank or trust company to be dishonest, reckless, or incom N e v a d a S t a t e B a n k s petent, he requires the directors of the corporation to remove him (56A ). REPORTS. Every banking corporation reports to the state bank ing board not less than four times a year, according to the form which the board prescribes (18), including the fol lowing items: Amount loaned on bonds and mortgages; amount loaned on notes-, bills of exchange, overdrafts, and other personal securities, with market value of the securities; amount of rediscounts and commercial paper past due; real-estate investments, with cost; cash on hand and on deposit, with names of depositories, etc.; and other assets. Each report states resources and lia bilities at the close of business on any past day specified by the board, and must be presented to the board within five days after receipt of its request. A summary is pub lished in a local newspaper (19). Special reports may be required at any time by the banking board or its chair man (20). After an examination the examiner reports the condition of the examined institution to the board (9). Reports of proposed reductions or increases of capital must be made to the banking board (35). Receivers report to the board monthly (53). For reports required for taxation purposes, see 1907, Chap. XCVII, sec. 5. EXAMINATIONS. The examiner investigates the affairs of every banking corporation as often as the board thinks necessary, and at least twice a year (7 and 9). He has authority, when ordered by the board, to take possession of a banking corporation and retain possession for time to make a thorough examination to determine the bank’s solvency, etc. (11). The board must cause an examination to be S . D oc. 353, 6 i-a- as 385 National M on et a r y Commission made of any bank which proposes a voluntary liquidation (41). When a bank has been in the possession of the board, the examiner, or a receiver, and has put itself in a position to resume business, the state banking board, before allowing such resumption, must carefully investi gate its affairs (46). Directors at each quarterly meeting must thoroughly examine the books and funds of their bank and record the result on the bank’s books (1907, p. 362, 5). IV.— R eserve R equirements. Every banking corporation must have on hand in avail able funds an amount equal to 15 per cent of its entire deposits; two-thirds may consist of balances due from solvent banks, and one-third must consist of cash. Re serve depositaries must maintain a 25 per cent reserve (23). Cash includes lawful money of the United States and exchange for any clearing-house association. When the reserve falls below the requirement, the bank must not make new loans or discounts except by dealing in sight exchange nor make any dividends until the reserve is replenished. The state banking board may notify a bank delinquent in this respect to make good its reserve within such time as the board directs (24). V.— D iscount and L oan R estrictions. No banking corporation may loan to any single corpo ration, firm, or individual “ including in such loan all loans made to the several members of any such firm for the use or benefit of such firm, corporation, or individual” more than 30 per cent of paid-up capital and surplus; but the discount of bills of exchange drawn against existing values, and of commercial paper owned by the persons negotiating it, is not considered money borrowed. The 386 N e v a d a S t a t e B a n k s total liabilities of stockholders to their bank must never exceed 50 per cent of paid-in capital and surplus (34). No banking corporation may loan or discount on the security of shares of its own capital unless accepting this security is necessary to prevent loss on a previous debt, in which case the stock must be sold within six months “ from the time of its purchase.” The amount of stock “ so held” (this includes stock held as security and owned outright) must never exceed 10 per cent of the paid-up capital of the bank (26). No director, officer, or employee of a banking corpora tion may become indorser or surety for loans to others or be in any manner obligated for money borrowed of his bank (32). No director, officer, or employee may directly or indirectly borrow money of the bank unless he gives good security, the loan and security to be approved by majority vote of directors, the applicant not voting (33). No banking corporation may pay interest on time deposits at a greater rate than 4 per cent a year (27). The aggregate of rediscounts and bills payable of any banking corporation must never exceed paid-up capital and surplus, nor may any corporation allow its loans and investments, exclusive of reserve, banking house, and fixtures, to exceed eight times its paid-up capital and surplus (25). VI.— I nvestments. A banking corporation may hold real estate only for the following purposes: Such as is necessary for the conven ient transaction of its business, not exceeding in value one-third of paid-up capital; such as is conveyed to it for debts due, and such as is purchased under judgment on its securities, but at a judgment sale the bank must not bid more th^n is necessary to satisfy its debts, and real estate purchased at judgment sale must not be held longer 387 ( N at ion a l M on e t a r y Commission than five years and thirty days; the total real estate held must never exceed in value 50 per cent of paid-up capi tal (29). “ No bank or trust campany shall employ its moneys directly or indirectly in trade or commerce by buying or selling goods, chattels, wares, or merchandise, and shall not invest any of its funds in the stock of any other bank or trust company, nor be the purchaser or holder of any shares therein, unless such securities or purchase shall be necessary to prevent loss upon a debt previously con tracted in good faith, and stock so purchased or acquired shall, within six months from the time of its purchase” be disposed of; after six months, such stock may not be considered assets. Any bank may, however, sell or acquire any personal property which comes into its possession as a collateral for a debt due it, according to the terms of any contract depositing the collateral, or, if there is no contract, then the collateral may be sold as on foreclosure of a chattel mortgage (43). No corporation may purchase shares of its own capital stock unless the purchase is necessary to prevent loss on a previous debt, in which case the stock must be sold within six months from its purchase; in no case may the amount of stock “ so held” (both as collateral and by purchase) exceed 10 per cent of paid-up capital (26). No bank may permit its loans and investments, exclu sive of its reserve and banking house and fixtures, to exceed eight times its paid up capital and surplus (25). VII.— Overdrafts. The only mention of overdrafts in the statutes is where it appears among the items required in reports of banking corporations, “ the amount loaned upon notes, bills of ex change, overdrafts,” etc. (19). 388 N e v a d a S t a t e B a n k s V III.— B ranches. No banking corporation doing business in Nevada may maintain a branch (30). X .— U nauthorized B anking It is unlawful for any corporation, firm, or individual to do a banking business in Nevada, except by means of a cor poration organized for the purpose under the state statutes; a violation of this section entails a penalty .of $25 a day and the appointment of a receiver to wind up the business (2). Another section provides that no person or persons may transact a banking business except corporations which have complied with the provisions of the statute of 1909, except that the act does not apply to national banks (6). It is unlawful for any person or corporation to do a bank ing business without first obtaining a license from the banking board (12). Any corporation which transacts a banking business without first obtaining a license is sub ject to a penalty of $50 a day (21); compare this penalty with that first given in this paragraph. X I.— P enalties . Any examiner who makes a false report of the condition of an examined corporation with intent to aid in its opera tion while insolvent, or who takes a bribe to induce him not to file a report of an examination, or who neglects to make an examination on account of having taken a bribe, is guilty of a felony punishable by imprisonment for from two to ten years (9). Any corporation which fails to make any report required by the 1909 statute is subject to a penalty of $50 a day during the delay (21). Any person who makes a false statement or a false entry in the books of any banking corporation, or subscribes to false papers, etc., with in- 389 N a t io n a l M o n et a r y Commission tent to deceive an examiner, or who makes a false state ment of the amount of assets or liabilities, is guilty of a felony punishable by imprisonment for from one to five years (22). Any officer, director, or employee of a bank which vio lates the prohibition upon paying more than 4 per cent in terest on time deposits is guilty of a misdemeanor punish able by fine of from $100 to $500, imprisonment not to ex ceed six months, or both (27). Any director, officer, or em ployee of a banking corporation who becomes in any man ner obligated for money loaned by his bank forfeits his office (32). Any director, officer, or employee of a bank who borrows from his bank, directly or indirectly, without giving security approved by the directors, or who violates or allows a violation of the section limiting loans to indi viduals and to the stockholders of the bank, is personally liable for loss suffered on account of his offense by the bank (33, 34, and 39). Any officer, director, or employee who violates or allows a violation of the second of the two sec tions above referred to, limiting the loans by a bank to any single corporation, firm, or individual, and to the stock holders of the bank, suffers a fine not to exceed $500 (34). It is unlawful for any officer or employee of a bank to cer tify a check drawn upon the bank unless the drawer of the check has on deposit an amount of credit equal to the face of the check (38). Where no other punishment is provided in the statute at page 251 of 1909, one who violates it is guilty of a misde meanor punishable by fine of from $25 to $500, imprison ment for from thirty days to six months, or both (55). Apart from the statute in which the above penalties are prescribed there are the following: Every officer, direct or, agent, etc., of a banking corporation who receives deposits when he knows that the bank is insolvent, and every person who is implicated in receiving deposits in 390 N e v a d a S a v i n g s B a n k s this way, is guilty of a felony punishable by imprison ment for from one to ten years (1909, p. 95, 1); an older statute forbids in slightly different terms any president, director, officer, etc., from assenting to the receipt of de posits or the creation of debts by an insolvent institution, and provides that any offender is individually responsible for deposits received and debts contracted (1907, p. 362, 11). No officer of a banking corporation may advertise the amount of capital stock authorized or subscribed unless he also advertises the amount of capital actually paid up; violation of this provision is a misdemeanor punishable by a fine not to exceed $500, imprisonment not to exceed six months, or both (1907, p. 362, 14). SAVINGS BANKS. See introductory paragraph; savings banks are subject to all the provisions digested under Banks, except as noted below. It is provided in the section limiting the loans and in vestments of banking corporations, exclusive of reserve, banking house and fixtures, to eight times paid-up capital and surplus, that the loans and investments of a savings bank, “ exclusive of its reserve and banking house fixtures,” must not exceed ten times capital and surplus (25). Sav ings banks are not subject to the section limiting holdings of real estate. See Banks, VI (29). The funds of a sav ings bank, excepting its reserve, must be invested in United States bonds, or bonds of any State or of a munici pality of any State; or loaned upon negotiable paper secured by such bonds or loaned upon notes or bonds secured by mortgage on unincumbered real estate (second mortgages may be taken on improved farm lands; no loans may be made on these improved farm lands or other real estate which loans, including the aggregate amount of incumbrance on the land, exceed 50 per cent of the 391 N at ion a l M on e t a vy Commission cash value of the land) or loaned upon notes secured by collateral of known marketable value; or held as cash; or deposited in good solvent banks. Savings banks may not loan upon chattel mortgages (36). A savings bank may issue certificates for legitimate deposits (37). TRUST COMPANIES. See introductory paragraph; trust companies are sub ject to all the provisions given under Banks. They are mentioned expressly once or twice in the statute of 1909: “ No bank or trust company” may engage in trade by dealing in merchandise, invest its funds in the stock “ of any other bank or trust company,” etc., see Banks, VI (43); the bank examiner may order any officer “ of any bank or trust company ” whom he finds to be dishonest, reckless, or incompetent to be removed by the board of directors (56A). NEW H AM PSH IR E. The Public Statutes, 1901, include all New Hampshire legislation previous to the session of 1901. Some of the laws contained in that revision, however, are not arranged in chapters and sections, but are inserted simply naming the year in which they were passed and the chapter in that year’s laws. More recent legislation is in the session laws of 1901, 1903, 1905, 1907, and 1909. The banking statutes of 1909, although the session laws are not pub lished in final form at the time of compiling this digest, have been obtained through the courtesy of the bank com missioners. The board of bank commissioners published in 1905 a reprint of the statutes dealing with state banks, savings banks, and trust companies, which forms, in part, the basis of this digest. Certain provisions not included in that reprint have been incorporated, together with banking legislation of 1907 and 1909. A chapter on “ Banks of issue” has been omitted from the digest. Where the citations are prefixed by the letters P. S., they refer to laws found in the Public Statutes, even though they may appear there named by chapter in some year’s session laws. Pater statutes are cited by the year, followed by the chapter, and, where necessary, the section in that chapter. BANKS. I.— T erms oe Incorporation. There is no express provision in the statutes allowing banks to receive savings deposits; “ banking and trust 39 3 N at ion a l M on et a r y Commission companies” may do so, for the statute for savings bank investments requires “ savings banks and savings depart ments of banking and trust companies ” to invest only in certain ways (1901, chap. 114, 1), and the penalty for violating that statute applies to “ any officer or trustee of a savings bank or savings department of a banking and trust company” (1901, chap. 114, 5). (See also Public Statutes, chapter 165, section 18, which requires “ trust companies, loan and trust companies, loan and banking companies, and other similar corporations receiving savings deposits ” to conduct the savings business separately.) II.— L iabilities D uties of Stockholders Directors. and and The stockholders of a “ banking corporation” are liable in their individual capacity for the debts of the corpo ration to the amount of their stock, and not otherwise (P. S., 163, 18). The trustees or directors of savings banks, state banks, and trust companies meet at least monthly, at which meet ing the work for the preceding month of the investment and other committees is submitted to the board (P. S., 1895, chap. 105, 2). If a trustee or director is absent for five successive monthly meetings he forfeits his position (P. S., 1895, chap. 105, 3). Directors of a state bank or trust company must own ten shares of stock, unless the stock of the institution does not exceed $50,000, in which case five shares are sufficient (P. S., 1895, chap. 105, 8). If banks are allowed to do a savings bank business, no doubt the clause making a trustee or officer personally liable for loss due to his illegal investment of savings deposits applies (1901, chap. 114, 5). The semiannual report (see infra) is based on an examination by the 394 Ne w H a mp s h i r e State Banks directors (P. S., chap. 165, 20, and P. S, 1895, chap. 105, 5). I l l .— Supervision . Banks, savings banks, and trust companies are under the supervision of a board of bank commissioners, consisting of three residents of New Hampshire, who must not be indebted to any savings bank or trust company in New Hampshire, or officers in a savings bank or trust com pany ; they must not be agents of persons or corporations engaged in making loans or selling securities, nor be officers or stockholders in a corporation engaged in that business. Not more than two members may be appointed from one political party (P. S., chap. 162, 2). The term of office is three years, a new commissioner being appointed each year (P. S., chap. 162, 3, amd. by 1905, chap. 26, 1). The salary is $2,500 a year (P. S., chap. 162, 4; amd. by 1905, chap. 26, 2). If a bank, savings bank, or trust company refuses to allow an examination, or does not furnish necessary facilities for the examination, or if the commissioners think it necessary for public safety that the institution should not continue to transact business, they petition the court, which may enjoin further business. Further proceedings may lead to the appointment of a receiver. The conduct of the liquidation by the receiver is provided for in some detail (P. S., chap. 162, 12 et seq.; amd. in part by 1905, chap. 55, 1). Provision is made for supervision by the commissioner of examination, verification, etc., of pass books of depositors in “ every institution under their supervision,” but the other sections of the act in which this is provided for seem to indicate that this requirement is made only of savings banks (P. S., 1899, chap. 72, 2). 395 N at i o n a l M on et a ry Commission REPORTS. The provision for semiannual reports from savings banks is extended to require the same reports from state banks and trust companies (P. S., 1895, chap. 105, 5). The clerk of every state bank, savings bank, and trust company must publish within thirty days of an election a list of the trus tees or directors (P. S., 1895, chap. 105, 4). The treasurers of all institutions under the supervision of the bank com missioners balance their books on the last business day in June of each year and within fifteen days from that time report to the commissioners on blanks furnished by them, showing the condition of the institutions. The com missioners prescribe what information is required (P. S., chap. 162, 8). Receivers of insolvent institutions make reports as the treasurers of the institutions themselves are required to do (P. S., chap. 162, 18). The cashier of every state bank makes a statement of the condition of his bank on the first Monday of March, June, September, and December, specifying stock paid in; debts due secured by a pledge of the bank’s stock (but see the prohibition on loans on such collateral, stated under V, infra) ; value of real estate; debts due the bank; debts due from directors; specie on hand; and deposits in the bank (P. S., chap. 164, 1). Abstracts of these quarterly returns must be published by the secretary of state (P. S., chap. 164, 4). (Tor reports required for purposes of taxation see Public Statutes, chapter 57, section 19 et seq., and Public Statutes 1895, chapter 113, section 4.) The board of bank commissioners files with the secre tary of state an annual report containing a statement of the resources and liabilities of every institution under their supervision; its earnings between examinations, or for a twelve month’s period; disbursements for the same pe396 New Hampshire — State Banks riod for expenses, etc.; dividends paid; names of cer tain officers of each institution, with salaries; kinds and amounts of stocks and bonds held by each institution with values; and a statement of the true condition of each institution. The commissioners make recommendations in this report (P. S., chap. 162, 9). EXAMINATIONS. The board of bank commissioners examines into the condition and management of banks, savings banks, and trust companies at least annually, and oftener if directed by the governor. They inspect books, evidences of debt, funds on hand, etc., and inquire into the ability of each institution to perform its engagements, and into its com pliance with law (P. S., chap. 162, 6). They make the same examinations into the affairs of receivers of insolvent institutions as into the affairs of solvent institutions (P. S., chap. 162,18). Every state bank, savings bank, and trust company keeps a particular book or record of loans and investments, which is exhibited to the trustees and the commissioners at each examination (P. S., 1895, chap. 105, 6). The directors make a semiannual examination on which their report is based (P. S., 1895, chap. 105, 5). V.— Discount and L oan R estrictions. “ No savings bank, state bank, or trust company shall loan to any person, firm, or its individual members, an amount in excess of 10 per cent of its deposits or capital stock, nor purchase or hold both by way of investment and security for loans, the stock, and bonds of any cor poration to an amount in excess of said 10 per cent” (P. S., 1895, chap. 105, 12). The capital stock of a state bank or trust company may not be accepted by the bank or trust company as collateral (P. S., 1895, chap. 105, 9). 397 N at ion a l Mone tary Commission No loan may be made to an officer or director of a state bank or trust company except by the unanimous consent of the board of directors (P. S., 1895, chap. 105, 10). The cashier of a state bank may not be directly or indi rectly indebted to it (P. S., chap. 163, 12). No director of a state bank may be indebted to it directly or indirectly to an amount greater than one-half the stock in the bank then held by him. Loans of state banks to any director must never exceed 3 per cent of the cash capital of the bank (P. S., chap. 163, 13). Contracts by a director or other officer of a state bank “ to indemnify any other person for liability to the bank or subjecting himself to liability to the bank on account of any other person ” are void (P. S., chap. 163, 14). VI. — Investments. Lvery state bank, savings bank, and trust company has an investment committee of not less than three of its directors or trustees (P. S., 1895, chap. 105, 1). No state bank, savings bank, or trust company may hold as invest ment the stock and bonds of any corporation to an amount in excess of 10 per cent of the capital stock or deposits (the latter in the case of savings banks presumably) of the investing corporation (P. S., 1895, chap. 105, 12). X . — U nauthorized B anking . Limited partnerships may not be formed to do a banking business (P. S., p. 381). X I. — P enalties . If any bank commissioner in the annual repox"t makes a statement without having fully examined the condition of the institution with regard to which his statement is made, or makes a false statement, he is fined not more 398 New Hampshire — Savings Banks than $1,000, or imprisoned for not longer than five years (P. S., chap. 162, 10). If the clerk of a state bank, sav ings bank, or trust company fails to publish the list of annually elected directors or trustees or makes a false publication, he is liable to a penalty of $100; so is any person who circulates a list of directors or trustees contain ing names of persons who have not entered the office and taken the oath (P. S., 1895, chap. 105, 4). Any director or trustee of a state bank, savings bank, or trust company who makes a statement of the condition of the institu tion without having fully examined it, or makes a false statement, is fined not more than $1,000, or imprisoned foi n°t longer than five years (P. S., 1895, chap. 105, 5). 1 he director of a bank who exceeds the limit of loans from the bank to him is fined double the excess, one-half of the fine going to the person who sues (P. S., chap. 163, 13). Any officer or director of a state bank or trust company violating any provision of law for which no other penalty is prescribed is punished by a fine not exceeding $500 (P. S., 1895, chap. 105, 13). Any officer of a state bank who receives compensation for procuring a loan, indemni fying an indorser on paper held by the bank, etc., for feits $100 and three times the amount of the compensa tion to any person who sues (P. S., chap. 163, 15). Any state bank which fails to make a quarterly cashier’s report is fined not more than $1,000 for each offense (P. S., chap. 164, 3)SAVINGS BANKS. I-— T erms of I ncorporation. There are in New Hampshire guaranty savings banks with capital stock and mutual savings banks without. No guaranty savings bank, trust company, or other similar corporation may begin business until it has satis- 399 National Monetary Commission fied the commissioner that its capital has been paid in (P. S., chap. 162, 11). The total yearly expenses of a savings bank must not exceed $4,000 while the average amount of its deposits is $1,000,000 or less, and in no given case may exceed the sum produced by adding to $4,000 one-fifth of 1 per cent of the excess of deposits over $1,000,000 (P. S., chap. 165, 5)* Every savings bank annually passes to the credit of its guaranty fund a sum equal to 10 per cent of its net earn ings for the year until the fund equals 5 per cent of deposits. This guaranty fund may be increased to 10 per cent of deposits (P. S., chap. 165, 16). The special depositors of a guaranty fund in a savings bank doing business under the guaranty system may increase the fund at a meeting of depositors. This increase may be subscribed for by the special depositors in proportion to their special deposits, or by other parties in case the special depositors fail to subscribe for it all. The increase in the guaranty fund may be on such terms of preference over the original funds as to dividends and in distribution of assets as may be determined by vote of the special depositors (P. S., 1895, chap. 92, 1). No savings bank may pay more than 3X per cent divi dends unless it has accumulated a guaranty fund equal to 5 per cent of its deposits, nor unless its assets as valued by the bank commissioners exceed the amount due de positors by at least 5 per cent; no savings bank having a guaranty fund less than 5 per cent of deposits, nor any savings bank whose assets do not exceed deposits by at least 5 per cent may declare in any year dividends exceed ing net income after providing for a guaranty fund. (Act of April 8, 1909.) 400 New II. Hampshire — Savings L iabilities and Banks Duties of Stockholders Directors. and For stockholders’ liability in “ banking corporations,” see Banks, II. The provisions stated under Banks for monthly meetings of trustees and for loss of office when absent from five successive monthly meetings apply to the trustees of savings banks (P. S., 1895, chap. 105, 2 and 3). Ih e requirement for holding stock as a prerequisite to eligibility to be a trustee is so framed that apparently to be a trustee of a guaranty bank one must own ten shares of the guaranty fund of the institution, unless the guaranty fund does not exceed $50,000, in which case five shares qualify (P. S., 1895, chap. 105, 8). No person indebted to a savings bank is eligible to any office in the bank unless the loan was made with the consent of all the trustees (P. S., chap. 165, 2 and 13). No one engaged in negotiating loans or selling securities in New Hamp shire is eligible to be president, treasurer, or a member of the investment committee of a savings bank (P. S., chap. 165, 3). Trustees may be paid a reasonable compensa tion for their services (P. S., chap. 165, 4). Officers and employees of savings banks, trust companies, etc., are forbidden to receive compensation for procuring a loan from the bank (P. S., chap. 165, 30). If any officer or trustee of a savings bank violates the provisions limiting savings-bank investments, he becomes, in addition to the regular penalties, personally liable for losses which may occur to the bank from his investment (1901, chap. 114, 5). III.— Supervision. Savings banks are placed under the supervision of the board of bank commissioners (P. S., chap. 162, 1). The S. Doc. 3 S3, 61—2‘ 26 401 N ation al M on et a ry Commission qualification and tenure of this board were stated under Banks. Guaranty savings banks may not begin busi ness until they have satisfied the commissioners that their capital is paid in (P. S., chap. 162, n ) . The provisions for proceedings in court against savings banks which refuse to be examined or which public safety requires to be closed are as stated under Banks (P. S., chap. 162, 12 et seq.). A judge, in connection with the bank commissioners, on petition of the trustees of a savings bank, may scale down the deposit accounts, if the assets of the bank become worth less than the total amount of deposits, so as to divide the loss equitably among depositors. This may be done by the commissioners themselves when the assets are reduced below 90 per cent of the deposits. If the assets appreciate in value later, the depositors whose accounts were reduced receive the excess. If new deposits are received after this sort of reduction, the business relating to the new deposits is conducted as though by a separate bank (P. S., chap. 165, 26, 27, 28, and 29). The commissioners may cause the sepa ration of a savings bank and a national bank occupying the same office (IX, infra; P. S., chap. 165, 22). They have supervision over a verification of deposit books of savings banks and a corresponding trial balance required every four years. They require “ every institution under their super vision ” to select a competent person to examine and verify the individual pass books. Depositors are required to present their books (P. S., 1899, chap. 72, 1, 2, and 4). REPORTS. The trustees of every savings bank make an examina tion of the affairs of the bank every six months, on which they base a report in the form prescribed by the bank commissioners. They publish this report in a local news 402 N e w H amps hi r e — S a v i n g s Banks paper (P. S., chap. 165, 20). The treasurers of all insti tutions under the supervision of the bank commissioners balance their books on the last day of June in each year, and within fifteen days report to the commissioners on blanks furnished by them showing the condition of the institutions (P. S., chap. 162, 8). Receivers report as so vent institutions do (P. S., chap. 162, 18). As in the case of banks, the clerk of every savings bank is required to publish lists of newly elected trustees (P. S., 1895, chap 105, 4). Every five years the treasurer of every savings bank makes a list of depositors who have not deposited or with drawn funds for twenty years, if they are not known to the treasurer to be living, or if, though they are dead, their executors or administrators are not known to the treas urer. This list, showing addresses, fact of death, if known, and amount to the credit of the lost depositors, if it ex ceeds $5, is published in local newspapers and transmitted to the bank commissioners to be published in their report (P. S., chap. 165, 24). (For reports for purposes of taxation see Public Statutes, 1895, chapter 113, section 4, and Public Statutes, chapter 165, section 12.) The board of commissioners, as stated under Banks, make an annual report. The special item required in it from savings banks is the statement of unclaimed deposits (P. S., chap. 162, 9, and P. S., chap. 165, 24). Examinations. the trustees of every savings bank, in person or by a ommittee of the board, make a thorough examination ° f1ffairs of the savings bank every six months, on q ,1C1 Clr rePort to the commissioners is based (P. S., P 5) 20). Once a year, or oftener if the governor 403 N a t io n a l M on et a r y Commission requires, the board examines the condition and manage ment of every savings bank, as in the case of banks (P. S., chap. 162, 6). Receivers are examined as the solvent institutions are (P. S., chap. 162, 18). The record book of loans and investments is kept for investigation by the trustees and the bank commissioners as in state banks (P. S., 1895, chap. 105, 6). V.— Discount and L oan R estrictions. The guaranty fund of a guaranty savings bank may net be accepted by the savings bank as collateral (P. S., 1895, chap. 105, 9). “ No savings bank, state bank, or trust company shall loan to any person, firm, or its indi vidual members an amount in excess of 10 per cent of its deposits or capital stock, nor purchase or hold both by way of investment and security for loans, the stocks and bonds of any corporation to an amount in excess of said 10 p ercent” (P. S., 1895, chap. 105, 12). It seems as though in this provision the percentage of deposit was intended to apply to savings banks and the percentage of capital stock to state banks and trust companies. No savings bank may loan to one of its officers nor accept an officer as surety unless all the trustees have consented (P. S., chap. 165, 13). No officer or employee of a savings bank may accept a compensation from a bor rower to induce a loan (P. S., chap. 165, 30). (For incidental loan restrictions classified with invest ments in the statutes see VI, infra.) VI.— I nvestments. Savings banks, like state banks, elect from their trustees an investment committee of not less than three (P. S., 1895, chap. 105, 1). No savings bank may hold as in vestment and as collateral stock and bonds of any cor 404 New Hampshire — Savings Banks poration to an amount in excess of io per cent of the depos its of the savings bank, or of its capital stock (P. S., 1895, chap. 105, 12). The prescribed investments for savings banks are as follows: First, notes secured by first mortgages of New Hampshire real estate, but not over 70 per cent of the value of the property covered may be thus loaned, and not over 70 per cent of the deposits may be thus invested. Second, notes secured by a first mortgage of real estate outside New Hampshire, if im proved, occupied, and productive, but not over 50 per cent of the value of the property may b<* thus loaned, and not more than 25 per cent of deposits may be thus in vested. Third, in notes secured by collateral in which the bank is at liberty to invest, of a value at least 10 per cent in excess of the face of the note. The amount of any one class of securities thus taken as collateral, added to the amount of securities of that class which the bank holds, must not exceed the total limit set for investments in that class; not more than 25 per cent of deposits may be in vested in this manner. Fourth, in notes secured by col lateral securities which are dealt with on the Boston or New Y ork exchange, provided the stock-exchange price is 20 pei cent in excess of the face of the note; not more than 25 per cent of deposits may be thus invested. Fifth, in notes of individuals or corporations with two or more signers or one or more indorsers, but not exceeding 5 per cent of deposits may be loaned to one person or corporation in this class of security, and not exceeding 25 per cent of deposits may be thus invested. Sixth, in public funds of the United States. Seventh, in bonds and notes of New Hampshire or municipalities of New Hampshire. Eighth, in bonds or notes of any State or Territory of the United States, and bonds or notes of any city in the other New England States or in New York, whose net indebtedness 405 N a t ion a l M onet ary Commission does not exceed 5 per cent of the value of property in the city for taxation, or bonds or notes of counties, towns, etc., in those States whose indebtedness does not exceed 3 per cent. Ninth, in bonds of municipalities of other States or Territories of the United States whose net indebtedness does not exceed 5 per cent of the value of their property for taxation; also bonds of any city of 100,000 in any of those States whose net indebtedness does not exceed 7 per cent of the value for taxation. Bonds are not legal in vestments if they have been issued in aid of railroads or for special assessment purposes. Moreover, bonds of counties, cities, an<? towns of less than 10,000, or of other municipal corporations of less than 2,000, are not legal investments. To be legal investments these bonds must be issued by municipalities that are permitted to levy taxes sufficient to pay the interest and to provide for sink ing funds for their debt. Not exceeding 50 per cent of deposits may be thus invested. Tenth, in bonds or notes of railroad companies, except street railways, incorporated under New Hampshire law, and located wholly or in part in New Hampshire, but not exceeding 25 per cent of de posits may be thus invested. Eleventh, in bonds of any railroad company, except street railways, incorporated under the law of “ any of the New England States, whose road is located wholly or in part in the same, ” and which is operating its own road and has paid regular dividends for two years; also bonds guaranteed by such a railroad com pany. But not exceeding 25 per cent of deposits may be thus invested. Twelfth, in bonds of any railroad com pany, except street railways, incorporated under the law of any State or Territory, if it is operating its own road and has paid regular dividends of not less than 4 per cent for three years, provided that the capital equals one-third of the entire bonded debt; also bonds guaranteed by such a railroad. But not exceeding 25 per cent of deposits 406 New Hampshire — Savings Banks may be thus invested. Thirteenth, in first-mortgage bonds of corporations of New Hampshire, except street railways, whose net indebtedness does not exceed the paid-in capital stock; but not exceeding io per cent of deposits may be thus invested. Fourteenth, in bonds of street-railway corporations incorporated under New Hampshire law and located wholly or in part there, and bonds of street-rail way corporations located wholly or in part in cities of 30,000 inhabitants or more in any of the other New Eng land States, and bonds of street-railway corporations located wholly or in part in cities of 50,000 or more in any of the United States, provided that the net indebtedness of any of these street railways does not exceed the paid-in capital, and that the corporation has paid dividends of not less than 4 per cent for five years. But not exceeding 10 per cent of deposits may be thus invested. Fifteenth, in bonds of telephone, telegraph, or express companies doing business in the United States, provided the total indebtedness of the company does not exceed its paid-in capital, and provided that the company has paid regular dividends of at least 4 per cent for five years. But not exceeding 10 per cent of deposits may be thus invested. Sixteenth, in the stock of any banking or trust company of New Hampshire, but the amount of such stock held by any savings bank as an investment and as collateral must not exceed one-tenth of the total capital of the com pany whose stock is held, and not exceeding 10 per cent of the deposits may be thus invested. Seventeenth, in stock of any national bank or trust company in the New England States or in New York, but the amount of such stock held by any savings bank as an investment and as collateral must not exceed one-tenth of the total capital of the bank or trust company whose stock is held (except in the case of a New Hampshire national bank or trust company, of which a savings bank may hold not 407 N at ion a l M on e t a r y Commission exceeding 25 per cent of the total capital— amendment of March 31, 1909), and not exceeding 10 per cent of deposits may be thus invested. Eighteenth, in stock or notes of any railroad corporation, exclusive of street railways, located in the United States, that has paid dividends of not less than 4 per cent for five years, provided the capital equals one-third of the bonded debt. Also stock of any other railroad whose property is leased to such a railroad at an annual rental of not less than 4 per cent of the capital of the leased railroad, provided the leased road has earned dividends of not less than 3 per cent for three years before the lease. But not exceeding 25 per cent of deposits may be thus invested. Nineteenth, in stock or notes of any manufacturing company in New England that^has paid dividends for five years and does not show a debt exceeding the amount of its paid-in capital; but not exceeding 10 per cent of deposits may be thus invested. Twentieth, in stocks or notes of any parlor-car or sleeping-car company in the United States whose cars are in use on a railroad whose stock is a legal investment, provided the company has paid regular divi dends of not less than 4 per cent for five years; but not exceeding 5 per cent of deposits may be thus invested. Twenty-first, in land and buildings for banking purposes, the total cost of which must not exceed 10 per cent of deposits (1901, chap. 114, 1, amd. by 1905, chap. 81, and 1907, chaps. 29 and 67). Twenty-second, in the stock of any real-estate trust company of New Hampshire whose property is located in the State, and whose capital is $100,000 or more, provided its debts do not exceed one-half its paid-in capital, and provided it has earned and paid 4 per cent dividends for five years; but not exceeding 5 per cent of deposits may be thus invested (act of March 11, 1909). Savings banks may hold and lease real estate acquired by foreclosure of mortgages 408 N e w H a m p s hi?' e — S a v i n g s Banks owned by the bank, but they must pay taxes, etc., out of the bank’s income (1901, chap. 114, 2). Deposits of cash on call may be made in authorized banks and trust companies in New Hampshire or Massachusetts, or in national banks in New England, New York City, or Phila delphia (1901, chap. 114, 3). IX .— Occupation of the Same B uilding . If a savings bank does business in the same office with a national bank, the treasurer of the savings bank must cause a committee of the directors of the national bank to indorse on the reports of the examinations of the savings bank which are made to the bank commissioners a cer tificate that they examined the affairs of the national bank at the same time and found them correct (P. S., chap. 165, 21). If the treasurer fails to furnish this certificate within a time fixed by the commissioners, they may sep arate the two banks (P. S., chap. 165, 22). X .— U nauthorized B anking . No person, firm, or corporation except savings banks incorporated in New Hampshire, and trust companies, loan companies, etc., empowered by their charters, may use a sign, or printed paper, indicating that the business is that of a savings bank, or transact business in a way suggestive of that of a savings bank. The commissioners may examine the books of any corporation, firm, or indi vidual receiving money on deposit to make sure it has not violated this provision. The penalty for violation is $100 a day (1907, chap. 112, 2 and 3). X I.— P enalties . The penalties stated under Banks hold good for false reports by a bank commissioner (P. S., chap. 162, 10), 409 I N ational M on e t a r y Commission failure on the part of the clerk of the corporation to pub lish the list of newly elected trustees (P. S., 1895, chap. 105, 4), and false statement or report by trustees or directors (P. S., 1895, chap. 105, 5). Any officer or trustee of a savings bank willfully violating any pro visions where no other penalty is prescribed forfeits, as in the case of bank officers and directors, not more than $500 (P. S., 1895, 105, 13). There is a provision also in chapter 165 that the violation of any provision of law by a savings bank or its officer, where no other penalty is prescribed, is a fine not to exceed $1,000 (P. S., chap. 165, 33). If the treasurer of a savings bank allows private banking to be carried on in the office of the savings bank he is fined not more than $1,000, imprisoned not longer than one year, or suffers both penalties (P. S., chap. 165, 10 and 11). If the treasurer of a savings bank neglects to publish his report of unclaimed deposits he is fined $100 for each offense (P. S., chap. 165, 25). Any officer or employee of a savings bank, trust company, etc., who receives a fee as an inducement for a loan by the bank is fined not more than $10,000, imprisoned not more than ten years, or suffers both penalties (P. S., chap. 165, 31). Any officer of a savings bank, loan and trust company, etc., who embezzles, or makes false entries or statements, intending to defraud, or to deceive an officer or some examining official, is fined not more than $20,000, or imprisoned not longer than ten years (P. S., chap. 165, 32). The person appointed to verify depositors’ books in savings banks suffers, if he makes a false statement of the result of his examination, a fine of not more than $500, or imprisonment for not more than one year (P. S., 1899, chap. 72, 1). 4x0 New Hampshire Trust Companies TRUST COMPANIES. I.— T erms oe I ncorporation. The statutes allow trust companies to do a savings deposit business (P. S., 1901, chap. 114, 1 and 5). More over, trust companies, loan and trust companies, etc., receiving deposits or transacting the business of a savings bank must conduct the business as a separate department, and that department is amenable to the laws governing savings banks (P. S., chap. 165, 18). Trust companies are not allowed to begin business until all their capital stock has been paid in (P. S., chap. 162, n ). II.— L iabilities and D uties op Stockholders D irectors. and If trust companies are within the term “ banking cor porations” their stockholders are liable in their individual capacity only for the debts of the corporation to the amount of their stock (P. S., chap. 165, 18). The requirement stated under Banks that directors meet at least monthly to review the work of the invest ment committee and other committees for the preceding month, and the provision that directors absent from five successive monthly meetings forfeit their positions hold good in trust companies (P. S., 1895, chap. 105, 2 and 3). Every director of a trust company, as in the case of banks, must own at least ten shares of stock, unless the capital does not exceed $50,000, in which case five shares are sufficient (P. S., 1895, chap. 105, 8). No officer or em ployee of a trust company may accept a compensation for inducing the making of a loan by the trust company (P. S., 165, 30). Officers or trustees of the savings depart ment are personally liable for loss which a bank suffers N at i o n a l M o ti 6 t a ty C o r n t n i s s i o 11 through their willful violation of the requirements for savings-deposit investments (P. S., 1901, chap. 114, 5). Each semiannual report is based on an examination which must be made by the directors (P. S., chap. 165, 20, and P. S., 1895, chap. 105, 5). I l l .— S upervision . The board of bank commissioners have control over trust companies (P. S., chap. 162, 1). The provisions for winding up the affairs of trust companies which refuse to be examined or which seem to the commissioners to be in dangerous condition are as stated under Banks (P. S., chap. 162, 12 et seq). R eports and examinations are subject to the same rules as were given under Banks. V.— D iscount and L oan R estrictions. See Banks for provisions applicable also to trust companies forbidding stock in a trust company to be taken by the company as collateral, forbidding loans to officers or directors except by unanimous approval of the board of directors, and forbidding loans to individ uals, firms, etc., in excess of 10 per cent of capital stock of the trust company, and the acceptance as collateral of such stock and bonds of any corporation as to make the lender hold an amount in excess of 10 per cent of the lender’s capital (P. S., 1895, chap. 105, 9, 10, and 12). See also the prohibition upon the acceptance of compen sation by an officer or employee of a trust company for inducing the company to make a loan (P. S., chap. 165, 30). V I.— I nvestments . Every trust company has an investment committee such as banks have (P. S., 1895, chap. 105, 1). As under Banks, there is also a prohibition on holding stock and 412 New Hampshire Trust Companies bonds of any corporation to an amount greater than io per cent of the capital of the investing trust company (P. S., 1895, chap. 105, 12). X I.— P enalties . See Banks (XI) for penalties upon bank commis sioners who report falsely, upon clerks who fail to publish lists of newly elected directors, and upon directors who report falsely. See Banks also for the penalty for violating a law in which no particular penalty is pre scribed. The officer or employee of a trust company who takes a compensation for inducing a loan, etc., suffers a fine of not exceeding $10,000, imprisonment for not more than ten years, or both (P. S., chap. 165, 30 and 31). There is a penalty upon any officer of “ a loan and trust company” who embezzles, or commits various frauds, including false entries or statements, of not more than $20,000 or imprisonment not exceeding ten years (P. S., chap. 165, 32). 4:3 I N EW JERSEY. The statutes of this State are in so inconvenient a form for investigation, there having been no revision since 1895, that the pamphlets issued in 1906 by the department of banking and insurance— one containing the laws relating to banks, banking, and trust companies, the other contain ing the savings bank act— have been relied on for the digest, merely bringing it to date by references to chap ters in the laws of New Jersey for 1907, 1908, and 1909. Each reference in the digest gives the year of the statute in question, the chapter in that year’s laws, and the section in the chapter. BANKS. I.— T erms of Incorporation. The capital stock of every bank must be not less than $50,000, and divided into shares of $100 each, all of which must be paid in in cash before business is begun. No cor poration organized under the banking law may issue more than one class of stock (1899, chap. 173, 1). Before allowed to begin business the incorporators must show the commissioner of banking and insurance that the establish ment of the proposed bank will be of public service (1899, chap. 173, 3). Dividends may be declared out of net profits, but before the declaration not less than one-tenth of the net profits for the preceding dividend period must be carried to sur plus until the fund amounts to 20 per cent of the capital (1899, chap. 173, 10). 414 New Jersey II.— L iabilities State — Banks D uties of Stockholders Directors. and and There is no special provision for liability of stockholders in banks. There must be not fewer than five directors, a majority of whom must be residents of New Jersey. Every director must hold not less than five shares of stock (1899, chap. 173, 9, amd. by 1906, chap. 190). The board appoints an examining committee to make an examination as stated below (1899, chap. 173, 11). If the directors fail to exact of the cashier a $20,000 bond, they are personally liable for his defalcations up to that amount (1899, chap. 173, 22). III.— Supervision . There is a department of banking and insurance (1891, chap. 6, 1), of which the chief officer is the commissioner of banking and insurance, appointed for terms of three years. The commissioner must not be connected with the management of any corporation over which he exercises supervision (1891, chap. 6, 2). His salary is $6,000 a year (1903, chap. 34) . The commissioner, before authorizing the incorporation of a bank, must determine that the establishment of the bank will be of public service (1899, chap. 193, 3). When ever it appears to him from a report or examination that the affairs of any bank are in an unsound condition on ac count of illegal and unsafe investments, or that its liabili ties exceed its assets, or that it is violating law, or that it is inexpedient that the bank continue business, then he must cause proceedings to be instituted against the bank as against an insolvent bank, or such other proceedings as the case may require. If he has reason to conclude that the bank is in an unsound or unsafe condition, he may take possession of its assets and retain possession until the 415 n » National Monetary Commission proceedings that he has caused to be instituted by the attorney-general are concluded, or until a receiver is ap pointed (1899, chap. 173, 24). If any bank refuses to submit its affairs to examination, that is ground for pro ceedings as against an insolvent bank. If it appears to the commissioner that any bank has violated the law, or is conducting its business unsafely, he orders a discon tinuance of the practices; if the bank does not comply with the order, this is ground for the same proceedings (1899, chap. 173,25). Whenever a bank is insolvent or suspends its business for want of funds, the attorneygeneral or any creditor or stockholder may petition the court for the appointment of a receiver. If the court thinks the corporation insolvent and not about to resume business in a short time safely, it may issue injunctions, etc.; or if it is made to appear to the court on application of the attorney-general that the bank is in an unsound condition; that liabilities exceed assets; that there has been violation of law; that examination has not been allowed; or that it is inexpedient for the bank to continue business, the court may stop the bank’s business and appoint a re ceiver (1899, chap. 173, 29 and 30, amd. by 1906, chap. 156). Creditors or shareholders of a bank interested to the amount of $1,000 or more may apply to the court of chan cery, which may order a strict examination by persons appointed by it and make such orders as it thinks neces sary (1899, chap. 173, 26). On an application by two or more directors, creditors, or stockholders of any bank the court of chancery must appoint one or more commissioners to examine the bank; if the bank refuses to allow exami nation by this commissioner of court, or if after examina tion the court thinks public interest demands it, the court directs the attorney-general to proceed as against an in solvent bank (1899, chap. 173, 27). 416 New Jersey — State Banks REPORTS. Every bank makes to the commissioner not less than four reports annually according to the form he prescribes; the report shows the condition of the bank at the close of business on a past day specified by the commissioner, and is transmitted to him within ten days after receipt of his request. A summary is published in a local newspaper. The commissioner may call for special reports when nec essary (1899, chap. 173, 13). Ih e commissioner makes an annual report to the legis lature embracing a statement of proceedings taken against banks, of new banks organized, and a summary of all re ports (1899, chap. 173, 32). EXAMINATIONS. The directors of every bank appoint from their number an examining committee who make an examination at least once every six months; this committee reports to the board with a special view to showing what assets are not of the value given them on the books (1899, chap. 173, n ). Reg ular examinations by the commissioner or a subordinate may be made whenever a commissioner thinks it expedient or at the request of the bank (1899, chap. 173, 23). The court of chancery may order an examination by a master of the court, or by other persons, not exceeding three, ap pointed by the court, or by one or more commissioners_ see above (1899, chap. 173, 26 and 27). IV.— R eserve R equirements. Every bank must keep in available funds an amount equal at least to 15 per cent of its immediate liabilities; three-fifths of this reserve may be in balances due from good solvent banks or trust companies and two-fifths must be in cash on hand. When reserves fall below, the bank 27 S. D oc. 3S3, 6 1 -2 ----- : 417 N at ion a l M on e t a r y C o mmi s s i o n must not make any new loans or discounts, except by buying sight exchange, nor declare dividends out of profits (1899, chap. 173, 20). V.— D iscount and L oan R estrictions. The total liabilities to any bank of a person, firm, or corporation for money borrowed, including in firm or cor poration liabilities those of the members, must never exceed 10 per cent of the paid-in capital and surplus; this does not apply to loans to municipalities, and money bor rowed is to be construed not to include discount of commer cial paper owned by the person negotiating it, discount of bills of exchange drawn against existing values, and dis count of paper based on collateral whose actual value is 10 per cent above the loan (1899, chap. 173, 18). No bank may loan to officers, directors, or employees, except upon the approval of a majority of the board of directors or the executive committee. No bank may allow its officers, directors, or employees to be liable by reason of overdrawn account (1899, chap. 173, 12). No bank may loan on the security of its own shares, unless the security is necessary to prevent loss on a pre vious debt, in which case the stock must be disposed of within a year (1899, chap. 173, 15). Among general powers of banks is that of “ loaning money on real and personal security” (1899, chap. 173, 6). V I .— I n v e st m e n ts . Every bank may hold such real estate as is necessary for the convenient transaction of its business, including with its banking offices other apartments that may be rented (but this investment must not exceed 25 per cent of capi tal and surplus); such as is mortgaged to it ; such as is conveyed to it in satisfaction of previous debts; and such 418 New J er s ey State Banks as it acquires by sale on judgment or decree in its favor. Except the banking house, real estate must not be held longer than five years (1899, chap. 173, 6). No bank may hold its own stock unless the purchase is necessary to prevent loss on a previous debt, in which case the stock must be sold within a year (1899, chap. 173, 15). V II .— Overdrafts . The only provision with respect to overdrafts appears to be that which forbids the officers, directors, or em ployees of a bank to become liable to the bank “ by reason of overdrawn account” (1899, chap. 173, 12). X.— U nauthorized Banking . No corporation other than a national bank, a trust com pany , or a savings bank may be organized to carry on banking business in New Jersey except under the act of 1899, and except for banks organized under that act, only savings banks may use the word “ bank” or “ banking” as part of their name (1899, chap. 173, 1). No bank organ ized under other laws than those of New Jersey may trans act any business in New Jersey, except to the extent that similar corporations of New Jersey are allowed to do busi ness in the State or country incorporating the bank now seeking to do business in New Jersey (1907, chap. 35). XI.— P enalties . Officers, directors, or employees who are implicated in loans to officers without the consent of the board of direct ors, or in overdrafts by officers, are guilty of a misde meanor, punishable by fine of not more than $1,000, im prisonment for not more than five years, or both (1899, chap. 173, 12), Directors, officers, or employees who make false statements intended to deceive examiners, or 419 N at i on a l M onet ary C o mmi s s i o n subscribe to or make false reports, are guilty of a “ high misdemeanor” (1899, chap. 173, 14). Any bank which fails to report is subject to a penalty of $100 a day (1899, chap. 173, 13). Any person who maliciously circulates statements affecting the solvency of any bank, or who aids another to circulate such rumors, is guilty of a mis demeanor (1907, chap. 50). SAVINGS BANKS. I.— T erms of Incorporation. The savings bank act provides for institutions without capital stock (1906, chap. 195, 3). At least a majority of the incorporators must reside in the county where the bank is to be located and be freeholders in New Jersey (1906, chap. 195, 2, amd. by 1908, chap. 39). The commis sioner does not allow the incorporation unless he believes that greater convenience of access to a savings bank will be afforded to a considerable number of depositors, that the density of population in the neighborhood will afford it support, and that the incorporators are fit (1906, chap. 195, 8). Dividends not to exceed 5 per cent a year are regulated so that as nearly as may be all the net profits are received by the depositors after such an amount as the managers deem expedient is reserved for a surplus, which may accu mulate up to 15 per cent of deposits. For dividends, depositors may be divided into classes, so that depositors in amounts of under $1,000 receive a dividend greater than depositors of over that amount. When the surplus amounts to 15 per cent and net profits are accumulated beyond that point, an extra dividend once every three years must be paid (1906, chap. 195, 40). 420 New J e r s ey II-— L iabilities — Savings and D uties of Banks Managers . The business of every savings bank is directed by a board of managers of not less than nine nor more than fifteen (1906, chap. 195, 15). At least a majority of the board of managers must reside in the county where the bank is located and be freeholders in New Jersey (1906, chap. 195, 17, amd. by 1908, chap. 39). There must be meetings every three months (1906, chap. 195, 16). A manager who borrows from the bank or fails to attend meetings or perform duties for six months vacates his office (1906, chap. 195, 18). No manager may have any interest in the gains or profits of the savings bank except as a depositor, nor may he take any pay for his services except such compensation for attendance on meetings or service on committees as may be fixed by a two-thirds vote of the board (1906, chap. 195, 20 and 23). The managers, by a committee of at least three of their number, examine at the end of each year (1906, chap. 195, 42). III.— Supervision . The commissioner of banking and insurance exercises supervision over savings banks. He determines whether convenience, necessities of the district, and fitness of the incorporators warrant allowing the incorporation of a pro posed savings bank (1906, chap. 195, 8, 9, and 11). He may reduce the compensation of savings-bank officers if it is fixed at an excessive amount (1906, chap. 195, 22). When it appears to the commissioner, from an examina tion or from a report, that a savings bank has violated the law, or is conducting its business unsafely, he directs the discontinuance of the illegal or unsafe practices. When ever any savings bank does not report, or fails to com ply with an order, or it appears to the commissioner that it is inexpedient to allow the savings bank to continue 421 N a t i on a l M on e t a r y C o mmi s s i o n business, he causes the attorney-general to institute pro ceedings for the removal of managers, or for such other relief as the facts seem to require (1906, chap. 195, 52). He may proceed in this way, if it appears that the mana gers of a savings bank, by keeping permanently uninvested an undue proportion of the moneys received by them, are violating the spirit of the rule allowing them to keep tem porary deposits pending a chance to invest (1906, chap. x95> 37)the proceedings by the attorney-general are directed toward declaring the savings bank insolvent, or placing it in the hands of a receiver, then the chancellor of the State may take charge of the savings bank and manage it (1906, chap. 195, 57). If a savings bank, a majority of its managers, or three or more depositors hold ing deposits of $5,000, petition, showing that the bank is insolvent, the chancellor causes an examination to be made or a report to be rendered, whereupon he may make decrees forbidding payments of deposits, etc. (1906, chap. 195, 58). From then on the chancellor has control over the savings bank and directs the action of its managers (1906, chap. 195, 59). If under this control the bank, after a sufficient time, still appears unable to return its deposits and pay its debts, then the chancellor stops its business and appoints a receiver. He orders a final dis tribution of assets and adjudges whether the charter of the bank is void or not (1906, chap. 195, 60). During the proceedings the chancellor may always order the reception of new deposits, keeping the investments of them wholly for the benefit of those depositing (1906, chap. 195, 61). The commissioner has supervision over voluntary dis solutions (1906, chap. 195, 63 et seq.). REPORTS. A statement of the names and residences of officers and location of the proposed bank is transmitted to the com422 New Jersey Savings Banks missioner before any deposits are received (1906, chap. I95> 13)- The managers, by a committee of not less than three of them, examine the affairs of their savings bank and report the result at the close of business of each calendar year; this report to the commissioner is made in January in the form he prescribes. It states the amount loaned upon bond and mortgage; a list of all bonds and mortgages upon which interest has been in arrears for six months; the value of all investments with items; the amount loaned upon pledge of securities; real estate investments with values; cash on hand and on deposit; with names of depositaries and amounts deposited in each. Also all liabilities, including the amount due depositors, with dividends, and any other debts or claims chargeable upon assets; the amount of deposits during the year; the amount withdrawn; interest or profits received or earned; dividends credited to depositors; number of accounts opened and reopened; number closed; number open at the end of the year; and other reasonable information that may be required by the commissioner (1906, chap. 195, 42, 43, 44 and 45). The commissioner may call for special reports when he thinks them necessary (1906, chap. 195, 47). When a receiver of a savings bank has been ap pointed by the chancellor he reports to the chancellor every three months (1906, chap. 195, 62). Dividends declared by the managers or the receiver of an insolvent savings bank, that are unclaimed for a year, are published once a week for four weeks (1906, chap. I95» 29). Every savings bank includes in its annual report to the commissioner a statement containing the name of every depositor who has not dealt with his de posit for ten years and whose deposits exceed $50; the report includes also the amount to the credit of such a depositor, his last known address, and the fact of his death, if known. This report is published by the savings 423 N at i ona l M on e t a r y C o mmi s s i o n bank once a week for three weeks for two successive years (1906, chap. 195, 30). The commissioner of banking and insurance makes an annual report to the legislature containing a statement of the condition of every savings bank that has reported during the preceding year; the name and location of new savings banks authorized; the date of their incorporation; and a particular description of those which, whenever incorporated, have begun business during the preceding year (1906, chap. 195, 50). The results of all examina tions during the previous year are embodied in the annual report to the legislature (1906, chap. 195, 51), and also the returns by savings banks of deposits that have not been disturbed for ten years (1906, chap. 195, 31). EXAMINATIONS. The managers, by a committee of not less than three of them, examine the condition of their savings bank to show its condition on December 31 of each year, on which examination their annual report to the commissioner is based (1906, chap. 195, 42). The commissioner personally or by a subordinate examines every savings bank at least once in two years, and oftener if he thinks it necessary (1906, chap. 195, 51). If a savings bank, a majority of its managers, or any three or more depositors whose de posits together amount to $5,000 or more, petition the court of chancery, the chancellor must make an examina tion (1906, chap. 195, 58). V.— Discount, Doan and Deposit R estrictions. No manager or officer of a savings bank may directly or indirectly borrow its funds or deposits, nor become surety for any money borrowed from the savings bank (1906, chap. 195, 20). No savings bank may loan its deposits 424 New Jersey — Savings Banks on notes, bills of exchange, or drafts, except upon the ad ditional pledge of collateral of the same sort as that in which investments are allowed, or the stock of national and state banks, or the stock or bonds of other New Jersey corporations which have not defaulted in interest or divi dends on the collateral loaned upon, within two years. Even when secured, the loans must not exceed 80 per cent of the market value of the collateral and the total of such loans must not exceed 15 per cent of the total deposits of the bank (1906, chap. 195, 34). The deposits to the credit of any one individual or corporation must never exceed $5,000, exclusive of accrued interest, except in the case of deposits ordered by a court. Savings banks need not receive sums less than $1, nor need they allow interest on fractions of a dollar or for fractions of a month (1906, chap. 195, 25). V I.— I nvestments. Moneys deposited with savings banks may be invested only as follows: First, in securities of the United States. Second, in interest-bearing bonds of New Jersey, or those authorized to be issued by any commission appointed by the supreme court of New Jersey. Third, in the bonds of any State which has not within ten years defaulted in principal or interest of any debt. Fourth, in the bonds of any municipality of New Jersey, if it has not defaulted in principal or interest on any debt for five years, and if certain other requirements are satisfied. In any interestbearing obligations except improvement certificates issued by the municipality in which the bank is situated. Fifth, in the bonds of cities or counties of other States, provided the city or county has not defaulted in principal or inter est for ten years, and the total indebtedness is limited to 10 per cent of the valuation for taxes. Sixth, in first 425 N at ion a l M onet ary Commission mortgage or consolidated mortgage bonds of any railroad company which has paid dividends of 4 per cent on its entire capital stock for five years. Seventh, in bonds secured by mortgages that are a first lien on New Jersey real estate worth double the amount loaned, but not more than 80 per cent of all deposits may be thus invested, and in case the loan is on unimproved or unproductive real estate the loan must be of not more than 30 per cent of its value. Loans on bond and mortgage must be approved by a committee of at least three managers. Eighth, in real estate as follows: A plot on which is a building required for the convenient transaction of the company’s business, from some portion of which rent may be derived, but the cost of the building and lot must not exceed 50 per cent of the net surplus of the bank unless the commissioner approves; land purchased at judicial sales on debts due the savings banks, or taken in settle ment to secure such debts, but all real estate thus acquired must be sold within five years (1906, chap. 195, 33). Savings banks must not trade in personalty except such as is necessary for the transaction of the bank’s business. The business of buying and selling exchange, selling or collecting commercial paper, etc., must not be engaged in in the bank (1906, chap. 195, 68). To meet current expenses, an available fund of not exceeding 10 per cent of all deposits may be kept on hand or on deposit in solvent state or national banks in New Jersey, or may be deposited on call at interest in such solvent trust companies of New Jersey, New York, or Pennsylvania, or in such solvent national banks of New York or Pennsylvania as the managers direct. The fund, moreover, may be loaned on pledge of the securities which are legal investments, provided the loan does not exceed 80 percent of the value of the securities (1906, chap. 195, 36, 426 New Jersey Savings Banks amd. by 1908, chap. 203). Temporary deposits may be made of the excess of daily receipts over payments pending an opportunity to invest (1906, chap. 195, 37). X.— U nauthorized Banking . Only such corporations as are authorized by law to receive deposits as savings banks may advertise or solicit deposits as such a bank. Any one offending against these provisions forfeits $100 for each offense each day that it is continued (sec. 46, of the act approved Apr. 21, 1876). Savings banks incorporated under other laws than those of New Jersey are allowed to do business in New Jersey only to the extent that the government incorpo rating them allows in its territory savings bank business to be done by New Jersey savings banks (1907, chap. 35). X I.— P enalties . Failure to furnish reports subjects the managers personally to a penalty of $100 a day (1906, chap. 195, 48). The officers of a savings bank who fail to make a return of unclaimed deposits are guilty of a misdemeanor and liable to a fine of not more than $500 (1906, chap. 195, 32). A receiver of an insolvent savings bank who fails to report is removed from his office (1906, chap. 195, 62). Managers or other officers who make illegal investments or loans are guilty of a misdemeanor, punishable by a fine of from $250 to $1,000 or imprisonment for not longer than two years (1906, chap. 195, 35). As in the case of banks, it is a misdemeanor to spread rumors affecting the financial standing of a savings bank (1907, chap. 50). 427 m m i ss i on I.— T erms of I ncorporation. Trust companies have authority “ to receive money on deposit to be subject to check or to be repaid in such manner and on such terms and with or without interest as may be agreed upon” (1899, chap. 174, 6). The capital must be not less than $100,000, divided into shares of $100 each, all of which must be paid in in cash before the company begins business. Trust com panies must not create more than one class of stock (1899, chap. 174, 1). The commissioner of banking and insur ance does not authorize incorporation unless it appears to him that the establishment of the proposed trust com pany will be of public service (1899, chap. 174, 3). Dividends may be declared out of net profits, but before the declaration not less than one-tenth of the net profits for the preceding dividend period must be carried to a surplus fund until it amounts to 20 per cent of the capital stock (1899, chap. 174, 13). Trust deposits must not be mingled with the general assets or deposits of the corporation; they are not liable for its general debts (1899, chap. 174, 7). II.— L iabilities D uties of Stockholders D irectors. and and There is no particular provision for liability of trust company shareholders. There must be not less than five directors, each of whom must own not less than five shares of stock (1899, chap. 174, 12, amd. by 1906, chap. 191). The directors must appoint an examining committee to make examinations explained below (1899, chap. 174, 14). 428 New Jersey — Trust Companies III.— Supervision . The commissioner of banking and insurance supervises trust companies (1899, chap. 174, 2). Before acting as trustee, each trust company must deposit with the reg ister of the prerogative court certain securities (1899, chap. 174, 9, amd. by 1903, chap. 214). The commis sioner allows a trust company to be incorporated only if he thinks its establishment will be of public service (1899, chap. 174, 3). When it appears to the commissioner from a report or examination that the affairs of a trust company are ren dered unsound by unsafe investments, or that its liabili ties exceed its assets, or that it is violating the law, or that it is inexpedient for it to continue business, then the com missioner notifies the attorney-general, who institutes pro ceedings as against an insolvent trust company, or such other proceedings as the case requires. If upon exami nation the commissioner has reason to think that the trust company is in an unsound condition, he may take possession of the company’s business until the termina tion of the proceedings by the attorney-general, or until the appointment of a receiver (1899, chap. 174, 22). If a trust company refuses to submit its affairs to examination, the attorney-general, on notice by the commissioner, may proceed as against an insolvent trust company. If it appears to the commissioner that a trust company has violated law or is conducting its business unsafely, he directs the discontinuance of the practices, and if the company fails to comply with his order, proceedings as against an insolvent trust company are instituted (1899, chap. 174, 23). If a trust company becomes insolvent or suspends business for want of funds, the attorney-general or a creditor or stockholder may petition the court of 429 N at ion a l M onetary Commission chancery for an injunction and the appointment of a receiver; the court, if satisfied that the company is insolvent and can not resume business safely, may issue injunctions, etc.; or if on petition it appears to the court, on application of the attorney-general, that a trust com pany is being unsoundly conducted or that its liabilities exceed its assets, that it has violated the law, that it refuses to be examined, or that it is inexpedient to allow it to do business, etc., then injunctions may issue and a receiver may be appointed (1899, chap. 174, 24 and 25, amd. by 1906, chap. 157). REPORTS. Every trust company makes to the commissioner of banking and insurance not less than two reports each year, according to the form prescribed by him, showing the condition of the corporation at the close of business on a past day specified by the commissioner. This report must be transmitted to him within twenty days after the receipt of his request, and a summary must be published in a local newspaper. The commissioner may call for special reports (1899, chap. 174, 16). The commissioner makes an annual “report to the legis lature embracing a statement of proceedings taken against trust companies, of new companies organized, and a sum mary of all trust company reports (1899, chap. 174, 27). EXAMINATIONS. The commissioner or a subordinate makes an examina tion of the affairs of every trust company whenever he deems it expedient or at the request of the trust company (1899, chap. 174, 21). The board of directors of every trust company appoint from the members of the board ax 43 ° New Jersey Trust — Companies examining committee to examine the company at least every six months, and oftener if required by the board, with special reference to assets which seem to be not of the value at which they are stated on the books of the company (1899, chap. 174, 14). IV.— R eserve R equirements. Every trust company receiving deposits that are sub ject to check or payable on demand must keep in avail able funds an amount equal to 15 per cent of demand liabilities. Four-fifths of this reserve may consist of balances due from good solvent banks or trust companies, and one-fifth must be in cash. When the reserve falls below, the trust company must not make any new loans except by purchasing sight exchange, nor make any divi dends of its profits (1899, chap. 174, 20). V.— Discount and L oan R estrictions. No trust company has power to discount commercial paper, nor to make loans on bills, notes, or other evidences of debt except to a New Jersey municipality, unless the loans are secured by mortgage upon lands, or by other securities whose market value exceeds by 10 per cent the amount of the loan (1899, chap. 174, 7). No trust company may loan to its officers, directors, or employees until the board of directors or the executive committee has approved of the loan by a majority vote. No trust com pany may permit its officers, directors, or employees to become liable to it by reason of overdrawn account (1899, chap, 174, 15). No trust company may loan on the security of its own shares unless acceptance of this secur ity is necessary to prevent loss on a previous debt. Stock so acquired must be disposed of within a year (1899, chap. i?4> 18). 431 N a t i on a l M on et a ry Commission VI. — I nvestments. Among trust company powers is the power to hold all real property necessary for the convenient transaction of the company’s business, and real property acquired in satis faction of debts under judgment, mortgage, etc., or in settlement of debts. Trust companies also may buy and sell stocks, promissory notes, bonds, mortgages, and other securities (1899, chap. 174, 6). No trust company may purchase or hold shares of its own stock unless the pur chase is necessary to prevent loss upon a previous debt, in which case the stock must be disposed of within a year (1899, chap, 174, 18). VII. — Overdrafts. No trust company may permit its officers, directors, or employees to become liable to it “ by reason of over drawn account” (1899, chap. 174, 15). X.— U nauthorized T rust Company B usiness. No corporation may be organized to do a trust company business in New Jersey except under chapter 174 of 1899, and no company organized under any other act may use the word “ trust” as part of its name (1899, chap. 174, 1). Trust companies incorporated under other than New Jersey law are allowed to do business in New Jersey to the extent that New Jersey trust companies are allowed to do business in the incorporating State (1907, chap. 35). X I. — Penalties . Any officer, director, or employee of a trust company who is implicated in a loan to an officer without the con sent of the directors, or an overdraft by an officer (1899, 432 New Jersey — Trust C o mp a n i e s chap. 174,15); any person who maliciously circulates false rumors affecting the financial condition of a trust com pany (1907, chap. 50); and any director, officer, or em ployee who makes false entries, false reports, etc., with intent to deceive an examiner, or subscribe to or make false reports, is guilty of a misdemeanor, and in the last case of a high misdemeanor (1899, chap. 174, 17). Every trust company which fails to report is subject to a penalty of $100 a day (1899, chap. 174, 16). S. Doc. 3S3, 61-2-----28 433 NEW MEXICO. The latest revision of the laws of the Territory of New Mexico was published in 1897. Title 3, beginning at page 157, deals with “ Banks and banking.” There are various amendments to sections in this title in the session laws of 1899, 1901, 1903, 1905, and 1907. Transcripts of two statutes of 1909, chapters 96 and 133, have been procured from the territorial banking officials, who state that these are the only 1909 laws which affect the digest; they are digested under the proper headings. The title on banks and banking in the Compiled Taws is divided into two parts, the first dealing with banks of discount and deposit and based chiefly on a statute of 1884, the second dealing with savings banks and based entirely upon a statute of 1887. These two halves of the title seem quite independ ent and conform to the plan of the digest, in treating first of banks and then of savings banks. Trust companies are legislated for in chapter 52 of 1903. It is worth noting that the savings bank statute, in its first section, provides for the incorporation of “ savings banks and trust associations,” but in the light of the complete and more recent legislation on trust companies, it seems unreasonable to consider the savings bank statute as pos sibly applicable to trust companies. Chapter 54 of 1903 transfers the supervisory duties with respect to banks and savings banks formerly incumbent upon the New M ex i co State Banks secretary and the treasurer of the Territory to a new offi cer created by the act and called “ the traveling auditor and bank examiner.” Since chapter 54 of 1903 shifted to the traveling auditor and bank examiner only those supervisory duties which had been in the hands of the secretary and the treasurer of the Territory, it was doubtful if under that statute the auditor, who had exercised supervision over trust companies, could properly be deprived of his former powers; chapter 96 of 1909, how ever, provides in section 9 that trust companies are to be placed “ under the direct supervision of the bank examiner.” On the strength of this provision the digest even with respect to trust companies treats the traveling auditor and bank examiner as the only supervisory officer. Chapter 96 of 1909 refers to the official simply as “ the bank examiner;” his full title as stated above is, under the act establishing the office, “ traveling auditor and bank examiner.” References in the digest, where they are simply numbers in parenthesis, are to sections in the Compiled Taws; later statutes are referred to by year of passage, chapter, and, where necessary, section. BANKS. I.— T erms of Incorporation. The capital of “ a bank of discount and deposit” must not be less than $30,000, and before the bank begins busi ness at least 50 per cent must be paid in in cash; the remainder must be paid in in cash within a year (244). The directors, semiannually or oftener, on the first Monday in January and July, may declare a dividend, but only out of net profits (250). No dividends are payable 435 N at ion a l M onet ary Commission on shares whose holders are liable, on debts past due, to the bank (247). In towns of less than 1,500 inhabitants corporations may be organized for trade and business, which may, in addi tion, transact a general banking business. These corpo rations must have a capital of not less than $30,000, of which not less than $20,000 must be paid in before banking is begun. The right to transact a banking business, more over, is not continued beyond a year unless the whole of the capital is paid up within that time. Existing corpo rations in cities or towns of less than 1,500 inhabitants may take advantage of the statute allowing incorporation for these combined purposes when their capital stock has been paid in in accordance with the act; such corporations must, however, be capitalized at not less than $30,000. The accounts of the banking business must be kept sepa rate from those of the regular mercantile business (1903, chap. 109). II.— L iabilities and D uties of Stockholders D irectors. and The officers and stockholders of banking corporations are individually liable for all debts contracted during the term of their being officers or stockholders “ equally and ratably to the extent of their respective shares of stock in any such corporation or association,” except that the lia bility ceases one year from the date of transfer of stock (252). A shareholder has no vote while his obligations held by the bank are past due (246). There must be not more than nine directors, elected annually (246). If a report is not made within a month of the time it is due, or if the bank wilfully violates the statute, the directors become liable personally for all debts contracted previous to and during the neglect (251). 436 New Mexico — State Banks III.— S upervision . The official charged with the supervision of banks is the “ traveling auditor and bank examiner,” who is appointed by the governor for terms of two years, must be a skilled accountant, and receives a salary of $2,000 a year with $1,200 additional for expenses (1903, chap. 54, 1). All the duties formerly put upon the secretary or treasurer of the Territory with respect to banks, savings banks, and trust companies now belong to the traveling auditor and bank examiner (1903, chap. 54, 9). If it appears to him that any bank is insolvent (as defined in 1909, chap. 96, 7) it is his duty to report to the governor, who, if it appears that such a proceeding is necessary, directs the bank examiner to take charge of the bank and of its property. The examiner thereupon makes a thorough examination and reports to the governor, who, if satisfied that the bank can not restime business or liquidate its debts to the satisfaction of its creditors, advises the attorney-general to institute proceedings for a receiver. I he bank examiner with the governor’s consent may appoint a deputy to take charge of an insolvent bank pending the appointment of a receiver, no bank, however, to remain in charge of a deputy longer than ninety days (1909, chap. 96, 4). A bank may voluntarily place its affairs under the control of the examiner by posting a notice on its doors (1909, chap. 96, 5). If it appears that the capital of a bank has been impaired, the examiner notifies the bank to make the impairment good in ninety days (1909, chap. 96, 8). REPORTS. Banks make semiannual reports in January and July in the form prescribed by the traveling auditor and bank examiner, which reports show resources and liabilities 437 N at ion a l M onet ary Commission at the close of business on a past day specified by the examiner, and must be transmitted to him within five days after his request. They must be published in a local newspaper (1909, chap. 96, 1). The foregoing late enactment seems to supersede the section formerly in force, which, after providing for the declaration of dividends “ semiannually or oftener, as they (the directors) may elect, on the first Monday in January and July,” proceeded: “ On each of such days the president or cashier shall make” a full statement to the bank examiner of the condition of the bank “ on that day after declaring the dividend, if any be declared.” The statement was required to contain a full abstract of the accounts of the bank so as to show its resources and liabilities. It was published once a week for three weeks in a local newspaper (250, and 1903, chap. 54, 9). The bank examiner reports to the governor all his official doings as examiner, embodying in his report an abstract of the condition of the assets and liabilities of the institutions under his charge, with general suggestions and recommendations (1903, chap. 54, 11). Banks which have in their possession money against which no check has been drawn, or of which no other dis position has been made, by the owner within three years, must annually publish for six days in a local newspaper a list of the names of such depositors, with the amount to the credit of each, etc. (1899, chap. 62). For reports required for purposes of taxation see 257, et seq, with amendments in 1907, chap. 103. EXAMINATIONS. The bank examiner visits each bank doing business in New Mexico except national banks at least annually, and oftener if necessary, in order to make a full investigation into its condition (1909, chap. 96, 2). 438 New Mexico — State Banks This late enactment does not materially change the older one under which he was required to visit “ each of the banking, savings, and other moneyed corporations created under the laws of the Territory” and thoroughly examine it at least once a year, verify the validity and amount of its securities and assets, and inquire into its observance of the law (1899, chap. 54, 6). A provision of the Compiled Taws provided that the secretary of the Territory (whose duties have now devolved upon the bank examiner under 1903, chap. 54, 9, and 1909, chap. 96, 9) might at any time appoint a suitable person to examine “ any corporation incorporated under this act (the savings bank statute) or any other law of this Territory,” or might make such an examination himself to determine the truth of any statement made by the bank or to de termine its solvency and the character of its assets (280). Under the 1909 statute the bank examiner upon taking charge of a bank must examine its affairs before receiver ship proceedings are instituted, and may make an exami nation of any bank which is voluntarily liquidated (1909, chap. 96, 4 and 6). V.— Discount and L oan R estrictions. Any bank of discount and deposit may “ carry on the business of banking by discounting on banking principles upon such securities as the directors or trustees shall deem expedient, * * * by loaning money on personal se curity and by exercising such incidental powers as may be necessary to carry on such corporation, association, or business” (246). The savings bank statute contains provisions for the maximum amount of individual loans and for curtailing loans to directors and officers (276); but there seems no reason to suppose that these provisions are applicable to commercial banks. The stockholders collectively of any 439 N at ion a l M onet ary Commission bank must never be liable, either as principal or surety or both, to an amount greater than two-fifths of the paid in and unimpaired capital (253). No bank may take as security a lien on any part of its capital; the same security is required of shareholders as of others (244). For provisions for deposits of territorial moneys see 255. V I.— I INVESTMENTS. A bank may carry on its business “ by buying or selling the bonds or stocks of this or any other State or Territory, or of the United States; also the bonds of any county, city, town, or school district in this Territory legally authorized to issue such bonds; gold and silver bullion; foreign coins and bills of exchange” (246). It is lawful for a bank to hold real estate only for the following purposes: Such as is necessary for its accommo dation in business; such as is mortgaged to it for previous loans; such as is conveyed to it in satisfaction of previ ous debts; and such as it purchases under judgments or mortgages held by it; but at such a sale the bank must not bid more than necessary to satisfy the debt and costs (248 and 249). No bank may “ be the holder or purchaser” of its own stock or the stock of any other corporation unless the pur chase is necessary to prevent loss on a previous debt con tracted on security which was thought adequate at the time; stock so purchased must not be held for longer than six months if it can be sold for what it cost or at par (244). V III.— B ranches. The only hint on this subject is that contained in the requirement of a certificate by the incorporators, which must state “ the place where the operations of discount 440 N ew M ex i c o State Banks and deposits of such banking corporation or association are to be carried on, designating the particular county, city, or town, at which place such association shall keep an office for the transaction of its business ” (245). X.— U nauthorized B anking . It is unlawful for persons, companies, or associations other than national banks to carry on a banking business in New Mexico without compliance with the provisions of the bank statute. Contracts made with banks doing busi ness in violation of the statute are void (254, amd. by 1899, chap. 40). X I.— P enalties . Any officer of “ any banking, moneyed, or savings insti tution or other moneyed corporation of this territory” who fails to furnish reasonable facilities to the examiner is guilty of a misdemeanor, punishable by a fine of not less than $500, imprisonment for not less than six months, or both (1903, chap. 54, 8). Any person who refuses the examiner access to books or papers or who hinders the complete examination of such an institution is also guilty of a misdemeanor, punishable by the same penalties (1903, chap. 54, 10). A failure by “ any banking house” to com ply with the provisions of the act requiring reports of un claimed deposits to be published renders each director and managing officer guilty of a misdemeanor, punishable by six months’ imprisonment (1899, chap. 62, 3). Failure to make a regular semiannual report is punishable by fine of $50 a day (1909, chap. 96, 1). Failure by the proper officer of any bank to make the report required for tax ation purposes entails a forfeit of $1,000 (258). If the president, director, or other officer of any banking institution is implicated in receiving a deposit, or in the creation of any debt by his bank in consideration of which 441 mm is s i on money or property is received into the bank, after he has knowledge that the bank is insolvent or failing, he is guilty of larceny (254, amd. by 1899, chap. 40). See also Savings banks, XI, for the sections of the savings bank statute, which provide for these offenses (282 and 283); these sections seem to be applicable to banks, as well as savings banks, for they forbid the officers of “ any bank or banking institution organized or doing business under the provisions of this act or of any law of this territory” to receive deposits during insolvency, and provide the penalty for this offense when committed by officers “ of any bank or banking institution.” SAVINGS BANKS. I.— T erms of I ncorporation. The first of the sections headed in the Compiled Taws “ Savings banks” provides for the incorporation of “ sav ings banks and trust associations,” the capital of which must not be less than $30,000, except in cities and towns of less than 3,000 inhabitants, in which the capital must not be less than $15,000. All the capital must be paid in in cash before business is begun (260, amd. by 1901, chap. 56). Each savings bank must create a surplus from its net earnings by setting apart at least 10 per cent of them semiannually until the surplus amounts to 40 per cent of capital (268). The directors may, in January and July, declare a dividend, if it has been earned, provided the savings bank is fully solvent without the earnings which it is proposed to divide; no dividend may be declared when the capital is impaired so as not to be worth in good resources the full amount paid in after the payment of all liabilities, nor when the provisions respecting surplus fund have not been fully complied with (266). No divi 442 New Mexico Savings Banks dends may be paid on stock the holder of which is liable on debts past due to the savings bank; dividends must be applied to discharge the liabilities (265). A savings bank may issue and negotiate its own evi dences of indebtedness to an amount not exceeding 90 per cent of the aggregate of the loans made and held by the savin8s bank and secured by mortgages of real estate (263). II. — L iabilities and Duties of Stockholders D irectors. and The stockholders of a savings bank “ shall only be in dividually liable to the extent of the par value of the shares of stock subscribed for by them” (273). There must be not more than nine directors (264). Any director who assents to declaring and paying a dividend while the capital is impaired is personally liable to the amount of his proportion of the dividend if losses occur on account of its payment (266). If a savings bank fails to make required reports or wilfully violates the savings bank statute, the directors are personally liable for bad debts contracted previous to and during the period of the neglect (272). Directors or other officers who are impli cated in receiving deposits or creating debts with knowl edge of the insolvency of the bank are individually respon sible for the deposits received or the debts created (282). I I I — Supervision . The same official is in control of savings banks (see Banks, III) as of banks. See Banks, III, for the provisions of the 1909 statute which require the examiner to report the insolvency of a bank to the governor and institute receivership proceed ings, appointing a deputy to act as temporary receiver if necessary; also for the provisions allowing a bank to place 443 » N at ion a l M onet ary Commission itself voluntarily in the hands of the examiner; and for those under which the bank examiner requires impairment of capital to be made good within ninety days (1909, chap. 96, 4, 5, and 8). It is not altogether clear that these provisions are applicable to savings banks; the stat ute states that “ for the purpose of examination and regulation the provisions of this act are hereby made applicable and extended to trust companies, banks, building and loan associations, and all territorial institu tions ; it is the intent and purpose by this section to place these institutions under the direct supervision of the bank examiner’’ (1909, chap. 96, 9). There is an older provi sion for action by the examiner when he considers a corporation in an unsafe condition to continue business, which, if not superseded by the 1909 act, applies clearly to savings banks. It provides for action by the examiner, culminating in the appointment of a receiver (280, and 1903, chap. 54, 9). Other provisions of the Compiled Taws, probably still effective, enact that when the capital of a savings bank is impaired to the extent of 25 per cent by reason of bad loans or otherwise the savings bank must cease to do business unless its capital is made good by assessment within sixty days or reduced to offset the impairment (266). REPORTS. See above, under Supervision, for the possible applica tion of chapter 96 of 1909 to savings banks. Under that chapter “ all banks heretofore or hereafter organized under the laws of the Territory, including private banks,” must make semiannual reports in January and July in the form prescribed by the examiner, exhibiting resources and liabilities at the close of business on a past day specified by the examiner, reports to be transmitted within five 444 New Mexico Savings Banks days after the request and to be published in a local news paper (1909, chap. 96, 1). If the language of chapter 96 of 1909 does not make this provision for reports applicable to savings banks, the provisions of the following para graph cover the point: The directors of a savings bank must, semiannually, in January and July, and whenever any dividends are declared, make a full statement to the bank examiner of the condition of the savings bank on that day, after the dividend, if any, has been declared; the statement must show fully the general accounts of the corporation and its resources and liabilities with details, and must be pub lished once a week for three weeks in a local newspaper (269, and 1903, chap. 54, 9). The bank examiner may call upon any savings bank to make such a statement at any time, though it be more than the second time within a year; he must give no notice to anyone of the day on which he will call for such a statement, which must show the actual condition of the bank at the close of busi ness upon a designated day prior to the call (270, and 1903, chap. 54, 9). The examiner makes a written report to the governor as stated under Banks (1903, chap. 54, 11). I he statute requiring the publication of reports of un claimed deposits (see Banks, III) applies to “ all national and territorial banks having banking houses in this Terri to ry” (1899, chap. 62). For reports for purposes of taxation see 1903, chapter 103. EXAMINATIONS. Under chapter 96 of 1909 the bank examiner must visit each and every bank doing business in the Territory of New Mexico except national banks” at least once a year, and oftener if necessary, to make full investigation into its condition (1909, chap. 96, 2). 445 I N at ion a l M on e t a r y Commission The older provision for examinations at least once a year by the traveling auditor and bank examiner (see Banks, III) includes savings banks. It particularly requires, with respect to savings banks, that he examine the validity of the mortgages they hold (1903, chap. 54, 6). A provision of the savings-bank statute in the Compiled Taws is that the secretary of the territory (whose duties have now de volved upon the bank examiner— 1903, chap. 54, 9) may appoint some one to make examination of a savings bank, or make the examination himself, to determine the truth of any statement made under the provisions of the act or to determine the solvency of the savings bank and the character of its assets (280). If savings banks are subject to the regulation features of chapter 96 of 1909, the bank examiner, when he has taken charge of a savings bank as insolvent, makes a thorough examination, and also may examine banks in voluntary liquidation (1909, chap. 96, 4 and 6). V.— Discount and L oan R estrictions. A savings bank may conduct the business of “ loaning money upon real estate or personal property and upon collateral, personal, or live-stock security, at a rate of in terest not exceeding that allowed by law; and also of buy ing, selling, and discounting negotiable and unnegotiable paper of all kinds, as well as all kinds of commercial paper” (262). No savings bank may loan its money to any individual or corporation, directly or indirectly, or permit any indi vidual or corporation to become at any time indebted to it in a sum exceeding 10 per cent of its paid-in capital, or permit a line of loans to any greater amount to any indi vidual or corporation; nor may a savings bank hold the name of any of its directors or officers as principal or 446 N ew M ex i c o Savings Banks surety upon paper, or to an amount greater than 5 per cent of its capital, unless the borrower deposits with the savings bank collateral security or executes a mortgage of personalty or realty (276). No savings bank may accept improved real estate as security for a greater amount than 50 per cent of its value; nor unimproved real estate for a greater amount than 30 per cent; nor live stock for a greater amount than 40 per cent (277). A savings bank may issue and negotiate its own evi dence of indebtedness to an amount not exceeding 90 per cent of the aggregate loans made and held by the bank and secured by mortgages on real estate (263). Savings banks may deposit in New Mexico banks or national banks (275). V I.— I nvestments . Savings banks may conduct the business of “ buying and selling gold, silver, coins of all kinds, uncurrent money; * * * and also the buying and selling of bonds and stocks of this or any other Territory or State, or of the United States; also the bonds or other evidences of indebtedness of any county, city, town, or school district in this or any other Territory or State legally authorized to issue such bonds or evidences of indebtedness” (262). No savings bank may employ its moneys in trade or com merce by buying and selling merchandise; but it may sell all kinds of property acquired as collateral or in the col lection of debts (278). A savings bank may hold real estate only as follows: First, a plot on which buildings requisite for its business are erected, from portions of which rent may be derived, the cost of the buildings and lot never to exceed 50 per cent of the net surplus of the bank; second, such real estate as the bank has purchased on foreclosure of 447 N at io n a l M onetary Commission mortgages owned by it or upon judgments for debts due it or in settlements to secure such debts. The second sort of real estate must be sold within five years (279). A savings bank may deposit the moneys deposited with it, or its surplus funds or unemployed capital, in a New Mexico bank or a national bank (275). V III.— B ranches. The only intimation in the statutes on this subject is in the provision that the incorporators shall certify “ the principal place where the business of such corporation shall be carried on, designating a particular county, city, or town at which place such corporation or association shall keep an office for the transaction of its business” (261). X I .— P enalties . If the president or other officer or director of a savings bank refuses to make statements required by the bank examiner, or makes a false statement, the offender is guilty of a misdemeanor punishable by fine for each offense of $100 to $500, or imprisonment for from one to twelve months, or both fine and imprisonment (271). If a savings bank or its officers or directors fail to publish a statement for one month beyond the time when it is required to be made, or willfully violate any provision of the savings bank statute, the directors become personally liable for bad debts contracted previous to and during the neglect (272). Every director and managing officer of a “ banking house ” which fails to publish unclaimed deposits is guilty of a misdemeanor, punishable by six months’ imprisonment (1899, chap. 62, 3). The provisions given under Banks, XI, respecting penalties for failing to fur nish facilities to the bank examiner (1903, chap. 54, 8) and those respecting penalties for refusing access to the 448 New Mexico Trust — C o mp a n i e s bank examiner to books or papers (1903, chap. 54, 10) apply to savings banks. If savings banks are required to report semiannually under chapter 96 of 1909, they are subject to the penalty of $50 per day during any delay in making a report (1909, chap. 96, 1). Any president, director, or other officer or agent of a bank organized or doing business under the savings bank statute or any law of the Territory who is implicated in receiving deposits or in the creation of debts by the insti tution with knowledge of its insolvency is individually responsible for the deposits or debts (282); one who will fully commits this offense and fails to make good the loss to the persons damaged within sixty days after the insol vency of the bank has been judicially determined is guilty of a misdemeanor punishable by fine for each offense of $100 to $500, or imprisonment of from one month to twelve months, or both fine and imprisonment (283). The provision on this topic given under Banks, X I, pro viding that such an offense shall be larceny, seems appli cable to savings banks as well as to banks (254, amd. by 1899, chap. 40). TRUST COMPANIES. I.— T erms of I ncorporation. Trust company powers are enumerated in 1903, chapter 52, 3. A trust company may “ receive upon deposit for safe keeping money and personal property of every de scription.” A majority of the fifteen or more incorpo rators of a trust company must be residents of New Mexico. The capital actually subscribed in good faith at the time of filing the articles must be not less than $250,000, of which $100,000 must have been actually paid in lawful money (1903, chap. 52, 1 and 9). A 1909 amendment allows the incorporation of a trust company S. Doc. 353, 61-3----- 29 449 N at i on a l M onet ary Commission in any city, town, or village of less than 7,000 with an actually subscribed capital stock of not less than $100,000, of which not less than $50,000 must have been actually paid in (1909, chap. 133, 1 and 3). Dividends may be declared semiannually or annually of so much of the net profits as the directors judge ex pedient, but before the declaration of the dividend at least one-tenth of net profits for the preceding half year or year must be carried to surplus fund until it amounts to 20 per cent of the paid-in capital. No dividend may be declared until at least $250,000 of capital has been paid in in the case of trust companies in communities of over 7,000; in those under 7,000, a trust company may not declare a dividend until its entire capital has been paid in. Dividends must never exceed net profits on hand (1903, chap. 52, 7, amd. by 1909, chap. 133, 2). II.— L iabilities and Duties of Stockholders Directors. and The shareholders of every trust company are indi vidually responsible for its contracts to the extent of the amount of their stock at par in addition to the amount invested in the shares (1903, chap. 52, 15). There must be not fewer than five directors, each the owner of not less than 10 shares of capital; a majority must be citizens of New Mexico. The term of office is regularly one year (1903. chap. 52, 17, amd. by 1903, chap. 115). III.— Supervision. The following provisions of chapter 96 of 1909 are applicable to trust companies: If at any time it appears to the bank examiner that a bank is insolvent he reports to the governor, who, if it appears that such a proceeding is necessary, directs the examiner to take charge; the exam450 N ew M ex i c o Trust Companies iner then examines thoroughly and makes a return to the governor, who, if satisfied that the company can not resume business or pay its debts, advises the attorney-general to proceed for a receiver, pending whose appointment the examiner may place the affairs of the company for not longer than ninety days in charge of a special deputy (1909, chap. 96, 4). A trust company may voluntarily place its affairs under the control of the examiner by post ing a notice on its doors (1909, chap. 96, 5). When it appears that the capital of a trust company has been impaired, the examiner notifies it to make the impairment good within ninety days (1909, chap. 96, 8). I'he provisions of the paragraph next following were law before the enactment of chapter 96 of 1909, with the powers and duties mentioned in the hands of the territorial auditor; since they seem not clearly repealed by chapter 96, they are inserted below with the examiner substituted for the territorial auditor. It is possible that this substi tution may not be altogether justified by chapter 96, which provides in section 9 that “ for the purpose of examination and regulation the provisions of this act are hereby made applicable and extended to trust companies; * * * and it is the intent and purpose of this section to place these institutions under the direct supervision of the bank examiner.” The examiner notifies any trust company whose reserve is below the requirement, and if the company fails to make the reserve good in sixty days, he may take charge, close the company’s doors, make a thorough examination, and take such proceedings as the situation requires (1903, chap. 52, 10); he may act similarly whenever a trust company fails to report for a period of thirty days after the time the report is due (1903, chaps. 52, 11) or refuses to submit to examination (1903, chap. 52, 12), and whenever the capital of a trust 451 N a t ion a l M o n et a r y Commission company, having becoiite reduced below the requirement, is not made good by assessment on the shareholders within three months of his requiring the deficiency to be repaired. When it appears to him that a trust company has violated its charter or any statute, or is conducting its business in an unsafe and unauthorized manner, he orders the company to discontinue these practices; and whenever, from a thorough examination of its affairs, it appears to him that it is unsafe for the company to continue business, he may take charge, close the com pany’s doors, and report the facts to the governor, who must require proceedings to be instituted for the appoint ment of a receiver (1903, chap. 52, 15). Failure to sell within six months its own shares acquired under the provision permitting their acquisition to prevent loss on a previous debt, is ground for the appointment of a re ceiver (1903, chap. 52, 8). The auditor of the Territory (probably now the exam iner— 1909, chap. 96, 9) has authority to designate reserve depositaries; apparently any national, state, or territorial bank may be a depositary and any trust company which he designates (1903, chap. 52, 10). There is provision for a deposit of cash or securities on the strength of which a trust company may serve in a fiduciary capacity without giving a bond (1903, chap. 52, 6). REPORTS. Chapter 96 of 1909, applying under its express terms to trust companies, requires them to make semiannual reports in January and July to the bank examiner in the form which he prescribes, exhibiting resources and lia bilities at the close of business on a past day specified by him, the report to be transmitted within five days after the request, and to be published in a local newspaper (1909, chap. 96, 1). 452 New M e x i co Trust Companies Under previous legislation trust companies were re quired to report to the territorial auditor four times a year, showing in detail resources and liabilities of the company at the close of business on a past day specified by the auditor; each report was transmitted to him within fifteen days after the receipt of his request, and was pub lished in a local newspaper. The auditor might call for special reports whenever they seemed necessary (1903, chap. 52, 11). Receivers of trust companies report, when required, to the appointing court (1903, chap. 52, 15). See Banks, III, for report of bank examiner to governor (1903, chap. 54, 11). The publication of unclaimed deposits is not re quired of trust companies unless they can be brought within the description, “ territorial banks having banking houses in this Territory” (1899, chap. 62). See 1907, chap. 103, for reports for taxation purposes required of all “ joint stock associations doing a banking business.” EXAMINATIONS. The bank examiner under the 1909 statute visits every trust company at least annually, and oftener if necessary, for the purpose of making a full investigation into its condition (1909, chap. 96, 2). He examines thoroughly when he takes oossession prior to the institution of receiv ership proceedings (1909, chap. 96, 4); and he may examine in voluntary liquidations (1909, chap. 96, 6). The above provision for regular annual examinations is a parallel to the earlier legislation which required the examiner to visit at least once in each year without prior notice “ each of the banking, savings, and other moneyed corporations created under the laws of the Territory ” and thoroughly examine them (1903, chap. 54, 6). It seems to override, however, still another earlier statute which required the auditor semiannually and at such 453 National Monetary Commission other times as he deemed necessary, to make a thorough examination into the affairs of every trust company either personally or through a suitable person appointed by him (1903, chap. 52, 12). IV. — R eserve R equirements. Every trust company must keep on hand in lawful money of the United States an amount at least equal to 15 per cent of its aggregate liabilities other than those for which a deposit with the State is required to be made. Whenever its reserve falls below the requirement the corporation must not increase liabilities by making new loans, nor make dividends, until the reserve has been restored. The auditor may notify a trust company whose reserve is below the requirement to make it good, and if it fails for sixty days he proceeds as stated under Supervision. Three-fifths of the reserve may consist of balances due from any national, state, or territorial banks or from any trust companies designated by the auditor (1903, chap. 52, 10). V.— D iscount and E oan R estrictions. Among trust company powers is that “ to loan money upon real-estate, personal and collateral security” (1903, chap. 52, 3, amd. by 1905, chap. 78, 1). No trust com pany may loan or discount on the security of shares of its own stock, except to prevent loss on a previous debt, in which case the stock must be disposed of within six months. The total liabilities to a trust company of any person, firm, or corporation, including in firm or corpora tion liabilities those of the members, must never exceed 20 per cent of paid-in capital. The total liabilities of a director, officer, or employee to his company must never exceed 10 per cent of paid-in capital (1903, chap. 52, 8). 454 N ew M e x i co — Trust Companies Trust companies may become depositaries of territo rial moneys to an amount not exceeding 40 per cent of their paid-up capital (1903, chap. 52, 16). V I.— I nvestments . Among trust company powers are those “ to purchase, invest in, and sell all kinds of government, state, munici pal, and other bonds and all kinds of negotiable and nonnegotiable paper and other investment securities” (1903, chap. 52, 3, amd. by 1905, chap. 78, 1). No trust company may purchase shares of its own stock, unless the purchase is necessary to prevent loss on a previous debt, in which case the stock must be sold within six months (1903, chap. 52, 8). A trust company may purchase or lease real estate for use in conducting its business; it may purchase real estate under its own foreclosure proceeding, judgment, or lien, or whenever it may be necessary to protect itself from loss, but such real estate must be sold as speedily as possible (1903, chap. 52, 20). V III. — B ranches. The articles of agreement must set out “ the name of the particular city or town and county in which the busi ness of the corporation is to be carried on” (1903, chap. 52, 1); the trust company statute contains no further hint with respect to doing business at branch offices. X I.— P enalties . Trust companies may only advertise their actually paidin capital, surplus, and undivided profits, and not their authorized capital, unless it is fully paid up; the penalty for violating this provision is $100 to $500 for each offense (1903, chap. 52, 9). Failure to report entails a penalty 455 N at io n a l M o n et a r y C o mmi s s i o n of $50 a day (1903, chap. 52, 11, and 1909, chap. 96, 1). Refusal to submit to an examination entails a penalty of $1,000 on the corporation, and $500 on any particular officer or director who refuses (1903, chap .52,12). See also chapter 54 of 1903, which creates the office of traveling auditor and bank examiner; under that statute any officer “ of any banking, moneyed, or savings institution or other moneyed corporation of this territory ” who fails to furnish facilities to the traveling auditor and bank examiner at examinations, is guilty of a misdemeanor, punishable by fine of not less than $500 or imprisonment for not less than six months, or both fine and imprisonment (1903, chap. 54, 8), and any person refusing the traveling auditor and bank exam iner access to books, etc., or hindering examination as required under the statute, is guilty of a misdemeanor punishable by the same penalties (1903, chap. 54, ip). If the president, director, agent, etc., of a trust com pany embezzles or issues without authority any certificate of deposit, etc., or makes a false entry, report, or state ment with intent to defraud the corporation or any other company or individual, or to deceive an officer of the cor poration or an examiner, is, together with those who aid him, guilty of a misdemeanor, for which the penalty is imprisonment for from five to ten years (1903, chap. 52, 14). The provision making it larceny to receive deposits while insolvent (see Banks, III) applies to every “ banking institution” (254, amd. by 1899, chap. 40). 456 NEW YORK. The State of New York has a complete banking law containing general provisions, and provisions dealing with banks, with savings banks, and with trust com panies separately. Individual bankers are, when they ac cept the benefits of the banking law, for the most part treated as banks are. There is separate legislation also for building and loan associations; cooperative loan asso ciations; mortgage, loan, and investment corporations; safe deposit companies and associations for loaning money on personal property. The digest treats separately banks, savings banks, and trust companies, with as little repeti tion as possible, inserting the provisions applicable to all corporations subject to the banking act, only once, under “ Banks.” Elaborate provisions for circulation (secs. 83-106) are omitted. The legislature of 1909 enacted a new revision of the statutes of the State, known as the Consolidated Laws, of which the banking law is chapter 2; references, where they are merely numbers in parentheses, are to sections in that chapter. BANKS. I.— T erms of I ncorporation. The superintendent of banks, when the necessary formalities have been complied with by proposed incor porators, determines, weighing their character and fitness and the needs of the locality, whether it is expedient and 457 * National Monetary Commission desirable for them to incorporate as a bank (63). The capital of banks in villages not exceeding 2,000 must be not less than $25,000; in cities, villages, or towns exceed ing 2,000 and not exceeding 30,000, it must be not less than $50,000; and elsewhere it must be $100,000 (60). The superintendent does not authorize beginning business unless it appears on examination that the requisite capital has been paid in in cash (12 and 68). Bank directors may declare semiannual or quarterly dividends out of net profits, which are defined in 28 and 29; but before declaring a dividend a corporation must carry one-tenth of its net profits to surplus fund until the surplus amounts to 20 per cent of the capital (27). II.— L iabilities and D uties of Stockholders Directors. and It is a constitutional provision that the stockholders of all corporations “ for banking purposes” are individu ally liable to an amount equal to that of the stock they hold for all the debts of their corporations (constitu tion, Art. V III, sec. 7); bank stockholders are liable to the extent of the amount of their stock at par, in addi tion to the amount invested in the shares (71). There must be not fewer than five directors of every bank. They must all be citizens of the United States, and three-fourths of them must be residents of New York. Each director must own at least $1,000 of the stock of his bank if the bank is capitalized at $50,000 or over, and if it is capitalized at less, $500 of its stock (69). The directors of all corporations, whether banks, savings banks, or trust companies, must meet once a month. They must appoint officers to report to them, or to a com mittee of not fewer than five of them, at each meeting, a statement of transactions between meetings, this state ment to include purchases and sales of securities; dis 458 V N e w York S t a t e B a n k s counts and loans of $1,000 and over, with items as to col lateral; and, where the liability of an individual, firm, or corporation to the banking corporation has increased $1,000 or more since the last meeting, the name of the borrower with the collateral furnished by him (42). See below, under Reports, details of the semiannual reports and examinations made by directors. III. — Supervision . The superintendent of banks of the State, who is chief officer of the banking department, is appointed by the governor for terms of three years, and may not be inter ested in any banking institution; his salary is $7,000 a year (3). He may appoint three deputies, and clerks, examiners, etc. (5). The expenses of the department, including salaries, are prorated among the institutions subject to it (7, 158, etc.). No examiner may be ap pointed receiver of a bank he has examined (11). It is within the superintendent’s discretion to determine if it is expedient and desirable that an application for incor poration as a bank be granted, taking into consideration fitness of incorporators and needs of the locality (60); also whether the density of population, convenience, re sponsibility of incorporators, etc., warrant the establish ment of a savings bank as applied for (133 and 134); and also to settle similar questions in the case of an application for incorporation as a trust company (183). He passes on proposed changes of location (31), consolidations (36), and the advisability of branches (109 and 186). He approves of reserve depositaries (67 and 198). In case he believes that the capital stock of any corporation or individual banker is impaired he orders the deficiency made good in sixty days, whereupon the directors must assess the stockholders. If he believes the corporation is violating 459 mm i s s i o n its charter or the law, or is conducting its business unsafely, he may order the practices discontinued (17). If capital is impaired, or if the corporation refuses to submit to examination, violates its charter or the law, suspends payment, conducts its business unsafely, or if from an examination or report the superintendent con cludes that it is unsafe or inexpedient for the corporation to continue business, he institutes, through the attorneygeneral, proceedings for a dissolution (18); failure to make two successive reports is ground for the same action (22). He then holds possession, through his regular or specially appointed deputies, till the corporation can resume busi ness or be finally liquidated; the statute provides elabo rately for the proceedings, proof of claims, payment of dividends, etc. (19). When the reserve of a bank, banker, or trust company falls below the required amount and is not made good after thirty days’ notice, the superin tendent proceeds as against an insolvent corporation (67 and 198). The superintendent posts weekly in his office a detailed statement giving items of the banking department’s work during the preceding week, including the names of corpo rations and bankers opening business, names of corpora tions opening branches, department appointments, resump tions of business, etc. These statements, even after removed from the superintendent’s bulletin, must be accessible to any applicant (43). Banks must keep with the department stocks of the State or of the United States amounting to $1,000, which are held by the superintendent as a pledge of compliance with the banking laws (76). REPORTS. Banks and individual bankers report to the superintend ent at least once in every three months with respect to a 460 N e w York S t a t e B a n k s date designated by the superintendent. The report includes whatever items the superintendent prescribes, in every case including the amount of those deposits payment of which is preferred in insolvency (21). It must be made within ten days of the designated date (22). Within ten days after each declaration of a dividend banks report facts concerning their net earnings, the state of their sur plus, etc., to the superintendent (27). Within thirty days after each regular quarterly report is made the superintendent publishes a summary in an Albany newspaper used by him for official notices; the summary contains specified items of the report, including capital, deposits, specie, securities held, etc., and such other items as are necessary to inform the public of the financial condition of the corporation or banker. The bank or banker publishes the summary in at least one local newspaper (24). Examiners report the result of each examination to the superintendent (11), who may, in his discretion, cause the report to be published (16). Directors of all banking institutions receive itemized reports from an officer, at their monthly meetings, as stated under II (42). The directors of banks in April and Octo ber of every year must examine, or cause a committee of three of them to examine, the books and affairs of the bank, with reference particularly to loans and discounts, and the security given for them, and such other matters as the superintendent may prescribe. Within ten days after completing this examination the directors file a report in their bank and a duplicate in the banking department. The report contains a statement of assets and liabilities; a detailed statement of loans which in the directors’ opin ion are doubtful or worthless; a statement of loans insuffi ciently secured, specifying the amount of the loans and the collateral; a statement of overdrafts; and also a full state ment of all matters affecting solvency (23). M onet ary Commission Deposits or other claims of $50 or more unclaimed for five years must be published for six weeks every year by the bank or banker with whom the deposit was made (30). The superintendent submits annually to the legislature a report showing the condition of the corporations and bankers reporting to him, with totals summarizing the con dition of them all; a statement of those authorized during the year to begin business, with facts about each; a state ment of those who have stopped business during the year; suggestions for amendments to the banking law; and sta tistics of the banking department, its expenses, etc. (25). He must include also details with respect to liquidations, dividends in insolvent corporations that are unclaimed, etc. (19). EXAMINATIONS. The superintendent, personally or by an examiner, visits all banks, trust companies, and individual bankers twice each year. Inquiry is made as to the condition of the cor poration, its management, investments, the security given its creditors, etc., its compliance with law, and such other matters as the superintendent may prescribe. He may require examinations more frequently if he thinks them necessary (8). An examination must be had at once if a report is not filed on time (22). There is a preliminary examination to make sure that capital has been paid in (12). When the superintendent believes capital is impaired, he may cause a special examination to be made to ascertain the amount of the deficiency (17). Creditors of any banking institution and shareholders whose debts or shares equal $1,000 or over may apply to court for an examination by a referee (20). See Reports, for the semi annual examination made by directors, the result of which they report to the superintendent. 462 N ew Yor k S t a t e B a n k s IV. — R eserve R equirements. For a bank or banker having principal place of business in a borough of i ,800,000 or over, the lawful money reserve, consisting of lawful money of the United States, gold cer tificates, silver certificates, or notes of national banks, must equal 25 per cent of the deposits, exclusive of deposits secured by bonds of New York State; for one with principal place of business in a borough of a population between 1,000,000 and 1,800,000 the lawful money reserve must be 20 per cent; for one with principal place of business elsewhere, 15 per cent. Banks located in boroughs of 1,800,000 or over may deposit on call two-fifths of the re serve in a bank or trust company which has a capital of at least $200,000, or a capital of $150,000 and a surplus of $150,000, and is approved by the superintendent as a de positary ; banks located in boroughs of less than 1,800,000 and not maintaining a branch in a borough of 1,800,000 or over may deposit one-half; banks located elsewhere, threefifths. While the reserve is below the requirement, no new loans or discounts may be made except by discounting sight exchange, and no dividends may be declared out of profits (67). V.— D iscount and L oan R estrictions. (A) No bank or trust company may loan to any person, firm, or corporation an amount exceeding one-tenth of its capital paid in and surplus. This restriction upon the ag gregate amount of loans is subject to the following excep tions, however: First, if the bank or trust company has its principal office in a borough of 1,800,000 or over, it may loan to any person, firm, or corporation a sum equal to not more than 25 per cent of its capital paid in and surplus on security worth at least 15 per cent more than the amount of the loans; and in smaller boroughs not more than 40 per 463 t National Monetary Commission cent on such security. Second, it may loan io per cent of its capital and surplus as first provided, and, beyond that, if located in a borough of 1,800,000 or over, a further sum not exceeding 15 per cent of capital and surplus on security worth at least 15 per cent more than the amount of the loans, or if located elsewhere 30 per cent upon such security. Third, purchases of commercial paper drawn in good faith against actual existing values, and discounts of paper owned by the person negotiating it may be made, up to 25 per cent of capital and surplus in the case of a bank located in a borough of 1,800,000 or over, and in the case of banks located elsewhere up to 40 per cent. Imposed upon all these exceptions, however, there is a general proviso that, with the exception of the liability of the United States or of New York, or of counties or cities in New York, the total liability of any one person, firm, or corpo ration to the bank must never exceed 25 per cent of the paid-in capital and surplus of the bank if its principal place of business is located in a borough of 1,800,000 or over, and must never exceed 40 per cent if it is located elsewhere. (B) No bank or trust company may loan on the securi ties of corporations the payment of which is undertaken severally but not jointly by two or more individuals, firms, or corporations, first, if the borrowers or underwriters are obligated to buy the securities collateral to the loan and have not paid in cash a sum equal to 25 per cent of the amount that remains due on the purchase; second, if the bank or trust company making the loan is liable directly, indirectly, or contingently for its payment; third, if the loan is for longer than a year; or, fourth, if the loan exceeds 25 per cent of the capital and surplus of the lender. (C) No bank, savings bank, or trust company may loan upon security of real estate on which there is a prior in cumbrance, if the aggregate unpaid amount on prior in 464 N ew Yor k S t a t e B a n k s cumbrances exceeds io per cent of the capital and surplus of the lender, or if the amount loaned plus the amount of the prior incumbrances exceeds two-thirds of the ap praised value of the real estate. Any real-estate securities may be taken, however, to secure a loan previously made in good faith. No bank having its principal place of busi ness in a borough of 1,800,000 or over may loan on real estate to an amount equal to more than 15 per cent of its total assets; no bank in a village of not over 1,500 in which there is no savings bank may loan to an amount equal to more than 40 per cent of its total assets; no bank elsewhere to an amount over 25 per cent. (D) No bank, savings bank, or trust company, nor its officers, directors, or employees, may purchase commer cial paper issued by the bank for less than its face value. (E) No bank, savings bank, or trust company may deposit in another moneyed corporation, unless that cor poration has been voted a depositary by a majority of the directors of the depositor corporation, exclusive of directors who are officers or directors of the depositary. (F) No officer, employee, or person interested in the management of a bank, savings bank, or trust company may as an individual loan upon paper offered to the cor poration and refused by it. (G) No officer, director, or employee of a bank may borrow of his bank without the consent of a majority of the directors. (H) No bank or trust company may accept as security its own shares, unless it is necessary to prevent loss on a previous debt; and in that case the stock must be dis posed of within six months. (I) No bank, savings bank, or trust company may loan on the security of the shares of another moneyed corpora tion so as to make the lender the holder of more than 10 per cent of the borrower corporation’s stock (27). S- D oc. 3S 3. 6 1 -2 ----- 30 465 N at i on a l M on et a r y Commi s s i on Banks may take interest at 6 per cent, but not more, except that exchange may be added when paper is taken which is payable at another place (74); and demand loans of not less than $5,000 made on warehouse receipts, bills of lading, stocks, bonds, etc., may draw interest at any rate agreed upon (75). VI. — Investments. Banks may own stocks or bonds of the United States and of the State of New York or any municipality of New York not in arrears, and may hold real estate for their necessary accommodation in transacting business, on mortgage to secure loans, on conveyances to satisfy pre vious debts, and on purchase under judgments or mort gages held by the bank (66). No bank or trust company may purchase or hold its own shares unless it is necessary to do so in order to pre vent loss on a previous debt; in such case the corporation must sell within six months (27). VII. — Overdrafts. Overdrafts are apparently allowed for both banks and trust companies, for they are an item required to be included in the April and October reports of directors (23). See also the provision in the Penal Law against overdrafts by officers, etc.— XI, infra. V III. — B ranches. Banks are not allowed to open branches except under the following restrictions: If the bank is located in a city of over 1,000,000 and its certificate of incorporation authorizes it, the bank may open branches in that city for business with the customers of the branch offices only; this is subject to the discretionary approval of the super 466 N ew York S t a t e — B a n k * intendent, who passes upon the necessity and convenience of the branch. The capital of the bank must exceed the amount normally required by $100,000 for each branch opened under this law and by $50,000 for each branch opened before it was enacted (109). IX. — Occupation of the Same B uieding. No savings bank may do business or be located in the same room with any bank or national banking association, or in a room communicating with any bank or national banking association (27). X.— U nauthorized B anking . No person doing a banking business in New York, not subject to the supervision of the superintendent and not required to report to him, may use on a sign or on letter heads, etc., a name or other words indicating that the business is that of a bank; the penalty for violation is $1,000 (112). No bank may transact business without the certificate of the superintendent (32). No corporation, without being authorized by law, may receive deposits or make discounts; notes and other securities given to secure the payment of money loaned or discounted contrary to the provisions of this section, are void, and every person and corporation violating it forfeit $1,000 (107). No foreign corporation except a national bank is allowed to do deposit and discount business in New York (108). See also these provisions of the Penal Law: Any per son, association, or corporation other than a moneyed corporation, who transacts business under a corporate name containing the words “ trust,” “ bank,” or “ sav ings,” etc., is guilty of a misdemeanor (Penal Law, sec. 666). Any person doing banking in New York not subject to the supervision of the superintendent and not 467 National Monetary Commission required by law to report to him, who uses an office sign having on it a name or other words indicating that the office is that of a bank, or who uses stationery, etc., hav ing on it a name or other words indicating that the busi ness is that of a bank, is guilty of a misdemeanor (Penal Law, sec. 302). X I.— P enalties . If a bank or individual banker delays a report after it is due, or omits required items, the penalty is $100 per day until the deficiencies are supplied. Failure to make two successive reports entails forfeiture of the right to do business (22). The penalty for failure of the directors of a bank to file their April and October reports is also $100 a day paid by the corporation (23). A bank fail ing to report unclaimed deposits forfeits $100 a day (30). The penalty on a bank and its officers for maintaining a branch illegally is $1,000 a week so long as the branch is open without the superintendent’s approval (109). Section 27, restricting loans (see V), provides for penal ties for violations of its restrictions: Any person violating D forfeits three times the face amount of the paper pur chased; any person violating F forfeits twice the amount of the loan; any person violating G forfeits twice the amount borrowed; and any person or corporation violat ing H forfeits twice the nominal amount of the stock. The penalty for violating the subdivision relative to declaring dividends and maintaining a surplus is loss of charter (27). The following penalties are provided in the Penal Law: A director of a corporation “ having bank powers’’ who concurs in a vote of directors by which it is intended to make a loan or discount to a director or upon paper upon which a director is liable, to an amount exceeding 468 / N ew Y o r k S t a t e B a n k s that allowed by the statute; or a director, trustee, officer, or employee “ of any corporation to which the banking law is applicable” who maintains or attempts to main tain a deposit of the corporation’s funds with another corporation on condition that the depositary make a loan to any director, trustee, officer, or employee of the depositor; or any officer or employee “ of any corporation to which the banking law is applicable” who conceals from or fails to report to the directors any discounts or loans or purchases or sales of securities between meetings of directors; or any director, officer, or em ployee “ of a trust company” who makes any agreement on issuing a certificate of deposit whereby the holder may receive payment before maturity, is guilty of a misdemeanor (Penal haw, sec. 290). Any officer or agent “ of any banking corporation” who makes a guaranty or indorsement on behalf of a corporation whereby it be comes liable beyond the legal amount is guilty of a mis demeanor (Penal Law, sec. 293). Any officer, director, or employee “ of any bank, banking association, savings bank, or trust company” who knowingly overdraws his account and obtains the funds of the institution, or who asks or receives a consideration for procuring a loan from or a discount by the institution or for permitting any person, firm, or corporation to overdraw an account with the institution, is guilty of a misdemeanor (Penal Law, 294). Any officer, agent, etc., “ of any bank, banking association, or savings bank,” and any private banker who receives any deposit knowing that the bank is in solvent, is guilty of a misdemeanor if the amount of the deposit is less than $25, and of a felony if the amount of the deposit is $25 or over. The felony is punishable by imprisonment for from one to five years, fine of from $500 to $3,000, or both (Penal Law, sec. 295). Every 469 director “ of a moneyed corporation” who participates in a fraudulent insolvency or violates the law is guilty of a misdemeanor (Penal Law, sec. 297). SAVINGS BANKS. I.— T erms I ncorporation. of Thirteen or more persons, two-thirds of them residents of the county where the bank is to be located, may become a savings bank (130), subject to the superintendent’s dis cretion in determining whether the convenience of the dis trict and the responsibility of the incorporators warrant granting the application (133 and 134). The statute evidently contemplates associations without capital stock. The trustees regulate the rate of interest or dividends, never over 5 per cent, so that the depositors receive the net profits of the savings bank. When the surplus that has accrued through the earning of profits over a 5 per cent dividend amounts to 15 per cent of the deposits, then the trustees may divide the accumulation equitably as an extra dividend; such disposal of surplus must be made at least once every three years (153). The statutes provide how the per cent of surplus shall be computed (i54)Prohibitions on borrowing are given under VI. II.— L iabilities and Duties of T rustees . There must be at least thirteen trustees, who must be residents of New York. No one may be a trustee who allows a judgment against him to remain unpaid for three months, or takes the benefit of a bankrupt or insol vent law, or makes a general assignment for creditors. A majority must not belong to the board of directors of any one bank or national bank (137). The trustee of a savings bank vacates his position when he becomes trustee, officer, 470 i New York Savings Banks or employee of another savings bank, or borrows from the funds of his own savings bank, or guarantees money bor rowed of his own savings bank, or neglects his duties as trustee for six months without excuse (140). The trustees must meet monthly (139); and the provisions of section 42, concerning meetings of directors and trustees and reports to them, apply to savings banks. No trustee of a savings bank is permitted to have any interest in the profits of the bank, nor to receive payment for his services except when he is engaged in regular work for the bank; and the vote of the paid trustee may not be cast to determine his salary (142 and 155). If the trustees of a savings bank vote more dividends than have been earned after deductions for expenses have been made, they are personally liable to the savings bank for the excess (153). III. — Supervision. The same superintendent, subject to the same general provisions as were enumerated in discussing banks, has supervision over savings banks. He proceeds against savings banks which have violated the law, or which refuse to allow an examination of their books, etc., as he does against banks (17, 18, 19, and 22). He may also proceed against savings banks which violate the spirit of the rule allowing them to deposit their funds pending good oppor tunities to invest (149). He approves savings bank build ings and changes of location, and may permit buildings and lot to exceed 25 per cent of surplus (147). He must approve all borrowing by savings banks and pledges of their securities (152). REPORTS. Savings banks report semiannually, before August 1 and February 1, to the superintendent, their condition on the 471 ) M o n et a r y Commission mornings of July i and January i, giving items of assets as follows: the amount loaned on bond and mortgage; a list of the bonds and mortgages, with the location of mort gaged premises not previously reported on; a list of such previously reported on as have been paid, wholly or in part, or foreclosed, with the amount of payments; the cost, date of purchase, date of maturity, rate of interest, par value, and estimated investment value of all stock or bond invest ments, designating each particular kind of stock or bond; the amount loaned on securities, with a statement of the collateral; the amount invested in real estate, giving its cost; the amount of cash on hand; the amount of cash on deposit, with what banks, and what amounts in each; and such other information as the superintendent may require. The statute provides how investment values are to be com puted. Items of liabilities must include the amount due depositors, including dividends. General items must include: the amount deposited during the previous year and the amount withdrawn; the amount of interest or profits earned and the amount of dividends credited to depositors; the number of accounts opened or reopened; the number closed; the number open at the end of the year; and such other information as the superintendent may require (21). The regular semiannual reports must be published in a local newspaper (24). A savings bank may not receive deposits until it has sent the superin tendent the names and addresses of its officers (135). The trustees receive monthly a report from a designated officer, as before stated (42). Proceedings of the trustees in voluntary dissolutions must be reported to the superin tendent (162 and 163). Savings banks annually report to the superintendent concerning accounts of $5 or more that have been dormant (i. e., neither increased nor diminished, nor pass book pre- 472 I New York Savings Banks sented for credit of interest) for twenty-two years and over; the report must give specific facts, including dates, name of depositor, and nationality of depositor, but not amount to the credit of the account. The superintend ent receives claims for these dormant deposits (30). When, after dissolution of a'savings bank, unclaimed de posits are left with the superintendent, he must include a statement of them in his annual report to the legislature (164); see Banks for other items in the report. The summary published by the superintendent after he receives a quarterly bank report is not published in the case of the semiannual reports of savings banks (24). After each examination the examiner reports the result of the examination to the superintendent (11), who may cause the report to be published if he deems it proper (16). Examinations. The superintendent, personally or by an examiner, visits savings banks once in two years, or more frequently if he thinks it necessary. The examination covers the same matters as in the case of banks, and the examiner is subject to the same limitations (8, 11, 12, 16, 20, and 22); see Banks. The trustees, by a committee of not less than three of their number, must twice a year thoroughly examine the books of the savings bank. The statements of assets and liabilities forwarded to the superintendent for July 1 and January 1 is based on this examination (157). IV.— R eserve R equirements. Certain provisions with respect to cash allowed to be held by a savings bank without investment are given in the last paragraph under VI, infra. They are not require ments, however. 473 N a t io n a l M on e t a ry V.— Deposit , D iscount, and Commission L oan R estrictions. Savings banks may limit the amount which one person or society may deposit. In any case the deposit of one individual, exclusive of deposits arising from judicial sales or trust funds or interest, must not exceed $3,000, nor the deposit of one society, exclusive of accrued interest, $5,000 (143). Of the restrictions given under Banks, V, prescribed by section 27, savings banks are subject to those against loans on security of real estate, in paragraph C (see V, Banks); to the prohibition of purchase by the corpora tion or its officers, etc., of paper issued by the corporation for less than its face value, paragraph D; to the rule for the designation of depositaries, paragraph E; to the pro vision that officers may not loan upon paper offered to the corporation and refused by it, paragraph F; and to the prohibition against loaning on the security of shares of another moneyed corporation to such an extent as to make the lender holder of more than 10 per cent of the bor rower’s stock, paragraph I (27). Savings banks must not loan to their trustees (140 and 142); they must not loan on personal securities (150); they must not issue certificates of deposit payable on de mand or on a fixed day, nor pay interest, except their regular dividends (152). See also VI, below. VI.— Investments. Savings banks are not permitted to deal in land or per sonalty or commercial paper, nor to borrow pledging secu rities except with the approval of the superintendent and by vote of a majority of the trustees (152). They may hold real estate only for necessary buildings, subject to the superintendent’s approval; and unless he approves, the lot and buildings, though part may be rented, must not 474 New York Savings Banks cost more than 25 per cent of the surplus. Savings banks may purchase at foreclosure sales on mortgages owned by them, may purchase at sales on judgments rendered for debts due them, or in settlements to secure such debts, but the land so acquired must be sold within five years (i47)The provisions for investments for savings banks are minute and complex. Omitting minor distinctions, they may invest, first, in stocks and bonds of the United States; second, in stocks and bonds of New York State; third, in stocks or bonds of any State which has within ten years before the investment not defaulted in payment of any debt; fourth, in the stocks or bonds of any city, town, etc., of New York; fifth, in stocks or bonds of any city in a State admitted to statehood prior to 1896, which city since 1861 has not repudiated payment of any debt, provided the city has a population of not less than 45,000, was incorporated twenty-five years before the invest ment, has not since 1878 defaulted for more than ninety days on its debts, nor compromised them, and is not at the time of the investment indebted beyond 7 per cent of its valuation for taxes, including the debts of municipal corporations or subdivisions, except counties, that are included wholly or partly within the limits of the city, but deducting water debt and sinking fund; sixth, in bonds and mortgages on unincumbered real property in New York to the extent of 60 per cent of its value, but not more than 65 per cent of the whole amount of deposits of the savings bank may be thus invested; if the real property is unimproved, the mortgage must not be for more than 40 per cent of the value of the land, and mortgages must always be approved by a committee of trustees. Further investments permitted are as follows: (a) First mortgage bonds of a railroad corporation of New York, the principal part of whose railroad is located in New 475 N at i on a l M on et a r y Commission York, or first mortgage bonds of any railroad corporation of any State, controlled and operated as part of the system of such a New York railroad if a majority of the stock of the controlled railroad is owned by such a New York rail road, or in the refunding bonds of any railroad companies satisfying the above description; the companies issuing the bonds must have paid interest on their mortgage debt and 4 per cent dividends for five years, and the capital of the issuing corporation must equal one-third of its total mortgage debt. (6) Mortgage bonds of fourteen named railroads; also the mortgage bonds of railroads leased, operated, or controlled by one of the named companies, if the controlling corporation guarantees the bonds, and if the company issuing the bonds has earned 4 per cent dividends for ten years, and its stock equals one-third of its bonded debt; these bonds must be secured by first or refunding mortgage, (c) Mortgage bonds of two named railroads so long as they pay 4 per cent dividends, pro vided their capital stock equals one-third their bonded debt; these bonds must be secured by first or refunding mortgage. (<d) First mortgage or refunding bonds of one named railroad, provided its capital equals one-third its bonded debt, and provided the railroad is of standard gauge. Also refunding bonds of another named railroad. (e) Mortgage bonds of any railroad incorporated in one of the United States which owns 500 miles of standard gauge railroad, exclusive of sidings, in the United States, provided that for five years it has paid principal and in terest of its mortgage debt and 4 per cent dividends, and provided that for five years its gross earnings, including the earnings of subsidiary companies, have been at least five times the amount necessary to pay interest on out standing debts and rentals, and provided the bonds are secured by first or refunding mortgage covering 75 per 476 New York Savings Banks cent of the railroad’s line; these mortgages must not au thorize an issue of bonds which, together with outstanding prior debts, exceeds three times capital stock. (/) Any railroad mortgage bonds which would be a legal invest ment under (e) except for the fact that the railroad issu ing the bonds owns less than 500 miles of line, provided that during the previous five years its gross earnings, in cluding those of subsidiary lines, have been at least $10,000,000. (g) Mortgage bonds of a railroad corpora tion described in (e) or (/), or mortgage bonds of a railroad owned by such a corporation, assumed or guaranteed by it, provided the bonds are prior to or are to be refunded by a general mortgage of the corporation, the bonds secured by which are a legal investment under (e) or (/), and provided further the general mortgage covers all the real property upon which the mortgage securing the underlying bonds is a lien, (h) Any railroad mortgage bonds which would be a legal investment under (e) or (g) , except for the fact that the railroad issuing the bonds owns less than 500 miles of road, provided the bonds are guaranteed or assumed by a corporation whose first or refunding mortgage bonds are a legal investment under (e) or (/); but no bonds thus guaranteed or assumed are a legal investment if the mortgage securing them authorizes a total issue of bonds which, with prior debts of the guar anteeing or assuming corporation, exceeds three times its capital, (i) First mortgage bonds of a railroad whose entire capital is owned by and which is operated by a railroad whose last issued refunding bonds are a legal investment under (a), (e) , or (/), provided these bonds are guaranteed by the owning and operating company, and provided the mortgage securing them does not authorize an issue of more than $20,000 of bonds per mile; but no bonds thus guaranteed shall be a legal investment if the 477 N at i on a l M on e t a r y Commission mortgage securing them authorizes a total issue of bonds which, together with prior debts of the guaranteeing com pany, exceeds three times its capital stock. Bonds which have been a legal investment are not rendered illegal by the sale of the mortgaged property or by the consolidation of the issuing or assuming railroad with another railroad, provided the consolidated or pur chasing railroad assumes the bonds and continues to pay interest or dividends, or both, on the securities issued to acquire the stock of the company taken over or the prop erty purchased to an amount equal to 4 per cent of the capital stock outstanding at the time of the consolidation or purchase of the issuing or assuming corporation. Not more than 25 per cent of the assets of a savings bank may be loaned or invested in railroad bonds; not more than 10 per cent of its assets may be invested in the bonds of any one railroad described under (a); and not more than 5 per cent of its assets in the bonds of any other railroad (146). A fund not exceeding 10 per cent of all the deposits may be held by a savings bank in cash on hand or on deposit for current expenses, but the deposit in any one depositary must not exceed 25 per cent of the capital and surplus of the depositary. This fund may be loaned on pledge of certain of the securities in which a savings bank may invest. The loan, however, must never exceed 90 per cent of the cash value of the securities pledged (148). This depositing is also subject to the rule that the deposi tary must be voted one by a majority of the directors of the depositor, exclusive of those who are officers of the depositary (27). Savings banks may deposit tempo rarily the excess of current daily receipts over payments pending a chance to invest (149). 478 New York Savings Banks V III .— B ranches. There, is no express provision respecting branches of savings banks. The provision given under Banks reads: “ No bank,” etc. (109). The certificate of incorporation of a savings bank must state “ the place where its busi ness is to be transacted, designating the particular city, village, or town, and, if in a city, the ward therein” (130). IX.— Occupation of the Same B uieding. (See Banks, IX.) X.— U nauthorized B anking . No person, firm, or corporation may use “ savings” in its business or in advertising, or do a savings deposit business, except savings banks organized under the New York statutes, offenders forfeit $100 per day. Despite the prohibition on unauthorized savings banking, how ever, principals of public schools may collect savings from their pupils and deposit them, using in their circu lars such words as “ school savings banks” (160). No savings bank may transact business without the certifi cate of the superintendent (32). See also sections of the Penal Taw, under Banks, X. X I.— P enalties . Failure to report on time entails, as in the case of banks, forfeit of $100 per day; failure to make two successive reports entails forfeiture of charter (22). Savings banks which fail to report unclaimed deposits, etc., forfeit $100 a day during the delay (30). A savings bank which allows a majority of its trustees to be members of the board of directors of a bank or a national bank forfeits its charter (137). Any person 479 m m iss i on violating the prohibition upon purchase by a savings bank or its officers, etc., of commercial paper issued by the bank at less than its face value forfeits three times the face value of the paper; any person violating the pro hibition upon a loan by an officer, etc., on paper which the savings bank has refused forfeits twice the amount of the loan (27). The provisions of the Penal Code discussed under the head of Banks are in part also applicable to savings banks See also Penal Law, section 296, which makes it a misde meanor for any officer or trustee of a savings bank to invest its funds in unauthorized securities. TRUST COMPANIES. I.— T erms of I ncorporation. The capital of a trust company must be at least $500,000, except that in cities of less than 250,000 and more than 100,000 the capital may be not less than $200,000; in cities between 25,000 and 100,000 it may be not less than $150,000; and in cities under 25,000 it may be not less than $100,000 (180); this capital must be fully paid in in cash (184). The superintendent must be assured that all the capital has been paid in in cash (12); he has discretion to deter mine if the public convenience requires this incorpora tion (183). The provisions for calculating profits before declaring dividends and for charging losses as reduction of capital are as they were in the case of banks (28 and 29). II.- -Liabieities and D uties of Stockholders D irectors. and A constitutional provision, before stated, makes the stockholders of all corporations “ for banking purposes" 480 I New York — Trust Companies individually liable if default is made in the payment of any debt, for all the debts of the corporation, to the amount of the stock held at the time of the default (constitution, Art. VIII, sec. 7). It is provided in the banking law that stockholders in a trust company are individually respon sible for its debts existing at the time it makes default on a debt, “ but no stockholder shall be liable for the debts of the corporation to an amount exceeding the par value of the respective shares of stock by him held in such cor poration at the time of such default” (196). Directors, of whom there must be for each trust com pany between thirteen and thirty, must each hold ten shares of the stock of the company (195). They must meet once a month and must appoint officers to report to them or a committee of them the statement of which details were given under this head in Banks (42). See Banks, also, for their semiannual examination and re port (23). III.— Supervision . The general sections of the banking law dealing with the superintendent and his examiners give him authority over trust companies. It is within his discretion to bar incorporation when public convenience will not be fur thered by the proposed trust company (183). He ap proves reserve depositaries, requires deficient reserves to be made good, and proceeds against trust companies which fail to make good their reserves in thirty days as against insolvent corporations (198). See Banks III, for his proceedings against delinquent corporations (17, 18, 19, and 22), and for other powers. He authorizes branches when he has ascertained that public convenience will be promoted by them (186). It is provided that every corporation subject to the banking law “ except banks, savings banks, and domestic S. Doc. 353. 61-2-----31 481 mmission corporations specified in articles six and eight of this chap ter, engaged in receiving deposits of money in trust in this State, and required to make a report of its affairs to the superintendent of banks ” (six and eight are articles deal ing with cooperative savings and loan associations and mortgage, loan, and investment companies) must deposit with the superintendent securities of various sorts and in various amounts, to be held by the superintendent in trust for depositors and creditors, paying the interest to the corporation (14). REPORTS. The reports of trust companies are provided for in the same terms as are those of banks; they must be made once in every three months in respect to a date designated by the superintendent, within ten days after that day, and must be published in a local newspaper; the superintendent publishes his summary, as in the case of banks (21, 22, and 24). A designated officer reports monthly to the directors (42). After each examination, the examiner reports its result to the superintendent (11), who may publish the report if he wishes (16). See Banks, for superintendent’s annual report to the legislature and for directors’ semi annual report. The report of unclaimed deposits and the report of net earnings and surplus after the declara tion of each dividend, are required only of “ banks” (27 and 30). Before beginning business a trust company must file with the superintendent a list of its stockholders, with address and stock holdings of each (185). EXAMINATIONS. Here also trust companies are subject to the same pro visions as banks are; they are examined twice a year on matters previously enumerated (8, 11, 12, 16, 17, 20, 22. 482 I *— N ew Yo r k Trust Companies and 23); see Banks. Trust company directors make April and October examinations, such as are required of bank directors (23). There is a preliminary examination by the banking department to make sure capital has been paid in (184). IV.— R eserve R equirements. First.— A trust company having a principal place of business or a branch in a borough which has a population of 1,800,000 or over must have a reserve fund of at least 15 per cent of its deposits, exclusive of moneys held in trust not payable within thirty days, exclusive also of time deposits not payable within thirty days represented by cer tificates, and exclusive also of deposits secured by bonds of New York State. This reserve must consist of either law ful money of the United States, gold certificates, silver certificates, or national-bank notes. Second^ A trust company having its principal place of business in a borough which has a population of less than 1,800,000 (provided the trust company has no branch in a borough of over 1,800,000) must have a reserve of 15 per cent of the aggregate deposits, exclusive of the same deposits that were enumerated above. Only two-thirds of this reserve, however, must consist in the funds prescribed for the trust companies in the larger boroughs; the other one-third may be in the shape of deposits subject to call in a bank or trust company in the State, with a capital of at least $200,000, or with a capital and surplus of at least $300,000; the depositary must be approved by the super intendent of banks. Third— A trust company having a principal place of business elsewhere must hold a reserve equal to at least 10 per cent of its deposits, exclusive of the sorts enumer ated in the first paragraph above. Half of this reserve must be in the lawful money prescribed in the other cases, 483 National Monetary Commission and the other half may be on deposit in a bank or trust company in the State approved by the superintendent of banks, with capital of $200,000 or capital and surplus of $300,000. If the reserve falls below, the company must make no new loans except by purchase of sight exchange, nor pay dividends till the reserve is restored (198). V.— D iscount and L oan R estrictions. Trust companies are subject to most of the provisions of section 27. The restrictions upon loans to any one person, firm, or corporation are as stated in paragraph A under this head under Banks; the restrictions upon loans made on securities of corporations where payment is undertaken severally, but not jointly, by two or more individuals, firms, or corporations are as stated in para graph B; the restrictions upon loans upon the security of real estate are as stated under C. The prohibition upon purchase by a trust company or any director, etc., of paper issued by the corporation for less than its face value is as stated in paragraph D. The requirements in choosing depositaries are as stated in E. No officer etc., may, as an individual, loan upon paper which the corporation has refused, as stated in F. The prohibition on holding the corporation’s own shares either as security or by purchase is as stated in H. The prohibition against loaning so as to hold more than 10 per cent of a borrow ing monied corporation’s stock is as stated in I. Note that G applies to “ any bank,” and therefore not to trust companies (27). No trust company may loan an amount equal to more than one-tenth of its capital stock to any director or officer, and no loan may be made to any director or officer without the consent of a majority of the directors (186). 484 N e w Y or k — Trust Companies VI. — I nvestments. Trust companies may hold real property that is nec essary for their business or that is acquired in satisfaction of debts under sales, judgments, or mortgages, or in settlements (186). Trust companies must invest their capital in bonds and mortgages on unincumbered real property in New York not exceeding 60 per cent of the value of the property, or in stocks or bonds of New York State, of the United States, or of municipalities of New York. Trust funds may be invested as capital is, or in securities of any State, “ or in such real or personal securities as it (the company) may deem proper ” (193). A trust company may not hold stock in any private corporation to an amount exceeding 10 per cent of the capital, surplus, and undi vided profits of the corporation holding, nor may a trust company hold stock of another monied corporation ex ceeding 10 per cent of the total stock of the corporation whose stock is held, except in the case of an adjacent safe deposit company (194). See Banks for the prohibition upon a trust company’s holding its own stock (27). V II. — Overdrafts. (See this heading under Banks.) VIII. — B ranches. Trust companies are prohibited from doing business by branch offices in a city not named in the certificate of incorporation as the place of the company’s business; written approval of the superintendent, which he may give or withhold at his discretion, is a prerequisite to opening a branch; the capital of the company must exceed that normally required by $100,000 for each branch (186). 485 National Monetary IX.— Occupation of the Commission Same B uilding. See Banks, IX. X.— U nauthorized T rust Company B usiness. Foreign corporations are denied most trust companypowers (186). No trust company may transact business without the certificate of the superintendent (32). See also sections of the Penal Taw, under Banks, X. X I.— P enalties . The penalties are in general the same as those for violation of law by banks. Failure to report entails a forfeit of $100 per day. Failure to make two successive reports entails forfeiture of charter (22). Failure of directors to file their April and October reports entails a $100 a day penalty, paid by the corporation (23). There is a $1,000 a week penalty for maintaining an illegal branch (186). See Banks, XI, for the penalties for violating various provisions of section 27; all are applicable to trust companies except G, which applies to “ any bank,” and except the penalty of loss of charter for violating provisions dealing with dividends and sur plus. This latter provision puts certain requirements on “ any bank” wTh respect to declaring dividends, after which it requires “ each corporation” to make a report on dividends, net warnings, etc. The various misdemeanors specified in the Penal Taw (see Banks, XI) apply, many of them, to trust companies, including especially the agreement by an employee of a trust company with a depositor that the depositor’s cer tificates be paid before maturity (Penal Law, sec. 290). Directors who open a branch without the wrritten ap proval of the superintendent forfeit $1,000 per week (186). 486 NORTH CAROLINA. “ Banks ” is the title of chapter 7 of the Revisal of 1905 of the laws of North Carolina. This act as originally passed applied to commercial banks and savings banks. Chapter 829 of the public laws of North Carolina for 1907 was designed, according to its title, to amend chapter 7 by placing trust companies under the laws and rules governing banks. This was done by inserting at various places in chapter 7 additions extending it to “ banking and trust, fiduciary, and surety companies.” The result seems to be that chapter 7 now applies indiscriminately to banks, savings banks, and trust companies that also do a banking business; the digest is accordingly not divided under those three heads. Nevertheless, since the amendment in certain sections left the language of the original chapter in such condition that it by no means clearly applies to all classes, such instances are indicated in the digest by quoting the doubtful language of the statute as it now stands. There are, besides, a few sections which are framed to apply only to one class, and these also are indicated. The citations are to sections in the Revisal of 1905 as amended by chapter 829 of 1907. The statutes have been examined through the special session of 1908 (at which an act was passed protecting banks which issued scrip in the panic of 1907 and 1908 from the penalties upon the issue of paper to circulate as money 1908, chap. 121), and the regular session of 1909. 487 mission I.— T erms of I ncorporation. The capital stock of a bank, savings bank, or banking, trust, and surety company must be not less than $5,000 in cities and towns of 1,500 or less; not less than >10,000 in cities and towns of from 1,500 to 5,000; and not less than $25,000 elsewhere. The shares must be of $50 or $100 (222). Before beginning banking, or banking and trust or surety business, every company files with the corporation commission a statement con taining various items. Nothing may be received in pay ment of capital stock but money (225). Fifty per cent of the capital stock of every bank must be paid in in cash before business is begun, and the rest paid in in monthly installments of at least 10 per cent of the whole capital, in cash; no bank may begin business with less paid-in capital than $5,000. This provision applies in its terms as stated only to “ every bank” (224, amd. by 1909, chap. 911). It seems likely that in case of ambiguity the stat ute would be read to apply to all three sorts of companies, on the strength of the legislature’s manifest intention to make the rules uniform for them all. The corporation commission may withhold from any bank, banking, and trust, fiduciary or surety company the authorizing certificate if it has reason to believe that the organization is formed for objects other than those con templated by the statute (227). Corporations may combine the business of discount and deposit banking known as commercial banking, and the business of operating offices of loan and deposit known as savings banking (222). II.— L iabilities and Duties of Stockholders D irectors. and The stockholders of “ every bank organized under the laws of North Carolina” are individually responsible for 488 North Carolina — G e n e r a l Provisions all contracts and debts of the corporation to the extent of the amount of their stock at par in addition to the amount invested in the shares. Here also, although the general intent of the act of 1907 seems to have been to bring trust companies within the scope of chapter 7, the language of the original section has been unchanged and is as quoted (235). 111 .— Supervision . The supervision of banking institutions in this State is in the hands of the corporation commission, a court of record consisting of three commissioners elected like other state officers and holding office for six years. They have control over not banks alone, but also railroads, telegraph companies, etc. (241, and Revisal of 1905, chap. 20). The corporation commission may make such rules for the governing of banking institutions as in its judgment seem wise (240). I he corporation commisssion appoints a suitable person or persons to make examinations of individuals and corporations doing a banking business (246). These examiners when ordered by the commission have authority to take possession of ‘ ‘ any bank doing business under the laws of this State,” and retain possession until a thorough examination can be made, when, if the examiner finds that such bank is insolvent or conducting its business unsafely, then the examiner, if authorized by the corporation commission, may hold possession of all the property of “ such bank, corporation, partnership, firm, or individual” until the commission acts on the examiner’s report and has a receiver appointed. The commission has power to institute proceedings for receiv ership or for such other relief as is necessary to pro tect the creditors. The commissioners may grant sixty days in which to correct irregularities, or make good 489 N at ion a l M on et a ry Commission deficiencies (250). When a receiver has been appointed he is under the control of the commission in so far as their orders do not conflict with the decrees of the appointing court (1907, chap. 829, sec. 13). If the reports or exami nations of persons, firms, or corporations doing a banking, trust, and surety business show that their liabilities are equal to their capital stock the corporation commission has power to make rules for the reduction of their lia bilities (242a). The commission has certain authority over reorganizations (230). Bank examiners have au thority to arrest for violation of the criminal laws of the State relating to banking (251). REPORTS. Corporations, firms, and individuals “ transacting a banking business or banking and trust, fiduciary, and surety business or banking and real estate business” make not less than four reports a year to the corpora tion commission in the form prescribed by the commission. The report is published in a local newspaper (242). Certain reports are required from state depositaries (5371) and from all banking institutions for purposes of taxation (5267 et seq.). In the case of persons, firms, or corporations “ doing a banking and trust and fiduciary and surety or guarantee business,” the reports show the trust and surety business as part of the liabilities of the banking institution (242a). Special reports may be called for by the commission whenever necessary from “ any bank, corporation, firm, or individual transacting a banking business” (243). Once a year, or whenever called upon, “ every bank” must file with the corporation commission a list of its stockholders, with the number of shares held by each (244). 490 * North Carolina — G e n e ra l Provisions EXAMINATIONS. If examinations are necessary they may be made, pre liminary to granting the authorization to begin business (226). The examiner or examiners appointed by the corporation commission examine “ every bank, corpora tion, or individual doing a banking business” as often as may be deemed necessary, and at least once a year (246). After examining any corporation or individual doing a banking business the examiners within ten days make a detailed report to the commission (248). An examiner when ordered by the commission may take possession of “ any bank doing business under the laws of this State” and retain possession for time enough to make a thorough examination. If this discloses unauthorized transactions or the like, the examiner, if authorized by the commission holds the property pending proceedings for a receiver (250)IV.— R eserve R equirements. “ Every bank or banking and trust company doing busi ness and engaging in a banking, trust, fiduciary, or surety business and dealing in real estate ” must keep in available funds a reserve equal to 15 per cent of its deposits. Twofifths of the 15 per cent must be in cash in the vaults of the bank. Savings banks are required to keep a reserve in available funds equal to 5 per cent of their deposits (231). Available funds generally must consist of cash on hand and balances due from solvent banks. Cash may include lawful money of the United States and exchange for any clearing house association. If available funds fall below the reserve requirement, no new loans may be made except by discounting or purchasing sight bills of exchange, and no dividends may be declared (232). 491 National Mone t ar y V.— Discount and C o mmi s s i o n L oan R estrictions. The total liabilities to any “ banking institution or banking or trust company doing a fiduciary and surety business and dealing in real estate’’ of any person, com pany, or firm for money borrowed including in company or firm liabilities, liabilities of the members, must never exceed one-tenth of the paid-in capital of the bank-. The discount of bills of exchange drawn against existing values, and generally the discount of commercial paper, are not considered money borrowed. This section, however, does not apply “ to banks” with a paid-up capital of $100,000 or less (233). “ No bank” may hold as pledgee any portion of its own capital stock (229). VI.— I nvestments. “ Banking corporations, banking and trust companies doing a fiduciary and surety business” may hold real estate, if it is necessary for the convenient transaction of their business, including other apartments that may be rented (this investment not to exceed 25 per cent of capital and surplus, however); if the real estate is mortgaged to secure loans due the bank; if it is conveyed to it in satis faction of previous debts; or if it is acquired by sale under execution or judgment in favor of the purchasing bank (228). “ Such bank and trust company doing a general banking and trust, fiduciary and surety business and deal ing in real estate” must not invest more than 25 per cent of its capital and surplus in real estate, unless to protect loans or debts previously contracted, or unless acquired on sale under execution in its favor (228a). “ No bank” may purchase its own stock unless the pur chase is necessary to prevent loss on a previous debt (229). 492 No r t h C a r o l i n a — G e n e r a l Pr ovi s i ons X I.— P enalties . The penalty for failing to report or publish required statements is $200 (245). Any person who willfully makes a false statement in the books of any banking institution or exhibits false papers to deceive an examiner or publishes a false report is guilty of a felony punishable by imprison ment of from four months to ten years (3326). Officers and directors of banks, who without authority from the directors issue certificates of deposit, draw negotiable paper, assign assets, make fraudulent report or state ments or aid in doing these things are guilty of a felony. The same section provides in a common form for embezzle ment (3325). If any bank examiner makes a false report of the condi tion of an examined bank with intent to abet the operation of an insolvent bank or if the examiner accepts a bribe to induce him not to report an examination, or if he neglects to examine by reason of having taken a bribe, he is guilty of a felony, punishable by imprisonment of from four months to ten years (3324). 493 L- Jl __AJaJ » NORTH DAKOTA. The digest for this State is based on the Revised Codes, 1905,and the session laws of 1907 and 1909. The princi pal act is one passed in 1905, the language of which refers continually to “ such association,” an expression which goes back to “ any association organized under the provi sions of this chapter,” and in some instances to “ every banking association, savings bank, and trust company or ganized under this chapter.” It seems likely, therefore, that the chapter is meant to apply to all three sorts of in stitutions. It has been digested under “ Banks ” only, and a hint is given under “ Savings Banks ” of the various pro visions of the chapter which expressly mention savings banks. Except for the sections in this act which men tion savings banks and one or two other provisions of the codes, savings banks are not subject to particular laws; so it is readily believed that they are subject to the banking law. If it is true that trust companies are, too, they are legislated for also, nevertheless, among the provisions relating to corporations, under the chapter “ Organization and management of annuity, safe de posit, and trust companies.’ Provisions of this chapter are digested under the heading “ Trust Companies;” but the probable application of the bank chapter to trust com panies must be also borne in mind. Numbers in par entheses refer to sections in the Revised Codes of 1905. 494 North Dakota State Banks BANKS. I.— T erms of I ncorporation. No association may be organized under the banking chapter in cities, towns, or villages of i ,000 or less with a capital of less than $10,000; in those of 1,000 to 2,000, with less than $20,000; in those of 2,000 to 3,000, with less than $30,000; in those of 3,000 to 4,000, with less than $35>°°o; in those of 4,000 to 5,000, with less than $40,000; in those of over 5,000, with less than $50,000. At least 50 per cent of the capital must be paid in before business is begun, and the balance must be paid in in installments of not less than 10 per cent of the capital at the end of each month (4641). Shares are of $100 each (4645). Dividends may be declared semiannually or annually out of net profits (never from capital; nor may capital be otherwise impaired— 4650); but before the declaration, one-tenth of net profits must be carried to surplus until it amounts to 20 per cent of capital (4648). “ Every banking association in this State” is exempt from attachment and execution (4673). II-— L iabilities and D uties of Stockholders Directors. and The shareholders of every association organized under the banking chapter are individually liable for debts of the association to the extent of the amount of their stock, in addition to the amount invested in the shares. This liability continues for one year after transfer of stock (4653)Every director must own at least 10 shares of stock (4649). Iwo-thirds of the directors must be residents of North Dakota (4639). In January and July of each year t e directors examine the affairs of the bank, reporting 495 M on et a r y C o mmi s s i o n to the state banking board (4667). Any bank officer or employee who pays out funds on a check for which there is not the required sum on deposit is personally liable to the bank for the amount paid (4669). Although banks which are disposing of loans on real estate may not guarantee the payment of the loan, the person or officer who illegally attempts to bind the bank by such guaranty is liable under it (4639). III.— Supervision . There is a state banking board composed of the governor, the secretary of state, and the attorney-general. This board holds monthly meetings, and special meetings at the call of the governor. It controls banks, savings banks, and trust companies. A t its regular meetings it examines all reports, and reports of examinations turned in by the state examiner (4635). The state examiner, an official who inspects public accounts, etc., is ex officio superintendent of banks. He does the examining and reports to the state banking board. He must not be interested in any association organized under the banking chapter (4664). His term of office is two years (140). Every bank is given an official number by the secretary of state (1909, chap. 43). The secretary of state withholds permission to begin business if he has reason to believe the corporation is not organized for legitimate purposes (4639). Reductions and increases in capital must be approved by the state banking board (4646). The board must determine what are bad debts, and must make and enforce orders for the disposal of them (4650). The board approves of reserve depositaries. The board must notify a bank whose reserve is below the required amount, and if it fails after thirty days to repair the reserve, the board imposes a 496 North Dakota State Banks penalty (4655). The secretary of state may withhold a certificate from a corporation which he has reason to suppose is formed for other than legitimate objects (4639). On being satisfied of the insolvency of any banking association organized under the banking chapter, or of the violation of any of the provisions of the chapter, the board, after an examination, takes charge of the insolvent bank, pending action by a court. The board appoints a temporary receiver (4668). If it appears that the capital stock of a bank is impaired, the board must make an order restraining the declaring of dividends and require the deficit to be made good (4671). If any bank fails to pay a judgment against it, the board declares the bank insolvent and causes a receiver to be appointed (4673). Insolvency is defined to include failure to make good a deficiency in reserve, and noncompliance with an order of the board (4674) • If any bank fails to comply with a requirement of the board or of the examiner for ninety days, or for a shorter period if it is specified in the order, it is deemed to have forfeited its franchise, and the state banking board, through the attorney-general, must bring suit to annul the bank’s existence (4663). REPORTS. “ Every banking association, savings bank, and trust company organized under this chapter” must make at least five reports a year to the state examiner, in a form prescribed by the banking board, as nearly as possible like the form for national bank reports. The report shows resources and liabilities at the close of business on a past day specified by the examiner, which must, whenever possible, be the day on which national banks report. Reports must be transmitted within seven days after receipt of the examiner’s request, and an abstract must S . D oc. 3 5 3 , 61 2----- -32 497 be published in a local newspaper. The board may call for a special report whenever it is necessary (4652). After the examination made by the directors in January and July of each year they report the results to the state banking board with suggestions and criticisms (4667). The state examiner reports the result of every examina tion to the banking board (4664). The temporary re ceiver appointed by the state banking board reports as soon as he has taken charge of a bank (4668). A list of names of shareholders with amount of stock held by each is filed twice a year with the state examiner (4670). For reports required for taxation see 1508 and 1509; for re ports from depositaries of public funds see 931. EXAMINATIONS. The state examiner, as often as the state banking board sees fit and at least once a year, examines “ every banking association, savings bank, and trust company organized under this law or the law of the State of North Dakota.’’ He reports the result to the board (4664). In the chapter in the Code on the state examiner, a list of the details which he must examine is given as follows: Validity and amount of securities held, what transactions each bank is carrying on foreign to its legitimate purposes, and its compliance with law generally. The examiner must re port the results of examinations to the governor, who may publish them (145). The directors, in January and July of each year, make a thorough examination of the assets of their bank, examine stocks, checks, certificates of de posit, and cashier’s checks, count cash, examine loans and discounts with collateral, compare the aggregate with the records, and report the result to the banking board (4667). When the board is satisfied of the insol vency of a bank it takes charge through a temporary 49s l North Dakota State Banks receiver, before doing this the board makes an examina tion (4668). The examiner makes a thorough examina tion in voluntary dissolutions (4647). IV.— R eserve R equirements. Every bank must keep in available funds an amount, which, after deducting the amount due to other banks, will equal 20 per cent of total deposits. Three-fifths of this amount may consist of balances due from good solvent state or national banks or trust companies, which carry a reserve sufficient to entitle them to act as deposi taries, are located in convenient commercial centers, and have been approved by the state banking board'; the remaining two-fifths must consist of actual cash, which must not include cash items. No paper may be carried as cash or a cash item except legitimate bank exchange which will be cleared on the same or the next day. When reserves fall below the required amount the bank must not make new loans or discounts, except by purchasing sight exchange, nor make dividends (4655). V. Discount and L oan R estrictions. Among banking powers is that of “ loaning money upon real or personal security, or both.” No bank may carry among its assets loans dependent wholly upon real estate security in an amount exceeding one-half its capital and surplus, whatever loans on real estate there are must be upon first mortgage (4639). The total liability of any person, corporation, or firm, including in firm liabilities those of the members, for money borrowed “ and paper of the same parties as ma ers t ereof, purchased,’’ must not exceed 15 per cent o paid m capital and surplus, but the discount of bills of exc ange drawn against existing values, or loans made 499 N at ion a l M onet ary Commission upon produce in transit or store as collateral, if all the papers are properly hypothcated, are not considered money borrowed. Moreover, a bank may discount paper actually owned by the person negotiating it without being considered as adding to its loans (4657, amended by 1909, chap. 45). No bank may loan on the security of its own shares unless it is necessary to prevent loss on a previous debt, in which case the stock must be disposed of within six months (4654). VI. — I nvestments. A bank may hold only such real estate as is necessary for its accommodation in business, not exceeding 25 per cent of a capital of over $10,000, and 30 per cent if the capital is $10,000 or less; such as is mortgaged for loans or previous debts; such as is conveyed to the bank in satisfaction of previous debts; such as is purchased at judicial sales under liens held by the bank or is pur chased to secure debts due it; but no bank may hold real estate under mortgage or that purchased to secure an indebtedness for longer than five years (4640). No bank may hold its own shares unless necessary to prevent loss on a previous debt, in which case it must dispose of the stock within six months (4654). No bank may employ its assets in trade or commerce, nor invest “ in the stock of any corporation, bank, part nership, firm, or association, nor shall it invest any of its assets in speculative margins of stocks, bonds, grain, provisions, produce, or other commodities, except that it shall be lawful for banks to make advances for grain or other products in store or in transit to market” (4672). V II. — Overdrafts. Any bank officer or employee wrho pays out the funds of the bank on the order of one who has not on deposit a 500 J North Dakota State Banks sum equal to the check is personally liable to the bank for the amount paid (4669) • The officer or employee of a bank or savings bank who overdraws his account and obtains the funds is guilty of a misdemeanor (9282). X .— U nauthorized Banking . No person, except national banks, may transact bank ing business or use such words as “ bank ” on signs, adver tisements, letter heads, etc., without complying with the provisions of the banking chapter. Violation of this provision is a misdemeanor punishable by fine of from $500 to $1,000, imprisonment for not less than ninety days, or both (4662). X I.— P enalties . Overdraft by an officer or employee of a bank or savings bank a misdemeanor (9282). Every director of “ a corporation having banking powers” who votes to loan or discount to a director in an illegal amount is guilty of a misdemeanor (9277). The state banking board may impose a penalty of from $100 to $500 on associations organized under the banking chapter which fail to make good their reserve within thirty days after notice (4655). Every officer or employee of any asso ciation organized under the banking chapter who knowingly makes false statements, etc., to deceive an examiner, or subscribes to a false report, is guilty of forgery (4659). Every association which fails to report forfeits $200 for each delinquency (4652). Any officer, director, etc., of a “ banking association” who receives deposits knowing that the association is insolvent is guilty of a felony, punishable by fine not to exceed $10,000, imprisonment not to exceed five years, or both (4660 and 4661; and see an apparently overridden provision in the Code in 9283). 501 N at i on a l M onet ary Commission “ Any officer of a banking association, savings bank, or trust company” violating provisions for which no par ticular penalty is provided suffers a fine of from $50 to $500 for each offense (4658). It is a felony not to make whatever returns the examiner asks for (146). It is also a felony to hinder examination, punishable by a $1,000 fine or one year’s imprisonment (147). SAVINGS BANKS. Savings banks are expressly mentioned in the sections of the banking act, creating the banking board (4635); requiring reports (4652); subjecting banks to examina tion (4664); etc. See introductory paragraph under this State. TRUST COMPANIES. I.— T erms of I ncorporation. Among the powers of an annuity, safe deposit, surety, and trust company is that “ to take, accept, and hold on deposit or for safe-keeping any and all moneys, bonds, stocks, and other securities or personal property whatso ever which any * * * person or persons shall be au thorized or required by law or otherwise to deposit in a bank or other safe deposit;” also the power “ to accept and receive deposits of money for general savings account for safe keeping or investment” (4682). Despite these powers, however, it is provided that “ no such company shall engage in any banking, mercantile, manufacturing, or other business except as is * * * expressly au thorized” by the trust company chapter (4689). The capital of a trust company must be not less than $100,000, divided into shares of $100 each. Not less than $50,000 must be actually paid in, invested, and deposited with the state treasurer (4678 and 4679). The full 502 North Dakota Trust — Companies amount of the subscribed capital must be paid in within two years after business is begun (4691). I I .-U A B iu .n s s AND Duties of Stockholders Directors. and There is no especial provision for liability of trust com pany shareholders. There must be from nine to fifteen directors, a majority of whom must be citizens of North Dakota, and each of whom must own at least 10 shares of stock (4680). Direc tors are responsible to the owners of moneys received on deposit or in trust for the validity etc., of investments and securities at the time the investments are made and for the safe-keeping of the securities. Special provisions in a trust are followed, free from this liability (4683). III.— Supervision . See Banks, III, for officials in charge of trust company business in North Dakota. There is a $50,000 deposit with the state treasurer required before the corporation is allowed to begin business. Certain securities permis sible for this deposit must be approved by the examiner and auditor (4678 and 4679). The examiner has over trust companies all authority conferred upon him over banking corporations. If it appears from an examina tion or report or from other information that a trust com pany has committed a violation of law or is conducting its business unsafely or that the deposit with the state auditor is insufficient, the examiner orders a discon tinuance of the practices or a further deposit. When ever the corporation refuses to comply, or it appears to the examiner that it is unsafe for it to continue business, he communicates the facts to the attorney-general and he thereupon is authorized to institute whatever proceed ings the case requires (4692). 503 National Monetary Commi ssi on REPORTS. When acting under appointment of the court a trust company reports fully to it. It renders the state ex aminer a detailed account of its condition on the ist of June in each year and such further accounts as he re quires. A condensed statement of the annual report, approved by the examiner, must be published in a local newspaper (4690). Note that the banking chapter on reports includes trust companies in terms (4652). Examinations. The state examiner once in every six months and with out notice to the trust company, examines it, exercising such authority as he does over banks (4692). Note here also that trust companies are mentioned in the section providing for examination of banks (4664). V.— Discount and L oan R estrictions. A trust company may loan ‘ ‘ upon such securities as may be deemed advisable by its board of directors” (4682) . Loans to officers, directors, and employees are forbidden (4689). VI.— Investments. A trust company may hold such real estate and personal property as may be necessary for the convenient trans action of its business, etc.; real estate acquired by foreclosure in settlement of debts, etc., may continue to be held if the directors think best. It may purchase at foreclosure, judgment sales, etc. (4632). The directors may invest “ all moneys received * * * on deposit or in trust * * * in such securities as are not * * * expressly prohibited” by the trust company chapter (4683) . 504 North Dakota Trust Companies The $50,000 deposit and certain trust funds must be invested in a prescribed way: In United States bonds; North Dakota bonds; bonds of other States that are approved by the auditor and examiner; bonds of certain North Dakota municipalities; and first mortgages of unincumbered real estate in North Dakota worth three times the loan (4678 and 4688). V II.— Overdrafts. Directors, officers, and employees of a trust company must not become indebted to the company “ by means of any overdraft * * * or other contract” (4689). 505 OHIO. In 1908 the legislature of Ohio, in an act printed at page 269 of the laws of Ohio for that year, provided a complete set of rules for the organization of banks and their inspec tion. This statute supersedes the various banking laws appearing in Bates’ Annotated Ohio Statutes, sixth edi tion, 1908, except those with regard to deposits of public moneys in banks and the reports of such depositaries (Bates’ Statutes, secs. 1136-1 etseq.,2M& 1536-655); and those prohibiting banking by limited partnerships (sec. 3141). In another act found at page 528 of the laws of 1908 the legislature regulated the organization and inspection of building and loan associations and savings associations. This digest covers simply the act dealing with banks, provisions of which are applicable to banks, savings banks, and trust companies. So many of the provisions apply to those three classes indiscriminately that the digest is arranged under four heads: (1) Those provisions which apply to all; (2) those which apply to “ commercial banks;” (3) those which apply to savings banks; (4) those which apply to trust companies. The numbers in parenthesis refer to sections of the act. No legislation is here digested which is more recent than the session laws of 1908. There was a special session in 1909, at which, however, no laws were passed affecting the topics covered by the digest. Ohio Ge n e r a l P rovisions GENERAL PROVISIONS. I-— T erms of I ncorporation. Any number of persons not less than five, a majority of whom are citizens of Ohio, may establish “ a commercial bank, a savings bank, a safe deposit company, a trust com pany or * * * a company having departments for two or more or all of said classes of business” (i). All these corporations must have a capital stock (18). If a corporation combines two or more classes of business, it must keep separate books of account for each class and the transactions relating to each class are governed by the pro visions of the act specifically applicable to the particular class (35). The general provisions for capital are as follows: The capital must be divided into shares of $100 each. The capital of a commercial bank shall not be less than $25,000; of a savings bank not less than $25,000; of a commercial bank and savings bank not less than $25,000; of a com mercial bank and safe deposit company not less than $25,000; of a savings bank, commercial bank, and safe deposit company not less than $50,000; of a trust company not less than $100,000; of a trust company and safe de posit company not less than $100,000; of a trust company and savings bank not less than $100,000; of a trust com pany , savings bank, and safe deposit company not less than $125,000; and of a trust company, savings bank, com mercial bank, and safe deposit company not less than $125,000 (2). The entire capital stock must be sub scribed and at least 50 per cent paid in before the corpora tion can begin business; the rest must be paid in in monthly installments of at least 10 per cent, payable at the end of each month after the superintendent of banks has authorized the corporation to commence business (11). 507 National M on e t a r y C o mmi s s i o n The board of directors of any corporation may declare a dividend of as much of the net profits as they shall deem expedient, providing first for all expenses, losses, interest, and taxes due. Before declaring a dividend, however, not less than one-tenth of the net profits for the preced ing dividend period must be carried to a surplus fund until the surplus amounts to 20 per cent of the capital (29). II-— L iabilities and Duties of Stockholders Directors. and An amendment to section 3 of Article X III of the con stitution, adopted in 1903, limits the liability of a stockholder for the debts of his corporation to the amount unpaid by the stockholder on his stock. There must be not fewer than five nor more than thirty directors (6 and 22). They must meet at least once a month (22). Each director must own at least five shares of stock and three-fourths of the directors must be resi dents of Ohio (25). The board of directors may appoint an executive committee, to consist of at least three directors, to meet not less frequently than once a month, and to approve or disapprove all loans and investments, subject to the control of the board of directors (23). A committee of two directors or stockholders must be appointed annually by the board of directors to examine the assets and liabilities of the corporation and to report to the directors. This report is filed with the superin tendent of banks (30). III.— Supervision . The state official in charge of banking is the superin tendent of banks. His term is four years (78), and his salary $5,000 a year (82). Neither he nor the examiners he appoints may be interested in banking (87). They are not 50 8 Ohio G e n e r a l Provisions allowed to receive extra pay (95). They must keep secret all information obtained in the course of examinations, except that which the public duty requires them to report (106). No person employed by the superintendent may be appointed receiver of a banking institution (107). No business may be done until the superintendent has authorized the corporation to begin (10). The superin tendent may withhold his certificate that the corporation has complied with law if he has reason to believe that the corporation has been formed for any other purpose than the legitimate business contemplated by the statute (16). Under certain circumstances the superintendent may institute proceedings for a receivership. He must do so if by the cancellation of stock of a delinquent holder the capital of the corporation is reduced below the legal minimum and is not increased to that point by addi tional subscriptions within sixty days from the date of the cancellation (14); also if a corporation has refused to pay its depositors, or is insolvent, or if its capital has been impaired for a period of ninety days, but in certain cases the corporation may show that the interests of its deposi tors, creditors, and stockholders will not be endangered by allowing it to continue business, under which circum stances the superintendent must not apply for the receiver (41); also if a corporation refuses to be examined (99); if it appears from a report that the capital of a corpora tion is impaired, and upon examination the superin tendent finds an impairment, which the corporation does not make good after written notice (100 and 101); if any banking institution fails to maintain its required reserve and upon notice from the superintendent fails to make good the reserve (52, 58, and 75); if a banking institution, having purchased shares of its own stock to save itself from loss on a previous debt, fails to dispose of the stock on thirty days’ notice from the superintendent (53). 509 » National Monetary Commission The superintendent may order a banking institution to sell certain securities which he considers undesirable (500 57b, 70b). REPORTS. All banking institutions report to the superintendent not less than four times each year, at such times and in such form as he requires (108). The reports exhibit in detail and under appropriate heads a statement of resources, assets, and liabilities at the close of business of any past day specified by the superintendent; the day is uniform throughout the State (109). The reports are required to be sent to the superintendent within ten days after receipt of his request, and they must be published in a local newspaper (no). The superintendent may call for special reports whenever he thinks them necessary ( in ) . At the end of each fiscal year the superintendent reports to the governor, giving a summary of the condition of all reporting companies, with an abstract of their total capital, liabilities, and resources, classifying the report by corporations, specifying the amount held by the report ing banks in lawful money, and adding whatever other information he thinks necessary. This report also includes a statement of corporations whose business has been closed, with figures as to their liabilities and the amount paid their creditors; items with regard to the conduct of the department and its receipts from fees and penalties (114). EXAMINATIONS. Permission to begin business is not given until the superintendent has made a preliminary examination to assure himself that the proper amount of capital has been paid in, and that the names and residences of directors have been furnished, and that other prelim inary requirements of law have been complied with (15). 510 Ohi o — General Provisions The superintendent or one of his examiners at least twice a year must thoroughly examine the cash, bills, securities, accounts, and affairs of all banking corpora tions (96). If the board of directors or the stockholders of a banking institution request it and the superintendent thinks such an examination desirable, a special examina tion may be made (93). All examinations must be made without previous notice to the corporation examined (104). A committee of at least two directors or stockholders is appointed annually by the board of directors to examine the assets and liabilities of the corporation and to report the result to the board of directors. These reports are filed with the superintendent (30). V.— Discount and L oan R estrictions. No banking corporation is allowed to loan money on pledge of shares of its own capital stock, unless so taking them is necessary to prevent loss upon a debt previously contracted (53). No loan is allowed to be made to an officer of any banking corporation unless duly authorized by a majority of the directors. When so authorized the loans must be made and secured in the same manner as loans to other persons (23). (See also VI, below.) VI.— I nvestments. No banking corporation is allowed to purchase or hold its own shares unless the purchase is necessary to prevent loss upon a previous debt, and stock so purchased must be sold within six months from its purchase on thirty days’ notice from the superintendent of banks (53). No bank ing corporation may invest more than 20 per cent of its capital and surplus in any one stock, security, or loan, unless it be in obligations enumerated in paragraphs (6), (c), and {d) of section 50, digested under Banks, VI, 5“ infra, or in a building and vaults (64); as appears under Banks, however, there may be a greater single loan than this 20 per cent, by a commercial bank, if it is on farm land mortgage (47). Overdrafts. Although there is no provision in the act expressly authorizing overdrafts, it seems clear they were contem plated as permissible, for in limiting the amount of indi vidual loans both by commercial banks and by savings banks the act contains the expression, “ including over drafts ” (47 and 63). X.— U nauthorized Banking . Corporations are not allowed to use names likely to mislead the public as to the character or purpose of the business authorized by the charter (3). No banking cor poration is allowed to advertise by newspaper, letter head, etc., a larger capital than is actually paid in (38). No banking institution incorporated under the laws of any other State is permitted to do any banking business in Ohio except to lend money (80). XI.— P enalties . An officer or employee who certifies checks fraudulently suffers fine of not more than $5,000, or imprisonment not more than five years nor less than one year, or both (33). Officers and employees who are guilty of any of the frauds enumerated in section 44 are punished by imprisonment not more than thirty years, or fine not exceeding $10,000, or both (44). All persons connected with a banking insti tution who fail to appear when summoned to testify by the superintendent or refuse to answer forfeit $100 (97). Any person connected with a banking institution who aids in 51-2 — O h i o S t a t e B a n k s the receipt of funds when he knows the bank is insolvent suffers a fine of not more than $5,000, or imprisonment not more than five years, or both (116). Corporations advertising a larger capital than actually paid in forfeit $500 for every offense (38). If the superintendent or one of his employees fails to keep official information secret or makes false reports, he loses his office and suffers fine of not more than $500, or imprisonment for not less than one year or more than five years, or both. He is besides liable to the party damaged by his disclosures (106). If a company fails to submit a report or to publish one after ten days’ notice from the superintendent, it is sub ject to a penalty of $100 a day (112). BANKS. IV .— R eserve R equirements. Commercial banks must keep a reserve of at least 15 per cent of the total deposits. Six per cent of demand deposits and 4 per cent of time deposits must be kept in the vaults of the bank in lawful money, national-bank notes, or bills, notes, and gold and silver certificates of the United States. The part of the reserve not kept in the vaults of the bank must be kept subject to demand in other banks or trust companies designated as depositaries by the directors in a resolution which they certify to the superintendents of banks (51). V.— Discount and Doan R estrictions. A commercial bank may receive deposits on which interest is allowed. It may lend on personal security, and discount, buy, and sell negotiable paper (49). The loan to any one person, firm, or corporation must not S. D oc. 353, 6 1-: -33 513 N at i on a l M onet ary Commission exceed 20 per cent of the paid-in capital and surplus of the bank unless the loan is secured by a first mortgage on improved farm property in a sum not to exceed 60 per cent of the value of the property. The total liabilities, including overdrafts, of any person, company, or firm, to any bank, either as principal debtor or as endorser, for money borrowed, must not exceed 20 per cent of the paid-in capital stock and surplus. Discount of com mercial paper, however, is not considered as lending money (47). Doans by a commercial bank upon real estate security may be made only upon a general resolution by a twothirds vote of the directors, stating to what extent the officers may loan on real estate. The aggregate amount of such loans must not exceed 50 per cent of the capital, surplus, and deposits, except that a bank that combines commercial and savings business may lend up to 60 per cent on real estate if authorized by two-thirds of the directors. Doans made on real estate must be upon real estate in Ohio or in immediately adjacent States, and must not exceed, inclusive of prior incumbrances, 40 per cent of the value of the real estate, if unimproved, or 60 per cent if improved (48). See also VI, below. VI.— I nvestments. Commercial banks may hold real estate only as follows: (a) Real estate on which its business buildings are erected, but the cost of this real estate must not exceed 60 per cent of capital and surplus; (6) real estate mortgaged to the corporation to secure loans; (c) real estate purchased by the corporation at sales for closing liens held by the cor poration, but this real estate must be sold within five years; (d) leasehold for business purposes (46). <14 O h i o S a v i n g s B a n k s Commercial banks may invest their capital, surplus, and deposits in or loan them upon the following: (a) Personal or collateral securities; (b) securities of the United States or foreign governments; (c) bonds of States of the United States; (d) securities of political subdivisions of States of the United States and of Canada; (e) mortgage bonds of any corporation which has paid dividends at 4 per cent for four years, but the bank must not invest in this sort of security at a rate of more than 80 per cent of the mar ket value of the bonds, and the superintendent may order that undesirable securities be sold within six months; (/) notes secured by mortgages on realty where the amount loaned, including prior incumbrances, is not over 40 per cent of the value of the realty if unimproved and not over 60 per cent if improved; but not more than 50 per cent of the capital, surplus, and deposits of a bank may be invested in real estate securities of this sort (50). SAVINGS BANKS. IV.— R eserve R equirements. Savings banks are required to keep as a reserve the same percentage of their total deposits as commercial banks are, but savings banks may invest one-half of the reserve required to be kept in vaults in the securities enumerated in (b) and (c) of section 50 (supra); and where the reserve of any savings bank required to be kept in its vaults is over $500,000, that excess may be invested in securities of the United States (56). V. D iscount, L oan , and Deposit R estrictions. Ihe total liabilities, including overdrafts, of any person, firm, or corporation to a savings bank for money bor rowed, must not exceed 20 per cent of the capital and 515 N a t i on a l M on et a ry Commission surplus, but the discount of business paper is not considered as money borrowed (63). Any savings bank may receive on deposit any sum of money that may be offered for deposit by any person, firm, or corporation, or by any municipality or State, or that may be ordered deposited by any court. It may pay such interest as is agreed upon (55). See also VI, below. V I.— I nvestments . Savings banks may hold land as commercial banks may (54; and see 46). After providing for their reserve, savings banks may invest the residue of their funds in, or loan money on, discount, buy, or sell commercial paper, and may invest their capital, surplus, and deposits in, and buy and sell the following: (a) The securities mentioned in (a), (b), (c), [d), 0), and (/) of section 50 [supra), except that savings banks may loan not more than 75 per cent of capital, surplus, and deposits on notes secured by mortgage of realty. Loans on personal security must be on the obli gation of more than one person, must be payable not more than six months from their date, and must not exceed in the aggregate 30 per cent of the capital, surplus, and deposits of the investing savings bank. (6) Stocks which have paid dividends for five consecutive years; also bonds and notes of corporations, if the board of directors or the executive committee of the investing savings bank so vote. Savings banks shall not invest in stock of other banking corporations. The superintendent may order undesirable securities sold within six months. (c) Prom issory notes, if secured by collateral approved by the directors (57). 516 I Ohi o — T r u s t C o m p a n i e s TRUST COMPANIES. I.— T erms of I ncorporation. There are the following special provisions for the capital of trust companies: No trust company may accept trusts until the paid-in capital of the corporation is not less than $100,000 and until the corporation has deposited with the state treasurer $50,000 if its capital is $200,000 or less, and $100,000 if its capital is more than $200,000. This deposit may be in cash, in bonds of the United States, of Ohio, of municipalities in Ohio or in other States, and in first-mortgage bonds of railroad corporations that have paid dividends of 3 per cent for five years. The treasurer holds this fund as security for the com pany s performance of trusts. The securities may be exchanged (69). The trust deposits, accounts, invest ments, etc., are required to be kept separately (73 and 76). III. — Supervision . Control of the trust business is assured by the deposits with the state treasurer (69). Examinations. A court in which a trust company is acting as trustee has authority to appoint persons to investigate the cor poration with respect to the trust in question. Courts may examine trust companies which they purpose making trustees (77). IV.— R eserve R equirements. Trust companies are required to keep the same reserve as savings banks {supra), but they need not keep a reserve 1 pon trust funds (75). 517 National Monetary V.— Discount and Commission L oan R estrictions. No trust company is allowed to lend except on security of bonds or stocks such as the corporation is allowed to invest in, or mortgage on real estate where the amount loaned, inclusive of prior encumbrances, does not exceed 60 per cent of the value of the real estate. No trust com pany is allowed to lend to any one person, firm, or corpora tion more than 20 per cent of its capital and surplus (72). See also VI, below. VI.— I nvestments. Trust companies may hold real estate as commercial banks may {supra, 46). This is, however, exclusive of trust property (66). The capital and surplus of trust companies, the de posits, and, unless the terms of a trust provide for other investment, the trust funds must, over and above the reserve, be invested in or loaned on the following: (a) The securities mentioned in (<b), (c), (d), {e), and (/) of section 50 {supra), but trust companies are not allowed to loan more than 60 per cent of the capital, surplus, and de posits on notes secured by mortgage on real estate, and the investment in notes so secured may be made only if the directors approve; (6) stocks which have paid divi dends for five years and bonds when they are authorized by the majority of the directors or the executive com mittee, but the superintendent may order undesirable securities sold within six months; (c) promissory notes when secured by collateral approved by the directors. Trust funds, together with the capital and surplus of the trust company, may be invested also in ground rents when authorized by the directors. Not more than 20 per cent of the capital and surplus may be invested in any one security or loan unless it be the securities in (6), (c), and {d) of section 50, or in providing a building and vaults (70 and 71), 518 O K L A H O M A . During the session of 1907-8, the legislature of Okla homa passed an act, found at page 125 of the session laws, designed apparently to be a complete banking law. Two other laws on banking passed at that session, namely, that on page 145 and that on page 152, are both marked in the session laws as having been repealed by the act at page 125; since the act at page 125 became a law later than the other two, and repealed all laws inconsistent with it, it seems safe to assume that the acts at page 145 and 152 are, as stated in the session laws, repealed. The only other statute on the subject of banking passed after the revision of the territorial statutes of Oklahoma in 1903 and prior to 1908 is a 1905 act, that is clearly repealed by the recent banking law. Various amendments to the recent law, made still more recently, by the 1909 legisla ture, are included in the digest. In the Revision of 1903 is a chapter (VIII) on “ Banks and banking,” of which many sections are found in the recent banking act. It seems clear that the recent act, in repealing all acts incon sistent with it, meant to wipe out this chapter. Conceiv ably some of its provisions are still law, but if so the points to be determined are matters of statutory construction too nice to warrant hazarding opinions on them in this digest. The chapter in the Revision of 1903 is for these reasons disregarded. There is a chapter in the Revision of 1903 519 N a 11 o n & l ]VI o n bt a ty Commission at page 381 that deals with trust companies. Whether the statute of 1907-8, the terms of which are for the most part applicable to “ banking corporations,” or the trust com pany statute, which in its title is stated to apply to “ sav ings and trust companies,” applies to savings banks is a matter of doubt. The heading “ Savings banks,” is there fore abbreviated in the digest; the provisions of the act of 1097-8 are digested under the title “ Banks,” and those of the trust company chapter under the title “ Trust compa nies.” The Roman figures in parenthesis refer to the article of the act of 1907—8, and the Arabic figures refer to the section in the particular article, as renumbered by the 1909 amendments; this way of citing that act is adopted because so many of the references in the digest are thus shortened. Other citations explain themselves. • BANKS. I.— T erms of I ncorporation. Banks are forbidden to do any business beyond the regular banking powers enumerated in the statute, unless they have complied with the laws of the state relating to trust companies (I, 3). Incorporators must be approved by the commissioner (I, 1). The capital stock must be fully paid up. It must be not less than $10,000 in towns of 500 or less; not less than $15,000 in towns of from 500 to 1,500; not less than $25,000 in cities and towns of from 1,500 to 6,000; not less than $5°,000 in cities of 6,000 to 20,000; and not less than $100,000 in cities of over 20,000 (I, 4, amd. by 1909, p. 121). The shares are of $100 each (I, 1). 520 O k l a h o m a State Banks Dividends may be declared from net profits, but before the declaration, not less than one-tenth of the net profits for the last preceding period must be carried to surplus fund until the fund amounts to 50 per cent of the capital. Dividends must be declared on January 1 and July 1, if at all, and must be reported to the bank commissioner (I, 23). Capital must never be withdrawn (I, 25). (For restrictions on power to borrow, see V, infra.) — L iabilities and D uties of Stockholders Directors. and The shareholders of every bank are additionally liable for the amount of stock owned and no more (I, 9). d here must be from three to thirteen directors, each the holder of $5°° of the stock of the bank. Any director or other person who participates in a violation of the banking laws is liable for all damages which the bank, its stock holders, depositors, or creditors may sustain. There must at be least two regular meetings a year, at each of which the directors examine thoroughly the affairs of the bank (I, 6). Any bank officer or employee who pays out the funds of the bank on check, order, or draft when the drawer has not the proper sum on deposit is liable to the bank for the amount paid (I, 30). HI •— Supervision. The officer charged with the general duties of supervising banks is the bank commissioner, who holds office for four years, must not be an officer or employee of any bank or person interested financially in a bank, and must have had at least three years’ practical experience as a banker (III, 1). His salary is $2,500 a year; he has eight assist ants (III, 4, amd. by 1909, p. 119). The bank commissioner must approve of the proposed incorporators of a banking corporation (I, 1). The bank 521 National Monetary Commission commissioner fixes the maximum interest which banks may pay upon deposits, and when it appears from a report that a bank has received deposits in excess of ten times paid-in capital and surplus, deposits of other banks not included, he requires the bank to make the necessary in crease in capital and surplus within thirty days, or cease receiving deposits (I, 3, amd. by 1909, pp. 120, 121). The commissioner approves of increases or decreases in the capital stock of banks (I, 5). He may remove unfit officers of banks (I, 7). He has authority in case of a violation of any of the provisions of the act by the officers or directors of any bank to close it and liquidate it (I, 8). If the reserve of any bank falls below the require ment, he notifies the bank to make it good, and if it fails to do so for thirty days he takes possession of it as insolvent (I, 11). Banks may voluntarily place their affairs under his control (I, 20). When a bank appears to be borrowing habitually for the purpose of reloaning, the commissioner requires it to pay off the borrowed money (I, 31). When the capital of any bank is impaired, the commissioner notifies it to make the impairment good within sixty days (I, 32). If any officer of a bank refuses to submit its affairs to inspection, or interferes with examination, the commissioner may proceed to wind up the bank’s business (I, 35). In general, whenever any bank or trust company voluntarily places itself in the hands of the commissioner, or is adjudged insolvent or to have forfeited its franchise to conduct a banking business, or whenever the commis sioner is satisfied of the insolvency of a bank or trust com pany, he may, after examining its affairs, take possession of it and wind up its business (II, 4). REPORTS. A list of names of stockholders, residences, and amounts held by each, is sent the commissioner as a preliminary 522 O k l a h o m a S t a t e B a n k s to receiving his certificate of incorporation (I, 2). At least four times a year, and oftener if called upon, every bank reports to the commissioner in the form he prescribes, showing the resources and liabilities of the association at the close of business on a past day specified. This report must be transmitted to the commissioner within ten days after receipt of his request. It is published in a local news paper. The commissioner may call for special reports whenever he thinks them necessary; they must relate to a date prior to the call (I, 17). The requirement of reports, whenever the commissioner calls for them, and at least four times a year, is extended to trust companies and such national banks as have taken advantage of the depositors’ guaranty fund protection (III, 7). Ten days after a divi dend is declared every bank must forward to the commis sioner a statement of the dividend and the amount carried to surplus and undivided profits. Within ten days after the first of January every bank must send to the commis sioner a statement of receipts and disbursements for the preceding year (I, 18). The examinations which directors make at least twice a year at regular meetings are recorded and forwarded to the bank commissioner (I, 6). A list of names and residences of shareholders, with the number of shares held by each, is sent to the commissioner each year (I, 34). Reports to the commissioner of average daily deposits for the preceding year are required, in order to determine assessments for the guaranty fund (II, 2, amd. by 1909, pp. 122, 123). EXAMINATIONS. The bank commissioner or one of his subordinates visits every bank and trust company at least twice a year and oftener if he thinks it advisable, to make a full examina tion into the condition of the corporation (III, 3). The commissioner makes a preliminary examination when the 523 mmission capital stock of any bank has been paid in in order to ascertain whether that and other preliminaries have been complied with (I, 2). The directors of banking associa tions, at regular meetings held at least twice a year, thoroughly examine the affairs of the bank (I, 6). In case of voluntary liquidations, the commissioner makes an examination to be certain that all liabilities have been paid (I, 21). Whenever any bank or trust company volun tarily puts itself into the hands of the commissioner, or whenever a bank or trust company is adjudged insolvent or to have forfeited its franchise, or whenever the commis sioner is satisfied of the insolvency of a bank or trust com pany, he examines its affairs before taking possession (II, 4). After he has, with the assistance of the guaranty fund, seen the institution through its difficulties, he exam ines it, if its stockholders have undertaken to put it in con dition to resume business, before allowing it to reopen, in order to make sure its assets are repaired, advances from the guaranty fund repaid, etc. (II, 8). IV.— R eserve R equirements. Every bank is required to have on hand in available funds the following sums: In towns or cities of less than 2,500, an amount equal to 20 per cent of entire deposits; in cities of over 2,500, an amount equal to 25 per cent of entire deposits. Two-thirds of this reserve may consist of balances due from good solvent banks approved by the bank commissioner; one-third must be cash. Moreover, any bank that has been made depositary for the reserve of another bank must keep a 25 per cent reserve. When the available funds fall below the requirements, the bank in question must not increase its liabilities, except by deal ing in sight exchange, nor make dividends, until the reserve has been restored. The commissioner in notifying such a bank of its delinquency may refuse to consider as reserves 524 O k l a h o m a State Banks balances due from associations which fail to furnish infor mation required by him to enable him to determine their solvency (I, n ). V.— Discount, Doan , and D eposit R estrictions. Among the powers of banking corporations is that of lending money on chattel and personal security, or on real estate secured by first mortgages running not longer than a year; but the loans on real estate must not exceed 20 per cent of the loans of the bank (I, 3, amd. by 1909, pp. 120, 121). No bank may loan on shares of its own stock unless it is necessary to take this security to prevent loss upon a previous debt, in which case the stock must be gotten rid of within six months (I, 10 and 39). The total liabilities to any bank of any person, company, or firm for money borrowed, including in firm or company liabilities those of the members, must not exceed 20 per cent of the capital of the bank paid in; the discount of bills of exchange and of commercial paper actually owned by those discounting it is not considered as money bor rowed (I, 12). Ihe total indebtedness of the stockholders of any incorporated bank to the bank must never exceed 50 per cent of its paid-up capital (I, 39). No active manofficer of any bank organized under Oklahoma law may borrow from his bank, directly or indirectly (I, 14). Compare with the last-stated provision the older one, which made it a misdemeanor for the director of any cor poration having banking powers to vote a loan or discount which would make the total loans and discounts exceed three times the capital paid in, or to vote a loan to a director in an amount in excess of one-third of the paid-in capital (R. S., 1903, 2545). Banks must not pledge their assets as collateral so as to give depositors or creditors a preference, but any bank may borrow for temporary purposes not more than 50 per cent 525 mmission of its paid-up capital, pledging assets as collateral. When ever it appears to the commissioner that a bank is bor rowing habitually in order to reloan, he may require it to pay back the money borrowed. Any bank may redis count and indorse its negotiable notes (I, 31). No bank may receive deposits in excess of ten times its paid-up capital and surplus, deposits of other banks not included (I, 3, amd. by 1909, pp. 120, 121). V I. — I nvestments. A bank may hold such real estate as is necessary for the convenient transaction of its business, but this must not exceed in value one-third of the paid-in capital; such real estate as is conveyed to the bank in satisfaction of pre vious debts; and such as the bank purchases at judicial sale under securities held by it, provided it does not bid more than enough to satisfy the debt and interest. Except the real estate held for its own accommodation in business, the bank must not hold real estate longer than five years; within thirty days after the expiration of that time it must sell it (I, 37). No bank may engage in trade or com merce, nor invest its funds in the stock of any other “ bank or incorporation,” nor hold shares of its own stock, unless necessary to prevent loss on a previous debt, in which case it must sell the stock within six months from the date it acquired it (I, 10). VII. — Overdrafts. Any officer or employee of a “ bank, banking associa tion, or savings bank” who knowingly overdraws his account is guilty of a misdemeanor (R. S., 1903, 2550). X .— U nauthorized Banking . It is unlawful for any individual, firm, or corporation to receive deposits or do a banking business except under 526 O k l a h o m a S t a t e B a n k s the banking or trust company statute. Violation of this prohibition, either individually or as a member of some association or corporation, is a misdemeanor, punishable by a fine of from $300 to $1,000, by imprisonment of from thirty days to one year, or both (I, 16). An officer who receives deposits in a bank after its authority to transact a banking business has been revoked is subject to the same penalty (I, 36). X I.— P enalties . Officers, directors, etc., who make false reports, false entries in books, etc., in order to deceive anyone concerned with the condition of the bank, are guilty of a felony, pun ishable by a fine of not more than $1,000, imprisonment of not more than five years, or both (I, 13). Any officer, director, etc., who receives deposits with knowledge of his bank’s insolvency is guilty of a felony, punishable by a fine of not more than $5,000, imprisonment for not more than five years, or both (I, 15). Officers, directors, em ployees, etc., who fail to perform duties required by the statute, or fail to conform to the requirements of the com missioner, are guilty of a felony, punishable by a fine of not more than $1,000, imprisonment of not more than five years, or both (I, 26). Any active managing officer of a bank who borrows from the bank, and any officer author izing such a loan, is guilty of larceny of the amount bor rowed (I, 14)- It is also a felony to certify a check for which there are no funds (I, 28), or to commit various frauds in the nature of embezzlement (I, 29). The bank ing board may pay sums of $500 out of the guaranty fund as rewards for securing the conviction of an officer, director, etc., who violates the law (I, 27). If any officer or employee of a bank advertises the deposits of the corporation as guaranteed by the State of Oklahoma, he is guilty of a misdemeanor punishable by a 527 fine not to exceed $500, imprisonment for thirty days, or both (II, 7, amd. by 1909, pp. 123, 124). Failure to report subjects a bank to a penalty of $50 a day (I, 19). The bank commissioner, or assistant, who neglects to perform any duty or makes a false statement, or is guilty of misconduct in office, commits a felony, punishable by removal from office in addition to any other penalties that may be provided (III, 8). XII.— D epositors’ G uaranty S ystem . In Article II of the act of 1907-8 as amended, are found the special Oklahoma provisions for the depositors’ guar anty fund. This fund is under the control of the state banking board, composed of the governor, the lieutenantgovernor, the president of the board of agriculture, the state treasurer, and the state auditor (II, 1). The second section of the act was amended by the 1909 legislature to provide a somewhat different system of assessment from that originally designed. The section as amended levies an assessment against the capital stock of every bank and trust company organized or existing under the Oklahoma statutes in order to create a guaranty fund equal to 5 per cent of the average daily deposits of the institution during its continuance in business. The assessments are payable one-fifth during the first year and one-twentieth during each of the following years until a 5 per cent assessment has been fully paid. Whatever assessments were paid under the statute before it was amended are credited to the banks making them. Every year each bank and trust company reports the average daily deposits for the preced ing year. After the 5 per cent assessment has been fully paid, no additional assessments are levied except those required by emergencies and those made necessary by increased deposits in banks. Whenever the guaranty 528 ■ Oklahoma — State Banks fund is reduced below 5 per cent of all deposits by reason of payments to depositors of failed banks,-the board levies emergency assessments sufficient to restore the impairment up to 5 per cent, but the aggregate of these emergency assessments must never in any one calendar year exceed 2 per cent of average daily deposits of all banks and trust companies. If the amount realized from emergencv as sessments is insufficient to pay claims against all failed banks, the board delivers to each depositor having an un paid deposit a certificate of indebtedness bearing 6 per cent interest. These certificates are payable out of emergency assessments which the board levies from year to year until all the certificates with their accrued interest are fully paid. As rapidly as the assets of failed banks are realized upon by the commissioner they are applied to the repayment to the guaranty fund of all moneys paid out to depositors, and toward refunding emergency assessments. Seventyfive pei cent of the depositors’ guaranty fund is invested for the benefit of the fund in state warrants or other secu rities of the sort in which state funds are invested (II, 2, amd. by 1909, pp. 122, 123). Banks and trust companies organized after the enactment of the statute pay 3 per cent of their capital when they open for business, which amount constitutes a credit fund subject to adjustment at the end of a year on the basis of average deposits. This 3 per cent payment is not required of consolidations of institutions which have complied with the statute (II, 3). Whenever a bank or trust company voluntarily places itself in the hands of the commissioner, or when it is in solvent or has forfeited its franchise, or whenever the com missioner is satisfied of its insolvency, he may, after due examination of its affairs, take possession and liquidate it (II, 4). The depositors of such an insolvent bank or trust company are to be paid in full; and if the available cash is insufficient to do this then the banking board draws S- D oc. 353, 6 1 -2 ----- 34 529 N at io n a l M on et a ry Commission upon the guaranty fund and makes, if necessary, additional assessments so as to pay these depositors. The State has, for the benefit of the guaranty fund, a first lien upon all the assets of the insolvent corporation (II, 5). The bank commissioner liquidates the corporation with full receiver’s powers (II, 6). The commissioner delivers to every bank or trust com pany which complies with the provisions of the statute a certificate stating that safety to its depositors is guaran teed by the depositors’ guaranty fund of Oklahoma. This certificate is displayed in the place of business of the corporation, which may also advertise to the effect that it is protected by the guaranty fund. No bank, however, may be permitted to advertise its deposits as guaranteed by the State of Oklahoma (II, 7, amd. by 1909, pp. 123, 124). After the commissioner has taken possession, a bank or trust company may nevertheless place itself in condition to do business again, but may not reopen until the com missioner has carefully investigated its affairs and has assured himself that its credits and funds are repaired and all advances from the guaranty fund have been fully repaid (II, 8). SAVINGS BANKS. There seems to be no legislation dealing specifically with savings banks. The act of 1908, when it says “ banks” and “ banking corporations,” may or may not be interpreted to include savings banks. The restriction upon receipt of deposits while insolvent (I, 15), given under Banks, probably does not apply to savings banks, but a similar provision in the Revised Statutes, with higher penalties, perhaps does, for its language is “ bank, banking house, * * * company, corporation, or parties en gaged in the banking, broker, or deposit business” (R. S., 530 Oklahoma Trust Companies 1903, sec. 2551). Also the provisions making directors guilty of a misdemeanor if they loan beyond three times the capital stock of the corporation or loan to a director in excess of one-third of the capital stock seem applicable to savings banks, for the language is “ any corporation having banking powers” (R. S., 1903, sec. 2545). The provision making it a misdemeanor for any officer or em ployee to overdraw his account is made applicable specific ally to savings banks (R. S., 1903, sec. 2550). One section of the act of 1907-8 applies to savings banks: “ All savings associations which do not transact a general banking business” must keep on hand in actual cash 10 per cent of deposits, and a like sum invested in good bonds of the United States, Oklahoma, or municipalities of Oklahoma, worth not less than par (I, 11). TRUST COMPANIES. I.— T erms of I ncorporation. Among trust company powers is that “ to receive money in trust or on general deposit with or without interest * * * and to accept and receive savings accounts” (R. S., 1903, sec. 1122, amd. by 1905, pp. 150, 151). Moreover, in the prohibition on unauthorized banking is the exception, “ except as authorized by this act (i. e., the banking law of 1907-8), or by the laws relating to trust companies” (I, 16). The capital stock of every trust company must be not less than $100,000 in towns of less than 10,000, and not less than $200,000 in towns of over 10,000. One-half must be paid in before business is begun. The other half of the capital stock must be paid in within six months after organization. The total capital must not be more than $10,000,000 (R. S., 1903, sec. 1124; and 1903, p. 85). 531 Dividends may be declared every six months or oftener, but not while the corporation is insolvent nor so as to render it insolvent (R. S., 1903, sec. 1125). II.— L iabilities and D uties of Stockholders D irectors. and Every stockholder in a trust company is individually liable for the debts of the corporation to double the amount that is unpaid on the stock held by him (R. S., 1903, sec. 1134). There must be not less than five nor more than twentyfive directors, stockholders in the corporation (R. S., 1903, sec. 1124). If the directors knowingly pay dividends when the corporation is insolvent, or so as to make it insolvent, they are liable for all debts contracted while they are in office (R. S., 1903, sec. 1125). I l l .— Supervision . Trust companies are subject to the provisions of Article II, section 4, of the act of 1907-8, which allows the bank commissioner to take possession of insolvent corporations. A section of the old trust company statute, moreover, pro vided that if after examination a trust company was found insolvent the “ bank examiner of this Territory” should immediately take charge of the assets of the company; he should then make a thorough examination and if satis fied that the company could not resume business or liqui date its debts he should institute proceedings for a receiver (R. S., 1903, sec. 1135)- This is, no doubt, superseded by the 1908 statute, wffiich provides for the commissioner’s acting as receiver (II, 4). Trust companies deposit $50,000 in certain securities to secure their fiduciary obligations. If the sum named is less than one-half the annual premiums and compensa532 Oklahoma Trust Companies tions of any company, it must be increased to equal that fraction (R. S., 1903, sec. 1133, amd. by 1905, pp. 151 et seq.). REPORTS. Full reports of the condition of each trust company were, by the trust company act in the Revised Statutes, required to be exhibited by the directors to the stock holders annually before elections. The same section pro vided that whenever the secretary of the treasury required, each trust company should, within fifteen days from the secretary’s call, furnish a statement in the form the secretary prescribed, showing the condition of the corporation at the close of business on a past day, a summary of this statement being published in a local newspaper (R. S., 1903, sec. 1126). This requirement must for the most part be superseded by the provision of the 1908 statute, which gives the bank commissioner power at any time he deems it necessary, and at least four times a year, to call upon every trust company for a report of the company’s condition on a given past day (III, 7). Trust companies subject to the guaranty fund system must also report average daily deposits at the end of the year, as required of banks (II, 2, amd. by 1909, pp. 122, 123). Trust companies must annually report the amount of their premiums and compensations to deter mine the amount of their deposit with the state treasurer (R. S., 1903, sec. 1133, amd. by 1905, pp. 151 et seq.). EXAMINATIONS. The bank commissioner or a subordinate at least twice a year, and oftener if he deems it advisable, visits each bank and trust company that is subject to the provisions of the 1908 statute to examine the condition of the company’s affairs (III, 3). 533 » N at ion a l M onet ary Commission See Banks, III, for the examinations required to be made at the beginning and at the end of the commission er’s possession of a trust company as receiver (II, 4 and 8). V.— Discount and L oan R estrictions. If trust companies are “ corporations having banking powers,” then it is a misdemeanor for directors to vote to make a loan whereby the total loans of the corporation are made to exceed three times its paid-in capital, or to make a loan to a director, or upon paper upon which he is liable, to an amount exceeding one-third of the paid-in capital (R. S., 1903, sec. 2545). Trust companies have power to loan on “ real estate and collateral security. ’ ’ The notes and debentures issued by any trust company must not exceed ten times the paid-up capital, and they must not exceed the amount of the first mortgages pledged to secure them (R. S., 1903, sec. 1122). VI.— Investments. Trust companies have power to buy and sell bonds of Oklahoma, all other kinds of government, state, or municipal bonds, all kinds of negotiable and nonnegotiable paper, “ stocks, and other investment securities” (R. S., 1903, sec. 1122). The directors of a trust company have power to invest “ the moneys placed in their charge” in loans secured by real estate or other sufficient col lateral, in United States or Oklahoma bonds, and in the bonds of any State or municipality in Oklahoma or in the Indian Territory. Trust companies may hold only such real estate as required in the transaction of their business and such as they acquire in the enforcement of liabilities due them (R. S., 1903, sec. 1125). 534 Oklahoma Trust Companies V II.— Overdrafts . The only provision relative to overdrafts is that stated under Banks, making every officer or employee of any “ banking association” who knowingly overdraws his account guilty of a misdemeanor (R. S., 1903, sec. 2550). X .— U nauthorized B anking . See X, under Banks. X I.— Penalties . The penalties given under Banks are none of them framed in language inclusive of trust companies, although such a penalty as that upon officers who advertise that deposits are guaranteed by the State of Oklahoma ought to be applicable to the two sorts of institutions indis criminately. Under the trust company act officers or directors who refuse to make statements required of them, or make false statements, are guilty of a misdemeanor, pun ishable by a fine not exceeding $500, imprisonment of from one to twelve months, or both (R. S., 1903, sec. 1126). If trust companies are “ corporations engaged in banking, broker, or deposit business” then any officer, director, etc., of a trust company who receives deposits with knowledge of the insolvency of the company is guilty of a felony, punishable by imprisonment “ in the territorial prison” for not less than ten years, imprison ment in the county jail for not more than one year, fine of not more than $10,000, or both fine and imprisonment (R. S., 1903, sec. 2551). (See also Revised Statutes, 1903, section 2545, making it a misdemeanor for directors of “ any corporation having banking powers” to vote loans in excess of three times the capital paid in, or to vote a loan to a director exceeding one-third of the paid-in capital.) X II.— D epositors’ G uaranty S ystem. See XII, under Banks. 535 O R EG O N . The most recent revision of the statutes of Oregon, that of 1902, by Bellinger and Cotton, contains only a few, and those very unimportant, provisions with regard to banks. The most important legislation on the topic is in chapter 138 of the laws of 1907, though chapters 148 and 265 of the same year also contain banking provisions. The session laws from 1902 through 1909 contain nothing that has been thought worth incorporating in the digest. References in the digest, where they are simply numbers in parenthesis, are to sections of chapter 138 of 1907. There is no sepa rate legislation for savings banks and trust companies, but chapter 138 provides that “ any person, firm, or corpo ration (except national banks) having a place of business within this State where credits are opened by the deposit or collection of money or currency or negotiable paper subject to be paid or remitted upon draft, receipt, check, or order shall be regarded as a bank or banker and as doing a banking business under the provisions of this a c t” (7). Moreover, section 8 specifically places savings banks under the provisions of the act, and section 35 expressly makes the word bank inclusive of the banking or savings depart ment of any trust company that does a banking or savings business. The provisions digested under “ Banks,” there fore, must be considered applicable to savings banks and trust companies as well. O r e g o n S t a t e B a n k s BANKS. I.— T erms of I ncorporation. Banking corporations may be formed to do a banking business, a savings banking business, or both (8). Al though not expressly authorized to do a trust-company business, that power may be inferred from the section which, after limiting real-estate holdings, provides that these restrictions do not apply to real estate bought with other funds than the capital and resources nor to real estate held in trust (15). Trust companies may clearly do a banking business, for the statute provides that they may use the name “ trust company” without compliance with the act if they are not doing a banking business; besides, companies which have any other department than a bank ing department must conduct it separately (9). The requirement for capital declares that it is unlawful for any person, firm, or corporation to transact a banking business without “ capital stock as follows:” In cities, villages, and communities of 1,000 or less, $10,000; in those of 1,000 to 2,000, $25,000; in cities of 2,000 to 5,000, $30,000; in cities of 5,000 and upward, $50,000 (8). Presumably these requirements are for minimum capital. At least 50 per cent of the capital must be paid in before business is begun; the remainder must be paid in within six months (10). Dividends may be declared out of net profits, but before they are declared not less than one-tenth of the net profits for the preceding dividend period must be carried to sur plus until the surplus amounts to 20 per cent of the paid capital (17). 53T N at i o n a l M on e t a ry II-— L iabilities and Commission D uties of Stockholders D irectors. and There is no particular provision for stockholders’ lia bility in banks. Banking corporations must have not fewer than three directors (8), each of whom must own at least $500 par value of stock. A majority must meet at least once every three months and examine the affairs of the bank (16). If the directors knowingly allow any officer, director, or employee, or the state bank examiner or one of his em ployees, to borrow funds of their bank in an excessive or dishonest manner, each director participating in the loan is personally liable for all damage which any person sus tains in consequence (22). 111.— Supervision . There is a board of bank commissioners composed of the governor, the secretary of state, and the state treasurer, who appoint a bank examiner for terms of four years. The examiner must have had at least three years’ practi cal experience in banking or have served for three years in some state banking department. While in office he may not have any interest in any banking business (1), nor may any of his assistants (3). The examiner’s salary is $3,000 a year (5). The examiner and his assistants are forbidden to disclose any information obtained in the per formance of their duties except so far as the banking act makes it incumbent upon them to publish the informa tion. Names of depositors and debtors, amounts of de posits and debts, must only be disclosed in the course of duty (33). Banks or bankers may present charges against the examiner to the board of bank commissioners, who, after a hearing, may remove him from office (41). 538 O r e g o n — S t a t e B a n k s The bank examiner approves of reserve depositaries (23). If by canceling unpaid shares the capital of a bank is reduced below the minimum and is not increased to the required amount within thirty days, the bank’s affairs may be wound up (11). If upon examination or from a report it appears that capital is reduced by impairment or otherwise, the examiner requires the bank to make good the deficiency. He may examine the bank later to see if the deficiency has been made good; if it has not been, he proceeds for a dissolution (29). These proceedings may follow not only impairment of capital, but a finding by the examiner from examination or report that a bank is insol vent or in a condition to render continuation of business hazardous, or a finding that it has exceeded its powers or failed to comply with law. Ih e examiner reports to the board of bank commissioners and may take immediate possession of the bank s affairs. If the board, after inquiry into the facts, consider it necessary in the interests of creditois, etc., or if they believe the bank is in a condition to render further business hazardous, or has exceeded its powers, failed to comply with law, failed to submit to examination and publish reports, or if they believe its capital is impaired, they may report to the attorney-gen eral, who thereupon proceeds in the name of the bank examiner to cause the bank to discontinue business. A receiver is appointed by court (30). REPORTS. Calls are made by the bank examiner for reports simul taneously with the issue of calls by the Comptroller of the Currency for national-bank reports. The reports, in the form prescribed by the examiner, show total resources and liabilities on a past day specified by him, and must be transmitted to him within ten days after receipt of his request. Abstracts of them are published in a local 539 % N at io n a l M onet ary Commission newpaper (24). The examiner annually reports to the board of bank commissioners, showing the published ab stract of the last report of each bank, any other proceed ings done by him, the condition of banking business in the State, and the affairs of the examiner’s office (25). The examiner reports to the board deposits in any bank which have not been added to or reduced for seven years. The board prescribes how the examiner is to publish these facts (42). The cashier or secretary of every institution in which deposits of money are made returns every second year to the secretary of state a statement of the amount standing to the credit of every depositor who has not deposited or withdrawn money for more than seven years, showing also the last known address of the depositor and the fact of his death, if known. The reporting officer publishes these statements weekly for four weeks in a local newspaper. Where the depositor is known to be dead, the deposit need not be reported (1907, chap. 148, 1). The secretary of state biennially reports these deposits to the attorney-general, and they are treated as having escheated to the State (1907, chap. 148, 2, amd. by 1909, chap. 36). (For reports required for purposes of taxation see 1907, chapter 265, sections 2, 5, and 6, for reports from deposi taries of public funds see chapter 135 of the laws of 1907.) EXAMINATIONS. At least once a year, and oftener if the examiner thinks it necessary, he must without previous notice examine the affairs of every bank (26). All examinations must be personally conducted by the examiner (5). Incidental to proceedings for a receivership may be an examination by the examiner (29), and an “ inquiry into the facts” by the board of bank commissioners (30). A majority of the directors of every bank at their meeting at least every 540 O r e g o n S t a t e B a n k s three months must examine all loans, paper, securities, liabilities, and resources of the bank (16). IV.— R eserve R equirements. Every bank doing business in cities or towns of less than 50,000 must keep on hand in actual cash or balances due from good solvent banks to be approved by the examiner not less than 15 per cent of demand liabilities and 10 per cent of time deposits. Every bank doing a business in cities of over 50,000 must keep on hand in the same form not less than 25 per cent of demand liabilities and 10 per cent of time deposits. At least one-third of the reserve percentages must be in cash (23). V.— Discount and L oan R estrictions. The total liability to any bank of any person, firm, or corporation for money loaned, including in firm or com pany liabilities those of the members, must never exceed 25 per cent of paid-in capital and surplus, but the discount of bills of exchange drawn in good faith against existing values and the discount of paper owned by the persons negotiating it, and loans secured by real estate, personal property, warehouse receipts, etc., are not within this limitation, if the loan does not exceed 75 per cent of the value of the paper, warehouse receipts, or personal prop erty, nor exceeds 50 per cent of the value of the real estate, if that is given as security (20). No officer, owner, or employee of a bank, nor the bank examiner, nor any employee of his, is allowed to borrow from the bank, whether he gives security or not, without the approval of a majority of the directors or an executive board or discounting committee chosen by a majority of the directors (22). No bank may take its own capital stock as collateral except when necessary to prevent loss on a previous debt, 54i I N at ion a l M onet ary Commission in which case the stock must be sold within twelve months (13). VI.— Investments. Real estate may be held only as follows: Such as is nec essary for the transaction of the bank’s business, including banking offices and certain premises in the same building which may be rented, but this investment must not exceed 50 per cent of capital, surplus, and undivided profits; such real estate as is taken by the bank in satisfaction of pre vious debts; such real estate as the bank purchases at sale under decrees or foreclosures under securities held by it. Except for the first sort of real estate, none may be held for longer than five years; if not then sold, it may not be carried as an asset (15). The lots on which the banking building is situated must be unincumbered (8). No bank may purchase its own stock except when nec essary to prevent loss on a previous debt, in which case the stock must be sold within six months (13). V III.— B ranches. Every bank with one or more offices in Oregon must maintain at every office a capital not less than that required for the organization of separate banks (35). X.— U nauthorized B anking . Except national banks, no person, firm, or corporation may carry on a banking business except on compliance with the act of 1907, nor may, without compliance with it, use the terms “ bank,” “ banker,” “ bankers,” ‘‘ banking house,” or “ trust company.” Trust companies which do not do a banking business may use the term “ trust company” without compliance with the banking statutes. Any person, firm, or corporation that violates 542 O r e g o n S t a t e B a n k s these provisions after thirty days’ notice from the exam iner is guilty of a misdemeanor, punishable by fine of from $20 to $100 a day (9). It is forbidden to advertise in any way greater capital, surplus, or undivided profits than are maintained (35). XI.— P enalties . Owners or officers of any bank who receive deposits with knowledge of the bank’s insolvency are guilty of a felony punishable by fine of not more than $1,000, impris onment not exceeding two years, or both (18). Owners, officers, and employees who certify to checks for which there is not the required amount to the credit of the drawer are guilty of a misdemeanor, punishable by fine not to exceed $1,000 (21). Failure to furnish and publish the reports to the examiner is punishable by fine upon the owners and officers of the offending bank of $50 a day (24). Failure by the cashier or secretary to report dormant deposits to the secretary of state is punishable by fine of from $50 to $1,000, imprisonment of from ten to ninety days, or both (1907, chap. 148, 3). Officers, owners, or employees who misrepresent the condition of their bank to the examiner are punished by fine of $1,000, impris onment for not less than six months, or both (27). If the examiner proceeds maliciously or without reason able cause against a bank for insolvency, impairment of capital, etc., he is not only liable on his bond for damages resulting, but guilty of a felony punishable by a fine of not less than $1,000, imprisonment for not more than two years, or both (30). If the examiner or his assistant discloses information outside his duty he is punished by a fine of $1,000, imprisonment for not less than six months, or both; he also loses his office (33). 543 See preliminary paragraph under this State. Savings banks are subject to all the provisions of the act of 1907 (7). Savings banking and regular banking business may be combined (8). TRUST COMPANIES. Trust companies, if they have a place of business “ where credits are opened by deposit or collection of money or currency or negotiable paper subject to be paid or remitted upon draft, receipt, check, or order” are subject to all the provisions of the act of 1907 (7). They may call themselves “ trust companies” without being subject to the act only if they do no banking busi ness (9). There is a provision in section 9 which, though not wholly clear in its application, seems to mean that trust companies must keep their trust department dis tinct from their banking or savings banking department. After forbidding the use of certain words except upon compliance with the act, and prescribing that trust com panies may call themselves by that name without com pliance with the act if they do not do a banking business, the section goes on: “ No assets, funds, properties, or investments of any other department shall be included in any statement of such banking or savings department as herein defined, and all such capital, assets, funds, proper ties, and investments of such banking or savings depart ment shall be kept separate and distinct from all other capital, assets, funds, properties, and investments of such company.” See also the provision of section 35, which provides that the word bank in the statute is to include the banking or savings department of any trust company doing a banking or savings business. 544 PENNSYLVANIA. The condition of the statutes of this State makes it par ticularly difficult to determine just what the law is on many particular points. Instead of being reenacted in the form of revised laws they have been collected from time to time in various editions of Purdon’s Digest, where it is often hard for the reader to tell what has been repealed and what is still in force. The banking statutes are reprinted in convenient form in a reprint compiled under an act of assembly, by direction of the commissioner of banking, by William Brown, jr., and Charles T. Brown, of the Philadelphia bar. The digest is based on this reprint, which includes legislation up to 1907; for later laws, the digest is based on a pamphlet edition, issued by the banking department, of those acts of 1907 which relate to banking, and on the published statutes of 1909. There must be considerable doubt what the law is on many points, these places are indicated, and the ambiguous lan guage is quoted. The two most important statutes are the banking act of 1850 and the banking act of 1876. These two and their amendments are digested under “ Banks;” they seem not to apply to other classes of bank ing institutions. Mr. John W. Morrison, deputy commis sioner of banking in Pennsylvania, states that the act of 1850 is now obsolete. Since it has never been repealed, however, it is included in the digest, but, together with other statutes which Mr. Morrison declares to be obsolete, is, when inserted, inclosed in brackets. Citations in the digest follow the citations in the reprint above referred to. S. Doc. 3S3, 61-2— •35 545 I.— T e r m s of In c o r p o r a t i o n . It is a constitutional provision that no corporation “ to possess banking and discounting privileges” may be organized without three months’ public notice at the place it is intended to be located, and that no charter may be granted for longer than twenty years (Const., art. 16, sec. i i .) No corporation may be organized under the act of 1876 with a less capital than $50,000 if its principal place of business is in a town of more than 5,000, nor with a less capital than $25,000 if its principal place of business is in a town of less than 5,000. Shares must be of not less than $50 each (act 13th May, 1876, sec. 5, P. L., 161, amd. by act 3d May, 1909, No. 230). Banks having capital divided into shares of more than $50 each may reduce the par value of each share, but not so as to make it under $50 (act 14th June, 1879, sec. 1, P. L., 94). At least 50 per cent of the stock of any association incorporated under the act of 1876 must be paid in before business is begun, and the remainder in installments of at least 10 per cent of the whole capital every month (act 13th May, 1876, sec. 9, P. L., 161). A statute in 1883 provided that whenever a banking company had a capital subscribed of which not all had been paid in, and certificates had been issued for unpaid stock, the company could decrease its capital to the amount paid in, but must not decrease its capital to less than $200,000 (act 22d June, 1883, sec. 2, P. L., 155). [The act of 1850 provided a system of voting whereby each share, not exceeding two, entitled the holder to one vote; each two shares above two not exceeding ten entitled him to one vote; each four shares above ten not 546 i It ■ Pennsylvania — State Banks exceeding thirty, one vote; every ten shares above thirty not exceeding fifty, one vote; above fifty, additional shares conferred no right to vote whatever. Under this act also shares had to be held three months before the election to be voted on (act 16th April, 1850, sec. 10, art. 4, P. U.,477). This was altered with respect to “ the banks of this Com monwealth ” so that every share not exceeding ten entitled the holder to one vote; every two shares from ten to twenty, one vote; every five shares from thirty to one hundred, one vote; and every ten shares above one hun dred, one vote (act 17th April, 1861, sec. 2, P. L., 342).] The act of 1876 provides that “ in all elections for directors and otherwise” every shareholder is entitled to one vote on each share of stock he holds (act 13th May, 1876, sec. 14, P. U, 161). [By the act of 1850 dividends must be declared at least twice a year on the first Tuesday of May and November, payable within ten days thereafter; these dividends must not exceed net profits, nor may they impair capital (act 16th April, 1850, sec. 10, art. 12, P. L., 477)-] Under the act of 1876 directors of corporations may declare quar terly 01; semiannual dividends out of net profits, payable within fifteen days after the declaration; before declaring a dividend, however, each corporation must carry “ at least one-tenth of net profits for the preceding quarter, if it is a quarterly dividend, and at least one-tenth of the net profits of the preceding half year, to its surplus” until the surplus amounts to 25 per cent of capital (act 13th May, 1876, sec. 16, P. U., 161). Capital must not be withdrawn, and dividends may be declared only out of net profits (act 13th May, 1876, sec. 24, P. U., 161). (Bor liabilities which a bank is allowed to incur see V, infra.) 547 m m iss i on II.— L iabilities and D uties of St o c k h o l d e r s D irectors. and There was an act passed in 1874 which made stock holders in “ banks, banking companies, saving-fund insti tutions, trust companies, and all other incorporated com panies doing the business of banks, or loaning and dis counting moneys as such,” personally liable for debts and deposits to double the amount of the capital held by each (act n th May, 1874, sec. 1, P. L., 135). Under the act of 1876 also, the shareholders of “ any corporation formed under this a c t” are individually liable for “ all contracts, debts, and engagements” of the corporation up to the amount of their stock at par in addition to the par value of the shares (act 13th May, 1876, sec. 5, P. U , 161). For corporations organized under the act of 1876 there must be not less than five directors, all citizens of the United States and of Pennsylvania, and each the holder of at least ten shares of the capital of the corporation. One director must be president and another vice-president, but cashiers, clerks, and tellers are ineligible (act 13th May, 1876, sec. 12, P. L., 161). Under the same statute, if directors of corporations make dividends which impair capital, those who consent are liable individually to the corporation for the stock divided (act 13th May, 1876, sec. 16, P. L., 161). A statute of 1901, applicable apparently to all corporations, allows the stockholders to fix the number of directors as they choose, except that there must be not fewer than three (act 19th April, 1901, P. L., 80). [Earlier legislation with regard to directors is briefly as follows: No judge or person holding office under the State in the treasury department, or in land offices, etc., may be director of a bank (act 27th January, 1819, sec. 3, 7 Sm. L., 148). Bank directors under an act passed 548 Pennsylvania — State Banks in 1843 were eligible three years out of any four, but no person was allowed to be a director of more than one bank at the same time (act 18th April, 1843, sec. 8, P. I/., 309). 1he act of 1850 required the affairs of every bank to be conducted by thirteen directors, all citizens of the United States and stockholders of the bank; it forbade any one to be directors in two banks and forbade the governor and certain public officers to be directors (act 16th April, 1850, sec. 10, P. L., 477). It was later enacted that the number of directors should not be less than five nor more than thirteen (act 17th April, 1861, sec. 1, P. U., 341). The act of 1850 again provided that directors should only be eligible for three years out of any four except the president (act 16th April, 1850, sec. 10, art. 2, P. U., 477). The same act forbade directors, except the president (extended to include vice-president act 13th April, 1859, sec. 1, P. fi., 613) to take any pay unless granted in stockholders’ meeting (act 16th April, 1850, sec. 10, art. 6, P. T., 477). The same act required a general meeting of stockholders annually, at which time the directors must make a statement of the affairs of the bank (act 16th April, 1850, sec. 10, art. 9, P. fi., 477). The same act made directors who declared dividends which impaired capital liable to the corporation for the capital divided (act 16th April, 1850, sec. 10, art. 12, 1 . U., 477)* I he same act provided that, in insolvency occasioned by fraud of the directors, those implicated in the fraud should be liable to stockholders and creditors for proportionate shares of losses (act 16th April, 1850, sec. 40, P. U., 477)-] Another act provided that when ever “ any bank, now or that may hereafter be incor porated under any law of this Commonwealth” should be declared fraudulently insolvent, the assignees of the bank should sue those who were officers and directors at the time of the assignment and those who had previously 549 I N at i on a l M on et a r y C o mmi s s i o n been officers and directors by whose act the insolvency had been caused, to get judgment for a sum equal to the outstanding paper issues and certificates of deposit of the bank (act 12th April, 1867, sec. 1, P. L-, 71). Ill.— Su p e r v i s i o n . An act passed in 1895 covers most of the points under supervision. It establishes a banking department at the head of which is the commissioner, who is to take care that the laws of the State in relation to banks, trust companies, savings banks, cooperative banking associations, surety companies, building and loan associations, etc., are being executed (act 1 ith February, 1895, sec. 1, P. U., 4). Unin corporated bankers are put under the supervision of the commissioner by act 7th June, 1907, P. L., 461. The commissioner is appointed for a term of four years with a salary of $6,000. Neither he nor his subordinate may be interested in any corporation subject to their supervision, nor may they divulge information acquired in department work (act n th February, 1895, secs. 2 and 16, P. L., 4). Whenever it appears from a report, or the commissioner has reason to believe, that the capital of any corporation subject to the supervision of the department is reduced below the legal amount, or below the amount certified as being paid in, the commissioner requires the deficiency to be made good; and if the corporation fails for sixty days to make the impairment good the commissioner communicates the facts to the attorney-general, who proceeds in court for a dissolution (act 1 ith February, 1895,sec. 6, P. L., 4). In case any corporation refuses to submit its affairs to exami nation or is found to have violated any law of the State, the commissioner proceeds through the attorney-general as before (act n th February, 1895, sec. 8, P. L., 4). If from an examination the commissioner has reason to believe that a corporation is in an unsound condition or is doing 550 Pennsylvania State Banks business contrary to public interests, or if for thirty days after his notification reserves are not made good (act 8th May, 1907, P. L., 189), the commissioner proceeds through the attorney-general for a receiver; if the commissioner thinks it immediately necessary he may, after a hearing before the attorney-general, appoint a temporary receiver (act n th February, 1895, sec. 9, P. L., 4). When a re ceiver is appointed, on motion of the attorney-general, at the instance of the commissioner of banking, of the assets of any corporation, any previously appointed receiver must turn over possession to the one thus appointed (act 23d April, 1909, No. 117). The following provisions were law before the act of 1895. If they continue in force it is with the commissioner in place of the auditor-general; the act of 1895 provides for substitution (act n th February, 1895, sec. 10, P. U , 4). When the auditor-general has notified a corporation sub ject to the act of 1876 that it has committed an act of insolvency, he appoints a special agent to make inquiry; if this verifies the auditor’s belief, the auditor applies to a court for a receiver (act 13th May, 1876, sec. 27,P.U., 161). Acts of insolvency under the statute of 1876 are defined in sections 11 and 26. [Under the act of 1850 the auditorgeneral could require certain returns from banks and when it appeared from a return that the limit of liabilities set by the act of 1850 had been violated, he could give notice to the governor, who would thereupon declare the charter of the bank forfeited (act 16th April, 1850, sec. 18, P. I 477). Under the same act failure to redeem all obliga tions, notes, certificates of deposit, etc., in gold or silver coin was ground for requiring a general assignment and dissolving the bank (act 16th April, 1850, sec. 27, P. U, 477). Under the act of 1850 also the maintenance of a branch, without express authority from the legislature, 551 National Monetary Co m m i s s i o n was ground for loss of charter (act 16th April, 1850, sec. 50, P. T., 477)-] Under late legislation, the commissioner of banking approves of reserve depositaries (act 8th May, 1907, P. L., 189), and performs certain duties with respect to selecting state depositaries (act 17th February, 1906, sec. 1, P. L., 45). REPORTS. The prevailing statute on this subject provides that every corporation subject to the supervision of the bank ing department, makes to the commissioner not fewer than two reports of its condition each year in the form prescribed by him stating resources and liabilities on a past day specified by the commissioner; the report is transmitted to him within five days after the receipt of his request and an abstract of it is published in a local newspaper. The commissioner may call for special re ports. This statute of 1895 enacts that the reports required by it are in lieu of all reports required by earlier laws (act n th February, 1895, sec. 5, P. U., 4). In the same act it is provided that the commissioner makes an annual report to the governor setting forth the condi tion of all corporations reporting to him; a statement of the corporations under the supervision of the department whose business has been closed during the year; sugges tions for amending the statutes; and details of depart ment administration (act 11th February, 1895, sec. 12, P. U., 4). A late statute requires banks, savings banks, and trust companies to give with especial completeness in their reports to the commissioner their liabilities, to depositors, etc., and for money borrowed (act 12th June, 1907, P. U., 525). The following provisions of earlier laws deal with re ports (if they are still law, it is with the commissioner sub552 Pennsylvania — State Banks stituted for the auditor in all matters except taxation— act n th February, 1895, sec. 10, P. U., 4): One statute required banks, savings institutions, and other corpora tions to publish in a local newspaper once a year, a state ment of dividends over $5, unclaimed for three years, setting forth the names and residences of the persons entitled to the dividends and their amounts (act 6th March, 1847, secs. 1 and 3, P. L., 222). Banks, together with all corporations receiving deposits of money, must publish annually names, residences, dates of deposits, and balances of depositors who have not dealt with their deposits for three years, and are now due over $10 (act 6th March, 1847, secs. 2 and 3, P. L., 222). [Under the act of 1850, the cashier of each bank was required to for ward the auditor annually a list of persons who had not dealt with their deposits or dividends for three years (act 16th April, 1850, sec. 52, P. B., 477), and directors were required to make a statement annually to stockholders (act 16th April, 1850, sec. 10, art. 9, P. L., 477). Under the act of 1850 the auditor required the cashiers of banks to make quarterly returns of the affairs of their banks, which returns he tabulated for the legislature (act 16th April, 1850, secs. 11, 12, 13,14, and 18, P. U., 477). Under the same statute a bank making an assignment was required to report to a local court a full statement of its affairs containing certain specified items (act 16th April, 1 ^5°, sec- 42> F- F., 477)-] The act of 1876 requires the directors of corporations subject to it to keep a list of names and residences of stockholders, with the number of shares held by each, which list must be sent annually to the auditor-general (act 13th May, 1876, sec. 15, P. U., 161). The same statute requires the cashier of every bank to make a full statement of the condition of the corporation on the day previous to the declaration of each dividend setting forth amount of capital paid in, 553 National Monetary Co mmi s s i on balances due to other banks, amount due to depositors, total of debts and greatest amount of debts since last previous statement, amount of paper, coin, etc., on hand, value of realty and personalty held, amount of undivided profits, liabilities to the corporation of directors and officers, and amount of liabilities to the corporation of stockholders (act 13th May, 1876, sec. 17, P. T., 161). The same statute requires the cashier of every corpora tion subject to it to publish every six months in a local newspaper a statement of the corporation’s condition, setting forth total assets and total liabilities (act 13th May, 1876, sec. 22, P. T. 161), and requires publication of a notice in voluntary dissolution (act 13th May, 1876, sec. 25, P. T., 161). Reductions of capital stock must also be published (act 22d June, 1883, sec. 2, P. L., 155). An act passed in 1897 requires every bank to report certain facts to the auditor-general for purposes of taxa tion (act 15th July, 1897, sec. 1, P. L., 292). (For reports of private bankers, see act 7th June, 1907, sec. 1, P. L., 559)EXAMINATIONS. These are covered by an amendment to the act of 1895, passed in 1901, clearly the last statute on the subject; it provides that the commissioner must examine or cause to be examined, as often as he deems proper, the affairs of every corporation subject to his supervision (act 29th May, 1901, sec. 1, P. L., 345). The papers, funds, etc., of banks are at all times subject to the inspection of their directors, and the minutes, etc., are subject to the inspec tion of any committee of the legislature (act 16th April, 1850, sec. 10, Art. 15, P. T., 477, and act 13th May, 1876, sec. 19, P. T., 161). [The act of 1850 provided that in insolvency the court should appoint auditors to make a strict investigation of the affairs of the bank to verify the 554 Pennsylvania State Banks report made by directors (act 16th April, 1850, sec. 43, P. E., 477).] Under the act of 1876 an examination must be made immediately upon the commission of an act of insolvency (act 8th May, 1907, P. L. 189). IV.— R eserve R equirements. Banks, savings banks, and trust companies which re ceive deposits are subject to the following rules for reserves: (1) Every corporation receiving money subject to be paid out on demand must have a reserve equal to at least 15 per cent of demand liabilities. The whole fund may, and at least one-third of it must, consist of lawful money of the United States, gold certificates, silver certificates, national-bank notes, or clearing-house cer tificates representing specie or lawful money deposited for the purpose. One-third or less may consist of United States bonds, Pennsylvania bonds, bonds of Pennsylvania municipalities, and bonds which are a legal investment for savings banks. The rest of the reserve fund above the cash and bonds above stated may consist of moneys on deposit subject to call in any Pennsylvania bank or trust company approved by the commissioner, or in any bank or trust company located in a city which is under United States statute a reserve city and approved by the com missioner. (2) Every bank, savings bank, or trust com pany receiving deposits payable at a future time must keep a reserve equal to 7^ per cent of time deposits. The fund may consist in part of cash and clearing-house cer tificates as described above, and in part of the bonds described above; or it may consist of money on deposit subject to call in the banks and trust companies specified above. Not more than one-tliird of this reserve fund may consist of bonds, however. (3) If the reserve falls below the amount required, the corporation must not increase its liabilities or purchase anything except sight exchange; 555 N a 11 o n a l M on e t a r y Commission it must not declare dividends. The commissioner notifies a bank whose reserve funds are below the requirement (act 8th May, 1907, P. L., 189). V.— D iscount and L oan R estrictions. The latest provisions on this topic are those enacted in 1901: No director of “ any banking institution, trust company, or savings institution having capital stock” may receive as a loan any amount greater than 10 per cent of the paid-in capital and surplus, and the gross amount loaned to officers and directors and to firms in which they are interested must not exceed at any time 25 per cent of the paid-in capital and surplus (act June, 1901» sec. 1, P. L., 561, and act 13th May, 1876, sec. 21, P. L., 161). None of the above-named corpora tions may take as security for a loan or discount a lien on any part of its capital stock; the same surety must be required of shareholders as of those not shareholders (act 14th June, 1901, sec. 2, P. L., 561). “ Banks char tered under the provisions of the laws of the Common wealth” are authorized to lend on the security of bonds and mortgages on unincumbered real estate in Penn sylvania not in excess of their time deposits and to invest their funds, not exceeding 25 per cent of capital, surplus, and undivided profits, in the purchase of such mortgages (act 10th July, 1901, sec. 1, P. L., 639). Previous to this legislation the topic of loans was dealt with in the act of 1876 in the following provisions; All associations incorporated under the act have power to hold as collateral real or personal estate, including secu rities of the Lnited States, individuals, or corporations; interest may be paid on deposits only of correspondents outside Pennsylvania (act 13th May, 1876, sec. 7, P. L., 161). No directors of any corporation under the act of 1876 may receive as a loan an amount greater than 10 556 Pennsylvania State Banks per cent of the paid-in capital, and the gross amount loaned to all officers and directors, or firms in which they are interested, must not exceed 25 per cent of the paid-in capital (act 13th May, 1876, sec. 21, P. L., 161). No corporation under that act is allowed to take as security a lien on any part of its capital; the same security is required of shareholders as of those not shareholders (act 13th May, 1876, sec. 23, P. L., 161). [Earlier legislation included the following provisions: Certain banking companies were in an act of 1824 required to loan one-fifth of their capital to the farmers, mechanics, and manufacturers of the district in which each bank was established, if proper applicants were found, and they were required whenever the legislature applied to lend not exceeding 5 per cent of their paid-in capital to the State (act 25th March, 1824, sec. 8, 8 Sm. E., 236). The banks of the Commonwealth under an act of 1829 were authorized to negotiate loans to or to purchase the stock of this Commonwealth not in excess of one-third of the capital stock of the corporation. It was provided that nothing in the act should authorize 1‘ such purchases of any individual or corporation, except such as shall be taken in satisfaction of debts previously contracted ” (act 23d April, 1829, sec. 1, P. T., 3601). Some years later banks were authorized “ to offer for and subscribe to the whole or part of any loan or loans to this Com monwealth” (act 14th April, 1835, sec. 1, P. L., 439). The statute of 1850 forbade any director of a bank to appear as drawer or indorser for an amount greater than 3 per cent of the paid-in capital stock; the gross amount discounted for or loaned to all directors and officers and to the firms in which they were interested was not allowed to exceed 6 per cent of paid-in capital. Actual business paper bona fide drawn by directors in the course of their private business and later presented by the holders for 557 National Monetary Commission discount are not within this prohibition, however (act 16th April, 1850, secs. 23 and 51, P. L., 477). A later statute provided that no director of a bank should bor row of the bank a greater amount at any one time than 5 per cent of the paid-in capital; the gross amount loaned to all directors and officers and to firms in which they were interested was forbidden to exceed 6 per cent on the paid-in capital stock (act 17th April, 1861, sec. 1, P. E., 341). There has been the following legislation on liabilities allowed banks: By the act of 1850 the total liabilities of any bank, exclusive of capital, were forbidden to exceed three times the paid-in capital; the debts of any kind were forbidden to amount to more than four times the capital stock paid in (act 16th April, 1850, sec. 17, P. L., 477). A similar later statute forbids the total liabilities of any bank, exclusive of its capital, to